M3-Marketing of Services

Dr R.KrishnaKumar
B.Sc(Engg)., MBA., M.Phil., PhD(Mgmt)., LLB., LLM., IELTS
(Camb)
Chief Executive Officer, Saai Raam International ,
Bangalore
 Service
Services in simple terms, services are deeds,
process, and performances.
For e.g.: consulting: client problem analysis
activities, meetings with the client, follow up calls,
and reporting-a series of deeds, processes and
performances.
Core offerings of hospitals, hotels, banks, ans
utilities comprise of deeds and actions performed
for customers.
 Services that are integral to the offerings of
manufactured goods- E.g. car and computer
manufacturers- warranties and repair services

All these services are examples of deeds ,

processes and performance
 Characteristics of a Service
What exactly are the characteristics of a service?
How are services different from a product?
In fact many organisations do have service
elements to the product they sell, for example
McDonalds sell physical products i.e. burgers but
consumers are also concerned about the quality
and speed of service, are staff cheerful and
welcoming and do they serve with a smile on their
face?
 There are five characteristics to a service which will be
discussed below.
1. Lack of ownership. You cannot own and store a
service like you can a product. Services are used or
hired for a period of time. For example when buying a
ticket to the USA the service lasts maybe 9 hours each
way , but consumers want and expect excellent service
for that time. Because you can measure the duration of
the service consumers become more demanding of it.
2. Intangibility You cannot hold or touch a service
unlike a product. In saying that although services are
intangible the experience consumers obtain from the
service has an impact on how they will perceive it.
What do consumers perceive from customer service?
the location, and the inner presentation of where they
are purchasing the service?
 3. Inseparability Services cannot be separated from
the service providers. A product when produced can
be taken away from the producer. However a service is
produced at or near the point of purchase. Take
visiting a restaurant, you order your meal, the waiting
and delivery of the meal, the service provided by the
waiter/ress is all apart of the service production
process and is inseparable, the staff in a restaurant are
as apart of the process as well as the quality of food
provided.
4. Perishibility Services last a specific time and cannot
be stored like a product for later use. If travelling by
train, coach or air the service will only last the
duration of the journey. The service is developed and
used almost simultaneously. Again because of this
time constraint consumers demand more.
 5. Heterogeneity It is very difficult to make each
service experience identical. If travelling by plane
the service quality may differ from the first time
you travelled by that airline to the second,
because the airhostess is more or less
experienced. A concert performed by a group on
two nights may differ in slight ways because it is
very difficult to standardise every dance move.
Generally systems and procedures are put into
place to make sure the service provided is
consistent all the time, training in service
organisations is essential for this, however in
saying this there will always be subtle differences.
 Growth of service Industries India
As reported by the Economic Survey, Indias services sector
contributed about 61 per cent to India's Gross Domestic
Product growing approximately at 10 per cent per annum in
2015-16. India is currently the second fastest growing
services economy in the world.
Against the slowdown in global economy in terms of
manufactured goods, service sector gains importance.
Importance
1. Increased exports in services (Ex- medical tourism) made
it a net foreign exchange earner which stabilizes the
currency.
2. Employs around 3.7 million people giving people
purchasing power spurring demand and keeping the
economy healthy.
 3. Has also been a source of income for Central and
State Govt which can be invested in social security nets.
4. Despite the fall in global tourist arrival, the tourism
sector remained vibrant because of domestic tourism.
This shows the resilience of the service sector.
5. E-commerce has been a trending employer breeding
young start-ups and reducing dependency on Govt jobs
helping Govt reduce deficits.
6. Service sector has provided support to other sectors
like Bank services to agriculture.
7. India is a world leader in terms of IT services. This
enhances Indias global clout.
 India is among the fast growing economies in the world.
The growth of Indias services sector, its contribution to GDP,
and its increasing share in trade and investment has drawn
global attention
According to the International Monetary Fund (IMF), in
2010, Indias gross domestic product (GDP) grew at 10.6%
compared to 10.4% for China, an average growth rate of
9.7% in developing countries within Asia and 7.5% average
growth rate in emerging and developing economies.
Although growth rate slowdown substantially in 2011 to
7.2%, it was still higher than the average growth rate of
emerging economies (6.2%).
Services sector has been a major contributor to Indias GDP
and growth (Bhattacharya and Mitra 1990).
It is the second largest employer after agriculture. Indias
trade in services have increased overtime and services
accounts for the largest share in Indias foreign direct
investment (FDI) inflows and outflows.
 Difference between Good and service
marketing
There is a major difference between goods and services based on both
tangible as well as intangible factors. Goods are basically objects
or products which have to be manufactured, stored, transported,
marketed and sold. Lays chips, BMW, Adidas are some companies
manufacturing goods.
Services on the other hand are output of individuals and they can be a
collective or individualistic action or performance by an individual. For
example a barber or a chartered accountant are giving individual services.
Airlines on the other hand have airplanes which is a product but travelling
by airplanes is a service (airlines are one of the most competitive service
sectors today).
Thus the difference between goods and services is based on tangibility.
Where goods are tangible in nature, services are mostly intangible. The
classic rules which defined services
were intangibility, heterogeneity, perishability and variability. However,
although the old rules are applicable even today, several new rules have
been added to define the difference between goods and services.
 Goods and Services
Goods:
Physical products. Services:
Nonphysical products.
 1) Ownership is not transferred
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.
2) Intangibility
How do you measure service? In a restaurant, the dish
can be measured, but the efforts gone in making the
same dish by two different chefs cannot be measured
from the customer end. Same goes for large service
corporates like Accenture and Infosys. The time and
effort gone for giving service to the customer is
intangible. Both ownership and intangibility are old
school differences between goods and services.
 3) Involvement of customer
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 products. For
example ATMs are services wherein customer has to use the
machine. The same goes for vending machines as well as for self
service restaurants. Today ice cream chains like Hokey pokey and
food chain like Subway have more than 50% involvement of
customer where the customer gets to decide the ingredients they
want in their ice cream / Subway sandwich.
4) Quality
In case of products, mass manufacturing is common. And mass
manufacturing means uniformity. However, services involve a lot
of manual labour due to which the quality may vary each time.
Uniformity in services is a factor which each service owner tries
for. For example The major challenge of food chains like Subway,
Pizza hut and dominos is to give the same quality over and over
again, whereas in local restaurants the quality of food may vary
time to time from the same restaurant.
 5) Evaluation of services is tougher
As quality varies from time to time and the involvement of
customer is maximum, evaluation of different services becomes
tougher. For example HDFC has more number of ATM than SBI.
Thus we can evaluate that HDFC service is better because they
have more reach to the end customer. But how do we evaluate
how a barber cuts your hair.

6) Inventories are absent

Production and consumption of services happens at the same
time. This does not mean that the raw material is not present to
provide the service. For example in a restaurant, a dish is made
only after you order it. The raw material and the chef might be
present. But the production does not begin unless and until there
is a customer to consume the service.
 7) Time is very important in services
Because inventories are absent in services, and
because production and consumption is at the
same time, time is a very important difference
between goods and services. The keyword here is
delay. There should be no delay in providing the
service. Thus the cab should arrive on time, the
food should be prepared by time and the trains
should run on time. Because time is important.
Thus the difference between goods and services is
based on many different factors. These factors
have become more and more acute as the services
sector rises in demand.
 Service Marketing Mix
Extended Marketing Mix
Introduction
In this article we discuss how the marketing mix for
marketing a service is different to selling a product.
If you would like to revisit the characteristics of a
service click here. characteristics of a service
Just like the marketing mix of a product the service
marketing mix comprises of Product, Price, Place
and Promotion. How ever as a service is not
tangible the marketing mix for a service has three
additional elements: People, Process and Physical
Evidence
 1. People
People are an essential ingredient in service provision; recruiting and
training the right staff is required to create a competitive advantage.
Customers make judgments about service provision and delivery based on
the people representing your organisation. This is because people are one
of the few elements of the service that customers can see and interact with.
Staff require appropriate interpersonal skills, aptitude, and service
knowledge in order to deliver a quality service.
2. Process
This element of the marketing mix looks at the systems used to deliver the
service. Imagine you walk into Burger King and order a Whopper Meal and
you get it delivered within 2 minutes. What was the process that allowed
you to obtain an efficient service delivery?
Banks that send out Credit Cards automatically when their customers old
one has expired again require an efficient process to identify expiry dates
and renewal. An efficient service that replaces old credit cards will foster
consumer loyalty and confidence in the company. All services need to be
underpinned by clearly defined and efficient processes. This will avoid
confusion and promote a consistent service. In other words processes mean
that everybody knows what to do and how to do it.
3. Physical Evidence (Physical Environment)
Physical evidence is about where the service is being
delivered from. It is particularly relevant to retailers operating
out of shops. This element of the marketing mix will
distinguish a company from its competitors. Physical evidence
can be used to charge a premium price for a service and
establish a positive experience. For example all hotels provide
a bed to sleep on but one of the things affecting the price
charged, is the condition of the room (physical evidence)
holding the bed.
Customers will make judgments about the organisation based
on the physical evidence. For example if you walk into a
restaurant you expect a clean and friendly environment, if the
restaurant is smelly or dirty, customers are likely to walk out.
This is before they have even received the service.
 Importance of quality and customer
satisfaction
WHAT IS SERVICE QUALITY? 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. By Kotler,
Armstrong, Saunders and Wong
Services are economic activities that create value
and provide benefits for customers at specific
times and places as a result of bringing about a
desired change in or on behalf of the recipient of
the service. By Christopher Lovelock
 5 Reasons Why Customer Satisfaction
Is Important
1. A Loyal customer is a treasure you should keep
and hide from the world
Some research says that it is 6-7 times more
expensive to acquire a new customer than it is to
keep a current one. Banks or mobile providers know
it best, so they dont have any problem with going
an extra mile for a customer who is not quite
satisfied and often offer him something special..
 2. They can stop being your clients in a heartbeat
Is not rocket science, nowadays clients easily switch their
love brands. It is often caused by terrible customer service.
You cant gain customers satisfaction for ever, you need to
look after them all the time.
Try to talk with them, instead of to them. Ask questions,
offer constant support, send personalized messages or
offers, use targeted website surveys, email surveys or any
other technique that will help you communicate with your
customers. T
ake care of each and every of your clients need and youll
be rewarded with their gratitude and loyalty. Sounds like a
good deal, doesnt it? Brands often take their audience for
granted, and theyve never been so wrong one decision,
or lack of it, can result in losing a lot of clients and their
respect. Thats why measuring clients satisfaction is so
important.
 3. Its (all) about the money, too
It shouldnt be surprising, but the customer satisfaction
is also reflected in your revenue.
Customers opinion and feelings about the brand can
affect, in both positive and negative way, the essential
metrics such as the number mentions and repeated
transactions, and also customer lifetime value or
customer churn.
Happy customers wont look at your competitors offers
they will happily interact with your brand again, make
a purchase and recommend the product further. If you
meet all of their requirements and answer their needs
while delivering the best quality of your services, they
will be fully satisfied.
 4. Customer satisfaction is a factor that helps you stand
out of the competition
Kate Zabriskie once said that Although your customers
wont love you if you give bad service, your competitors
will. and we couldnt agree more. Your competitive
rivals are just waiting for you to make a wrong move.
What is more, they can often play a role of
an instigator. Being prepared for their provocations is
not enough if you dont know how to deal with the
negative backlash. However, if you provide your
customers with an amazing customer service, you will
gain arguments to convince those uncertain of your
services.
 5. Great customer experience can take your brand
places
The importance of customer satisfaction should never
be neglected. You should consider it especially while
planning your marketing and positioning campaigns.
Satisfied customers are more likely to share your
content across the social media. They will also more
keenly interact with your posts, leaving some delightful
and admirable comments. Later you can use it as the
source for case studies and success stories. Being an
example of a company that provides a ravishing
customer satisfaction? Every brand should aim for it.
 Providing a great customer service will satisfy
both you and your targets. They get a proper
service, you get a proper revenue and everyone
is happy. As simple as that. Think, is there
something more you can do to better treat your
audience? Thats why you should never forget
the importance of customer satisfaction. Its high
time to face the truth your brand can always do
better!