By

Prof. K.G. Muralidhara

Introduction of Service Marketing
 Selling?
 Advertising?
 Promotions?
 Making products available in stores?
 Maintaining inventories?

 All of the above, plus much more!

Marketing is the process of planning and executing the
conception, pricing, promotion, and distribution of ideas,
goods, services to create exchanges that satisfy
individual and organizational goals
 American Marketing Association
Marketingmanagement is the art and science of
choosing target markets and getting, keeping, and
growing customers through creating, delivering, and
communicating superior customer value.
 Communication

Goods/services
Industry Market
(a collection (a collection
of sellers) of Buyers)
Money

Information
 Marketing Convenience
Mix

Place
Product

Customer
Solution Price Promotion

Customer Communication
Cost
 Goods
 Services
 Events
 Experiences
 Personalities
 Place
 Organizations
 Properties
 Information
 Ideas and concepts
 Based on :
 Needs, Wants, Desires / demand
 Products, Utility, Value & Satisfaction
 Exchange, Transactions & Relationships
 Markets, Marketing & Marketers.
Needs, wants Utility, Value &
Products
demands Satisfaction

Marketing & Xchange, Transaction

Markets
Marketers Relationships
 The services sector has been growing at a rate
of 8% per annum in recent years
 More than half of our GDP is accounted for
from the services sector
 This sector dominates with the best jobs, best
talent and best incomes
-Theodore Levitt-
It is the part of the product or the full
product for which the customer is
willing to see value and pay for it.
 It is intangible.
 It does not result in ownership.
 It may or may not be attached with a physical
product
 Banking, stock broking
 Lodging
 Restaurants, bars,
catering
 Insurance
 News and entertainment
 Transportation (freight
and passenger)
 Health care
 Education
 Wholesaling and
retailing
 Laundries, dry-cleaning
 Repair and maintenance
 Professional (e.g., law,
architecture, consulting)
Physical goods Services

tangible intangible

homogeneous heterogeneous

Production and distribution are Production, distribution and

separated from consumption consumption are simultaneous
processes
A thing An activity or process

Core value processed in factory Core value produced in the buyer-seller

interaction
Customers do not participate in the Customers participate in production
production process
Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership

 4 Characteristics of Services
1. Intangibility - “u can’t touch this”
2. Production (or performing the service)
and Consumption (using the service) -
happens at the same time
3. Heterogeneity - services are not always
delivered the same way
4. Perishability - cannot be put in
inventory or stored for later use
ie. You can’t buy 2 haircuts
 Characteristics of Services

1. Intangibility - “u can’t touch this”

• Services cannot be stored
• Services cannot be protected through
patents
- therefore a really great travel package and
service can be copied
a really great physical object can be patented,
and NOT allowed to be copied
 People
 Physical evidence
 Process
Goods and Services: Scale of
Elemental Dominance
service providers have product lines and
product mixes as well
examples
 Mastercard

 insurance

 telephone services

 cable services

 ISPs - internet service providers

 airlines, first class, economy class

 banks
 UNIT-2
CUSTOMER CENTRICITY
1. “The purpose of a company is ‘to create a customer…The only
profit center is the customer.’”
2. “A business has two—and only two—basic functions: marketing
and innovation. Marketing and innovation produce results: all the
rest are costs.”
3. “The aim of marketing is to make selling unnecessary.”
4. “While great devices are invented in the Laboratory, great
products are invented in the Marketing department.”
5. “Marketing is too important to be left to the marketing
department.”
 Are
Are Banks
Banks truly
truly
marketing-savvy
marketing-savvy and
and customer
customer --
centric?
centric?
 Myth 1 – The larger the range of products, the
more customer-centric I am.

Mythbuster – The range of products has

emerged from being
competition-centric.
 Myth 2 – Better technology leads to
 better customer service.

Mythbuster – Technology
alone does not deliver,
helps people do.
  Myth 3 – Launch a product and the customer will start
 using instantly.
 - Give a customer a card and he will learn how to play
 with it immediately

Mythbuster – Customers need

To be educated too…
 Myth 4 – The only way to get a customer is from
 competition.

Mythbuster – Customers
are not only present
where competition is.
 Myth 5 – Just advertise and - You will sell.

Mythbuster – Advertising will only sell,

Not retain customers.
Myth 6 – No difference between marketing & selling

Mythbuster – “Selling focuses on the needs of the seller; marketing on

the needs of the buyer.

31
Myth 7 – In the absence of relationships ‘trust’ builds
financial brands

Mythbuster – Trust is not a differentiator at all…

it is the very minimum that the customer expects!!
• Technology ?

• Brand ?
 The real differentiator of
customer – centricity in a
commoditised world of financial
products -
Customer Service !
 CUSTOMER IS . . . . .

Anyone who is in the market looking at a product /

service for attention, acquisition, use or consumption
that satisfies a want or a need
 CUSTOMER has needs, wants, demands and
desires
 Understanding these needs is starting point of
the entire marketing
 These needs, wants …… arise within a
framework or an ecosystem
 Understanding both the needs and the
ecosystem is the starting point of a long term
relationship
 Value - the value or benefits the customers gain
from using the product versus the cost of obtaining
the product.
 Satisfaction - Based on a comparison of
performance and expectations.
 Performance > Expectations => Satisfaction
 Performance < Expectations => Dissatisfaction
As a priority , we must bring to our customers
“WHAT THEY NEED”
We must be in a position to UNDERSTAND their
problems
Or
in a new situation to give them a chance to
AVOID the problems
Value = Benefit / Cost
Benefit = Functional Benefit + Emotional
Benefit
Cost = Monetary Cost + Time Cost +
Energy Cost + Psychic Cost
Strategic Marketing

Strategic marketing management is concerned with how we will

create value for the customer
Asks two main questions
 What is the organization’s main activity at a
particular time? – Customer Value
 What are its primary goals and how will these be
achieved? – how will this value be delivered
The Strategic-Planning, Implementation,
and Control Process
 External environment
(Opportunity &
Threat analysis)

Business Mission Goal Formulation

Internal Environment

(Strength/ Weakness analysis)

 HMT vs. Titan
 HLL vs. Nirma
 Bajaj vs. Honda
 Dot.com boom, then bust and now resurgence
 Market leadership today cannot be taken for
granted.New and more efficient companies are able
to upstage leaders in a much shorter period.
Factors
Influencing
Company’s
Marketing
Strategy
 UNIT-3
CUSTOMER SATISFACTION
 Many aspects of the firm’s value proposition
contribute to customer satisfaction:
 The core product or service offered
 Support services and systems
 The technical performance of the firm
 Interaction with the firm and it employees
 The emotional connection with customers
 Ability to add value and to differentiate as a firm
focuses more on the top levels
 Marketers are focused on stimulating
exchanges with customers who make up
markets – B2C or B2B.
 The market is comprised of people who
play a series of roles: decision makers,
consumers, purchasers, and influencers.
 It is absolutely essential that marketers
have a detailed understanding of
consumers, their needs and wants.
 Much happens before and after the sale to
affect customer satisfaction
 Old Economy New Economy

•• Organize • Organize by customer segments

Organize by
by product
product units
units
•• Focus
Focus on
on profitable
profitable transactions
transactions • Focus on customer lifetime value
•• Look
Look primarily
primarily at
at financial
financial • Look also at marketing scorecard
scorecard
scorecard
•• Focus
Focus on
on shareholders
shareholders • Focus on stakeholders
•• Marketing
Marketing does
does the
the marketing
marketing • Everyone does the marketing
•• Build
Build brands
brands through
through advertising
advertising
•• Focus • Build brands through performance
Focus on
on customer
customer acquisition
acquisition
•• No
No customer
customer satisfaction
satisfaction • Focus on customer retention
measurement
measurement • Measure customer satisfaction and
•• Over-promise,
Over-promise, under-deliver
under-deliver retention rate
• Under-promise, over-deliver
Word of Personal Past
Mouth Needs Experience

External
Expected Communication
Service to Customers

Service
Quality Perceived
Gap Service
Quality

Perceived
Service

51
 Do your customers perceive YES Continue to monitor
your offerings as meeting customers’ expectations
or exceeding their expectations? and perceptions

NO

Do you have an accurate NO Take corrective action

understanding of
customers’ expectations?

YES

Are there specific NO

Take corrective action
standards in place to meet
customers’ expectations?

YES

Do your offerings meet or NO Take corrective action

exceed the standards?

YES

NO
Is the information Take corrective action
communicated to customers
about your offerings accurate?
YES

52
 Level Customers
Desired Service Believe Can and Should Be
Delivered

Zone
of
Tolerance
Minimum Level
Adequate Service Customers Are Willing
to Accept

53
 Creating Better Offering Building deeper
Products or compelling customer
Services customer relationships
experience

End goal of customer focused strategies is the same:

Boosting retention and repurchase = more

sales!!!
 The tools available to a business to gain the
reaction it is seeking from its target market in
relation to its marketing objectives
 7Ps – Price, Product, Promotion, Place, People,
Process, Physical Environment
 Traditional 4Ps extended to encompass growth
of service industry
 Pricing Strategy
 Importance of:
 knowing the market
 elasticity
 keeping an eye
on rivals
 Methods used to
improve/differentiate
the product and increase
sales or target sales more
effectively to gain
a competitive advantage
e.g.
 Extension strategies
 Specialised versions
 New editions
 Improvements – real or
otherwise!
 Changed packaging
 Technology, etc.
Image copyright: www.freeimages.co.uk
 Strategies
to make the
consumer aware of
the existence of a
product
or service
 NOT just
advertising
 People represent the business
 The image they present can be important
 First contact often human – what is the lasting image
they provide to the customer?
 Extent of training and knowledge
of the product/service concerned
 Mission statement – how relevant?
 Do staff represent the desired culture
of the business?
 How do people consume services?
 What processes do they have to go through
to acquire the services?
 Where do they find the availability
of the service?
 Contact
 Reminders
 Registration
 Subscription
 Form filling
 Degree of technology
 The ambience, mood or physical presentation
of the environment
 Smart/shabby?
 Trendy/retro/modern/old fashioned?
 Light/dark/bright/subdued?
 Romantic/chic/loud?
 Clean/dirty/unkempt/neat?
 Music?
 Smell?
 Unit-IV
Delivering and performing Service
 A “GAPS” MODEL OF SERVICE QUALITY

CUSTOMER SERVICE ORGANIZATION

Market Organization’s Service

Information Understanding of Standards
Gap Expectations Gap
Customers’
Service Organization’s
Expectations GAP 1 Service Standards
GAP 2
Service Service
Quality GAP 5 Performance
Gap GAP 3 Gap
GAP 4 Organization’s
Customers’ Service Performance
Service
Perceptions
Organization’s Internal
Communications to Communication
Customers Gap

72
 Customer
Expectations

Key Factors:
• Insufficient marketing research
• Inadequate use of marketing research
• Lack of interaction between
management and customers
• Insufficient communication between
contact employees and managers

Lack of
Management “Upward
Perceptions of Communication”
Customer Expectations

73
 GAP 2

Management
Perceptions of
Customer Expectations

Key Factors:
• Inadequate management commitment
to service quality
• Absence of formal process for setting
service quality goals
• Inadequate standardization of tasks
• Perception of infeasibility -- that
customer expectations cannot be met

Service
Quality
Specifications

74
 GAP 3

Service
Quality
Specifications

Key Factors:
• Lack of teamwork
• Poor employee - job fit
• Poor technology - job fit
• Lack of perceived control (contact personnel)
• Inappropriate evaluation/compensation system
• Role conflict among contact employees
• Role ambiguity among contact employees

Service
Delivery

75
 GAP 4

Service
Delivery

Key Factors:
• Inadequate communication between
salespeople and operations
• Inadequate communication between
advertising and operations
• Differences in policies and procedures
across branches or departments
• Puffery in advertising & personal selling
Lack of
External “Horizontal
Communication”
Communications
to Customers

76
 Service Culture
 The Critical Importance of Service Employees
 Boundary-Spanning Roles
 Strategies for Delivering Service Quality
Through People
 Customer-Oriented Service Delivery
 Demonstrate the importance of creating a service
culture in which providing excellent service to both
internal and external customers is a way of life.
 Illustrate the pivotal role of service employees in
creating customer satisfaction and service quality.
 Identify the challenges inherent in boundary-
spanning roles.
 Provide examples of strategies for creating customer-
oriented service delivery through hiring the right
people, developing employees to deliver service
quality, providing needed support systems, and
retaining the best service employees.
“A culture where an appreciation for good
service exists, and where giving good service to
internal as well as ultimate, external customers,
is considered a natural way of life and one of
the most important norms by everyone in the
organization.”
- Christian Grönroos (1990)
 They are the service.
 They are the organization in the customer’s
eyes.
 They are the brand.
 They are marketers.
 Their importance is evident in:
 the services marketing mix (people)
 the service-profit chain
 the services triangle
 Every encounter counts

 Employees are the service

 Every employee can make a difference

 Through their actions, all employees shape the

brand
 Understanding customer needs
 Managing expectations
 Traditional marketing communications
 Sales and promotion
 Advertising
 Internet and web site communication
 Service delivery
 Reliability, responsiveness, empathy, assurance,
tangibles, recovery, flexibility
 Face-to-face, telephone & online interactions
 The Customer Experience
 Customer interactions with sub-contractors or
business partners
 The “moment of truth”
 Hiring the right people
 Training and developing people to deliver
service
 Employee empowerment
 Support systems
 Appropriate technology and equipment
 Rewards and incentives
 Overall Strategic  Specific Service
Assessment Implementation
 How is the service  What is being
organization doing on promoted and by
all three sides of the whom?
triangle?  How will it be
 Where are the delivered and by
weaknesses? whom?
 What are the  Are the supporting
strengths? systems in place to
deliver the promised
service?
 Don’t Do
 Ignore customer  Acknowledge
 Blame customer problem
 Leave customer to  Explain causes
fend for himself  Apologise
 Downgrade  Compensate/upgrade
 Act as if nothing is
wrong  Lay out options
 ‘pass the buck’  Take responsibility
 Don’t Do
 Promise and fail to  Recognise the
keep them seriousness
 Show unwillingness  Acknowledge
to try
 Embarrass the
 Anticipate
customer  Accommodate
 Laugh at the customer  Adjust
 Avoid responsibility  Explain rules/policies
 Don’t Do
 Exhibit impatience  Take time
 Yell/laugh/swear  Be attentive
 Steal from customers  Anticipate needs
 Discriminate  Listen
 Ignore  Provide information
 Show empathy
 Unit-V
Overview of some of the key factors
Patients
Family members
Referral Doctors
Suppliers
Employees

Who is the key customer in the hospital?

 Patient Satisfaction is “hospital services and its
perception by the patient” minus ”patient
expectations”
0 = Patient Satisfied
- = Patient Dissatisfied
+ = Patient Delighted
 Patient satisfaction measures need to be
developed from the patients perspective
 Patients are becoming better informed
 Involve patients for making improvements
 Patient satisfaction is not Static but Dynamic
 Good Medical Care  Cleanliness
 Good Nursing Care  Good Coordination
 Less Waiting Time  Cooperation among
 Excellent Hospitality the Staff
 Personal Attention  Discipline
 Courteous Behavior
 Communication &
Information
 Affordable Charges
 Transparency in
charges and
procedures
 Health care is generally becoming
competitive
 Providers must not only maintain high
clinical standards but also service that
satisfies the patients
 To meet the dual challenge, providers
must have an understanding of what
constitutes both clinical excellence and
customer satisfaction
A group of potential customers with a great
deal in common for which a specialized set of
goods or services may be provided.

Examples:
Lawyers
Health Care Professionals
Accountants

95
Successful continuing education organizations
must continually communicate two messages:

The mission of the organization therefore

enhancing their image

The individual programs and products

currently available

96
Image Marketing Should Target:
 The general public

 Client or potential client organizations

 The government

 Funding organizations

 Other stakeholders

 The institution

97
Newspapers Personal Selling
Direct Mail Flyers
Radio Individual Referral
Television E-mail
Telephone Internet
Posters

98
Darkenwald identified six factors that
motivate individuals to participate in
continuing education:

 Social relationships
 Social welfare
 External expectations
 Personal advancement
 Escape/stimulation
 Learning opportunities

99
Flyers are generally distributed
to a general audience and use a
variety of inexpensive
distribution systems.

100
 Posted on windows

Left in offices & businesses

Mailed to prospective students

101