The service marketing is of competitive nature as the identical services are offered by many individuals and agencies.

Thus, managing the pace of delivery of the services is the critical issue and requires dynamism in building the competitive strategies for establishing the credentials of the brand in particular.

The process of services marketing includes the stages from its designing to delivery and post-delivery evaluation of the services in order to measure the customer satisfaction.

Service marketing is a new development in the marketing and comes with certain different sets of attributes than the traditional marketing factors. Recently new avenues have been added to this newly developed branch with regards to the social media consideration and the increasing usage of technology for marketing and other managerial concerns.

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Learn about:- 1. Meaning of Service Marketing 2. Definitions of Service Marketing 3. Features 4. Classification 5. Importance 6. Component 7. Service Marketing Mix 8. Types 9. Environment 10. Role of Services in Economy 11. Contribution in Indian Economy 12. Problems.

Service Marketing: Definitions, Features, Classification, Importance, Component, Types, Environment and Problems 


Contents:

  1. Meaning of Service Marketing
  2. Definitions of Service Marketing
  3. Features of Service Marketing
  4. Classification of Service Marketing
  5. Importance of Service Marketing
  6. Service Marketing Component
  7. Service Marketing Mix
  8. Types of Service Marketing
  9. Service Marketing Environment
  10. Role of Services in Economy
  11. Service Sector Contribution in Indian Economy
  12. Problems in Service Marketing

Service Marketing – Meaning

The American Marketing Association defines services as “1. Activities, benefits or satisfactions which are offered for sale, or 2. Are provided in connection with the sale of goods.” The services described in the second half of the definition are those included in the sale of goods to the customer, viz, pre-sale and after-sale services, e.g., services of installation of machinery, its maintenance and repairs, credit and delivery services, etc.

The marketing of these kinds of services usually does not include the sale of the goods to the customer. Such activities, benefits or satisfactions offered for sale are intangible in nature, i.e., they are not concrete objects which can be seen, tasted, felt, moved, and so on.

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There is a regular market for such services represented by activities, benefits and satisfactions offered for sale by providers of services. These services may be labour services (domestic, office, factory, workers), personal services (hand laundry, photographers, barber), professional services (accountant, lawyer).

When a customer buys a service in the service market, he buys the time, knowledge, skill or resources of someone else who is the provider or supplier of a service. The buyer receives satisfactions or benefits from the activities of the provider who may be an indivi­dual, a firm or a company, i.e., an institution specialising in selling certain benefits or satisfactions.

Today we live in a service economy. Just as there was a shift from the farm to the factory, the shift has now been from manufacturing to service. If an industrial society is defined by the quantity of goods as making a standard of living, the post-industrial society is defined by quality of life as measured by the services and amenities — health, education, recreation, arts, and entertainments — which are now deemed desirable and possible for everyone for all-round self-development.

Many firms are willing to buy specialised services from other service organisations. For example, instead of employing maintenance workers, they are using the services of professional maintenance companies. Similarly, instead of employing specialists, they want to buy the services of specialists such as management consultants, auditors, lawyers, tax experts, valuation experts, etc.

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Hence, we have now specialised service firms and institutions ever-willing to sell specialised services to business organisations. We have advertising agencies, marketing research agencies to offer promotion services, share broker firms as experts buying and selling agents of securities, financial institutions offering financial services, transport and warehousing concerns offering physical distribution services, insurance companies selling insurance, and so on.

These service organisations render specialised services and they facilitate industrial and marketing operations. Today, we are living in the world of specialisation. Hence, we need experts in filing our income tax returns, in maintaining our accounts, in solving our personal health problems and so on.


Service Marketing Definitions Provided by Sir William Beveridge, Hasenfeld, A.V.S.Rao, Peters, Watesmen, Sasser, Olsen and American Marketing Association

The term services is not limited to personal services like auto servicing, beauty parlours, medical services, consultancy services etc. On the contrary, it has under-connotations according to management gurus. Services have been defined in several ways; however there is not any single universal definition for the same.

Some definitions of services have been mentioned below:

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“Establishments primarily engaged to provide various services to individuals, business and government establishments, other organisations, hotels and other lodging places, establishments providing personal services as per individual requirement, and entertainment services, educational institutions, membership organisations and other miscellaneous services are included.” – Sasser, Olsen and Wyckoff

“Services refer to social efforts which include government to fight five giant evils, which are wants, disease, ignorance, squalor and illness in the society.” – Sir William Beveridge

“Services can be defined as action(s) of organisation(s) which maintain and improve the well-being and functioning of people.” – Hasenfeld

This definition, though brief, covers services in a substantial way. The well-being and functioning of people are important and we can’t ignore it while clarifying the perception and the very essence of services.

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“Services can also be defined as human efforts, which provide succour to the needy. It may be food to a hungry person, water to a thirsty person, medical services to an ailing person, education to a student, loan to a farmer, transport to a consumer, communication aid to two persons who want to share a thought, pleasure or pain.” – A. V. S. Rao ‘Services Sector Management’

“Services are activities, benefits or satisfactions which are offered for sale or are provided in connection with the sale of goods.” – American Marketing Association

The American Marketing Association defines services as “activities, benefits or satisfactions which are offered for sale or provided with sale of goods to the customer, i.e., pre-sale and after sale service”.

According to Peters and Watesmen “Services are those separately identifiable, essentially intangible activities which provide want — satisfaction and are not necessarily tied to the sale of a product or another service.”

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Service attached to a customer for a product he owns is called ‘customer- service’ and service to the same customer by doctor is ‘health-service’.

A service, like human beings, is known by its deeds. Thus, services are deeds, acts or performances.

The definition suggests that there is a continuity with a pure service and a tangible goods as the two ends as shown below:

(a) Pure service goods – Baby sitting

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(b) A major service through tangible goods – Hotels, Telephone

(c) A major goods with service – Copiers with maintenance contract.

(d) Pure tangible goods Books, soap, toothpaste

It is easier to define the service through the provider, which is either products or persons. Pure services are those rendered by a person to another person with no relation to a tangible product. A major service is one rendered through tangibles like telephone or hotels.

A major goods will have a service attached, mainly as after sales service. Pure tangible goods have no service attached to it. It is however, nearly impossible to find a pure tangible goods with no service attached to it, particularly in the age of consumer oriented marketing.


Service Marketing Features: Perishability, Changing Demand, Intangibility, Inseparability, Heterogeneity and Pricing of Services

Feature # 1. Perishability:

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As a marketable commodity, a service has a high degree of perishability. Time element assumes unique importance. If a service is not used today, it is lost forever. It cannot be stored. It cannot be carried forward. Unutilised services are economic losses. A building unoccupied, a person unemployed, credit not utilised, a ship, a wagon or a warehouse loaded only to half its capacity, empty rooms in a five star hotel are illustrations representing perishable nature of services and business which is lost forever.

Feature # 2. Changing Demand:

The market for services has wide fluctuations. These fluctuations in demand may be seasonal or even by weeks, days or hours. During non-peak hours we need less transport. The use of public transport fluctuates greatly during the day. During night we need less telephone services. Tourism also has seasonal demand. Cricket fields are unused in the rainy season. Golf courses are not used in the winter.

Feature # 3. Intangibility:

A physical product, e.g., a television set, a refrigerator, silk saree, idli- dossa, face cream, are visible and concrete products. You can see them, feel them, taste them, smell them and even eat or enjoy their possession. It is not possible to see, feel, taste, and smell services before they are bought.

A service, by nature, is an abstract phenomenon. It is not a physical object. It has mental connotations. While selling or promoting the sale of a service, we have to concentrate entirely on the benefits and satisfaction a buyer can derive after buying that service. We cannot emphasise the service itself. Banks promote the sale of credit cards by emphasising the conveniences and advantages derived from possessing a credit card.

Whether you are out on business, shopping or just dining out, you don’t have to pay cash or give a cheque. By holding a credit card you can discover a new way of life. In this way a bank marketer can promote the sale of any bank service by stressing the benefits, conveniences and other advantages derived from that particular service.

The telephone company stresses how the use of telephone can reduce costs of selling and storage by using long-distance calls. Of course, sale of a service, e.g., insurance involves a real challenge. The burden of selling an intangible product like service falls mainly on the promotion mix.

Feature # 4. Inseparability:

Personal service cannot be separated from the individual. Some services are created and supplied simultaneously. Dentist, musician, dancer, and such other professionals create and offer service at the same time. Hence, due to inseparability, direct sale of many services is the only channel of distribution. The market for offering personal services is bound to be limited.

A person can sell his service only to a limited number of customers in a day. However, when an institution is acting as a creator of a service, we may have its representatives or agents to sell that service. For instance, a travel agent, an insurance broker, a finance broker, may represent and sell the services supplied by a tourist organisation, insurance company and financial institutions.

Feature # 5. Heterogeneity:

The quality of services offered by firms cannot be standardised. Even the quality of the output of services sold by one seller cannot be uniform or standardised. For instance, a technician cannot offer equal quality of service when he is repairing a number of television sets. Similarly, it is difficult to judge accurately the quality of services.

Payment of price and the quality of actual performance may not have perfect correlation. Price paid for a service may be too high or too low in relation to actual performance. This is particularly significant in the case of sports and entertainment services.

Feature # 6. Pricing of Services:

Perishability, fluctuations in demand and inseparability in services involve significant implications in pricing. Consumers may postpone purchases or perform some services themselves. Quality of services cannot be fully standardised. There are many difficulties in pricing of services. In regulated services, we have cost plus pricing. Usually prices of services are determined on the basis of demand and competition. Example- Hotels in hill stations offer high discounts during winter season due to low demand.


Service Marketing – Top 2 Types: Consumer Services and Industrial Services

Type # 1. Consumer Services:

The services that offered to consumers for consumption are known as consumer services. Every individual, in various capacities enjoy the different services.

They are further classified in to:

i. Food Services:

There are some eating places where in food is provided for value. The people, now a days are cultivating the habit of out siding eating. Such public are satisfied by providing the food expected by them in the places such as – Hotels, Restaurants, Boarding, Canteens, Cafeterias, Dhabas, Street vendors, Fast-food centres, Parcel Houses, Lunch Houses, etc.

They provide some times special food or general items. Ex – If hotel is titled as North Indian Dishes, Chinese, South Indian food means, they provide only those items. The taste and quality of food depends upon the value / price charged for it. The business centres in cities have joined with fast-food services such as Gobi Manchurian, Noodles, Butter Dosa, Pani puri, Bread toast, Specialist. The ‘CBF’ i.e., ‘Cheap, Best and Fast’ is the policy.

Modern days, celebrations of birthday, anniversaries, silver-jubilee etc., are well planned and organised in such centres.

ii. Hotels and Motels:

These are places in which lodging and boarding facility is provided to customers, modern days floating population is increasing due to expansion in trade and commerce. Commercial centres are concentrated in some centres only. Hence, people feel it necessary to stay outside but with all comforts, they expect homely, luxurious services even when they are out.

Now a days Hotels and Motels have grown up both in size and quality. A common ordinary lodging with Rs. 50/- per day to a high of Rs. 5000 ranges are providing the services. The high profile people such as – Executives, Govt Officials, film-stars, sportsmen, foreigners, have become common customers.

iii. Personal Care:

A common feeling in the human mind is to look young! At any cost nobody wants to identify as senior citizens. Health and mind are to be maintained properly. Personally those who intend to be fit, disciplined, would go for Beauticians, Gymnastics, Yoga, Dry cleaners, Massage centres, Spoken language courses, Cat walking coach centres etc.

iv. Entertainment:

The growth in the level of income has made the people to seek avenues to spend the same. They search for entertainment centres such as – Cinema house, Video Centres, Dance Bars, Live Shows clubs, Race, Horse Riding, Photographic, Birds Watching, Water Parks, Circus, to get free, relaxed from the routine schedule. All these services are provided in an organised manner in the modern days. A professional touch has been provided to these centres.

v. Transportation:

This service has moved from an ordinary auto services to air conditioned sleeping coach. Varieties of services of services are being offered by Rail, Row, and air transportation. Transportation has become of nerve-system that connects various appointments, objectives; Special packages are being announced now-a days to take the people to different destinations. Transportation has become an industry of prime importance.

vi. Communication:

The world has become small due to communication system. The whole world is connected with internet, phone, mobile, fax, television, telex, etc. The concept ‘E-World’ speaks about communication system. Accuracy and speed are the characteristics of modern communication.

vii. Car-Station:

Car, car everywhere but no place them. Cities are overcrowded with vehicles. Modern car population has made it obligatory to search a place for them. Therefore, car maintenance, parking, has become services now-a-days. In cities some buildings are exclusively constructed for car care parking, the garages, repairs, workshop, also provide for maintenance of vehicles.

viii. Insurances:

The man’s intention to live long with low risks has given birth to insurance. Someone should take care of him after he has gone is the best reason to insure himself, various agencies both Indian and foreign are competitively providing wide- range of insurance products. Human life is fully insured from all types of risks. Not only life, the properties are also insured. ‘Lead a free-life’ is the motto of Insurance services. They call it as Yogakshem.

ix. Financial:

Man’s life with money i.e., economic man experts certain services. Modern economy is known by its monetary money related services. Everyone needs Banking, Salary, Cash transfers, Installment purchases, Investments advices, maintaining cash, wise channelisation all these comes within the limits of financial services. A vast group of banks such as commercial, cooperative, nationalised, scheduled are continuously rendering number of services. They are known for their services style i.e., 24 /7. Twenty four hours a day and Seven days a week.

Type # 2. Industrial Services:

The services for which industries are the customers are known as Industrial services or business services. These services act as an aid to commercial activities. These also facilitates for the growth, expansion of trade and commerce. Now a days, without these facilities, it is not possible to imagine the very existence of industry.

The following paragraphs briefly explain the industrial services:

i. Financial:

Industry runs with the help of finance which is said to be ‘life-blood’. One of the factors planned at the promotion of a business is ‘finance’. For all the purposes, finance is the focal- point.

In modern days numbers of institutions are rendering a fleet of financial service. They are banks, merchant banks, factoring, consultants, investment advisors, portfolio management, asset management, project advisors, lease and hire purchase advisors, stock-brokers, accountants, etc. The financial service marketing is rich in India.

ii. Insurance:

Business is known for risks. But risks freeness is possible with the help of insurance centres. Business can delegate every risk to Insurance companies, any loss due to natural calamities; normal, abnormal, known, unknown reasons can be insured. Employees, their families, assets are also insured. Risks transfer has enabled the business executives a smooth functioning.

iii. Transportation and Warehousing:

Marketing means physical movement of goods from the production centres to the consumption centres. This is facilitated by the services i.e., Transportation. They add place utility to the products. These two links the manufacture and consumer thus balance between supply and demand of goods. Warehousing maintains the products from the point of production to the point of distribution. Both go hand in hand. This specially more carefully performed to agricultural perishable, floriculture products.

iv. Engineering:

The technical requirements of manufacturer are met by engineering centres. While evaluating the projects from technical sides, Product designing, plant selection, installation, maintenance, special equipments repairs, restructuring of the production procedures etc., need the engineering consultants.

v. Advertising Promotion:

Modern marketing has become more complicated and technical. Unless good quality goods are brought to the notice of prospective customers, the marketing will not be effective. Advertisement and promotion are the twin tools which educate the customers and enhance the sales. Market competitions expert every manufacturer to go for new ways of advertising. Now, advertising agencies such as – T.v., mobile, internet, Films, CD’s have opened the flood gates of ideas.

vi. Office:

A well-established office has become inevitable now-a-days. Modern electronic devices such as computers, auto copy machines, filing desks, record keeping sections, etc., are most essential services. Organisation may be handicapped without the office services.

vii. Management Consultants:

A modern professional service is management consultancy. Business houses have become professional institutions. To grow with professional touch, the consultation in the areas of marketing, finance, public relation, labour welfare, information technology, future planning and strategies, environment has become inevitable. The fast and vast growing technology has become a challenge and that expect up gradation every time.

The professional services are provided by professional very professionally. The entrepreneurs who come with original ideas can shoulder most of their work to the professionals to think and act upon it. The concerns who are blessed with consultation can performing, better way and expert maximum return. The only solution to complexity is consultation by experts.


Service Marketing Importance: A Key Differentiator, Importance of Relationship, Customer Retention, Multiple Touch Points, Service Proliferate and a Few Others

As service is an intangible product, its marketing becomes a difficult task. However, the marketing of such intangible services is extremely important in order to sustain and survive in the market.

Following points are listed, to explain the importance of services marketing:

1. A Key Differentiator:

Most of the consumers consider the services as an important element in order to judge the product or a service. For example, Dominos and Pizza Hut are known to sell similar products in the market; however the service that they provide to their customers matter a lot.

Since there is not much difference in the product of the above mentioned two brands, at such times their services create an impact on the customer’s mind. Hence, “service” is defined as a key differentiator where a company can provide excellent customer services to retain their old customers and to attract new ones.

2. Importance of Relationship:

Since service is an intangible product, customers will be able to buy such services based on mutual trust and confidence in the seller. Hence, it is important for the seller to maintain good relationships with the customers by listening to their needs properly and delivering exactly what they want. Hence, relationship is considered very important in a service sector, which will help the seller to retain loyal customers and also attract the new ones.

3. Customer Retention:

In today’s highly competitive environment, it is very important to retain old customers than to attract new ones. This is because there are a lot of sellers trying to catch from the same pool of buyers. Thus, sellers must concentrate on retaining the customers by fulfilling their changing needs.

They must promote feedback amongst customers and must work on the given feedback in order to match up to their wants. This way they will be able to retain their loyal customers by offering increasing satisfaction.

4. Multiple Touch Points:

Service sector does not provide any tangible services to the customers. Thus customers have to depend on intangible services like talking to many people about the services before buying the same. This creates a perception in the customer’s mind whether to go ahead with the purchase or not. These multiple touch points are important to motivate the customers to trust them and make the purchases.

5. Services Proliferate:

Since it is a challenge to market the intangible services to the customers, marketers should find various ways and means to market the product in such a way that it stands out from the rest of the crowd. They should invent various ways to communicate the benefits of the services to the customers in such a language which they find easy to reflect to their needs and value.

6. Feedback Improves Services:

Since it is difficult to match up the marketing concepts of the service sector with the needs of the customers, sellers must work on the feedback given by the customers. These feedbacks are genuine suggestions and tips given by the customers and if the seller works on the same, it will help him to match up with the changing needs and desires of the customers. Sellers must cultivate the habit of collecting regular feedbacks from the customers and working on the same.

7. Technology Impacts:

Technology is a big boon for the service sectors. People like to collect information on the services before actually purchasing them. Thus, internet plays a very important role here to flash the required details of the services so that customers can directly visit the website for details and this will also prevent them from talking to many other people. Service sellers must take full advantage of the growing technology and reach out to maximum customers with the required knowledge and quality.


Service Marketing – 3 Important Components: External Marketing, Internal Marketing and Interactive Marketing 

As services have several characteristics different from those of goods, they need a different marketing strategy.

In view of the complexities of services marketing arising out of their special characteristics, Gronroos has suggested three interrelated and mutually supporting approaches to service marketing which should be planned and implemented as an integrated whole.

The three components of service marketing advocated by Gronroos are:

1. External marketing,

2. Internal marketing, and

3. Interactive marketing.

Component # 1. External Marketing:

External Marketing covers the traditional marketing functions of preparing, pricing, promoting and distributing the service to the customers. While external marketing is an essential requirement of service marketing, a comprehensive and effective service marketing strategy extends much beyond this and encompasses internal and interactive marketing.

Component # 2. Internal Marketing:

Internal marketing refers to the customer orientation of the company in training and motivating its employees to serve the customers well. A human touch is very important in respect of many services. Some services are indeed high-touch services, including some high tech services.

It is also necessary that everyone in the organisation becomes marketing oriented. Berry, who has defined service as a deed, performance or effort, argues that the most important contribution the service department can make is to be exceptionally clever “in getting everyone else in the organisation to practice marketing.”

As Payne succinctly puts it, internal marketing has the following two key aspects:

i. Every employee and every department within an organisation both have roles as internal customers and internal suppliers. To help ensure high quality external marketing, every individual and department within a service organisation must provide and receive excellent service.

ii. People need to work in a way that is aligned with the organisation’s stated mission, strategy and goals. This is obviously a critical element within high-contact service firms where there are high levels of interaction between the service provider and customer.

Component # 3. Interactive Marketing:

Interactive marketing describes the employees’ skills in serving the client. The customer considers not only the technical quality of the service (for example, the professional competence of a doctor), but also the functional quality (for example, the personal approach which makes a patient feel free and friendly and confident to talk to or discuss with the doctor).

The interactive marketing can be differentiating factor, particularly in services where the technological quality is difficult to judge. The internal marketing has a great role is interactive marketing. For instance internal marketing (training and motivation) can very significantly help to enhance the functional quality of the service, as also the technical quality.


Service Marketing Service Marketing Mix: Product/Service, Price, Place, Promotion, Physical Evidence, People and Process 

Marketing mix means to collect and blend the resources to maximize the customers’ satisfaction and achieve the objective of the organization. The salient features such as intangibility, inseparability, heterogeneity and perishability make marketing of services a unique challenge. The traditional marketing mix which includes product, place, price and promotion could be extended to another 3Ps which are physical evidence, process and people.

1. Product/Service:

The service or activity itself is a product in service marketing. Since service products are intangible their performances are evaluated by the consumers based on features, quality, availability etc. of the services. On account of this intangibility, the firm may find it difficult to understand how consumers perceive their services. Therefore in order to attract consumers towards a particular service, the services marketer should rely on tangible offerings to build an image of the organization and its services in the market.

The service product is therefore a package consisting of the intangible service and certain tangible offerings such as the brochures, the furniture at the service outlet etc.

A service package is also classified as follows:

i. The core service – This is the actual service which is absolutely intangible. It is this service which will enable the consumers to satisfy their needs. Examples – the consultation offered by a consultant, the counseling offered by a counselor etc.

ii. The facilitating services – Since services are intangible, their delivery to the consumers requires certain facilitating aspects which may be physical entities also. These are the facilitating services. Examples – a consultant needs an office to interact with the client; a counselor needs a room to counsel people etc.

iii. Supporting or supplementary or augmented services – These are the services which are offered by the service providers to enhance the value of the core services. Examples – a lodge offering travel guidance to its clients, a doctor offering general health tips etc. Providing such additional services makes the core services more attractive from a marketing point of view.

2. Price:

Price is the amount a consumer has to pay to purchase and consume the service. Price from the view point of the service provider represents revenue and this is the only component of the marketing mix which brings him revenue whereas all other components are sources of expenses.

Service being intangible in nature, pricing is a very difficult and complex issue as compared with pricing of goods. Price is also considered an indicator of quality of service. It is essential, therefore that the service firm prices its services very appropriately. Price discrimination is a common phenomenon in pricing services.

Ideally, the price should provide for the cost of generating the service and also a certain amount of profit to the service provider.

A service provider may follow any of the following pricing objectives while pricing:

i. Profit related objectives

ii. Volume or value of sales objective

iii. Competition based objectives

iv. Social responsibility related objectives

v. Market leadership related objectives

vi. Market share related objectives

The following are the factors influencing pricing decisions:

i. Cost of providing the service

ii. Market demand

iii. Expected competitors’ reactions

iv. Government restrictions

v. Company objectives

vi. Barriers of entry and exit in the industry

vii. The prevailing economic situation

3. Place:

Place refers to the places where the services can be acquired by the consumers. It also includes the distribution channels of services. Most of the services are sold directly by the service producers to the consumers. Examples – consultancy, counseling etc. In certain cases however merchant middlemen or agents are used to sell services to the final consumers.

Even though services are intangible, the place factor is very crucial in case of services marketing. Consumers would like to buy and use services with minimum amount of travelling. The choice of a particular channel of distribution for services depends on several factors.

A service marketer can use any of the traditional channels of distribution for distributing services to the consumers.

4. Promotion:

Promotion is equally important to enhance the sales of the services as it is in the case of tangible goods. Service providers should put in all efforts to promote the products and bring them to the notice of the consumers.

A service provider can use any of the following techniques of promoting his services among the consumers – advertising, salesmanship, publicity, sales promotion, direct marketing, word of mouth promotion etc.

Word of mouth promotion is a very effective method which ensures high sales of the services. The type of promotion to be used in case of a service largely depends on the target customers. In case of services, post-purchase communication is very important in retaining existing customers and attracting potential customers.

5. Physical Evidence:

Physical evidence refers to the place and all the other physical things which are present in that place in which the service provider and the service consumer meet each other and interact for the purpose of selling and buying the service. It includes the place itself, the interiors, the furniture, the stationery, the brochures, the lighting, the dress of the staff etc.

Physical evidence is an important aspect in case of services marketing because the customers form an impression of the organization on the basis of physical evidences. An effectively planned physical evidence can create a positive image of the organization in the minds of the consumers and create goodwill to the organization.

6. People:

People include all the people involved in the delivery of the service to the consumers. Therefore, people in this context include the employees, the executives, and the salesmen etc. who work for the service provider.

People form an important element of marketing mix for services as most services are highly labour oriented. The behaviour, attitude, customer friendly nature of the personnel providing the service and the customers involved in production have a profound influence on providing quality customer service.

Therefore, it is quite essential for die service provider to hire right people for the right job to be performed. This will go a long way in providing consumer satisfaction and building a positive image of the organization. Examples of people – a receptionist at the front office, the executives interacting with the consumers etc.

For successful services marketing, the people factor is very important. Therefore, an organization should focus on all the aspects of its employees. Care should be taken at the stage of recruitment to employ the right people. They should be sufficiently trained in the art of creating and delivering services.

They should also be sufficiently motivated through financial and non-financial motivators. The people should be made to realize the importance of dealing effectively with the service customers. This concept is also called internal marketing.

7. Process:

Process refers to the entire stream of actual procedures, mechanisms, and flow of activities by which the service is delivered to the customers. Experience in the past with a service also influences the expectations of the customer. If the customer has had a bad experience with the service on any previous occasion, it will influence his or her future perceptions of the service. It is essential to train the front line employees, whose actions and behavior influence the customers opinions of the organization and the actual service provided.

It is very difficult to measure quality in service. Therefore, customers’ perception about the quality of the service is largely influenced by the process. The process should create a pleasant memory in the minds of the customers. The process should be such that the service is delivered in a manner which is efficient, pleasant and prompt.

It is essential to have complete knowledge of the customer to know their expectation, perception and behavior. To analyze behavior of the customers marketing research has to be conducted to look into the ability of the service providing organization. The service provider should provide services much beyond the expectation of the customers to save the organization from the downfall and to ensure long run relation with the existing and potential customers by creating an effective process.


Service Marketing – Environment

Marketing environment for services is a combination of factors which the service providers use as tools for pursuing its marketing objectives in the identified markets for achieving targets. These factors have to be strategically mixed in services marketing planning for offering quality services and optimizing customer value. It is an integrated approach for promoting the services with view to expand the area under services market.

The traditional components of marketing-mix include product, pricing, place and promotion. These are further supplemented by another set of 4Ps consisting of participants (people), pace, process and physical evidence in marketing of services. The services-mix comprising variables of marketing determine the rightness of a service (or goods or both) in the market in view to provide consumer satisfaction to a larger extent.

Thus the implication of services-mix lies in identifying a right service, with appropriate customization at the right price, may help in establishing brand credentials and potential scope of business expansion, diversification and qualitative improvement in delivery through right promotion policies.

The services-mix provides a basic framework to develop inter-factor relationship in a marketing organization to manage the tasks of achieving targets.

The success largely depends on the administration of the above factors in the marketing environment considering customers impact on the whole exercise. Thus, services-mix is a very basic concept which does not proclaim marketing results. However, it serves as framework for understanding environment, developing strategies, implementing programs and management thereof.

Broadly, an effective factor relationship in services-mix would help in optimizing the results in order to achieve the business targets. Such design of optimum business targets is based on symbiosis of institutional management of factors and research support. A clear vision of customer group, marketing targets, product-market segmentations and resources of company supports in formulation of an effective design of services-mix.

The quantitative methods of research, spatial dynamics of product and buyer-seller relationship are some methods of research which helps in building an optimum services-mix. The product in the context of services marketing may be explained as the type of service offered and the related package along with this offerings. The airlines offer varied services like passenger travel, cargo, charter services, etc., which may be termed as the products of the service organization.

The price of the service offered may be categorized broadly into customized and competitive in the segmented markets. The pricing mechanism of some standardized services may be alike the products in class and mass markets. The services are positioned in the segmented customer markets according to the demand, purchasing power and channel availability thereof. In delivering the services the role of service providers and receivers is more important which may be termed as participation.

The service marketing is of competitive nature as the identical services are offered by many individuals and agencies. Thus, managing the pace of delivery of the services is the critical issue and requires dynamism in building the competitive strategies for establishing the credentials of the brand in particular. The process of services marketing includes the stages from its designing to delivery and post-delivery evaluation of the services in order to measure the customer satisfaction.

Most of the services need physical evidence for purchasing and availing the services like tickets for witnessing the movie, travel or undergoing a surgery in the hospital. This physical evidence may also be explained for the presence of the infrastructure.

Besides the 8Ps in service marketing the accessibility to the services to the existing and potential customers and approaches to deliver the services are also important factors in the service marketing-mix. The attitude of the customers to adopt the new services plays significantly in driving their marketing.

For example, the service of a super-specialty hospital conducting surgery with advanced technology needs to generate enough confidence in the service buyers and simultaneously the services need to be priced reasonably to suite the customers’ purse. Thus, in the marketing of new services adaptability and affordability are the factors which determine the behavior of the service buyers.

The services are largely customized and require personalized approaches in their dispensing. The customers need to be provided comprehensive information about the offering and delivered at the convenient place at competitive price.

The operational factors involved in the marketing of services are as many as listed below:

i. Identifying products and services

ii. Segmenting services

iii. Delivery of services

iv. Sustaining competition

v. Brand personality management

vi. Technology management in designing and delivering the services

vii. Strategic alliances management

viii. Patronizing services

ix. Scheduling the services for higher market and user-orientation

x. Achieving customer delight

The service provider should identify the services based on the assessment of the needs of the customers and segment the markets for particular service. The pathological services should be located near to the large hospitals where the referred cases may be attended. The delivery services may be added value by providing advantages of home service, honoring credit cards, express delivery and add-on delivery to the third party on the request of the original buyer of the services.

The services can be marketed more effectively if associated with the brand and owns its personality. The brand personality consists of brand awareness, brand acceptability, brand preference and brand loyalty. Adequate awareness about the brand and its advantages may be generated by personal marketing of services and through extensive communication and advertisement.

The AT&T advertises extensively about its communication services (cellular telephones) and holds campaigns to generate awareness among the users which helps in their decision-making in buying the same. The analysis of services package leads to acceptability (or rejection) of services and adds to the existing brand preference among the buyers.

The customers become brand loyal when they have adequate awareness, acceptance and high preference for the particular services. The services offered by any company should be continuously improved using the new technology.

The companies offering services may also look for various strategic alliances with leading domestic or international service Provider Company for making the services more effective and brand loyal:

i. Human resource alliance

ii. Technology alliance

iii. Capital resource alliance

iv. Research and development alliance

The companies which intend to market the services in bulk look for the organizations for patronizing their services. The internet services in India are provided by the educational research network (ERNET) and Videsh Sanchar Nigam Limited (VSNL), National Informatics Center, etc., and all these agencies prefer for bulk marketing of their services to the business houses, industries, educational institutes and the like than retail marketing of services to individual customers.

The organizational patronage to the service provider company results into sustainable marketing relationship and the service provider company may use this relationship as a brand push {relationship marketing). The services should to be properly scheduled with a view to cater the needs of the customers at the right time to get the effective customer response (ECR).

The higher the degree of ECR higher would be the customer satisfaction. The physical attributes of the services marketing may range from the presentation of the services to logistics involved in providing the services. The logistics may also be a category of service which may be sold to the customers.

Some of the physical attributes of the services marketing may be seen as listed below:

i. Dealer services for delivery of the services

ii. Logistics services for the customers

iii. Product linked services package

iv. Franchising of services

v. Branding of services

vi. Out-sourcing of services

vii. Research and development in services

viii. Presentation of services

ix. Client account servicing

x. Total quality servicing

The service providers may choose to deliver the services directly to the customers or through the authorized or exclusive dealers network like the service network of Maruti Udyog Ltd. The company which has wide area under operation may provide the services through the dealers or franchisees for assured, quality and timely service. This strategy would also help in promoting the brand of the service company.

The franchisees of the companies also out-source the experts to ensure quality and timely service to the customers. Brand is largely associated with the attributes of the services, benefits, use values, user culture, personality and user behavior. Hence the branding decisions are very important for the company. In this process the company should first take a decision on developing the brand name and its need. Branding is necessary to get the identification of the services and the team that offers the services, delivery process, gain legal protection and good corporate image.

Branding also helps in building loyal customers for the services and organizing its channels. Brand is largely associated with the attributes of the product, benefits, use values, user culture, personality and user behavior. Hence the branding decisions are very important for the company.

In this process the company should first take a decision on developing the brand name and its need. Branding is necessary to get the identification of the product and supplier, process supply orders, gain legal protection and good corporate image. Branding also helps in building loyal customers for the product and organizing the seller segments for better operational efficiency.

There are three basic elements:

(i) Service recognition,

(ii) Cost of service, and

(iii) The delivery planning that is required to develop an effective services-marketing mix.

The relative importance of these three elements varies from product to product and from time to time. Delivery of services on time and safely, is the key to a successful marketing of services. The objective of delivery planning is to make the service available to the consumers at more convenient outlets. The time and distance factor for the delivery of services normally influences the buying decisions where the manufacturing of products is subject to consumer order, occasional demands and door-to-door delivery promises.

This strategy helps in developing right consumer approach towards brand building of the company. The consumer behavior as a rule is purposeful and goal- oriented. The goods and services of the companies are accepted and rejected by the consumers on the basis of the extent they are perceived as relevant to the needs and lifestyle. It is observed that the consumerism responds to the goods and services offered by any company as long as they are backed with enough selling firepower.


Service Marketing – Role of Services in the Economy (With Example)

Service marketing is a new development in the marketing and comes with certain different sets of attributes than the traditional marketing factors. Recently new avenues have been added to this newly developed branch with regards to the social media consideration and the increasing usage of technology for marketing and other managerial concerns.

After studying concept of service marketing, its significance, scope and classification as well as service marketing mix it is important to study relation between services marketing and economy.

We are developing step by step approach towards concept of service marketing and economic relationship, scope of service marketing in generation of job opportunities, role of services in economy and finally service quality.

We have already seen impact of service marketing on economy, global as well as on Indian economy.

After few years only service sector will decide the faith of countries economic growth and progress.

So it is important to understand service marketing in view of the whole economic system.

Its scope, importance, objectives, employment generation, and role of service sector marketing in country’s overall sectors.

It is unnecessary to even stress the importance of service in modern world. Role of service sector in economy is as immensely increasing and there will be a time when without service industry, no economy will even stand in world competition. Services are spine of the economy with growing tendency of using technologically advanced techniques for providing service. Many organizations are making large investment in service sector because it is a call of today’s global market to stress the service rather than product. Services lie at the very center of economic activity in any society.

For example:

a. Business services- Financial services, banking, consulting.

b. Trade Services- Retailing, maintenance and repairs

c. Infrastructure Services- Communications, transportation

d. Social/personal Services- Restaurants, beauty services, health care and spa

e. Public administration- Education, Government.

Of the above, Infrastructure services are very important links between all the other sectors of the economy, if these services are sound, all the economy flourishes rapidly. In economy, infrastructure services works as the intermediaries between extractive and other trade services.

Service activities are absolutely necessary for the economy to function and to enhance the quality of life.

Service activities show how the economy is functioning and how much growth has achieved. Developing countries show increase in service diversity whereas underdeveloped countries lack even in infrastructure services therefore low growth of economy.

Hence, services are not subsidiary activities for the economic progress, but integral part of the growth. They are central to the functioning of a healthy economy. The service sector not only facilitates but also make possible the goods producing activities of the extractive and manufacturing sectors. Services are the crucial force for change towards a global economy.

Development comes hand in hand with service sector progress. Future of marketing lies in the progressive nature of service sector and its impact on the global market. With respect of India, the share of services in GDP is almost 47%, against 29% for industry and 24% for agriculture.

The biggest and fastest growing service segment is computer software.


Service Marketing Service Sector Contribution in Indian Economy: Customer Preferences, Women to Job Market, Changing Family Structure and a Few Others

Service sector is in the driver’s seat in the Indian economy. It is also important to understand the reasons for the change. Whether the same trend is expected to continue in the future also is a big question. The following together have contributed for the boost in service sector. These factors include the changes taking place in economy, sociological, political and demographic environment.

1. Customer Preferences:

The job opportunities created by economical environment has added more money to the customer purses. The fast rising income has made them to get attracted towards domestic services, travel and tourism, investment in durables, equities, insurance, health care, renewal of their assets, health/sports/ladies clubs and pubs etc. It has made the business people to establish more number of such institutions.

2. Women to Job Market:

Another significant change in Indian economy is that women have entered the job-market. The restricted shackles have been taken off, and she has become a working woman. Making an entry into the household industrial sector, now she has presence in all the sectors of the economy. The work performance of woman in the most of services sector like bank, insurance, airlines etc., is highly appreciable.

In short, women are getting involved in almost all male dominated activities. Due to increasing involvement of woman in commercial activities, the services like domestic activities, fast food restaurants, marriage counselling, personal care, financial services, retailing etc., have emerged in the recent times.

3. Changing Family Structure:

India was known for big families called joint Hindu families. But, a diffusion in the structure could be seen over the period of time. Families are becoming smaller in size. In recent time a joint family, means 2+2 (father + mother and two kids)! The entry of women as work force has further resulted into DISK (double income single kid), DINK (double income no kid), HHWW (Husband Houseman Wife Working) etc. Due to such family composition, the demand for entertainment, hotels, restaurants, career counseling institutions, resorts, health care etc., has gone up.

4. Improved Life Expectancy:

The enhanced life expectancy has resulted services, gardening services, investments banking, insurance services etc. Hence, there are reasons for the growth of medical technology, awareness about health and education. This has resulted into the growth of service sector.

5. New Product Development:

The changing lifestyle and increased income demands are demanding innovative products. The market is experiencing a number of new entries which are also backed by ‘services’. For example, once a new computer is being sold to customer, these should be servicing centers for both hard and software. Similarly, more and more innovative products enter the market; these would be increased demand for services such as – repairs, second sale, training, development education etc.

6. Added Complexities:

The changing environment is bringing new complexities in life style, relations and products.

7. Youngisthan:

The upcoming generations is dominated by young population. India is experiencing the demographic dividend with 60 percent of the total population belongs to the age group between 18 to 35.

8. Pressurized Resources:

The diminishing resources and manifold increase in demand has made the emergence of resource management services. How to draw the balance between these two has become the subject matter.

The services which could minimize the waste and minimize the levels of satisfaction are being heavily demanded. The water conservation, pollution control, carpools, plantation, disease control etc., are having the top priorities. Hence, the services sector is shining with the number of new young generation choosing the path of social entrepreneurship.

9. Mammoth Growth of Corporate World:

India, since the acceptance of LPG in 1990, is becoming a hub of corporate world. The policy has given a chance to move towards companies. The information technology and biotechnology have completely changed the phase of life of few cities in India. The persons who are working do not have any schedule of life and its security. Hence, the service sector is changing and growing at the different pace. The areas like airlines, courier, travel, insurance, risk management, personal financial planning, restaurants, health care, Ayurveda care, star hotels, mobile services, net services etc., are the drivers of the service – bus.

The other reasons for the service sector in India are political and economic changes. The economic environment is providing open invitation for service- sector. The expanding network in rural India is a treasure of opportunities for service providers. The online service, consultation, outsourcing, are the new phases of service sector.


Service Marketing – Problems: Intangibility, Inseparability, Perishability and Heterogeneity

The unique service features and the kinds of services pose peculiar problems for marketing managers of services.

They are as follows:

1. Intangibility – It cannot be stored and protected through patents and cannot be readily displayed or communicated. Prices are difficult to set.

2. Inseparability – Consumer is involved in production. Centralized mass production is difficult.

3. Perishability – Services cannot be inventoried.

4. Heterogeneity – Standardization and quality are difficult to control.

In developing a service marketing strategy, many firms consider the following seven areas:

1. Marketing should occur at all levels, from the marketing department to the point where the service is provided.

2. Wherever possible, establishment of direct contact with the customers.

3. Using only high-quality personnel for marketing job.

4. Creation of loyalty among existing customers.

5. Ensuring quick resolution of problems faced by customers.

6. Provision of improved services at lower cost.

7. Branding of services offered.