Services Marketing
Unit I

Services – The Concept
• A service is an "(intangible) act or use for which a consumer, firm, or
government is willing to pay.“
• Examples include work done by barbers, doctors, lawyers, mechanics, banks,
insurance companies, and so on. Public services are those that society (nation
state, fiscal union or region) as a whole pays for.
• Marketing experts feel that the content of service as much more wider
• “Services can be defined as an action of organization that maintains and
improves the well being and functioning of people”
• According to US Govt Standard Industrial certification, establishment primarily
providing a wide variety of services for individual, businesses and Govt
establishments and other organizations, hotels and other lodging places,
establishment providing personal services, repairs and amusement services,
educational institutions, membership organization and other miscellaneous
services are included.

Goods Vs Services
Goods and services can be differentiated based on
1) Tangibility
2) Transferability
3) Existence
4) Heterogeneity(hardly standardised)
5) Reselling

Features of Services
• Intangibility
• Perishability
• Inseparability
• Heterogeneity
• Ownership
• Simultaneity
• Quality measurement
• Nature of demand

• The American Marketing Association defines services marketing as an
organizational function and a set of processes for identifying or
creating, communicating, and delivering value to customers and for
managing customer relationship in a way that benefit the
organization and stake-holders.
• Services are (usually) intangible economic activities offered by one
party to another. Often time-based, services performed bring about
desired results to recipients, objects, or other assets for which
purchasers have responsibility. In exchange for money, time, and
effort, service customers expect value from access to goods, labor,
professional skills, facilities , networks, and systems; but they do not
normally take ownership of any of the physical elements involved.
Services Marketing

• The application of marketing principles in services sector is the main
thing in the services marketing.
• Marketing of services is meant for marketing something intangible.

Why Services Marketing
• Upward trend in the disposable income
• Increasing specialisation
• Growing fashion
• Professionalism in education
• Information explosion
• Sophistication in Market
• Increasing governmental activities

Significance of services marketing
• Creation and expansion of job opportunities
• An optimal utilisation of resources
• Paving avenues for the formation of capital
• Increasing the standard of living
• Environmental friendly technology

Types of Services
• GATS identified 155 activities as services and classified them into 11 categories. These11 types of services
are
• Business services
• Communication
• Construction and engineering
• Distribution
• Environment
• Finance
• Tourism
• Health
• Recreation
• Transportation

Types of Services
There are 4 types of services on the basis of ownership and business objective
Government for profit – Public sector – e.g. post office, police, water, electricity
Government not for profit –g. charities, foundations, old age homes, societies related to women, literacy,
welfare etc.
Non-government for profit– Business sector – e.g. banks, hotels, airlines, travel agencies, insurance, legal,
medical and consultancy
Professional services –g. security personnel, accountants, auditors, computeroperators etc
In relation to goods there can be 7 types of services
Pure tangibles –g. renting goods where no service or intangibles are associated
Major tangible with minor intangibles – g. tangible good with accompanying services ( Refrigerator ,AC)
Minor tangibles with major intangibles –g. major services accompanying a minor tangible good (Meals on
Airlines)
Pure services – Here the o er is only a service (telecom, health club)
Rented goods – The service gives the right to possess and use a product
Owned goods – It involves creation, repair or improvement of a product
Non good services – Such a service has no product elements but is rather an experience

Relationship marketing
• Relationship marketing refers to those marketing activities that are aimed
at developing and managing long-term relationships with the customers.
The details about the customer, his buying patterns, contacts, etc. are
maintained in a sales database and an account executive is assigned to
fulfill the needs of the customers and maintain the relationships
successfully.
• Relationship marketing recognizes the value of a customer and the
significance of keeping good relations with him.
• Marketers attempt to build goodwill and confidence in the consumer’s
mind by showing that they care.
• Relationship marketing is a wide concept; it covers not just the customers,
but also the other stakeholders who are vital to the company.

Definition
• Relationship Marketing is marketing with the conscious aim to
develop and manage long term and/or trusting relationship with
customers, distributors, suppliers, or other parties in the marketing
environment”.
Relationship management begins with clear understanding
of:
Who your customers are
What are their values
What they want to buy
How they prefer to interact with you and
How they expect you to serve them.

The Characteristics of Relationship Marketing
1. Concern
2. Trust and Commitment
3. Service

Goal of Relationship marketing
• Enhancing
• Retaining
• Satisfying
• Getting

Strategies for Relationship Marketing
(i) Core Service Strategy
(ii) Relationship Customization
(iii) Service Augmentation
(iv) Relationship Pricing
(v) Internal Marketing

Service Marketing Mix
• The traditional marketing mix is considered in the context of services. Since
a different marketing mix is needed for services some have expanded the
traditional four Ps.
1. Product
2. Pricing
3. Promotion
4. Place
5. People
6. Process
7. Physical evidence

Service Marketing Mix

Service Marketing Mix - Definition
“The marketing mix concept is a well established tool used as a
structure by marketers. It consists of the various elements of a
marketing programme which need to be considered in order to
successfully implement the marketing strategy and positioning in the
company’s market. It is important internal elements or ingredients that
make up an organisation’s marketing programme ”.
– Adrian Payne

Product (Service Product)
According to Adrian Payne, a product is an overall concept of objects or
processes which provide some values to customers. Goods and services
are subcategories of product. The term produce is used in a broad
sense to denote either a manufactured good or product and a service.
Strictly speaking, customers are not buying goods or services but
specific benefits and value from the total offering. This total offering
to the customer is termed as “offer”.
Total Product
- Core Product
- Expected product
- Augumented product
- Potential

1. The core or generic product
The core product represents the basic services of a product. This
product is at its basic level. For example, food served in a restaurant a
bed in a hotel room for the night safety of deposits and loanable funds
in a bank.
2. The expected product
The expected product consists of the core product together with the
minimal purchase conditions which need to be met. For example in a
restaurant in addition to basic food served, aspects such as cleanliness,
timely service polite and courteous service of bearer, availability of
menu and background music are expected.

3. The augmented product
Augmented product refers to offerings (product benefit or services in
addition to hat customers expect). This concept enables a product to
be differentiated from another. For example, though IBM has not got
technologically advanced core product they are praised for excellent
customer service. This adds value to their core product in terms of
reliability and responsiveness.
4. The Potential product
Potential product refers to doing everything potentially feasible to hold
and attract the customers. The concept of potential product of a
restaurant is viewed in terms of a pleasing flower arrangement,
manager’s word of thanks, readiness to go out of the way to serve, etc.

PRICE
Price plays a significant role in the marketing mix by attracting revenue
to the marketer. Pricing decisions are important for determining the
value of the service as perceived by the customer and building of an
image for the service. Price serves as a basis for perception of quality.
The pricing strategy should be in tune with the marketing strategy.
Pricing strategy should gain competitive advantage for the firm.
PROMOTION
Promotion is an important part of the marketing mix for many
marketers. The promotion element of the service marketing mix
communicates the positioning of the service to customers. Promotion
adds tangibility and helps the customer evaluate the service offer. The
promotion mix includes six elements, namely
(a) Advertising (b) Personal Selling (c) Sales Promotion (d) Public
Relations (e) Word of mouth and (f) Direct mail.

PLACE
Place mix of services marketing involves the location and channels which are
the two key decision areas. The service provider should decide as to how to
deliver the service to the customer and where this should take place. The
service provider should ensure that the promised services reach the ultimate
users without any distortion. With regard to location, a service firm decides
where its operations and staff are situated.
PEOPLE
In all the organisations, people play a decisive role. Employees working in the
service organisations are the contact people with the customers. Employees
working in a bank, hotel, hair-cutting saloon etc., are all frontline people.
They are in direct contact with the customers who visit their services. The
role of these frontline people decides the success of the service organisation.
A service organisation can be only as good as its people. The strength and
success of the service organisation lies in the quality of the service personnel
working in the organisation.

PHYSICAL EVIDENCE
Physical evidence is another important variable to be considered in the
context of services marketing. Since a service is intangible, it is important
for the client to search for evidences which enables him to evaluate the
service. Physical evidences are those tangible clues which customers may
receive during the process of receiving the service. The customers
evaluate the worthiness of the service with the physical evidences they
receive.
PROCESSES
The processes by which services are created and delivered to the
customers are an important element of marketing mix. Customers
perceive the delivery system as a part of the service itself. The decisions
on process management are of great importance to the success of the
marketing of the service. The processes involve the procedures, tasks,
schedules, mechanisms, activities and routines by which a service is
delivered to the customer.

SERVICE MARKET SEGMENTATION
Market segmentation is defined as the process of dividing a market into
distinct sub-sets of consumers distinguished from one another, with
common needs or characteristics & selecting one or more segments to
target, with a distinct marketing mix
1) UNDIFFERENNTIATED MARKETING APPROACH
2) DIFFERENTIATED MARKETING APPROACH
3) CONCENTRATED MARKETING APPROACH

BENEFITS OF MARKET SEGMENTATION
Proper Choice Of Target Market
 Helps Distinguish One Customer From The Other
 Effective Tapping Of Market
 Helps Crystalize The Need Of Target Audience
 Becomes Productive And Profitable
 Brings Benefits To Customer As Well
 When Segmentation Attains High Sophistication, Customers And
Companies Stay Together

BASES OF MARKET SEGMENTATION
• GEOGRAPHIC
• DEMOGRAPHIC
• PSYCOGRAPHIC
• BEHAVIORISTIC
• PURCHASE OCCASION
• USAGE RATE