An Introduction to Services Marketing


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In this slide presentation know about “Services Marketing”, which is an integral part of even the developed economies. The developed economies thus called as service economies reveal that the service sector accounts for more employment, contribution in GDP and more consumption than manufactured goods.
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An Introduction to Services Marketing

  2. 2. KEY POINTS 1> Introduction. 2> Reason for growth. 3> The role of services. 4> Definition of services. 5> Types of services. 6> Nature. 7> characteristics. 8> Difference between goods and services. 9> Need for services marketing.10> Obstacles in service marketing.11> The service challenge. 2
  3. 3. INTRODUCTION The service economies reveal that the servicesector accounts for more employment, contributionin GDP and more consumption than manufactured goods. % of GDP % of Countries Employment in Manufacturing Service service sector USA 21 74 80% Japan 29 60% 58 UK 32 77% 69 Australia 72 75% 22 Canada 24 70 79% 47 60% 3 India 29
  4. 4. REASONS FOR GROWTH IN SERVICE SECTORIncrease in population creates a newmarket for different kind of services.The economic reforms have usheredconsumerism & middle class isemerging as “ConsumptionCommunity”. 4
  5. 5. Increase in govt. interaction in the tradesector has increased trade relationshipsbetween nations leading to development oftourism & hotel industry.Changing lifestyles due to cultural exchange& communication networks resulted incontinued emphasis on services.The boom in I.T industry & computersciences encouraged the shift in serviceindustry like Travel, Banking, Education,Financial services etc. 5
  6. 6. THE ROLE OF SERVICES IN AN ECONOMYThe model of the economy by Dorothy Riddle shows the flow of activity amongthe three principal sectors of the economy, extractive manufacturing andservice, which is divided in to five subgroups. Extractive sector Business services Consumer Infrastructure Trade services services Public Social/Personal Administration services Manufacturing sector Fig. 1.1 Interactive Model of an Economy 6
  7. 7. Services lie at the center of economic activity in any society. Allactivity eventually leads to the consumer, for exampleBUSINESS SERVICES - Consulting, finance, bankingTRADE SERVICES - Retailing, maintenance & repairINFRASTRUCTURE SERVICES - Communication, transportation.SOCIAL SERVICES - Restaurants, healthcare.PUBLIC ADMINISTRATION - Education, Government. 7
  8. 8. INDIAN SCENARIOIndia is among the early leaders of thedeveloping world in the race for serviceexports compared to its exports ofmanufacturers. India’s service exports in 1997 were $ 9.3 billion against its merchandise exports of $ 32.2 billion. 8
  9. 9. In recent days India is becomingservice economy like Hong Kong &Singapore as the share of services inIndia’s GDP is almost 47%, against29% for industry and 24% foragriculture.India didn’t meet even the South Asianstandards because of its poor policiesbut still there is a hope to lean overthe Asian neighbors. 9
  10. 10. DEFINITION OF SERVICES The Service Industries Journal defines“service as any primary or complimentaryactivity that does not directly produce aphysical product, that is, the non goods partof transaction between buyer and seller.” “Services are those separately identifiable,essentially intangible activities, whichprovide want satisfaction when marketed toconsumers and/or industrial uses and whichare not necessarily tied to the sale of aproduct or another service” - Stanton. 10
  11. 11. “A service is an activity or benefitthat one party can offer to another thatis essentially intangible and does notresult in the ownership of anything. Itsproduction may or may not be tied to aphysical product”- Kotler and Armstrong (1981) 11
  12. 12. TYPES OF SERVICESProfessional Services Which serve the business marketsegments in which advisory & problemsolving provided by a qualifiedprofessional known for theirspecialty... e.g. Financial services,advertising, business and managementconsultancy, engineering, medical etc. 12
  13. 13. Consumer oriented ServicesThe ones which the consumer ismore acquainted with, such asholiday tour companies,entertainment, travel, healthcare,social services etc. 13
  14. 14. THE NATURE OF SERVICESThe basic nature of the service isits Intangibility. The more aproduct is intangible, the more itbecomes a service rather than agood. Products that are primarilyintangible are classified asservices. 14
  15. 15. Goods are produced while servicesare performed.Intangibility, heterogeneity,inseparability and perishabilitysuggest certain marketingapproaches, which in turn lead toparticular marketing strategies, thatdiffer from those for goods. 15
  16. 16. CHARACTERISICS OF SERVICESINTANGIBILITY - Make service more tangible. - Focus on the service provider.SERVICE VARIABILITY - Increase control over the service. - Switch from people to machines. - Reduce perceived risk. 16
  17. 17. SIMULTANEOUS PRODUCTIONAND CONSUMPTION - Simplicity of Distribution. - Importance of many locations. - Image of the service provider.SERVICE PERISHABILITY - Service supply Management - Service demand management 17
  18. 18. DIFFERENCES BETWEEN GOODS & SERVICESMany services are essentiallyperishableLack of transportabilitySmall firm sizeDifficulty in quality controlLabour Intensity 18
  19. 19. Legal and Ethical BarriersUnpredictability of demandDifficulty in entering foreignmarketsLimited applicability of portfoliotheoryDifficulties in establishing largemarket shares 19
  20. 20. NEED FOR SERVICES MARKETING In this consumer oriented scenario theservice sector is growing rapidly,Utility services expenditure growingrapidly faster than the nation’s totalpopulation. But there was a lack ofinnovative marketing on the part ofservice industry because of :Limited View of MarketingLimited Competition 20
  21. 21. Non-creative ManagementNo ObsolescenceLack of Innovation in the Distributionof Services Services require a specialunderstanding & unique marketingefforts by marketers. Service industryhas to be consumer oriented tocompete more effectively. 21
  22. 22. OBSTACLES IN SERVICE MARKETINGThe factors of Intangibility andInseparability.Difficulties in maintaining the same servicequality.Making comprehensive service marketing.The lack of imagination and creativeinnovation. 22
  23. 23. THE SERVICE CHALLENGEThe service challenge is the quest to : - Constantly develop new services that will better meet customer needs; - Improve upon the quality and variety of existing services; - Provide and distribute these services in a manner that best serves the customer. 23
  24. 24. CHALLENGES TO MANAGEMENT Challenges to management are implied by : labour intensity and interaction differences inservices.To control cost increases with maintaining itsqualities.Managing the frequency to delivering theservices with advancement.Gaining employee loyalty. 24
  25. 25. CHALLENGES FOR SERVICE MANAGERS (Fig. 1.5) Challenges for Managers (low labour intensity) Capital decisions Technological advances Managing demand to avoid peaks and to promote off-peaks. off- Scheduling service delivery Service factory Service Shop Challenges for Management (low labour (low labour (high interaction/high customization) Intensity/ low intensity/ high IChallenges for Managers Fighting cost increases Interaction and Interaction and(low interaction/low customization) Maintaining quality Customization) Customization Marketing Reacting to consumer Marketing service “warm” warm” intervention in process Mass Service Professional Attention to physical Managing advancement of (high labour Service surroundings intensity/ low (high labour people delivering service Managing fairly rigid hierarchy Interaction and Intensity) Managing flat hierarchy with with need for standard Customization) loose subordinate superior operating procedures. relationships Gaining employee loyalty Challenges for Managers (high labour intensity) Hiring Training Employee welfare Scheduling workforce Startup of new units Managing Growth 25
  26. 26. SUMMARYThus, we may infer that services dominatethe modern economies of the world, & itmay put an economy to earn higher levelof income. The chapter focused theintangibility of services, key differencebetween goods & services, & associationof services with the goods. 26