The document discusses the concept of services marketing, defining services as intangible products focused on fulfilling specific customer needs. It explores the evolution of service marketing, highlighting the transition from traditional views to a customer-centric approach in a service-driven economy, and underscores the importance of managing customer experiences. Additionally, it addresses the growth of the service environment, traditional and augmented marketing mixes, and the gap model for improving service quality.

1. RASHTRASANT TUKDOJI MAHARAJ NAGPUR UNIVERSITY
MBA
SEMESTER: 4
SPECIALIZATION – MARKETING
RETAIL SALES MANAGEMENT & SERVICES MARKETING
MODULE NO 4
INTRODUCTION TO SERVICES MARKETING
- Jayanti R Pande
DGICM college, Nagpur

2. Q1. Define services. Mention the myths encountered services.
SERVICES
• Services can be defined as intangible products or actions that are provided to fulfill a specific need or want.
• Unlike physical goods, services are primarily characterized by their intangibility, meaning they cannot be perceived by the
senses in the same way as tangible products.
• Services are typically consumed at the point of production and are often created and delivered simultaneously.
• Services are essential for meeting the needs and demands of individuals, businesses, and society as a whole.
• Effective management of services is crucial to ensure customer satisfaction, loyalty, and long-term success.
• Service providers focus on delivering exceptional experiences, enhancing service quality, managing customer
expectations, and building strong relationships
• Examples of services include healthcare, banking, transportation, education, consulting, hospitality, entertainment, and
customer support.
DEFINITION OF SERVICES
• Services are intangible products or actions provided to fulfill specific needs or wants.
• Zeithaml & Bitner – “Services are deeds, processes and performances”.

3. MYTHS ENCOUNTERED IN SERVICES
1.Lower value misconception:This myth assumes that services have lower value compared to tangible goods. However,
services can offer significant value through intangible benefits, expertise, convenience, and personalized experiences.
2.Low capital intensity:This myth suggests that services require less capital investment compared to manufacturing or
product-based businesses. In reality, many service industries require substantial investments in technology, infrastructure,
talent, and ongoing training to deliver high-quality services.
3.Small scale misconception:This myth assumes that services are limited to small-scale operations and cannot achieve
large-scale growth or impact. However, numerous service-based companies have successfully expanded and scaled their
operations globally, demonstrating the potential for substantial growth and market reach.
4.Services cannot provide wealth:This myth suggests that services are not as lucrative as goods-based businesses when
it comes to generating wealth. However, successful service-based companies, such as those in finance, technology, consulting,
and entertainment, have proven that services can indeed be highly profitable and contribute to wealth creation.
Lower value
misconception
Low capital
intensity
Small scale
misconception
Services
cannot provide
wealth

4. Q2. Explain the concept of service marketing. Describe evolution of service marketing.
CONCEPT OF SERVICES MARKETING
Services marketing is all about promoting and selling intangible services, like healthcare or banking, which can't be seen or
touched like physical products. It focuses on understanding and meeting the specific needs of customers in service
encounters. In services marketing, we pay attention to the customer experience, making sure customers have a positive and
memorable interaction with the service.We also use tangible cues, such as logos or advertising, to show the quality of the
service. Services marketing is about making customers happy and satisfied with the services they receive.
Services marketing focuses on the unique challenges and characteristics of intangible services, which require a different
approach compared to marketing physical products. It emphasizes building strong relationships with customers through
personalized experiences, effective communication, and exceeding customer expectations. Services marketing involves
understanding customer needs, designing service offerings, pricing strategies, promoting services through various channels,
and continuously improving service quality. It recognizes the pivotal role of customer satisfaction, loyalty, and positive word-
of-mouth in driving business success in the service industry.

5. EVOLUTION OF SERVICES MARKETING
Pre-Industrial Era: In this stage, which dates back to ancient times, the focus was primarily on agrarian and craft-
based economies. Services were mostly localized and based on personal relationships. Marketing activities were limited,
as production and consumption often occurred within close-knit communities.The concept of marketing as a formal
discipline did not exist during this period.
Industrial Era:The industrial revolution marked a significant shift in the economy, with the emergence of mass
production and manufacturing. During this stage, goods became the primary focus of economic activities. Marketing
efforts were predominantly geared towards promoting and selling tangible products. Services were often overlooked or
considered secondary to the physical goods being produced. Service encounters were often characterized by
standardization and limited customer involvement.
Post-Industrial Era:With the rise of information technology, globalization, and a shift towards a service-based
economy, the post-industrial era brought about a fundamental transformation in the field of service marketing. Services
gained recognition as a distinct economic sector, and marketing strategies specifically tailored to the unique
characteristics of services began to emerge.This era emphasized the importance of customer experience,
customization, and relationship-building. Service marketing became more interactive, customer-centric, and focused on
intangible value creation.Technology played a significant role in enabling the delivery of services, expanding service
offerings, and enhancing customer interactions.

6. Q3. Describe the growth of service environment. Mention the need of service marketing
GROWTH OF SERVICE ENVIRONMENT
The services sector has undergone significant growth and transformation. Service providers have shifted their focus from
simply selling services to building lasting relationships with customers. In India, the services sector has outperformed other
sectors, contributing to the country's economic growth
• Service providers have evolved from purely selling services to building lasting customer relationships.
• The growth of the services sector in India has outperformed agriculture and industry sectors.
• The Indian healthcare industry is shifting towards digitally enabled remote consultations.
• The telemedicine market in India is expected to grow at a CAGR of 31% from 2020 to 2025.
• Collaborations and initiatives aim to accelerate digital skills training and AI skilling in India.
• Byju's acquisition of 3D virtual lab startup LabInApp strengthens its presence in the edtech sector.
• The services sector is the largest recipient of FDI in India.
• Jio Platforms Ltd. raised a significant amount of funds from global investors, marking a record fundraise.
• Services sector accounts for around 55% of GrossValue Added (GVA) and GVA growth in India.
• Services exports have outperformed goods exports, contributing to India's rising share in world's commercial services
exports.
• Gross FDI equity inflows into the services sector have witnessed a strong recovery.
• Shipping turnaround time at ports in India has significantly reduced in recent years.
• India has launched multiple satellites per year with a high success rate.
• Services sector activity experienced a moderation in 2019-20 based on high-frequency indicators and sectoral data.
• Services sector contributes significantly to total FDI inflows, total exports, and Gross StateValue Added in India.

7. NEED OF SERVICE MARKETING
1 Formation and expansion of job opportunities: Service marketing plays a crucial role in the growth of service
industries, which in turn creates employment opportunities. It enables the promotion and marketing of services, attracting
customers and generating demand, thereby driving the expansion of service-related jobs.
2 Optimum utilization of available resources: Service marketing helps in effectively utilizing available resources. By
promoting and marketing services, businesses can attract customers and efficiently utilize their resources, such as
infrastructure, technology, and skilled personnel, to meet customer needs and maximize service delivery.
3 Formation of capital: Service marketing contributes to the formation of capital by stimulating economic activity in the
service sector. Effective marketing strategies help service providers attract customers, generate revenue, and reinvest
profits into expanding and improving their services, leading to capital formation and economic growth.
4 Raising living standards: Service marketing plays a vital role in improving the quality of life and raising living standards.
By promoting and delivering high-quality services, service providers can enhance customer experiences, meet their needs,
and contribute to overall customer satisfaction.This, in turn, leads to improved living standards and enhanced well-being
for individuals and communities.
5 Eco-friendly technology: Service marketing can promote the adoption and implementation of eco-friendly
technologies in service industries. By creating awareness and highlighting environmentally friendly practices, service
providers can contribute to sustainability efforts, reduce their ecological footprint, and align their services with the
growing demand for environmentally responsible solutions.

8. Q4. Explain traditional and augmented service marketing mix in detail.
Traditional Service Marketing Mix:
The traditional service marketing mix consists of the 4Ps: Product, Price, Place, Promotion
Product: In service marketing, the product refers to the intangible service itself, which includes its features, benefits, and value
proposition. It involves defining the core service offering, identifying service variations, and differentiating it from competitors.
Price: Price refers to the monetary value customers pay for the service. It involves determining the pricing strategy, considering
factors such as perceived value, pricing models (e.g., hourly rates, fixed fees), discounts, and bundling options.
Place: Place involves the distribution and accessibility of the service. It focuses on making the service available to customers when
and where they need it.This includes physical locations, online platforms, service delivery channels, and partnerships with
intermediaries or agents.
Promotion: Promotion involves the communication and promotion of the service to the target market. It includes advertising,
public relations, personal selling, sales promotions, and digital marketing strategies to create awareness, generate interest, and
persuade customers to choose the service.
1 Product
4 Promotion
2 Price
3 Place 7 Physical Evidence
6 Process
5 People
MARKETING MIX
[ 7Ps ]

9. Augmented Service Marketing Mix:
The augmented service marketing mix extends the traditional mix by incorporating three additional elements to
enhance the overall customer experience.These additional elements are People, Process, and Physical Evidence, as
they directly impact customer perceptions and satisfaction.
People: In the augmented mix, people represent not only the service provider's personnel but also the customers
themselves. It recognizes the significance of customer engagement, co-creation, and the role of other customers in
the service experience. Engaging customers as active participants and valuing their contributions can enhance the
overall service encounter.
Process: In the augmented mix, process expands to include the entire customer journey, from pre-service
interactions to post-service follow-up. It emphasizes a customer-centric approach, focusing on streamlining
processes, reducing friction, and personalizing interactions to create a seamless and memorable customer
experience.
Physical Evidence: Physical evidence extends beyond tangible cues to encompass all touchpoints and interactions
that influence the customer's perception of the service. It includes digital interfaces, online reviews, customer
testimonials, and social proof. Leveraging positive physical evidence can build trust, credibility, and confidence in the
service provider.

10. Q5. Elaborate the gap model of services. Give the prescriptions for closing quality gap.
THE GAP MODEL of Services, also known as the "SERVQUAL" model, is a framework that identifies the gaps between
customer expectations and perceived service quality.These gaps highlight areas where service quality may fall short, providing
valuable insights for service providers to improve their offerings.
Gap 1: Customer Expectations vs. Perceived Service Quality Gap
Gap 1 represents the difference between customer expectations and how management perceives those expectations. Factors
responsible for Gap 1 include:
A. Absence of direct communication with customers: Lack of channels for customers to express their expectations directly.
B. Absence of asking customer expectations: Failure to proactively seek customer input and understand their needs.
C. Unpreparedness to answer expectations: Inability to meet customer expectations due to inadequate resources or
capabilities.
D. Absence of market segmentation: Failure to identify and cater to specific customer segments with different expectations.
Gap 2: Quality Standard Gap
Gap 2 occurs when management fails to translate customer expectations into specific service quality standards. Factors
influencing Gap 2 include:
A. Absence of pure customer-driven standards: Lack of customer input and involvement in defining service quality standards.
B. Lack of formal quality control objectives: Failure to establish clear quality control objectives and guidelines.
C. Undefined service design: Insufficient clarity in designing service processes and standards.
D. Management indifference: Lack of commitment and attention from management towards setting and maintaining quality
standards.

11. Gap 3: Service Performance Gap
Gap 3 represents the gap between established service quality standards and the actual service performance. Factors
contributing to Gap 3 include:
A. Defective recruitment: Hiring employees without the necessary skills, attitude, or training to deliver quality service.
B. Maintaining supply and demand balance: Difficulty in managing fluctuations in customer demand and maintaining service
quality during peak periods.
C. Non-participation from customers: Customers not actively participating in the service delivery process, leading to
potential quality gaps.
D. Lack of training: Insufficient training and development programs for employees to ensure consistent and high-quality
service delivery.
Gap 4: Promises vs. Performance Gap
Gap 4 refers to the gap between the promises made through marketing and the actual service performance. Factors
influencing Gap 4 include:
A. Poor education to customers: Inadequate communication with customers about the service offerings, leading to
misaligned expectations.
B. Poor use of communication: Ineffective communication channels or messages that fail to accurately convey the service
performance.
C. Overpromising: Setting unrealistic expectations through marketing and advertising efforts.
D. Inadequate communication between sales and operations: Lack of coordination between sales teams and operational
departments, resulting in unmet customer expectations.

12. PRESCRIPTIONS FOR CLOSING QUALITY GAP
1 Creating a Shared ServiceVision: Developing a clear and compelling vision for service excellence is essential.This vision
should be communicated and shared across all levels of the organization, aligning everyone towards a common goal of
delivering high-quality service.
2 Locating Service Points Near Customers: By strategically locating service points closer to customers, organizations can
improve accessibility and responsiveness.This could involve opening new service centers or satellite locations in areas with
high customer concentration, reducing travel time and enhancing convenience for customers.
3 Product Design: Investing in product design that emphasizes quality and customer satisfaction can significantly impact the
quality gap. By understanding customer needs and preferences, organizations can design products that meet or exceed their
expectations.This includes factors such as functionality, durability, ease of use, and aesthetics.
4 Performance Measurement and Reward System: Implementing a robust performance measurement system is crucial
for identifying gaps and monitoring progress. By setting key performance indicators (KPIs) related to service quality,
organizations can track their performance and identify areas for improvement.Additionally, a reward system tied to these KPIs
can incentivize employees to deliver exceptional service and drive continuous improvement.
5 Unconditional Guarantee: Offering an unconditional guarantee can be a powerful way to close the quality gap. By assuring
customers that their satisfaction is of utmost importance, organizations in still confidence and trust.This guarantee should
include a promise to address any issues or concerns promptly and effectively, providing customers with peace of mind and
demonstrating a commitment to quality.`

13. Q6. Explain the models of service marketing in detail.
1.Service Triangle: The Service Triangle model, also known as the Service Profit Chain, highlights the interrelationships
between three key components in service marketing: the company (SBU, department, or management), customers, and
employees or service providers. It emphasizes that a strong connection and alignment among these three elements are
essential for delivering exceptional service experiences and generating business success.
a) Company: This component represents the organization providing the service. The company's role is to design and
deliver services that meet customer needs and expectations. It involves strategic decisions, resource allocation, service
design, and quality management.
b) Customers: Customers are the recipients of the service and play a crucial role in service marketing. Understanding
customer needs, preferences, and expectations is essential for designing and delivering personalized and satisfying
service experiences. Building strong relationships with customers can lead to customer loyalty, positive word-of-mouth, and
repeat business.
c) Employees or Service Providers: The employees or service providers are the frontline representatives who directly
interact with customers. They are responsible for delivering the service and creating a positive customer experience.
Employee satisfaction, training, empowerment, and motivation are vital for ensuring high-quality service delivery.
INTERNAL MARKETING
ENABLING PROMISES
CUSTOMER
PROVIDERS
COMPANY
EXTERNAL MARKETING
MAKING PROMISES
INTERACTIVE MARKETING
KEEPIING PROMISES
SERVICE
TRIANGLE

14. 2.Variants of Service MarketingTriangle:
a)Internal Marketing: Internal Marketing focuses on treating employees as internal customers and
recognizing the importance of their satisfaction and engagement in delivering quality services. This approach
involves aligning internal processes, communication, and training to ensure that employees have the
necessary tools, knowledge, and motivation to provide exceptional service experiences.
b) External Marketing: External Marketing refers to traditional marketing efforts aimed at attracting and
acquiring customers. It involves advertising, promotions, branding, and communication strategies to create
awareness, generate interest, and communicate the value proposition of the services offered.
c) Interactive Marketing: Interactive Marketing focuses on the actual interactions between service providers
and customers during the service encounter. It recognizes that these interactions play a crucial role in
shaping customer perceptions and satisfaction. Effective communication, responsiveness, empathy, and
personalized attention are key factors in creating positive interactive experiences.

15. INTERNAL MARKETING STRATEGIES:
Alignment of Organizational Attitude and Employee Attitude: Ensuring that the values, goals, and vision of the
organization are effectively communicated and embraced by employees, creating a shared sense of purpose and commitment.
Rewarding: Implementing reward and recognition systems that acknowledge and reinforce employee performance,
motivating them to deliver excellent service and fostering a positive work environment.
Employee Empowerment: Providing employees with the authority, autonomy, and resources to make decisions and take
ownership of their roles, enabling them to deliver personalized and responsive service.
Coordination: Establishing effective communication channels and coordination mechanisms within the organization to
ensure seamless teamwork, collaboration, and information sharing across different departments or functions.
Friendly Atmosphere: Cultivating a supportive and inclusive workplace culture that promotes teamwork, trust, and open
communication, creating a positive and friendly atmosphere for employees.

16. EXTERNAL MARKETING STRATEGIES:
Advertising: Using various media channels to create awareness and promote the services offered, targeting the desired
customer segments and communicating the unique value proposition.
Sales Promotion: Implementing short-term incentives, discounts, or special offers to stimulate immediate customer
interest and encourage trial or repeat purchases.
Personal Selling: Engaging in direct, face-to-face interactions with potential customers to understand their needs,
provide personalized information about the services, address concerns, and build relationships.
Publicity: Generating positive media coverage and leveraging public relations efforts to enhance the organization's
reputation, credibility, and visibility in the market.
Public Relations (PR): Developing and managing relationships with the media, industry influencers, and other
stakeholders to shape the organization's image and maintain positive public perception.
Direct Marketing: Directly reaching out to targeted customers through methods such as email marketing, direct mail,
telemarketing, or online advertising, tailoring messages and offers to specific customer segments.

17. ACTIVITIES OF INTERACTIVE MARKETING:
Design and Development: Understanding customer needs and preferences, and designing services that align with
those requirements, incorporating elements such as service features, processes, and pricing.
Production: Executing the service delivery process, ensuring efficiency, consistency, and quality in the actual
production and delivery of services.
Marketing: Engaging in customer interactions, communication, and relationship-building activities during the service
encounter, addressing customer inquiries, providing information, and managing expectations.
Consumption:The actual utilization or consumption of the service by the customer, where they experience the
value and benefits delivered by the service.
Destruction: Handling post-service interactions and activities, such as customer feedback, complaint resolution, and
service recovery, to maintain customer satisfaction and loyalty even after the service encounter.

18. Q7.What is service design? Describe the components of new service design.
SERVICE DESIGN:
Service design refers to the process of conceptualizing and organizing the various elements and components of a service to
ensure its effective delivery and create value for customers. It involves both the structural elements, which are tangible and
physical aspects, and the managerial elements, which focus on the processes and interactions involved in delivering the service.
Structural Elements of Service Design:
Delivery System:This refers to the method or channel through which the service is delivered to customers. It includes the
processes, procedures, and technologies used to facilitate the service delivery and ensure its efficiency and effectiveness.
Facility Design:The physical layout and design of the service facility or environment where the service is provided.This
includes aspects such as interior design, ambiance, aesthetics, seating arrangements, and other tangible elements that
contribute to the overall customer experience.
Location:The strategic selection and positioning of the service facility or outlets. Location considerations include factors
such as proximity to target customers, accessibility, visibility, and the surrounding environment.
Managerial Elements of Service Design:
Quality:The design of service processes, standards, and protocols to ensure consistent and superior service quality.This
involves defining service quality objectives, establishing quality control mechanisms, and implementing continuous improvement
initiatives.
Information:The management and utilization of information throughout the service delivery process.This includes gathering
customer data, analyzing customer preferences, and using insights to customize and personalize the service experience.
Service Encounter:The design of interactions and experiences between service providers and customers.This includes
training and empowering frontline employees, developing service scripts or guidelines, and creating processes to handle
customer inquiries, complaints, and requests effectively.

19. COMPONENTS OF NEW SERVICE DESIGN:
1.Core Services:These are the fundamental or basic services provided to customers that meet their primary needs or
solve their core problems. Core services form the foundation of the service offering and are the primary reason why
customers seek out the service. For example, in a hotel, the core service is providing accommodation.
2.Supplementary Services:These are additional services or features that enhance the overall value and customer
experience beyond the core service. Supplementary services are designed to address specific customer needs, preferences,
or desires.They can be categorized into two types:
•Flower of Service:The Flower of Service is a visual representation of supplementary services that surround the core
service. It includes facilitating services and enhancing services.
•Facilitating Services:These services support the core service delivery process and make it easier for customers to use the
core service. For example, in a restaurant, facilitating services can include reservation management, valet parking, or online
ordering.
•Enhancing Services:These services add extra value and exceed customer expectations, providing a superior experience.
Enhancing services aim to create a memorable and unique customer experience. Examples can include personalized
greetings, complimentary upgrades, or special amenities in a hotel.
3.Delivery Process:The delivery process refers to the step-by-step procedures and activities involved in providing the
service to customers. It encompasses all interactions, touchpoints, and stages of the customer journey, from initial contact
to post-service follow-up. Designing an efficient and effective delivery process is crucial to ensure seamless service delivery,
minimize errors, and maximize customer satisfaction.

20. Q8. Explain service delivery and service delivery process.
SERVICE DELIVERY/DISTRIBUTION
Service delivery refers to the actual process of providing a service to customers and fulfilling their needs or
requirements.
It involves the interaction between service providers and customers, where the service is performed, consumed, or
experienced.
Service delivery is a critical component of the overall service experience and plays a vital role in customer satisfaction,
loyalty, and perception of service quality.
DEFINITION
American Marketing Association – “A channel of distribution o marketing channel is a structure of intra-company
organisation, units and intra-company agents and dealers, wholesalers and retailers through which a commodity product
or service is marketed"

21. Service Delivery Process:
The service delivery process refers to the sequence of activities and steps involved in delivering a service to customers. It
encompasses all the interactions, touchpoints, and stages that customers go through during the service encounter.The
service delivery process typically includes the following key elements:
Pre-Service Interaction:This involves any communication or interaction that occurs before the actual service encounter.
It can include activities such as making a reservation, gathering customer information, or providing initial information about
the service.
Service Encounter:The service encounter is the primary stage where the service is delivered and customers directly
interact with the service providers. It includes activities such as receiving the service, interacting with frontline employees,
and experiencing the core and supplementary services.
Service Performance:This stage involves the actual execution of the service, where service providers perform the
necessary tasks and activities to deliver the promised service. It includes aspects such as performing the core service,
providing supplementary services, and ensuring service quality.
Service Recovery: In cases where there may be service failures, service recovery is an essential part of the service delivery
process. It involves addressing customer complaints, resolving issues, and taking appropriate actions to restore customer
satisfaction.
Post-Service Interaction:After the service is delivered, there may be follow-up interactions with customers.This can
include activities such as collecting feedback, seeking customer opinions, or providing post-service support.