This document discusses the key concepts of service marketing. It begins by defining service marketing as promoting and selling intangible goods and services, as opposed to tangible products. It then explains the importance of studying service marketing. The rest of the document outlines the characteristics of services, such as intangibility, inseparability, variability, and perishability. It categorizes services into four broad categories based on how they are processed: people processing, possession processing, mental stimulus processing, and information processing. The document also discusses the 7Ps of marketing framework (product, price, place, promotion, people, process, and physical evidence) in the context of services. Finally, it explains why service marketing can be more difficult than product marketing

1. Service
Marketing
Unit 1: Introduction to Services
Marketing
Part I
BBA (Semester 5)

2. • The process of promoting and selling
a service or an intangible good to a
specific group of people.
• The marketing of services as against
tangible products.
• Different from product marketing,
which involves promoting a product
that can be seen.
• Instead, service marketing involves
promoting a service that can’t be seen
but is still sold to customers.
• Gained in importance as a discipline
only towards the end of the 20th
century.
What is Service Marketing?

3. Why to study
Service
Marketing???

4. Dominate the global
economy
01
More Job
Opportunities
05
Importance
02
Key Differentiator
Facilitator to other
sectors
More Value Creation
04
03

5. What exactly is a Service?
• Services are economic activities
performed by one party to another.
Often time-based, these
performances bring about desired
results to recipients, objects, or
other assets.
• In exchange for money, time, and
effort, service customers expect
value from access to labor, skills,
expertise, goods, facilities,
networks, and systems.
• However, they do not normally take
ownership of the physical elements
involved

6. Lack of ownership
One can’t own and store a
service like a product.
User participation
One watching a favorite TV
show on a streaming platform,
leads to participation
Perishability
Can’t be stored for later
sale or use
Variability
The quality of services can
vary greatly, depending on
who provides them and when,
where and how
Inseparability
Produced and consumed at
the same time and can’t be
separated from their providers.
Intangibility
Can’t be seen, tasted, felt,
heard or smelled before
they are bought.
Characteristics of Services

7. FOUR BROAD
CATEGORIES OF
SERVICES — A
PROCESS
PERSPECTIVE

8. People Processing
Service production and consumption are simultaneous, which means that the
customers typically must be present in the physical location (service factory).
This requires planning about the location of the service operation, careful design of
service processes and the service environment, and demand and capacity
management.
Active cooperation of the customer is needed in the service delivery process. For
example, for a manicure service, you would have to cooperate with the manicurist
by specifying what you want, sitting still, and presenting each finger for treatment
when requested.
There is a need for managers to think carefully about the location of the service
operation, the design of service processes and the service environment, demand and
capacity management, and output from the customer’s point of view.
Apart from financial costs, non-financial costs such as time, mental and physical
effort need to be taken into account.

9. Possession Processing
Unlike for people-processing services, production and consumption are not
necessarily simultaneous, giving more flexibility to the service firm in designing such
services for cost-efficiency.
Customers tend to be less involved in these services, compared to people-
processing services. The involvement may be limited to just dropping off or
collecting the item.
In such instances, production and consumption can be described as separable.
However, in some instances, the customer may prefer to be present during service
delivery, perhaps wishing to supervise cutting of the hedge or comfort the family dog
while it receives an injection at the veterinary clinic.

10. Mental Stimulus Processing
Customers do not have to be physically present in the service factory. They only
access the information remotely when they need it.
Services in this category can be “inventoried” for consumption at a later date, or
consumed repeatedly.
Mental stimulus processing services include education, news and
information, professional advice, and some religious activities. Obtaining the full
benefit of such services requires an investment of time and a degree of mental
effort on the customer’s part. However, recipients don’t necessarily have to be
physically present in a service factory — just mentally in communication with the
information being presented.
There’s an interesting contrast here with people-processing services. Passengers can
sleep through a flight and still arrive at their desired destination. But if you fall
asleep during an online lecture, you won’t be any wiser at the end than at the
beginning

11. Information Processing
Information can be processed by information and communications technology (often
referred to as ICT), and/or by professionals who use their brains to perform
information processing and packaging. Information is the most intangible form of
service output.
Some services that are highly dependent on the effective collection and processing
of information are financial and professional services such as accounting, law,
marketing research, management consulting, and medical diagnosis.
It is sometimes difficult to tell the difference between information processing and
mental stimulus processing services. For example, if a stockbroker performs an
analysis of a client’s brokerage transactions, it seems like information processing.
However, when the results of the analysis are used to make a recommendation
about the most suitable type of investment strategy for the future, it would seem
like mental stimulus processing.

12. Service Categories
Service industry seems
to be more
complicated than the
manufacturing
industry. The services
can be either tangible
or intangible; people-
oriented or product
oriented.
Customer Oriented
In the service industry,
customization of the
product offering becomes
essential as compared to
that of the manufacturing
industry. The customer’s
needs, perception and
requirements are given
significance.
Speed and Accurancy
The consumers prefer
services without any
interruption. Therefore, the
rate with which the service
is provided is considered as
a parameter for efficient
service. It is also responsible
for the selection of one
service provider over the
other
Paradigms in Service Marketing

13. Service is a one-take action, i.e., it
cannot be restored, redone, replaced or
exchanged. It is intangible and
irreversible; thus, it needs to be perfect
and well-delivered at the first time
itself.
An organization, therefore, requires
trained and experienced personnel to
provide services because a lousy
consumer experience may lead to
negative publicity.
The process here refers to the steps
involved in availing the service by the
consumer.
An organization must keep a watch
over each of these steps. It must
ensure humbleness, honesty and
sincerity of the personnel involved in
the interaction with the consumers,
while the execution of each of these
steps.
Paradigms in Service Marketing
Single Take Service as a Process

14. Product
Companies often think of their services as intangible products. So they save time
they would otherwise spend taking care of physical aspects like packaging. Instead,
companies focus on telling customers what a service includes and how it can fulfill
their wants and needs.
Service products consist of a core product that meets the customers’ primary need
and a variety of supplementary service elements that are mutually reinforcing, and
add value to help customers to use the core product more effectively.
Supplementary service elements include providing information, consultation, order
taking, hospitality, handling exceptions, etc.
Companies may also consider how their service packages compare to competitors'
packages. A service package typically consists of four parts:
• The building where the service happens
• Additional products customers can buy during the service, such as hairspray in a
hair salon
• Explicit services that offer an obvious benefit, like pain relief from a massage
• Implicit services that provide a psychological benefit, like feeling more confident
after a haircut

15. Price
Pricing strategies affect how customers react to prices, recurring fees and discounts.
Customers often use price to predict the quality of service.
For customers, price is a key part of the costs they must incur to obtain desired
benefits. To calculate whether a particular service is “worth it,” they may go beyond
just money and assess how much time and effort are involved. Service marketers,
therefore, must not set only prices that target customers are willing and able to pay,
but also understand — and seek to minimize, where possible — other burdensome
outlays that customers incur in using the service. These outlays may include
additional monetary costs (such as travel expenses to a service location), time spent,
unwanted mental and physical effort, and exposure to negative sensory experiences.
Companies also consider these factors when thinking about price:
• Overhead costs like advertising, rent and insurance
• Cost of labor and materials
• The price of competitors' services
• Price packets, which educate customers about all the services a company
provides

16. Place
Since businesses that sell services often require customers to come to them, location
is important. Customers often purchase services near where they live, which means a
business is more likely to make a sale if it chooses a location closer to its target
audience.
Service distribution may take place through physical or electronic channels (or both),
depending on the nature of the service. For example, today’s banks offer
customers a wide range of distribution channels, including visiting a bank branch,
using a network of ATMs, doing business by telephone, online banking on a desktop,
and using apps on a smartphone. In particular, many information-based services can
be delivered almost instantaneously to any location in the world that has Internet
access.
"Place" also refers to where and when a company places its ads. Some other location-
based factors that companies consider include:
• What their customers' typical schedules are
• Whether customers can access the business by walking or driving
• Where the company advertises online
• Where competitors locate their businesses

17. Promotion
Promotion focuses on making potential customers aware of a brand and helping
them determine the quality of that brand's services. Businesses often offer services
that look similar to their competitors' services, so using promotional material can
help a company distinguish itself.
What should we tell customers and prospects about our services? Few marketing
programs can succeed without effective communications. This component plays
three vital roles: providing needed information and advice, persuading target
customers to buy the service product, and encouraging them to take action at
specific times. In services marketing, much communication is educational in nature,
especially for new customers. Suppliers need to teach their customers about the
benefits of the service, where and when to obtain it, and how to participate in
service processes to get the best results.
Businesses do this by advertising frequentlyand targeting their advertisements to
address the wants and needs of their target audiences. The types of advertisements
often include:
• Contests
• Livestreams
• Endorsements from influential figures
• Social media advertising

18. People
This refers to the people who work for a company in customer-facing roles. These
people can affect a customer's level of satisfaction as much as the service they
provide because customers associate services with the people who deliver them.
Effective customer service can motivate customers to return to the business for
additional services as repeat buyers and also refer their peers to the company.
Companies apply several methods to strengthen the customer service of their staff,
including:
• Training staff on how to greet customers, answer questions about the services
they provide and resolve customer challenges
• Creating a service script so that staff can create a unified, consistent customer
experience
• Establishing a protocol for upselling so customers feel comfortable when a staff
member suggests purchasing additional products and services
• Instructing staff to remember important details about repeat customers, such as
their career path and interests.

19. Process
Businesses train their staff members to perform a service using a set process. These
processes ensure that the employee delivers a service efficiently and that
customers can expect a consistent standard of quality. Many companies use process
mapping to teach their staff what actions to perform when providing a service.
Process mapping usually consists of the following:
• Symbols that visualize each step of the process can make it easier for employees
to follow
• Details about when and where the action happens
• Flowcharts showing how each step transitions into another
• A regular revision process to strengthen existing steps and add new ones

20. Physical Evidence
Customers often use the physical aspects of a business to help them judge the
quality of the company's services. Physical evidence includes the space where the
service takes place and the tangible items that customers take as proof of
purchase. Though the service is intangible, giving customers a receipt or brochure
allows them to associate their service experience with a physical symbol. Some
ways that customers perceive physical evidence include:
• The comfort of waiting areas
• The color scheme and decorations within the service provider's facility
• The cleanliness of a business
• The clothing staff members wear
• The branding of any products they buy after a service

21. Element Explanation Example
Product
The service you offer to
the consumer.
Uber: ride-hailing, food delivery, and
freight.
Price
The cost your clients pay
for the service.
• Rides: based on time and
distance. Additional options for
more comfort and riding with
pets.
• Freight: based on data points like
distance, day of the week, time
of the day, weather, etc.
Additional costs apply, e.g.,
layover, driver assist.
Place
Where and how your
customers can purchase
your service.
Mainly through mobile apps;
optionally through the website.

22. Element Explanation Example
Promotion The marketing tactics
and channels you use to
reach your target
audience.
PR, referral programs, and
advertising.
People People involved in
delivering your product
(including support).
Service is largely automated. But
people are critical to the
attractiveness of the services, i.e.,
drivers (driving experience,
communication skills, etc.).
Uber offers extensive online training
and has experimented with
performance review methods.
Process The procedures by which
the service is delivered.
Self-service through apps and
cashless payments. The algorithms
process data and make this available
to both parties (suppliers and
clients).

23. Element Explanation Example
Physical evidence Tangible elements of
the offer.
UX design of the apps, driver
experience, the comfort of the cars,
and signage of the cars.
Performance (P-8) Success metrics. Some examples: app downloads,
ride/delivery requests and
cancellations, customer ratings,
driver supply, and revenue.

24. 7 P’s of Marketing 7 C’s of Marketing
Product Consumer Convenience
Price Cost
Promotion Communication
Place Convenience
People
Customer Service
Process Connection
Physical Evidence Credibility

25. Service Product VS Consumer Services VS After Sales Services
Service Product
These are intangible offerings
provided by businesses, such
as software as a service (SaaS),
consulting, advice, expertise,
support, or assistance. They are
not physical goods but rather
intangible solutions or
assistance provided to
customers.
Consumer Services
It refers to the support and
assistance provided to customers
before, during, and after a
purchase and includes activities
like inquiries, product
information, order processing,
complaint resolution, and general
assistance. It focuses on creating
a positive customer experience,
building relationships, and
ensuring customer satisfaction.
After Sales Services
Also known as post-purchase
service, it involves the support
provided to customers after they
have made a purchase and includes
activities like installation, training,
maintenance, repairs, warranties,
and technical support. It aims to
address any issues or concerns
customers may have with the
purchased product or service,
ensuring customer satisfaction.
1 2 3

26. The 4 I’s of
Marketing

27. Intangibility
Services do not have any physical
appearance like products, Which
makes it challenging to convince a
customer that a particular service
will give the best results. Because
customers can not see, touch or
experience a service, they can only
experience its final results. Let’s
take an example of a painting
contractor. No matter how properly
you explain, a customer will only
believe you when you show pictures
of your previous projects or client
reviews.
Inseparability
Another characteristic is
inseparability. It means you can not
separate the consumption and
production of the service from the
service provider. For instance, when
you buy a TV, you can install it at
home and enjoy watching it for
years. But you can not do the same
with a soccer match. The customer
needs to be present at the place of
service to consume a particular
service. Moreover, services can be
availed for a specific period, and
then it’s over until you pay again for
them
The 4 I’s of Marketing

28. Inconsistency
Service quality is often
inconsistent. This is because
service personnel have different
capabilities, which vary in
performance from day to day. This
problem of inconsistency in service
quality can be reduced through
standardization, training and
mechanization.
In insurance sector, all agents
should be trained to bring about
consistency in providing service or,
the insurance process should be
mechanized to a certain extent. Eg:
the customers can be reminded
about the payment of premium
through e-mails instead of agents.
Inventory
No inventory can be maintained for
services. Inventory carrying costs
are more subjective and lead to idle
production capacity. When the
service is available but there is no
demand, cost rises as, cost of
paying the people and overhead
remains constant even though the
people are not required to provide
services due to lack of demand.
In the insurance sector however,
commission is paid to the agents on
each policy that they sell. Hence,
not much inventory cost is wasted
on idle inventory. As the cost of
agents is directly proportionate to
the policy sold.
The 4 I’s of Marketing

29. What is Service
Marketing more
difficult than
Product Marketing?

30. A product is tangible, which means the
customer can touch and see the
product before deciding to make a
purchase. Items such as packaging and
presentation may compel a customer
to purchase a product. Services, on the
other hand, are not tangible, which can
make them more difficult to promote
and sell than a product.
If a customer purchases a product, the
customer and can return it the does
product for her money back or at least
to receive a store credit. A service is
consumed as it is offered, so it lacks
the return factor that a product has.
Some service providers overcome this
by offering money-back guarantees.
Challenges And Issues In Service Marketing
Tangibility Return Factor

31. Marketing products tends to involve
multiple products that make up the
line. For example, cleaning product
manufacturers tend to market not just
one cleaning product. Instead, they
have a line of cleaning products to
serve the various needs of their
customers. Services, on the other
hand, typically have a single option. It
can be harder to promote and sell the
reputation of one single service over
the benefits of many different
products.
Measuring the quality of a product is
easier than measuring that of a service.
If a customer buys a cleaning product
to clean the kitchen sink and it
doesn‟t do product is zero. On the
other hand, it is harder to measure the
quality of a service.
Challenges And Issues In Service Marketing
One Versus Many Comparing Quality

32. A service is more about selling a relationship and the value of the relationship
between the buyer and seller of the service. For example, a car is something a
buyer can touch and see as well as use. A service, such as lifestyle coaching, for
example, is not tangible. A lifestyle coach may be able to assist clients in creating a
life plan and implementing steps to transform his life into one that the client
wants to live, but it is not something tangible that the client can place in his home
and look at every day. Therefore, the client needs to perceive the value of the
service.
Challenges And Issues In Service Marketing
Relationship and Value