1. SERVICE MARKETING
Aug – Dec. (2008)

2. SERVICES “Service is an act or performance offered by
one party to another that is essentially
intangible and does not result in the
ownership of anything.”

3. TRENDS IN SERVICES SECTOR
Service industry known as tertiary industry (primary – agri, mining; secondary – manufacturing)
Share of services, industry, and agriculture in India's GDP is 55.1 per cent, 26.4 per cent, and 18.5 per cent respectively
A KPMG survey of BRIC countries (Brazil, Russia, India and China), has revealed highest confidence among the service sector in India with 60% of the Indian firms expect rise in activity, a few notches above than that of China

4. TRENDS IN SERVICES SECTOR
Factors contributing to growth:
1. Government Policies
Govt. regulations,
Privatisation
2. Social Changes
Rising customer expectations
More affluence
Increased desire for buying experiences vs products

5. TRENDS IN SERVICES SECTOR
Factors contributing to growth:
Business trends
Mfrs. Adding value through services
Quality Movement
Growth of franchising
Advances in Information Technology
Growth of internet
Convergence of computers & telecommunications
Internationalisation
More cos. operating on transnational basis
International mergers & aquisitions

6. TRENDS IN SERVICES SECTOR
The various sectors that combine together to constitute service industry in India are:
Trade
Hotels and Restaurants
Railways
Other Transport & Storage
Communication (Post, Telecom)
Banking
Insurance
Dwellings, Real Estate
Business Services
Public Administration; Defence
Personal Services
Community Services
Other Services

7. TRENDS IN SERVICES SECTOR
While almost all service sectors participated in this boom, growth was fastest in communications, banking, hotels and restaurants, trade and business services.

8. INTERNAL SERVICES
Service elements within an organization that facilitate creation of--or add value to--its final output
Includes:
accounting and payroll administration
recruitment and training
legal services
transportation
catering and food services
cleaning and landscaping
Increasingly, these services are being outsourced

9. GOODS AND SERVICES Differences between goods & services
Customers do not obtain ownership of services
Service products are ephemeral & cannot be inventoried
Intangible element
Customers maybe involved in production process
Other people part of product

10. GOODS AND SERVICES Differences between goods & services
Greater variability in operational inputs & outputs
Services are difficult for customers to evaluate
Time factor assumes more importance
Distribution channel take different forms

11. Value Added by Tangible vs Intangible Elements in Goods and ServicesHi
Salt
Soft drinks
CD Player
Golf clubs
New car
Tailored clothing
Furniture rental
Fast food restaurant
Tangible Elements
Plumbing repair
Office cleaning
Health club
Airline flight
Retail banking
Insurance Lo
Weather forecast
Intangible Elements Hi

12. CLASSIFICATION OF SERVICES
A significant classification is based on
process (taking an input & transforming into an output)
Marketers of services need to understand nature of services to which customers are exposed
Services range from simple procedures to highly complex activities

13. CLASSIFICATION OF SERVICES
People Possession
People Processing Possession processing Tangible
- Passenger transportation Freight transportation actions
Health care Repair & maintenance
Lodging & Restaurant Retail distribution
Mental stimulus Information processing Intangible
- Advtg. & PR Accounting & Bkg actions
Education Insurance & Legal
- Entertainment & Arts Software Consulting

14. CLASSIFICATION OF SERVICES
People processing
Customers must physically enter the service system as they are integral part of process
They must spend time interacting & co-operating with service providers
Process & output is important

15. CLASSIFICATION OF SERVICES
Possession processing
Providing treatment to possession. Customers less physically involved
Customer’s involvement – to drop item that needs treatment, requesting the service, explaining problem & later picking it up & paying the bill.
If object to be processed is difficult to move then “service factory” comes to customer

16. CLASSIFICATION OF SERVICES
Mental stimulus processing
These services interact with the customer’s minds which has the power to shape their attitude & behaviour. Core content is information
Customers not physically present, but mentally connected with information presented.
Recipients have to make investment of time

17. CLASSIFICATION OF SERVICES
Information processing
Information is most intangible but can be made tangible by letters, reports, books
Financial & professional services are strong examples of collection & processing of information
No requirement of personal contact with supplier of service. Contact could be over , telephone.

18. IMPLICATIONS OF SERVICE PROCESS
1. Designing Service Factory (people proc.)
When customers have to be physically present throughout delivery, process must be designed with them in mind – right from the moment they arrive the service factory.
Choose convenient location
These factors assume importance
exterior & interior facilities,
encounters with service personnel,
interactions with self-service equipment
characteristics of other customers

19. IMPLICATIONS OF SERVICE PROCESS
2. For possession-processing, mental-stimulus processing, or information processing services, alternatives include:
1. Customers come to the service factory
2. Customers come to a retail office
3. Service employees visit customer’s home or workplace
4. Business is conducted at arm’s length through
- physical channels (e.g., mail, courier service)
- electronic channels (e.g., phone, fax, , Web site)

20. IMPLICATIONS OF SERVICE PROCESS
Making most of Information Technology
All services can benefit from IT, but mental
stimulus processing and information- processing services have the most to gain.
Remote delivery of information-based services “anywhere, anytime”
New service features through websites, , and internet (e.g., information, reservations)
More opportunities for self-service

21. IMPLICATIONS OF SERVICE PROCESS
Balancing Supply & Demand
Problems arise because service output can’t be stored
If demand is high and exceeds supply, business may be lost. If demand is low, productive capacity is wasted
Services that process people & possession face more capacity limitations. Increasing capacity entails huge costs. Managing demand becomes more important.

22. IMPLICATIONS OF SERVICE PROCESS
People becoming part of Product
When people become part of service, their attitude, behaviour & appearance can enhance it or detract it
Managers should be concerned about employees’ appearance, social skills, technical skills

23. SERVICES MARKETING MIX
Product
Place & Time
Promotion & Education
Price
Physical Environment
Process
People

24. INTERDEPENDENCE OF MARKETING, OPERATIONS & HR
Customers
Operations
Management
Marketing
Human Resources

25. SERVICE BUSINESS – AS A SYSTEM
Three Overlapping Sub-systems
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 assembly” of service elements takes place
and service is delivered to customers
Includes customer interactions with operations and other customers
Service Marketing (front stage)
Includes service delivery (as above) and all other contacts between service firm and customers

26. SERVICE MARKETING SYSTEM High Contact Service
Service Delivery System
Other Contact Points
Service Operations System
Backstage Front Stage
(Invisible) (Visible)
The
Customer
Technical
Core
Interior & Exterior
Facilities
Equipment
Service People
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

27. SERVICE MARKETING SYSTEM Low Contact Service
Service Delivery System
Service Operations System Other Contact Point
Mail
Self Serv.
Equipment
Phone,
Website
Backstage Front stage
Technical
Core
Customer
Advertising
Market Research
Surveys
Word of Mouth
Customer

28. Theatre – A Metaphor for Service Delivery
Service facilities is the stage on which drama unfolds. Some cases customer’s own facilities provide stage.
Stage can have minimal props or very elaborate
Service dramas could be tightly scripted or improvisational
Settings change from one act to another
Front stage personnel play roles of actors ( sometimes wearing costumes) supported by backstage production team

29. SERVICE PLANNING

30. (Customer Base, Mkt. Knowledge, Implementation Skills, Brand Reput.)
SERVICE PLANNING
Corporate Objectives
and Resources
Marketing Assets
(Customer Base, Mkt. Knowledge, Implementation Skills, Brand Reput.)
Operating Assets
(Facilities/Equipment, IT Systems, People, Op. Skills, Cost Structure)
Service Marketing Concept
Benefits to customer from core/
supplementary elements, style,
service level, accessibility
User costs/outlays incurred
Price/other monetary costs
Time
Mental and physical effort
Neg. sensory experiences
Service Operations Concept
Nature of processes
Geographic scope of ops
Scheduling
Facilities design/layout
HR (numbers, skills)
Leverage (partners, self-service)
Task allocation: front/backstage
staff; customers as co-producers
Service Delivery
Process

31. SERVICE PLANNING
Starts with statement of objectives or mission at corporate leve
This mission leads to two types of analysis – SWOT Analysis identifying strengths, weaknesses, opportunities & threats on marketing & operations fronts
Market & Competitive Analysis
Resource Allocation analysis – appraisal of firm’s resources, how to allocate them & identifying additional resources

32. SERVICE PLANNING Each analysis draws two statement of assets
Marketing assets statement which includes – customer portfolio, market knowledge, marketing implementation skill, product line, reputation of brands & positioning strategies.
Operating assets statement which includes – Physical facilities, equipment, Information technology, H.R. (numbers & skill), alliances & partnerships, cost structure

33. SERVICE PLANNING
Statement of assets leads to creation of the following concepts. This must be an interactive process.
a. Service marketing concept to clarify benefits to customers & costs they shall incur
Service operating concept clarifies nature of processes & how & when operating assets should be deployed
5. Set of choices before the management in configuring delivery process.