The document provides an overview of service marketing, defining services, their characteristics, and classifications. It discusses the growth of the Indian service sector, its economic contributions, and implications for marketing strategies. Key aspects include the marketing mix tailored for services, emphasizing the importance of intangibility, perishability, and the role of people in service delivery.

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Service Marketing
Introduction to Services, Growth of service sector economy,
Service characteristics, Service classification, Service
marketing mix
Course Instructor: Sneha Sharma (PhD*, MBA, Dip T & D)

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SERVICE
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A service is any activity or benefit that one party
can offer to another which is essentially intangible
and does not result in the ownership of anything.
Its production may or may not be tied to a physical
product.

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“There are no such thing as service
industries. There are only industries
whose service components are greater
or less than those of other industries.
Everybody is in service.”
-Theodore Levitt-

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Indian Service Sector
52 per cent contribution to the Gross Domestic Product (GDP) in
2014-15
Attracted significant foreign investment flows, contributed
significantly to exports as well as provided large-scale
employment.
Services sector contributed US$ 783 billion to the 2014-15
GDP (at constant prices) growing at Compound Annual
Growth Rate (CAGR) of 9 per cent, faster than the overall
GDP CAGR of 6.2 per cent in the past four years.

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Indian Service Sector
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India’s services sector covers a wide variety of activities
such as
-Trade
-Hotel And Restaurants
-Transport
-Storage
-Communication
-Financing
-Insurance
-Real Estate
-Business Services
-Community
-Social And Personal Services
-Services Associated With Construction

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Growth Of Service Sector Economy
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Indian services sector has attracted the highest
amount of FDI equity inflows in the period April
2000-September 2015,
- amounting to about US$ 45.38 billion
- which is about 17 per cent of the total
foreign inflows,
according to the Department of Industrial Policy
and Promotion (DIPP)

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Difference Between Physical Goods And
Services
Physical goods Services
Tangible Intangible
Homogeneous Heterogeneous
Production And Distribution Are
Separated From Consumption
Production, Distribution And
Consumption Are Simultaneous
Processes
A Thing An Activity Or Process
Core Value Processed In Factory Core Value Produced In The Buyer-
seller Interaction
Customers Do Not Participate In The
Production Process
Customers Participate In Production
Can Be Kept In Stock Cannot Be Kept In Stock
Transfer Of Ownership No Transfer Of Ownership

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Service Characteristics
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Service
Characteristics
Intangibility
Heterogeneity
Simultaneous
Production and
Consumption
Perishability

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Marketing Implications of Intangibility
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Great marketing skills in tangibilising intangible offerings, i.e., in surrounding
them with “hard” peripheral attributes
Technical superiority and long term vision in new service development, in
order to protect a service from its non-patentability
Special pricing know-how, i.e., what is the cost of a service?
Creative communications skills, i.e., what message to communicate?

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Tangibility Spectrum
Tangible
Dominant
Intangible
Dominant
Salt
Soft Drinks
Detergents
Automobiles
Cosmetics
Advertising
Agencies
Airlines
Investment
Management
Consulting
Teaching
Fast-food
Outlets
Fast-food
Outlets
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Marketing Implications Of Heterogeneity
Service delivery and customer satisfaction depend on
employee actions
Service quality depends on many uncontrollable factors
There is no sure knowledge that the service delivered
matches what was planned and promoted

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Marketing Implications of Simultaneous
Production and Consumption
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Mass production of services is difficult, if possible at all
No significant economies can be earned from centralization of operations,
since the service must be produced at the convenience of customers
(temporal and physical)
Service quality depends highly on what happens in real time, i.e., during the
service encounter
Since customers have a vital role in the servuction and delivery process, the
service provider needs great skills to train them how to play their role
The service provider must prove excellence each time the service is produced
The service provider needs skills in order to tackle disruptions in the
servuction process, caused by problem customers

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Marketing Implications of Perishability
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Need for developing an as accurate as possible demand forecasting
mechanism
Need for a creative plan for capacity utilization
Need for the implementation of strategies and actions to accommodate
malcontent customers from non-returnable services

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Classification of Services
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On The Basis Of End User
Consumer
• Leisure,
hairdressing,
personal
financing
B2B
• Advertising
agencies,
consultancy
Industrial
• Plant
machinery and
working,
installation and
project
management

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Service Tangibility
• The degree of tangibility can be used for classification:
HIGHLY TANGIBLE
• Car rental, mobile
phones, vending
machine.
SERVICES LINKED TO
TANGIBLE GOODS
• Domestic appliance
repairs, car services,
plumbing jobs.
HIGHLY INTANGIBLE
• Physiotherapy, legal
services, insurance,
consultancy,
coaching.

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Degree of Labor
Labor intensive
• Education,
dental care
Equipment
intensive
• automatic car
wash, movies

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Degree of expertise
Professional
• Medical services,
legal services,
tutoring
Non Professional
• Care taking, baby
sitting

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SERVICE
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Marketing
Mix
E. Jerome McCarthy, proposed a Four P classification in 1960

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4 C’s
• C's developed by Robert Lauterborn
Place becomes
Convenience
Price becomes
Cost to the user
Promotion
becomes
Communication
Product becomes
Customer needs
and wants

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Extended P’s: Booms and Bitner
People Process
Physical
Evidence

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Service Marketing Mix
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Product
• The product in service marketing mix is intangible in
nature.
• At the same time service products
are heterogeneous, perishable and cannot be owned.
• The service product thus has to be designed with care.
Generally service blue printing is done to define the
service product.

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Service Marketing Mix
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Pricing
• Pricing in case of services is rather more difficult than in
case of products.
• Generally service pricing involves taking into
consideration labor, material cost and overhead costs. By
adding a profit mark up you get your final service pricing.

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Service Marketing Mix
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Place
• In case of services determine where is the service product
going to be located.
• E.g. The best place to open up a petrol pump is on the highway
or in the city. A place where there is minimum traffic is a wrong
location to start a petrol pump.
• Similarly a software company will be better placed in a
business hub with a lot of companies nearby rather than being
placed in a town or rural area

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Service Marketing Mix
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Promotion
• Promotions have become a critical factor in the service
marketing mix.
• Services are easy to be duplicated and hence it is
generally the brand which sets a service apart from its
counterpart.
• It is because competition in this service sector is
generally high and promotions is necessary to survive.

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Service Marketing Mix
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People
• People is one of the elements of service marketing mix.
• People define a service.
• If you have an IT company, your software engineers define you. If
you have a restaurant, your chef and service staff defines you.
• In case of service marketing, people can make or break an
organization. Thus many companies nowadays are involved into
specially getting their staff trained in interpersonal skills and
customer service with a focus towards customer satisfaction.

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Service Marketing Mix
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Process
• Service process is the way in which a service is delivered to the
end customer.
• The process of a service company in delivering its product is of
utmost importance.
• It is also a critical component in the service blueprint, wherein
before establishing the service, the company defines exactly
what should be the process of the service product reaching
the end customer.

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Service Marketing Mix
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Physical Evidence
• To create a better customer experience tangible
elements are also delivered with the service.
• Physical evidence is used as a differentiator in service
marketing.

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Term Paper
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Choose a company of your choice.
Part 1- Service Marketing Mix

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That’s All for Today !! 
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