SERVICES MARKETING

UNIT - 1
"Services" and "Service Marketing".
Introduction
Everyday we interact with various economic activities like - getting courier delivered at the
requested address, making phone call to friend, relative, or client, having coffee at coffee shop, or taking
metro to commute office. Such activities are called services because they involves deed or act and
offered by one party to another for sale.
Services differ from goods in many ways. The way a product is produced, distributed, marketed, and
consumed is not the way a service is. Hence, a different marketing approach is necessary for the
marketing of services.
Today, in this post we are going to explain What services are? What are the characteristics of services?
How services are marketed?
Definition of Services
According to American Marketing Association services are defined as activities,
satisfactions which are offered for sale or provided in connection with the sale of goods.

benefits

or

According to Philip Kotler and Bloom services is defined as any activity or benefit that one party can
offer to another that is essentially intangible and does not result in the ownership of anything. Its
production may or may not be tied to a physical product.
Characteristics of Services
1.
Intangibility Services are cannot be touched or hold, they are intangible in nature. For
example you can touch your Smartphone. But, you cannot hold or touch the services of your telecom
service provider.
2.
Inseparability In case of services the production, distribution, and consumption takes place
simultaneously. These three functions cannot be separated.
3.
Variability It is impossible to provide similar service every time. Youll experience some change
every time you buy a particular service from a particular service provider. For example Yesterday you
had a coffee at CCD. Today, you are again at CCD to have a coffee, but you have got different place to sit
today; the person served you coffee is different today; other people having coffee are also different today.
Hence, your experience of having coffee today is different as compared to yesterday.
4.
Perish-ability You can store goods, but it is not so in the case of services. Services get
perished immediately.
5.
Participation of customer Customer is co-producer in production of services. For delivery
customer involvement is as important as is of the service provider. For example if you went to a parlour
for haircut, how it cannot be possible without your presence and involvement.
6.
No ownership In the sale of services, transfer of ownership not take place. It means to say that
consumer never own the services.

Marketing of Services
A different marketing approach is necessary for services marketing, because services differ from goods in
many respects.

Difference between Services and Goods

Basis
Tangibility
Separability

Ownership
Perish-ability
Heterogeneity

Services

Goods

Services are intangible in nature.

They cannot be touched or hold.
Services are inseparable in nature.
Production, distribution, and
consumption of service take place
simultaneously.
Services cannot be owned. They can
be hired for a specific time period.
Services get perished after a specific
time period. It cannot be stored for
future use.
Services are more heterogeneous. It
is very difficult to make each service
identical.

Goods are tangible in nature. They can be

touched and hold.
Function of distribution and consumption
of goods can be separated from the
function of production.
Goods can be owned.
Goods can be stored for future use.
Goods are less heterogeneous. It is
possible to make each goods identical.

Customer Service in a service firm is highly interactive in nature. Customer interacts with the firm physical
facilities, personnel, and tangible elements like the price of the service. The success of any service firm
depends on how its performance is judged and perceived by the customer. Today, Service Firms are
becoming highly competitive, so, it is essential for service firms to provide high quality services for their
survival.
An expanded marketing mix for services was proposed by Booms and Bitner (1981), consisting of the 4
traditional elementsproduct, price, place, and promotion and three additional elementsphysical
evidence, participants, and process. These additional variables beyond the traditional 4 P's distinguish
customer service for service firms from that of manufacturing firms.

Service Marketing Mix

Service Marketing
What is Service Marketing?
A Service is an economic activity, that is intangible or not be touched, not be stored, and not be owned.
Postal service Delivering mail is a Service, and the use of expertise like person visiting a doctor is also a
service. A service is consumed at the point of sale and does not result ownership.
A product is material or tangible in nature, can be touched, can be stored, and a product can also be
owned, but it is not so in case of a service.
Nature of Service
1. Lack of ownership
One cannot own or store a service as it can be done in case of a product. Service is consumed at the
point of sale and does not result ownership. Services are used or hired for a period of time. For example
buying a movie ticket the service lasts for two or three hours, but customer want and expect complete
entertainment and excellent service for that time period.
2. Intangible
Services are intangible in nature, you cannot touch it, cannot see it, cannot taste it. You cannot touch or
hold a service as you can do with a product. For example one cannot touch or hold the services provided
by his financial adviser. This makes it difficult to evaluate the quality of service prior to consuming it since
there are fewer attributes of quality in comparison to a product.
3. Inseparable
Service is inseparable in nature means to say that it cannot be separated from the service provider. A
product when produced can be taken away from its producer whereas a service is produced at or near
the point of purchase. For example visiting a restaurant, you order your meal, wait for the meal, meal
delivered to you and services provided by waiter/waitress are all part of service production process and is
inseparable.
4. Perishable
Service last for specific time period, it cannot be stored as like a product for future use. Service production
and utilisation goes simultaneously. For example watching a movie in cinema hall, service will only last
the duration of the show. Again because of this time constraint consumers demand more.
5. Heterogeneous
It is very difficult to make each service experience identical, for example you travelling by plane the
service quality may differ from the first time you travelled by that airline to the second, because the air

hostess is less or more experienced. Systems and procedures are followed in service production process
to minimise this heterogeneity and to provide consistent services all the time.
Service Firms
Customer Service in a service firm is highly interactive in nature. Customer interacts with the
firm physical facilities, personnel, tangible elements like the price of the service. The success of any
service firm depends on how its performance is judged and perceived by the customer. Today, Service
Firms are becoming highly competitive, so, it is essential for service firms to provide high quality services
for their survival.
Marketing Mix for a Service Firm
An expanded marketing mix for services was proposed by Booms and Bitner (1981), consisting of the 4
traditional elementsproduct, price, place, and promotion and three additional elementsphysical
evidence, participants, and process. These additional variables beyond the traditional 4 Ps
distinguish customer service for service firms from that of manufacturing firms.

7 Ps of the Service Marketing Mix

The customer service for a service firm cannot be explicitly divided into pre-transaction and posttransaction elements, because production and consumption of a service occurs at the same time. The
service provided can prove effective in terms of satisfying the customer, only if the gap between expected
service and perceived service is bridged. The wider this gapthe more the number of disappointed
customers; and disappointed customers may cause the image of the firm to deteriorate.
1. Product/Service
Most services are intangible because they are performances rather than objects, precise manufacturing
specifications concerning uniform quality can rarely be set. Because of this intangibility, the firm may find
it difficult to understand how consumers perceive their services. For developing a good customer service,
the service marketer should stress on tangible cues and also create a strong organisational image. This
can be done by communicating clearly to the customers the features of the service being provided.
2. Price
Because of the intangible nature of the serviceprice becomes a pivotal quality indicator in situations
where other information is not available. It is essential, therefore that the service firm engage in
competitive pricing. Being an important tangible cue, price of the service is an area in which the service
marketer can concentrate to get a competitive edge. In the case of pure services, as in the
present context, like medical services or legal services price is an important factor because it is a basis
for the customer to make a final choice among several competing service organisations.
3. Place
Because services are performances that cannot be stored, service businesses frequently find it difficult to
synchronise supply and demand. Also, services cannot be inventoried for the same reason. Consequently
the service firms must make simultaneous adjustments in demand and capacity toachieve a closer match
between the two. Also, the firm could use multisite locations to make the service more accessible to the

users. If the service is located in a remote area, regardless of the other advantages of the service,
customers would not be motivated to use the service.
4. Promotion
The service marketer should constantly simulate word-of-mouth communications apart from using regular
advertising. If customers in an existing market, for some reason or another have an image of the firm
which does not correspond with reality, traditional marketing activities can be expected to be an effective
way of communicating the real image to the market. Communication includes informing the customers in
a language they can understand. Specially in services post-purchase communication is very important,
because retaining existing customers is as important, or even more important than attracting potential
customers.
5. Physical Evidence
Physical evidence, as already discussed under the services marketing mix, like the environmental decor
and design significantly influence the customers expectations of the service. Since services cannot
be readily displayed, firms should create a conducive environment that help the customers to develop a
positive perception of the service. For example, people would not like to wait for a medical service or a
legal service, if the atmosphere of the place they are made to wait is unpleasant. Customers can be put
off by a mere change in the layout of the service facility or even the absence of clear signboards.
6. Participants
Most services are highly labour intensive; the behaviour of the personnel providing the service and the
customers involved in production (due to the inseparable nature of services), have an effect on providing
efficient customer service. To achieve customer-oriented personnel, the organisation needs to recruit and
select the right people, and offer an appropriate package of employment, in order to enhance their skills
and encourage them. Because of the constant interaction between the employees involved in the service,
and the customersthere is a mutual dependence between the two. If the customers are dissatisfied,
employees experience discomfort working with unhappy customers, and customers are unhappy because
the employees were not trained in customer satisfaction. The extent of this mutual dependence
influences the customers perception of the service.
7. Process
In the how of the service delivery is extremely important because the service and the seller are
inseparable. The functional quality, or the how of service delivery is especially important to service
industries, as it is difficult to differentiate the technical quality, or the what of service delivery. Previous
experience with a service also influences the expectations of the customer. If the customer has had a bad
experience with the
service on any previous occasion, it will influence his or her future perceptions of the service. It is
essential to train the front line employees, whose actions and behaviour influence the customers opinions
of the organisation and the actual service provided.
Conclusion
What the customer actually gets out of the service, and how he or she perceives the service may not
always match. So the customers judgement or evaluation of the service is the crucial factor in the

delivery of a service. But service marketers can influence these perceptions to a large extent by
controlling favourably the service marketing mix variables. It is all the more difficult because a service
cannot be broken down into logical steps or sequences.
If service organisations pay more attention to their employees as well as their customers, it would
increase both employee motivation as well as customer satisfaction.

What are E-Services?

What exactly are e-services? According to Hewlett-Packard, an e-service is an
electronic service available via the net that completes tasks, solves problems, or
conducts transactions. E-services can be used by people, businesses, and other eservices and can be accessed via a wide range of information appliances. Eservices that are available today include your local banks online account services,
ATMs, UPS package tracking service, Schwabs stock trading services, Travelocitys
online purchasing options, a grocery stores self-check-out option, and the list could
go on and on. Today, e-services have become more commonly known as self-service
technologies. Proponents of self-service technologies (SSTs) frequently boast that
the best service is self-service!
With respect to airlines, customers can easily compare prices of alternative
providers, book their own tickets, select their own seats, and preprint boarding
passes to bypass check-in procedures. Ultimately, consumers often enjoy the
convenience, speed, and ease of using self-service technologies as compared to
traditional assisted services. Service industries that employ self-service
technologies include: auto rental chains, banks, insurance companies, hotels, movie
rental chains and theatres, and a variety of other retail operations.
SSTs are great when they work; however, when something goes wrong and
consumers are unable to successfully navigate SST menus, self-service technologies

can become a major source of customer dissatisfaction. Simply consider a service

providers automated phone answering system that does not respond or does not
provide the consumer the desired option. A self-service technology that is
implemented purely to decrease the operating cost of the firm will most likely not
be well-received.
E-service plays a critical role in the transformation of the customers online
experience that progresses over time from a functional experience to a more
personalized experience. In essence, e-service humanizes the net by providing
various customer service activities while simultaneously reducing the online firms
operating costs. Examples include electronic order confirmations, package tracking
services, electronic wallets, cobrowsing, live text chats, merchandise return
services, and collaborative filtering.

Service Sector In India

IT and ITeS: Leading services segment
Indias technology and BPM sector (including hardware) is estimated to have generated US$
146 billion in revenue during FY15 compared to US$ 118 billion in FY14, implying a growth
rate of 23.72 per cent
The contribution of the IT sector to Indias GDP rose to approximately 9.5 per cent in FY15
from 1.2 per cent in FY98
TCS is the market leader, accounting for about 10.1 per cent of Indias total IT & ITeS sector
revenue
The top six firms contribute around 36 per cent to the total industry revenue, indicating the
market is fairly competitive

Introduction
The services sector, with around 52 per cent contribution to the Gross Domestic Product (GDP)
in 2014-15, has made rapid strides in the past decade and a half to emerge as the largest and one
of the fastest-growing sectors of the economy. The services sector is not only the dominant sector
in Indias GDP, but has also attracted significant foreign investment flows, contributed
significantly to exports as well as provided large-scale employment.( The share of service sector
in Indias GDP is expected to reach 62 per cent by FY 2020) Indias services sector covers a wide
variety of activities such as trade, hotel and restaurants, transport, storage and communication,
financing, insurance, real estate, business services, community, social and personal services, and
services associated with construction.

Market Size
The services sector contributed US$ 783 billion to the 2014-15 GDP (at constant prices) growing
at Compound Annual Growth Rate (CAGR) of 9 per cent, faster than the overall GDP CAGR of
6.2 per cent in the past four years.
Out of overall services sector, the sub-sector comprising financial services, real estate and
professional services contributed US$ 305.8 billion or 20.5 per cent to the GDP. The sub-sector
of community, social and personal services contributed US$ 188.2 billion or 12.6 per cent to the
GDP. The third-largest sub-segment comprising trade, repair services, hotels and restaurants
contributed nearly equal or US$ 187.9 billion or 12.5 per cent to the GDP, while growing the
fastest at 11.7 per cent CAGR over the period 2011-12 to 2014-15.

Investments
The Indian services sector has attracted the highest amount of FDI equity inflows in the period
April 2000-September 2015, amounting to about US$ 45.38 billion which is about 17 per cent of
the total foreign inflows, according to the Department of Industrial Policy and Promotion
(DIPP).
Some of the developments and major investments by companies in the services sector in the
recent past are as follows:

Credit Analysis and Research (CARE Ratings) has signed Memorandum of

Understanding (MoU) with Japan Credit Rating Agency, Ltd (JCR) to collaborate with
each other as strategic business partners.
Shuttl, an Indian bus aggregator platform headquartered in Gurgaon, has raised US$ 20
million in Series A funding from Lightspeed, Sequoia India and Times Internet Ltd.

Indian logistics platform Rivigo has raised US$ 30 million in debt and equity in Series B
financing round, led by SAIF Partners. The firm aims to use the raised funds to achieve
its target of scaling 10 times in the next 12 months.
India had the strongest activity in office leasing space in Asia and accounted for half of
Asias total office leasing in third quarter of 2015, with Delhi being the most active
market@.
Fairfax India will look to acquire controlling stake in collateral management and weather
advisory firm National Collateral Management Services (NCML) where the deal size
could be $150-180 million.
Amazon, the world's largest online retailer, plans to invest Rs 31,700 crore (US$ 4.76
billion) in India in addition to the US$ 2 billion investment it committed two years ago,
in expanding its network of warehouses, data centers and increasing its online
marketplace, besides launching an instant video and subscription-based ecommerce
services for high-end buyers, called Amazon Prime, later this year.
The private security services industry in India is expected to register a growth of over 20
per cent over the next few years, doubling its market size to Rs 80,000 crore (US$ 12
billion) by 2020.
The Government of India has awarded a contract worth Rs 1,370 crore (US$ 210 million)
to Ricoh India Ltd and Telecommunications Consultants India Ltd (TCIL) to modernise
129,000 post offices through automation.
Taxi service aggregator Ola plans to double operations to 200 cities in current fiscal year.
The company, which is looking at small towns for growth, also plans to invest in driver
eco-system, such as training centers and technology upgrade, besides adding 1,500 to
2,000 women drivers as part of its pink cab service by women for women.
JP Morgan Asset Management (UK) Ltd, JP Morgan Investment Management Inc and JP
Morgan Chase Bank NA, have together acquired 4.11 per cent stake in Mahindra &
Mahindra Financial Services Ltd for Rs 113.75 crore (US$ 17.1 million).

Government Initiatives
The Government of India recognises the importance of promoting growth in services sectors and
provides several incentives in wide variety of sectors such as health care, tourism, education,
engineering, communications, transportation, information technology, banking, finance,
management, among others.
The Government of India has adopted a few initiatives in the recent past. Some of these are as
follows:

The Central Government is considering a two-rate structure for the goods and service
tax(GST), under which key services will be taxed at a lower rate compared to the
standard rate, which will help to minimize the impact on consumers due to increase in
service tax.
By December 2016, the Government of India plans to take mobile network to nearly 10
per cent of Indian villages that are still unconnected.

The Government of India has proposed provide tax benefits for transactions made
electronically through credit/debit cards, mobile wallets, net banking and other means, as
part of broader strategy to reduce use of cash and thereby constrain the parallel economy
operating outside legitimate financial system.
The Reserve Bank of India (RBI) has allowed third-party white label automated teller
machines (ATM) to accept international cards, including international prepaid cards, and
has also allowed white label ATMs to tie up with any commercial bank for cash supply.

Road Ahead
Services sector growth is governed by both domestic and global factors. The sector is expected to
perform well in FY16. Some improvement in global growth and recovery in industrial growth
will drive the services sector to grow 7.4 per cent in FY16 (FY15: 7.3 per cent) as per Mr Dilip
Chenoy, MD and CEO of National Skill Development Corporation. The Indian facilities
management market is expected to grow at 17 per cent CAGR between 2015 and 2020 and
surpass the $19 billion mark supported by booming real estate, retail, and hospitality sectors. The
performance of trade, hotels and restaurants, and transport, storage and communication sectors
are expected to improve in FY16. Loss of growth momentum in commodity-producing sectors
had adversely impacted transport and storage sectors over the past two years. The financing,
insurance, real estate, and business services sectors are also expected to continue their good run
in FY16. The growth performance of the community, social and personal services sector is
directly linked with government expenditure and we believe that the government will remain
committed to fiscal consolidation in FY16.
REASONS FOR THE GROWTH OF SERVICES IN INDIA:
Economic affluence: One, of the key factors for the growth of demand for services is the
economic affluence. According to the NCAER study the size of the middle income
consumer is raising fast and the percentage of the very poor households declining. The
rural households in the upper income category is growing at a much faster pace than the
urban households in the corresponding categories. The Economic liberalisation Process has
had a positive impact on the Indian households. Their income as well as their expenditure
has been pushed, creating a demand for many goods and services.
Changing Role of Women: Traditionally the Indian woman was confined to household
activities. But with the changing time there has been a change in the traditional way of
thinking in the society. Women are now allowed to work. They are employed in defence
services, police services, postal services, software services, health services, hospital services,
entertainment industries, Business Process Outsourcing and so on.
The percentage of working women has been growing rapidly. The changing role of women
has created a market for a number of product and services. Earning women prefer to hire
services in order to minimise the innumerable roles that they are required to perform. The
demand by woman is forcing service organisations to be more innovative in their approach.

Cultural Changes: Change is the underlying philosophy of culture place of change in

Indian culture is not uniform. However, during the last century the factors of change are
prominent. The emergence of the nuclear family system in place of the traditional joint
family system creates a demand for a host of services like education, health care,
entertainment, telecommunication, transport, tourism and so on. There has been a marked
change in the thought Processes relating to investment, leisure time perception and so on
which has created a huge demand for services.
I.T. Revolution: For the last 15 years India6aste,en occupying a vital position in the area of
Information Technology. IT became one of the key service businesses of the country. India
has the largest software skilled population in the world. The domestic market as well as the
international market has grown substantially. Realising the potential for this area many
state governments have made IT as their most, prioritized segment states such as
Karnntnka, Andhra Pradesh, Madhya Pradesh Maharashtra and Delhi have already
achieved substantial progress in Information Technology the In Ile years to come Lille IT
enabled se Aces will have a bright future. The growth. of population, industrialisation and
indiscriminate consumptions have affected the, natural resources, environment and the
ecological balance. Due to this there is an imbalance of the ecology various service
organisations have been promoted in order to take up social marketing. Thousands of
crores of rupees are being spent on safeguarding the rare animals and birds, water
pollution, conservation of oil & energy and research to develop new technologies that can
promote effective use of natural resources and safeguard the environment.
Development of Markets: During the last few decades the wholesaler and the retailer
population has grown in the country. Urban India has become a cluster of wholesaling and
retailing business. In the Semi urban areas, retailing has spread to the nooks and corners
of the streets and in the rural areas retail business is significantly present. A new breed of
organisations, offering marketing services has come up. The government also offers
marketing services to the small-scale agricultural farmers, artisans and other traditional
business sectors such as promotion of regulated markets, export promotion councils,
development boards etc.
Market orientation: The changing competitive situation and demand supply positions has
forced the manufacturing organisation to shift their philosophy from production
orientation to market orientation. Market is a service function that has been added in the
organisation. The pressures in the market has further forced the manufacturing
organisations to have marketing research, accounting, auditing, financial management,
human resource management and marketing research divisions all of which are services
functions.
Health-Care Consciousness: In India, the healthcare market has grown substantially. The
increased life expectancy is the result of the consciousness of the people regarding the
health issues. The growth of fitness clubs, diagnostic centres, medical counselling, health-

related information sites are the reflections of the growing demands for health care
services. The government as well as the social organisations have taken up the mass
campaigns in order to create awareness among the illiterate persons and the rural
population on health service. Hence, the growth of health related services.
Economic liberalisation: The economic liberalisation of the 1991 has brought many
changes in the Indian scenario. With the Disinvestment and the Privatisation policies the
state owned monopolies in many service areas came to an end Multinationals were
permitted to enter the Indian market. Liberal lending policies and lower interest rates
motivated many people to become self-employed. Different sectors like Banking, Insurance,
Power projects, Telecommunication, Hospitality sector, Health Services, Entertainment, Air
transport, and Courier services witnessed intense competition, due to the entry of
multinationals. The flow of time-tested service technology from various parts of the world
changed the attitude of the Indian consumer towards sources.
Rampant migration: One of the important reasons for the growth of services in India is the
rampant migration of rural to semi-urban and urban areas. Migration to urban areas for
the want of jobs and livelihood has resulted in the expansion of cities and townships due to
which businesses like real estates, rentals, transportation and infrastructure services are
rapidly expanding.
Export potential: India is considered to be a Potential source for services. There are a
number of services that India offers to various parts of the world like banking, insurance,
transportation co data services, accounting services, construction labour, designing,
entertainment, education, health services, software services and tourism. Tourism and
software services are among the major foreign exchange earners of the country and that
the growth rate is also very high as compared to the other sectors.
Service tax: The growth in the service sector attracted the attention of the government as a
tax generating source. Over the years, the number of services brought under service tax has
increased- Service tax is levied on hotels and restaurants, transport, storage and
communications, financial services, real states, business services and social and personal
services.

SERVICE REVOLUTION
India's services sector has the largest share in the GDP, accounting for 57% in 2012, up from
15% in 1950. It is the 9th largest in the world by nominal GDP, and fourth largest when
purchasing power is taken into account. The services sector provides employment to 27% of the
work force. Information technology and business process outsourcing are among the fastestgrowing sectors, having a cumulative growth rate of revenue 33.6% between 1997 and 1998 and

200203 and contributing to 25% of the country's total exports in 200708. The growth in the IT
sector is attributed to increased specialisation, and an availability of a large pool of low cost,
highly skilled, educated and fluent English-speaking workers, on the supply side, matched on the
demand side by increased demand from foreign consumers interested in India's service exports,
or those looking to outsource their operations. The share of the Indian IT industry in the country's
GDP increased from 4.8% in 200506 to 7% in 2008. In 2009, seven Indian firms were listed
among the top 15 technology outsourcing companies in the world.[158
India has the second fastest growing services sector with its compound annual growth rate at
nine per cent, just below Chinas 10.9 per cent, during the last 11-year period from 2001 to 2012,
the Economic Survey for 2013-14 said. Russia at 5.4 per cent is a distant third.
Among the world's top 15 countries in terms of GDP, India ranked 10th in terms of overall GDP
and 12th in terms of services GDP in 2012, it said, adding that services share in world GDP was
65.9 per cent but its share in employment was only 44 per cent in 2012.
As per the survey, in India, the growth of services-sector GDP has been higher than that of
overall GDP between the period FY2001- FY2014. Services constitute a major portion of Indias
GDP with a 57 per cent share in GDP at factor cost (at current prices) in 2013-14, an increase of
6 percentage points over 2000-01.
Despite deceleration, services GDP growth at 6.8 per cent was above the 4.7 per cent overall
GDP growth in 2013-14, it said.
In fact the growth rate of 6.8 per cent for the sector is marginally lower than in 2012-13. This is
due to deceleration in the growth rate of the combined category of trade, hotels, and restaurants
and transport, storage, and communications to 3 per cent from 5.1 per cent in 2012-13, the
survey said.
On the other hand, robust growth was seen in financing, insurance, real estate, and business
services at 12.9 per cent.
FDI inflows to the services sector (top five sectors including construction) declined sharply by
37.6 per cent to USD 6.4 billion compared to an overall growth in FDI inflows at 6.1 per cent.
Indias share in world services exports, which increased from 0.6 per cent in 1990 to 1.1 per cent
in 2000 and further to 3.3 per cent in 2013, has been increasing faster than its share in world
merchandise exports, according to the survey.
While exports of software services, accounting for 46 per cent of Indias total services exports,
decelerated to 5.4 per cent in 2013-14 from 5.9 per cent in 2012-13, travel, accounting for a
nearly 12 per cent share, witnessed negative growth of 0.4 per cent.
However, moving in tandem with global exports of financial services, Indias exports of financial
services registered a high growth of 34.4 per cent in 2013-14.

The survey highlighted that some services like software and telecom were big
ticket items that gave India a brand image in services
The survey, tabled in the Parliament on Wednesday, said the immediate challenge in services
sector is revival of growth.
While this could be achieved through reforms and speeding up of the policy decision making, a
targeted approach with focus on big ticket services could lead to a rebounding of services-sector
growth for India, it stated.
The survey highlighted that some services like software and telecom were big ticket items that
gave India a brand image in services. While further focus on these services is needed to retain
and further our lead, the time has come to focus on some other high potential big ticket items
(such as Tourism and hospitality sector, Ports services and Railways) that have high
manufacturing-sector and employment linkages.
Commenting on the outlook of services sector, which was growing at a steady rate of over 10 per
cent since 2005-06, has shown subdued performance in the last three years, the survey said the
year 2014-15 seems to augur well for the services sector with expansion in business activity in
India.
There are also signs of revival in growth of the aviation sector with the announcement of new
players like Air Asia and Tata-SIA Airline after a turbulent period of withdrawals and losses by
some airlines. There are also indications of revival in world GDP that could help in revival of the
tourism and shipping sectors.

UNIT -2

Competitive differentiation of services

How do you differentiate your services from that of the competition? Its easier in
products where the variables are tangibles but pretty different in case of services. When the
physical product cannot be differentiated easily, the key to competitive success may lie in adding
valued services and improving their quality. This is the outlook of service differentiation.
The main factors which can be used for service differentiation are:
1. Ordering ease: Refers to how easy it is for you to place an order with the company. Baxter
Healthcare has eased the ordering process by supplying hospitals with computer through which
they send orders directly to Baxter; consumers can now order and receive groceries without
going to the supermarket through web-based service such as peapod and net grocer. Thus these
services have differentiated themselves through ease of ordering.
2. Delivery: It is related to how well the product or service is delivered to the customer, covering
speed, accuracy and customer care. Deluxe check printer, inc., has built an impressive reputation
for shipping out its checks one day after receiving an order- without being late once in 18 years.
3. Installation: refers to the work done to make a product operational in its planned location.
Buyers of heavy equipment expect good installation service. Differentiation by installation is
particularly important for companies that offer complex products such as computers.
4. Customer training: refers to how the customers employees are trained to use the vendors
equipment properly and efficiently. General Electric not only sells installs expensive X-rays
equipment in hospitals, but also gives extensive training to users of this equipment.
5. Customer consulting refers to data, information system and advising services that the seller
offers to buyers. For example, the Rite aid drugstore chains communications program, called the
Vitamin Institute, provide customers with research so they can make more educated judgments
and fell comfortable asking for help. On the Web, Rite Aid has teamed with drugstore.com to
offer even more health-related information.
6. Maintenance and repair: describes the service program for helping customers keep
purchasing products in good working order, an important consideration for many products.

These are 6 steps to achieve service differentiation. Each of these steps can be seen implemented
in leading service chains / companies.