INTRODUCTION TO

SERVICES MARKETING
WHAT ARE SERVICES??
 Industrial and economic activities can be categorized as
under:
 Primary: Agriculture, fishing and forestry
 Secondary: Manufacturing and construction
 Tertiary: Services and distribution

 Gronroos describes services as “Objects of transaction

offered by firms and institutions that generally offer
services or that considers themselves as service
organs.”

 According to Kotler, a service is any activity or benefit

that one party can offer to another that is essentially
intangible and does not result in the ownership of
anything.

 In most simple terms, services are deeds, processes

and performances.
DISTINCT CHARACTERISTICS OF
SERVICES
The following can be regarded as distinctive features of services:

 Intangibility. Like when you visit a mall the kind of comfort

you get in the form of music that is being played, the AC
which makes you feel cool is the intangible factor.

 Inseparability. It is inseparable from the service provider.

 Heterogeneity. Two services cannot be the same it depends

on the situation.

 Perishability. You cannot store the service.

 Ownership. You cannot own the service you can use it and
feel it.
Intangible
 Services cannot be inventoried
 Cannot be patented
 Cannot be readily displayed or
communicated
 Pricing is difficult
Inseparability: Simultaneous production
and consumption

 Customer participate in and affect

the transaction
 Customers affect each other
 Employees affect the service
outcome
 Decentralization is essential
Heterogeneous
 Services delivery and customer
satisfaction depend on employee
actions
 Services quality depends on many
uncontrollable factors
 There are no sure knowledge that
the service delivered matches what
was planned and promoted.
Perishable
 It is difficult to synchronize supply
and demand with services
 Services cannot be stored, saved,
returned or resold.
 Therefore required strong recovery
strategies
CHALLENGES AND QUESTIONS
FOR SERVICE MARKETERS
 Because of the basic differences between
goods and services, marketers of services
face some very real and distinctive
challenges.

 Challenges revolve around

 Understanding customer needs and
expectations for service
 Tangibilizing the service offering,
 Dealing with a myriad of people and Delivery
issues
 Keeping promises made to customers
CHALLENGES AND QUESTIONS
FOR SERVICE MARKETERS
 How can service quality be defined and
improved when the product is intangible and
nonstandardized?

 How can new services be designed and

tested effectively when the service is
essentially an intangible process?

 How can the firm be certain it is

communicating a consistent and relevant
image when so many elements of the
marketing mix communicate to customers
and some of these elements are the service
providers themselves?
CHALLENGES AND QUESTIONS
FOR SERVICE MARKETERS
 How does the firm accommodate fluctuating
demand when capacity is fixed and the
service itself is perishable?

 How can the firm best motivate and select

service employees who, because the service
is delivered in real time, become a critical
part of the product itself?

 How should prices be set when it is difficult

to determine actual cost of production and
price may be related to the perceptions of
quality?
CHALLENGES AND QUESTIONS
FOR SERVICE MARKETERS
 How should the firm be organized so that good
strategic and tactical decisions are made when a
decision in any of the functional areas of
marketing, operations, and human resources may
have significant impact on the other two areas?

 How can the balance between standardization and

personalisation be determined to maximise both
the efficiency of the organisation and the
satisfaction of its customers?

 How can organisation ensure the delivery of

consistent quality service when both organisation’s
employees and the customers themselves can
affect the service outcome?
ADDRESSING THE CHALLENGES

 The basic frameworks/ models for

addressing these questions, we will
discuss
 Services Marketing Triangle
 Services Marketing Mix

 Gaps model of service quality

THE SERVICES MARKETING TRIANGLE

COMPANY

EXTERNAL
INTERNAL MARKETING
MARKETING
“SETTING THE
“ENABLING THE PROMISE”
PROMISE” TECHNOLOGY

PROVIDER CUSTOMER
S S
INTERACTIVE MARKETING
“DELIVERING THE PROMISE”
THE SERVICES MARKETING
TRIANGLE

 There are three types of marketing:

 External marketing
 Internal marketing
 Interactive marketing
 All these revolve around making and
keeping promises to customers.
 For services, all three types of marketing
activities are essential for building and
maintaining relationships with customers.
External Marketing
 A company makes promises to its
customers regarding what they can
expect and how it will be delivered.
 Traditional marketing activities:
advertising, sales, special promotions etc.
 For services, some other factors like the
service employees, the design and décor
of the facility, the service process etc.
also helps to set customer expectations.
 Tendency to overpromise also leads to
shaky beginning of the customer
relationship
Interactive Marketing: Keeping
Promises
 Promises made must be kept
 The most critical from customer point of
view
 Also delivered through technology
 Interactive marketing occurs in the
moment of truth when the customer
interacts with the organisation and the
service is produced and consumed.
 Reliability of services is tested every time
the customer interacts with the
organisation.
Internal Marketing: Enabling Promises

 In order to deliver the promises

made, the providers or service
systems must have the skills,
abilities, tools, and motivation to
deliver.
 It also indicates that employee
satisfaction and customer
satisfaction are closely interlinked.
THE SERVICES MARKETING
TRIANGLE

 All three sides are essential to

complete the whole and are critical
for the success.

 Without one of the sides in place,

the triangle, or the total marketing
efforts, cannot be optimally
supported.
THE SERVICES MARKETING MIX

 Another way to begin addressing the

challenges of services marketing is to think
creatively about marketing mix – extended
marketing mix for services.

 One of the most basic concepts in

marketing is marketing mix.

 Marketing Mix: The elements an

organization controls that can be used to
satisfy or communicate with customers.
THE SERVICES MARKETING MIX
 Traditional Marketing Mix : 4Ps
 Product
 Place
 Promotion
 Price

 The service marketing mix includes

three more Ps
 People
 Physical Evidence
 Process
People
 All human actors who play a part in
service delivery and thus influence
the buyer’s perceptions;

 The firm’s personnel, the customer

and other customers in the service
environment
Physical Evidence
 The environment in which the
service is delivered and where the
firm and customer interact and
 any tangible components that
facilitate performance or
communication of the service
Process
 The actual procedures,
mechanisms, and flow of activities
by which the service is delivered –
the delivery and operating systems.