BRAINWARE UNIVERSITY

[MM403] CLASS NOTES [Services Marketing]

Unit I: Introduction to Services

Services Vs. Customer Service, Tangibility Spectrum, Differences in Goods vs Services

Marketing: Intangibility, Heterogeneity, Inseparability, Perishability, Challenges
Confronted by Service Sector: Infrastructure, Technology, Employees, Consumers,
Competition, Suppliers, Service Management: Traditional Marketing Mix, Expanded
Marketing Mix of Services, People, Physical Evidence, Process, Expanded Mix for
Services

Needs, Wants, and Demands

Needs

Human needs are states of felt deprivation. They include basic physical needs for food, clothing, warmth and
safety; social
needs for belonging and affection; and individual needs for knowledge and self-expression.
Marketers did not create these needs; they are a basic part of the human make-up.

Wants

Wants are the form human needs take as they are shaped by culture and individual personality. If you’ll
excuse the stereotypes – used for illustrative purposes only – a German consumer needs food but wants a
sauerkraut, sausage and beer. An American needs food but wants a Big Mac, fries, and a soft drink. A person
belonging from South India, needs food but wants idli, dosa, or uttapam. Wants are shaped by one’s society
and are described in terms of objects that will satisfy those needs.

Demand

When want is bagged by purchasing power/ability then it gets converted into demand.

Customer Vs Consumer

The person who purchases the product is called a customer.

2023-24 Prepared by: Anik Ghosh ( Brainware University, Barasat)

 BRAINWARE UNIVERSITY
[MM403] CLASS NOTES [Services Marketing]

The person who uses the product is called a consumer.

In some cases, Customer & Consumer can be the same person.

For example, Alexa purchases a bar of chocolate & consumes herself.

Market

Traditional Concept: - Market is a physical place where buyers and sellers meet each other & conduct
buying & selling activities.

With Times, what has changed, however, is not so much the “what” but the “where” of a market. Marketers
or sellers tend to use the word “market” to describe only the buyers.

Modern Concept: - Set of all potential & actual buyers of a product.

Definition- Marketing

Marketing is about identifying and meeting human and social needs. One of the shortest
definitions of marketing is “meeting needs profitably.”

The American Marketing Association offers the following formal definition: Marketing is an
organizational function and a set of processes for creating, communicating, and delivering value to
customers and for managing customer relationships in ways that benefit the organization and its
stakeholders.

Definition – Marketing Management

Marketing Management can be defined as the art and science of choosing target markets and getting,
keeping, and growing customers through creating, delivering, and communicating superior customer value.

Features of Marketing:
Need and want: - The focus of marketing is need and want of customers. All the activities in
the market are carried out with the main motive of satisfying need and want of customers
and organizations.

Creating a market offering: - Market offering means offering a product or service by specifying
its features, shape, size, colour, etc. For example, offer is T.V. then specifying the various sizes
in which it is available, various technologies used, various shapes, prices of different types, etc. A good
market offer should keep in mind the satisfaction of customers.

2023-24 Prepared by: Anik Ghosh ( Brainware University, Barasat)

 BRAINWARE UNIVERSITY
[MM403] CLASS NOTES [Services Marketing]

Customer value: - Customer is ready to give a price for the product only when he gets satisfaction or only
when product is offering utilities matching to the price. Customer values the product on the basis of
satisfaction and service offered by the product. Marketer must add to the value of product so that customers
prefer your product over the competitor.

Exchange mechanism: - The process of marketing involves exchange of products and services for money or
money’s worth. In exchange customer pay money and in return they take product or services which satisfy
their need and wants. Exchange can take place directly between manufacturer and customer or through
middlemen. Exchange is the essence of marketing.

The preconditions of exchange mechanism or pillars of marketing are:

(i) Presence of at least two parties—buyer and seller or customer and marketer, etc.
(ii) Both parties must have something viewed valuable by each other.
(iii) Both parties are free to accept or reject the offer.
(iv) Each party feels desirable to deal with the other, and
(v) Each party is capable of communication and delivery.

Marketing Process: 5 Steps of Marketing Process

Marketing is how companies create value for customers and build strong customer relationships to capture
value from customers in return. 5 step process of the marketing framework wherein value is created for
customers and marketers capture value from customers in return.

2023-24 Prepared by: Anik Ghosh ( Brainware University, Barasat)

 BRAINWARE UNIVERSITY
[MM403] CLASS NOTES [Services Marketing]

5 Steps of
Marketing
Process

Step 1: Understanding The Marketplace And Customer Needs And Wants

It is important to understand customer needs, wants, and demands to build want- satisfying market offerings
and building value-laden customer relationships. This increases long-term customer equity for the firm.

Step 2: Designing A Customer-Driven Marketing Strategy

Focus areas for designing a marketing strategy:

 Selecting customers to serve -defining the target market

 Deciding how to serve customers in the best way – choosing a value proposition

Selecting customers to serve:

The company first decides who it will serve and divides the market into segments of the customer. Then it
goes after specific sections of the market or its target market.

They target customers based on their level, timing, and nature of demand.

2023-24 Prepared by: Anik Ghosh ( Brainware University, Barasat)

 BRAINWARE UNIVERSITY
[MM403] CLASS NOTES [Services Marketing]

Choosing a value proposition

They decide how it will serve their customer. That is how it will differentiate and position itself in the
market. A brand’s value proposition is the set of values and benefits that it promises to deliver its customers.

Companies need to design strong value propositions to give them the greatest advantage in their target
markets.

Step 3: Constructing an integrated marketing plan that delivers superior value

The company’s marketing strategy outlines which customers the company will serve and how it will create
value. Then the marketer develops integrated marketing plans that will the intended value to target
customers. It consists of the firm’s marketing mix (4Ps), the set of marketing tools the firm uses to
implement its marketing strategy. The marketing program builds customer relationships by transforming the
marketing strategy into action. For this, it needs to blend all of these marketing tools into a comprehensive,
integrated marketing program that communicates and delivers the customers’ expected value.

Step 4: Build Profitable Relationships

Customer relationship management is the overall process of building and maintaining profitable customer
relationships by delivering superior customer value and satisfaction. Customer relationship management
aims to produce high customer equity, the total combined customer lifetime values of all of its customers.
The key to building lasting relationships is the creation of superior customer value and satisfaction.
Companies today want to acquire profitable relationships and build relationships that will increase their
share of the customer portion of the customers purchasing that a company gets in its product categories.

Step 5: Capturing Value from Customers

Customer relationship management’s ultimate aim is to produce high Customer equity – total combined
lifetime values of all of the company’s current and potential customers.

The more loyal to the company’s profitable customers, the higher are the customer equity. Customer equity
may even be a better way to measure its performance than market share or current sales.

Marketers cannot create customer value and build customer relationships by themselves. They need to work
closely with other company departments and with partners outside the firm.

In addition to being good at customer relationship management, they also need to be good at partner
relationship management.

Marketing Mix

According to Philip Kotler “Marketing Mix is the set of controllable variables that the firm
can use to influence the buyer’s response”.

2023-24 Prepared by: Anik Ghosh ( Brainware University, Barasat)

 BRAINWARE UNIVERSITY
[MM403] CLASS NOTES [Services Marketing]

The service marketing mix consists of 7 P’s (Product, Price, Place, Promotion, People, process, Physical
Evidence) as compared to the 4 P’s of a product marketing mix (Product, Price, Place, Promotion). Simply
said, the service marketing mix assumes the service as a product itself. However, it adds 3 more P’s which
are required for optimum service delivery.

Product: Product refers to the goods and services offered by the organisation. A pair of shoes, a plate of
dahi-vada, a lipstick, all are products. All these are purchased because they satisfy one or more of our needs.
We are paying not for the tangible product but for the benefit it will provide. So, in simple words, product
can be described as a bundle of benefits which a marketeer offers to the consumer for a price. While buying
a pair of shoes, we are actually buying comfort for our feet, while buying a lipstick we are actually paying
for beauty because lipstick is likely to make us look good. Product can also take the form of a service like an
air travel, telecommunication, etc. Thus, the term product refers to goods and services offered by the
organisation for sale.

Price: Price is the amount charged for a product or service. It is the second most important element in the
marketing mix. Fixing the price of the product is a tricky job. Many factors like demand for a product, cost
involved, consumer’s ability to pay, prices charged by competitors for similar products, government
restrictions etc. have to be kept in mind while fixing the price. In fact, pricing is a very crucial decision area
as it has its effect on demand for the product and also on the profitability of the firm.

Place: Goods are produced to be sold to the consumers. They must be made available to the consumers at a
place where they can conveniently make purchase. Woollens are manufactured on a large scale in Ludhiana
and you purchase them at a store from the nearby market in your town. So, it is necessary that the product is
available at shops in your town. This involves a chain of individuals and institutions like distributors,
wholesalers and retailers who constitute firm’s distribution network (also called a channel of distribution).
The organisation has to decide whether to sell directly to the retailer or through the distributors/wholesaler
etc. It can even plan to sell it directly to consumers.

Promotion: If the product is manufactured keeping the consumer needs in mind, is rightly priced and made
available at outlets convenient to them but the consumer is not made aware about its price, features,
availability etc, its marketing effort may not be successful.
Therefore, promotion is an important ingredient of marketing mix as it refers to a process of informing,
persuading and influencing a consumer to make choice of the product to be bought. Promotion is done
through means of personal selling, advertising, publicity and sales promotion. It is done mainly with a view
to provide information to prospective consumers about the availability, characteristics and uses of a product.
It arouses potential consumer’s interest in the product, compare it with competitors’ product and make his
choice. The proliferation of print and electronic media has immensely helped the process of promotion.

People

2023-24 Prepared by: Anik Ghosh ( Brainware University, Barasat)

 BRAINWARE UNIVERSITY
[MM403] CLASS NOTES [Services Marketing]

Service quality is inseparable from quality of service providers. The company has to set standards to improve
quality of service provided by employees and monitor their performance. Without training and control,
employees tend to be variable in their performance leading to variable service quality. Training is crucial so
that employees understand the appropriate norms of behavior.
A service provider trains its employees to identify and categorize different personality types of customers,
and to modify their behavior accordingly. Employees need to know how much discretion they have to talk
informally to customers. They also need to control their own behavior so that they are not intrusive, noisy or
immature. They need to adopt a customer-first attitude rather than putting their own convenience and
enjoyment before those of their customers.

Physical Evidence
Physical evidence is about the environment in which the service is delivered and it includes any tangible
goods that facilitate the performance and communication of the service. Customers look for cues to have an
idea about the likely quality of a service by inspecting the tangible evidence.
Prospective customers may peep through a restaurant window to check the appearance of the waiters, the
décor and the furnishings. The layout of a service operation has to balance the operational need for
efficiency and marketing desire for effectively serving the customer.
Service providers should research the concerns of the customer regarding the service and also find out the
cues that the customer will be searching to get an idea of that part of the service which is of concern to him.
The service provider should strengthen those cues.

Process
These are the procedures, mechanisms and flow of activities by which a service is delivered to customers.
Self-service cafeteria is very different from a restaurant. The company needs to research the requirements of
its customers and set its processes accordingly so that the required service is delivered. Since requirements of
customers vary widely, processes cannot be standardized. But if a process is allowed too much flexibility,
the efficiency of the facility goes down. Therefore, customer requirements should not be allowed to vary
widely. Through targeting the smaller segment of customers, variations in their requirements can be
controlled.
The process is important because in some services, they are visible to customers. Sometimes the
effectiveness of a process can be compromised in the effort to make it look good to the customer. Some
patients feel good when they are extensively examined by the doctor though it may not be necessary. Some
processes in personal grooming and hair care saloons are not really required but service professionals have to
carry them out because customers have come to expect them.

2023-24 Prepared by: Anik Ghosh ( Brainware University, Barasat)

 BRAINWARE UNIVERSITY
[MM403] CLASS NOTES [Services Marketing]

Difference – Marketing Vs Selling

2023-24 Prepared by: Anik Ghosh ( Brainware University, Barasat)

 BRAINWARE UNIVERSITY
[MM403] CLASS NOTES [Services Marketing]

Goods Vs Services
Nature

A particular product will remain the same regarding physical characteristics and specifications, but services
can never remain the same.

The nature of goods is that they are homogeneous and tangible, whereas services are heterogeneous and
intangible.

Perishability
Services are simultaneously produced & consumed; thus services are perishable. Ex- Service of a
doctor/teacher.

Goods may or may not be perishable. Ex- Pen, Pencil, Marker, Duster.

Involvement

When comparing the difference between goods and services we have to look at the involvement of customer
as well. In services, involvement of customers is much more than in goods.

Ownership
When buying a service, the service ownership is not transferred to the end customer. If you buy a car then
the car is yours. But if you buy a ticket for an airline, then the airline is definitely not yours.

Inseparability: -

Services cannot be separated from their providers since they can be consumed at the same time they are
offered. On the other hand, a product can be separated from the owner once the purchase has been
completed.

Return Ability: -
It is easier to return a product to the seller if the customer is not satisfied about it. In turn, the customer will
get a replacement of the returned product. However, a service cannot be returned to the service provider
since it is something that is intangible.

Variability: -

2023-24 Prepared by: Anik Ghosh ( Brainware University, Barasat)

 BRAINWARE UNIVERSITY
[MM403] CLASS NOTES [Services Marketing]

A particular product will remain same regarding physical characteristics and specifications, but services can
never remain same.

Evaluation: -
The evaluation of services is difficult because every service provider has a different approach of carrying out
services, so it is hard to judge whose services are better than the other as compared to goods.

Storage: -
Goods can be stored for future use, but services are time bound, i.e. if not availed in the given time, then it
cannot be stored.as compared to goods.

Tangibility Spectrum
The tangibility spectrum is a way to categorize products and services based on their level of tangibility or
physicality. At one end of the spectrum are highly tangible products like goods, while at the other end are
highly intangible products like pure services. In between these two extremes, there are products and services
that have varying levels of tangibility.

Here are the different categories on the tangibility spectrum:

Goods: These are tangible products that customers can see, touch, and possess. Examples include clothing,
furniture, cars, and books.

Hybrid products: These are products that have both tangible and intangible components. Examples include
software, which is delivered on a physical medium like a CD or USB drive, but the actual product is
intangible and can only be accessed through a computer.

Augmented products: These are tangible products that also include intangible components, such as
warranties, customer support, or maintenance services. For example, when you buy a car, you also get a
warranty that provides additional support and service.

Services with a tangible component: These are services that have some physical aspect to them, such as
cleaning services, landscaping services, or transportation services. While the service itself is intangible, the
equipment, tools, and vehicles used to provide the service are tangible.

Pure services: These are intangible products that cannot be touched or possessed, such as consulting,
education, or financial services.

2023-24 Prepared by: Anik Ghosh ( Brainware University, Barasat)

 BRAINWARE UNIVERSITY
[MM403] CLASS NOTES [Services Marketing]

Understanding where a product or service falls on the tangibility spectrum can help businesses identify the
unique challenges and opportunities associated with delivering and marketing their products to customers.

Challenges in Marketing of Services as compared to Marketing of Goods

Goods Vs Service Marketing – Nature

While goods are designed, built and delivered to a range of customers ‘as standard’, services can be tweaked
and customized depending on the needs or wants of customers.

The service marketing strategy should reflect this by highlighting the personal touches you provide or how
you listen to your customers’ needs.

Goods Vs Service Marketing – Perishability

Usually, services are provided at a specific time for a specific period. After this, the service agreement must
be renewed or cancelled. A good can be bought and owned without any time constraints.

Marketing differences here should center around managing demand-supply through peak/off peak pricing,
offering alternatives for un-used services.

Goods Vs Service Marketing – Involvement

2023-24 Prepared by: Anik Ghosh ( Brainware University, Barasat)

 BRAINWARE UNIVERSITY
[MM403] CLASS NOTES [Services Marketing]

Often, customers are actively involved in helping create the service, either by serving themselves (as in using
a ATM) or by cooperating with service personnel in settings such as hair salons, hotels, colleges, or
hospitals.

As in service, the customer gets involved in the process; the service provider must make the service delivery
process smooth & crisp to ensure maximum customer satisfaction.

Goods Vs Service Marketing – Ownership

Perhaps the key distinction between goods and services lies in the fact that customers usually derive value
from services without obtaining permanent ownership of any substantial tangible elements.

Thus, the service provider must create a memorable experience for the customer so that they don’t feel
dissatisfied after consuming the service.

Services Vs. Customer Service

Services refer to the products or intangible benefits that a business provides to its customers, such as goods,
expertise, advice, or support. Services can vary widely across different industries, but they all have one thing
in common: they aim to satisfy a specific customer need.

Customer service, on the other hand, is the support and assistance that a business provides to its customers
before, during, and after a purchase. Customer service can include things like answering questions, resolving
complaints, and providing technical support. Good customer service can enhance a customer's overall
experience with a business and increase their satisfaction and loyalty.

While services and customer service are closely related, they are not the same thing. A business can offer
great services but still have poor customer service, which can negatively affect customer satisfaction and
retention. Conversely, a business with average services but exceptional customer service can still have a
loyal customer base due to the positive interactions they have with the company.

2023-24 Prepared by: Anik Ghosh ( Brainware University, Barasat)