Services marketing (ppt slides)

SERVICES MARKETING
Teaching & Study
Material
1
Dr.S.N.Selvaraj, Assistant Professor, Department of Management Studies, Dr.N.G.P.Arts and Science College

Definitions of Services
 According to Philip Kotler, “A service is an act or
performance 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”.
 According to American Marketing Association,
“Services are activities, benefits or satisfaction,
which are offered for sale are provided in
connection with the sale of goods”.
2
Dr.S.N.Selvaraj, Assistant Professor, Department of Management Studies, Dr.N.G.P.Arts and Science College

Types/Classification of Services
Figure: Types/Classification of Services
TYPESOFSERVICES
By Market Segment
Degree of Customer Contact
By Degree of Tangibility
Skills of the Service Provider
By Business Orientation
By Degree of Regulation
Degree of Labor Intensiveness
3Dr.S.N.Selvaraj, Assistant Professor, Department of Management Studies, Dr.N.G.P.Arts and Science College

Difference between Product and Services Marketing
Basis of Difference Goods Services
Tangibility Goods are tangible since
people can touch, see and
buy it. Goods are patented.
Services are intangible
because people cannot
touch or cut it. Services
cannot be patented.
Transfer of Ownership
The transfer of ownership
is possible in case of
goods.
Transfer of ownership is
not possible in case of
services.
Perishability
Goods are less perishable
so people can store these
as inventory.
Services are highly
perishable in nature.
People cannot store these
for future use
Heterogeneity
The goods can be
standardized so they are
having less heterogeneity.
High heterogeneity is
found in service. But it is
difficult to measure it.
Re-selling
Re-selling is possible in
case of goods.
Re-selling is not possible
in case of services.
Product Consumption
In case of goods
production and
consumption may take
place in different places.
In case of services, both
processes take place
simultaneously.
Customer Relationship
Comparatively low
customer relationship is
found in goods marketing
A high customer
relationship is required for
service marketing.
Marketing Mix
Traditional 4 Ps of
marketing mix.
Augmented or extended
7 Ps of marketing mix.
Customer Involvement
Generally low customer
involvement.
High customer
involvement in services.
Production
Mass production is easy. Mass production is
difficult.

Unique Features of Services
 Intangibility: Services are intangible. Unlike physical
products, they cannot be seen tasted, felt, heard or smelled
before they are bought.
 Inseparability: Inseparability of production and consumption
and Inseparability of the service from the person who
possesses the skill and performs the service.
 Variability: Services are also market by
variability/individuality/heterogeneity. The provider of the
service being inseparable from the service.
 Perishability: Services are perishable as well which cannot
be stored. In few countries, some doctors charge patients for
missed appointments because the service value existed only
at that point.

Services Quality
 Service quality is not easy to measure in a precise
manner. The nature and characteristics of services can
have an impact on quality issues.
 The intangibility of many service means that it can be
very difficult for service quality to be measured and
assessed.
 Inseparability of the service itself from the service
provider highlights the role of people in the service
transaction, and their influence on quality levels.
 The heterogeneous nature of service means that a
service is never exactly repeated and will always be
variable to some extent.

Principles of Services Quality
Quality Definition Examples
Search
Quality
Can be evaluated prior
to purchase
 Shoes
 Jeans
 Refrigerators
 Lawn movers
 Food
 Raw materials
 Component parts
 Office supplies
 Tools
 Janitorial services
Experience
Quality
Can be evaluated only
during or after the
goods or service has
been consumed
 Catering services
 Entertainment
 Cosmetic surgery
 Lawn services
 Delivery services
 Repair services
Credence
Quality
Difficult to evaluate
even after the service
or good is consumed.
 Accountant
 Funeral services
 Education
services
 Veterinarian
 Consulting services
 Financial services
 Advertising
 Insurance

Common Customer Expectations
The main expectations that are to be considered:
 Speed of service
 Efficiency of service
 High quality at a competitive price
 Friendly, helpful service staff
 Prompt replies
 Sufficient stock
 Not being referred on when you ask a question
 Easily navigable store
 Easily navigable website

Zone of Tolerance
Desired Level of Service
Adequate Level of Service
Zone of
Tolerance
What
Customer
Expects?
What
Customer
Accepts?

Segmentation Bases
Segmentation Bases
Demographic
Segmentation
(2)Psychological
Segmentation
(3)
Volume
Segmentation
(4)
Geographical
Segmentation
(1)
Demographic
Segmentation
(2)
Benefit
Segmentation
(5)

Targeting Strategies
Anyone of the following strategies can be used by service
providers as below:
 Undifferentiated Marketing (mass marketing): A
company‟s attempt to appeal to the whole market with a
single basic marketing strategy intended to have a mass
appeal.
 Differentiated Marketing (multiple-segmentation): A
company‟s attempt to appeal to two or more well-defined
market segments with a marketing strategy tailored to
each segment.
 Concentrated Marketing: A company‟s attempt to
appeal to one well-defined market segment with one
tailor-made marketing strategy.

Positioning Strategies in Services
PositioningStrategies
Positioning by Attributes, Features or Customer Benefits
Positioning by Price Value
Positioning by Use of Application
Positioning According to Users or Class of Users
Positioning with Respect to Product Class
Positioning against Competition
Positioning by Endorsement
Positioning by Quality Dimension
Positioning by Service Evidence

Service Marketing Mix
 Marketing mix describes the specific
combination of marketing elements used to
achieve an organization‟s /individual‟s objectives
and satisfy the target market.
Marketing Mix
Product Price Place Promotion
Target Market

Augmented Marketing Mix
People Process Physical Evidence
Employees:
 Recruiting
 Training
 Motivation
 Rewards
 Team work
Flow of Activities:
 Standardized
 Customized
Number of Steps:
 Simple
 Complex
Facility Design:
 Aesthetics
 Functionality
 Ambient conditions
 Equipment
 Signage
 Employee dress
Customers:
 Education
 Training
 Communicating
 Culture and Values
 Employee Research
Level of Customer
Involvement
Other Tangibles:
 Reports
 Business cards
 Statements
 Guarantees

Service Life Cycle
 Products and services are often said to have „life cycles‟.
This idea is based on an analogy with natural life cycles;
birth, growth, maturity and son on. The product life cycle
is frequently illustrated as being comprised with four
stages:
Launch Growth Maturity Decline
Figure: Services Life Cycle

Features of Pricing of Services
 Marketers‟ have to consider these features while pricing services
and marginal differences which need to be considered are:
 Negotiations: Because of „inconsistency‟ characteristics of the
services, there can be a scope for negotiation of prices. For
example, two denting and painting may be providing the same
service but the standards may vary. Therefore, the customer can
negotiate the prices.
 Discounts: Because of non-inventory (perishability) characteristics
of services, there may be an incentive to use this service at
unpopular times. For example, some resorts offer discounts to
customers who come during non-peak hours.
 Quality: Customers perceive high quality of service with higher
price; therefore service providers price the services high to
demonstrate quality.

Examples of Pricing of Services
S.No Price (What one pays) Service (What one gets)
1 Tuition Education
2 Interest Use of money
3 Rent Use of living house, shop, etc.
4 Fare Taxi ride, bus journey, air travel
5 Fee Services of doctor / lawyers
6 Retainer-ship Consultants’ service over a period of time
7 Toll Travel on some highway
8 Salary Services of an executive/white collar work
9 Wages Services of blue collar work
10 Commission Sales person’s service, Agent services
11 Dues Membership of a union/club
12 Admission Theatre entry
13 Tariff Utilities
14 Premium Insurance

Methods of Pricing Services
 Cost-Based Pricing: In case of goods, the prices are often based
on the cost of production. For example, the price of petrol or diesel
in India is based on the cost of oil in the international markets.
 Competitor-based Pricing: The competition could be from firms
offering the same services fulfilling similar needs, different services
fulfilling similar needs or similar services fulfilling different needs.
 Demand Oriented Pricing: Demand oriented pricing is a pricing
strategy approach whereby a firm set prices after researching
consumer desires and ascertaining the range of prices acceptable to
the target market.
 Value Based Pricing: Value is defined as perceived benefits for the
total cost of acquisition. Thus the value-based pricing depends
upon: higher value perception due to lower price for the service and
higher value due to higher perceived benefit.

Pricing Strategies in Service Marketing
Price Discounting
Odd Pricing
Penetration Pricing
Bundled Pricing
Prestige Pricing
Market Segmentation Pricing
Bid Pricing
Loss Leadership Pricing
Gain and Risk-Sharing
Money-back Guarantees

Promotion Mix for Services
Advertising
Personal Selling
Sales Promotion
Publicity
Public Relations
Direct Marketing
E-Commerce/Internet Marketing
Sponsorship
Exhibitions
Packaging
Corporate Communications
Word-of-Mouth
Event Marketing
Trade Shows

Key Channels / Distributors for Service Delivery
In service marketing there are three main groups of channel
intermediaries which may be selected:
 Agents : Unlike merchant wholesaler, agents and broker do not
take title to the merchandise.
 Brokers: They specialize in certain areas and bring buyer and
sellers together to negotiate the contract. For example, real estate
broker.
 Franchising: One of the major ways of services provision is through
franchising. The parties involved are the franchiser, the franchisee,
and the customers. For example, health clubs and fitness centers,
computer training institutes, etc.
 Electronic Channels: Electronic channels are the only service
distributors that do not require direct human interaction.

Elements of Physical Evidence
Servicescape Other Tangibles
Facility Exterior:
 Exterior design
 Signage
 Parking
 Landscape
 Surrounding environment
Facility Interior:
 Interior design
 Equipment
 Signage
 Layout
 Air quality /temperature
Business cards
Stationer
Billing statements
Reports
Employee dress
Uniforms
Brochures
Web pages
Virtual servicescape

Role of Communication in Services Marketing
All organizations need to communicate with their customers (both
internal and external) at various times and for a variety of reasons.
 Externally
 To inform the target markets about current and new service offerings
 To educate customers
 To persuade existing and potential customers to buy
 To remind customers about the service and where it is available
 To make public announcements
 Internally
 To inform employees about changes in the organization
 To communicate plans and programs effectively
 To keep all employees informed about company performance
 To publicize incentive schemes and other events
 To inform and educate employees about new products and services

The Communication Process
The communication processes is typically
illustrated as consisting of four main elements:
 The Source (the sender): encoding
 The Message (which is subject to noise)
 The Media selected to transmit the message
 The Recipient: decoding

Techniques and Technologies of Internal
Communication
 Today there are a plethora of techniques and
technologies used to communicate, both up/down and
side-to-side within an organization:
 Staff/team meetings
 Emails
 Video broadcasts
 Intranets
 Staff-to-staff newsletters
 Corporate newsletters
 Annual Reports
 Roadshows

Role of Technology in Services Marketing
 The following are significant aspects by the role of
Information Technology in Services Marketing:
 CRM
 Digital Marketing
 Internet Marketing
 Mobile Marketing
Types of Mobile Marketing can be viewed as:
 Mobile Marketing via SMS
 Mobile Marketing via MMS
 Mobile Web Marketing
 Mobile Marketing via Bluetooth
 Mobile Marketing via Infrared

Special Features of Financial Services
 Services tend to share four important characteristics
which distinguish them from physical products and
impact on marketing programs, namely:
 Intangibility
 Inseparability
 Heterogeneity
 Perishability
 Financial services share these characteristics to a
degree but also exhibit certain differences.

Segmenting, Targeting and Positioning of
Financial Services
Financial service sector in India is very potential in its roots
and has diverse nature in providing services to the
customers. The major areas of financial services sector are
as follows:
 Banking services
 Insurance services
 Leasing services
 Mutual Fund services
 Factoring Services
 Portfolio Management Services
 Financial Intermediary Service

Requirements for Effective Segmentation
 (a) Measurable
→ Size, purchasing power, and profile of segment
 (b) Accessible
→ Can be reached
 (c) Substantial
→ Large and profitable enough to service
 (d) Differentiable
→ Respond differently
 (e) Actionable
→ Effective programs can be developed

Steps involved in Segmenting, Targeting and
Positioning
 Identify basis of segmenting the market
 Develop profile of resulting segments
 Develop measures of segments
attractiveness
 Select the target segments
 Develop positioning for each target
segment
 Develop marketing mix for each target
segment
Segmentation
Targeting
Positioning

STP Process (Segmentation – Targeting – Positioning)
Market
Segmentation
Targeting –
Select the
target market
Product
Positioning
Decide on the
Optimal
Marketing Mix
Identify bases
for
segmentation
Determine
characteristics
of each
segment
Evaluate potential
and commercial
attractiveness of
each segment
Select one or more
segments
Developed detailed
product positioning
for selected
segments
Develop a marketing
mix for selected
segments
Unique Value
Proposition
Product or Service
Price
Place
Promotion

The Financial Services Marketing Mix
 (1) Product: There is little or no room for innovation in
product design due to the ease by which competitors can
make similar offerings, for example, by altering charges
or interest rates to meet those of competitors.
 (2) Price: The price in financial services terms relates to
the cost involved to the customer in, say, bank charges
or credit card interest rates.
 (3) Place: Place or location has always been regarded
as critical in retail financial services where high street
positions are maintained by most of the large institutions.
 (4) Promotion: Major advertising campaigns are
undertaken continuously by banks, building societies and
other major financial institutions such as insurance
companies.

The Financial Services Marketing Mix…
 (5) People: Customer care is at the forefront of both
quality and differentiation in the financial services
industry.
 (6) Process: Improvements in the process stem not only
from the automation of many transactions and data
handling within organizations.
 (7) Physical Evidence: This creates confidence and
helps to build the relationship between customer and
service provider to tangibilize the service.

Services marketing (ppt slides)

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Services marketing (ppt slides)