Marketing Services: Key Concepts

C
PAPER: SERVICES MARKETING
PAPER CODE : 318
CLASS: BBA CAM SIXTH SEMESTER

Chanderprabhu Jain College of Higher Studies & School of Law
Plot No. OCF, Sector A-8, Narela, New Delhi – 110040
(Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India)
WHAT IS A SERVICE
• It is the part of the product or the full product for which the customer is
willing to see value and pay for it.
• It is intangible.
• It does not result in ownership.
• It may or may not be attached with a physical product
• Health Care
– hospital, medical practice, dentistry, eye care
• Professional Services
– accounting, legal, architectural
• Financial Services
– banking, investment advising, insurance
• Hospitality
– restaurant, hotel/motel, bed & breakfast
• Travel
– airline, travel agency, theme park

TANGIBILITY SPECTRUM

COMPARING GOODS & SERVICES

WHY DO FIRMS FOCUS ON SERVICES?
• Services can provide higher profit margins and growth potential than
products
• Customer satisfaction and loyalty are driven by service excellence
• Services can be used as a differentiation strategy in competitive markets
WHY STUDY SERVICES MARKETING?
• Service-based economies
• Service as a business imperative in manufacturing and IT
• Deregulated industries and professional service needs
• Services marketing is different
• Service equals profits

THE SERVICES MARKETING TRIANGLE
Internal
Marketing
Interactive Marketing
External
Marketing
Company
(Management)
CustomersEmployees
“enabling the
promise”
“delivering the promise”
“setting the
promise”
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler

INTANGIBILITY
• Customer is unable to experience the ‘product’ prior to ‘purchase’
Implications:
• Services cannot be inventoried
• Services cannot be easily patented
• Services cannot be readily displayed or communicated
• Pricing is difficult
PERISHABILITY
• Can’t be stored
Implications:
• It is difficult to synchronize supply and demand with services
• Services cannot be returned or resold

INSEPERABILITY
• Production & consumption happen at the same place and cannot be
separated
Implications:
• Customers participate in and affect the transaction
• Customers affect each other
• Employees affect the service outcome
• Decentralization may be essential
• Mass production is difficult

VARIABILITY
• Difficulty in establishing consistency in quality
– across Providers or within providers
– across Time
– across Delivery Centers
Implications:
• Service delivery and customer satisfaction depend on employee and
customer actions
• Service quality depends on many uncontrollable factors
• There is no sure knowledge that the service delivered matches what was
planned and promoted

CHALLENGES FOR SERVICES
• Defining and improving quality
• Ensuring the delivery of consistent quality
• Designing and testing new services
• Communicating and maintaining a consistent image
• Accommodating fluctuating demand
• Motivating and sustaining employee commitment
• Coordinating marketing, operations, and human resource efforts
• Setting prices
• Finding a balance between standardization versus customization

Expanded Mix for Services –The 7 Ps
All elements within the control of the firm that communicate the firm’s
capabilities and image to customers or that influence customer satisfaction
with the firm’s product and services:
1. Product
2. Price
3. Place
4. Promotion
5. People: All human actors who play a part in service delivery and thus
influence the buyer’s perceptions: namely, the firm’s personnel, the
customer, and other customers in the service environment.
6. Physical Evidence: The environment in which the service is delivered
and where the firm and customer interact, and any tangible components
that facilitate performance or communication of the service.
7. Process: The actual procedures, mechanisms, and flow of activities by
which the service is delivered.

REASONS FOR GROWTH IN SERVICE SECTOR
• CHANGING LIFESTYLE- increase in affluence, increase in leisure time,
women in working places
• CHANGING WORLD- increased complexity of life, increased life
expectancy, ecology & resource concerns.
• CHANGING ECONOMIES- globalization, Privatization, Deregulation
• CHANGING TECHNOLOGY- range of new products, product complexity

TYPES OF SERVICES
• Transportation services
• Public utility services
• Communication
• Trading services
• Financial & insurance services
• Real estate services
• Marketing related services
• Govt. Provided services
• Engineering service
• Entertainment services
• Business & professional services
• Hospitality services
• Other services

SERVICE MARKETING ENVIRONMENT
All organizations operate within the marketing environment. The marketing
environment is made up of two parts –
Macro environment : It represents all the outside influences which have
impact on an organization’s marketing or business activity.
• It includes economic and political factors and socio-cultural trends,
•for example the external environment influences will effect all organizations
within a sector to a greater or lesser degree.
•Micro environment : It is the internal environment of the organization .
•The internal environment relates to a particular organization and its publics
•The factors to be analyzed in the internal environment will include the
following :
• Company management structure
• Customers
• Suppliers
• Channel members

UNIT 2
CONSUMER DECISION MAKING
Why do Individual Consumer Select a particular service say a Bank.
• It is conveniently located.
• My father has an account in this bank
• My friend is working here
• My neighbor introduced me.
• And so on.

MOTIVATION & CONSUMER BEHAVIOR
MASLOW’S HIERARCHY OF NEEDS
• Physiological need
• Safety
• Belongingness
• Esteem
• Self Actualization

PERCEPTION & CONSUMER BEHAVIOR
SELECTIVE EXPOSURE-
• people most likely to notice stimuli that relate to current need
• People are likely to notice stimuli that they expect or anticipate
• People are more likely to notice stimuli that are large in relation to normal
size of stimuli
SELECTIVE DISTORTION
SELECTION RETENTION

CONSUMER DECISION MAKING FRAMEWORK
a. SOCIAL FACTORS
• Family influence
• Reference group influence
• Roles & status
b. CULTURAL FACTORS
• Culture
• Sub culture
• Social class
c. PSYCHOLOGICAL FACTORS
• Beliefs & attitudes
• learning
d. PERSONAL FACTORS
• Age & family life cycle
• Economic circumstances
• Occupation
• Personality & self concept
• psychographics

LEARNING THEORY
• Drive
• Cues
• Response
• Reinforcement

FAMILY LIFE CYCLE & BANKING NEEDS
STAGE FINACIAL SITUATION BANKING NEEDS
young , single people few financial burdens,
recreation oriented
low cost checking, auto
loan, credit card
full nest: youngest child
under six
home purchasing peak,
liquid assets low, many
working mothers
mortgage, credit card,
revolving credit line, bill
consolidation loan
full nest: older couples
with dependent children
good financial position,
many working mothers
home improvement
loans, equity credit lines,
certificates of deposits,
money market deposits
empty nest: older
couples, no children at
home
significantly reduced
income
monthly income checks
on cds, estate planning,

CONSUMER BUYING PROCESS
• STAGE 1: AWARENESS
• STAGE 2: SEARCH & COMPEREHENSION
• STAGE 3: ATTITUDE DEVELOPMENT
• STAGE 4: EVALUATION OF ALTERNATIUVES
• STAGE 5: PURCHASE
• STAGE 6: ADOPTION & POST PURCHASE BEHAVIOR

ORGANIZATIONAL BUYING BEHAVIOR
• STAGE 1: NEED IDENTIFICATION
• STAGE II: DEFINE OBJECTIVES & SPECIFICATIONS
• STAGE III: IDENTIFYALTERNATIVES
• STAGE IV: EVALUATE ALTERNATIVES
• STAGE V: SELECT SUPPLIER

ITEM CONSUMER BUYER
BEHAVIOR
ORGANISATIONAL
BUYER BEHAVIOR
involvement one or two people involved in
buying process
several people involved
type relatively simple process but
informal
depending on nature of
purchase, can be
complicated formalized
pattern no set formula systematic sequence
behavior learnt behavior professional skill &
training
buyer-seller
relationship
independent relationship between
buyer & seller
interdependent
relationship

UNIT 3
Segmentation strategies:
• Geographic segmentation
• Demographic segmentation
• Psychological segmentation
• Volume segmentation
• Benefit segmentation

TARGETING
GUIDELINES FOR SELECTING TARGET MARKET
1. Target market should be consistent, should meet the goals of the
organization. A tourism org which is leading in group tours can not
suddenly target individuals.
2. Organizations should look for markets that are consistent with the
resources.
3. An organization should look for markets which will generate not
sufficient sales volume but profit volume.
4. An organization should look for a target market where the number and
size of competitor is small

TARGETING
• Market Targeting:
– The process of evaluating each market segment’s attractiveness and
selecting one or more segment to enter.
• A target market is a set of buyers sharing common needs or characteristics
that the company decides to serve.

MARKET TARGETING
Company
marketing
mix
Market
Company
marketing mix 1
Company
marketing mix 2
Company
marketing mix 3
Segment 1
Segment 2
Segment 3
Segment 1
Segment 2
Segment 3
Company
marketing
mix
Undifferentiated
marketing
Differentiated
marketing
Concentrated
marketing

Factors Undifferentiated
marketing
Concentrated
marketing
Differentiated
marketing
SERVICE
PRODUCT
Limited no. of
service offering
under one brand for
many type of
consumers
One brand which
has been aimed to
one to one
consumer group.
Distinct brand for
each consumer
group
DISTRIBUTION All possible outlets All suitable outlets All suitable outlets
differs by segment
PROMOTION Mass media All suitable media All suitable media-
differs by segment
PRICE On popular price
range
One price range
aimed to the
consumer group
Distinct price
range for each
consumer group

STRATEGY
EMPHASIS
appeal to large
no. of consumers
via a uniform
broad based
marketing
programmes
Appeal to one
specific consumer
group via a highly
specialized but
uniform marketing
programme.
Appeal to two or
more distinct
market segments
via different
marketing plans
catering to each
segment.
TARGET
MARKET
Broad range of
consumers
One well defined
consumer group.
Two or more well
defined consumer
groups
Factors Undifferentiated
marketing
Concentrated
marketing
Differentiated
marketing

WHY POSITIONING?
• To create a distinctive place in minds of potential customers.
• To provide competitive edge to a product or service.
• Place an intangible service within a more tangible frame of reference.
• Influence both service development and redesign of existing services.
• Follow consideration of competitor’s possible moves.
• To give reasons to target market to buy your services.

POSITIONING SERVICES
• Image is the picture of an org. as perceived by a target group.
• Identity is associated with the way in which a company presents itself to its
target group.
• The current image- the way company is seen by different groups.
• The mirror image- the way a company thinks it is seen by different groups.
• The wish image- the way a company would like to be seen by different
groups

POSITIONING PROCESS
Step 1- Market positioning
Step 2- Psychological positioning- objective and subjective
Step 3 - Positioning approaches

STEP 1 MARKET POSITIONING
• It is defined as a process of identifying and selecting markets or segments
that represent business potential to determine the criteria for competitive
success. This must be based on the following factors:
a. Thorough knowledge of needs, wants and perceptions of target market
b. Benefits offered by the service offered.

STEP 2- PSYCHOLOGICAL POSITIONING
• It involves the use of communication to convey the firms or its offering’s
identity & image to the target market. It converts the needs into images and
positions the offerings in the customer’s mind.
• Exists solely in the mind of consumer and occurs automatically without
marketer’s effort.
• For eg: two tourist attraction which are dissimilar may be perceived as same by
a consumer while two similar tourist attractions may be perceived as different.
OBJECTIVE POSITIONING: concerned with creation of an image of service
offering that reflects physical features & functional features eg: tourism
industry
SUBJECTIVE POSITIONING: relates to subjective attributes of service
offering. It is the (mental perception) image & other attributes as perceived by
the tourist.

STEP 3- POSITIONING APPROACHES
• Positioning by attributes , features or customer benefits.
• Positioning by price value- “Malaysia gives more natural value” MALAYSIA
TOURISM
• Positioning by use of application- Hotel Inter Continental position itself as a
Meeting place.
• Positioning according to users or class of users- airlines target executive
class, the frequent fliers and tourists.eg: The Ashok group position itself to
corporate world with “conference venues can help write corporate history”.
• Position with respect to product class- used to associate an offering with
experience.
• Positioning against competition: Visa Card against American Express by
quoting examples of places in the world that do not accept Master Card
• Positioning by endorsement: Amitabh Bachchan for ICICI Bank

• Positioning by quality dimensions- reliability, assurance, tangibility,
empathy & responsiveness
a. Reliability : Fedex “world on time” or first Flight couriers ltd. “Any time,
any where first”
b. Assurance: PNB positions itself by conveying trust and confidence by “
the name you can bank upon”
c. Tangibility: Sahara airlines “High on achievement” by showing awards
won by them in their advertisements.
d. Empathy: Taj hotel established its position as SHE who cares and
provides individual attention
e. Responsiveness: At Hotel Radisson every question asked is answered by
YES I CAN !
STEP 3- POSITIONING APPROACHES (contd..)

STEP 3- POSITIONING APPROACHES (contd..)
• Positioning by People: ICICI BANK uniform
• Physical evidence: a conference, aimed at senior executives and directors,
invitation would be on an excellent quality paper, multi color with
attractive graphics
• Positioning by process

STRATEGIES FOR MARKETING OF SERVICE
• Strategies to stay proactive by differentiation.
• Strategies for dealing with Intangibility
• Strategies for dealing with Inventory (Perishability).
• Strategies for dealing with Inconsistency (Heterogeneity)
• Strategies for dealing with Inseparability.

PRO- ACTIVITY: A STRATEGIC TOOL TO OUTSERVICE
COMPETITION
• Service providers must understand the distinctions between one’s CORE
SERVICE OFFERING & SUPPLEMENTAL SERVICES (VALUE
ADDED OR PERIPHERAL SERVICES).
CORE PRODUCT/ SERVICE
OFFERING
SUPPLEMENTAL SERVICE
•Safe transport from one city to
another via aeroplane.
•Doctor’s proper diagnosis &
treatment
•Lawyer’s sound legal advice
•Hotel Room with comfortable bed &
clean bath.
•Movie or meal on board the
aeroplane.
•Doctor’s friendly bedside manner
•Trustworthiness of Lawyer.
•Bathroom amenities and mini bar in
the hotel room.

WHY CUSTOMERS EVALUATE SERVICE ON
SUPPLEMENTALS
• A good core extension alone is not sufficient.
• Within & across competitors , the core product offerings hardly have
variations eg: the core offering of airlines are the same.
• For many customers/ consumers it is very difficult to judge the core
offering. Eg: to differentiate between lawyers.

PROACTIVE SERVICE MODEL
Proactive
Services
Reactive
Services
Primary
Services
Core
product

STRATEGIES TO DEAL WITH INTANGIBILITY
• Stress tangible cues
• Use personal sources more than non-personal sources
• Promote or stimulate word-of mouth communications
• Create strong brand/ organizational image
• Use cost accounting to help set prices.
• Engage in post purchase communications
STRATEGIES TO DEAL WITH INSEPARABILITY
• Emphasize selection and training of public contact personnel
• Manage customers
• Use multi site locations

STRATEGIES TO DEAL WITH HETEROGENITY
• Industrialize service
• Customize service
STRATEGIES TO DEAL WITH HETEROGENITY
• Use strategies to cope with fluctuating demand
• Make simultaneous adjustment in demand and capacity to achieve a closer
match between the two.

UNIT 4
HOSPITALITY & TOURISM INDUSTRY:
• The hospitality industry is a broad category of fields within service industry
that includes lodging, event planning, theme parks, transportation, cruise
line, and additional fields within the tourism industry.
• A hospitality unit such as a restaurant, hotel, or an amusement park consists
of multiple groups such as facility maintenance and direct operations
(servers, housekeepers, porters, kitchen workers, bartenders, management,
marketing, and human resources etc.)
• According to Krippendort “Tourism marketing is to be understood as the
systematic and coordinated execution of business policy by tourist
undertakings whether private or state owned at local, regional , national or
international level to achieve the optimal satisfaction of the needs of
identifiable consumer groups, and in doing so to achieve an appropriate
return.”

TOURISM INDUSTRY
• Reasons why tourism is important
• Factors that influence number of tourists
• Reasons for growth/increase in tourism

CHARACTERISTICS
• Intangible
• Perishable
• Heterogeneous
• Feeling and touch based
Kerala – God’s own country
Rajasthan – Padharo maahro desh

MARKETING IN HOSPITALITY AND TOURISM
• As the production and consumption experiences are inseparable, it is
impossible to sample a tourism service before purchase.
• Marketing of tourism is based on
– Trust
– Relationship
– Delivering value

1. PRODUCT
•The tourism product differs from other products due to the wide range it
covers
-Accommodations
-Transportation
-Food
-Recreation
-Attractions.
•Often the product includes intangibles such as history, culture and natural
beauty.
•Many times the hospitality or tourism product is viewed as a “service” in the
customer’s eyes.
•The closer we can determine how to satisfy the customer’s needs, the more
successful the destination will be.

Giving a Feel For The “Product” Inside a Service Wrapper .
•Consumers are demanding not products, or features of products but the
benefits they will be offered.
•The airline product includes of two types of services:
On the Ground Services & In-Flight Services.
PRODUCT MIX
Airlines service products
 CABIN SERVICE.
 CATERING SERVICE
 RAMP SERVICE.
 OTHER SERVICE.

2. PRICE
• Amount customers’ pay for the product or service provided.
• A quality tourism experience at a fair price is what the customer is looking
for in most cases .
• Pricing should be based upon clear-cut goals and objectives:
Survival
Profit maximization
Market share
Competition or positioning

3. PLACE
• The place where customers purchase the tourism product can vary greatly.
Travel agents, tour operators and tour wholesalers are a few examples of
the distribution points for tourism products.
• Direct distribution: own website or direct purchase in place
• Indirect distribution: third party operators: agencies/affiliates, online
websites: travelocity.com, edreams.com, auctions etc.

•Online 24-hour reservation Systems.
•Consolidation.
•Tour Operator/ Travel Agent.
•Affiliated with companies.
PLACE MIX

4. PROMOTION
• A range of activities can be used to convince customers to buy the product,
including
-information kits
-web sites
-advertising
-personal selling
-sales promotion
-travel shows
-public relations.
• Utilize tourist information centers, such as welcome centers. Participation
with your state, regional and local tourism offices and associations.

PROMOTION MIX
Advertising
Publicity
Sales promotion
Word of mouth

5. PEOPLE
•People in the travel and tourism industry
-travel agents
-tourist guides
-hotel and restaurant staff
-transport personnel
•Play an important role in brand building and customer satisfaction.

 Competence.
 Reliability.
 caring Attitude.
 Responsiveness.
 Initiative.
 Problem Solving Ability.
 Goodwill.
PEOPLE MIX

6. PROCESS
Detailed and well documented procedures for addressing every situation
and service context supported by infrastructure and IT systems = consistent
and good quality service.
•Administration
•Training
•Planning and strategizing
•Recruitment
•Purchasing
•Distribution
•Service delivery

•Detailed Information.
•Reservation.
•Facilities.
•Personal belongings.
•Meal Service.
•Entertainment.
•Deliver Quality Service.
59
PROCESS MIX

7. PHYSICAL EVIDENCE
•Good customer experience is extremely important for generating repeat business
and also business from new customer through positive word-of-mouth.
•“Tangibalizing the product is a good way of giving positive and attractive hints
or clues to potential customers.
•First service, then installations and facilities.

On the go:
•Booking offices or ticket
counters.
•Paperwork.
•Brand Logo.
•Tickets or reservations.
61
PHYSICAL EVIDENCE MIX
In the place:
•Service professionalism .
•Display configuration.
•Good Inner-exteriors.
•Cleanliness.
•Uniforms.
•Ambience.
•Comfortable .
•Labels and descriptions.

WHAT IS AN EDUCTIONAL SERVICE?
• Education encompasses teaching and learning specific skills , and also
Something less tangible but more profound the impart of knowledge,
positive judgment and well developed wisdom .

FACTOR RESPONSIBLE FOR COMMERCIALSATION
OF EDUCATION
• CHANGING LIFESTYLE
• CHANGING WORLD
• CHANGING ECONOMIES
• CHANGING TECHNOLOGY

PRODUCT : Product is a set of benefit: knowledge, ideas, course, degree
PRICE
• The Main source of income – Fee
• Various components
• The penetration pricing strategy
PLACE: It refers to the place where the customers can buy the product and how
the product reaches out to that places.
• Points to Delivery
• Usually requires large classrooms
• Cost-visibility trade off
• Ideally away from cities
• Virtual classrooms
PRODUCT MIX

PROMOTION : It includes the various ways communicating to the
customers of what the services provider has to offers .
• Growth in the sector has called for promotion
• Reputation matters
• Channels of communication
PEOPLE: refers to the customers, employees ,management & everyone else
involved in it .
• Teachers ,staff members ,students , suppliers ,etc.
• Face to face teaching
• Open house meeting
• Reputation of the brand rest in your people’s hands
• Reputation of teachers can add to the institution’s reputation
PRODUCT MIX

PROCESS: The process of giving a service and the behaviour of those deliver
are crucial to customers satisfaction .
Best viewed as something that yours customers participates in at different points
in time
• Course plan
• Internal mark policy
PHYSICAL EVIDENCE: choosing to use a service can perceived as a risky
business because you are buying something intangible .
Uncertainty can be reduce by helping potential customers to “see” what they are
buying
• Infrastructure
• Teaching equipments
• Transportation
• Prospectus – hard copy
PRODUCT MIX

THANK YOU

Marketing Services: Key Concepts

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