Definition – Service Economy – Evolution and growth of service sector – Nature and Scope of Services – Unique characteristics of services - Challenges and issues in Services Marketing.

1. Unit 1
SERVICES
MARKETING
Definition – Service Economy – Evolution and
growth of service sector – Nature and Scope of
Services – Unique characteristics of services -
Challenges and issues in Services Marketing.

2. Sectors of Indian Economy
• Three sectors – Primary, Secondary and Tertiary.
• Primary = Agriculture related; Secondary = Industry
related; Tertiary = Service related.
• Sector share towards GDP : Tertiary (60%)> Secondary
(28%)> Primary(12%)
• Sector share by working force : Primary (51%)> Tertiary
(27%) > Secondary (22%)
• The tertiary sectors includes insurance, banking and
transport.
INDIAN ECONOMY

3. Services
• Are economic activities offered by one party to another
• Most commonly employing time-based performances to bring
about desired results
• In recipients themselves or
• In objects of other assets for which purchasers have responsibility
• Customers expect to obtain value from their service purchases
in exchange for their money, time and effort, this value comes
from
• Access to a variety of value-creating elements (goods, labour,
professional skills, facilities, networks and systems)
• Do not take ownership of any of the physical elements involved
SERVICES - DEFINITION

4. • Information Technology
• Trade
• Education
• Media
• Hospitality,
Accommodation and Food
services
• Entertainment, Culture and
Recreation
• Transportation and
Warehousing
• Communication
• Healthcare
• Tourism
• Public Utilities
• Real Estate and Leasing
• Business Support Services
• Professional, Scientific and
Technical Services
SEGMENTS OF SERVICE
INDUSTRY IN INDIA

5. Services marketing typically refers to both business to
consumer (B2C) and business-to-business (B2B)
services, and includes marketing of services such as
telecommunications services, financial services, all types
of hospitality, tourism leisure and entertainment
services, car rental services, health care services and
professional services and trade services.
SERVICES MARKETING

6. • Changes in Regulations
• Privatization
• New rules to protect customers, employees and the
environment
• New agreements on trade in services
GOVERNMENT
POLICIES

7. • Rising consumer expectations
• More affluence
• More people short of time
• Increased desire for buying experiences vs. things
• Rising consumer ownership of computers, mobile
phones and high-tech equipment
• Easier access to more information
• Immigration
• Growing but aging population
SOCIAL CHANGES

8. • Push to increase shareholder value
• Emphasis on productivity and cost savings
• Manufacturers add value through service and sell
services
• More strategic alliances and outsourcing
• Focus on quality and customer satisfaction
• Growth of franchising
• Marketing emphasis by non-profits
BUSINESS TRENDS

9. • Growth of internet
• Greater bandwidth
• Compact mobile equipment
• Wireless networking
• Faster, more powerful software
• Digitization of text, graphics, audio and video
ADVANCES IN IT

10. • More companies operating on transnational basis
• Increased international travel
• International mergers and alliances
• ‘Offshoring’ of customer service
• Foreign competitors invade domestic markets
GLOBALIZATION

12. The Powerful forces are reshaping these in the Services
Sector
• Demand
• Supply
• Competitive Landscape
• Customers’ choices, power and decision making
TERTIARY SECTOR

14. • Customer Affluence
• Leisure time
• Product innovation
• Product complexity
• Resource Scarcity
• Low cost of operation and
tax advantages
• Rapid industrialization and
growth of IT parks in the
country
• Supportive Government
Policies
• Rapid introduction of IT in
major sectors
• Strong growth in export
demand
• Use of new technologies like
cloud computing
• Government established
SEZs
EVOLUTION & GROWTH
OF SERVICE SECTOR

15. According to Fisk, Brown and Bitner (1993)
• First Era – Biological evolution
• Crawling Out (Pre 1980) – when early services scholars
created and defended the services marketing field;
• Scurrying About (1980 to 1985) – when a rapidly
growing and enthusiastic community of scholars quickly
built the basic structure of services marketing;
• Walking Erect (1986 to 1992) – when the services
marketing field achieved a measure of respect and
legitimacy within the marketing discipline and beyond.
EVOLUTION OF
SERVICE MARKETING

16. According to Fisk, Brown and Bitner (1993)
• Second Era – Emergence of a Multi-disciplinary field
• Making Tools (1992 to 2000) – A tremendous
technology infusion, especially of information
technology made it possible for most service
industries to rapidly increase the technological
sophistication of the service they provide customers
EVOLUTION OF
SERVICE MARKETING

17. According to Fisk, Brown and Bitner (1993)
• Second Era – Emergence of a Multi-disciplinary field
• Creating Language (2000 to 2010) - the technical
language rooted in the service marketing field was widely
disseminated within the marketing discipline and the
business field in general. Terms such as service
encounters, service quality, service scapes and service
recovery were widely adopted.
EVOLUTION OF
SERVICE MARKETING

18. According to Fisk, Brown and Bitner (1993)
• Second Era – Emergence of a Multi-disciplinary field
• Building Community (2010 to Future) - collaboration
among service researchers across academic disciplines.
• Campbell’s (1969) “fish-scale” metaphor for disciplines.
Campbell believed that disciplines should overlap like the
scales of fish.
• These overlapping areas facilitate communication and
collaboration among scholars
EVOLUTION OF
SERVICE MARKETING

19. • Explains what can be expected from the service
organization.
A scope of services of a company may:
• List the fullest range of services that may be provided,
and then not being provided.
• Provide options, such as; to ‘carry out’ services or to
‘organise’ them; to provide cost consultancy services or
not and so on.
• Indicate the basis on which the services will be charged,
for example, ‘T’ indicating time-based, or ‘LS’ indicating
a lump sum fee.
SCOPE OF SERVICES

20. • Intangibility
• Inseparability from the person / firm providing it
• Heterogeneity – Standardization very difficult
• Perishability – cannot be stored, saved, resold or
returned
• No transfer of ownership – pay for its use but can’t
own
NATURE & CHARACTERISTICS
OF SERVICES

21. Consumer Services
• Food services
• Entertainment services
• Banking and financial services
Industrial Services
• Financial services
• Transport and Warehousing services
• Insurance services
• Engineering and Technical services
• Office services
• Advertising and sales promotion services
TYPES OF SERVICES

22. DIVERSITY OF SERVICES

23. • Generation of employment opportunities
• Customer Satisfaction
• Higher growth in Income
• Advancement of Technological facilities
• Changes in tastes and preferences of customers
SCOPE OF SERVICES

24. • Managerial Process
• Organized effort
• Social Process
• Adds value to customers
NATURE OF SERVICES
MARKETING

25. • Most service products cannot be inventoried
(involves actions/performances which are transitory
and perishable; unused – wasted; system for providing
service can be ready, but service itself cannot be)
• Intangible elements usually dominate value
creation (At restaurants, the cost of food may
account for as little as 20-30% of the price of the
meal. The value added comes from food preparation
& cooking, table service, the restaurant environment
and facilities (parking, restroom, etc).
CHALLENGES &
ISSUES

26. • Distinguishing goods and services –
• Lynn Shostack : tangible-dominant and intangible-
dominant
• Economic test : more than half the value comes
from tangible or intangible elements
• Example : Flight service (intangible) From safety
briefing, to serving drinks and food, first aid to final
cabin check, flight attendants or cabin crew must be
thoroughly trained to graciously handle customers’
requests.
CHALLENGES &
ISSUES

30. • Model used to illustrate
factors that influence
service experience
including those that are
visible and invisible to
consumer
SERVUCTION MODEL

31. • Services are often difficult to visualize and
understand (mentally intangible – difficult to
visualize the experience in advance; Documenting
performance, offer guarantees and explaining what &
why reduces anxiety and builds trust)
• Customers may be involved in Co-Production (Eg.
Cooperating with service personnel, doing some of
the work; working out at the gym under the direction
of a personal trainer)
CHALLENGES &
ISSUES

32. • People may be part of the service experience
(employees need technical, interpersonal skills and
positive attitude; other customers should also enhance
the experience eg. Restaurant, lodge)
• Operational inputs and outputs tend to vary more
widely (Service is delivered and consumed in real
time; attitudes, transaction speed, quality of
performance may vary; Organisation reduces
variability by adopting standardized procedures,
implementing rigorous management of quality,
training employees carefully and automating tasks)
CHALLENGES &
ISSUES

33. • Time factor often assumes great importance (Services
are delivered in real time [customers physically present];
Customers are in a hurry and willing to pay extra to save
time; time taken between making a request and receiving
the output)
• Distribution may take place through Non-Physical
channels (core products and supplementary services; Eg.
Banking transaction on the internet, check timings of
flight, online educational programs (CP), reserve a seat in
bus/train (SS; delivery of core product happens through
physical channels), etc.)
CHALLENGES &
ISSUES