Services Marketing

By- Valarie A. Zeithaml

Mary Jo Bitner
4
th
edition
Services Marketing
Course Instructor
Sarif Mohammad Khan
Assistant Professor
Business Administration discipline
Khulna University
Outline
Definition of service
Example of service industries
Categories of service mix
Tangibility spectrum
Service differentiation tools
Why services marketing?
Paradoxes of technological products
Characteristics of services and its implications
Service marketing mix
Definition of service
A service is any act or performance - one
party can offer to another that is
essentially intangible and does not result
in the ownership of anything.

Its production may or may not tied to a
physical product.
Health Care
hospital, medical practice, dentistry, eye care
Professional Services
accounting, legal, architectural
Financial Services
banking, investment advising, insurance
Hospitality
restaurant, hotel/motel, bed & breakfast,
Travel
airlines, travel agencies, theme park
Others:
hair styling, counseling services, health club

Example of service industries
Categories of service mix
Pure tangible goods Soap, salt, Pen etc.
Tangible goods with accompanying service
Computer, car
Hybrid Equal parts of goods and services-
People patronize restaurant.
Major services with accompanying minor goods
and services Airlines passenger buy
transportation service.
Pure service Baby-setting, psychotherapy etc.
Marketing Management by Philip Kotler - 11
th
edition Chapter-15
Tangibility spectrum
Tangible
Dominant
Intangible
Dominant
Salt
Soft Drinks
Detergents
Automobiles
Cosmetics
Advertising
Agencies
Airlines
Investment
Management
Consulting
Teaching
Fast-food
Outlets
Fast-food
Outlets












Service differentiation tools
Ordering ease
Delivery (Speed, accuracy & care attending delivery
process)
Installation (The work done to make a product
operational)
Customer training
Customer consulting (Data, information, advice )
Maintenance and repair
Miscellaneous services
Marketing Management by Philip Kotler - 11
th
edition Chapter-11
Why services marketing?
A service-based economy
Service as a business imperative in
manufacturing and IT
Deregulated industry and professional
service needs
Service marketing is different
0
10
20
30
40
50
60
70
80
1929 1948 1969 1977 1984 1996
P
e
r
c
e
n
t

o
f

G
D
P

Year
Services
Manufacturing
Mining & Agriculture
Source: Survey of Current Business, April 1998, Table B.8, July 1988, Table 6.6B, and July 1992, Table 6.4C; Eli
Ginzberg and George J. Vojta, The Service Sector of the U.S. Economy, Scientific American, 244,3 (1981): 31-39.
% of US labor force by industry
% of US GDP by industry
0
10
20
30
40
50
60
70
1948 1959 1967 1977 1987 1996
P
e
r
c
e
n
t

o
f

G
D
P

Year
Services
Manufacturing
Mining & Agriculture
Source: Survey of Current Business, August 1996, Table 11, April 1998, Table B.3; Eli Ginzberg and
George J. Vojta, The Service Sector of the U.S. Economy, Scientific American, 244,3 (1981): 31-39.
Service and technology
Potential for new service offerings
New ways to deliver service
Enabling both customers and employees
Extending the global reach of service
The internet is a service
Eight central paradoxes of
technological products.
Control/chaos
Freedom/enslavement
New/obsolete
Competence/incompetence
Efficiency/inefficiency
Fulfills/creates needs
Assimilation/isolation
Engaging/disengaging
The dark side of technology and
service
Privacy and confidentiality
As substitute for human labor and
perhaps eliminate their jobs
There is a loss of human contact
Differences in goods vs. services
marketing
Goods Services
Tangible Intangible
Standardized Heterogeneous
Production
separate from
consumption
Simultaneous
production and
consumption
Nonperishable Perishable
Characteristics of services (1)
Intangibility: services can not be seen,
felt, tasted or touched in the same
manner that we can sense tangible goods.
Example: Health care services

Heterogeneous:
Result of human interaction
May very day to day or even hour to
hour
Example: Banker

Characteristics of services (2)
Simultaneous production and
consumption:

Perishable: Can not be saved, stored,
resold or returned;
Example: An hour of a lawer




Implication of Intangibility
Services cannot be patented
Services cannot be readily displayed or
communicated
Pricing is difficult (actual cost of a unite
of services are hard to determine)
Implication of Heterogeneity
Service delivery and customer
satisfaction depend on employee actions
Service quality depends on many
uncontrollable factors
There is no sure knowledge that the
service delivered matches what was
planned and promoted

Implication of simultaneous
production and consumption
Customers participate in and affect the
transaction
Customers affect each other
Employees affect the service outcome
Decentralization may be essential
Mass production is difficult

Implication of Perishability
Services cannot be inventoried
It is difficult to synchronize supply and
demand with services
Services cannot be returned or resold

Service marketing mix
Traditional marketing mix
Expanded mix for services
Traditional marketing mix (1)
Product
Place
Promotion
Price
Traditional marketing mix (2)
PRODUCT PLACE PROMOTION PRICE

Physical good
features


Channel type

Promotion blend

Flexibility
Quality level Exposure Salespeople Price level
Accessories Intermediaries Advertising Terms
Packaging Outlet location Sales promotion Differentiation
Warranties Transportation Publicity Allowances
Product lines Storage
Branding


Expanded mix for services (1)
People
Physical evidence
Process
Expanded mix for services (2)
PEOPLE PHYSICAL
EVIDENCE
PROCESS

Employees


Facility design

Flow of activities
Customers Equipment

Number of steps
Communicating
culture and values
Signage Level of customer
involvement
Employee research Employee dress
Other tangibles

People
All human actors who play a part in service delivery and thus
influence the buyers perceptions: namely the firms
personnel, the customer, and other customers in the service
environment.
Factors to Consider Regarding People:
Employees
Recruiting
Training
Motivation
Rewards
Teamwork
Customers
- Education
- Training
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.

Factors to Consider Regarding Physical Evidence :

Facility Design.
Equipment
Signage
Employee dress.
Other tangibles
Reports.
Business cards.
Statements.
Guarantees.



Process
The actual procedures, mechanisms and flow of activities by
which the service is delivered- the service delivery and
operating systems.

Factors to Consider Regarding Process:

Flow of activities:
Standardized
Customized
Number of steps:
Simple
Complex
Customer Involvement
Assign Reading
Southwest Airlines : Aligning People,
Processes and Physical Evidence

Chapter 01: Page 28
Zeitham & Bitner (4
th
edition)




Holistic Marketing in Service Firms
Holistic marketing concept: is based on
development, design and implementation of
marketing programs, processes and activities
that recognizes their breadth and
interdependencies. It holds that everything
matters in marketing and a broad an
integrated perspective is often necessary
Internal marketing
Senior management
Marketing Department
Other department


Integrated marketing
Product & services
Communications
Channels


Relationship marketing
Customers
Channels
Partners


Social responsibility
marketing
Ethics
Environment
Legal
Community
Holistic Marketing in Service Firms