Introduction to service marketing

April 15, 2023 [email protected] 1

SERVICE MARKETING: AN INTRODUCTION

TEACHING NOTES ON SERVICE MARKETING

BY

C P RIJAL

PhD, MPhil, MBA

PROFESSOR OF MANAGEMENT SCIENCES

CHIEF ACADEMIC ADVISOR

NEPAL COLLEGE OF MANAGEMENT

KATHMANDU UNIVERSITY, SCHOOL OF MANAGEMENT


UNIT 1: INTRODUCTION

1. Concept of Service Marketing

2. Development of Service Marketing

3. Differentiating Goods and Service Marketing

4. Challenges for Service Marketers

5. Triangle of Service Marketing

6. Service Marketing Mix


1. Concept of Service Marketing For building up our basic understanding about

service marketing, we should consider at least three things – defining services, defining service marketing, and recognizing the main marketable service entities.

So, let’s focus on understanding the basic concepts on service, service marketing and main marketable service entities.


Defining Service … Simply speaking, service is the way how a provider or

producer acts by means of its deeds, processes or performances so as to satisfy the expectations, deprivations, motivations and unmet needs of the receivers of the outputs of such deeds, processes or performances.

Facebook provides with social networking features, The British Airways offers with worldclass flight experiences, Norvic Hospital offers quality healthcare solutions in Nepal. These all are a few examples of services.

The quality of such services relies on effectiveness of the actions of the provider – the deeds, the way they are produced – processes, and the effects they generate on experiencing or consuming them – performances.


Defining Service … A service may be referred to as an intangible and more

perishable component of any business offering – absolute package as a core product or as an augmented form to promote the tangible products.

Normally, the production and consumption of services takes place simultaneously.

The purpose of creating such may be business as well as purely service to the society.

There is big difference between the services offered by ‘service not for profit’ organizations and ‘service at a cost’ organizations.

Let’s consider ‘service at a cost’ proposition in business.


Defining Service Marketing … The overall approach of generating awareness, interest,

desire and action (AIDA) to consume services that are put on offer of the provider may be referred to as service marketing.

Communication of the core meaning, benefits, and procedures of consumption of a service; making it convenient for the reach of target customers; building a sound in-bound and outbound logistics support system; selection, development and promotion of an effective service distribution network; and developing and promoting systems visibility are a few integrated functions related to marketing of services.


Defining Service Marketing … Ordinarily, ‘service marketing’ can be linked to the overall

approach adopted by a firm to promote the service component of its offering – no matter whether it is a core offering or augmented one.

The key functions related to marketing of services will include branding and packaging of services, performing advertising and publicity about the services on offer, promoting the business partners that leverage marketing and promotion of services across the markets, assessing the service impact and customer satisfaction, and so on – as it applies to marketing of tangible goods.

In other words, service marketing refers to the overall approach of promoting the marketable service entities.


Main Marketable EntitiesCan you justify with examples how these elements can serve as marketing entities? 1. Goods or commodities2. Services3. Ideas4. Events5. Places6. Persons7. Information8. Properties9. Experiences10.Know-how

Better, differentiate these in respect with --a. tangibility,b. perishability,c. transfer of ownership,d. heterogeneity, ande. timing of production

and consumption?


Implications of Intangibility Services cannot be inventoried. Services cannot be patented. Services cannot be readily displayed or

communicated. Pricing is difficult. Services cannot be physically handed over the

buyer after transaction. There will remain a long-term debate over the

ownership of services as they cannot be fully separated from their maker.


Implications of HeterogeneityService delivery and customer satisfaction depend

on employee actions.Service quality depends on many uncontrollable

factors.There is no sure knowledge that the service

delivered matches what was planned and promoted.

Quality of delivered services will vary from person to person delivering it.

Different customers will have varying level of perception on delivered service quality.


Implications of Simultaneous Production and Consumption

Customers participate in the process and affect the transaction.

Customers affect each other, a less satisfied customer may affect adversely to a greater extent.

Employees affect greatly the service outcomes.Mass production of services is quite difficult.If not consumed immediately, many services turn

into big cost to the firm.


Implications of Perishability

It is difficult to synchronize supply and demand of services.

Services cannot be returned or resold. They cannot be stocked for future sale or use. Opportunity cost is always unpredictable.


Value Added by Physical, Intangible Elements Helps Distinguish Goods and Services


Tangibility Spectrum

TangibleDominant

IntangibleDominant

SaltSoft Drinks

DetergentsAutomobiles

Cosmetics

AdvertisingAgencies

AirlinesInvestment

ManagementConsulting

Teaching

Fast-foodOutlets

Fast-foodOutlets


More Examples of Services and Service Industry1. Health Care: hospital, medical practice, dentistry, etc.

2. Professional Services: accounting, legal, architectural, research and innovation, consulting, management contracts, etc.

3. Financial Services: banking, investment advising, insurance, etc.

4. Hospitality: restaurant, hotel/motel, bed and breakfast, ski, etc.

5. Travel: airlines, travel agencies, theme park, etc.

6. Public Service: national security, defense, general admin., etc.

7. Social Service: politics, economic development, NGO/INGO, etc.

8. Education: education, counseling, coaching, teaching, etc.

9. Others: hair style, pest control, plumbing, lawn maintenance, counseling services, health club, etc.


2. Development of Service MarketingWhat resulted in evolution of services?1. Evolution of human being as a social entity required

services of others for living better lives.2. The financial prosperity and well-being of people made it

realize the need of special services in which they could spend their disposable money.

3. Changing behavior and values of people forced them realize the need of services.

4. Felt importance of spending some portion of life in pleasure, entertainment and leisure resulted evolution of services as alternatives to it.

5. A range of survival needs also resulted in evolution of services.


What resulted in evolution of services?6. To facilitate the challenges of material developments, it

required a number of services.7. Various new inventions required to be attached with a

number of services.8. More service sectors evolved to create jobs, empowerment

and employment as part of government and social development missions.

9. Due to more educated and aware people, they got realized a number of services required.

10.To meet the ever-increasing and ever-evolving unmet needs of the human beings.


Additional Reasons of Growth of Services1. Evolution of service-based economies2. Economic changes3. Service as a business imperative in manufacturing and

IT4. Increasing needs of professional services, especially in

hospitality, research and innovation5. Industrial deregulation; political legal changes; policy

changes 6. Globalization

7. Socio-demographic changes8. Technological changes


A Few Evolutionary Landmarks of ServicesPhase I: Argumentation (Prior to 1980s)

Phase II: Foundation Phase (1980 – 1985)

Phase III: Independent Phase (1986 onwards)

1. Can you explain what happened during these phases? And why these phases are called argumentation, foundation and independent?

2. Also discuss how the need of marketing of services evolved as one of the core marketing concepts.


3. Differentiating Goods and Service Marketing

Let’s compare it from at least five perspectives…Marketing of

GoodsBasis of

comparisonMarketing of

Services? 1. Tangibility ?

? 2. Perishability ?

? 3. Timing of production and consumption

?

? 4. Separating from its creator

?

? 5. Heterogeneity of offered quality

?


4. Challenges for Service Marketers1. Since the services are intangible, it is quite difficult to

define and improve their quality.2. Communicating and testing new services is always

complicated as they do not have any tangible form.3. Communicating and maintaining a consistent image is

always a tough task.4. Motivating and sustaining employee commitment to serve

the best is a highly complicated task.5. Coordinating marketing, operations and human resource

efforts for best service delivery is another challenge. 6. Setting prices of services is very much difficult job.7. Standardization and customization of services is difficult.


5. Triangle of Service Marketing It is a tri-logical concept advocating that

effectiveness of service delivery relies on three integral elements – company that offers of owns services, customers for whom the services are targeted to, and the employees responsible for the delivery of services.

It all talks about how the company, its employees and customers can work collectively for setting, enabling and delivering the promises more effectively.


The Services Marketing Triangle

Internal Marketing

Interactive Marketing

External Marketing

Company(Management)

CustomersEmployees

enabling the promise

delivering the promise

setting the promise


Company or Management

Customers or UsersEmployees or Providers

Technology

The Services Triangle and Technology

Technology connects all the agencies responsible in it.


Ways to Use the Services Marketing TriangleOverall Strategic Assessment

1. How is the service organization doing on all three sides of the triangle?

2. Where are the weaknesses?

3. What are the strengths?

Specific Service Implementation1. What is being promoted

and by whom?

2. How will it be delivered and by whom?

3. Are the supporting systems in place to deliver the promised service?


6. Service Marketing Mix

Product, price, place and promotion decisions are

referred to as traditional elements of marketing

mix.

Service marketing mix goes three steps further as it

incorporates additional three elements including

people, physical evidence and processes involved

in production and consumption of services.


7 Ps in Service Marketing

1. Product2. Price3. Place4. Promotion

5. People6. Process7. Physical Evidence

Building Customer Relationships

Through People, Processes, and

Physical Evidence

Expanded Marketing Mix for Services

PRODUCT PLACE PROMOTION PRICE

Physical good features

Channel type Promotion blend

Flexibility

Quality level Exposure Salespeople Price level

Accessories Intermediaries Advertising Terms

Packaging Outlet location Sales promotion

Differentiation

Warranties Transportation Publicity Allowances

Product lines Storage

Branding

PEOPLE PHYSICALEVIDENCE

PROCESS

Employees Facility design Flow of activities

Customers Equipment Number of steps

Communicatingculture and values

Signage Level of customerinvolvement

Employee research Employee dress

Other tangibles

Expanded Marketing Mix for Services


Ways to Use the 7 Ps

Overall Strategic Assessment1. How effective is a firm’s

services marketing mix?2. Is the mix well-aligned with

overall vision and strategy?3. What are the strengths and

weaknesses in terms of the 7 Ps?

Specific Service Implementation1. Who is the customer?2. What is the service?3. How effectively does the

services marketing mix for a service communicate its benefits and quality?

4. What changes or improvements are needed?

Introduction to service marketing

Education

Transcript of Introduction to service marketing