Module 1

• Goods Vs Services.

• Characteristics of Services and their Marketing implications.

• Service Marketing Mix.

• Gaps Model of Service Quality.

 Services Vs Goods

• Tangibility
• Perishability
• Variability
• Inseparability /Simultaneous Production and Consumption
• Lack of Transportability
• Labour Intensive
• Legal and Ethical Barriers
• Difficulty in Quality control
• Unpredictability of Demand
 Characteristics of Services and the Marketing Implications

Implications

1)Services are Intangible:

• Services cannot be inventoried

• Services cannot be easily patented (New Service concepts can be easily copied by the
competitors)

• Services cannot be readily displayed or easily communicated

• Pricing is difficult (Difficulty in determining unit cost of service)

• Difficulty in evaluating competing services

• Greater emphasis on personal sources

• Higher level of risk perceived

 Characteristics of Services and the Marketing Implications

Marketing Strategies

• Make Services more Tangible.

EX: Credit cards, Degree certificates

• Focus on the Service provider.

To project the Service provider as a credible and knowledgeable source of service

Ex: Air hostess, Insurance agents and Bank executives portrayed significantly in Airlines, Insurance
and Banking services advertisements

• Facilitate word of mouth communication.

• Reduce Service complexity.

• Focus on Service Quality.

 Characteristics of Services and the Marketing Implications

Implications and Marketing strategies

2)Services are Variable:

• Service delivery and customer satisfaction depend on employee actions.

• Service Quality depends on many uncontrollable factors (Ability of customer to articulate

his/her needs, presence of other customers etc.)

• No surety that service delivered matches what was planned and promoted
Marketing strategies:
• Switch from people to Machines.

• Reduce perceived level of risk.

• Increase control over service (Proper selection and training of service personnel,
standardising procedures etc.)
 Characteristics of Services and the Marketing Implications

Implications and Marketing strategies

3) Services are Inseparable:

• Customers participate in the process and affect the transaction/Co producers.

• Customers affect each other.

• Employees affect the service outcome.

• Mass production is difficult.

• Decentralisation is essential.
 Characteristics of Services and the Marketing Implications

Implications and Marketing strategies

Marketing strategies:

• Image of the service provider and service facility.

• Make service available in many locations.

• Improvement in service delivery systems.

• Management of Employee – consumer interaction

 Characteristics of Services and the Marketing Implications

Implications and Marketing strategies

4)Services are perishable:

• Services cannot be returned or resold.

• Difficulty in synchronising Demand and Supply of services.

Marketing strategies:
• Service supply management

1. Perform only essential tasks during peak periods.

2. Let consumers perform certain tasks.

3. Use part time employees during peak demand periods.

 Characteristics of Services and the Marketing Implications

Implications and Marketing strategies

• Service demand management

1. Pre sell the service.

2. Use differential pricing to shift demand from peak periods to non

peak periods.

3. Stimulate demand during non peak periods.

 Service Marketing Mix

• Product.

• Price.

• Place.

• Promotion.

• People.

• Process.

• Physical evidence
 Product

• meets customer needs as closely as possible

• range of services
• earn less from regular services
• earn more from special services
 Price
• price represents quality
• pricing or fee setting should be regarded as a strategic
element
• Fixed or hourly, daily depending on the services
 Promotion

• Promotional objectives need to be clearly defined before a strategic

promotional programme can be designed
• professional service providers may have more than one promotional
objective
• Eg1: Cosmetic surgery clinics advertise widely, using a mixture of
informative, details of the various services provided together with visual
images of the possible results to attract customers.
• Newsletters or house magazines , Sponsorship, PR and publicity
 Distribution

• Location decisions are important in professional services

marketing
• clients use convenience as a key factor in provider selection
• …effectively walking in off the street to make an appointment
for an eye test or for legal advice
 People

• Employees
-- Recruiting
-- Training
-- Motivation
-- Rewards
-- Teamwork

• Customers
-- Education
-- Training
 Process

• Flow of activities
-- Standardised
-- Customised

• Number of steps
-- Simple
-- Complex

• Customer involvement
 Physical Evidence

• Facility Design.

• Equipment.

• Signage.

• Employee dress.

• Other Tangibles
-- Reports
-- Business cards
-- Statements
-- Guarantees
Services Marketing Triangle
 External Marketing: Making Promises

• Traditional marketing vehicles: advertising, sales; special

promotions, and pricing

• service employees, the design and decor of the facility, and

the service process itself also communicate and help to set
customer expectations

• Service negotiation on an individual basis as against delivering

expected service (Unrealistic promises)
 Interactive marketing: Keeping Promises

• Promises made must be kept

• Keeping promises is interactive marketing
• Service promises are most often kept or broken by
the employees of the firm or by third-party providers
• Interactive marketing occurs in the moment of truth
when the customer interacts with the organization
and the service is produced and consumed
 Internal Marketing :Enabling Promises
• Promises are easy to make, but unless providers are
recruited, trained, provided with tools and appropriate
internal systems, and rewarded for good service, the
promises may not be kept
• Internal marketing, takes place through the enabling of
promises
• In order for providers and service systems to deliver on the
promises made, they must have the skills, abilities, tools, and
motivation to deliver (ENABLED)
 MASTERS OF SERV TRIANGLE
• FED Ex Corp
• Strong in External mkting (2400 new response
evry qrtr)
• Int mkting- SERVQUAL measurement evry day
(SQI)
• Interactive mkting- FEDEx strategy –moment
of truth
•
GAP Model of Service quality
ervice delivery and external communications to consumers.
•Parasuraman et al. GAP model (Zeithaml 1996)
 Gaps Model of Service Quality

• Gap 1: Not knowing what customers expect.

• Gap 2: Not selecting the right service designs and standards.

• Gap 3: Not delivering to Service standards.

• Gap 4: Not matching performance to promises.

• Gap 5 : Difference in Expected and the Perceived quality

 Factors Leading to Gap 1

1) Inadequate Marketing Research Orientation

• Insufficient Marketing Research.

• Research not focused on service quality.

• Inadequate use of Market Research.

2) Lack of upward communication

• Lack of interaction between management and customers.

• Insufficient communication between contact employees and managers.

• Too many layers between contact personnel and top management.

 Factors Leading to Gap 1

3) Insufficient relationship focus

• Lack of Market Segmentation.

• Focus on transactions rather than relationships.

• Focus on new customers rather than relationship customers.

4) Inadequate Service recovery

 Factors Leading to Gap 2

1) Poor Service design

• Unsystematic new service development process.

• Vague undefined service designs.
• Failure to connect service design to service positioning.

2) Absence of customer defined service standards

• Lack of customer defined service standards.

• Absence of process management to focus on customer requirements.

• Absence of formal process for setting service quality goals.

3) Inappropriate Physical evidence and Servicescape
 Factors Leading to Gap 3

1) Deficiencies in human resource policies

• Ineffective recruitment.

• Role ambiguity and role conflict.

• Poor employee – technology job fit.

• Inappropriate evaluation and compensation systems.

• Lack of empowerment, perceived control and team work.

 Factors Leading to Gap 3

2) Failure to match supply and demand

• Failure to smooth peaks and valleys of demand.

• Inappropriate customer mix.

• Over reliance on price to smooth demand.

3) Customers not fulfilling roles

• Customer ignorance of roles and responsibilities.

• Customers negatively affecting each other.

 Factors Leading to Gap 3

4) Problems with service intermediaries

• Channel conflict over objectives and performance.

• Channel conflict over costs and rewards.

• Difficulty in controlling quality and consistency.

• Tension between empowerment and control.

 Factors Leading to Gap 4

1) Lack of integrated services marketing communications

• Tendency to view each external communication as independent.

• Not including interactive marketing in communication plan.

• Absence of strong internal marketing program.

2)Ineffective management of customer expectations

• Not adequately educating customers

• Not managing customer expectations through all forms of communication

 Factors Leading to Gap 4

3) Over promising
• Over promising in advertising.

• Over promising in personal selling

• Over promising through physical evidence cues.

4) Inadequate horizontal communication

• Insufficient communication between sales and operations.

• Insufficient communication between advertising and operations.

• Differences in policies and procedures across branches or units

 Module 2

• Consumer Behaviour in Services.

• Customer expectations of Service.

• Customer perceptions of Service.

 Consumer Behaviour in Services

Classification of goods/services based on their properties

• Search qualities : Attributes that a consumer can determine before

purchasing a product. Ex: Colour, Hardness, Style

• Experience qualities: Attributes that can be determined only after purchase or

consumption. Ex: Taste, Promptness

• Credence qualities : Attributes that consumers may find it impossible to

evaluate even after purchase and consumption.
Ex: Expertise, Performance

Experience and Credence qualities dominate in services, leading to

difference in buying behaviour compared to goods.
 Consumer Behaviour in Services

Consumer decision making process

1. Need Recognition

2. Information Search

3. Evaluation of Alternatives

4. Purchase and Consumption

5. Post purchase Evaluation

 Need Recognition

• Physiological needs : Food, Water and Sleep

• Safety and security needs: Shelter, Protection and security

• Social needs : Affection, Friendship and acceptance

• Ego/Esteem needs : Prestige, success, accomplishment and

self esteem

• Self actualisation needs : Self fulfillment and enriching experiences

Services are more important for Social, Ego and Self Actualisation needs
 Information Search

Consumers rely to a great extent on Personal sources. Because,

• Media convey information about search qualities and very little information about
experience qualities

• Non personal sources may not be available as,

-- Service providers are local with neither experience or funds for advertising.
-- Co-operative advertising is not used frequently in case of Services, as
service providers are both producer and retailers of service themselves.
-- Professional associations ban advertising.

• Consumers can discover very few attributes before purchase of a service.

 Information Search

Consumers perceive greater risk in purchase of services than goods,

Because:
• Services are intangible and have high level of experience, leading to less purchase
information about services.

• Services are non standardised. Hence there will be uncertainty every time a service is
purchased.

• Services (with few exceptions) are not accompanied by warranties or guarantees.

• Some services are so technical or specialised that consumers can not evaluate whether
they are satisfied or no, even after consumption.
 Evaluation of Alternatives

The set of alternatives the customers consider are lesser in case

Of services. Because,

• While purchasing a service the customer visits an establishment that offers only
one brand.

• Customer is unlikely to find more than one or two service providers of the
service.

• Difficult to obtain adequate pre purchase information about services.

 Evaluation of Alternatives

In case of non professional services the set of alternatives would

include “ Self provision of service” by the customer themselves.

For Ex: House cleaning, Laundry services

In case of certain services Technology also is one of

the alternatives.

For Ex: Internet shopping

 Purchase and Consumption

• Emotion and moods of customers influence their perception of service

-- Positive moods make customer more willing and obliging in a service
encounter.
-- Moods and emotions influence the way customers judge service encounters
and service providers.
-- Moods and emotions influence the way service information is absorbed and
retrieved.

• Physical setting of the place where service is being provided becomes important as
service is produced and consumed simultaneously.

• The compatibility of service customers.