Unit 1

CONTENTS:
• Foundation of service marketing
• Introduction
• The services concept
• Service industry
• Nature of services
• Characteristics of services
• Classification of services
• Importance of marketing
• The growth in services
• Global & Indian Scenario. - gp discussions
DEFINING SERVICE:
Put in most simple terms,
Services are deeds, processes and performances.

A broad definition of services , defines it to include “ all economic

activities whose outputs are not a physical product; is generally
consumed at the time it is produced and provides added value in forms
that are essentially intangible.

Types of
services
Service Service as Customer Derived
industry & products service Services
companies
 HIGHLY TANGIBLE
[ Rented goods]

SERVICES LINKED
SERVICE TANGABILITY TO TANGIBLE
GOODS [Car repair]

HIGHLY INTANGIBLE
[legal service]

Service offered on a
personal basis
[ Health care]

END USER Business to business

[ Telecom]

Industrial Service
[ IBM]

CLASSIFICATION Professional

OF SERVICES EXPERTISE
[ Coaching classes]

Non- Professional
[ Baby sitting]

Not for profit

[ Charities]
PROFIT ORIENTATION
Commercial

EQUIPMENT BASED
[ ATMs]
PEOPLE BASED
PEOPLE BASED
[ Education]
 CHARACTERISTICS OF SERVICES &
RESULTING MARKETING IMPLICATIONS
GOODS SERVICES MARKETING
IMPLICATIONS
Tangible Intangible  Services cannot be patented
 Services cannot be inventoried
 Services cannot be displayed
 Services are difficult to advertise
& price
Standardised Heterogeneous  Ensuring consistent service
quality is difficult
 Delivery of service in a
consistent manner is difficult
Production is Simultaneous  Mass production is difficult.
separate from production &  The quality of service and
consumption consumption customer satisfaction depends
on what happens in real time
 It is difficult to gain economies of
scale through centralization
 The final outcome of the service
transaction is affected
Non Perishable  Difficult to maintain inventory of
perishable services
 Demand forecasting and
maximum capacity utilization is
difficult
 Stronger recovery strategies are
to be implied
 Customers
do not
obtain
ownership Service
Different
products as
distribution
intangible
channel
performance

Customer
Importance
involvement
of time
in service
factor
SERVICES production

No People as
inventories part of the
for services product

Harder for Greater

customer variability in
operational
to inputs &
evaluate outputs
MARKETING TASKS & IMPLICATIONS
CHARACTERISTICS MARKETING MARKETING RELATED TASKS
OF SERVICES IMPLICATIONS
Most service  Customers may be turned away  Smooth demand through
products cannot be or have to wait promotions, dynamic
inventoried pricing and reservations
 Work with operations to
adjust capacity
Intangible elements  Customers cant taste, smell,  Make services tangible
usually dominate touch and may not be able to through emphasis on
value creation hear the elements. physical clues
 Harder to evaluate service and  Employ concrete and
distinguish it from competitors vivid images in
advertising and branding
Services are often  Customers perceive greater risk  Educate customers to
difficult to visualize and uncertainity make good choices,
and understand document performance
& offer guarantee
Customers may be  Customers interact with  Develop user friendly
involved in co – provider’s equipments, facility & systems
production systems.
 Poor task execution by  Provide customer
customers may hurt productivity, support
spoil service experience and
curtail benefits
People may be a part  Appearance, attitude and  Recruit, train and reward
of the service behaviour of service personnel employees to reinforce
experience can shape customer’s service planned service
experience and thus satisfaction  Target right customers at
the right time
Operational inputs  Harder to maintain consistency,  Set quality standards
and outputs tend to reliability and service quality or to based on customer
vary more widely lower costs through higher expectations
productivity.  Institute good service
 Difficult to shield customers from procedures and
results of service failures. automate the customer
The time factor often  Customers dislike to wait, waste  Find ways to compete on
assumes great time and want services at a time speed of delivery and
importance convenient to them offer extended service
hours
Distribution may take  Information based services can  Create user friendly,
place through be delivered via internet or phone secure, web sites and
nonphysical but core products involving toll free numbers
channels physical activities cannot  Ensure all information
based services can be
easily downloaded.
SOCIAL CHANGES BUSINESS TRENDS GLOBALIZATION ADVANCE IN IT GOVERNMENT POLICIES
• Rising customer • Push to increase More companies are GROWTH of internet Changes in regulation
expectations shareholder value operating on a transnational Greater bandwidth Privatisation
• More affluence • Emphasis on basis Compact mobile equipment New rules to protect
• More people short of productivity Increased international Wireless networking customers
time • Value addition travel Faster & more powerful New agreements on trade
• Internal desire for through services by International mergers & software
buying experience manufacturers alliances Digitization
• Rising consumer • Focus on quality & Foreign competitors coming
ownership of hi-tech customer in domestic markets.
equipments satisfaction
• Easier access to more • Growth of
information franchising
• Growing population  

New markets and product categories create increased demand for services in many existing
markets more intensive competition

Innovation in service products and delivery systems, stimulated by application of new and
improved technologies

Customers have more choices and exercise more powers

Success hinges on –
Understanding customers & competitors
Viable business models
Creation of values for both customers and firms
Increased focus on service marketing and management

FACTORS AFFECTING GROWTH OF

SERVICE INDUSTRY