Understanding Services (Contd.) Understanding Services (Contd.)

Agenda Services Marketing Mix Services Marketing Triangle

Need for expansion of 4Ps framework High degree of direct contact between the service providers and the customers High degree of direct contact between the service providers and the customers Highly visible nature of the service process Highly visible nature of the service process The simultaneity of the production and consumption The simultaneity of the production and consumption

Expanded Marketing Mix Product Product Place Place Price Price Promotion Promotion People People Physical Evidence Physical Evidence Process Process

People All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment

Why include ‘People’? Services are delivered by people in most cases and people form a very important part of the ‘service experience’ Services are delivered by people in most cases and people form a very important part of the ‘service experience’ There is a lot of interaction involved in the service process (between people in the service company and people as in customers) There is a lot of interaction involved in the service process (between people in the service company and people as in customers)

Physical Evidence The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service

Why include ‘Physical Evidence’? As services are largely intangible in nature, so the tangible elements have to be separately accounted for As services are largely intangible in nature, so the tangible elements have to be separately accounted for Sometimes, these serve to differentiate between service providers Sometimes, these serve to differentiate between service providers They tangibilise the service offering, providing information to the customer to decide on whether he wants to use a service or not They tangibilise the service offering, providing information to the customer to decide on whether he wants to use a service or not

Process The actual procedures, mechanisms, and flow of activities by which the service is delivered – the service delivery and operating systems The actual procedures, mechanisms, and flow of activities by which the service is delivered – the service delivery and operating systems

Why include ‘Process’? In every service situation, the ‘process’ is very important. It applies to the most ordinary of service transactions In every service situation, the ‘process’ is very important. It applies to the most ordinary of service transactions The way it is done can sometimes determine the customer satisfaction with the entire service experience The way it is done can sometimes determine the customer satisfaction with the entire service experience It is important to view the process in terms of a visual map with various activities or stages listed explicitly, preferably from a customer’s viewpoint It is important to view the process in terms of a visual map with various activities or stages listed explicitly, preferably from a customer’s viewpoint

Services Marketing Triangle The triangle is a concept that links the three elements of service marketing: organisation, employees, and customers The triangle is a concept that links the three elements of service marketing: organisation, employees, and customers Three levels of marketing are deducted from this framework: Three levels of marketing are deducted from this framework: –Internal marketing from the organisation to the employees –External marketing from the organisation to the customer –Interactive marketing that occurs between the employee and the customer during service consumption

The Service Marketing Triangle – Christian Grönroos Company (Management) Internal External Marketing Employees Customers Interactive Marketing

External Marketing Where promises are made to customers Where promises are made to customers Includes traditional activities like Includes traditional activities like Advertising sales, sales promotion, and pricing Also expressed through employees, design Also expressed through employees, design and décor, service process

Interactive Marketing Where promises are kept or broken Where promises are kept or broken Occurs in “the moment of truth” when the Occurs in “the moment of truth” when the customer interacts with the firm and the service is produced and consumed service is produced and consumed

Internal Marketing Takes place through the enabling of Takes place through the enabling ofpromises Enabling means providers must have the Enabling means providers must have the skills, abilities, tools, and motivation to do their job right Encompasses marketing efforts directed Encompasses marketing efforts directed at employees (the internal customer)

Ways to Use the Services Marketing Triangle Overall Strategic Overall StrategicAssessment –How is the service organization doing on all three sides of the triangle? –Where are the weaknesses? –What are the strengths? Specific Service Implementation What is being promoted and by whom? How will it be delivered and by whom? Are the supporting systems in place to deliver the promised service?