SERVICES MARKETING MANAGEMENT

Meaning Of Services Marketing

Service marketing referred to the marketing of service as against intangible product.
These services may be Labour service [Domestic, office, factory, workers] personal service [Cooking, Laundry,
photographers, Barber] Professional Services [Accountant, Lawyer, Musician, Engineer] or Institutional Services
such as offered by transport, banking, insurance, warehousing, Advertising and such other services organizations.

Definition Of Service Marketing:

According to The American Marketing Association, defined as, Services are activities, benefits or satisfaction
which are offered for sale or provided in connection with sale of goods.

CHARACTERISTICS OF SERVICES MARKETING:

Introduction:
Services are said to have four distinctive characteristics which necessitate a different
marketing strategy. These are intangibility, inseparability, heterogeneous, perishability.
Diagrams:
The following diagram help us in understanding the different characteristics of service
marketing as follows;

Intangibilit
y

Inseparabil
ity

Servic
es

Heterogene
ous:

Perishabili
ty:

 Intangibility :
A service cannot be touched or tasted.
Precise standardization is not possible.
There is no ownership transfer.
A service cannot be patented.
There are no inventories of services.
Production and consumption are inseparable.
The customers ought to have faith in the person providing service.
Service cannot be readily displayed or communicated.
Inseparability :
Both, the production and consumption of service take place simultaneously.
Service cannot be separated from the person providing it.
Service, such as education, health-care, hairstyling etc. the service provider is the
service in the eyes of consumer.
Heterogeneous:
Equipment-based service are less variable than human-based service.
The inseparability of the service from the provider leads to some variability.
Variability automatically enters in the picture depending on the person performing
the service.
The service delivery opf the same employee can vary from customer to customer
day to day or even hour to hour in the same day.
Variability is inherent in human based service. Thus it is impossible to bring
consistency in service.
Perishability:
A service has a high degree of perishability.
Time element assumes unique importance
If a service is not used today, it is lost forever.
Unutilized services are economic losses.
Mass production is difficult.
Service cannot be returned or resold.

CLASSIFICATION OF SERVICES MARKETING:

End- user:
Consumer: Leisure, hairdressing, personal finance, package holidays.
Business to business: Advertising agencies, printing, accountancy, consultancy.
Industrial: Plant maintenance and repair, work wear and hygiene, installation,
project management.
Service Tangibility:
Highly tangible: car rental, vending machines, telecommunications.
Service linked to tangible goods: Domestic appliance repair, car service.
Highly intangible: Psychotherapy, consultancy, legal services.
People- based services:
People-based service-high contact: Education, dental care, restaurants, medical
service.
Equipment-based: Low contact automatic car wash, launderette, vending
machine, cinema.
Expertise:
Professional : Medical services, legal services, accountancy, tutoring.
Non-professional: Baby-sitting, caretaking, causal labour.
Profit Orientation:
Not-for-profit: The scouts association, charities, public sector leisure facilities.
Commercial: Banks, airlines, tour operators, hotel and catering services.

DIFFERENTENCE BETWEEN GOODS AND SERVICES:

1. Tangibility:
By tangibility, we mean anything which can be touched or viewed.
On the basis of tangibility, goods are found tangible since we can view the goods bought by

us.
Contrary to it, the services are found intangible because it is not possible to touch or view
the services. we can just realize the services used by us.

2. Transferability:
The goods can be transferred from one place to another.
We can carry goods bought by us but not services.
3. Existence:
The goods bought by us remain existent.
The durables continue for a long-time and also non-durables have limited existence.
We dont find the same thing with the services.
4. Heterogeneity:

On the basis of heterogeneity, the services can hardly be standardized.

Contrary to it, the goods can be standardized.
It is difficult to measure the quality of services but it is easier to measure the quality
of goods.
5. Re-selling:
The goods bought by us can be resold.
We dont find the same thing with the services.
If we buy a seal in cinema hall or a roo in a hotel; we have no option but to use
surrender.
We dons bear the right of reselling the same.

KEY SERVICE BUSINESS

(1) Introduction:
Key service business in the service sector may be grouped under two heads

(2) Non Financial service:

When the services offered dont deal with finance and banking, such services are called
non financial services.
The sectors like education entertainment, medical, health care, tourism and travels air
& surface transport are note worthy of non financial service.
However following is the list of some of the emerging non financial services:
Health and medical care services.
Education & training service.
Telecommunication services (Telecom).
Air & surface transport services.
Hospitality & tourism services.
Other consultancy services namely.
World wide web (www) internet, mobile, telephones & the general practiceness in
median, engineering financial services etc.

(3) Financial services:

Financial are the services that refers is the marketing of the financial product and
related services. By the banking and non banking financial institutions.
For financial services are: Banking Services, Insurance Services, Leasing Services,
Investment Banking, Retail Banking.

(4) Other services:

Photo graph, software development, courier services, child day care, gardening,
catering,
pet care, security services, recreations, fashion designing, hairstyle, beauty
clinic, real estates, advertising, telemarketing, management consultancy .

SERVICES MARKETING STRATEGY

(1) Introduction:

Services marketing strategy is evolved through three steps namely: Segmentation, Measuring
Expectations, Managing the Expectation.

(2) Segmentation:

A market consists of customers heterogeneous in nature.

It is necessary to find out like-behaving individuals and group them.
Segmentation is an exercise to that end.
A services segment is a second stage fragmentation of such homogeneous group.
Goods market segments can have several expectation based sub segment
It is, thus necessary that the customers in a segment be ranked on the basis of their
expectations and the services be modified to suit them.

(3) Measuring expectation:

The segment once defined give us a group of homogenous customers.
The next step is to find out what people expect from the service.
Expectation is created out of personal needs, word-of-mouth, the post experience of the
customers and the message that a service firm floats.
One way of measuring the expectations is the response on a feedback form introduced
towards the end of service contact.

(4) Managing expectations:

services firm can meet all the expectation of customer and should not try to do it for basic
reason that expectation keep changing and with experience, increasing.
The expectation have to be managed to fit into the capabilities and scope of the process that
a firm possesses.
This necessitates that services strategy, service delivery system and the providers be closely
associated to the customers.

A strategic model for achieving this will include the following basic elements: (1)
segment characteristics, (2) concept formulation, (3) operationalisation (4) delivery
system. These basic elements provide the framework for a strategy in service.
Determination of target segment and its characteristic and more specifically the
expectation is the key to a good services strategy.

SERVICES MARKETING MIX:

Introduction:

The service marketing mix can be studied in following two headings. (1) The Marketing
mix is referred to as the four Ps of marketing or (Traditional Marketing Mix). (2) Expanded
Mix (Augmented mix for services).
Definition:

According to S.M JDA defined as, it is a combination of different submixes of the

marketing mix, such as product mix, promotion mix, price. Some of the expert also talk about
submixes like people, physical evidence and process.
(1) The four PS of marketing (Traditional Marketing Mix):
Marketing mix describes the specific combination of marketing elements used to achieve
an organisations and individuals objectives and satisfy the target market.
Diagrams:
The following diagram help us in understanding the different Traditional marketing
Mix as follows;

Market
Target

Summary Table :

PRODUCT
Physical Goods
Features

PLACE
Channels Type

PRICE
Flexibility

PROMOTION
Advertising

Quality Level

Exposure

Price Level

Personal Selling

Accessories

Intermediaries

Terms

Public Relation

Packaging

Outlet Location

Differentiation

Media

Warranties

Transportation

Discounts

Sales Promotion

Product Lines

Storage

Commissions

Publicity

Branding

Managing Channels

Perceived Value

Service Lines

Accessibility

After Sales Services

Coverage

Product:
A product, service or idea, may be defined as something which is given to
consumers in exchange for a price. Activities related to a product, service or idea include the
following: packaging, service, warranties, brand .
Price:
Price as the amount that consumer must pay in exchange for the product, service or
idea. Generally, markers consider the following factors in setting price: target customers,
cost, competition, the law, social responsibility.
Promotional:
Promotional activities consist of various means of communicating persuasively with
the target audience. The important promotional method are: advertising, personal selling,
sales promotion
Place:
Basically, place or distribution activities are used to transfer ownership to consumer
and to place product, service and idea at the high time and place. Distribution is made up
of two components: physical distribution, channels of distribution.

(2) Expanded Mix (Augmented mix for services)

Over a time the special needs of services have led to the extension of the mix to seven Ps. The
Additional 3 Ps listed below are known as the expanded services mix or augmented services mix.

Diagrams:
The following diagram help us in understanding the different Expanded marketing Mix as follows;

Process

Market

Target

Summary Table :

PEOPLE

PHYSICAL
EVIDENCE

Employees, Recruiting. Training,

Motivation, Rewards, Team works

Equipment

Customers, Education, Training.

Signage

PROCESS
Flow of activities
standardardized, customized
Number of steps , simple,
complex.

Communicating, Culture and Values. Employee dress

Policies

Employees research
Attitudes

Procedures
Employee discretion
Customer involvement

Reports
Business Cards
Statements

People:
All human actors who play in service delivery and thus influence the buyers
perceptions; namely, the firms personnel, the customer, and other customers in the
service environment.

Physical Evidences:
The environment in which the services is delivered and where the firm and customer
interact, and any tangible components that facilitate performance or communication of
the service.

Process:
The actual procedures, mechanism and flow of activities by which the services is
delivery the service delivery and operating systems.

SERVICE MARKET SEGMENTATION

Meaning:

Market segmentation is the process of dividing a heterogeneous market into homogeneous subunit.
Definition:
According to Philip Kotler defined as, Marketing Segmentation is the sub-dividing of market
into homogeneous sub-sections of customers, where any sub-section may conceivably be selected as a
market target to be reached with a distinct marketing mix.

Significance of segmentation:
Customized Services:
Service offered can be fine-tined to be needs of the customers, so
that they derive maximum satisfaction.

Multiple Choices:
The customers have a choice of selecting a service and
corresponding price range that suits their budget.
Best Distribution Channel:
The most appropriate distribution channel, in terms of money and
efficiency, can be used.
Cost Effective:
By serving a particular segment or a niche, the investment in
resources, marketing production facilities etc., can be minimized, thereby
increasing the return on investment

Bases Of Segmentation Or Segmentation Strategies:

Introduction:
Listening to what those in the market say, for example, about their
preferences.
Studying what those in the market are for example, their
demographic characteristics.
Studying what those in the market do for example, their life style.

Definition:
According to Philip Kotler defined as, Marketing Segmentation is the sub-dividing of
market into homogeneous sub-sections of customers, where any sub-section may conceivably
be selected as a market target to be reached with a distinct marketing mix.

Diagram:

The following diagram help us in understanding the different Bases of segmentation as

follows;

Bases of
segmentation

Geographic
Segmentation

demographic
Segmentation
Psychological
segementation
Volume
segmentation
Benefit segmentation
Geographical segmentation:
This segmentation is based on places or locations where consumer
reside. They can divide marketers divide consumer on the basis of
countries, regions, states, cities and towns. So, company may operate in
one or more geographical area as per its capacity.

Demographic segmentation:
Demographic is the study of people in the aggregate, including
population size, age, sex, income, occupation and family lifecycle.

Psychological segmentation:
Psychological segmentation is the process of dividing markets into
segments on the basis of consumer lifestyles, social class or personality
profile.
Volume segmentation:
Markers make an attempt to segments final consumers and organizational consumers based
on usage rate, usage expenses and brand loyalty. Amongst the uses they distinguish segments
based on volume. Segments under volume segments are: heavy usage, medium usage, light
usage.
Benefit segmentation;
Benefit segmentation is the process of grouping consumers into market segment on the basis
of different benefit sought from the product.

Criteria for marketing segmentation:

Introduction:
For market segmentation to be worthwhile six criteria namely: identity,
accessibility, responsiveness, size, measurability and nature of demand must be satisfied.
Identity:
The marketing manager must have some means of identifying members of the
segment by common characteristics which display similar behavior.
Accessibility:
It must be possible to reach the different segments in regard to both promotion and
distribution.
Responsiveness:
A clearly defined segment must react to changes in any of the elements of the
marketing mix.
Size:
The segment must be reasonably large enough to be a profitable target. It depends
upon the number of people in it and their purchasing power.
Nature of Demand:
It refers to the different quantities demanded by various segments. Segmentation is
required only if there are marked differentiation in terms of demand.
Measurability :
The purpose of segmentation is to measure the changing behaviour pattern of
consumers.

Service Positioning

Introduction:
There is an intrinsic relationship between product positioning and product differentiation.
Positioning can be achieved by product differentiation, market targeting and segmentation and
product aggregation.

Definition:
According to Ries and Troat defined as, Positioning is defined as not
what you do to a product but rather what you do to the mind of the
prospect you position the product in the mind of the prospect.
Positioning by features:
For example Music along with a dinner for the restaurant.
Positioning by comparison:
For example, the highest percentage of successful candidates for a
coaching class or educational institution.
Positioning by benefit to consumers:
Indian airlines offers the largest connections to Indian cities and
use it to position itself.
Positioning as an expert:
For example. we understand air travel for an airline.
Positioning through guarantees:
Full satisfaction or your money back by retail shop.
Positioning as a leader:
Number in readership by a newspaper.
Positioning through emotions:
Such as fear, love, environmental concern etc.

Service Product
Meaning:

The term Service product is defined as a bundle of attributes capable of exchange or use,
usually a mix of tangible and intangible forms. It may be an idea, a physical entity, or a service,
or any combination of three.

Definition:
According to American Marketing Association defined as, Activities, benefits or satisfaction
which are offered for sale or are provided in connection with sale of goods

Diagrams:
The following diagram help us in understanding the different Expanded marketing Mix as
follows
e c
p
x
E
te d
A

o re
c
o te
p
n tia l
e n
m
g
u
te d

The core :
The core product represents the basic services of a product. This product is at its basic
level.
The expected :
The expected product consists of the core product together with the minimal purchase
conditions which need to be met.
The Augmented:
Augmented product refers to offerings (product benefit ort service in assition to what
customers expect). This concept enables a product to be differentiated from another.
The potential :
Potential product refers to doing everything potentially product of a restaurant is
viewed in terms of a pleasing flower arrangement, managers word of thanks, readiness
to go out of the way to serve, etc.

SERVICE LIFECYCLE

Introduction:
There are five key stages in the lifecycle of any product or service.
Introduction: New Technology appears. Early adopters.
Growth: Greater awareness of benefits. Rapid growth in demand.
Maturity: Increasing level of competition
Saturation: Intense completion. Market has ceased to grow.

Decline: New Technology appears which reduces demand.

Definition:
According to Philip Kotler defined as, An attempt to recognize distinct stage in
the sales history of the product.
Diagram:
The following diagram help us in understanding the different Product Lifecycle as
follows;

 Introduction Stage:
In the beginning, sale of new products or service increase slowly. Profit are nonexistent at this stage because of heavy expenses of product introduction.
Low and slow sales
Highest promotional expenses
Highest product prices
There may be heavy losses

Growth Stage:

your product or service is establishing itself. You have few competitors, sales are
growing and profit margins are good. Now's the time to work out how you can reduce the
costs of delivering the new product.
Sales rise faster
Higher promotional expenses
Product improvements

Maturity:
Sales growth is slowing or has even stopped. You've been able to reduce
production and marketing costs, but increased competition has driven down prices. Now
is likely to be the best time to invest in a new product.
Sales increase at decreasing rate
Normal promotional expenses
Uniform and lower prices

Saturation:
Sales reach and remain on a plateau marketed by the level of replacement demand.
There is little as additional demand to be stimulated.

Decline
New and improved products or services are on the market and competition is
high. Sales fall and profit margins decline. Increased marketing will have little impact on
sales and won't be cost-effective unless new markets are identified.
Rapid fall in sales
Further fall in prices

 No promotional expense

New Service Development

Introduction:
There are Eight key stages in the New Service Development (NSD) of any product
or service.
Definition:
According to Philip kotler defined as, A product is anything that can be offered to a
market for attention, acquisition, use or consumption. It includes physical object, services,
personalities, place, organization and ideas.

Diagrams:
The following diagram help us in understanding the different Service Product Lifecycle as
follows;

Idea Generation
Idea Screening
Concept Testing
Business Analysis
Market Testing

Technical Implementation
Commercialization
New Product Pricing

1.Idea Generation:
Idea Generation is often called the "NSD" of the NSD process.

Ideas for new products can be obtained from basic research using a SWOT
analysis (Strengths, Weaknesses, Opportunities & Threats)
Major sources of new product ideas include:
External sources which consists of: customers, competitors, Distributors,
suppliers.
Internal sources which consists of: R&D
Brain Storming of: Scientists, Engineers, Marketing People, Managers, Salesmen.

2. Idea Screening:
Screening new product idea in order to spot good ideas and drop poor ones as soon as
possible.
The purpose of idea generation is to create a large number of ideas.
The purpose of the succeeding stage is to reduce that number.

3. Concept Testing:
Testing new product concepts with a group of target consumers to find out if the
concepts have strong consumer appeal
Concept can be presented symbolically or physically.
Some people use pictures, world, virtual reality etc. for concept testing.
4. Business Analysis:

Estimate likely selling price based upon competition and customer feedback

Estimate sales volume based upon size of market and such tools as the Fourth

Estimate profitability and break-even point.

5. Market Testing:

Produce a physical prototype or mock-up

Test the product (and its packaging) in typical usage situations

Conduct focus group customer interviews or introduce at trade show

Make adjustments where necessary

Produce an initial run of the product and sell it in a test market area to determine
customer

6. Technical Implementation:
New program initiation
Finalize Quality management system
Resource estimation
Requirement publication
Publish technical communications such as data sheets
Engineering operations planning
Department scheduling
Supplier collaboration
Logistics plan
Resource plan publication
Program review and monitoring
7. Commercialization:
Launch the product
Produce and place advertisements and other promotions

 Fill the distribution pipeline with product

Critical path analysis is most useful at this stage.
8. New Product Pricing:
Impact of new product on the entire product portfolio
Value Analysis (internal & external)
Competition and alternative competitive technologies
Differing value segments (price, value and need)
Product Costs (fixed & variable)
Forecast of unit volumes, revenue, and profit

SERVICE PRODUCT MIX

Introduction:
Product mix, also known as product assortment, refers to the total number of
product lines that a company offers to its customers. This is usually described in
terms of four dimensions: (1) width, (2) depth, (3) Length, (4) consistency.
Width:
The width of a company's product mix pertains to the number of different
product lines that a company offering. The product width could be narrow or width.

 Length:
Product mix length pertains to the number of total products or items in a
company's product mix, according to Philip Kotler's defined as, "Marketing
Management: Analysis, Planning, Implementation and Control.
Depth:
Depth of a product mix pertains to the total number of variations for each
product. Variations can include size, flavor and any other distinguishing characteristic.
Consistency:
Product mix consistency pertains to how closely related product lines are to one
another--in terms of use, production and distribution. A company's product mix may be
consistent in distribution but vastly different in use

SERVICE QUALITY
Meaning :
Service quality is a critical element of customer perception in the case of pure service.
Quality is a dominant element in customer evaluate of service.

Definition :
According to Zeithaml and Bitner defined as, Service quality is the delivery of
excellent or superior service relative to customer expectations.

Service quality determinants:

In order that the process and output aspects of quality is reflection in the service, an
organization needs the factors or dimensions that indicate quality such as:
Reliability :
Ability to perform the promised to services dependable and accurately.
Responsiveness:
Willingness to help customers and provide prompt service.
Assurance :
Employees knowledge and curtsey. There ability to inspire trust and confidence.
Empathy:
Caring and individualized attention given to customers.
Tangibles:
Physical facilities equipments and other customer conveniences.
How To Improve The Service Quality :
Following are quality guidelines to improve into quality service:
Design the service in cooperation with customers.
Focus your improvement programs.
Create tangible representations.
Use team work to promote service excellence
Create professionalism, trust worthiness reputation and credibility.
Develop proper measurement of quality.
Select employees, job design and training to build service quality.
Reward total quality effort in marketing.
View service as a process not as a function.
Integrate the customer information into accorded the sales channel.