This document discusses key aspects of services marketing. It defines what a service is, noting that services are intangible, perishable, and require simultaneous production and consumption. It also outlines several challenges of services marketing, such as differentiation, the intangible nature of services, the importance of building trust, and the difficulty of proactively generating leads. Additionally, the document introduces the services marketing triangle framework, which illustrates the interactions between a company's internal marketing to employees, external marketing to customers, and the interactive marketing that occurs when employees deliver the service to customers.

2. Services in product business
Service itself as a business

3. What is a Service?
• Intangible economic activity
• Heterogeneous in nature
• Perishable
• Simultaneity of production and consumption
• Doesn’t result in Ownership

4. 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

5. Extended P’s of Service Marketing Mix:

6. The service component and support processes of product offerings are rapidly becoming the
competitive advantage in winning customer loyalty.

7. Importance of Customer Service
• A 5% increase in customer retention can increase a company’s profitability by 75%.
• 86% of consumers quit doing business with a company because of a bad customer
experience
• 73% of customers cited rude and incompetent staff as the primary reason why they
give up on a brand
• 78% of online customers recommend a brand to friends and other contacts after a
great customer experience
• It is 5-7 times more expensive to acquire a new customer than to keep an old one
Source: 10 Mind-blowing reasons why Customer Service is the New Marketing By:
Ross Beard

8. GATS Classification.
 General agreement on trade in services classifies 155 activates as service.
 Major 11 categories are
1. Business services.
2. Communication.
3. Construction & Engg.
4. Distribution.
5. Education.
6. Environment.
7. Finance.
8. Health.
9. Tourism.
10. Recreation.
11. Transport

9. Service organizations…
• Large international corporations –airlines , banking, telecom, hotel
chains, transportation…..
• Locally owned small business– restaurants, laundries, taxi services,
internet services, courier etc.,…
• B-2- B services…
• Franchised service outlets--- food , education…

10. Promotional techniques
• Sampling.
• Premium
• Prize promotion.
• Price /quantity promotion
• Refunds & future discounts.
• Coupons

11. Strategies:
Understanding your customers’ core frustration and demonstrating that you can solve them.
• Enhance customer satisfaction through service encounters.- recover from service
failure, flexibility in delivering service, assistance in handling difficult customers.
• Reflect evidence of service- behavior & physical evidence.
• Communicate & create realistic image.- make promises & keep them.
• Enhance customer perception of quality & value through price.

12. Customer expectation & perception of service
Customer
expectations
Adequate
service
Desired
service

13. Service level expectation
adequate
desired
low
high
Zone of tolerance

14. Service Quality -- Dimensions
• Reliability – Ability to perform promised service dependably & accurately.
• Responsively – Willingness to help customers & provide prompt service.
• Assurance – Employees ability to inspire trust & confidence.
E.g.- Insurance , brokerage, legal services
• Empathy – Caring , Individual attention to customers.
E.g.-- Hotel
• Tangibles – Appearance of physical facilities equipment, personnel & written materials.
E.g. – travel agents putting attractive pictures..

15. In services, the last experience remains
uppermost in your mind. Therefore, it is
not enough to be good, you have to be
consistently good
Service quality is directly proportional to
customer satisfaction

16. 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

17. Points of the triangle
• Each side of the service marketing triangle represents a type of marketing, and the
types interact between the entities on the points where the sides meet.
• At the top of the triangle sits your business organization.
• At each corner at the bottom of the triangle are your customers and your employees
who interact with and provide the services to your customers.

18. Internal Marketing
• Internal marketing is the side of the triangle between your organization and your
employees who provide your services to customers.
• Marketing issues include adequate training on the services to be delivered and
customer satisfaction service techniques.
• Internal marketing requires you to be involved with your employees and let them
know the goals and even problems facing the business.

19. External Marketing
• External marketing goes from your business organization out to customers.
• This is the traditional form of business marketing, showing customers how the
services provided by your business benefit them.
• External marketing includes advertising, your website and your company's social
media efforts. The purpose of external marketing is to fill the business pipeline with
future business.

20. Interactive Marketing
• The side of the triangle between your employees and customers is called interactive
marketing.
• This form of marketing revolves around how your employees deliver the services
your company provides.
• The goal is to have highly satisfied customers who become long-term, repeat
customers. The effectiveness of the interactive marketing relates back to the internal
marketing efforts of your business.
• Interactive marketing is also how your employees keep the promises made by your
external marketing efforts.

21. Challenges in Service Marketing:
• Differentiation
• Intangible
• Trust is necessary
• Brand extends beyond marketing
• Proactive lead generation is difficult
• Demonstrating Empathy
• Competitive pricing

22. Differentiation
A company is said to have achieved differentiated competitive advantage when its customers
perceive the service offered as different from competition based on elements of marketing
mix– product / service , price, promotion , distribution etc…
• Offering
• Faster and better delivery
• Image

23. Intangible
• Services are not perceptible by touch.
• Difficult to make the customer to visualize.
• Creates uncertainty.

24. Trust is the main thing

25. Brand extends beyond marketing
• Internal Brand management plays a vital role.
• It is what you actually are.

26. Lead generation is not so
proactive
Not as good as product marketing.
Direct marketing & Personal selling are a bit effective