Strategic Management

1. SERVICES MARKETING

2. UNIT I - INTRODUCTION
1. Definition
2. Characteristics of services
3. Service product continuum
4. Challenges and issues in Services Marketing
5. Nature and Scope of Services
6. Service Economy
7. Evolution and growth of service sector
8. Consumer behavior in services: Search,
Experience & credence properties.

3. What is service
 Service is an act or performance that one
party can offer to another that is essentially
intangible and does not result in any
ownership of anything. Its production may or
may not be tied to physical products.(Philip
Kotler)

4. PRODUCT & TYPES OF PRODUCT

6. Difference between goods & services
Intangibility Inseparability
Variability Perishability

8. Characteristics Physical Goods Services
Physical shape Tangible Intangible
Nature of products Homogeneous Heterogeneous
Ownership / Title Transfer of Ownership No Transfer of Ownership
Perishable Can be kept in stock Cannot be kept in stock
Life Longer life Still born
Shelf life Shelf life- Days to year Shelf life - Zero
Pricing Material base Labour base
Facility location Near supply Close to customer
Distribution Requires physical distribution
Works with personal
contact
Attributes
Attributes can be determined
before the purchase
Difficult to determine the
attributes
Marketing mix
Marketing mix consist of 4 P’s-
product, price, place, promotion
Marketing mix consist of 7
P’s- product, price, place,
promotion, people, process,
physical evidence

9. Characteristics Physical Goods Services
Demand Stabilized Fluctuating
Supply Flexible Inflexible
Forecasting Long term Short term
Image Brand Corporate
Delivery Separate with Production Along with production
Production & consumption separated Simultaneous process.
Core value Core value produced in factory produced in buyer – Seller.
Customer Participation
Customer do not participate in
the production process
Customer participate in
the production process
Worker skill Technical Interaction skill
Customer involvement Less High
Consumer reaction Delayed Spontaneous
Quality Standardized Varies with time and person
Standardization All over Only for routine services
Repairs Common Impossible
Replacement Common Rare
Technology Hard Soft
Physical evidence Not so important Important

10.  The American Marketing Association (1960):
Services are “activities, benefits or satisfactions
which are offered for sale or provided in connection
with the sale of goods.”
 Regan (1963): “Services represent tangibles,
yielding satisfaction directly or intangibles, yielding
satisfaction jointly when purchased either with
commodities or other services “credit delivery.”
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DEFINITION OF SERVICES

11.  Lehtinen(1983): “Service product is an activity or a series of
activities which take place in interaction with a contact person or
a physical machine and which provides consumer satisfaction.”
 Kotler, Armstrong, Saunders and Wong (1984):” A service is
an 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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12.  Valarie A Zeithmal and Mary Jo Bitner (1996) : “services
are deeds, processes and performances”
 Adrian Palmer (1998): “Service as an activity which as an
element of intangibility associated with it and which involves
the service provider’s interaction either with the customers or
with the property belonging to the customer. The service
activity does not involve the transfer of ownership of the
output.”
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13. A comprehensive definition of services must include the
following elements:
 The intangible nature of services
 Performed by person or machine or both
 Produced by the service provider
 In association with the consumer
 Combination of a service with the production of goods
 Benefit to the receiver
 Does not involve the transfer of ownership of the output.
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14. COMPONENTS OF SERVICE
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16. CHALLENGES AND ISSUES IN
SERVICES MARKETING

17. 1. INTANGIBILITY
 Means that cannot be seen
 Service cannot be touched
 There is no precise standardisation method for
services
 Services cannot be patented
 There are no inventories in services
 This causes increase in the uncertainty level
 Consumer may experience difficulty in
knowing and understanding what is on offer
before and even after receipt of service.

18.  The challenge for the service provider is to
determine the degree of tangibility and management
action to make the service more tangible
For reducing customer uncertainty the service
provider has to provide
 physical evidence
 a brochure
 testimonials and referrals
 explaining your service
 allowing customer preview visits

19. 2. INSEPERABILITY
MARKETING CHALLENGES
 Physical connection of the service provider to the
service
 Involvement of the customer in the production process
 Involvement of other customers in the production
process
POSSIBLE MARKETING SOLUTIONS
 Emphasis on selecting and training public contact
personnel
 Consumer Management
 Use of multisite locations

20. 3. VARIABILITY
MARKETING CHALLENGES
 Lack of ability to control service quality before it reaches the
consumer.
 Most errors are one-time events and cannot be foreseen nor
corrected ahead of time
 Consistency of service varies from firm to firm, among employees
of the firm and also while interacting with the same service provider
on day-to-day basis
 Service standardization and quality control are difficult to achieve
and maintain since each employee is a different personality
POSSIBLE MARKETING SOLUTIONS
 Customization
 Standardization
 Automation

21. 4. PERISHABILITY
 Service cannot be stored
Eg: hotel rooms not occupied,
airlines seat not purchased and
college seats not filled cannot be reclaimed.
 If demand far exceeds supply it cannot be met
CHALLENGES
 Perishability can affect company performance - balancing supply
and demand is very difficult
SOLUTION
 Managing demand & supply
 Pricing strategies

22. 5. CUSTOMER PARTICIPATION
 Customers are co-producers of service.
Challenges
 No proper mechanism to manage the misbehaviour of
customers towards the frontline employees.
 70% of female retail workers are subjected to
harassment by consumers at work.
 Negative outcomes for frontline workers includes
increased intention to quit, loss of interest in their work,
withdrawal from customer interactions, and reduced job
performance.

23. 6. NO OWNERSHIP
 You cannot own or store a service like you can a product
 Services are used or hired for a period of time
 Customer pays only to secure access to or use of the service
• Aeroplane ticket • Hotel room • Banking services
TRANSUMERS
Individuals that engage in renting and non - ownership consumption
Example – Olacars, uber
CHALLENGES
• Non ownership can sometimes make it difficult for a customer to assess
and appreciate the advantages of purchasing the service.
• The marketer therefore needs to pay particular attention in emphasizing
benefits of non- ownership

24. 7. PRODUCTIVITY IN SERVICE SECTOR
 Difficult to define productivity in service sector.
 To different people, productivity means different things.
 Hard to standardize the inputs and outputs
 Trade-off between quality and quantity.
PROBLEMS IN MEASURING PRODUCTIVITY
 Difficult to measure the outputs.
 The output includes quality, which is intangible and difficult to
quantify.
 The inputs also include both intangible and tangible elements

25. 8. CUSTOMER EXPECTATIONS
 Different customers have different
expectations
 Different expectations from same customer

26. 9. DEFINING AND MEASURING QUALITY
Garvin identifies five perspectives
 Transcendent view
 Product based approach
 User based definition
 Manufacturing based approach
 Value based definition

27. 10. DESIGNING AN EFFECTIVE SERVICE CUSTOMER
ORGANIZATION
 Presence or absence of intermediaries
 High contact v/s low contact
 Duration of service delivery process
 Level of complexity
 Degree of risk

28. STRATEGIC CHALLENGES IN SERVICES MARKETING
 POSITIONING A SERVICE IN MARKETPLACE
 Competitive advantage
# Value for money
# People are the key
# Convenience
# Quality and speed
# Differentiation in meaningful ways
TO SELECT THE TARGET MARKET
• Identifying the market segments
• ability to match competing offerings
• judge the current and prospective customers
• Redesigning the existing services

29. NATURE OF SERVICES MARKETING
1. Marketing Of Intangible Products
2. Non-Transfer Of Ownership
3. Expanded Marketing Mix
4. Inseparability Of Consumption And Production
5. Heterogeneous Products
6. Managerial Function

30. SCOPE OF SERVICES MARKETING
1. Create Awareness
2. Boosts Sale And Increase Revenue
3. Raises Standard Of Living
4. Provide Employment
5. Source Of New Ideas
6. Basis For Decision Making
7. Helps In Economic Development

31. •An economy is called a service economy when the
contribution of the service sector to the GDP of the
nation is more than 50 per cent.
•The first economy declared as a service economy is
USA in 1948 with about 53 per cent to its GDP.
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32.  Services plays a significant role of source of wealth in
many ways to the economies.
 Economies experienced increase in employment with
the growth in service sector
 in times of economic recession, the service sector
has kept employment up.
 All human beings are service producers as well as
consumers.
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33.  India is the second fastest growing services economy in the
world
 It provides employment to 28% of work force,
 growth rate 7.5% in 1991-2000 up from 4.5% in 1951-80.
 In 2015-16 India's - 61% to India's GDP
 growing strongly at approximately 10 % per anum.
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34. 1. Cultural Changes
2. Change role of women
3. Conservation of Natural Resources
4. IT Revolution
5. Development of markets
6. Increased Consciousness of Health Care
7. Economic Liberalization
8. Exporting
9. Migration
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REASONS FOR THE GROWTH OF THE SERVICE ECONOMY

35. EVOLUTION OF SERVICES
MARKETING

36. EVOLUTION OF SERVICES MARKETING
Fisk, Brown and Bitner
1. 'Crawling Out‘ - prior to 1980;
2. 'Scurrying About' stage – 1980 to 1986;
3. 'Walking Erect' stage - 1986 to 2000
4. Galloping stage- 2000 to till date
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37. THE FUTURE OF SERVICE SECTOR
There are the likely trends in the service
sector for the different kinds of services:
 Old services
 New services
 Complementary services
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38. CONSUMER BEHAVIOR IN SERVICES
SEARCH, EXPERIENCE & CREDENCE
PROPERTIES

39. Importance / Need of consumer behaviour
 strategies for increasing profits.
 buying decisions and how consumer make consumption.
 Consumer’s tastes or preferences.
 to make pricing policies.
 avoid future market failures.

41. CONSUMER DECISION MAKING PROCESS
Five steps
1. Need recognition
2. Information search
3. Evaluation of alternatives
4. Purchase
5. Post purchase evaluation

42. THANK YOU