Introduction to Service Marketing

Introduction: Everyday we interact with various economic activities like - getting courier
delivered at the requested address, making phone call to friend, relative, or client, having
coffee at coffee shop, or taking metro to commute office. Such activities are called services
because they involve deed or act and offered by one party to another for sale.
Services differ from goods in many ways. The way a product is produced, distributed,
marketed, and consumed is not the way a service is. Hence, a different marketing approach is
necessary for the marketing of services.

Definition of Services
According to American Marketing Association services are defined as “activities,
benefits or satisfactions which are offered for sale or provided in connection with the sale of
goods.”
According to Philip Kotler and Bloom services is defined as “any activity or benefit
that one party can offer to another that is essentially intangible and does not result in the
ownership of anything. Its production may or may not be tied to a physical product.”
Characteristics of Services:
Intangibility – Services are cannot be touched or hold, they are intangible in
nature. For example – you can touch your Smartphone. But, you cannot hold or touch the
services of your telecom service provider.
Inseparability – In case of services the production, distribution, and consumption
takes place simultaneously. These three functions cannot be separated.
Variability – It is impossible to provide similar service every time. You’ll experience
some change every time you buy a particular service from a particular service provider. For
example – Yesterday you had a coffee at CCD. Today, you are again at CCD to have a
coffee, but you have got different place to sit today; the person served you coffee is different
today; other people having coffee are also different today. Hence, your experience of having
coffee today is different as compared to yesterday.
Perish-ability – You can store goods, but it is not so in the case of services. Services
get perished immediately.
Participation of customer – Customer is co-producer in production of services. For
delivery customer involvement is as important as is of the service provider. For example – if
you went to a parlour for haircut, how it cannot be possible without your presence and
involvement.
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 No ownership – In the sale of services, transfer of ownership not take place. It means
to say that consumer never own the services.

Marketing of Services: A different marketing approach is necessary for services

marketing, because services differ from goods in many respects.

Difference between Services and Goods

Basis Services Goods
Tangibility Services are intangible Goods are tangible in
in nature. They cannot nature. They can be
be touched or hold. touched and hold.
Separability Services are inseparable Function of distribution
in nature. Production, and consumption of goods
distribution, and can be separated from the
consumption of service function of production.
take place
simultaneously.
Ownership Services cannot be Goods can be owned.
owned. They can be
hired for a specific time
period.
Perish-ability Services get perished Goods can be stored for
after a specific time future use.
period. It cannot be
stored for future use.
Heterogeneit Services are more Goods are less
y heterogeneous. It is heterogeneous. It is
very difficult to make possible to make each
each service identical. goods identical.

Customer Service in a service firm is highly interactive in nature. Customer interacts

with the firm physical facilities, personnel, and tangible elements like the price of the service.
The success of any service firm depends on how its performance is judged and perceived by
the customer. Today, Service Firms are becoming highly competitive, so, it is essential for
service firms to provide high quality services for their survival.
An expanded marketing mix for services was proposed by Booms and Bitner (1981),
consisting of the 4 traditional elements–product, price, place, and promotion and three
additional elements–physical evidence, participants, and process. These additional variables

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beyond the traditional 4 P's distinguish ‘customer service’ for service firms from that of
manufacturing firms.
The extent of services in the economy: US is the worlds first service economy.
More than 75% of the workforce in the private sector is employed in the service industry.
Accounts for more than $3bn in output and contribute 60% of GNP. 60% of services are
consumed by the final consumer. The increase in the service sector is a result of LT growth in
the US economy deriving demand for additional services
Travel
Financial services
Entertainment
Personal care etc.
Dual income families need for convenience.
Increase in health awareness.
Illustration of Service Marketing Marriot Hotels: Offer different services for different
segments of their target market. Great attention paid to product positioning. Rely on research,
publicity, TV advertising, use of well conceived slogans and greater personal attention to
consumers. Quick resolution to customer problems--overbooking, long customer lines,
unresponsiveness, discourteous staff. Hotels now offer alternative accommodations for over
booking, computerized check out systems, express check outs, serving free drinks, provide
baggage handling etc.
Service delivery: The delivery of a service typically involves five factors:
 The service providers (e.g. the people)
 Equipment used to provide the service (e.g. vehicles, cash registers)
 The physical facilities (e.g. buildings, parking, waiting rooms)
 The client
 Other customers at the service delivery location.
The service encounter is defined as all activities involved in the service delivery process.
Some service managers use the term "moment of truth" to indicate that defining point in a
specific service encounter where interactions are most intense. Many business theorists view
service provision as a performance or act (sometimes humorously referred to as dramalurgy,
perhaps in reference to dramaturgy). The location of the service delivery is referred to as the
stage and the objects that facilitate the service process are called props. A script is a sequence
of behaviours followed by all those involved, including the client(s). Some service dramas

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are tightly scripted, others are more ad lib. Role congruence occurs when each actor follows a
script that harmonizes with the roles played by the other actors. In some service industries,
especially health care, dispute resolution, and social services, a popular concept is the idea of
the caseload, which refers to the total number of patients, clients, litigants, or claimants that a
given employee is presently responsible for. On a daily basis, in all those fields, employees
must balance the needs of any individual case against the needs of all other current cases as
well as their own personal needs. Under English law, if a service provider is induced to
deliver services to a dishonest client by a deception, this is an offence under the Theft Act
1978.
The dichotomy between physical goods and intangible services should not be given
too much credence. These are not discrete categories. Most business theorists see a
continuum with pure service on one terminal point and pure commodity good on the other
terminal point. Most products fall between these two extremes. For example, a restaurant
provides a physical good (the food), but also provides services in the form of ambience, the
setting and clearing of the table, etc. And although some utilities actually deliver physical
goods — like water utilities which actually deliver water — utilities are usually treated as
services. In a narrower sense, service refers to quality of customer service: the measured
appropriateness of assistance and support provided to a customer. This particular usage
occurs frequently in retailing.
List of economic services: The following is an incomplete list of service industries,
grouped into rough sectors. Parenthetical notations indicate how specific occupations and
organizations can be regarded as service industries to the extent they provide an intangible
service, as opposed to a tangible good.
 Business functions (that apply to all organizations in general)
consulting
customer service
human resources administrators (providing services like ensuring that employees are
paid accurately)
 child care
 cleaning, repair and maintenance services
janitors (who provide cleaning services)
gardeners o
mechanics

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 construction
carpentry
electricians (offering the service of making wiring work properly)
plumbing
 death care
coroners (who provide the service of identifying corpses and determining time and
cause of death)
funeral homes (who prepare corpses for public display, cremation or burial)
 dispute resolution and prevention services
arbitration
courts of law (who perform the service of dispute resolution backed by the power of
the state)
diplomacy
incarceration (provides the service of keeping criminals out of society)
law enforcement (provides the service of identifying and apprehending criminals)
lawyers (who perform the services of advocacy and decision making in many dispute
resolution and prevention processes)
mediation
military (performs the service of protecting states in disputes with other states)
negotiation (not really a service unless someone is negotiating on behalf of another)
 education (institutions offering the services of teaching and access to information)
library
museum
school
 entertainment (when provided live or within a highly specialized facility)
gambling
movie theatres (providing the service of showing a movie on a big screen)
performing arts productions
sports
television
 fabric care
Dry cleaning
Laundromat (offering the service of automated fabric cleaning)

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 financial services
accounting
banks (offering lending services and safekeeping of money and valuables)
real estate - building societies
stock brokerages
tax return preparation
 foodservice industry
 hairdressing
 health care (all health care professions provide services)
 information services
data processing
database services
language interpretation
language translation
 risk management
insurance
security
 social services
social work
 transport
Service Car Rental
 utilities
electric power
natural gas
telecommunications
waste management
water industry
The services marketing mix: Cowell states that what is significant about services are the
relative dominance of intangible attributes in the make-up of the ―service product. Services
are a special kind of product. They may require special understanding and special marketing
efforts. The provision of the continuing education contains the element of the tangible and
intangible. It usually provides a learning materials (physical good) and also numbers of the
service activities (teaching processes, contact with customers, organisation of the courses,

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etc.). The distinction between physical and service offering can, therefore, be best understood
as a matter of degree rather that in absolute terms. The continuing education is service –based
since the value of this product is dependent on the design and delivery of the CE courses
rather than the cost of the physical product (teaching materials, CDs, etc.).
The services marketing mix is an extension of the 4-Ps framework. The essential
elements of product, promotion, price and place remain but three additional variables –
people, physical evidence and process – are included to 7–Ps mix. The need for the extension
is due to the high degree of direct contact between the CE providers and the customers, the
highly visible nature of the service process, and the simultaneity of the production and
consumption. While it is possible to discuss people, physical evidence and process within the
original-Ps framework (for example people can be considered part of the product offering)
the extension allows a more thorough analysis of the marketing ingredients necessary for
successful services marketing.
People – because of the simultaneity of production and consumption in services the
CE staff occupy the key position in influencing customer‘s perceptions of product quality. In
fact the service quality is inseparable from the quality of service provider. An important
marketing task is to set standards to improve quality of services 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 forms of behaviour and trainees adopt the best practises of the
andragogy.
Physical evidence – this is the environment in which the service is delivered and any
tangible goods that facilitate the performance and communication of the service. Customers
look for clues to the likely quality of a service also by inspecting the tangible evidence. For
example, prospective customers may look to the design of learning materials, the appearance
of facilities, staff, etc.
Process – this means procedures, mechanism and flow of activities by which a service
is acquired. Process decisions radically affect how a service is delivered to customers. The
service in CE includes several processes e.g. first contact with customers, administrative
procedure regarding course delivery, preparation, delivery and evaluation of the courses. The
following guideline can be useful for successful CE management:
 Ensure that marketing happens at all levels from the marketing department to

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 Where the service is provided consider introducing flexibility in providing the service;
when feasible customize
 The service to the needs of customers recruit high quality staff treat them well and
communicate clearly to them: their
 Attitudes and behaviour are the key to service quality and differentiations attempt to
market to existing customers to increase their use of the service, or to
 Take up new service products sep up a quick response facility to customer problems and
complaints
 Employ new technology to provide better services at lower costs
 Use branding to clearly differentiate service offering from the competition in the
 Minds of target customers
Marketing mix: Elements of the Marketing Mix:
Product
Product design
Product positioning
Product name and branding
Packaging and labelling
Breadth and depth of product line
Level and type of customer service
Product warranty
New product development process
Product life cycle strategies
Manufacturer, wholesaler and
Price
retailer selling prices
Terms and conditions
Bidding tactics
Discount policies
New product pricing (Skimming vs. Penetrating pricing)
Promotion (marketing communications)
Advertising
Sales force policies
Direct marketing (mail, catalogue)

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 Public relations
Price promotions – for the consumers and the channel
Trade shows and special events
Direct Vs. Indirect channels
Place (distribution channels)
Channel length
Channel breadth (exclusive, selective or intensive)
Franchising policies
Policies to ensure channel
Coordination and control
People
Employees - Recruiting - Training - Motivation - Rewards - Teamwork
Customers - Education - Training
Physical evidence
Facility design
Service ambience
Equipment
Signage
Employee dress
Point-of-sale displays
Other tangibles (e.g. business cards)
Process
Flow of activities
Service script (number of steps)
Customer involvement
The Changing Face of Services Marketing:
Marketing of Services has emerged as an important sub discipline of marketing in its
own right. It has evolved phenomenally to emerge as a major field of study with far reaching
implications in today’s increasingly service driven economies. It is then, only natural, to
wonder what is the future course that this field of study is most likely to take.
At first glance, one can see that there are as yet many opportunities available for
Services Marketing to evolve and gain in relevance as the role of the service economy
continues to expand. A large chunk of Third World economies are now beginning to move
into the service domain. The role and share of the service sector in these economies is
growing with an increased monetization of services

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 However, there are several challenges also. There has been a change in the basic nature of
services. Services, today, can no longer be described according to the parameters of -
intangibility, heterogeneity, inseparability and perishability. These changes are detailed
below:
1. Intangibility: While services maybe intangible, the process of delivery and even the
customer experience of the service is not necessarily so. Thus while service providers
focus on pre purchase behavior they often fail to pay attention to customer experience
during the process of service delivery, the nature of output (which may manifest in an
observable physical change) or the learning outcomes of the delivery process.
2. Heterogeneity: Heterogeneity of services is also not applicable to the services domain
today. Across sectors and industries we see an increased pressure for standardization of
services. This is being achieved in some instances through automation such as through
ATM’s and vending machines. Even in cases where automation is not possible there is
greater focus on standardizing the service delivery process by way of service scripts and
strict adherence to service cycles. For example, most fast food outlets and quick service
restaurants follow the & steps of the service cycle that starts with greeting the customer
(using standard phrases) through to saying good bye.

3. Inseparability: Even this criterion does not hold true for all services rendered.
Inseparability implies that the production and consumption of services is simultaneous.
Thus, consumers need to be present and/or involved in the production process. In reality
however, there are several services that are separable. Example: insurance, repair and
maintenance where production happens prior to consumption and the customers need not
necessarily be present at the time the service is rendered. The same is witnessed in the
phenomenon of outsourcing of services.

4. Perishability: even though this is true for a lot of services, there are several notable
exceptions. In today’s information era there are several information based services that can
be recorded and saved in electronic media and reproduced on demand. Moreover, for
greater clarity in this regard it is necessary to have a distinction between the perishability
of productive capacity, of customer experience and of the output.

Thus the definition of services is not as clear cut as it was once assumed to be. Consequently
this is one of the major challenges lying ahead for the field of Services Marketing.

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