S1: Introduction to Services Marketing

Learning Coach

Dr. Mohan Agarwal Chief Mentor, Multinational Business Academy, USA, Canada, Singapore, Dubai, India www. multinationalacademy.com Email: mentor@multinationalacademy.com

Agenda
1. Services economy 2. Services defined 3. Service family and classification

Why Study Services?

1. Services Dominate most economies. 2. Most New Jobs are Generated by Services, Fastest Growth Expected in Knowledge-Based Industries; Many New Jobs are Well-Paid Positions Requiring Good Educational Qualifications 3. Many manufacturing firms moved to marketing stand- alone services

Contribution of Services Industries to Global GDP

% of Service Sector in Countries

Transformers of Service Economy

Social Changes
Government

Business Trends

Advances in IT

Policies

Globalization

New markets and product categories Increase in demand for services More intense competition

Innovation in service products & delivery systems, stimulated by better technology

Customers have more choices and exercise more power

Success hinges on: Understanding customers and competitors Viable business models Creation of value for customers and firm

Transformers of Service Economy

Social Changes Business Trends Advances in IT

Government Policies

Globalization

1. Changes in regulations 2. Privatization 3. New rules to protect customers,

employees, and the environment

4. New agreement on trade in services

Transformers of Service Economy

Social Changes Business Trends Advances in IT

Government Policies

Globalization

1. Rising consumer expectations 2. More affluence 3. Personal Outsourcing 4. Increased desire for buying experiences
vs. things

5. Rising consumer ownership of high tech

equipment

6. Easier access to more information 7. Immigration 8. Growing but aging population

Transformers of Service Economy

Social Changes Business Trends Advances in IT

Government Policies

Globalization

1. Push to increase shareholder value 2. Emphasis on productivity and cost savings 3. Manufacturers add value through service and
sell services

4. More strategic alliances 5. Focus on quality and customer satisfaction 6. Growth of franchising 7. Marketing emphasis by nonprofits

Transformers of Service Economy

Social Changes Government Policies Business Trends

Advances in IT

Globalization

1. Growth of Internet 2. Greater bandwidth 3. Compact mobile equipment 4. Wireless networking 5. Faster, more powerful software 6. Digitization of text, graphics, audio, video

Transformers of Service Economy

Social Changes Business Trends Advances in

IT
Globalization

Government Policies

1. More companies operating on transnational

basis

2. Increased international travel 3. International mergers and alliances 4. Offshoring of customer service 5. Foreign competitors invade domestic
markets

#3: What is a Service?

An act or performance offered by one party to another An add on to a physical product American Marketing Association (1966). a benefit or activity that one party can offer to another which is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. Kotller

# 3. Characteristics of a Service

#3: Goods Vs. Services Fundamental differences

1. Intangibility (service can not be seen, touched or put on a shelf) 2. Inseparability or, simultaneity (services usually are inseparable between production and consumption) 3. Perishability (can not be produced or stored before consumption) 4. Variability or, heterogeneity (services are hard to standardize)

#3: The Three Most Common Confusions

Service, Customer Service Serving a customer

#7: Classification of Services Lovelock (1983)

1. 2. 3. 4. 5. 6. Type of recipient Type of act Type of relationship Frequency of interaction Degree of customization Degree of demand fluctuation

Four Categories Of Services

Differences, Implications, and Marketing-Related Tasks

Difference
Most service products cannot be inventoried Intangible elements usually dominate value creation Services are often difficult to visualize & understand

Implications
Customers may be turned away Harder to evaluate service & distinguish from competitors

Marketing-Related Tasks
Use pricing, promotion, reservations to smooth demand; work with ops to manage capacity Emphasize physical clues, employ metaphors and vivid images in advertising Educate customers on making good choices; offer guarantees Develop user-friendly equipment, facilities & systems; train customers, provide good support

Greater risk & uncertainty perceived

Interaction between customer & provider; but poor task execution could affect satisfaction

Customers may be involved in coProduction

Differences, Implications, and Marketing-Related Tasks

Differences
People may be part of service experience

Implications
Behavior of service personnel & customers can affect satisfaction Hard to maintain quality, consistency, reliability Difficult to shield customers from failures Time is money; customers want service at convenient times Electronic channels or voice telecommunications

Marketing-Related Tasks
Recruit, train employees to reinforce service concept Shape customer behavior Redesign for simplicity and failure proofing Institute good service recovery procedures Find ways to compete on speed of delivery; offer extended hours Create user-friendly, secure websites and free access by telephone

Operational inputs and outputs tend to vary more widely Time factor often assumes great importance Distribution may take place through nonphysical channels

GLIM Smart Ex 1: Rolls Royce 1. Scale it from 0-10 on Type of recipient, Type of act, Type of relationship, Frequency of interaction, Degree of customization, Degree of demand fluctuation 2. Rank the 7Ps in order of importance to market the service. 3. Identify a similar goods or service that can do Rolls Royce in India