2. Some FACTS…
Wal-mart is in the list of Fortune 500
GE derives almost 40% of its revenue
from services
In India service sector contributes 56% of
GDP
3. Services dominate the United States
Economy:
GDP by Industry, 2001
Source: Bureau of Economic Analysis, November 2002
Finance, Insurance,
Real Estate
20%
Wholesale and
Retail Trade
16%
Transport, Utilities,
Communications
8%Health
6%
Business
Services
5%
Other Services 11%
Government
(mostly services)
13%
Manufacturing 14%
Agriculture, Forestry,
Mining, Construction 8%
SERVICES
6. What is a SERVICE ?
“ A service is any act or performance
one party can offer to another that is
essentially intangible & does not result
in the ownership of anything.”
Its production may or may not be tied to a physical
product
7. Defining the Essence of a
Service
An act or performance offered by one party to another
An economic activity that does not result in ownership
A process that creates benefits by facilitating a desired
change in:
customers themselves
physical possessions
intangible assets
8. Distinguishing Characteristics of
Services
Customers do not obtain ownership of services
Service products are ephemeral and cannot be inventoried
Intangible elements dominate value creation
Greater involvement of customers in production process
Other people may form part of product experience
Greater variability in operational inputs and outputs
Many services are difficult for customers to evaluate
Time factor is more important--speed may be key
Delivery systems include electronic and physical channels
9. Growth Factors
Economic,socio cultural & life style
change
Women taking up jobs
Explosion of IT sector
Advent of many new technical products
Reforms & liberalization
10. Tasks involved…
Understanding the nature of services
Understanding the customer & his expectations
Giving a shape to service
Organizing delivery system
Pricing strategy
Promoting the services
Extended marketing mix-7P`s
Differentiation
Quality & satisfaction
13. Elements of The Services Marketing
Mix:
“7Ps” vs. the Traditional “4Ps”
Rethinking the original 4Ps
Product elements
Place and time
Promotion and education
Price and other user outlays
Adding Three New Elements
Physical environment
Process
People
14. The 7Ps:
(1) Product Elements
All Aspects of Service Performance that Create
Value
Core product features—both tangible and
intangible elements
Bundle of supplementary service elements
Performance levels relative to competition
Benefits delivered to customers (customers don’t
buy a hotel room, they buy a good night’s sleep)
Guarantees
15. The 7Ps:
(2) Place and Time
Delivery Decisions: Where, When, and How
Geographic locations served
Service schedules
Physical channels
Electronic channels
Customer control and convenience
Channel partners/intermediaries
16. The 7Ps:
(3) Promotion and Education
Informing, Educating, Persuading, and Reminding Customers
Marketing communication tools
media elements (print, broadcast, outdoor, retail, Internet, etc.)
personal selling, customer service
sales promotion
publicity/PR
Imagery and recognition
branding
corporate design
Content
information, advice
persuasive messages
customer education/training
17. The 7Ps:
(4) Price and Other User Outlays
Marketers Must Recognize that Customer Outlays
Involve More than the Price Paid to Seller
Traditional Pricing Tasks
Selling price, discounts, premiums
Margins for intermediaries (if any)
Credit terms
Identify and Minimize Other Costs Incurred by Users
Additional monetary costs associated with service usage (e.g., travel to
service location, parking, phone, babysitting,etc.)
Time expenditures, especially waiting
Unwanted mental and physical effort
18. The 7Ps:
(5) Physical Environment
Designing the Servicescape and providing
tangible evidence of service performances
Create and maintaining physical appearances
buildings/landscaping
interior design/furnishings
vehicles/equipment
staff grooming/clothing
sounds and smells
other tangibles
Select tangible metaphors for use in marketing communications
19. 7Ps:
(6) Process
Method and Sequence in Service Creation
and Delivery
Design of activity flows
Number and sequence of actions for customers
Providers of value chain components
Nature of customer involvement
Role of contact personnel
Role of technology, degree of automation
20. The 7Ps:
(7) People
Managing the Human Side of the Enterprise
The right customer-contact employees performing tasks well
job design
recruiting/selection
training
motivation
evaluation/rewards
empowerment/teamwork
The right customers for the firm’s mission
fit well with product/processes/corporate goals
appreciate benefits and value offered
possess (or can be educated to have) needed skills (co-production)
firm is able to manage customer behavior
21. Managing the 7Ps Requires Collaboration
between Marketing, Operations, and HR
Functions
Customers
Operations
Management
Marketing
Management
Human Resources
Management
22. The search for customer loyalty
• Targeting, acquiring & retaining the right customers is at
the core of many successful service firms.
All businesses aspire to have a database of loyal
customers.
Loyalty is described as a
customer’s willingness to continue patronizing a firm
purchasing & using its goods & services on a repeated
& preferably exclusive basis &
recommending the firm’s products to friends &
associates.
23. What Makes Loyal Customers
More Profitable?
Tend to spend more as relationship develops
customer’s balances may grow
may consolidate purchases to one supplier
Cost less to serve
less need for information and assistance
make fewer mistakes
Recommend new customers to firm (act as unpaid sales
people or Customer Advocates)
Trust leads to willingness to pay regular prices vs. shopping
for discounts
24. Franchising
Resources are limited
Long-term commitment of store managers is
crucial
Local knowledge is important
Fast growth is necessary to pre-empt
competition
Franchising has become a popular way to expand
delivery of all 7Ps to multiple sites
25. The 7 S Framework…
Strategy
Shared Value
Skills
Structure
Staff
System
Style