SERVICE MARKETINGISSUES & CHALLENGES

Presented by:

Mr. Naresh Thatipamula

Services in product businessService itself as a business

What is a Service?

• Intangible economic activity

• Heterogeneous in nature

• Perishable

• Simultaneity of production and consumption

• Doesn’t result in Ownership

Physical goods Services

tangible intangible

homogeneous heterogeneous

Production and distribution are separated from consumption

Production, distribution and consumption are simultaneous processes

A thing An activity or process

Core value processed in factory Core value produced in the buyer-seller interaction

Customers do not participate in the production process

Customers participate in production

Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership

Extended P’s of Service Marketing Mix:

The service component and support processes of product offerings are rapidly becoming the competitive advantage in winning customer loyalty.

Importance of Customer Service

• A 5% increase in customer retention can increase a company’s profitability by 75%.

• 86% of consumers quit doing business with a company because of a bad customer experience

• 73% of customers cited rude and incompetent staff as the primary reason why they give up on a brand

• 78% of online customers recommend a brand to friends and other contacts after a great customer experience

•  It is 5-7 times more expensive to acquire a new customer than to keep an old one

Source: 10 Mind-blowing reasons why Customer Service is the New Marketing By: Ross Beard

GATS Classification. General agreement on trade in services classifies 155 activates as service.

Major 11 categories are

1. Business services.

2. Communication.

3. Construction & Engg.

4. Distribution.

5. Education.

6. Environment.

7. Finance.

8. Health.

9. Tourism.

10. Recreation.

11. Transport

Service organizations…

• Large international corporations –airlines , banking, telecom, hotel chains, transportation…..

• Locally owned small business– restaurants, laundries, taxi services, internet services, courier etc.,…

• B-2- B services…

• Franchised service outlets--- food , education…

Promotional techniques

• Sampling.

• Premium

• Prize promotion.

• Price /quantity promotion

• Refunds & future discounts.

• Coupons

Strategies:

Understanding your customers’ core frustration and demonstrating that you can solve them.

• Enhance customer satisfaction through service encounters.- recover from service failure, flexibility in delivering service, assistance in handling difficult customers.

• Reflect evidence of service- behavior & physical evidence.

• Communicate & create realistic image.- make promises & keep them.

• Enhance customer perception of quality & value through price.

Customer expectation & perception of service

Customer expectations

Adequate service

Desired service

Service level expectation

adequatedesired

lowhigh

Zone of tolerance

Service Quality -- Dimensions

• Reliability – Ability to perform promised service dependably & accurately.

• Responsively – Willingness to help customers & provide prompt service.

• Assurance – Employees ability to inspire trust & confidence.

E.g.- Insurance , brokerage, legal services

• Empathy – Caring , Individual attention to customers.

E.g.-- Hotel

• Tangibles – Appearance of physical facilities equipment, personnel & written materials.

E.g. – travel agents putting attractive pictures..

In services, the last experience remains uppermost in your mind. Therefore, it is not enough to be good, you have to be

consistently good

Service quality is directly proportional to customer satisfaction

The Services Marketing Triangle

Internal Marketing

Interactive Marketing

External Marketing

Company(Management)

CustomersEmployees

“enabling thepromise”

“delivering the promise”

“setting thepromise”

Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler

Points of the triangle

• Each side of the service marketing triangle represents a type of marketing, and the types interact between the entities on the points where the sides meet.

• At the top of the triangle sits your business organization.

• At each corner at the bottom of the triangle are your customers and your employees who interact with and provide the services to your customers.

Internal Marketing

• Internal marketing is the side of the triangle between your organization and your employees who provide your services to customers.

• Marketing issues include adequate training on the services to be delivered and customer satisfaction service techniques.

• Internal marketing requires you to be involved with your employees and let them know the goals and even problems facing the business.

External Marketing

• External marketing goes from your business organization out to customers.

• This is the traditional form of business marketing, showing customers how the services provided by your business benefit them.

• External marketing includes advertising, your website and your company's social media efforts. The purpose of external marketing is to fill the business pipeline with future business.

Interactive Marketing

• The side of the triangle between your employees and customers is called interactive marketing.

• This form of marketing revolves around how your employees deliver the services your company provides.

• The goal is to have highly satisfied customers who become long-term, repeat customers. The effectiveness of the interactive marketing relates back to the internal marketing efforts of your business.

• Interactive marketing is also how your employees keep the promises made by your external marketing efforts.

Challenges in Service Marketing:

•Differentiation

•Intangible

•Trust is necessary

•Brand extends beyond marketing

•Proactive lead generation is difficult

•Demonstrating Empathy

•Competitive pricing

Differentiation

A company is said to have achieved differentiated competitive advantage when its customers perceive the service offered as different from competition based on elements of marketing mix– product / service , price, promotion , distribution etc…

• Offering

• Faster and better delivery

• Image

Intangible

• Services are not perceptible by touch.

• Difficult to make the customer to visualize.

• Creates uncertainty.

Trust is the main thing

Brand extends beyond marketing

• Internal Brand management plays a vital role.

• It is what you actually are.

Lead generation is not so proactive

Not as good as product marketing.Direct marketing & Personal selling are a bit effective

THANK YOU