Services Marketing

1. SERVICES
MARKETING
CHAPTER 1
INTRODUCTION

2. HIGHLIGHTS
1. Definition of services Marketing
2. Characteristics of services
3. 8Ps of Services Marketing
4. Servuction Model (Service Experience)

3. OUTCOME
• Be able to illustrate, in detail, the principle variables
that differentiate marketing services with that of
product marketing
• Realise that the consumer’s contact of service
marketing is very much different from that of product
marketing
• Understand the unique challenges of doing marketing
for services

4. CONSIDER THIS….
• Services account for more than 60 percent of world’s
GDP
• Almost all economies have a substantial service sector
• Most new employment is provided by services
• Strongest growth area for marketing

5. DEFINITION OF SERVICES
MARKETING
• Are economic activities offered by one party to another in order
to exchange value
In exchange for their money, time, and effort, service customers expect to
obtain value from:
o Access to goods, labor, facilities, environments, professional
skills, networks, and systems
o But they do not normally take ownership of any of the physical
elements involved

6. DIFFERENCES BETWEEN SERVICES
MARKETING & PRODUCT MARKETING
• Marketing management tasks in the service sector
differ from those in the manufacturing sector
• The eight common differences are:
1. Most service products cannot be inventoried
2. Intangible elements usually dominate value creation
3. Services are often difficult to visualize and understand
4. Customers may be involved in co-production
5. People may be part of the service experience
6. Operational inputs and outputs tend to vary more widely
7. The time factor often assumes great importance
8. Distribution may take place through nonphysical channels
• What are the implications?

7. DIFFERENCES, IMPLICATIONS &
MARKETING TASKS

8. DIFFERENCES, IMPLICATIONS &
MARKETING TASKS

9. WHAT WE’VE LEARNT SO
FAR….
• Services are an integral part of business & marketing
• Requires a different approach than product-based
marketing
• Have unique implications on marketing management

10. END OF PART ONE

11. CHARACTERISTICS OF
SERVICES
• Four characteristics:
1. Intangibility
2. Perishability
3. Inseparability
4. Variability/Heterogeneity
• Requires unique strategies to overcome these
shortcomings

12. CHARACTERISTICS OF
SERVICES
 Intangibility
o Lack of tangible assets which can be seen, touched, smelled,
heard or tasted prior to purchase
o However, there are tangible items used to perform the service
o Ex: college education-there are physical structure such as
classrooms

13. STRATEGIES
i) Stressing tangible cues
ii) Using personal sources of information
iii) Stimulating word of mouth communication
iv) Creating a strong corporate image
v) Encouraging employees to communicate with customers

14. CHARACTERISTICS OF
SERVICES
 Perishability
o The service cannot be inventoried or stored
o Ex: to maximize revenue, airlines wants to fill every seat in an
airplane. The same is true for sporting events and concerts

15. STRATEGIES
i) Simultaneous adjustments in demand, supply and capacity
(demand equal supply will equal capacity)
 Ex: cinema/movie-adjusting demand is to move some of the
demand from the high peak showings to nonpeak
 Or reducing the price in the nonpeak showings
 Or multiple showings of the popular movies during high peak
 Or to increase capacity, show popular movie in more mini
theaters at the same time

16. CHARACTERISTICS OF
SERVICES
 Inseparability
o The simultaneous production and consumption of services
o Goods can be produced and then sold at a later time,
services cannot
 Ex: getting medical services involves a doctor or a dentist performing
an examination or procedure while the customer is present
o Quality of the service is highly dependent on:
 The ability of the service provider
 The quality of interaction between the service provider and the
customer

17. STRATEGIES
i) Look for ways to automate their service through use of
machines and computers
 Ex: Cash deposit, Maybank2U
ii) Emphasize selection and training of its employees and
service provider
iii) Should have a process to manage their customers
iv) Open multiple sites

18. CHARACTERISTICS OF
SERVICES
 Variability/Heterogeneity
o Refers to unwanted or random levels of service quality
customers receive when they patronize a service
o The outcome will differ if the firm uses different employees
each time a business is serviced
o Because of the variability characteristics of services,
standardization and quality control are more difficult

19. STRATEGIES
i) Industrialize their operations
ii) Mass producing product in advance, more customers can
be served during peak demand
iii) Employees are also trained to follow a specific procedure

20. END OF PART TWO

21. SERVICES REQUIRES AN
EXPANDED MARKETING MIX
• Marketing can be viewed as:
• A strategic and competitive thrust pursued by top management
• A set of functional activities performed by line managers
• A customer-driven orientation for the entire organization
• Marketing is the only function to bring operating revenues into a
business; all other functions are cost centers
• The “8Ps” of services marketing are needed to create viable
strategies for meeting customer needs profitably in a competitive
marketplace

22. THE 8Ps OF SERVICES
MARKETING
1. Product
2. Place
3. Price
4. Promotion and Education
5. Process
6. Physical Environment
7. People
8. Productivity and Quality

23. PRODUCT
• Embrace all aspects of service performance that create value
• Core product responds to customer’s primary need
• Array of supplementary service elements
 Help customer use core product effectively
 Add value through useful enhancements
• Planning marketing mix begins with creating a service
concept that:
 Will offer value to target customers
 Satisfy their needs better than competing alternatives

24. PLACE
• Delivery decisions: Where, When, How
• Geographic locations served
• Service schedules
• Physical channels
• Electronic channels
• Customer control and convenience
• Channel partners/intermediaries

25. PRICE
• Marketers must recognize that customer outlays
involve more than price paid to seller
• Identify and minimize other costs incurred by users:
Additional monetary costs associated with service usage
(Ex: travel to service location, parking, phone, babysitting,
etc.)
Time expenditures, especially waiting
Negative sensory experiences

26. PROMOTION & EDUCATION
• Informing, educating, persuading, reminding customers
• Marketing communication tools
• Imagery and recognition
• Content

27. PROCESS
• How firm does things may be as important as what it
does
• Customers often actively involved in processes, especially
when acting as co-producers of service
• Process involves choices of method and sequence in service
creation and delivery
• Badly designed processes waste time, create poor
experiences, and disappoint customers

28. PHYSICAL ENVIRONMENT
• Design servicescape and provide tangible evidence of
service performances
• Create and maintain physical appearances
• Manage physical cues carefully— can have profound impact
on customer impressions

29. PEOPLE
• Interactions between customers and contact personnel
strongly influence customer perceptions of service
quality
• The right customer-contact
• The right customers for firm’s mission
• Contribute positively to experience of other customers
• Possess—or can be trained to have— needed skills (co-
production)
• Can shape customer roles and manage customer behavior

30. PRODUCTIVITY & QUALITY
• Productivity and quality must work hand in hand
• Improving productivity key to reducing costs
• Improving and maintaining quality essential for building
customer satisfaction and loyalty
• Technology often the key
Technology-based innovations have potential to create
high payoffs

31. END OF PART THREE

32. TUTORIAL QUESTIONS
1. Give an example of a service that offers labor and expertise
rental
2. Give an example of a service that offers access to physical
environments as a form of rental
3. Describe the eight Ps of service that would be involved in a
banking service.
• Product:
• Place:
• Price:
• Promotion:
• Process:
• Physical Environment:
• People:
• Productivity & Quality:

33. MEETING THE CHALLENGES OF
SERVICES MARKETING
1. Framing the service experience (Servuction
Model)
2. Role of Marketing in services
3. The Services Revolution: Changing the
perspective of Marketing

34. THE SERVUCTION MODEL
• Model used to illustrate factors that influence service
experience, including those that are visible and
invisible to consumer
• Invisible component consists of invisible organizations
and systems

35. THE SERVUCTION MODEL
• Visible part consists of 3 parts: inanimate environment,
contact personnel/service providers, and other
consumers
Inanimate environment: All nonliving features present
during service encounter
Contact personnel: :Employees other than primary
providers that interact with consumer

36. THE SERVUCTION MODEL
• Service Provider: Primary provider of core service, such
as dentist, physician or instructor
• Other Customers
Customer A : Recipient of bundle of benefits created
through service experience
Customer B : Other customers who are part of Customers
A’s experience

37. THE SERVUCTION MODEL

38. CUSTOMER INVOLVEMENT IN
THE SERVICE EXPERIENCE
• Servuction model demonstrates consumers are an
integral part of service process
• Participation may be active or passive, but always there
• Managers must understand interactive nature of
services and customer involvement in production
process

39. ROLE OF MARKETING IN
SERVICES
• The core element in the exchange between firms and
customers is service provision
• Consumers acquire products to obtain the services
that they provide
• Information technology drives services
• Marketing helps firm to leverage technological
advancement and customer engagement

40. THE SERVICES
REVOLUTION
• Having a “service logic” approach to Marketing
• Customer is the value creator
• In a service-centric world, marketing is reinvented as a
customer centric, multi-functional and relational
customer management process

41. CONCLUSION
• Services marketing has fundamental differences with
goods marketing
• Need to expand the marketing mix (from 4Ps to 8Ps)
• Services marketing is influenced by the inherent
characteristics of services
• A service-centric world had created a paradigm change
in Marketing

42. THANK YOU