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An Introduction
Prof. Madhavi Garikaparthi

What are Services?

Services are deeds, processes and performances. Services include all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced and provides added value in forms that are essentially intangible concerns of its purchaser.

Services Vs. Customer service

Services encompasses a wide range of industries Customer service the service provided in support of a companys core product.

Why do firms focus on Services?

Services can provide higher profit margins and growth potential than products
Customer satisfaction and loyalty are driven by service excellence

Services can be used as a differentiation strategy in competitive markets

Examples of Service Industries

Health Care hospital, medical practice, dentistry, eye care Professional Services accounting, legal, architectural Financial Services banking, investment advising, insurance Hospitality restaurant, hotel/motel, bed & breakfast, ski resort, rafting Travel airlines, travel agencies, theme park Others: hair styling, pest control, plumbing, lawn maintenance, counseling services, health club

Tangibility Spectrum

Soft Drinks Detergents Automobiles Cosmetics Fast-food Outlets

Tangible Dominant

Intangible Dominant

Fast-food Outlets

Advertising Agencies Airlines Investment Management Consulting


Why Services Marketing?

A service-based economy Service as a business imperative in manufacturing and IT Deregulated industries and professional service needs Services Marketing is different Service = profits

What is Service? The New View

Dealers Web site and any e-channel Interaction


Billing and Accounting Personnel

Receptionists and Schedulers

Service Employees

Management and Executives

Where the Money in Manufacturing Is: Services

Personal Computers The sale of a 100% product accounts for only a small portion of overall 80% revenues. Providing services to customers is where the real money is.
60% annual cost of PC use: $6,259

total annual cost of rail operations: $29 billion

average annual household expenditure: $6,064

network administration network technical support network equipment nonproductive operations by end user (downtime, file management, etc.) administration

yard operations, railroad administration, other

other finance repair insurance

train operations gas Infrastructure freight car services locomotive services locomotives used car purchase



technical support desktop hardware new car purchase


total expenditure: 5X product costs

total expenditure: 21X product costs

total expenditure: 5X product costs

Source: GartnerGroup, Association of American Railroads, Federal Highway Administration Office of Highway Information Management. (Railroad expenditures are for Class 1 railroads.)

Differences Between Goods and Services



Simultaneous Production and Consumption


Implications of Intangibility
Services cannot be inventoried Services cannot be patented Services cannot be readily displayed or communicated Pricing is difficult

Implications of Heterogeneity
Service delivery and customer satisfaction depend on employee actions Service quality depends on many uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and promoted

Implications of Simultaneous Production and Consumption

Customers participate in and affect the transaction Customers affect each other Employees affect the service outcome Decentralization may be essential Mass production is difficult

Implications of Perishability
It is difficult to synchronize supply and demand with services Services cannot be returned or resold

Services are Different



Resulting Implications
Services cannot be inventoried. Services cannot be patented. Services cannot be readily displayed or communicated. Pricing is difficult.


Heterogeneous Service delivery and customer satisfaction depend on employee actions. Service quality depends on many uncontrollable factors. There is no sure knowledge that the service delivered matches what was planned and promoted. Simultaneous production and consumption Customers participate in and affect the transaction. Customers affect each other. Employees affect the service outcome. Decentralization may be essential. Mass production is difficult. It is difficult to synchronize supply and demand with services. Services cannot be returned or resold.

Production separate from consumption

Nonperishable Perishable

Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, Problems and Strategies in Services Marketing,

Services Marketing Mix: 7 Ps for Services

Traditional Marketing Mix Expanded Mix for Services: 7 Ps Building Customer Relationships Through People, Processes, and Physical Evidence Ways to Use the 7 Ps

Expanded Mix for Services -The 7 Ps

Product Price Place Promotion People Process Physical Evidence

Expanded Marketing Mix for Services

Physical good features Quality level Accessories Packaging Warranties Product lines Branding

Channel type

Promotion blend Salespeople Advertising Flexibility

Exposure Intermediaries

Price level Terms Differentiation Allowances

Outlet location Sales promotion Transportation Publicity Storage

Expanded Marketing Mix for Services

Employees Customers Communicating culture and values Employee research

Facility design Equipment Signage Employee dress Other tangibles

Flow of activities Number of steps Level of customer involvement

Ways to Use the 7 Ps

Overall Strategic Assessment
How effective is a

Specific Service Implementation

Who is the

firms services marketing mix? Is the mix wellaligned with overall vision and strategy? What are the strengths and weaknesses in terms of the 7 Ps?

customer? What is the service? How effectively does the services marketing mix for a service communicate its benefits and quality? What changes/ improvements are needed?

Challenges for Services

Defining and improving quality
Communicating and maintaining a consistent image Motivating and sustaining employee commitment

Communicating and testing new services

Coordinating marketing, operations and human resource efforts

Setting prices

Standardization versus personalization

Built on Trust With the advent of many non-banking institutions, banks today face aggressive competition Innovation in services and products is the key.

Market Segmentation in Banking

Different Criteria Geographic Demographic
Children & youth ( for educational needs)
Middle-aged ( housing & other) Aged (sustenance)

Market Segmentation in Banking

Based on customer profile & lifestyle preferences Based on Customer Profiles
Retail banking
Commercial banking Corporate banking NRI banking Investment banking

Market Segmentation in Banking

Based on Customer needs loans market can be divided into
Consumer finance

Trade finance
Corporate finance Project finance Venture capital

Market Segmentation in Banking

Focus on
Individual customers corporate

customers Small investors High-net worth customers

Marketing Mix
Market Segmentation in BankingBasic or core product
Augmented products

Savings account Debit card Salary savings account Current account Fixed deposits Recurring deposits Loans two wheeler, home, personal, home-equity Payment services of utility bills

Overdrafts, cash credits, credit, virtual, smart cards Advisory & consultancy services Depository services Selling or cross-selling of products like bancassurance Prospectus of other institutions Transfer of money through DD, checks, challans Public ltd. Cos public issue services

Savings A/c Special Savings Account Senior Citizen Services Fixed Deposit Easy FD Recurring Deposit Private Banking Roaming Current A/c Young Stars Bank@camp us Salary A/c Womens A/c EEFC A/c RFC A/c Privilege Banking No frills A/c Outward Remittance

Credit Cards Debit cum ATM Cards Travel Card

Home Loans Personal Loans Car Loans Two Wheeler Loans Commerci al Vehicle Loan Loans against Securities Farm Equipment Loans Constructi on Equipment Loan Office Equipment Loan Medical Equipment Loan Pre Approved Loans

ICICI Bank Bonds GOI Bonds Mutual Funds IPO Pure Gold Foreign Ex Services Senior Citizens Savings Scheme, 2004

NRE Savings A/c NRO Savings A/c NRE Fixed Deposit NRO Fixed Deposit NRE Recurring Deposit FCNR Fixed Deposit RFC Savings A/c RFC Fixed Deposit Home Loans Donate2India

Bill Payment Shopping Ticket Booking Prepaid Mobile Recharge Smart Money Order Card-2-Card FT Funds Transfer Share Trading Charity

ICICI Bank in News Investors Relations Customer Care Queries Feedback Privacy Online Security Terms and Conditions Disclaimer

Life Insurance General Insurance

Singapore Offshore Branch Bahrain Offshore Branch

Bank Account Credit Card Demat Loans To Subscribe Charges

USA Patriot Act Certification Life Cycle Planning What's New Service Charges

Augmented & supplementary services

Internet, phone, mobile, ATM, mobile ATM banking, home banking 24 hr customer care services Anytime anywhere banking Add-on debit & credit cards

Cost of funds Administrative expenses Credit losses incurred Expected profit

Revenue generation Traditional source interest rate differential Annual charges for credit & debit cards Penalties Commissions for cross-selling Charges for payment of utility bills

Cost-based pricing strategies Competition based pricing strategies Customer-based pricing strategies Risk/return pay-offs While initiating a price change, reactions from customers & competitors are taken into consideration

Methodology for pricing credit Ratios followed shd. Be revisited regularly ( loan to deposit)

Characteristic of Perishability causes inconvenience Includes conventional & modern distribution channels Bank branches Telephones or call centers ATM Internet Banking Home banking Plastic cards ( virtual, smart, minicredit & debit cards) Virtual branches & automated video banking Mobile offices & mobile ATMs

Various promotion mix variables

Reduced due to technology for core banking services Enhanced for supplementary & additional products High intangibility in service

Determines efficiency of operations & winning customers

Blueprint of BANKING Sector

Door Keeper Ambience Token Machine Pamphlets Waiting Lobby Magazines Display


Fill Form Cheque Book Pass Book Statements

Fill Form Credit card

Fill Form

Fill Form Pay slip

Fill Form Keys Security System Lockers

Forms Exchange Rate Display

Forms FD Certificates

Forms Holding Statements Contract Notes

Ambience ATM Machine Phone Security System Camera Pamphlets Firewall Statements Debit Card


Arrive at the Bank

Help Desk

A/c Opening

Credit Card

Loans Deposit/Withdrawal




Fixed Deposit



Line of Interaction



Greet & send to concerned Dept.

Fill Form

Acceptance of Cheque/ DD/ Cash

Fill Form

Acceptance of Forex Document

Fill Form & acceptance of Cash/ Cheque

Line of Visibility



Verification of documents

Credit Rating

Cross- checking of Form

Conversion of Shares

Line of Internal Interaction


RBI/ Demat Clearing House Clearing House Registration Process

Physical Evidence
Ambience. Buildings, lawns AC branch offices ATMs Furnished lounge for customers in queue or waiting Amenities like Newspapers, drinking water, etc Displayed awards & certifications Displayed achievements, financial results, business milestones Displayed associations Cheque books, communication letters, brochures etc.