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An introduction to services:

What is a service? (page no.291 Philip kotler)

Service is any activity or benefit that one party can offer to another that is
essential intangible and does not result in the ownership of anything.

Characteristics of service: (page no. 317, Philip kotler)

1. Intangibility: Service cannot be seen, taste, touch, fell, and smell before
purchase.
2. Inseparability: It cannot be separated from the service provider.
3. Variability or heterogeneity: Service quality depend on who provide the
service where, when, and how. If the man is different then quality will be
different. For example, different restaurant service will be different.
4. Perishability : Perishability is a distinguishing characteristic of service in
that they cannot be saved, their unused capacity cannot be reserved, and
they cannot be inventoried.

Element of services:

1. People: Service depends on who provide service.

2. Physical evidence: The place where service will be delivered must have
physical evidence.
3. Delivery process: How do service actually delivered. Delivery process
depends on overall marketing program.

Core marketing management task.

There are four core marketing management tasks.

1. Managing differentiation against competitor.
2. Managing the overall brand image.
3. Managing the quality of a service delivered to customer and setting their
expectation.

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4. Managing communication.

Consumer behavior theory for service marketing / consumer behavior

model or steps or process. (page no. 193 Philip kotler)

1. Problem recognition.
2. Search for information on service provider (internal or external).

3. Alternative evaluation options (comparison and choice decision).

4. Purchase or consumption.
5. Post purchase evaluation.

Scope or field of services:

Divided into two ways-A. Profit organization:

B. Non-profit organization:

1. Housing (Household Corporation).

1.
2. Recreation and entertainments:
e.g. park
3. Personal care: e.g. private hospital
2.
4. Medical and other health care.
5. Private education: e.g. private
university
6. Business and other professional
3.
service: e.g. lawyer, consultancy
4.
etc.
7. Insurance and other financial
5.
organization: e.g. Life Insurance
6.
Company, bank etc.
7.
8. Transportation: e.g. bus, train,
airplane etc.
9. Communication: e.g. mobile
Fundamental difference between goods

Educational
institution: e.g.
public university
Cultural
organization: e.g.
Bangladesh SHISHU
academy.
Religions:
Charitable
philanthropy:
Social causes:
Health care:
Political:

and service:

Define the goods, services, and product.(page no. 4, Hoffman)

Goods: Goods can be defined as objects, devices, or things.

Service: Service can be defined as deeds, efforts, or performances.
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Product: It refers either a goods or a service.

Difference between goods and service. (page no. 27,Hoffman)

Goods and services can be differentiated by the following points

1. Intangibility
3. Heterogeneity

2. Inseparability
4. Perish ability

Intangibility: (page no. 27, Hoffman)

Intangibility is the primary sources from which the other three characteristics
emerged. Intangibility is a distinguishing characteristic of services that
makes them unable to be touched or sensed in the same manner as physical
goods.

Marketing problem caused by intangibility: (page no. 28, Hoffman)

1. Lack of ability to be stored.

2. Lack of protection my patents.
3. Difficulty in displaying or communicating services.
4. Difficulty in pricing services.

Possible solutions to intangibility problems. (page no. 30, Hoffman)

1. The use of tangible clues or physical evidence.

2. The use of personal sources of information.
3. Creation of a strong organization.

Inseparability: (page no. 31, Hoffman)

Inseparability is a distinguishing characteristic of services that reflects the interconnection

among the service provider. The customer involved in receiving the service, and other customers
sharing the service experience.

Marketing problems caused by inseparability: (page no. 31, Hoffman)

1. Physical connection of the service provider to the services.

2. Involvement of the customer in the production process.
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3. Involvement of other customers in the production process.
4. Special challenges in mass production of service.

Possible solutions to inseparability problems. (page no. 36, Hoffman)

1. Emphasis on selecting and training public contact personnel.

2. Consumer management.
3. Use of multisite locations.

Heterogeneity: (page no. 38, Hoffman)

Heterogeneity is a distinguishing characteristic of cervices that reflects the

variation in consistency from one service transaction to the next.

Possible solution to heterogeneity problems. (page no. 39, Hoffman)

1. Customization (Providing service or product according to customers

specification).
2. Standardization (providing better training and exact specification).

Perishability: (page no. 41, Hoffman)

Perishability is a distinguishing characteristic of service in that they cannot

be saved, their unused capacity cannot be reserved, and they cannot be
inventoried.

Marketing problems caused by perish ability. (page no. 42, Hoffman)

1. Higher demand than maximum available supply.

2. Higher demand than optimal supply level.
3. Lower demand than optimal level.
4. Demand and supply at optimal levels.
For demand:
For supply:
1. Creative pricing
1. Part-time employee utilization.
Possible solutions to perish ability problems / How to manage or overcome
2. Reservation systems
2. Capacity sharing.
the
demand
and
supply
strategy?
(page
no. 43, Hoffman)
3. Development of complementary
3.
Advance
services.
preparation
for expansion
4. Development of nonpeak demand.
4. Utilization of third parties.
5. Increase in customer participation.

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Ethical issues in services marketing:

Ethics: (page no. 107, Hoffman)

Ethics are commonly defined as a branch of philosophy dealing with what is

good and bad and with moral duty and obligation; the principles of moral
conduct governing an individual or group.

Business ethics : (page no. 107, Hoffman)

Business ethics comprises moral principles and standards that guide

behavior in the world of business.

The opportunity for ethical misconduct in service marketing: (page no.

107, Hoffman)

In more specific terms, consumer vulnerability to ethical misconduct within

the service sector can be attributed to several sources, including the
following
1. Services are characterized by few search attributes.
2. Services are often specialized and /or technical
3. Some services have a significant time lapse between performance and
evaluation.
4. Many services are sold without guarantees and warranties.
5. Services are often provided by boundary spanning personnel.
6. Variability in service performance is somewhat accepted.
7. Reward systems are often outcome-based as opposed to behavior-based.
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8. Customers are active participants in the production process.

Factors that influence on ethical decision making: (page no.120, Hoffman)

Factors influencing ethical decision making includes--1. Stage of cognitive moral development: six stages
I.
II.
III.
IV.
V.
VI.

Right is based on rules and authority

Right is based on ones own needs or another in terms of what is fair.
The individual focuses mare in others as opposed to personal gains.
Right is based on the individuals duty to society.
Right is based on basic rights, values, and legal contracts.
Right is a set of universal ethical principles that everyone should
adhere to.

2. Personal values
3. Corporate culture
4. Cultural differences
5. Organizational structure
6. Opportunity
7. Reward systems
8. Significant others
9. Competitive environment
10. Changes in technology

How control the ethical misconduct:(page no.125,Hoffman)

Suggestions for controlling and managing ethical behavior include

1. Employee socialization.
2. Standards of conduct.
3. Corrective control.
4. Leadership training.
5. Service or product knowledge.
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6. Monitoring of employee performance.
7. Building long-term customer relationships.

Service delivery process model : (Page no. 313, Lovelock)

Pricing

Types of Cost in relation to services: (Lovelock, p-361)

a. Time cost b. Physical cost c. Physic cost d. Sensory cost
Foundations of pricing strategy: (page no.362, Lovelock)
The foundation can be described as a tripod where three legs are.....
a. Cost b. Competition c. Value to customer
Value: (Lovelock, p-362)
Zeithaml found four broad expression of value
a. Value id low price
b. value is whatever I want in a product.
c. Value is the quality I get for the price I pay.
D. value is what I get for what I give.
Net value: (Lovelock, p-363)
The sum of all perceived benefits (gross value) minus the sum of all the
Perceived costs is called net value.
Ways to increase value: (Lovelock, p-363)
A marketer can increase the net value of a product by adding benefits
or by cutting costs or by a combination of both. A marketer can
increase the net value by cutting costs according to the following ways.
a. Reducing the amount of time involved in service purchase, delivery
and consumption.
b. Minimizing unwanted mental effort or physical stress involved in
obtaining service.
c. Reduce any unwanted physical effort.
d. Minimizing any unpleasant sensory experiences.

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Importance of pricing: From different view point
a. view point of consumer. b. view point of individual firm.
c. view point of economy.
Objectives of Pricing: (Lovelock, p-365)
a. Revenue oriented: b. Operation oriented (operate the business to
maintain
=> Profit seeking. (Balance between demand and supply)
=> Cover cost. c. Patronize oriented ( main obj. is to patronize)
Service pricing related issues: (Lovelock, p-365)
a. How much should be charged for the service?
b. What should be the basis of price?
c. Who should collect payment?
d. Where should payment be made?
e. when should payment be made?
f. How should payment be made?
g. How should price be communicated to the target market?
Pricing Strategies: (Hoffman, p-184)
Three strategies
a. Satisfaction based pricing: Strategies that are designed to reduce the
amount ofperceived risk associated with a purchase. Two types
1. Benefit driven pricing: Focuses on the aspects of the service that
consumer actually
use. The objective is to develop a direct association between the price
and the
components of the service that customers value.
2. Flat- rate pricing: A strategy in which a customer pays a fixed price
and the provider
assumes the risk of price increases and cost overruns.
b. Relationship pricing: Strategies that encourage the customer to
expand his or her
dealings with the provider. Two types:
1. Price bundling: The practice of marketing two or more products
and/services in a
single package at a single price.

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2. Mixed bundling: Price bundling t5echnique that allows customers to
either buy
service A and service B together of purchase one service separately.
c. Efficiency pricing: Strategies that appeal to economically minded
consumers by
delivering the best and most cost effective service for the price.
Developing the service communication mix:

Role of service communication strategy:(page no. 192, Hoffman)

1. To inform the customer 2. To Persuade customer

3. To remind customer

Objectives of communication strategy: (page no. 192. Hoffman)

1. To create consumer awareness

2. Position the firms service offering in the consumers evoked set of alternatives.

Way of communication or promotion. (page no. 192, Hoffman)

1. Non-personal way (Through advertising, media)

2. Personal way (face to face communication)

Basis for developing communication strategy. (page no. 192, Hoffman)

1. Selecting target market

2. Developing firms positioning strategy
3. Developing the communication budget and mix
Differentiation
approaches
for
effective
positioning.
no.194,
1. Product differentiation:
2. Personnel
differentiation:
3.
Image
differentiation:
4.(page
Service
differentiation:
Features
competence
Symbols
Delivery (Speed, accuracy)
Hoffman)
Performance
courtesy
Written, audio, visual media.
Installation
Conformance
credibility
Atmosphere
Customer training
Durability
reliability
Events
Consulting service
Reliability
responsiveness
Repair
Repair ability
communication
Miscellaneous service
Style
design
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Service versus packaged goods: (page no. 382, Lovelock)

1. Absence of inventories

2. Reduce role of intermediaries

3. Importance of contact personnel

4. Customer involved in production process

5. Alternate promotion techniques

If the service is innovated or new then three conditions must be met.

These conditions are(page no.385 Lovelock)

1. Customer must be aware that the system has been changed or that a new alternative exists.
2. Each customer needs to be educated as to how to use the new system properly.
3. Customers must be encouraged to use the new approach a sufficient number of times to
become comfortable with it and to recognize its benefits.

General guidelines for developing service communications. (Page no. 208.

Hoffman)

1. Develop a word-of-mouth communications network.

2. Promise what is possible.
3. Tangibilize the intangible.
4. Feature the working relationship between customer and provider.
5. Reduce customer fears about variations in performance.
6. Determine and focus of relevant service quality dimensions.
7. Differentiate the service product via the service delivery process.
8. Make the service more easily understood.
Service failures and recover strategies.
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Service failures: (page no.352, Hoffman)

Service failures means fail to provide ------- Quality service

-----Excepted service
-----Breakdowns in the delivery service

Why service fail or Types of service failure: (page no. 352, Hoffman)

1. Responses to service delivery system failures:

a) Unavailable service.
b) Unreasonably slow service.
c) Other core service failure.
2. Responses to customer needs and requests:
a) Special needs.
b) Customer performance.
c) Customer error.
d) Disruptive other.
3. Unprompted and unsolicited employee actions:
a) Level of attention.
b) Unusual action.
c) Cultural norms.
d) Gestalt.
e) Adverse conditions.
Customer complaints

Types of complaints: (page no. 362. Hoffman)

1. Instrumental complaints.
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2. Non-instrumental complaints.
3. Ostensive complaints.

Complaining outcomes: (page no. 364, Hoffman)

1. Voice.
2. Exit.
3. Retaliation.

Why do customers complain? Or major causes of complains. (Page no.

1. Improper buying.
2. Insufficient service delivery system.
3. Inadequately trained and careless service personnel.
4. Habitual complainers.

How to control complain? Or handling complains. (Page no.

1. Centralize system: (Central authority will handle the problem)

2. Decentralize system. (Opposite of Centralize system)
3. Combination of both.

Defining and measuring customer satisfaction:

What is customer satisfaction or dissatisfaction? (page no. 298,

Hoffman)

Customer satisfaction or dissatisfaction is a comparison of customer expectations with

perceptions regarding the actual service cncounter.

Measuring customer satisfaction. (page no. 301, Hoffman)

By two ways customer satisfaction is measured.

1. Direct measures: Direct measures are the proactive collection of customer satisfaction data
through customer satisfaction surveys.
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2. Indirect measures: Indirect measures of customer satisfaction include tracking and
monitoring sales records, profits, and customer complaints.
Types of customer expectations. (page no.313, Hoffman)
1. Predicted service: (It is a probability expectation)
2. Desired service: (It is an ideal expectation)
3. Adequate service: (It is a minimum tolerable expectation)

Factors influencing service expectation: Desired service. (Page no. 315.

Hoffman)
Desired service expectations are developed as a result of six different sources. These are......
1. Enduring service intensifiers:
a). Derived expectations.
b). Personal service philosophies.
2. Personal needs.
The other four factors that influence desired service expectations also
influence predicted service expectations. (page no. 315, Hoffman)
3. Explicit service promises.
4. Implicit service promises.
5. Word-of mouth communication.
6. Past experience.
Factors influencing service expectations: adequate service. (page no. 318,
Hoffman)
Adequate service relicts the level of service the consumer is willing to accept and is influenced
by five factors.
1. Transitory service.
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2. Perceived service alternatives.
3. Customer self-perceived service roles.
4. Situation factors.
5. Predicted service.
Service quality

What is service quality? (page no. 324, Hoffman)

Service quality is an attitude formed by a long-term, overall evaluation of a firms performance.

Diagnosing failure gaps in service quality. (page no. 326, Hoffman)

1. Service gap: Service gap is the distance between a customers expectation of a service and
perception of the service quality delivered.
2. Knowledge gap: Knowledge gap is the difference between what consumers expect of a
service and what management perceives the consumers to expect.
3. Standards gap: Standard gap is the difference between what management perceives
consumers to expect and the quality specifications set for service delivery.
4. Delivery gap: Delivery gap is the difference between the quality standards set for service
delivery and the actual quality of service delivery.
Customer expectations

5. Communications gap: Communications gap is the difference between the actual quality of
service delivered and the quality of service described in the firms external communications.
Mgt. perception of customer expectations

Knowledge gap

Standards specifying service to be delivered

Retailer communications about services

Standard gap

Actual service delivered

Service
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Customer perception of service

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Delivery gap

gap
Communication gap

Fig: Conceptual model of service quality.

Factors influencing the knowledge gap. (Page no.328, Hoffman)

Three main factors influence the size of the knowledge gap.

1. Research orientation.
2. Upward communication.
3. Levels of management.

Customer retention

Retention or building customer relationship: (page no. 385, Hoffman)

Customer retention refers to focusing the firms marketing efforts toward the existing customer
base. It is the process to build up the long term relationship with customer.

Customer retention tactics or principles or techniques. (page no. 394,

Hoffman)

1. Maintain the proper perspective: (need to know customer need and wants)
2. Remember customers between calls: (providing card in any occasion likeanniversary day, happy friendship day, happy New Year, PHOELA BOISHAK,
etc.

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3. Build trusting relationships: It can be done by--a) Protecting confidential information.
b) Refraining from making disparaging remarks about other customers
and competitors.
c) Telling the customer the truth, even when it hurts.
d) Being dependable, courteous, and considerate with customers
e) Becoming activity involved in community affairs.
4. Monitor the service delivery process.
5. be there when you are needed most.
6. Provide discretionary effort.

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