Service Marketing

MC 6061

Chapter: 01 – Fundamentals of Service Marketing

 Role of Services in Industrial Economic
Activities
Industrial economic activities can be divided to three sectors &
service is the third tier.

Primary Secondary Tertiary

Agriculture Manufacturing Retail
Fishing Processing Distribution
Forestry Construction Hospitality & Leisure
Mining Utilities Banking
 Service Definitions

Different authors has sought different dimensions of the

services.
 Smith (1776): Services are different from goods because they are
perishable
 Say (1803): As services are immaterial, consumption cannot be
separated from production
 A service is any activity or benefit that one party can offer to another
which is essentially intangible and does not result in the
ownership of anything’ (Kotler, Armstrong, Wong and Saunders,
2008)
 Service benefits are delivered through an interactive experience
involving the consumer to a greater or lesser extent’ (Bateson,
1999)
 Service Characteristics

Character Description

Intangible Services are intangible we cannot touch them are not physical objects

Perishable Services can not be stored

Inseparable Services and their providers are associated closely, thus can not
separable
Heterogeneity The quality of services cannot be standardized

Ownership The users have only an access to services. They cannot own the service.

Simultaneity Services cannot move through channels of distribution and cannot be

delivered to the potential customers and user
Quality measurement A service sector requires another tool for measurement. We can measure
it in terms of service level.
Service Characteristics
 Basic Service Characteristics 5 “I” s

 Intangibility
 Inseparability
 Inconsistency
 Inventory
 Inability to own
 Intangibility

 Service can’t touch

 Service is an experience
 Enhanced perceived risk when a customer buys a service
 Intangibility & Service Categories

 Pure tangible good Pure service?

 Tangible good with Major service accompanying

goods and service
accompanying Hybrid
services Tangible good with accompanying

 Hybrid service

 Major service with Tangible good with accompanying

service
accompanying minor
Pure tangible good?
goods and services
 Pure service
Intangibility & Service Categories
 Intangibility – Marketing Implications

 Managing the physical

evidence
 Symbols
 Messages
 Uniforms
 McDonald’s arches readily
accepted worldwide -
standardised approach
 Thai Airlines’ uniforms are
traditional conveying a Thai
experience
 Inseparability

 Can not separate the service from one who produce the service
 Production and consumption occurs simultaneously
 Consumer participation required in production of service
 (In most cases) service production can begin in presence of customer
 Role performance in service delivery
 Inseparability – Marketing Implication

 Managing the people

 Recruitment, training and remuneration becomes a significant activity
and large part of the budget
 Staff are part of the visible evidence of the company brand
Perishability / Inventory

 Lower opportunity to store service

 Manage fluctuations in demand
 Increase efficiency (reduce costs/increase sales)
Inability to Own

 The users have only an

access to services.
 They cannot own the
service.
 According to Philip Kotler,
“A 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
Criteria for Classifying Services
Strategic in Nature
Intangibility continuum
Profit vs not for profit
Markets and industries
Service delivery process
External and internal markets
Operational in Nature
Customer’s buying behaviour
Relationship between service provider and
customer
Service provider’s knowledge/skills & capacity
Physical site of service delivery
Classifying Services

Doctors, accountants Five star resorts, private jets

low budget airlines Pizza Hut

Marketing Services
 Marketing services – Internal Marketing
(Employees
 Employees are seen as customers
 The best possible people need to be employed and retained
 Satisfied employees a vehicle for staff acquisition,
motivation and retention
 Satisfied employees a vehicle for promotion of customer-
oriented behavior
 Marketing services – External market
(Customers)
 Managing differentiation
 Offering
 Primary service package
 Secondary service features
 Faster and Better Delivery
 Reliability
 Resilience/flexibility
 Innovativeness
 Image
 Managing Service Quality
 Perceived service – management perceptions of customer expectations
 Expected service – functions of customer's past experience, personal needs and word of
mouth communication by consumers
Marketing services – External market
(Customers)

Gap between consumer expectation and management

Gap -01
perception

Gap between management perception and service-quality

Gap -02
specification

Gap -03 Gap between service-quality specification and service delivery

Gap -04 Gap between service delivery and external communications

Gap -05 Gap between perceived service and expected service

 Empowerment of employees – Interactive
marketing

Service Production Menu Service

Line
e.g. public transport, e.g. personal
Low banking,
fast food, cinema
satellite TV
Level of Provider Discretion
Performance Professional Service
Service e.g. legal advice,
e.g. Large scale consultancy,
education, theatre specialist jobs
High performance, health
care
Low High

Degree of Customisation