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What is a service?

Service is any act or performance that one party can offer to another that is essentially intangible and does not result in any ownership of anything. Its production may or may not be tied to physical products..Philip Kotler Services marketing is marketing based on relationship and value. It may be used to market a service or a product There is 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 LevittIt is intangible. It does not result in ownership. It may or may not be attached with a physical product

Difference between goods and services: Physical goods tangible homogeneous Production and distribution are separated from consumption A thing Core value processed in factory Customers do not participate in the production process Can be kept in stock Transfer of ownership Services intangible heterogeneous Production, distribution and consumption are simultaneous processes An activity or process Core value produced in the buyer-seller interaction Customers participate in production Cannot be kept in stock No transfer of ownership

Service Marketing Triangle

Characteristics of Service Sector Intangibility Perish ability 1

Inseparability Heterogeneity Ownership Quality measurement Nature of demand

Reasons behind the growth of the Service Industry Increasing affluence More leisure time Higher percentage of working women Complex products Complexity of life

Moment of Truth (MOT) Service encounter is known as MOT any episode in which the customer comes in contact with the organization and gets an impression of the quality of its services E.g. A rude employees behavior makes the customer conclude that he is dealing with a rude company.

Marketing Challenges of Services Intangibility Services cannot be stored Trust building Brand management Competition Physical evidence Marketing and sales lose momentum Classification of Services

Degree of Involvement of the customer 2

People Processing Possession Processing Mental Stimulus Processing Information Processing

Classification based on Service Intangibility Highly Tangible Service linked to tangible goods Tangible goods linked to services Highly intangible

Classification based on skills and expertise required Professional service Non Professional service

Classification based on Business Orientation of Service Provider Non Profit organization Commercial organization

Classification based on type of End User Consumer Service Business to Business Services Industrial Services

1. Business Environment
Internal environment External environment Micro Environment Macro Environment Service Marketing Environment

Internal Environment Goals and objective of the organization Corporate Image Research and development facilities Efficient Manpower Business Polices Strong Financial base Cordial relations Value based management

Micro Environment Corporate Resources Customers Suppliers Competitors Marketing intermediaries Society

Macro Environment
Economic environment Industrial policy Trade policy Foreign exchange policy 4

Fiscal policy Monetary policy Foreign investment and technology policy

Political environment Legal/ regulatory environment Technological environment Socio-cultural environment

PEST Analysis

Porters Five Force Model

Factors responsible for the transformation of Service Marketing Environment Government Policies Social Changes Business trends Advances in IT Internationalization and Globalization

Government Policies Changes in regulation Privatization and economic liberalization Protection rules for customers, employees and the environment New agreement on trade in services

Social Changes Rising customer expectations More affluence Rise in use of mobile phones and computers Increased immigration

Business trends Manufacturers add value to service and sell service Relaxation of professional association standards 6

Emphasis on productivity and cost saving Quality movement Growth of franchising Innovative hiring practices

Advances in IT Convergence of computers and telecommunication Digitization of text, graphics audio and video Powerful software Greater bandwidth Wireless networking

1. Consumer Buying Behavior

Learning Objectives 1. Understand the major factors influencing consumer behavior 2. Know and recognize the types of buying decision behavior 3. Understand the stages in the buying decision process Consumer Market- Consists of all the individuals and households who buy or acquire goods and services for personal consumption. Consumer Behavior- Consumer Behavior is defined as the actions or beliefs that guide a person to purchase and consume a product or a service. Buying Roles 4. Decision making roles 5. Initiator 6. Influencer 7. Gatekeeper 8. Decider 9. Buyer 10.User 7

Types of buyer behaviour 11.Complex buyer behaviour e.g. Intel Pentium Processor 12.Dissonance-reducing behaviour (brand reduces after-sales discomfort) 13.Habitual buying behaviour e.g. salt - little difference Stages in family life Demographic cycle Profiles 14.variety seeking behaviour - significant brand differences e.g soap powder Factors Influencing Consumer Behavior 1. Personal 2. Psychological 3. Social 4. Cultural Personal Factors 5. Age 6. Life-Cycle Stage 7. Occupation 8. Economic Circumstances 9. Life Style Psychological Factors Wants 1. Solitary Survivor 1. Occupation 1. Full Nest III 1. Empty Nest I 1. Empty Nest II 1. Religion 1. Family Size 1. Education 1. Full Nest I 1. Full Nest II 1. Gender 1. Race 1. Newly Married Couples 1. Age 1. Single 1. Income

Based on a want or desire to have something. 1. Solitary Not a necessity. Survivor, Retired Motivation: Maslow need hierarchy

Perception The process by which an individual selects, organizes, and interprets inputs to create a meaningful picture of the world. Selective Exposure 8

Selective Distortion Selective Retention

Learning Changes in an individuals behavior arising form experience

Beliefs Descriptive thoughts that a person holds about something

Attitudes Enduring favorable or unfavorable cognitive evaluations emotional feelings and action tendencies

Functional Factors Needs - Need over wants. Delivers to a real need to have something. Social Class - Relatively homogenous, enduring divisions in a society, hierarchically ordered with members sharing similar values, interests, and behaviors. American Social Classes Buying Behavior Upper Upper Lower Upper Upper Middle Middle Working Upper Lower Lower Lower 1% 2% 12% 32% 38% 9% 7% Family Influence on Husband-Dominant Wife-Dominant Equal

Culture & Subcultures

Consumer Buying Decision Process

Cultures - The accumulation of values, knowledge, beliefs, customs, objects, and concepts that a society uses to cope with its environment Subcultures - Groups of individuals who have similar value and behavior patterns within the group but differ from those in other groups. 9

Decision Process 1. Problem Recognition 2. Information Search 3. Evaluation of Alternatives 4. Purchase Decision 5. Post-Purchase Behavior Buyer Decision Process 1. Need Recognition - The first stage of the buyer decision in which the consumer recognizes a problem or need. 2. Information Search - The stage of the buyer decision process in which the consumer aroused to search for more information; the consumer may simply have heightened attention or may go into active information search. The consumer can obtain information from any of several sources: Personal Sources Family Friends Neighbours Commercial Sources Advertising Sales people Dealers Public Sources Mass media Consumer rating org. Experimental Sources Handling Examining Using the product

3. Evaluation of Alternatives - The stage of the buyer decision process in which the consumer uses information to evaluate alternative brands in the choice set. 4. Purchase Decision - The stage of the buyer decision process in which the consumer actually buys the product. 5. Post- purchase Behaviour - The stage of the buyer decision process in which the consumer take further action after the purchase, based on their satisfaction or dissatisfaction. Understanding Customer Requirement

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Customer Satisfaction is dependent on the extent to which the service provider is able to meet Customer Expectation. Also depends on perception of the service providers performance. Customer Expectation - Customer expectations are based on customers experience with the product or service. Assurance Empathy Reliability Responsiveness Service tangibles

Types of Service Expectations Desired Service Adequate Service

Factors that Influence Expectation of Service Desired Service Customer Needs Derived service expectation Customers Philosophy

Adequate Service Transitory service intensifiers Perceived service intensifiers

Factors that Influence Expectation of Service A Customers Self Perceived Service Role Situational Factors Predicted Service Expectations

Factors Influencing both Desired And Perceived Service Expectations Explicit Service Promises Implicit Service Promises

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Word Of Mouth Publicity Past Experience

Managing Customers Expectations Managing Promises Reliability-Getting it Right the First Time Effective Communication

Customer Perception - Perception is the process of making a meaningful picture by selectively organizing a set of stimuli. Perceptions change over time, differ from person to person, differ from culture to culture.

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Factors that influence Customer Perception Service encounter Remote encounters Phone encounter Face to face encounter Factors leading to satisfaction or dissatisfaction in service encounters (Service Encounter Themes) Recovery Spontaneity Adaptability Coping

Recovery Dont
Ignore customer Blame customer Leave customer to fend for himself Downgrade Act as if nothing is wrong pass the buck

Do
Acknowledge problem Explain causes Apologize Compensate/upgrade Lay out options Take responsibility

Adaptability Dont
Promise and fail to keep them Show unwillingness to try Embarrass the customer

Do
Recognise the seriousness Acknowledge Anticipate

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Laugh at the customer Avoid responsibility

Accommodate Adjust Explain rules/policies

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Spontaneity Dont
Exhibit impatience Yell/laugh/swear Steal from customers Discriminate Ignore

Do
Take time Be attentive Anticipate needs Listen Provide information Show empathy

Coping Dont
Take customers dissatisfaction personally Let customers dissatisfaction affect others Listen Try to accommodate Explain Let go of the customer

Do

Factors that influence Customer Perception Service Evidence Service Personnel Process of Service Delivery Physical Environment Image Price Strategies to influence customers perception Enhance customer satisfaction through service encounters 15

Reflect evidence of service Communicate and create a realistic image

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