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Services Marketing

Definition of services Characteristics The Services Marketing Triangle: The Service Marketing Mix SerQual and Gaps Model.

Services Marketing
Service is any activity or benefit that one party can offer to another that is essentially intangible does not result in the ownership of anything. Its production may or may not be tied to a physical product.. A Service is a type of a product. a deed performed by one party for another

Discussions about the marketing of goods apply to services as well. Services have special characteristics that make them different than products E.g. Banking services, Educational services, Advertising services, Marketing Research, Consultancy services, Air lines Hotels, Tourism, Health services, Entertainment Services (Films etc.)

Challenges for Services

Defining and improving quality Communicating and testing new services Communicating and maintaining a consistent image

Motivating and sustaining employee commitment

Coordinating marketing, operations and human resource efforts Setting prices Standardization versus personalization

Nature and Characteristics of Services

The company must consider major services characteristics, they are 1) Intangibility. 2) Inseparability. Simultaneous Production and consumption. 3) Variability. Lack of Standardization. 4) Perishability. Not Inventorable.
And Ownership cannot be transferred.

Figure 1-1

Tangibility Spectrum

Soft Drinks Detergents Automobiles Cosmetics Fast-food Outlets

Intangible Dominant (Service Dominant)

Tangible Dominant (Goods dominant Products)

Fast-food Outlets Advertising Agencies Airlines Investment Management Consulting Teaching

Differences Between Goods and Services

Differences Between Goods and Services (Service Characteristics



Simultaneous Production and Consumption


Services Characteristics

1) Intangibility:

Service intangibility means that services cannot be seen, tasted, felt, heard, or smelled before they are bought. Therefore the services marketers task is to make the services tangible in one are more ways by people, place , equipments, and communication material.
2) Inseparability: Production and Consumption. Services inseparability means that services cannot be separated from their providers or people or machines. Provider-client interaction is a special feature of services marketing. So the service provider has to use his time efficiently. E.g. doctor, teacher

Tangible / Intangible Attributes

Tangible touch see taste smell

Intangible cant see cant touch cant smell cant taste

Service Characteristics Intangibility

Resulting Marketing Challenges

Difficult for Customer to Evaluate Customer Does Not Take Physical Possession Difficult to Advertise and Display Difficult to Set and Justify Prices Service Processes Usually Not Protectable by Patents Service Provider Cannot Mass-Produce Services Customer Must Participate in Production Other Consumers Affect Service Outcomes Services Are Difficult to Distribute

Inseparability of Production and Consumption

Sources: K. Douglas Hoffman and John E. G. Bateson, Essentials of Services Marketing, (Fort Worth: Dryden Press, 1997) pp. 25-38; Valerie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, Delivering Quality Service: Balancing Customer Perceptions and Expectations (New York: Free Press, 1990); and Leonard L. Berry and A. Parasuraman, Marketing Services: Competing Through Quality (New York: Free Press, 1991), p. 5.

3)Variability: Cannot Standardized (Heterogeneity)

Service variability means the quality of services depends on who provides them as well as when, where and how they are provided. Service firms can take several steps towards quality control. They can select and train their personnel carefully. They can make service employees more visible and accountable. And handle the customer grievances or complaints immediately. Singapore airlines, Marriot Hotels, Federal Express.
4) Perishability: Cannot Store for future

Service Perishability means that services cannot be stored for later use or sale. Doctors charged for missed appointments because the service value existed only at that point and disappeared when the patient did not show up. Service firms can use several strategies for producing a better match between demand and supply.

Service Characteristics Perishability

Resulting Marketing Challenges

Services Cannot Be Stored Very Difficult to Balance Supply and Demand Unused Capacity Is Lost Forever Demand May Be Very Time-Sensitive Service Quality Is Difficult to Control Difficult to Standardize Service Delivery Success Depends on Satisfying and Keeping Customers Over the Long term Generating Repeat Business Is Challenging Relationship Marketing Becomes Critical


Client-Based Relationships

Sources: K. Douglas Hoffman and John E. G. Bateson, Essentials of Services Marketing, (Fort Worth: Dryden Press, 1997) pp. 25-38; Valerie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, Delivering Quality Service: Balancing Customer Perceptions and Expectations (New York: Free Press, 1990); and Leonard L. Berry and A. Parasuraman, Marketing Services: Competing Through Quality (New York: Free Press, 1991), p. 5.

The Services Marketing Triangle (Services Marketing Strategies)

The Services Marketing Triangle: (Services Marketing Strategies)

Company (Management)
Internal Marketing
enabling the promise

External Marketing
setting the promise

delivering the promise

Interactive Marketing Interactive Marketing

Marketing Strategies for Services Marketing: (Triangle of Services Marketing)

Marketing of services are difficult to compare to marketing of goods. Because of its characteristics services marketing firms uses three types of marketing;

1) Internal Marketing:
Means that that the service firm must effectively train and motivate its customer- contact employees (frontline) and all the supporting service people to work as a team to provide customer satisfaction. E.g. Marriot Hotels. (customers, employees &stakeholders)

2) Interactive Marketing: means that perceived service quality depends heavily on the quality of the buyers-seller interaction. The customer judges service quality not only based on technical quality, but also on functional quality( Concern and inspire confidence). Service companies face three major marketing tasks A) Competitive differentiation: Differentiating offer, delivery and image. B) Managing service Quality: Identify the expectation of the customers. Harder to define service quality. c) Managing Productivity: With cost rising rapidly, service firms are under great pressure to increase service productivity by adding assembly line and designing more effective services.

3) External Marketing: means companies effort towards customers to attract and retain them by various marketing mixes and strategies. That is different services and prices for different types of customers.


7Ps ( Expanded Marketing)

Expanded Marketing Mix for Services


Marketing mix for services includes 7Ps of Services Marketing which includes; 1) PRODUCT: It includes services level, types of services, additional services, branding, new service development, and service life cycle 2)PRICE: It includes factors effecting pricing strategies, pricing of services, discounts and terms of payments etc. 3)PLACE: It includes strategies like location, channels of distribution, coverage strategies etc. 4) PROMOTIOM: It includes advertising, sales promotion, personal selling an public relations. 5) PEOPLE: It includes employees( on-stage and off-the-stage), Customers (potential, current& loyal, lost customers). Other aspects like training, service culture, skills and attitude. 6) Physical Evidence: 7) Process:

The service marketing mix-VI

People because of the simultaneity of production and consumption in services the CE staff occupy the key position in influencing customers perceptions of product quality. In fact the service quality is inseparable from the quality of service provider. An important marketing task is to set standards to improve quality of services provided by employees and monitor their performance.

The service marketing mix-VII People contd.

Without training and control employees tend to be variable in their performance leading to variable service quality. Training is crucial so that employees understand the appropriate forms of behaviour and trainers adopt the best practises.


The service marketing mix

As services are intangible, service firms has to give importance to make the service visible. Therefore they have to give importance to appearance, Equipments( Computers) Machines, Building ( Banks), Physical Facilities and Employee Uniform etc. Physical evidence this is the environment in which the service is delivered and any tangible goods that facilitate the performance and communication of the service. Customers look for clues to the likely quality of a service also by inspecting the tangible evidence. For example, prospective customers may look to the design of learning materials, the appearance of facilities, staff, etc.

The service marketing mix

7) PROCESS:It includes activities sequence, Quality Management, Customer Participation and delivery Process. Order processing ( order receiving to service delivery and Service Encounters). Process this means procedures, mechanism and flow of activities by which a service is acquired. Process decisions radically affect how a service is delivered to customers. The services includes several processes e.g. first contact with customers, administrative procedure regarding course delivery, preparation, delivery and evaluation of the courses.

Examples of Service Industries

Health Care

hospital, medical practice, dentistry, eye care accounting, legal, architectural banking, investment advising, insurance restaurant, hotel/motel, bed & breakfast, ski resort, rafting

Professional Services Financial Services



airlines, travel agencies, theme park

hair styling, pest control, plumbing, lawn maintenance, counseling services, health club


Service Providers
service providers have product lines and product mixes as well examples Mastercard insurance telephone services cable services ISPs - internet service providers Airlines, Banks

Marketing of Goods Like Services:

Xerox: Photocopiers. Apple: Computers Samsung & Nokia : Mobile Phones Kodak: Cameras:

Treat marketing as Marketing of Services

Determinants of service quality SerQual Model

Reliability delivering on promises Responsiveness willing to help Assurance inspiring trust and confidence Empathy individualising customers Tangibles- physical representation

Managing Service quality

Gap between management perceptions and consumer expectations Gap between management perceptions and service quality specifications Gap between service quality specifications and service delivery Gap between service delivery and external communication Gap between expected service and perceived service

The Gaps model of service quality

(Zeithaml, Parasuraman & Berry 1990)

Moments of truth
It is the customer service encounter Every positive or negative experience of the consumer would have fall-out on the overall service experience

Managing Service Productivity

Giving quality service is an expensive business Not every consumer is willing to pay extra for service quality Service providers would have to find their optimum service quality/cost ratios Can technology substitute part of the labour content? Can customers substitute part of the labour content? Making services obsolete by product innovations

Should we have different Strategies for Marketing of Goods and Services? All Marketers Must Be Service Marketers!