Basic Concepts of 'Services marketing'

SERVICES MARKETING
Total concepts covered:16 no’s
(respective author names also mentioned topic wise)
By
A.RAJA

1. Positioning Strategies For Services
2. The Services Marketing Triangle
3. Relationship Marketing
4. Expanded Marketing Mix
5. Characteristics Of Services & Reasons For Growth Of Services In India
6. Basis For Market Segmentation
7. Customer Portfolio
8. Branding Of Service Product
9. Traditional Marketing Mix
10. New Service Development Process
11. Value Addition To The Service Product
12. New Service Development
13. Marketing Services Vs Physical Services
14. Approaches To Positioning Of Services In Competitive Market
15. The Concept Of Service Product
16. Factors Affecting Service Encounter
CONCEPTS IN SERVICES MARKETING

POSITIONING
Definition:
According to Philip Kotler, “Positioning is the act of
designing the company’s offering and image to occupy a
distinct place in the target’s mind.”
Positioning means Projecting the image of a product or
a service in such a way that consumers perceive its value
distinctively from that of competitive offers.
Positioning strategies for Services

Positioning Strategies for Services
1. Attribute Positioning
2. Service Application Positioning
News paper no.1 in circulation

3. Service User Positioning
4. Competitive Positioning
 Kiddy bank deposit scheme to
children.
 Educational loans to students.

6. Price positioning
5. Quality Positioning

NAME : DR.CHRISTIAN
GRONROSS
NATIONALITY : FINNISH
OCCUPATION :
PROFFESSOR IN SERVICE
AND RELATIONSHIP
MARKETING
SERVICE TRIANGLE.
SOURCE :
SERVICES
MARKETING - S.M
JHA , HIMALAYA
PUBLICATIONS

INTRODUCTION
One of the most popular models for services marketing.
CHRISTIAN GRONROSS has the credibility of developing the service triangle.
He identifies 3 important groups playing a significant role in the accomplishment of
organizational goals.
The model suggests development of special marketing programme for company and
its employees and customers.

INTERNAL MARKETING
If we have a team of qualified people, our task of accomplishing goals is considerably
simplified even if we find design, system and supportive services are not up to the
mark.
The working people should be given top preference for service generating
organization to serve.
The top management should make sure that the strategic decisions are very much
proactive to the working people.

EXTERNAL MARKETING
The success of customers rests on the customers.
External marketing focuses on developing their awareness of customers.
Increasing flow of information and sophisticated mode of transportation shape the
level of expectation provided we find the discretionary income moving upward.
Customers play a decisive role in construction of service portfolio mix.

INTERACTIVE MARKETING
It is also known as “service encounter”.
The service process not having an interactive base cannot be proactive.
There are number of forces found instrumental in process such as supporting
services, systems, techniques and tangibles.

Relationship Marketing :
“Relationship marketing is to identify and establish , maintain
enhance and when necessary terminate relationships with customers
so that objectives regarding economic and other variables of all the
parties are met”.
This is achieved through mutual exchange and fulfilment of
promises.
-Christian Gronroos
Ref: Christian Gronoroos : “Services Marketnig and Management” ,
Wiley India , New Delhi , 2010.

Identifying and establishing , maintaining nad enhancing
customer relationship implies respectively that the process of
marketing includes the following :
1. Market research : to identify potential and profitable
customers to contact
2. Establishing : first contact with customer – relationship starts
to emerge.
3. Maintaining : getting a share of customers wallet.
4. Enhancement : emotional connections - getting share of
customers heart and mind –expanding wallet share.
5. Terminating :either customer discontinues or firms – re-
established in future.

Benefits Of Relationship Marketing :
To the firm :
•Less distraction by competitors
•Increased revenue
•Customer retention
•Word of mouth publicity
To the customers :
•Saves time
•Enjoy highly personalized services
•Better information regarding services provided

The Dark Side Of Relationships :
1. Either party or both may become lazy and neglect developments
in the market place.
2. The customers choice are restricted in long term relationship.
3. Suppliers may be satisfied with having customers buying existing
solutions and as a consequence neglect to invest in developing
new and improved technologies and solutions.
4. The trust in one party in a relationship may be misused by the
other party ,especially when problems occur.

COCA-COLA AND RELATIONSHIP MARKETING:
Coca-Cola and American Patriotism :
Coca-Cola has been a patriotic symbol in
America ever since the company started
supporting American soldiers during World
War II by shipping cases of Coke to military
bases abroad. Coke was giving a helping
hand in times of adversity and quickly
became very dear to the soldiers who missed
their homes. To them, Coke was far more
than a consumer product.

Coca-Cola’s Friendly Twist Campaign
The brand launched a campaign in
Colombia whereby college freshmen
received bottles of Coke on their first day
on campus. Nothing too creative you say,
however, there is a twist . The caps of these
bottles could only be opened when clicked
together with another cap. This encouraged
students to collaborate in order to open their
bottles of Coke, and therefore facilitated
starting conversations between strangers on
a day when students usually are a bit lonely
and don’t know anyone yet.

Coca-Cola Hello Happiness Phone Booths:
Dubai employs thousands of South Asian
blue-collar workers who came to the UAE
in order to sustain their families back in
their home countries. Making an average
of $6 a day, these workers cannot afford to
make international calls to their families.
This is where Coca-Cola comes in as an
enabler to these people with the Hello
Happiness Phone Booths. In exchange for
a Coca-Cola bottle cap, these booths allow
the workers to make 3-minute international
calls to their home countries.

Marketing
Mix
Process
Physical
Evidence
People
Expanded
Marketing
Mix
Expanded Marketing Mix
Source: S .M. Jha

PEOPLE
Employees
 Recruiting
 Training
 Motivation
 Rewards
Customers
 Education
 Training

 People are a key factor in a hotel
business.
 The receptionists, the porters, the
housekeepers, the waiters and waitresses
and even the doorman play an incremental
role in promoting the business.
PEOPLE IN HOTEL MARKETING

PHYSICAL EVIDENCE
 Equipment
 Facility Design
 Signage
 Employee Dress
 Business Cards

PHYSICAL EVIDENCE IN HOTEL
MARKETING
 The hotel business considerably rests on
projection through tangibilisation of
outstanding properties.
 Aesthetic management plays a significant
role in the tangibilisation process.

PHYSICAL EVIDENCE IN HOTEL
MARKETING

PROCESS
Flow of activities
 Standardized
 Customized
Number of steps
 Simple
 Complex

PROCESS IN HOTEL MARKETING
The services processed for customers include
booking, cancellation, room service, food
supply…
we find a lot of people in the processes that take
place right from the entry of the customer to the
hotel to their exit from the hotel.

‘Service’ definition:
According to Philip Kotler and Bloom defined Service as “any
activity or benefit that 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 be tied to a physical
product.”
Pg no:6
CHARACTERISTICS OF SERVICES & REASONS FOR GROWTH OF SERVICES IN
INDIA
Reference : Services Marketing By K.Rama
Mohana Rao

1.Intangibility: Services are intangible i.e. they cannot be seen,
tasted, felt, heard or smelt before they are bought unlike physical
products.
Ex: A Woman who purchases services in a beauty parlour for a facial
cannot foresee the exact result.
2.Variability: Services are highly variable. No two customers can
have exactly similar service even though they experience it
simultaneously.
Ex: The experiences of bus travellers vary with the seats they occupy.
Characteristics of Services
Pg no:8

3.Perishability: Services perish. They cannot be stored.
Ex: A Train that leaves the railway station half full means that the
service of the empty half remains unused.
4.Inseperability: Services cannot be separated from the service
provider. In fact the production, delivery and consumption of a
service takes place simultaneously in the buyer-seller interactions.
However , some service organizations are able to reduce direct
interactions by introducing new technologies.
Ex: Banking organizations have introduced the cheque facility, the
credit card facility, tele-banking and ATM facility etc.
Cont…

5.No Ownership: Service consumers will have experiences but not
ownership. Since the services are intangible and perishable, the
question of ownership doesn’t arise.
Ex: Hospitality services, Hotel services …
6.Customer Participation: Service production is not a one-sided
activity. Customers are co-producers of service. The production
quality of the service greatly depends upon the ability, skill and
performance of the employee as well as the ability and performance
of the customer.
Ex: IT services
Cont…

A Few Reasons for growth of Services in India
 Export Potential
Development of Markets
IT Revolution
Economic Affluence
Increased Consciousness of Health Care
Pg no:22

BASIS FOR MARKET SEGMENTATION
Market Segmentation:
The process of dividing and sub dividing a large
homogenous market in to clearly identifiable segments
having similar needs, wants or demand characteristics.
Source: k Ram Mohan Rao

BASIS OF MARKET SEGMENTATION
 Geographic segmentation
 Demographic segmentation
 Psychographic segmentation
 Behavioral segmentation

GEOGRAPHIC SEGMENTATION
 It is simplest way of segmenting the market.
 Under this approach market will be divided in to various
geographical units such as states, regions, cities and towns to
get the benefits at low price.
 This segmentation helps in identification of cultural groups,
demand- supply gaps, religion and race.
 It provides opportunities for service stalls for product
development as well as product differentiation.
Ex: seasonal products

DEMOGRAPHIC SEGMENTATION
 It is the study of population. Under this a[approach
market is divided in to segments based on various
demographic variables such as age, family, size, income,
occupation, education and social class.
 The demographic variables are most popular basis for
differentiating customer groups and these variables are
easy to measure.
Ex: Banking & Cosmetics and perfumes

PSYCHOGRAPHIC SEGMENTATION
 under this approach consumers are divided in to groups
based on lifestyle, personality and value.
 People belonging to the same demographic may vary in
their activities, opinions, value and perceptions.
 To use this segmentation, service providers have to
develop a sound database on the psychographics of
market in order to make service offer more focused.
Ex: Frozen food manufacturers & Car manufacturers

BEHAVIORAL SEGMENTATION
 In this consumers are divided in to groups based on their
knowledge, attitudes and response to a service.
 The variables used under this segmentation are occasion,
benefits user status, usage rate and loyalty status.
Ex: restaurant

A customer portfolio is the collection of mutually
exclusive customer groups that comprise a business’s entire
customer base.
An appropriate customer portfolio

The success rate of marketing professionals while developing
personal relationship with the customers and potential customers
would, of course, be high when they have an in-depth knowledge
of the portfolio of an appropriate customer.
In the context of marketing when we make use of the term
portfolio, our focus should be on developing a mix in which
we find inclusion of profitable customers.

We cannot negate that different segments offer a different value
for a service generating organization.
An anatomy of different segments keeping in view the short and
long term effects is to be done by marketing professionals.
Personal relationship with customers is required to be established.

BRANDING OF SERVICE PRODUCT
Branding begins with giving an identity to the service beyond the
one it has within trade circles.
Consumers feel that they are getting more in a branded service
than otherwise. It creates a mental patent.
Brand is derived from Norse verb “brand re” which means “to
burn”.
Branding has now become one of the strategic weapons of
business.
Ref. service marketing by k.Ram mohana rao

BRANDING
A brand is a name, term, sign, symbol or design or a combination
of these, intended to identify the goods or services of one seller or a
group of sellers and to differentiate them from those of their
competitors.
-American Marketing Association

SERVICE
Service characteristics such as intangibility, variability and perish
ability make branding a strategic requirement to promote beliefs and
values in the target market.
Most service companies promote product brand names along with
corporate branding.

BENEFITS OF BRANDING
The following are the benefits of branding service:
Provides corporate identity and recognition.
Provides an opportunity to distinguish the competitive products.
Helps customers to develop value perceptions.
Helps in developing customer relationships.
Builds up long-term equity to the concern,
Market penetration becomes easy
New service offers get quick response.

BRANDING DECISIONS
Service firms need to decide whether to brand their service
packages or not, because requires consistent quality performance
and accessibility.
The cost of branding must be less than the premium that a
marketer can get out of it.
Keeping in view the competition from unbranded local service
outlets, the service firms should be able to provide greater value
perceptions to the customers in branded services.

Once it is decided to brand a service, there are at least four
important decisions a company has to make in branding.
They are:
Should the company’s own brand be promoted or a sponsor
be found for branding?
What should be quality of the brand?
Corporate brand or independent product brand or mix?
Should the existing brand name be extended or a new brand
built?

MEANING
One of the most basic concepts in marketing is the
marketing mix, defined as the elements an
organization controls that can be used to satisfy or
communicate with customers. The traditional
marketing mix is composed of the four p’s of
marketing such as product, place, promotion and
price.
Traditional Marketing Mix
Ref:Services Marketing Written By Valarie A Zeithaml And Ajay Pandit

TRADITIONAL MARKETING MIX
Traditional marketing mix is also called as the four p’s of
marketing mix.
Those are
 Product
 Place
 Promotion
 price

PRODUCT
 Physical good features
 Quality level
 Accessories
 Packaging
 Warranties
 Product lines

PLACE
 Exposure
 Intermediaries
 Outlet locations
 Transportation
 storage

PROMOTION
sales people
Selection
Training
Incentives
 Sales promotion
 publicity

PRICE
 Flexibility
 Price level
 Terms
 Discounts

Developing a new product shouldn’t feel like you’re
fighting in the dark. There’s an easier way. What you
need is a structured road-map that gives your
business a clear path to follow.
Actually developing the tangible product or service is
only a small part of the new product development
process, which includes the complete journey from
generating the initial idea to bringing the product to
market.
New service
New service development process
Reference Book
“Services marketing “by S M JHA
Himalaya publishing house

Generation of ideas
screening
Testing the concept
Business analysis
Development
Market testing
Product launch
New service development process

GENERATION OF IDEAS
 The development of a product will start with the
concept. The rest of the process will ensure that
ideas are tested for their viability, so in the
beginning all ideas are good ideas (To a certain
extent!)Ideas can, and will come, from many
different directions.
 The best place to start is with a SWOT analysis,
(Strengths, Weaknesses, Opportunities and
Threats), which incorporates current market trends.

SCREENING
This step is crucial to ensure that unsuitable ideas, for whatever
reason, are rejected as soon as possible. Ideas need to be
considered objectively, ideally by a group or committee.
Specific screening criteria need to be set for this stage, looking at
ROI, affordability and market potential. These questions need to be
considered carefully, to avoid product failure after considerable
investment down the line.

TESTING THE CONCEPT
 The ideas which continue the new service be
translated into a specific feature and attributes
which the product or service will display concept
testing is usually done through marketing research
involves presenting the idea or concept to the target
market and studying their actions to make
necessary modifications to the predict before

BUSINESS ANALYSIS
 At this stage, ideas which have been selected to
the developed further require in depth exploration
and evaluation to the important task is to produce a
formal analysis of market potential of the ideas in
terms of forecasting all aspects of developing and
launching services.

PRACTICAL DEVELOPMENT
 At this stage preparation are made for development
and launching the service. The service provides
undertake the work of designing and supply of
literature and supporting materials.
 A detail marketing program is developed to cover
all aspects of marketing mix

MARKET TESTING
 Marketing research is carried to test the concept , it
is necessary to test the market to reduce he risk.
This may be done artificially by using panel of
consumers who will use the series at their
residence or testing in the actual market but in a
small area may do it.

PRODUCT LAUNCH
 The precuts launch is the final stage and the
organization now can make decision on when to
introduce the ne service , whereto whom and the
service moves from being purely cost, to bringing
the revenue. At this stage major decisions are
taken regarding the timings of the launch the
geographical location of the launch and the specific
marketing.

Value Addition through Supplementary services:
C. Lovelock developed the flower of service which
indicates the core service surrounded by a cluster of facilitating
and support services. It represents basically two types of
supplementary services. They are
Facilitating Supplementary
services
• Information
• Order Taking
• Billing
• Payment
Value Enhancing
supplementary services
• Consultation
• Hospitality
• safekeeping
• Expectations
Value addition to the service product
REF: Ram Mohan Rao. k : “ Services Marketing”

1. Information:
Customers need information on various elements of a service for
evaluation and decision making.
Examples of information elements are
 Signboards to the service site
 Service performance hours
 Charges for services
 Alerting people
 Notices
 Conditions etc..
2. Order Taking:
The first step in transaction. Examples of order taking elements are
 Filling out applications for membership of associations
 Subscription to a service
 Reservation of seats, tables, rooms and rentals
 Online, postal or telephonic order

3. Billing:
 Billing is important from the company’s as well as the
customer’s point of view.
 Customers expect accuracy, completeness and legibility in
bills prepared by service providers.
4. Payment:
Activities of payment system are
cash handling
 cheque handling
credit system
coupon system

5. Consultation:
 Consultation is directed at identifying and understanding
customer’s requirements so as to design and develop a tailored
solution.
 It is offered generally to help customers use service, clarify
doubts and offer management/technical consultancy.
6. Hospitality:
Hospitality includes
 Greeting
 Enquiry and Reception
 Waiting facilities
 Bathrooms
 Food and Beverages etc..

7. Safekeeping:
Service organizations have to make arrangements for the
safekeeping of customer property.
Safekeeping includes
 Child care services
 Pet-care services
 Parking facilities
 Storage and baggage handling services etc..
8. Expectations:
 Service providers may be required to provide supplementary
services that are not routine to the customers on special
considerations.
 Expectations may be allowed on special requests by the customers
for the advanced delivery of service under special circumstances.

New service development
meaning
New service development concerns all the activities involved
in realizing new service opportunities including product or
service design, business model design and marketing.
AUTHOR:
CHRISTOPHER
LEVELOCK|JOCHEN
WIRTZ|JAYANTA
CHATTERJEE.
PAGE NO:89-91

Some of the service categories of new services
1) Major service innovation
2) Product line extensions
3) Style changes
4) Process line extensions
5) Service improvements

Major service innovation
Major service innovations are new core products for markets
that have not been previously defined. They usually include
both new service characteristics and radical new process.
Example include fed ex’s introduction of overnight
nationwide, express package delivery in 1971.

Product line extensions
Product line extensions are additions to current product lines by
exiting firms. The first company in a market to offer such a product
may be seen as an innovators. these new services may be targeted at
existing customer to service a broader array of needs or designed to
attract new customers with different needs.
Style changes represent the simplest type of innovation, typically
no changes in either processes or performance. Style are often
highly visible create excitement and may motivate employees.
Style changes

Service improvement are the most common type of innovation.
They involve modest changes in the performances of current
products,incliding improvement to either the core product or
existing supplementary.
Service improvements
Process lineextensions
Process line extensions are less innovative than process innovations
but often represent distinctive new ways of delivering existing
products so as to either offer more convenience and a different
experience for existing customers or a attract new customers who
find traditions approach unappealing.

Marketing services
Services are (usually) intangible economic activities offered by one party to
another.
It is the part of the product or the full product for which the customer is
willing to see value and pay for it.
Services marketing is a sub-field of marketing, which can be split into the two
main areas of goods marketing and services marketing.
Services marketing typically refers to both business to consumer (B2C) and
business to business (B2B) services, and includes marketing of services such as
telecommunications services, financial services, all types of hospitality
services, car rental services, air travel, health care services and professional
services.
marketing services vs physical services

marketing Physical goods
A product is tangible any item you can physically touch, has packaging
and usually a shelf life.
Goods are basically objects or products which have to be
manufactured, stored, transported, marketed and sold.
Goods are items that are tangible such as books, pens, salt, shoes, hats
and folders.

Difference Between Marketing Services versus
physical services
Tangibility
Inseparability
Perishability
Trust
Wants and needs

Returnability
Time
Relationships
Elements

POSITIONING OF SERVICES IN COMPETITIVE
MARKET:
Services that vary in their configuration
according to the goods service continuum have to be
positioned according to the degree of tangibility or
intangibility as one move across the tangibility
spectrum(goods service continuum). This necessitates
the development of advanced form of positioning
process especially for services.
Approaches to positioning of services in competitive market
Source: Services Marketing by Nargundkar

APPROACHES TO POSITIONING OF
SERVICES:
There are a variety of ways in which positioning can
be arrived at. Some major ways of dong this are discussed
below.
 Positioning by Features
 Positioning By Comparison

POSITIONING BY BENEFIT TO CUSTOMER
 Positioning as an expert
 Positioning by endorsement

POSITIONING THROUGH GUARANTEES
 Positioning through smart taglines
 Positioning by value price

THE SERVICE PRODUCT CONCEPT
Potential Service
Augmented
Service
Expected
Service
Basic
Service
Core
Benefit
The Concept of Service Product
Source:
Rajendra
Nargundkar

CORE BENEFIT
Core benefit is what the buyer is
really buying.
It is solution or benefit which a
customer is looking for while going for
a service.

EXAMPLES
 when you are buying a ticket for a
movie, the core benefit is …

EXAMPLES
 the core benefit when we are
buying the services of a software
firm is …
The Technical Quality

EXAMPLES
 When you buy an airline ticket, the
core benefit is …

BASIC SERVICE
 The intangible service through
which the core benefit is received is
called the Basic Service.
 Consumers expect these services
to be present in any offering.

THE BASIC SERVICE PRODUCT FOR AN AIRLINE
IS …..
Example

EXPECTED SERVICE
 These are the service qualities that
customers expect to get when they
purchase services.

A FAST FOOD RESTAURANT IN THE U.S.A. IS
EXPECTED TO HAVE …
Example

AUGMENTED SERVICE
 The Augmented Service consists of
the measures taken to differentiate
the services from competitors, and
provide them with service quality
beyond their expectations.

Example
Providing suits to overnight passengers
in an airline or providing facilities like a
business center in the airline lounge

POTENTIAL SERVICE
 This level includes all the augmentation and
the futuristic product developments.
 At this stage, the firm tries to find out better
ways of delighting customers.

A UNIVERSITY WHICH PROVIDES THE CORE
BENEFIT OF EDUCATION CAN TRANSFORM
ITSELF BY PROVIDING PLACEMENTS,
BRINGING LATEST DEVELOPMENTS,
WORKING HAND IN HAND WITH INDUSTRY,
PUBLISHING OWN JOURNALS.
Example

Meaning of service encounter
“ The service encounter is a period of time during which a
consumer directly interacts with a service.”
Services encounters are where promises are kept or broken
and where the proverbial rubber meets the road – Some
times called “real – time marketing”
It is from these services encounters that customers build
their perceptions.
From the author Valarie a ziethaml maryjobitner
Dwayne d gremler ajay pandit

Types of service encounter
There are three general types of services encounters: Remote
encounters, phone encounters and face to face encounters.
Remote encounters: When customer interacts with a bank through the
ATM system, with a retailer through its internet website, or with a
mail ordered service through automated touch phone ordering. In
remote encounters the tangible evidence of the service and the
quality of the technical processes and systems become the primary
base for judging quality. Eg Airline ticketing, repair and
maintenance trouble shooting and package and shipment tracking.

Phone Encounter: The judgment of quality in phone encounters is
different from remote encounters because there is greater
potential variability in the interaction. E.g Bank insurance
companies information bureaus and friendship firms use
telephone encounters to sell their services.
Face to face encounters: A third type of encounters is the one that
occurs between an employee and a customer in direct contact.
Both verbal and nonverbal behaviors are important
determinants of quality issues in face-to-face contexts is the
most complex of all.

Factors affecting service encounter

 Recovery - Employee response to service Delivery System Failures
The first theme includes all incidents in which there has been failure of the service delivery
system and an employee is requires to respond in some way to consumer complaints and
disappointments. The content or form of the employee’s response is what causes the
customer to remember the event either favorably or unfavorably.
Eg : An Airplane flight that is delayed six hours.
 Adaptability – Employee Response to Customer Needs and Requests:
A Second theme underlying satisfaction in service encounters is how adaptable the service
delivery system is when the customer has special needs or requests that place demand on the
process. External Customers and internal customers alike are pleased when the service
provider puts forth the effort to accommodate and adjust the system to meet their
requirements.

Spontaneity – Unprompted and Unsolicited employee Actions:
When There is no system failure and no special request or need, customers can
still remember service encounters as being very satisfying or very dissatisfying.
Satisfying incidents in this group represent very pleasant surprise for the
customer ( Special attention being treated like royalty)
Coping – Employee Response to problem customers
In this group came to light when employees were asked to describe services
encounter incidents in which true customers were either satisfied or dissatisfied.

Basic Concepts of 'Services marketing'

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