Services Marketing

Difference between Services and Goods

Services have four unique characteristics that distinguishes them from goods.
1) Intangibility: The basic difference between services and goods is that services are intangible
where as goods are tangible.
--- intangibility means one cannot see, touch whereas tangibility goods are very much seen and
touched.
--- A search quality in service is a characteristic that can easily be assessed before purchase.
--- An experience quality is a characteristic that can be assessed only after use, such as the quality of a
meal in a restaurant
--- Credence quality: A credence good is a type of good with qualities that cannot be observed by the
consumer after purchase, making it difficult to assess its utility. Typical examples of credence goods
include expert services such as medical procedures, automobile repairs

2) Inseparability: Inseparability is a key characteristic of services. It means that the production and
consumption of a service can’t be separated from each other. In effect, it means that the producer and
the consumer of the service have to be in contact with each other. E.G of inseparability of service – a
3) Heterogeneity: Each and every service is different in nature. Imagine 2 restaurants. Even if
they have the same aesthetics, the people serving would be different, the cook will be different
and hence the experience can be completely different.
--- the perception of service by all customers is different which contributes to heterogeneity.
--- invest in good hiring and training procedures
--- standardize the service performance process throughout the organization
--- monitor customer satisfaction

4) Perishability: the inability of services to be stored, warehoused or inventoried. One can

understand that services such as a doctors treatment, a hair dressers haircut etc.
--- Right services must be available to the right customers at the right places at the right times and
at the right prices to maximize profitability.
 Maximizing the profitability (on demand side)

• Differential pricing will shift some demand from peak to off peak periods.

• Nonpeak demand can be cultivated. E.g. McDonald pushes breakfast services.

• Complementary Services: can provide alternatives for waiting customers.

• Reservation system are a way to manage the demand level.

 Maximizing the profitability (on supply side)

• Part time employee can serve peak demand. E.g. colleges add part-time teachers
when enrollment goes up.

• Peak time efficiency routine can allow employee to perform only essential tasks
during peak periods.

• Increased consumer participation

• Shared services

• Facilities for future expansion

 The New Service Realities

• Increasing Role of Technology:

• Customer Empowerment:

• Customer Coproduction:

• Satisfying Employees as well as Customer:

 Achieving Service Excellence

• For achieving service excellence, one has to understand the three broad areas:

--- External marketing: is the normal work of preparing, pricing, distributing, and
promoting the service to customers.

--- Internal marketing: consists of training and motivating employees to serve

customer well.

--- Interactive marketing: reflects employees skill in serving the client. In

interactive marketing, teamwork is often key.
 Best Practices of top service companies
• Customer Centricity: is a business strategy that's based on putting your customer first and at
the core of your business in order to provide a positive experience and build long-term
relationships.

• The First Class Sky Suites feature leather seats trimmed with Burrwood.

• The airline offers the Krisworld entertainment system and Givenchy fleece blankets.

• In the more expensive Suites, first, and business classes, customers can enjoy Bose Quiet
Comfort acoustic noise-canceling headphones (economy flyers get Dolby).

• SIA applies a 40-30-30 rule: 40% resources go to training and motivating, 30% to reviewing
process and procedures, and 30% to creating new products and service ideas.
• Service Quality: is a measure of how an organization understands its users' needs and fulfills
their expectations. The five dimensions of service quality are:
• Catering to High Value Customer:

• Managing Customer Complaints: On average 40% of customers who suffers

through a bad service experience with a company stop doing business with it.
--- Companies are looking to improve the way they handle complaints by increasing
the quality of their call centers and their customer service representatives.
 Differentiating Services
• Ease of Ordering:

• Speed and Timing of Delivery:

• Installation, Training and Consulting:

• Maintenance and Repair:

• Returns
Managing Service Quality (The Gap Model of Service Quality)
Gap 1: Knowledge Gap: (The Gap between Consumer Expectation and Management Perception): Management
does not always correctly perceive what customer want. Hospital administration may think patients want better
food, but patients may be more concerned with staff responsiveness.

Gap 2: Standard Gap (Policy Gap): (The Gap between Management Perception and Service Quality
Specification): Management might correctly perceive customers wants but not set a uniform performance
standard. Hospital admin may tell the nurse to give fast service without specifying speed in minutes.

Gap 3: The Delivery Gap: (The Gap between Service Quality Specification and Service Delivery):
Employees might be poorly trained; they might be incapable of meeting, or unwilling to meet the
standard. Staff might confused about whether they should take time to listen to patient or give them fast
service.

Gap 4: The communication gap: (The Gap between Service Delivery and External Communications):
Consumer expectations are affected by statements made by company representatives and ads.

Gap 5: The Customer Gap: (The Gap between Customer Expectations and Customer Perceptions): The
consumer may misperceive the service quality. The physician may keep visiting the patient to show care,
 Managing Service Quality

• A. Parasuraman, Valarie Zeithaml and Leonard L. Berry designed the

SERVQUAL questionnaire and get it published in 1988.

• SERVQUAL is a multi-dimensional research instrument, designed to capture

consumer expectations and perceptions of a service along with the five dimensions
that are believed to represent service quality.

• The Zone of Tolerance is the gap between two levels of customer expectations –
the desired service and adequate service. Adequate service is the minimum criteria
that a customer expects from the service received.
 SERVQUAL Items
Dimension No. of Items in Questionnaire Definition

The ability to perform the promised

Reliability 5
service dependably and accurately

The knowledge and courtesy of

Assurance 4 employees and their ability to convey
trust and confidence

The appearance of physical facilities,

Tangibles 4 equipment, personnel and communication
materials

The provision of caring, individualized

Empathy 5
attention to customer

The willingness to help customers and to

Responsiveness 4
provide prompt service
 Managing Self-Service
• Self-service is an approach where users access resources to find solutions on their
own without requiring assistance from a service representative.
 Managing Product Service Bundles

• Product or service Bundling is defined as combining two or more products/services with a

reward benefit for the customer that takes up the combined product/service set.

• Many product companies also have a stronger online presence than before and must ensure that
they offer adequate service online as well.

• Caterpillar, John Deere, AIRBUS Boeing, Mitsubishi and many companies are there in the
market who combines their services with the product.