1.services mktg introduction 28.10.09
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SERVICES MARKETING -
INTRODUCTION
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HOW IMPORTANT IS THE SERVICE SECTOR IN
OUR ECONOMY ?
In most countries, services add more economic valuethan agriculture, raw materials and manufacturingcombined
In developed economies, employment is dominated by
service jobs and most new job growth comes fromservices
Jobs range from high-paid professionals andtechnicians to minimum-wage positions
Service organizations can be any size³from hugeglobal corporations to local small businesses
Most activities by government agencies and nonprofitorganizations involve services
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WHY SERVICES MARKETING
Bcoz services differ from goods in many respects.
Services are intangible. Goods are tangible
Services are heterogeneous. Goods are homogeneous
Services are produced in buyer-seller transactions.Goods are produced in factory
Production, distribution and consumption take placesimultaneously in the case of services. In the caseof goods, the three are separate and independent
functions Services cannot be stored. Goods can be stored.
In the sale of services, transfer of ownership will nottake place, whereas in the case of goods it does takeplace.
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DEFINITIONS
AMA ² activities, benefits or satisfactions which
are offered for sale or provided in connection with
the sale of goods.
Kotler ² any activity or benefit that one party can
offer to another that is essentially intangible and
does not result in the ownership of anything.
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Five categories of products
Pure tangible goods
y Agricultural produce and unbranded products, soaps, toothpasteetc.,
Tangible goods with services
bikes, cars, home appliances
Hybrid services
Like restaurants
Services with accompanying tangible goods tours and travel services
Pure services
teaching, consultancy etc.,
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Characteristics of services
Intangibility Inseparability
Variability
Perishability
People Participation No Ownership
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THE N ATURE OF SERVICES
regardless of the ´productµ, there is aservices component to the offerings of allfirms
in some cases, a service is the principalpurpose of the transaction, as in the rentalof a car, a haircut, or legal services -- werefer to this as the core servicecore service
in others, service is performed in support of the sale of a tangible product -- these arereferred to as supplementary servicessupplementary services
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Canned
foods
Ready-
madeclothes
Auto-
mobiles
Draperies,
Carpets
Rest-
aurantmeals
Repairs:
auto, house,landscaping
Air
travel
Insurance,
Consulting,Teaching
MOSTLY GOODS MOSTLY SERVICES
The Goods-Services Continuum
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0
20
40
60
80
100
120
Tangible goods Tangible goods
with some
services
good n services in
equal measure
services with
minor goods
pure services
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Implications in Marketing the Services
Intangibility
y Cannot be communicated
y Comparative presentation is not possible
y Consumer suspects due to absence of concrete evidences
y No impulse purchase
Inseperability
y Problems of market expansion
y Maintenance of service quality
y Limited production and operations capacity
Variability
y Limited scope for standardisation
y Not possible to communicate exactly what the consumer is going
to receive
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Perishability
y
Storage of services is not possibley Time pressure in sales
People participation
y Customers are not controllable
y Service providers are unique nature
y Customers are evaluating at every stage of service production
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Classification of services
1)Classification by Industry:
Government services, Finance, insurance, Education, Transportation,
trading, telecommunications, health, entertainment, etc
2)Classification of services by Target Effect:
Services aimed at physical care such as health care beautyclinics, gymnasiums and restaurants
Services for intangible assets such as banking, legalconsultation, accounting , brokering, insurance and securities services
Services aimed at the mind of the customer such aseducation, broadcasting, information, entertainment, etc
Services aimed at physical possessions and tangible assets such astransport, vehicle repair and maintenance, cleaning , laundry etc.,
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What are the problems that a marketer faces due
to customer involvement in services delivery?
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Flowcharting the Service Processes
Eg: Stay at a Budget Hotel Repair TV set or Music System
Selecting a telecom service
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CUSTOMER INVOLVEMENT IN SERVICE ENCOUNTERS
A service encounter is a period of time duringwhich customer interact directly with a service.
It is important to under the customer·sinvolvement in a given service environment todeliver quality service.
Is customer·s expectations change during thecourse of service delivery in view of perceivedquality at each step and number of steps in theprocess?
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HIGH-CONTACT AND LOW-CONTACT SERVICES
High Contact Services Customers visit service facility and remain throughout
service delivery
Active contact between customers and service personnel
Includes most people-processing services
Low Contact Services
Little or no physical contact with service personnel Contact usually at arm·s length through electronic or
physical distribution channels
New technologies (e.g. Web) help reduce contact levels
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Service encounter: A period of time during whichcustomers interact directly with a service
M oments of truth: Defining points in service delivery
where customers interact with employees or equipment
Critical incidents: specific encounters that result in
especially satisfying/dissatisfying outcomes for either
customers or service employees
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THE PURCHASE PROCESS FOR SERVICES
P re-purchase Stage
Awareness of need
Information search
Evaluation of alternative service suppliersService Encounter Stage
Request service from chosen supplier
Service delivery
P ost-purchase Stage
Evaluation of service performance
Future intentions
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A SERVICE BUSINESS IS A S YSTEM COMPRISING THREE
O VERLAPPING SUBSYSTEMS
Service Operations (front stage and backstage)
Where inputs are processed and service elements created.
Includes facilities, equipment, and personnel
Service Delivery (front stage) Where ´final assemblyµ of service elements takes place
and service is delivered to customers
Includes customer interactions with operations and other
customers
Service M arketing (front stage)
Includes service delivery (as above) and all other contacts
between service firm and customers
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SERVICE M ARKETING S YSTEM:
HIGH CONTACT SERVICE - HOTEL
TheCustomer
TechnicalCore
Interior & ExteriorFacilities
Equipment
Service People
Other
Customers
Other
Customers
Advertising
Sales Calls
Market Research
Surveys
Billing / Statements
Miscellaneous Mail,
Phone Calls, Faxes, etc.
Random Exposure to
Facilities / Vehicles
Chance Encounters
with Service Personnel
Word of Mouth
Service Operations System
Backstage(invisible)
Front Stage(visible)
Service Delivery System Other Contact P oints
Service M arketing System
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SERVICE M ARKETING S YSTEM:
(2) LOW CONTACT SERVICE--CREDIT C ARD
TechnicalCore
Self Service
Equipment
Phone, Fax,Website
The
Customer
Service Operations System
Service Delivery System Other Contact P oints
Backstage
(invisible)
Front Stage
(visible)
Advertising
Market ResearchSurveys
Random ExposuresFacilities, Personnel
Word of Mouth
Service M arketing System
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Internal marketing : the company has to provide
the work space, equipments and also to recruit
and train the appropriate employees, channel
partners, distributors, franchisees.
Interactive Marketing: The providers do
interactive marketing with the customer. Theprovider is the face of the company and
represents the company. Both the customer as
well as provider gets instant feedback about each
other during service transaction. Theirtransaction reflects the perception of the quality
of the service.
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REASONS FOR GROWTH IN SERVICES SECTOR
Intermediate Demand from firms
Demand from customers
y Higher Disposable Incomes
y Greater life expectancy ² Increased conscious of health
y The Young generation - More leisure time
y Social changes - Working woman
y Greater complexity of products due to advances in Product
Technology
y Change in Government Attitude
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F ACTORS THAT INFLUENCE
CUSTOMER EXPECTATIONS OF SERVICES
Predicted Service
Explicit & ImplicitService Promises
Word-of-Mouth
Past ExperienceDesired Service
ZONEOF
TOLERANCE
Adequate Service
Personal Needs
Beliefs aboutWhat Is Possible
Perceived Service Alterations
Situational Factors
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COMPONENTS OF CUSTOMER EXPECTATIONS
Desired Service Level: wished-f or level of service
quality that customer believes can and should be
delivered
Adequate Service Level: minimum acceptable level of service
P redicted Service Level: service level that customer
believes f irm will actually deliver
Z one of Tolerance: range within which customers arewilling to accept variations in service delivery
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Is product attributes affect ease of evaluation?
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Create a simple flow chart for a service you are
familiar with and define the front stage and back
stage activities?
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I s it possible for customers to be delighted by very
ordinary services?
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Research shows that delight is a function of 3
components
y Unexpectedly high levels of performance
y Arousal (e.g., surprise, excitement)y Positive affect (e.g., pleasure, joy, or
happiness)