SERVICE

MARKETING

UNIT - 1
“There are no such thing as service
industries. There are only industries whose
service components are greater or less
than those of other industries. Everybody is
in service.”
: Theodore Levitt
Service Defined
“Service is an act or performance
offered by one party to another that
is essentially intangible and does not
result in the ownership of anything.”

It is the part of the product or the full

product for which the customer is willing
to see value and pay for it.
Characteristics of Services

 Intangibility – not perceived by the senses or

physically possessed
 Inseparability – being produced and consumed
simultaneously
 Perishability – unused services can’t be used
at a future time
 Characteristics of Services
(cont’d)

 Heterogeneity – variation in quality

 Client-based Relationships – interactions
resulting in satisfied customers who use a service
repeatedly
 Customer contact – the necessary level of
interaction between provider and customer to
deliver the service
The Tangibility Continuum
Difference between physical goods
and services
Physical goods Services
Tangible Intangible
Homogeneous Heterogeneous
Production and distribution are separated Production, distribution and consumption
from consumption are simultaneous processes

A thing An activity or process

Core value processed in factory Core value produced in the buyer-seller
interaction

Customers do not participate in the Customers participate in production

production process

Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership
Molecular Model
 Helpful in understanding difference between
Goods & services.
 Reinforces the understanding that all products
have both tangible and intangible elements.
 It enables managers to get a broadened view of
their products, which in turn helps in better
understanding of needs servicing more
effectively and differentiating from competitors.
Molecular Model

Transport

Price

Distribution

Market Positioning
Molecular Model

Vehicle

Price

Transport
Distribution

Market Positioning
INTERNAL SERVICES
Service elements within an organization that facilitate
creation of--or add value to--its final output
 Includes:
◦ accounting and payroll administration
◦ recruitment and training
◦ legal services
◦ transportation
◦ catering and food services
◦ cleaning and landscaping
 Increasingly, these services are being outsourced
Service Marketing Mix
 Service Sector Growth

 Contribution towards GDP: 60%

 Employment generation: 35%
 Foreign Investment inflows: 50%
 India’s total exports: 80%
 Provides massive business prospects to
investors.
 Service Sector: Reasons for
growth
 Technological Advancements: Engineering
Consultancy
 Globalization: Courier/ Shipping Companies
 Deregulation of policies: Telecom Cos., Pvt.
Airlines
 Competition: Market Research, Software
programming
 Cost effectiveness drives: Security/ Janitorial
services
 Computer explosion: Advertising services
 Service Sector: Reasons for
growth
 Increase in Affluence: Cleaning services/ travel
agents
 More working women: Crèches/ Baby sitters
 More Leisure time: Travel Resorts/ Disco
 Greater Life Expectancy: Pvt. Hospitals/ Gyms
 Demographic Changes: Home Delivery/ Maid
Services
 Urbanization: Security Services
 Classification of Services
It is required to design & apply marketing techniques to
completely satisfy the customer, increase profits & identify new
emerging services.

Classifications can be done on following basis:

• Classification by Industry
• Classification by Target Effect
• Skill level of service provider (Professional/ Nonprofessional)
• Labor intensiveness (People-based/Equipment-based)
• Degree of customer contact (High / Low)
• Goal of the service provider (Profit /Nonprofit)
 Classification By
Industry
a. Entertainment industry
b. Education
c. Telecommunications
d. Finance & Insurance
e. Transportation
f. Public utilities
g. Government services
h. Health
i. Hospitability Industry
j. Business services
k. Telecommunications
l. Trading
 Classification By Target
Effect
Based on Degree Of Customer Involvement: ( Lovelock)

1. People Processing: Services aimed at physical care e.g.

Healthcare, clinics, restaurant, hospitals, hair stylists, fitness centers

2. Mental Stimulus Processing: Services aimed at mind of customer

e.g. Education, information, entertainment, consulting, psychotherapy

3. Possession Processing: Services aimed at physical possession &

tangible assets e.g. repair & maintenance, laundry, repair services,
house cleaning services

4. Information Processing : Services for intangible assets e.g.

Banking, legal consultation, brokerage, financial services.
 Skill level of service
provider
• Teacher

• Doctor

• Engineer

• Accountant
 Labor intensiveness
• Mechanic

• Electrician

• Labor

• Plumber

• Artisan
 Degree of customer
contact
• High Degree (Every Day) – TV Channels,
Mobile etc.

• Moderate Degree (Regular) – Teacher,

Barber, Washer Man etc.

• Low Degree ( Occasional ) – Lawyers, Doctors

etc.