SERVICE MARKETING

Factors Influencing The Growth Of Service Sector Demographic Changes Social Changes Economic Changes Technological changes Policy changes (legal changes)

Demographic Changes
The rate of mortality & fertility decreases. As a result no. of birth per year decreases & people live longer. The proportion of young people in the population increases. If there is employment opportunities for these people, there is enough disposable income to spend. The no. of aged people in the country increases.

Social Changes
The standard of living of people improved. More & more women are entering into the workforce to get the double income. As a result of this child care service provision has risen. The health care, education & entertainment industries are also growing fast. Convenient shopping in malls for busy lifestyle of working people.

Economic Changes
GOI withdrew control over services such finance & real estate because of demand of this services. As a result of this, there is growth of private companies in service sector. Globalization is one of the major factor that has contributed to growth of service sector. After this, several developing country removed cross borders, trade barriers. Many MNCs started their shop in India.

Services
any activity of benefit that one party can offer to another that is essentially intangible & does not result in the ownership of anything. Its production may or may not be tied to a physical product.

 Service is activity which satisfy wants. Some services are offered individually while some services are offered as supplement. Services are intangible but sometimes they may involve the use of some tangible goods. But as a result of this, the title of product doesn t change.

TANGIBILITY SPECTRUM
The major factor that differentiates a service from product is its intangibility. Marketers today try to attach an element of service even to the product, to attract customer & enjoy their loyalty. E.g.. When customer buys car, he enjoys a free service for the 3 years from the co.

 Intangibility plays a key role in determining whether an offering made by marketer is a product or service. In some cases, the service provider also gives the customer a tangible element bundled together with his services. E.g. airline offers magazines & food to customer

 A pure tangible good wheat, sugar, soap A tangible good with accompanying services computers, cars, A.C. machinery A major service accompanying minor goods & services Child care center, beauty saloons A pure service surgery, consultancy & teaching

Characteristics of services
`The major characteristic of services are: 1) Intangibility 2) Inseparability 3) Heterogeneity 4) Perishability

The Service Marketing Triangle

Company

Internal Marketing Enabling Promises

External Marketing Making Promises

Providers
Interactive Marketing Keeping Promises

Customers

The Service Marketing Triangle

The service marketing triangle consist of the three components of the service delivery process : the company, the front line employees (Providers), & the customers. In the service industry, customer become a part of the service delivery process due to inseparability characteristic of services. Both production & Consumption of a service takes place simultaneously.

 The interaction that takes place between the company & its customer constitute external marketing through which the company promises to deliver quality service to customers. The company communicate its information about product or service with the customer through advertising. Sales promotion, personal selling, direct marketing & PR. The interaction between the company & the front line employees constitute internal marketing, by means of which the company enables its employees to deliver quality service to customers.

 Internal marketing is the process of communicating information about the company s products or services to employees of the organization. Any service organization, in order to achieve its marketing objectives, has to first communicate with its internal staff & convince them of the quality of its service. The internal marketing process makes use of tools such as newsletter, video shows, staff forum, presentation, etc.

 The third type of interaction determines customer retention by service firms is interactive marketing that takes place between Providers & the customer. Interactive marketing refers to the mutual exchanges that takes place between providers & customer before, after & at the point of sale. Interactive marketing bring out responses from the customers, which help the company improve the value it delivers to the customer in the form of product or service.

Service Profit Chain

Profit and growth Customer loyalty Customer Satisfaction

Service Value Employee productivity Employee Loyalty Employee satisfaction Internal quality of work life

Leaking Bucket Theory

Service Company A 10% New Customers every year Service Company B

5% loss of Customer 95% Retention Rate

10% loss of Customer 90% Retention Rate

SERVICE COMPANY A Doubles its Customer Base

SERVICE COMPANY B Has the same Customer Base

Advantages of Customer Retention Program

Customer retention is cheaper than acquisition Reduces communication costs for customer acquisition like ads, promo Loyal customer tend to do repeat purchase, reducing marketing cost Even slight change in price loyalist do not agitate or run away. Satisfied customers advocates, can be promoter.

Consumer Behavior in Services

Search Quality : Attributes that a consumer can determine before purchase a product Experience Quality : Attributes that can only be discerned after purchase or during consumption Credence quality : Are Characteristics that the consumer may find impossible to evaluate even after purchase or consumption

Consumer Decision-Making Process

Need Perception Search for Information Evaluation of Alternatives Purchase Decision Post-purchase evaluation