The document discusses key concepts in services marketing. It outlines that services make up a large portion of economies and employment. Services are characterized as intangible, perishable, inseparable, and heterogeneous. These characteristics present unique marketing challenges. Consumer evaluation of services is based on factors like consistency, competence, and courtesy. The marketing mix for services includes the core service, facilitating services, physical evidence, people, process, and customer relationships.

1. SERVICES MARKETING Introduction

2. Levitt – “There are no such things as service industries. There are only service industries whose service components are greater or less than other industries. Everybody is in service.”

3. Growth of services About 80% of US’s GDP is accounted for by services In India, it is about 60% Matched by a growth in employment The software industry is growing at a CAGR of 28% over the past 5 years

4. Characteristics of services Intangibility Perishability Inseparability Heterogenity (variability)

5. Intangibility Marketing implications No patents Display issues Communication issues Pricing

6. Intangibility Strategies Tangible clues Personal sources Word-of-mouth Post purchase communication

7. Inseparability Marketing implications Consumer is involved in production No mass production Supply demand match Strategies Selection and training of contact person Multi-site location

8. Heterogeneity Marketing implications Standardisation difficult Quality control difficult Strategies Industrialise Customise

9. Perishability Marketing implication No inventorisation Demand management Develop off peak pricing Non-peak promotion & demand creation Develop complementary services Create reservation systems

10. Perishability Capacity management Use part time employees Lower options or supply base-versions Increase efficiency or multi-tasking Get more participation of consumer Share capacity Expansion options

11. Consumer evaluation of services Consistency (reliability of performance) Concern (prompt service, etc) Competence (knowledge and skills) Contact (approachability and access) Courtesy (politeness) Communication (keeping customers informed)

12. Consumer evaluation of services Credibility (trust) Confidentiality (security at ATM) Customer knowledge (effort to understand the customer) Bateson – “Higher degree of perceived control leads to greater satisfaction”

13. The Service product The ‘core’ service Facilitating services – mandatory? Support services – do not facilitate the consumption of core services Brand

14. Pricing Pricing strategy can help in handling demand fluctuations Factor in cost of tangible clues Price may be used as a quality indicator Price should be used to ward off competition from....

15. Customer as competitor During a party, housewife vs catering service During transfer of residence, packer & mover vs family Laundry vs spouse, Taxi vs walk it down Beauty care services vs do-it-yourself

16. Place Brokers Agents Franchisee

17. Promotion Consumers of services are less likely to buy without prior information, than those of goods Importance of personal relationship Competency, consistency are main messages Post purchase communication significant

18. People Internal marketing Employees are the first market Focus on developing customer-conscious personnel Investing in people quality is investing in product quality

19. People Compete as hard for employees as for customers Give the employees a vision to believe in Develop skill and knowledge Stress team play Give freedom and structure Measure and reward performance Listen to employees

20. Physical evidence Customer makes purchase decision on perceptions based on tangible clues Essential evidences (cannot be possessed) Peripheral evidence (can be possessed) Physical facilities are important in facilitating the delivery of services

21. Service gaps Marketing information gap - Not knowing what the customer expects Standards gap - Inability to set the right type of standards Service performance gap - Not delivering to service standards Communication gap - Mismatch between promise and performance

22. Measuring service delivery Reliability Tangibles Responsiveness Assurance Empathy

23. SERVICES MARKETING Re-introduction

24. SM Paradigm Paradigm – fundamental set of assumptions Shapes formulation of theory, focus data gathering and influences research gathering The validity of underlying assumptions should be open to challenge

25. IHIP Kerin – intangibility, inconsistency, inseparability and inventory Kotler Pride & Ferrell add customer relationship and contact

26. Differences between services and goods Customers do not obtain ownership of goods Service products cannot be inventoried Intangible elements dominate value creation Other people may form part of the product There is greater variability in operational inputs and outputs

27. Differences between services and goods Many services are difficult for customers to evaluate The ‘time’ factor assumes great importance Distribution channels take different forms

28. Origin of the terms Intangible – Adam Smith differentiated between output of ‘productive’ and ‘unproductive’ labour Also, material and immaterial production were widely used terms

29. Intangibility Physical intangibility – it cannot be touched Mental intangibility – it cannot be visualised before experiencing it

30. Servicescape: physical aspects Sensory package to elicit emotional responses A facilitator to shape consumer behaviour A differentiator to distinguish from competitors

31. Mental intangibility Mental intangibility is not correlated with physical intangibility Search qualities – attributes that can be determined before purchase Experience qualities – attributes determined after consumption Credence – hard to evaluate even after consumption

32. Heterogeneity Performance variation between workers Also from one customer to another External conditions Customer perceptions of variability ‘ industrialisation’, use of technology and procedures, leads to lesser variability Standardisation, modularisation and customisation

33. Inseparability Consumer as prosumer or coproducer Separable services – r & m, laundry To customer’s possessions

34. Perishability Inventory carrying costs are disguised as idle capacity Perishable capacity is not the same as perishable output Surgery CDs, tapes and other storages

35. Banking, insurance entertainment, education Laundry, r&m Health care, haircut Examples exceptions exceptions yes yes Perishability exceptions exceptions No yes Inseparability exceptions exceptions exceptions yes heterogeneity Yes Yes Misleading Misleading Intangibility Information processing Nonphysical acts to customer’s mind Physical acts to possessions Physical acts to customers

36. So.... Service Marketing is what marketing is all about. Make it the core of marketing thought Service marketing ceases to exist as an independent sub-field

37. Focus on independent subfields High-contact services delivering tangible actions to the person of the customer Low-contact highly intangible services like e-services Separable services Information-based services that can be stored

38. New paradigm: Non-Ownership Rented goods Space rental Labour and expertise rentals Physical facility usage Network access

39. Implications Manufactured goods can form the basis of services Services often involve selling slices of larger physical entities Labour and expertise is a renewable resource Time plays a central role New approach to pricing Resource sharing (Zipcar, graminphone)