Services Marketing

BY Prof. K.G. Muralidhara

“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-
Goods - things you can touch - “tangible”
Services - things you can’t touch - but you
can see their effect “intangible”
“… services are not physical, they are
intangible…”
 Service
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.
 Tangible / Intangible Attributes
• Tangible • Intangible
– touch – can’t see
– see – can’t touch
– taste – can’t smell
– smell – can’t taste
Goods and Services: Scale of
Elemental Dominance
 4 Characteristics of Services
1. Intangibility - “u can’t touch this”
2. Production (or performing the service) and
Consumption (using the service) - happens at
the same time
3. Heterogeneity - services are not always
delivered the same way
4. Perishability - cannot be put in inventory or
stored for later use
ie. You can’t buy 2 haircuts
 Characteristics of Services

1. Intangibility - “u can’t touch this”

• Services cannot be stored
• Services cannot be protected through patents
- therefore a really great travel package and
service can be copied
a really great physical object can be patented, and
NOT allowed to be copied
 Characteristics of Services

1. Intangibility - “u can’t touch this”

Marketing Strategies
• stress tangible cues, eg. Smiling face
• use personal information, sources, references
• use word-of-mouth
• contact customers after they buy to stimulate
continued enthusiasm and hope they “talk it up”
 Characteristics of Services

2. Inseparability of Production (or performing

the service) and Consumption (using the service)
- happens at the same time

• Many people involved in delivering a service

• mass production of services is hard to do
 Characteristics of Services

2. Inseparability of Production (or performing

the service) and Consumption (using the service)
- happens at the same time

Marketing Strategies
• Emphasize how much you train your people - so their
ability to give you good service will be high
• Have many locations so customers can get to you
• ie. Insurance sales come to your home
 Characteristics of Services

3. Heterogeneity - services are not always

delivered the same way
It is very difficult to standardize services
eg. A machine can make ice cream cones a
standard size 100% of the time
A person filling an ice cream cone with a scoop
cannot do it the same amount each time, unless
you use a machine to dispense the ice cream
 Characteristics of Services

4. Perishability - cannot be put in inventory or

stored for later use
ie. You can’t buy 2 haircuts

Demand fluctuates and changes, sometimes

depending on the season, or weather
eg. Taxi in the rain, vacation in summer
 Service Providers
service providers have product lines and product
mixes as well
examples
• Mastercard
• insurance
• telephone services
• cable services
• ISPs - internet service providers
• airlines, first class, economy class
• banks
 Difference between physical
goods and services
Physical goods Services

tangible intangible

homogeneous heterogeneous

Production and distribution are Production, distribution and

separated from consumption 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

 Unit 2
Customer Centricity
7 P’S of Service Marketing Mix…

Product
Price
Promotion
Place
People
Physical evidence
Process
 The three additional ‘P’s of Service
Marketing
• People
• Physical evidence
• Process
 Qualities of services
• Search qualities
• Experience qualities
• Credence qualities
 Differentiation in services
• Offering
• Faster and better delivery
• Image
 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
 Determinants of service quality
• Reliability – delivering on promises
• Responsiveness – willing to help
• Assurance – inspiring trust and confidence
• Empathy – individualising customers
• Tangibles- physical representation
• How do customers perceive and evaluate service
quality?
• What are managers’ perceptions about service
quality?
• Do discrepancies exist between the perceptions of
customers and those of managers?
• Can customers’ and managers’ perceptions be
combined into a general model of service quality?
• How can service organizations improve customer
service and achieve excellence?

23
Determinants of Perceived Service Quality

Word of Personal Past

Mouth Needs Experience

External
Expected Communication
Service to Customers

Service
Quality Perceived
Gap Service
Quality

Perceived
Service

24
 A “GAPS” MODEL OF SERVICE QUALITY

CUSTOMER SERVICE ORGANIZATION

Market Organization’s Service

Information Gap Understanding of Standards Gap
Expectations
Customers’
Service Organization’s Service
Expectations GAP 1 Standards
GAP 2
Service Service
Quality Gap GAP 5 Performance Gap
GAP 3
GAP 4 Organization’s Service
Customers’ Performance
Service
Perceptions
Organization’s Internal
Communications to Communication
Customers Gap

25
PROCESS MODEL FOR CONTINUOUS MEASUREMENT AND IMPROVEMENT
OF SERVICE QUALITY

DO YOUR CUSTOMERS PERCEIVE YES CONTINUE TO MONITOR

YOUR OFFERINGS AS MEETING CUSTOMERS’ EXPECTATIONS
OR EXCEEDING THEIR EXPECTATIONS? AND PERCEPTIONS

NO

DO YOU HAVE AN ACCURATE NO

TAKE CORRECTIVE ACTION
UNDERSTANDING OF
CUSTOMERS’ EXPECTATIONS?

YES

ARE THERE SPECIFIC NO

TAKE CORRECTIVE ACTION
STANDARDS IN PLACE TO MEET
CUSTOMERS’ EXPECTATIONS?

YES

DO YOUR OFFERINGS MEET OR NO

TAKE CORRECTIVE ACTION
EXCEED THE STANDARDS?

YES

NO
IS THE INFORMATION TAKE CORRECTIVE ACTION
COMMUNICATED TO CUSTOMERS
ABOUT YOUR OFFERINGS ACCURATE?
YES
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 Determinants of Perceived Service
Quality
Dimensions of Service Quality
Word of Personal Past
1. Access Mouth Needs Experience
2. Communication
3. Competence
4. Courtesy
External
5. Credibility Expected Communication
6. Reliability Service to Customers

7. Responsiveness
8. Security Service Perceived
9. Tangibles Quality Service
Gap Quality
10. Understanding/Knowing the
Customer
Perceived
Service

27
 Nature of Service Expectations

Level Customers
Desired Service Believe Can and Should Be
Delivered

Zone
of
Tolerance
Minimum Level
Adequate Service Customers Are Willing
to Accept

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 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
 In services, the last experience
remains uppermost in your mind.
Therefore, it is not enough to be
good, you have to be consistently
good
 Importance – Performance Analysis
I
M
P Concentrate Keep up the
O
R here good work
T
A
C
E
Low priority Possible overkill

PERFORMANCE
 When customers visit a service
establishment
Their satisfaction will be influenced by
• Encounters with service personnel
• Appearance and features of service facilities –
exterior and interior
• Interactions with self service equipment
• Characteristics and behaviour of other
customers
 Customer Service Expectations
• Desired Service – the ‘wished for’ service
• Adequate Service – the service that would be
acceptable
 Zone of Tolerance

Difference between the desired

service and the adequate service
 Service Encounter Themes
• Recovery
• Adaptability
• Spontaneity
• Coping
 Recovery
Don’t
Do
•• Ignore customer
Acknowledge problem
•• Blame
Explaincustomer
causes
•• Leave customer to fend for himself
Apologise
• Downgrade
• Compensate/upgrade
• Act as if nothing is wrong
• Lay out options
• ‘pass the buck’
• Take responsibility
 Adaptability
Don’t
Do
•• Promise
Recogniseand
thefail to keep them
seriousness
•• Show unwillingness to try
Acknowledge
•• Embarrass
Anticipate the customer
• Laugh at the customer
• Accommodate
• Avoid responsibility
• Adjust
• Explain rules/policies
 Spontaneity
Don’t
Do
• Take time
Exhibit impatience
• Yell/laugh/swear
Be attentive
• Steal from needs
Anticipate customers
• Discriminate
Listen
• Ignore information
Provide
• Show empathy
 Types of complainers
• Passives
• Voicers
• Irates
• Activists
 Customer complaints
• It pays to resolve customer complaints
• On an average only 5 % dissatisfied customers
complain. Others simply go over to the competitor
• A satisfied consumer speaks to an average of 3
people on his her experience
• A dissatisfied consumer gripes to on an average 11
persons about his/her unpleasant experience
Companies that pay importance to resolving
customer complaints
• Pay attention to quality and training of manpower
recruited
• Have clear benchmarks on service quality and
communicate to employees
• Take remedial steps to improve customer satisfaction
and prevent repeats of customer dissatisfaction
• Have a data base on customer complaints that is
periodically analysed and policies adjusted
 Satisfied employees will produce satisfied
customers
• Morale
• Motivation
• Mood