Introduction to service

• What are Services?

• Why Service Marketing?
• Services & Technology
• Differences between goods & Services
• The Service Marketing Mix
• The Gap Mode of Service quality.
 What is a service?
• Services to “ include all economic activities
whose output is not a physical product or
construction is generally consumed at the time it
is produced & provides added value in forms
(I,e. Convenience amusement,timeliness,comfort
or health) that are essentially intangible concerns
of its first purchase”.
 What is a service?
• Kotler: „… it does’t provide ownership
over anything.”

• Bateson: „We talk about service, if the

benefit is provided rather by the service
than the product.”

• L.L. Berry: „… services can be defined as

deeds, efforts, or performances…”
 Difference btw. goods and services

Goods Services

Tangible Intangible
touch can’t see
see can’t touch
taste can’t smell
smell can’t taste
 Difference btw. goods and services

Goods

Produced Sold Consumed

Services

Sold Produced
Consumed
eg. Airplane ticket is first bought then customer flies (service is provided and
consumed simultaneously)
 How Important is the Service Sector in
Our Economy?
• The size of the service sector is increasing in almost all
economies around the world
• Services make up the bulk of today’s economy and also account
for most of the growth in new jobs
• Even in emerging economies, service output is growing rapidly
and often accounts for half or more of GDP
• Jobs range from high-paid professionals and technicians to
minimum-wage positions
• Service organizations can be any size – from huge global
corporations to local small businesses
 Changing Structure of Employment as Economic
Development Evolves

Share of
Employment
Agriculture

Services

Industry

Time, per Capita Income Source: IMF, 1997

 Estimated Size of Service Sector in
Selected Countries
Cayman Islands (95%), Jersey (93%)
Bahamas (90%), Bermuda ( 89%)
Luxembourg (83%)
Panama (80%), USA (79%)

Japan (74%), France (73%), U.K. (73%), Canada (71%)

Mexico (69%), Australia (68%), Germany (68%)

Poland (66%), South Africa (65%)

Israel (60%), Russia (58%), S. Korea (56%)
Argentina (53%), Brazil (51%)

India (48%)
China (40%)

Saudi Arabia (33%) Services as Percent of GDP

10 20 30 40 50 60 70 80 90
 In the future – services dominate the
economy

80% Agriculture
Manufacturing
70% Services
% 60%
o
f 50%
40%
G 30%
N
P 20%
10%
0%
1850 1950 2050
 Why Study Services?
• Services dominate economy in most nations
• Understanding services offers you personal competitive
advantages
• Importance of service sector in economy is growing
rapidly:
– Services account for more than 60 percent of GDP
worldwide
– Almost all economies have a substantial service
sector
– Most new employment is provided by services
– Strongest growth area for marketing
 Distinguishing Characteristics of Services

• Customers do not obtain ownership of services

• Intangible elements dominate value creation
• Greater involvement of customers in production process
• Other people may form part of product experience
• Greater variability in operational inputs and outputs
• Many services are difficult for customers to evaluate
• Service products are ephemeral and cannot be inventoried
• Time factor is more important--speed may be key
• Delivery systems include electronic and physical channels
 Services V/S Customer Services

Services:- Services is different from Customer services. Services

encompass a wide range of industries like Banking, Insurance,Hotels,Consulting
firms, Advertising Firms, Air, Rail, Water transportations..So on.
However Services can be offered to the Market place by
manufacturers & Technology companies as well Ex:- IBM, Compaq…

Customer Service:-Customer Service is the service provided in support

of a company’s Core products like dealing with billing issues, Handling
Complaints,After sales services,Taking orders & Information sharing or support.
Range of business types (based on their
tangibility):

• Pure goods
•Goods plus an element of service
•Goods and services equal
•Service with an element of goods
•Pure service
 Scale of market entities
Tangibility spectrum
 Why Study Services Marketing?
Services dominate economy in most nations:-
Job formation are in service industries & Importance of service
sector in economy is growing rapidly
Service as a Business imperative in
Manufacturing & IT:- Understanding services offers you
personal competitive advantages & industries have recognized
the need to provide quality services in order to compete world
wide.
Deregulated industries & professional service
needs:-Due to deregulation & globalization, drastic changes
has been noticed in the service industries like
Airlines,Banking,Telecom & so on.
Service Marketing is different:-There is differences
in Marketing services & Managing Services. So, need for
developing/designing new concepts & approaches for
 Why Study Services Marketing?
Services equals profits:-A dedication to quality
services has been the foundation for success for many
companies. Since the mid 1990’s firms have begun to demand
the hard evidence of the bottom line effectiveness of service
strategies & Customer Satisfaction,
 But Service Stinks
Theories of Declining customer satisfaction:-Customer perceive that the over all the
Quality of service is decaling.

• More companies offering tiered service based on the calculated profitability of

different market segments.
2. Self-service & technology-based service is perceived as less service(no human
interaction/human personalization is provided)
3. Technology-based services are hard to implement & there are many failures
4. Customers expectations are higher(because of excellent .service during these
days.
5. Organizations have cut costs and are too lean to understand to provide quality
Service..
6. Many companies give lip service to customers focus & service quality(instead
of
providing the training,compensation, and support needed to actually deliver
quality service.
7. Delivering consistent, high-quality service is not easy,yet many company
promises it.
 Service & Technology
•Information Technology is currently shaping the field &
influencing The practices of service marketing.

•Technology is profoundly changing how services are delivered

enabling both customer & employee to provide more efficient
customized services.

• Internet, the king of current technology is “one big service” vehicle.

1.Potential for new service offering:-

Explosion of the internet, New technology service are on
the horizon.GPRS technology for Cars,RFID,Mobile
internet-accessing the web via cell phone.
 Service & Technology
2. New ways to deliver service:- Face-to-face service to
telephone based service,interactive voice response
systems,internet-based customer service & now wireless service.
3. Enabling both customers & Employees:
With the advent of technology both are more effective in
getting & providing service through self service. On line
banking,On line ticket booking,CRM & sales support software.
4. Extending the global reach of Service:-
with the advent of internet services has crossed its boundaries.
5. The Internet is a service:- “Inter net” is one big service.
Business & organization operate largely on the net to provide
essential services.
 Paradoxes & Dark side of Technology & Services

• Technology can assimilate(digest/absorb) people while isolating

them.

• It can provide a sense of control & at the same time feelings of

ineptitude(incompetence/uselessness).

• With technology in fusion there is a loss of human contact,

• In organization people become more & more reliant on

communicating through technology.
 Characteristics of Services
intangibility:
intangibility difficult to sample and to
evaluate
inseparability: difficult to separate services
from the service provider; mainly direct sales;
staff are essential to the delivery of quality
services
heterogeneity:
heterogeneity virtually every service is
different; very difficult to standardize quality
Simultaneous production &
Consumption:Most services are sold first &
then consumed Simultaneously.
perish ability: those not sold can not be
stored
fluctuating demand: demand for some
 The Service Marketing Mix
Marketing Mix:-Defined as the elements an organization controls that can be
used to satisfy or communicate with customer

The Traditional Marketing Mix

1. Product,- Packing,Product lines Branding, Quality level….

2. Price,- price level,terms,flexibility,discounts allowance….

3. Place (Distribution) &,-- Storage,Channels,channel type,outlet

locations, transportation….

4. Promotion-promotion blend,advertising,sales promotion,publicity…

These elements appear as core decision variables in any marketing/

marketing plan.they are inter related & depend on each other.
 The Service Marketing Mix
Expanded Mix for Services :- Services are produced & consumed
simultaneously, customer interact directly with the firm personnel & he is the
part of the service production process.

1.People:- Customers themselves influencing delivery of service & thus affecting

service quality & their own satisfaction.
- Employees,Recruiting,Training,Motivating,Team Work,Customer
education,& training….

2.Physical evidence:- Tangible components that facilitate performance or

communication of the service.
-Facility design,Equipment,Signage, employee dress & other tangibles
i,e.Reports,Business cards,Statements & guarantees.

3.Process:-The actual procedures,Mechanisms & flow of activities by which the

service is delivered.
-Flow of activities,Standardized,Customized,number of steps(simple,complex)
customer involvement
 Gaps Model of Service Quality
Expected
Service
CUSTOMER
Customer
Gap
Perceived
Service

External
COMPANY Service
Communications
Delivery Gap 4 to Customers
Gap 3
Gap 1 Customer-Driven
Service Designs and
Standards
Gap 2
Company Perceptions
of Consumer
Expectations
 Customer expectations CUSTOMER

1. Knowledge Gap
MANAGEMENT
Management definition of
these expectations

2. Standards Gap

Translation into standards

4. Communications
7. Service Gap

3. Delivery Gap Gap

Actual service delivered Advertising and sales

4. promises

5. Perceptions Gap 6. Interpretation Gap

Customer perceptions of Customer interpretation of
service execution communications
 The Customer Gap
Expected
service

Customer Gap

Perceived
service

Central focus of the gaps model is the customer gap

Expectations:-Expectations are the reference points customers have coming in to
a service experience .
Perceptions:-Perceptions reflect the service as actually received to satisfy their customers
& build long-term relationships with them a firm needs to close this gap.
In order to close this gap the model suggests that 4 other gaps The PROVIDER gaps need to
Be closed
 Key Factors Leading to the Customer
Gap
Customer
Customer Expectations
Gap

Provider Gap 1: Not knowing what customers expect

Provider Gap 2: Not selecting the right service designs and standards

Provider Gap 3: Not delivering to service standards

Provider Gap 4: Not matching performance to promises

Customer
Perceptions
 Key Factors Leading to Provider Gap 1
Customer Expectations

 Inadequate marketing research orientation

Gap Insufficient marketing research
Research not focused on service quality
1 Inadequate use of market research
 Lack of upward communication
Lack of interaction between management and customers
Insufficient communicationbetween contact employees and
managers
Too many layers between contact personnel and top management
 Insufficient relationship focus
Lack of market segmentation
Focus on transactions rather than relationships
Focus on new customers rather than relationshi
p customers
 Inadequate service recovery
Lack of encouragement to listen to customer complaints
Failure to make amends when things go wrong
No appropriate recovery mechanisms in place for service failures

Company Perceptions of
Customer Expectations
 Key Factors Leading to Provider Gap 2
Customer-Driven Service
Designs and Standards

Poor service design

Gap Unsystematic new service development process
2 Vague, undefined service designs
Failure to connect service design to service positioning
Absence of customer-driven standards
Lack of customer-driven service standards
Absence of process management to focus on customer
requirements
Absence of formal process for setting service quality goals
Inappropriate physical evidence and servicescape
Failure to develop tangibles in line with customer expectations
Servicescape design that does not mee t customer and
employee needs
Inadequate maintenance and updating of the servicescape

Management Perceptions of
Customer Expectations
 Key Factors Leading to Provider Gap 3
Customer-Driven Service
Designs and Standards

Gap
3
 Deficien
Ineffec
Service Delivery
Role a
 Key Factors Leading to Provider Gap 4
Service Delivery

Gap
4  Lack of in
Tendenc
Not inclu
External Communications to
Customers