FUNDAMENTAL OF

SERVICE
MARKETING
AT THE END OF
THE TOPIC,
STUDENT
SHOULD BE ABLE
DIFFERENTIATE
TO : DEFINE WHAT BETWEEN FOUR
SERVICE BROAD
MARKETING IS CATEGORIES OF
SERVICES
Why study services?

• Services account for more than 60% of GDP worldwide

• Almost all economies have a substantial service sector
• Most new employment is provided by services
• Strongest growth area for marketing

3
What are services?
Total revenue of Services sector in Malaysia in second
quarter 2020 recorded RM335.6 billion, decreased
24.0 percent compared to the same quarter 2019.

The growth was contributed by the Wholesale & Retail

Trade, Food & Beverages, and Accommodation
segment (-RM82.8 billion; -23.7%).

Meanwhile, total revenue every quarter registered a

negative growth of 23.4 percent or RM102.3 billion.
Powerful Forces Are Transforming Service Markets
Forces Transforming the Service Economy
Social Business Advances in
Changes Trends IT

Government
Policies Globalization
● New markets and product categories
● Increase in demand for services
● More intense competition
Innovation in service products & delivery systems, stimulated by improved
technology

Customers have more choices and exercise more power

Success hinges on:

● Understanding customers and competitors
● Viable business models
● Creation of value for customers and firm
7
● Increased focus on services marketing and management
1.4 Four broad categories of
services
Four broad categories of services

9
 Four broad categories of services
 People Processing

 Customers must:

➔ physically enter the service

factory

➔ co-operate actively with the

service operation

 Managers should think about

process and output from
customer’s perspective

➔ to identify benefits created and

non-financial costs:
Time, mental, physical effort

10
Four broad categories of services
Possession Processing
▪ Possession Processing

▪ Customers are less

involved compared to
people processing
services

▪ Involvement may be
limited to just dropping
off the possession

▪ Production and
consumption are
separable

11
 Four broad categories of services
Mental Stimulus Processing
● Mental Stimulus Processing

● Ethical standards required

when customers who depend
on such services can
potentially be manipulated by
suppliers

● Physical presence of
recipients not required

● Core content of services is

information-based

➔Can be ‘inventoried’’

12
 Four broad categories of services
Information Processing
▪ Information Processing

▪ Information is the most

intangible form of service
output

▪ May be transformed into

enduring forms of service
output

▪ Line between information

processing and mental
stimulus processing may
be blurred.

13
Services Pose Distinctive Marketing
Challenges
Marketing management tasks in the service sector differ from
those in the manufacturing sector.

The eight common differences are:

Distribution may
Most service Intangible elements Services are often Customers may be People may be part Operational inputs The time factor
take place through
products cannot be usually dominate difficult to visualize involved in co- of the service and outputs tend to often assumes great
nonphysical
inventoried value creation and understand production experience vary more widely importance
channels
REFERENCES
• © Pearson Education South Asia Pte Ltd 2013. All rights
reserved