Unit:1 Introduction to service marketing

BBA V SEMESTER
SERVICE MARKETING
Introduction :
Services constitute a very significant portion of the business market.
There has been an enormous growth of the service sector. It is the
largest sector in most of the economies and it is the fastest growing
sector in many of them. The developed economies are primarily service
economies in the sense that the service sector generates bulk of the
employment and income. The contribution of services to GDP and
employment is substantially high in, particularly, the developed
economies.
In the light of liberalization, privatization and globalization, services
have been commercialized and have become more professional in
nature. Services can be defined as human efforts, which provide
succour to the needy. Services include a wide range varying from
education, transportation, hospitality, finance, real estates, accounting,
banking, insurance, taxation, consultancy, health care etc. These
services are together called the services sector or the tertiary sector.

Meaning of Service:
A service is an act, deed, performance or a rendering offered by one
person to another. A service does not involve the transfer of any
tangible commodity. Service is integral part of human life in modern
day.
As opposed to Product Marketing that involves a physically visible
product being promoted over various media, service marketing calls for
the promotion of a service that is not physically available but is still
sold out to the customers.

P. Kotler suggested that “service is an activity or benefit that one

party can offer to another that is essentially intangible and does not
result in the ownership of anything.

Service marketing refers to the creation of a plan or strategy to sell an

intangible product to customers. In short, these goods cannot be seen,
heard, touched, or kept by a customer unlike the ones in product
marketing.

Business sectors such as insurance, tourism, and hospitality use service

marketing to drive growth and success in their industry. However, it’s
essential to remember that service marketing is a bit more challenging
compared to product marketing due to its unique characteristics.

On the basis of the extent of service component involved in a

company’s offer to the market place, Kotler distinguishes the following
five categories of offer –
1. A pure tangible good, like screw or lubricant, with no service
accompanying the product.
2. A tangible good with accompanying service, like car, television,
laptop etc.
3. A hybrid, where the offer consists of more or less equal parts of
goods and services such as – restaurants which are patronised
both for their food and service.
4. A major service with accompanying minor goods and services.
For example, airline passengers are provided with some food and
drinks etc., during the air travel.
5. A pure service, like consultancy.

Unique characteristics of service marketing:

I. Intangibility:
The goods of tangible nature can be displayed, the prospects or
buyers can have a view and they can even test and make a trial
before making the buying decisions. The customer can’t touch the
services, they albeit can’t smell them. In a true sense, it is not a
physical object. It has mental connotations. While selling or
promoting services, we need to concentrate on benefits and
 satisfaction which a buyer can derive after buying. We can hardly
emphasise the service itself.
Thus, it is right to mention that due to intangibility, the selling
and marketing of services become much more complicated.

II. Inseparability:
The inseparability focuses on the fact that the services are not of
separable nature. Generally, the services are created and supplied
simultaneously. Like the dancers, musicians, dentists and other
professionals create and offer services at the same time. In other
words, the services and their providers are the same. Donald
Cowell says, “Goods are produced, sold and then consumed
whereas the services are sold and then produced and consumed.”

It is inseparability that makes the task of marketing services a bit

difficult. The goods are produced at one point and then distributed
by others at other points. In the services, we find the selling
processes making ways for the generation of services. The
professionals while marketing the services thus bear the
responsibility of removing or minimising the gap between the
services-promised and services-offered.

III. variability / Heterogeneity:

The quality of services can’t be standardised. The prices charged
may be too high or too low. In the case of entertainment and
sports, we find the same thing. The same type of services can’t be
sold to all the customers even if they pay the same price.
The consumers rate the services in a different way. Of course, it
is due to the difference in the perception of individuals at the
levels of providers and users.
The heterogeneity factor makes it difficult to market efficiently.
The professionals by using their excellence bear the responsibility
of minimising the problem.
IV. Perishability:
The goods if not sold today can be stored, preserved for further
selling. The services can’t be stored or preserved. Like that of
movie tickets , airlines, any appointments booked etc..
This makes it essential that decision-makers or the executives by
using their professionalism minimise the possibilities of
economic waste. The opportunities come and you need to
capitalise on the same by using your excellence.

V. Ownership:
The goods sold are transferred from one place to another, the
ownership is also transferred and this provides to the buyers an
opportunity to resell. In the case of services, we don’t find the
same thing. The users have just an access to the service. As for
example, a consumer can use personal care services or Medicare
services or can use a hotel room or swimming pool, however the
ownership rests with the providers.

VI. Simultaneity:
Services can’t be delivered to customers or users. Services don’t
move through the channel of distribution. For availing the
services, it is essential that the users are brought to the providers
or the providers go to the users. It is right to say that the services
have limited geographical areas.

VII. Quality Measurement:

As for example, we can quantify the food served in a hotel but the
way a waiter or a carrier serves it or overall environment or
behaviour of other staff can’t be ignored while rating the total
process. Hence, we can determine the level of satisfaction at
which the users are found satisfied. A firm sells atmosphere,
conveniences, consistent quality, status, anxiety, moral, etc.
VIII. Nature of Demand:
Generally, the services are found of fluctuating nature.
Particularly during the peak season, we find an abnormal increase
in the demand. As for example, the mobility of passenger is found
increased, especially during the marriage season or during an
important festival.
The tourists prefer to go the tourist spots or resorts specially
during summer when we find the weather condition suitable. The
public transport facilities are used considerably during the
beginning and end of office hours. There are a number of
examples to prove the peak hour when we find an abnormal
increase in the demand position. Professionals working in the
services sector need excellence to make available to the
customers the promised services without a gap.

MARKETING CHALLENGES OF SERVICES:

1. Challenge of Intangibility: Clients cannot see or touch services

before they purchase them. According to CARMAN AND
UHL, a buyer of a products have an opportunity to see
,touch,hear,smell them before they buy but we don’t find the
same thing with the services products and it is a challenge to
the services provider and consumer. As for example, the
banking organisations promote the sale of credit cards by
visualizing the convenience and comforts the holders of the
credit cards are likely to get from the same. Thus, it is right to
mention that due to intangibility, the selling of services become
much more challenging.

2. Services must be consumed when produced i.e. challenge of

inseparability: It is a special challenge in services marketing,
in the case of manufacturing, products can be stored till
 consumed by the buyers but services production should be
done in customer presence, it is creating a very different and
challenging dynamic.

3. Challenge of Perishability: Services products are produced in

the presence of clients, Hence, the resources remain ideal, If
the clients are not coming.

4. Challenge of Variability: Lack of well-developed networks

and infrastructure, New marketing platforms, lack of
standardisation creates biggest challenge to the services
marketing like supply related issues pertaining to distribution
and infrastructure .

5. The lack of well-developed distribution networks; makes it

especially Challenging to penetrate the fast growing areas in
addition, regular power cuts and poor road Linkages makes it
more challenging.

6. New modes of Communication: Consumers has evolved with

times, while conventional media continues to be important,
focus for change is on new media such as the internet and
mobile phones. These form an important part of the consumer
search process in the buying process and therefore services
marketing companies are increasing investments behind online
marketing.

7. Challenge of trust: Some level of trust in the service

organisation and its people must be established before the
client engage in the service. This is more important than the
service offering and value propositions.

8. competition is often not who you think: competition for product

companies are other product companies, whereas competition
 for service are the clients themselves. Sometimes you found
yourself in competitive shootout, but often the clients are
asking whether we should hire this service at all.

9. Brand extends beyond marketing: brand in service is about who

you are as much as what you say about yourself. Internal brand
management and communications are equally vital to business
success as external communications.

10. People: Passion is necessary yet elusive, the more passion,

hustle, spirit your staff will show, the more your business will
grow. Training should be given that enhance interpersonal
skills. Along with this the right attitude, aptitude and service
knowledge goes a long way in satisfying customer.

11. Price: what should be the price and how it should be

estimated? Such that customers are ready to pay. To check
whether the price is too high of too low?

12. Physical evidence: makes up the opinion of customer

regarding the service. The place where are services are required
to be provided should be clean, hygienic, prompt, friendly etc.
It is the backbone of customer opinion making.

SERVICE MARKETING MANAGEMENT PROCESS-

OVERVIEW

Step 1: Setting Marketing Objectives:

The first step of marketing management process is setting marketing
objectives. While setting objectives, the organisational mission must be
considered. The mission helps the marketer to conduct the proper
environmental scanning and search for new opportunities.
Step 2: Analyzing Marketing Opportunities:
In the next step, different marketing opportunities are analysed in
accordance with the strengths and weaknesses of the organisation, which can
be internal or external. The availability of further opportunities can be
examined on the basis of the project or work assigned.
A consistent market information system is needed for the effective analysis
of the opportunities. This enables the marketers to have information
regarding choices and preferences of target customers, their geographical
locations, buying behaviour, social behaviour, etc.

Step 3: Researching and Selecting Target Markets:

After analysing the opportunities, the research and selection of target market
is carried out. For selecting a target market, it is very essential to understand
that how the attractiveness of a particular market can be measured. There
are various techniques which are used to measure the market potential and
forecast the future demand. Under modern marketing concept, the whole
market is divided into several small segments. These segments are evaluated
to select the target markets, and then different positioning strategies are
applied to each market.

Step 4 : Designing Marketing Strategies :

This is the most crucial step of marketing management process. In this, the
marketing strategy of an organisation is designed for the target markets. The
strategy reflects the overall plan of the organisation for achieving marketing
or business objectives.
Marketing strategy states the major approaches through which an
organisation can achieve its business goals in a target market. It also
comprises of basic decisions related to marketing mix, marketing
expenditure and marketing distribution.
This step also involves extensive marketing research for the development of firm-market
system. Based on the system, four Ps of marketing management, viz., product,
price, place, and promotion are determined and applied on the
consumers. The organisation should also decide the total expenditure to be
used for marketing mix.

Step 5: Planning Marketing Programs:

The broad marketing strategies alone are not enough to meet the
organisational goals. In order to achieve the business goals and implement
marketing strategies, the organisation requires effective marketing
programs.
These marketing programs include decisions regarding the product
characteristics, packaging, policies related to services, branding, pricing
(retail as well as wholesale), credits, discounts and allowances, recruitment,
selection and integration of different marketing intermediaries for effective
distribution, advertisement, sales promotion, personal selling, direct
marketing, etc.

Step 6 : Organizing, Implementing and Controlling the Marketing

Effort :
The concluding step in marketing management process involves
organisation of resources and implementation and control of the marketing
plan.
A marketing organisation is designed to apply the marketing plan into action,
that is for the implementation of marketing plan.
Once the plan is executed, activities concerned with customer feedback and
sales forecast are organised. This is done to evaluate the effectiveness of
marketing plan.
In marketing plan, control is very essential component through which
alternations or modifications can be done. Controlling in marketing is
responsible for determining performance standards, analyzing actual
performance and minimizing the difference between actual and desired
performance.
It involves three main elements, i.e., measuring, analyzing, and monitoring.
The marketing manager compares the actual performance with the standard
performance and takes corrective measures, if required. In case of applying
corrective measures, the reason for the deviation is identified by conducting
market research.

SERVICES MARKETING MANAGEMENT STRATEGY FOR

TARGET MARKET:

We consider strategy an integrated and coordinated set of commitments

and actions designed to exploit our potentials and gain competitive
advantage. The success of the services marketing depends upon the
make use of the services marketing mix in a right blend

1. Product: Services are intangible, therefore is often difficult to

understand the quality and quantity in advance. An effective way
to geneate confidence is to highlight the tangible aspects. Banks
are issuing credit cards as tangible element of their credit
facilities.

2. Price: It draws the attention of service users and service providers

it may not be same by all service provides. There are number of
factors influencing the pricing strategy. Airline services pay more
attention in fixing the price to attract more customers because it
is perishable in nature

3. Promotion: Promotion is the life blood of services marketing then

other businesses, because it is having intangible nature products
the effective promotional tools can take the services to the
prospective consumers, aggressive advertising campaign
INCREDIBLE INDIA By Tourism Ministry has played a major
role in changing the image of India from that of the land of snake
charmers to a hot and happening place and has sparked renewed
interest among foreign travellers.

4. Place/Distribution: High contact services have to be distributed

directly because consumer and supplier have to meet Economics
of scale can be achieved by using indirectly distribution with
computer- based technology such as travel agents and ATMS.

5. People: All people involved either directly or indirectly of the

consumption of a service is important. People can add a
significant value to a service offering. People sell the service and
either make or break the marketing of the service you offer. Its
time to take a look at the face of your service and evaluate.
6. Physical Evidence: The way that service is delivered needs to be
communicated and followed through. You are creating an
intangible experience so communication and documentation is
the only physical evidence you have to share with your consumer.
Make sure you are doing enough of it.

7. Process: Procedure and flow of activities of how services are

consumed is an essential strategy in marketing services.
Everything must run smoothly to keep the trust of the consumer.