This document discusses key concepts in services marketing. It defines services and their characteristics, including intangibility and heterogeneity. Services are often classified based on the type of processing involved (people, mental stimulus, possessions, information) and the degree of customer interaction. The growth of the services sector is also addressed. Excellent services marketing requires external, internal, and interactive efforts. Customer expectations, perceptions, satisfaction and the factors that influence them are examined in detail. The five dimensions of service quality - reliability, responsiveness, assurance, empathy and tangibles - are also explained.

1. By: Mr. Vivek Sangwan
Asstt. Professor
(RBIM) Hoshiarpur
Punjab
MBA-906

2. UNIT 1 Services
 “ A service is an act of performance that
one party can offer to another that is
essentially intangible and does not result
in the ownership of anything. Its
production may or may not be tied to a
physical product.” -Philip Kotler
 In simple words, Service is an economic
activity that is intangible, cannot be stored
and does not result in ownership. Services
are consumed at the point of sale.

3. Service Marketing
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.- AMA

4. Growth of service sector
economy

5. Service marketing excellence
 It requires excellence in three broad
categories: external, internal and interactive
marketing.
 External marketing covers the pricing,
distribution and promotion of services to
consumers.
 Internal marketing involves training and
motivating employees to serve customers
well.
 Interactive marketing describes the

6. Services Characteristics
/ Heterogeneity

7. Service Classification
 who or what is being processed-
1. People processing (e.g. beauty services,
child care, medical services)
2. Mental stimulus processing (e.g. education
services, counseling services, life-coaching)
3. Possession processing (e.g. pet care,
appliance repair, piano tuning)
4. Information processing (e.g. financial
services, data warehousing services)

8. Service Classification
 The degree of customer interaction in the
service process-
1. High contact (e.g. hospitality, dental care,
hairdressing)
2. low contact (e.g. telecommunications, utility
services)

9. Service Classification
 Both economists and marketers make
extensive use of the Search → Experience →
Credence (SEC) classification of goods and
services.
 Based on the ease or difficulty of consumer
evaluation activities.
1. Search goods (e.g. clothing, office stationery,
home furnishings)
2. Experience goods (e.g. restaurant,
hairdresser, beauty salon, theme park, travel,
holiday)
3. Credence claims (e.g. accountant, legal

10. Service Industry
 Telecommunication
 Hospitality
industry/Tourism
 Mass media
 Healthcare/hospitals
 Public health
 Information technology
 Wholesale and Trade
 Transportation
 Education
 Government services
 Financial services
1. Banking
2. Insurance
3. Investment
management
 FMCG
 Professional services
1. Accountancy
2. Legal services
3. Management
consulting
 Retail sales
 Real estate
 Consulting

12. Consumer Behavior in Services
Consumer behavior is the study of
individuals, groups, or organizations and
all the activities associated with the
purchase, use and disposal of goods
and services, including the consumer's
emotional, mental and behavioural
responses that precede or follow these
activities.

13. Customer Expectation of
Service
 Are beliefs about service delivery that serve as
standards or reference points against which
performance is judged.
 Because customers compare their perceptions
of performance with these reference points
when evaluating service quality, thorough
knowledge about expectations is critical to
services marketers.
 Knowing what the customer expects is the first
and possibly most critical step in delivering
quality service.

14. Levels of Customer Expectation

15. Dual Customer Expectation
Levels

16. The Zone of Tolerance
Adequate Service
Desired Service
Zone of
Toleranc
e
 Delights
 Desirables
 Musts

17. Zone of Tolerance
 The range of expectations between
desired and adequate…
can be wide or narrow
can change over time
can vary among individuals
may vary with the type of
product/service

18. Zones of Tolerance for Different
Service Dimensions

19. Factors That Influence Desired
Service

20. Factors That Influence Adequate
Service

21. Factors That Influence Desired and
Predicted Service

22. Customer Perceptions of Service
Quality and Customer Satisfaction
Service
Quality
Reliability
Responsiveness
Assurance
Empathy
Tangibles
Product
Quality
Price
Personal
Factors
Customer
Satisfaction
Situational
Factors

23. Factors Influencing Customer
Satisfaction
 Product/service quality
 Product/service attributes or features
 Consumer Emotions
 Attributions for product/service success
or failure
 Equity or fairness evaluations

24. Outcomes of Customer
Satisfaction
 Increased customer retention.
 Positive word-of-mouth
communications.
 Increased revenues.

25. Customer Perceptions of
Service
 Customer’s perception is relative to
expectation.
 Evaluation of service quality are in constant
flux.
 Service Quality - The customer’s judgment of
overall excellence of the service provided in
relation to the quality that was expected.

26. The 5 Dimensions of Service
Quality
SERVQUAL
1. Reliability
Ability to perform promised service dependably and accurately.
2. Responsiveness
Willingness to help customers and provide prompt service.
3. Assurance
Knowledge and courtesy of employees and their ability to convey
Trust and confidence
4. Empathy
Caring, individualized attention to the firm provide its customers.
5. Tangibles
Physical facility, equipment, and appearance of personnel.
Imp. dimension for hospitality service

27. Exercise to Identify Service
Attributes
 In groups of five, choose a services industry
and spend 10 minutes brainstorming specific
requirements of customers in each of the five
service quality dimensions. Be certain the
requirements reflect the customer’s point of
view.
 Reliability:
 Assurance:
 Tangibles:
 Empathy:
 Responsiveness:

28. SERVQUAL Attributes
 Providing service as promised
 Dependability in handling customers’
service problems
 Performing services right the first
time
 Providing services at the promised
time
 Maintaining error-free records
RELIABILITY

29. SERVQUAL Attributes
 Keeping customers informed as to
when services will be performed
 Prompt service to customers
 Willingness to help customers
 Readiness to respond to customers’
requests
RESPONSIVENESS

30. SERVQUAL Attributes
 Employees who instill confidence in
customers
 Making customers feel safe in their
transactions
 Employees who are consistently
courteous
 Employees who have the knowledge
to answer customer questions
ASSURANCE

31. SERVQUAL Attributes
 Giving customers individual attention
 Employees who deal with customers
in a caring fashion
 Having the customer’s best interest
at heart
 Employees who understand the needs
of their customers
 Convenient business hours
EMPATHY

32. SERVQUAL Attributes
 Modern equipment
 Visually appealing facilities
 Employees who have a neat, professional
appearance
 Visually appealing materials associated
with the service
TANGIBLES

33. Factors influence Customer
Perception
 Service Encounter
 Evidence of Service
 Image
 Price

34. Service Encounter
 is the “moment of truth”
 occurs any time the customer interacts with the firm
 can potentially be critical in determining customer satisfaction
and loyalty
 types of encounters:
 remote encounters
 phone encounters
 face-to-face encounters
 is an opportunity to:
 build trust
 reinforce quality
 build brand identity
 increase loyalty

36.  Industrial Purchase
Sales Call
Ordering Supplies
Billing
Delivery and Installation
Servicing

37. Critical Service Encounters Research
 GOAL - understanding actual events and
behaviors that cause customer dis/satisfaction
in service encounters
 METHOD - Critical Incident Technique
 DATA - stories from customers and employees
 OUTPUT - identification of themes underlying
satisfaction and dissatisfaction with service
encounters

38. Sample Questions for Critical Incidents
Technique Study
 Think of a time when, as a customer, you had a
particularly satisfying (dissatisfying) interaction
with an employee of .
 When did the incident happen?
 What specific circumstances led up to this
situation?
 Exactly what was said and done?
 What resulted that made you feel the interaction
was satisfying (dissatisfying)?

40. Recovery
 Acknowledge
problem
 Explain causes
 Apologize
 Compensate/upgrade
 Lay out options
 Take responsibility
 Ignore customer
 Blame customer
 Leave customer to
fend for him/herself
 Downgrade
 Act as if nothing is
wrong
DO DON’T

41. Adaptability
 Recognize the
seriousness of the
need
 Acknowledge
 Anticipate
 Attempt to
accommodate
 Explain rules/policies
 Take responsibility
 Exert effort to
 Promise, then fail to
follow through
 Ignore
 Show unwillingness
to try
 Embarrass the
customer
 Laugh at the
customer
 Avoid responsibility
DO DON’T

42. Spontaneity
 Take time
 Be attentive
 Anticipate needs
 Listen
 Provide information
(even if not asked)
 Treat customers fairly
 Show empathy
 Acknowledge by
name
 Exhibit impatience
 Ignore
 Yell/laugh/swear
 Steal from or cheat
a customer
 Discriminate
 Treat impersonally
DO DON’T

43. Coping
 Listen
 Try to accommodate
 Explain
 Let go of the customer
 Take customer’s
dissatisfaction
personally
 Let customer’s
dissatisfaction
affect others
DO DON’T

44. Evidence of Service
from the Customer’s Point of View
People
Process
Physical
Evidence
 Contact employees
 Customer him/herself
 Other customers
 Operational flow of activities
 Steps in process
 Flexibility vs. standard
 Technology vs. human
 Tangible
communication
 Servicescape
 Guarantees
 Technology