Services Marketing: MBA - IV Semester

Services Marketing
MBA –IV Semester

Syllabus
Definition for service
• Service is an act or performance offered by
one party to another that essentially
intangible and does not normally result in
ownership of anything. Its product may or
may not be tied the physical product.
–Philip Kotler
• E.g.: transportation, electricity
• service sector: the portion of a nations economy represented by services of all
kinds, including those offered by public and non-profit organizations.
Changing Structure of Employment as an Economy Develops
Characteristics of Services
• 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.
• Inseparability – In case of services the production, distribution, and

consumption takes place simultaneously. These three functions cannot be
separated.
• Variability – It is impossible to provide similar service every time. You’ll

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.
Characteristics of Services
• Perish-ability – You can store goods, but it is not so in the case of
services. Services get perished immediately.
• 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.
• No ownership – In the sale of services, transfer of ownership not

take place. It means to say that consumer never own the services.
Difference between Services and Goods
Basis Services Goods
Services are intangible in nature. Goods are tangible in nature. They
Tangibility They cannot be touched or hold. can be touched and hold.
Services are inseparable in nature. Function of distribution and

Production, distribution, and consumption of goods can be
Separability consumption of service take place separated from the function of
simultaneously. production.
Services cannot be owned. They Goods can be owned.

Ownership can be hired for a specific time
period.
Services get perished after a Goods can be stored for future use.
Perish-ability specific time period. It cannot be
stored for future use.
Services are more heterogeneous. Goods are less heterogeneous. It is

Heterogeneity It is very difficult to make each possible to make each goods
service identical. identical.
Reasons for Growth in Service Sector
• Growth in intermediate demand from firms
• Growth in final demand from customers
– Increase in affluence
– More leisure time
– Working women
– Growth in population of DINKS
– Greater life expectancy
– Greater complexity of products
– Greater complexity in life
– Greater concern for resource scarcity and ecology
– Increasing number of new products
Sector wise contribution in India
Reasons for growth of services in India
• Economic Affluence
• Changing Role of Women
• Cultural Changes
• IT Revolution
• Conservation of Natural Resources
• Development of Markets
• Unbundling Corporations
• Increased Consciousness of Health Care
• Economic Liberalization
• Migration
• Export Potential
Key Service Businesses in India
• Insurance • Postal services
• Transport • Tourism
• Telecommunications • Banking
• Software • Health care
• Electricity • Education
Components of a Service
Service Marketing Environment
• All organizations operate within the marketing
environment. The marketing environment is made
up of two parts –
– Macro environment
– Micro environment
Macro Environment
• The macro environment represents all the outside
influences which have impact on an organization’s
marketing or business activity.
• It includes economic and political factors and socio-
cultural trends,
• for example the external environment influences will
effect all organizations within a sector to a greater or
lesser degree. The internal environment relates to a
particular organization and its publics.
Political –Legal Environment:
• There is considerable influence of the political – legal environment on
service marketing . Service industries are often more closely regulated
than most other forms of private enterprise. Many service firms are
being subject to government regulations in addition to the usual taxes
and legislation. Service providers must understand and recognize the
impact of such regulation on their competitive strategies.
• Regulation generally influences service business in four ways.
• Regulation generally influences the range and type of competition.
• Regulation reduces the marketer’s array of options and introduces
certain rigidities into the marketing process.
• Decision of the regulatory agencies being the binding part of the
marketing decision –making process must be focused at understanding
and predicting those agencies action
• Pressure groups may be established to lobby and effect change or
modify , the directions being taken by the regulatory bodies.
• Economic Environment:
• In economic environment changing life style , changing world
,changing economies and changing technological advances and
changing consumer needs have contributed to increase spending
on consumer services. Technological innovations have also helped
to create a higher standard of living for a common man, who
presently spends a larger portion of his or her increased disposable
income of services. But the role of technology has also aided
in circumventing barriers to trade , especially in its role in
designing and delivering services. The urbanization has widened
the demand for personal and public services . The demographic
shift towards an older population in some countries has resulted in
new service demands such as better healthcare , convenience
products etc. In the global environment , due to cross country
cultural issues , trade barrier ( both tariff and non-tariff) tend to
become more restrictive in marketing of services.
• Socio-Cultural Environment:
• Socio- cultural forces are set factors including life style , social values and
beliefs that affect the marketing activities of an organization. These
factors have significant impact on the marketing of services . The
marketers have found the intensive use of consultants and counselors in
their personal family and working lives. Health, Beauty, travel, culture,
and higher education have partly replaced durable goods as status
symbols in the mind of many consumers . There had been an increasing
trend in the services like security , insurance, legal, medical and
investment. Globally , the cultural dimensions affect services in a more
pronounced manner than do goods. Due to inseparability characteristic of
services the firms may need to adapt their offerings to suit local taste and
preferences . KFC and Mc’Donald’s had to adapt its products in India to
suit local polates.
• Business negotiations are very much subject to local norms and local
systems. Language is a major cultural influence
• Technological Environment:
• Technology has influenced our life styles, consumption
pattern and our economic well being tremendously.
Just think of internet , worldwide web (www) , E-
commerce , video conferencing. World has become
too small and boundary less. The service economies
will be technologically driven soon. Instead of
expecting service providers to improve results ;
management must see what kind of organizational
structure , incentives , technology and skills can
improve overall productivity.
Micro Environment
• The micro environment is the internal environment of the
organization .The factors to be analyzed in the internal
environment will include the following :
– Company management structure
– Customers
– Suppliers
– Channel members
– Competitors
– Other publics which may include
– Government and political bodies
– Pressure groups
– Financial institutions
– Shareholders

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Services Marketing

MBA –IV Semester

• Inseparability – In case of services the production, distribution, and

• Variability – It is impossible to provide similar service every time. You’ll

• Participation of customer – Customer is co-producer in production

• No ownership – In the sale of services, transfer of ownership not

Services are inseparable in nature. Function of distribution and

Services cannot be owned. They Goods can be owned.

Services are more heterogeneous. Goods are less heterogeneous. It is

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