The document discusses the significance of the service sector in modern economies, highlighting its rapid growth and contribution to GDP and employment. It emphasizes the unique characteristics of services, such as intangibility and perishability, and the challenges faced in marketing them effectively. Additionally, it examines India’s position as a growing service economy and the importance of innovative marketing strategies tailored to consumer needs.

1. CHAPTER - 1
SERVICES
MARKETING
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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.
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3. INTRODUCTION
The service economies reveal that the service
sector accounts for more employment, contribution
in 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. REASONS FOR GROWTH IN
SERVICE SECTOR
Increase in population creates a new
market for different kind of services.
The economic reforms have ushered
consumerism & middle class is
emerging as “Consumption
Community”.
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5. Increase in govt. interaction in the trade
sector has increased trade relationships
between nations leading to development of
tourism & hotel industry.
Changing lifestyles due to cultural exchange
& communication networks resulted in
continued emphasis on services.
The boom in I.T industry & computer
sciences encouraged the shift in service
industry like Travel, Banking, Education,
Financial services etc.
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6. THE ROLE OF SERVICES IN AN ECONOMY
The model of the economy by Dorothy Riddle shows the flow of activity among
the three principal sectors of the economy, extractive manufacturing and
service, 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
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7. Services lie at the center of economic activity in any society. All
activity eventually leads to the consumer, for example
BUSINESS SERVICES - Consulting, finance, banking
TRADE SERVICES - Retailing, maintenance & repair
INFRASTRUCTURE SERVICES - Communication, transportation.
SOCIAL SERVICES - Restaurants, healthcare.
PUBLIC ADMINISTRATION - Education, Government.
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8. INDIAN SCENARIO
India is among the early leaders of the
developing world in the race for service
exports compared to its exports of
manufacturers.
India’s service exports in 1997 were $
9.3 billion against its merchandise
exports of $ 32.2 billion.
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9. In recent days India is becoming
service economy like Hong Kong &
Singapore as the share of services in
India’s GDP is almost 47%, against
29% for industry and 24% for
agriculture.
India didn’t meet even the South Asian
standards because of its poor policies
but still there is a hope to lean over
the Asian neighbors.
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10. DEFINITION OF SERVICES
The Service Industries Journal defines
“service as any primary or complimentary
activity that does not directly produce a
physical product, that is, the non goods part
of transaction between buyer and seller.”
“Services are those separately identifiable,
essentially intangible activities, which
provide want satisfaction when marketed to
consumers and/or industrial uses and which
are not necessarily tied to the sale of a
product or another service” - Stanton.
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11. “A service is an activity or benefit
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”
- Kotler and Armstrong (1981)
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12. TYPES OF SERVICES
Professional Services
Which serve the business market
segments in which advisory & problem
solving provided by a qualified
professional known for their
specialty... e.g. Financial services,
advertising, business and management
consultancy, engineering, medical etc.
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13. Consumer oriented Services
The ones which the consumer is
more acquainted with, such as
holiday tour companies,
entertainment, travel, healthcare,
social services etc.
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14. THE NATURE OF SERVICES
The basic nature of the service is
its Intangibility. The more a
product is intangible, the more it
becomes a service rather than a
good. Products that are primarily
intangible are classified as
services.
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15. Goods are produced while services
are performed.
Intangibility, heterogeneity,
inseparability and perishability
suggest certain marketing
approaches, which in turn lead to
particular marketing strategies, that
differ from those for goods.
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16. CHARACTERISICS OF
SERVICES
INTANGIBILITY
- Make service more tangible.
- Focus on the service provider.
SERVICE VARIABILITY
- Increase control over the service.
- Switch from people to machines.
- Reduce perceived risk.
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17. SIMULTANEOUS PRODUCTION
AND CONSUMPTION
- Simplicity of Distribution.
- Importance of many locations.
- Image of the service provider.
SERVICE PERISHABILITY
- Service supply Management
- Service demand management
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18. DIFFERENCES BETWEEN
GOODS & SERVICES
Many services are essentially
perishable
Lack of transportability
Small firm size
Difficulty in quality control
Labour Intensity
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19. Legal and Ethical Barriers
Unpredictability of demand
Difficulty in entering foreign
markets
Limited applicability of portfolio
theory
Difficulties in establishing large
market shares
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20. NEED FOR SERVICES MARKETING
In this consumer oriented scenario the
service sector is growing rapidly,
Utility services expenditure growing
rapidly faster than the nation’s total
population. But there was a lack of
innovative marketing on the part of
service industry because of :
Limited View of Marketing
Limited Competition
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21. Non-creative Management
No Obsolescence
Lack of Innovation in the Distribution
of Services
Services require a special
understanding & unique marketing
efforts by marketers. Service industry
has to be consumer oriented to
compete more effectively.
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22. OBSTACLES IN SERVICE
MARKETING
The factors of Intangibility and
Inseparability.
Difficulties in maintaining the same service
quality.
Making comprehensive service marketing.
The lack of imagination and creative
innovation. 22

23. THE SERVICE CHALLENGE
The 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.
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24. CHALLENGES TO MANAGEMENT
Challenges to management are implied by :
labour intensity and interaction differences in
services.
To control cost increases with maintaining its
qualities.
Managing the frequency to delivering the
services with advancement.
Gaining employee loyalty.
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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 I
Challenges 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. SUMMARY
Thus, we may infer that services dominate
the modern economies of the world, & it
may put an economy to earn higher level
of income. The chapter focused the
intangibility of services, key difference
between goods & services, & association
of services with the goods.
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