Marketing Of Services MBATERM Unit-1

MODULE-01 Duration-3 Lectures. ► INTRODUCTION TO SERVICES MARKETING ► Definitions. ► Characteristics & classification of services ► Services economy ► Nature and scope of ► service market potential

Goods Goods - things you can touch - “tangible” Services Services - things you can’t touch - but you can see their effect “intangible” “… services are not physical, they are intangible…”

A Service is a type of a product. “… a deed performed by one party for another…” Services have special characteristics that make them different than products. Service

A product without physical characteristics; a bundle of performance and symbolic attributes designed to produce consumer want satisfaction. Service Definition

Definition of Service-2 ► A service is an act for performance of an essentially intangible nature that does not result in the ownership of tangible product or commodity but serves to create value and benefits for customer.

► A service, according to Vargo and Lusch (2004), is ‘the application of specialized competences (knowledge and skills) through deeds, processes, and performances for the benefit of another entity or the entity itself. Services are economic activities, rather than tangible products, offered by one party to another. ► A service, according to Vargo and Lusch (2004), is ‘the application of specialized competences (knowledge and skills) through deeds, processes, and performances for the benefit of another entity or the entity itself. Services are economic activities, rather than tangible products, offered by one party to another. Services

“There are no such thing as service industries.There are only industries whose service components are greater or less than those of other industries. Everybody is in service.” -Theodore Levitt-

► Services make up the bulk of the economy in post-industrial societies and account for most of the growth in new jobs. Unless a person is already predestined for a career in family manufacturing or agricultural business, the probability is high that they will spend their working life in service organizationss. post-industrial societiespost-industrial societies

► Tangible  touch  see  taste  smell ► Intangible  can’t see  can’t touch  can’t smell  can’t taste Tangible / Intangible Attributes Not in the text

What is a service Services are deeds, processes and performances. Services are deeds, processes and performances. Service industries and companies – industries and companies typically classified within the service sector whose core product is a service. Service industries and companies – industries and companies typically classified within the service sector whose core product is a service. Services as products – a wide range of intangible product offerings that customers value and pay for in the marketplace. Services as products – a wide range of intangible product offerings that customers value and pay for in the marketplace. Customer service – the service provided in support of a company's core product. Customer service – the service provided in support of a company's core product. Derived service – the value derived from physical goods is really the service provided by the good, not the good itself. Derived service – the value derived from physical goods is really the service provided by the good, not the good itself.

Definitions James Schorr At Procter & Gamble: At Procter & Gamble: “ A product is something a consumer purchases and takes away with him or consumes or otherwise uses. If it is not physical, not something that they can take away or consume, then we call it a service” “ A product is something a consumer purchases and takes away with him or consumes or otherwise uses. If it is not physical, not something that they can take away or consume, then we call it a service” At Holiday Inns: “…people are buying a hotel experience. I’m selling the room, the way they treat you at the front desk, the way the bellman treats you, the way the waitress treats you – it’s all mixed together in a consumer’s mind when he makes a hotel decision”

Services (examples)  Casino / Hotels  Continuing Care Retirement Communities  Diet and Weight Reducing Centers  Environmental Consulting  Golf Courses and Country Clubs  Hazardous Waste Collection  Medical Centers  Industrial Design Services  Investment Banking  Management Consulting Services  Satellite Telecommunications  Internet Search Engine provider

Goods and Services: Scale of Elemental Dominance Not in the text

1. Intangibility - “u can’t touch this” 2. Production (or performing the service) and Consumption (using the service) - happens at the same time 3. Heterogeneity - services are not always delivered the same way 4. Perishability - cannot be put in inventory or stored for later use ie. You can’t buy 2 haircuts 4 Characteristics of Services

1. Intangibility - “u can’t touch this” Services cannot be stored Services cannot be protected through patents - therefore a really great travel package and service can be copied a really great physical object can be patented, and NOT allowed to be copied Characteristics of Services

1. Intangibility - “u can’t touch this” Hard to explain and display Services if you can’t see them Prices are difficult to set - depends on customers expectations Characteristics of Services Not in the text

2. Inseparability of Production (or performing the service) and Consumption (using the service) - happens at the same time Characteristics of Services mass production of services is hard to do Not in the text

3. Heterogeneity - services are not always delivered the same way It is very difficult to standardize services eg. A machine can make ice cream cones a standard size 100% of the time A person filling an ice cream cone with a scoop cannot do it the same amount each time, unless you use a machine to dispense the ice cream Characteristics of Services Not in the text

3. Heterogeneity - services are not always delivered the same way Services are ephemeral-transitory and perishable Characteristics of Services Not in the text

► ► It is very difficult to standardize services ► ► eg. A Taxi driver cannot drive you to the office in exactly the same time each day because the traffic patterns change ► ► eg. A travel agent can sell you a vacation package - but cannot guarantee you will like the trip exactly the same way another tourist did.

4. Perishability - cannot be put in inventory or stored for later use ie. You can’t buy 2 haircuts Demand fluctuates and changes, sometimes depending on the season, or weather eg. Taxi in the rain, vacation in summer Characteristics of Services Not in the text

So what’s it all about? No ownership No ownership Not inventoried Not inventoried Intangible dominated Intangible dominated Customer involvement in production Customer involvement in production Other customers may form part of the product Other customers may form part of the product More variability in operational inputs and outputs More variability in operational inputs and outputs More difficult to evaluate More difficult to evaluate Time = important Time = important

► Intangible elements dominate value creation ► Distribution channels take different forms.

Key factors behind the growth of services Demographics Demographics Social norms and working Social norms and working 2 income families 2 income families Increase in quality of life Increase in quality of life Greater life complexity Greater life complexity International travel and mobility International travel and mobility Increasing aspirations Increasing aspirations Globalisation Globalisation E- business IT linked to competitive advantage Globalisation Growth in government services Mergers and acquisitions Too expensive to retain service expertise Outsourcing of services Consumer Business

Results in…  In the US 80% of employment and 77% of GDP is attributable to the service sector.  In the UK 63% of employment and 76% of GDP is attributable to the service sector. Across Europe, services account for most growth in new jobs Across Europe, services account for most growth in new jobs Business services are growing even where manufacturing is in decline Business services are growing even where manufacturing is in decline Service sector accounts for >50% of GNP and employs >50% of work force in many Latin American countries Service sector accounts for >50% of GNP and employs >50% of work force in many Latin American countries Now growing rapidly in developing nations Now growing rapidly in developing nations (World Bank) (World Bank)

Services dominate the Economy: GDP by Industry, 2015 Source: Bureau of Economic Analysis, November 2002 Finance, Insurance, Real Estate 20% Wholesale and Retail Trade 16% Transport, Utilities, Communications 8% Health 6% Business Services 5% Other Services 11% Government (mostly services) 13% Manufacturing 14% Agriculture, Forestry, Mining, Construction 8% SERVICES

In China (2004) Services sector contributed $265 billion of its economic growth Services sector contributed $265 billion of its economic growth share of the economy 41% 46% 13% service Small factory primary industries

Assignment ► Prepare a PPT of. ► 5 organizations providing services in different categories. TOTAL OF 8 SLIDES. Presentation Time- 5 minutes. Give one page write up on services industry relevance in today’s economy with facts and figures- Mention along the sources. Date of presentation 4 th Sept 2014