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1. What is a service?

Service is any act or performance that one party can offer to another that is

essentially intangible and does not result in any ownership of anything. Its

production may or may not be tied to physical products..Philip Kotler

Services marketing is marketing based on relationship and value. It may be used

to market a service or a product

There is no such thing as service industries. There are only industries whose

service components are greater or less than those of other industries. Everybody

is in service. Theodore Levitt-

It is intangible.

It does not result in ownership.

It may or may not be attached with a physical product

Difference between goods and services:

Physical goods Services

tangible intangible

homogeneous heterogeneous

Production and distribution are

separated from consumption

Production, distribution and 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

production process

Customers participate in production

Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership

Characteristics of Service Sector

Intangibility

Perish ability

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Service Marketing Triangle

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Inseparability

Heterogeneity

Ownership

Quality measurement

Nature of demand

Reasons behind the growth of the Service Industry

Increasing affluence

More leisure time

Higher percentage of working women

Complex products

Complexity of life

Moment of Truth (MOT)

Service encounter is known as MOT

any episode in which the customer comes in contact with the organization and

gets an impression of the quality of its services

E.g. A rude employees behavior makes the customer conclude that he is dealing

with a rude company.

Marketing Challenges of Services

Intangibility

Services cannot be stored

Trust building

Brand management

Competition

Physical evidence

Marketing and sales lose momentum

Classification of Services

Degree of Involvement of the customer

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1. Business Environment

Internal environment

External environment

Micro Environment

Macro Environment

Internal Environment

Goals and objective of the organization

Corporate Image

Research and development facilities

Efficient Manpower

Business Polices

Strong Financial base

Cordial relations

Value based management

Micro Environment

Corporate Resources

Customers

Suppliers

Competitors

Marketing intermediaries

Society

Macro Environment

Economic environment

Industrial policy

Trade policy

Foreign exchange policy

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Service Marketing Environment

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Fiscal policy

Monetary policy

Foreign investment and technology policy

Political environment

Legal/ regulatory environment

Technological environment

Socio-cultural environment

PEST Analysis

Porters Five Force Model

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Factors responsible for the transformation of Service Marketing Environment

Government Policies

Social Changes

Business trends

Advances in IT

Internationalization and Globalization

Government Policies

Changes in regulation

Privatization and economic liberalization

Protection rules for customers, employees and the environment

New agreement on trade in services

Social Changes

Rising customer expectations

More affluence

Rise in use of mobile phones and computers

Increased immigration

Business trends

Manufacturers add value to service and sell service

Relaxation of professional association standards

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Emphasis on productivity and cost saving

Quality movement

Growth of franchising

Innovative hiring practices

Advances in IT

Convergence of computers and telecommunication

Digitization of text, graphics audio and video

Powerful software

Greater bandwidth

Wireless networking

1. Consumer Buying Behavior

Learning Objectives

1. Understand the major factors influencing consumer behavior

2. Know and recognize the types of buying decision behavior

3. Understand the stages in the buying decision process

Consumer Market- Consists of all the individuals and households who buy or acquiregoods and services for personal consumption.

Consumer Behavior- Consumer Behavior is defined as the actions or beliefs that

guide a person to purchase and consume a product or a service.

Buying Roles

4. Decision making roles

5. Initiator

6. Influencer

7. Gatekeeper

8. Decider

9. Buyer

10.User

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Types of buyer behaviour

11.Complex buyer behaviour e.g. Intel Pentium Processor

12.Dissonance-reducing behaviour (brand reduces after-sales discomfort)

13.Habitual buying behaviour e.g. salt - little difference

14.variety seeking behaviour - significant brand differences e.g soap powder

Factors Influencing Consumer Behavior

1. Personal

2. Psychological

3. Social

4. Cultural

Personal Factors

5. Age

6. Life-Cycle Stage

7. Occupation

8. Economic Circumstances

9. Life Style

Psychological Factors

Wants

Based on a want or desire to have something.

Not a necessity.

Motivation:

Maslow need hierarchy

Perception

The process by which an individual selects,

organizes, and interprets inputs to create a meaningful picture of the world.

Selective Exposure

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Stages in family life

cycle

Demographic

Profiles

1. Single 1. Income

1. Newly Married

Couples

1. Age

1. Full Nest I 1. Gender

1. Full Nest II 1. Race

1. Full Nest III 1. Religion

1. Empty Nest I 1. Family Size

1. Empty Nest II 1. Education

1. Solitary

Survivor

1. Occupation

1. Solitary

Survivor,

Retired

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Selective Distortion

Selective Retention

Learning

Changes in an individuals behavior arising form experience

Beliefs

Descriptive thoughts that a person holds about something

Attitudes

Enduring favorable or unfavorable cognitive evaluations emotional feelings and

action tendencies

Functional Factors

Needs - Need over wants. Delivers to a real need to have something.

Social Class - Relatively homogenous, enduring divisions in a society,

hierarchically ordered with members sharing similar values, interests, and

behaviors.

American Social Classes Family Influence on

Buying Behavior

Upper Upper 1% Husband-Dominant

Lower Upper 2% Wife-Dominant

Upper Middle 12% Equal

Middle 32%

Working 38%

Upper Lower 9%

Lower Lower 7%

Culture & Subcultures

Cultures - The accumulation of values, knowledge, beliefs, customs, objects, and

concepts that a society uses to cope with its environment

Subcultures - Groups of individuals who have similar value and behavior patterns

within the group but differ from those in other groups.

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Consumer Buying Decision Process

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Customer Satisfaction is dependent on the extent to which the service provider is

able to meet Customer Expectation. Also depends on perception of the service

providers performance.

Customer Expectation - Customer expectations are based on customers experience

with the product or service.

Assurance

Empathy

Reliability

Responsiveness

Service tangibles

Types of Service Expectations

Desired Service

Adequate Service

Factors that Influence Expectation of Service

Desired Service

Customer Needs

Derived service expectation

Customers Philosophy

Adequate Service

Transitory service intensifiers

Perceived service intensifiers

Factors that Influence Expectation of Service

A Customers Self Perceived Service Role

Situational Factors

Predicted Service Expectations

Factors Influencing both Desired And Perceived Service Expectations

Explicit Service Promises

Implicit Service Promises

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Word Of Mouth Publicity

Past Experience

Managing Customers Expectations

Managing Promises

Reliability-Getting it Right the First Time

Effective Communication

Customer Perception - Perception is the process of making a meaningful picture

by selectively organizing a set of stimuli. Perceptions change over time, differ from

person to person, differ from culture to culture.

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Factors that influence Customer Perception

Service encounter

Remote encounters

Phone encounter

Face to face encounter

Factors leading to satisfaction or dissatisfaction in service encounters

(Service Encounter Themes)

Recovery

Spontaneity

Adaptability

Coping

Recovery

Dont Do

Ignore customer Acknowledge problem

Blame customer Explain causes

Leave customer to fend for

himself

Apologize

Downgrade Compensate/upgrade

Act as if nothing is wrong Lay out options

pass the buck Take responsibility

Adaptability

Dont Do

Promise and fail to keep

them

Recognise the seriousness

Show unwillingness to try Acknowledge

Embarrass the customer Anticipate

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Spontaneity

Dont Do

Exhibit impatience Take time

Yell/laugh/swear Be attentive

Steal from customers Anticipate needs

Discriminate Listen

Ignore Provide information

Show empathy

Coping

Dont Do

Take customers

dissatisfaction personally

Listen

Let customers

dissatisfaction affect others

Try to accommodate

Explain

Let go of the customer

Factors that influence Customer Perception

Service Evidence

Service Personnel

Process of Service Delivery

Physical Environment

Image

Price

Strategies to influence customers perception

Enhance customer satisfaction through service encounters

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Reflect evidence of service

Communicate and create a realistic image

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