Services Marketing by P Sivarajadhanavel Chapter – 1 Introduction to Services

Objective Explain what services are and identify service trends Explain the need for special services marketing concepts and practices Outline the basic differences between goods and services and the resulting challenges for service businesses Introduce the service marketing triangle Introduce the expanded services marketing mix

What are Services Definition of Services Services are deeds, processes, and Performance Definition of Services Services include “all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced, and provides added value (such as convenience, amusement, timeliness, comfort, or health) that are essentially intangible concerns of its first purchaser”

Distinct categories of Services Service industries and companies Service as products Customer Service Derived Service

Distinct categories of Services Service industries and companies Whose core product is a service & considered pure service companies Ex: Hotels, Airlines, Financial services, Insurance, Healthcare etc.. Service as products Intangible product offerings that customers value and pay for in the market place Service products are sold by service companies and by non service companies like manufacturing and technology companies Ex: IBM, HP, TCS, etc

Contd… Customer Service Derived Service Service provided in support of a company’s core products Ex: Employees in airline industry providing information and guiding them on boarding Derived Service Value derived from physical goods Ex: computer provide information and data manipulation, razor provides barbering services

Trends in the Service Sector

What is GDP The market value of all final goods and services produced within a country in a given period of time. It is also considered the sum of value added at every stage of production of all final goods and services produced within a country in a given period of time. GDP is a number that expresses the worth of the output of a country in local currency

Various Sectors Agriculture Industry Mining and Quarrying Manufacturing Electricity, Gas and Water Services Trade, Hotels, Restaurants, Transport, Storage and Communication Financing, Insurance, real Estate and Business Services Community, Social and Personal Services Construction

Contribution of various Sectors in GDP of India In 2006-2007, India's GDP grew at an impressive 9.2 per cent. The share of different sectors of the economy in India's GDP Agriculture - 18.5 per cent, Industry - 26.4 per cent, and Services - 55.1 per cent. Recently India joined the elite club of 12 countries with a trillion dollar economy. The trillion dollar economy includes US, Japan, Germany, China, UK, France, Italy, Spain, Canada, Brazil, and Russia Source: http://www.indiaonestop.com/economy-macro-view.htm

Why Service Marketing Service Based Economies Service as a Business imperative in Manufacturing and IT Deregulated industries and professional Service needs Services Marketing is different Service equals profits Service profit chain – internal service and employee satisfaction to customer value and ultimately to profits Service stinks American Satisfaction Index

Service- based Economies Country Name - % of services to its GDP United States - 78.6 France - 77.2 Netherlands - 73.9 UK - 73.4 Japan - 73.1 India - 60.7 Brazil - 54.0 China - 40.0

Service and Technology Potential for new service offerings Automated voice mail, interactive voice response systems, fax, ATMs New ways to deliver service Delivering existing services in more accessible, convenient, & productive ways Ex: bill paying, accounts, tracking orders, etc Enabling both customers and Employees Extending the global reach of services Today technology which takes services across the globe The internet is a service

Services Vs Goods Intangibility Heterogeneity Simultaneous Production and Consumption Perishability

Intangibility Generally, services cannot be seen, felt, tasted, or touched in the same way as physical goods Implications Services cannot be inventoried Services cannot be patented Services cannot be readily displayed or communicated Pricing is difficult

Tangibility Spectrum             Intangible Dominant Salt  Soft Drinks  Detergents  Automobiles  Cosmetics  Fast-food Outlets  Intangible Dominant Tangible Dominant   Fast-food Outlets  Advertising Agencies  Airlines  Investment Management  Consulting Teaching

Heterogeneity Generally, no two services are exactly alike due to: Customers Employees Implications Service delivery and customer satisfaction depend on employee actions Service quality depends on many uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and promoted

Simultaneous Production / Consumption Goods Produced Purchased Consumed Services Purchased Consumed / Produced simultaneously Implications Customers participate in and affect the transaction Customers affect each other Employees affect the service outcome Decentralization may be essential Mass production is difficult

Perishability Services cannot be saved, stored, resold, or returned Implications It is difficult to synchronize supply and demand with services Services cannot be inventoried Recovery processes are critical

Challenges for marketing a Services Defining and improving quality Communicating and testing new services Communicating and maintaining a consistent image Motivating and sustaining employee commitment Coordinating marketing, operations and human resource efforts Setting prices Standardization versus personalization

Service Marketing Mix Traditional marketing mix Expanded Mix for services marketing

Traditional Marketing Mix Product Place Promotion Price

Expanded Marketing Mix Product Place Promotion Price People Physical Evidence Process

Expanded Marketing Mix Product – Physical good features, Quality level, Accessories, Packaging, warranties, product lines, Branding Place – Channel type, Exposure, intermediaries, outlet locations, transportation, storage, Managing channels Promotion – Promotion blend, Sales people (Selection, Training, incentives), Advertising (Media types, Types of ads), Sales promotion, publicity, internet/web strategy Price – Flexibility, price level, terms, differentiation, discounts, allowances

Expanded Marketing Mix People – Employees (Recruiting, Training, motivation, rewards, teamwork), Customers (education, Training) Physical Evidence – Facility design, equipment, signage, employee dress, other tangibles (reports, business cards, statements, guarantees) Process – Flow of activities (standardized, customized), Number of steps (simple, complex), Customer, involvement

The Services Marketing Triangle Company (Management) Internal Marketing External Marketing “enabling the promise” “setting the promise” Employees Customers Interactive Marketing “delivering the promise”

Focused on the Customer Service marketing is focused towards the customers and customers satisfaction Service delivery and service quality

Reference Consulting http://commerce.nic.in/export-promotion-Summary.pdf