1st Module of Services Marketing Reasons for the growth of the services sector and its contribution; the difference in goods and service marketing; characteristics of services; the concept of service marketing triangle; service marketing mix; GAP models of service quality. Consumer behavior in services: Search, Experience and Credence property, consumer expectation of services, two levels of expectation, Zone of tolerance, Factors influencing customer expectation of services. Customer perception of services-Factors influencing customer perception of service, Service encounters, Customer satisfaction, Strategies for influencing customer perception.

1. SERVICES MARKETING
(20MBAMM303)
Dr.Satish S.Uplaonkar
Assistant Professor
Department of Management Studies
Visvesvaraya Technological University
Kusnoor Road Kalaburagi 585105
Karnataka

2. Course Objectives
• To acquaint the students with the characteristics of
services and their marketing implications.
• To discuss and conceptualize the service quality,
productivity in services, role of personnel in service
marketing and to manage changes in the environment.
• To familiarize the students with the GAPS model and
strategizing towards closing the GAPS for effective
services marketing.

3. Module-1 Introduction to services

4. Definition of Service Marketing
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)
Services are deeds, processes and performances

5. What is Services ?
Services includes every
interaction between any
customer and anyone
representing the
company , include
Services are valuable action,
deeds, processes, efforts and
performances performed to
satisfy a need or fulfill a demand

6. Services Sector in India
Source: MoSPI.

7. • Services sector is estimated to grow at 6.9%in
2019-20as compared to 7.5% in 2018-19 .
• The service sector is estimated to contribute
55.3% to India’s GVA in 2019-20.

8. Importance of Services Marketing
• Key Differentiator
• Importance of relationship
• Customer Retention

9. Reasons for the growth of services sector
and its contribution
• Consumer affluences
• Working Woman
• Double income no kids (DINK)
• Leisure time
• Greater life expectancy
• Product innovation
• Product Complexity
• New generation youth
• Resource scarcity and Ecology
• Corporate Crowd

10. • The growth of per capita income and rising middle class in India
• Increase in gross domestic product of the country
• More woman are joining to services sector
• Cultural transition in India like food and lifestyle is encouraging the
services sector
• Growth of information technology sector in India
• Need for conservation of natural resources
• Liberalization government polices.
• Changing health dynamics in the country
• Increasing services exports
• Urbanization and need of ancillary services

11. Difference Between goods and services
Marketing
• Goods :- Goods are objects which can be seen felt
,sensed easily (Tangible)
• Services:- services are intangible ,Services are
performance or action which cannot be tasted ,felt,
touched
Or
It is intangible economic products that is provided by a
person on the other person demand .It is an activity
carried out for someone else …Ex postal Services ,
Banking

12. Characteristics of SM
• Intangibility
• Inseparability
• Variability
• Perish ability

13. 1. Intangibility :- Service are intangible means it
cannot be seen tasted felt, heard, smelled before
purchase
2. Inseparability:- Service are produced and
consumed simultaneously provider client
interaction is a special feature of service marketing
3. Variability (Heterogeneity):- Service are
highly variable ,the state or characteristic of being
variable Ex- service firms, Car wash
4. Perish ability:- is used in marketing to describe
the way in which service capacity cannot be stored
for sale in the future service

14. Concept of service marketing triangle

15. • The Services Marketing Triangle is shown in the
following diagram. It shows the key marketing
activities that happen between the key actors
within services businesses.
• Each actor works together to develop, promote,
and deliver a company’s service. As you can see
from the diagram we represent actors by the points
of the triangle. Our actors are:

16. • Company: refers to the leadership team of the
company in question.
• Employees: refers to all employees, including
subcontractors who deliver the company’s service.
• Customers: refers to all customers and potential
customers of the company.
• The lines between the points show the different types
of marketing that must occur:
• External Marketing: occurs between the company and
its customers.
• Internal Marketing: occurs between the company and
its employees.
• Interactive Marketing: occurs between the employees
and the customers.

17. External Marketing
• Companies use external marketing to make promises to
customers. External marketing is any communication to
customers (or potential customers) that happens before
service delivery starts.
Forms of external marketing include:
• Advertising
• Personal selling
• Public relations (PR)
• Direct marketing
• We use external marketing to achieve many aims
including:

18. We use external marketing to achieve many
aims including:
• Creating awareness.
• Setting price expectations.
• Setting service level expectations.
• Informing customers if any prerequisites that
must be in place before they can use the service.

19. Internal Marketing
• Within a services business, we view employees as internal
customers. They are a market which we must please first
as a company. The leadership team should be focused on
satisfying its employees so that they want to better serve
customers.
• Internal marketing involves motivating employees to work
as a team to make customers satisfied. This is obviously
true for customer service representatives. It can equally be
applied to all employees. This results in everyone, at all
levels of the organization, being empowered to deliver
great customer service.

20. SM Mix 7Pcs
1. Product
2. Price
3. Place
4. Promotion
5. People
6. Process
7. Physical evidence
20

21. Factors Affecting Development of SM
Organization size and structure
Regulatory Bodies
Growth in service industries
Customer /Employer Interaction
Service quality
Specific Sector

22. Consumer Behaviour in Service Marketing
“Consumer behavior is the actions and the decision
processes of people who purchase goods and services for
personal consumption”
Studying consumer behaviour helps to understand what
influences consumers buying decisions.
Two most important influences are
1.Consumer life stage
2.The generation in which he/she was born

23. Search
Attributes a consumer can determine prior to purchase of a product
Eg:- Color ,Price ,fit , feel
Experience
Attributes a consumer can determine after purchase of a product
Eg:-Meals , Hotels
Credence Qualities
Characteristics that may be impossible to evaluate even after purchase
and consumption
Eg:- Surgeries
Search, Experience and Credence Properties

24. Continuum of Evaluation for Different Types of Products

25. Understanding Customer Service
Expectations
• Customer evaluate service quality by comparing what is
expected with what they receive from suppliers
• If expectations are met/exceeded , customers believe that
they have received high quality service . If price/Quality
relationship is acceptable and situational factors are costive-
customers likely to make repeat purchases and remain loyal
to that supplier
• Expectation also vary depending upon positioning
• Service , expectations change over time influenced by advt,
pricing ,new tech ,service innovation ,social trends , increased
access to info through various media

26. Customer Expectations of services
• Influenced by type and meaning of services
• Meaning or the significance of the services
• Expectations are influenced by a reference point
that the customer holds

27. Level of Customer Expectations
• Desired Service-Hope to receive
• Ideated Services-Accept

30. The Gap Model of Service Quality
The Gap Model of Service
Quality has been developed by Parasuraman and
his colleagues which helps to identify the gaps
between the perceived service qualities that
customers receive and what they expect.

31. The Gap Model of Service Quality identifies
five gaps:
• Consumer expectation — management
perception gap.
• Management perception — service quality
expectation gap.
• Service quality specifications — service delivery
gap.
• Service delivery — external communications to
consumer’s gap.
• Expected service — perceived service gap.

32. Gap — 5 is the service quality shortfall as seen by
the customers, and gaps 1-4 are shortfalls within the
service organization. Thus gaps 1-4 contribute to
gap — 5.

33. The first gap is the difference between
consumer expectations and management
perceptions of consumer expectations. Research
shows that financial service organizations often
treat issues of privacy as relatively unimportant,
whilst consumers consider them very important.

34. The fifth gap represents the difference
between the actual performance and the customer
perception of the service. Subjective judgment of
service quality will be affected by many factors, all of
which may change the perception of the service
which has been delivered. Thus a guest in a hotel may
receive excellent service throughout his stay, apart
from poor checking out facilities. But this last
experience may damage his entire perception of the
service, changing his overall estimation of the quality
of the total service provided from good to poor.

35. Gap 1: Knowledge Gap
The knowledge gap is the difference between the customer’s
expectations of the service and the company’s provision of that
service.
Essentially, this gap arises because management
doesn’t know exactly what customers expect. There are a number
of reasons this could happen, including:
• Lack of management and customer interaction.
• Lack of communication between service employees and
management.
• Insufficient market research.
• Insufficient relationship focus.
• Failure to listen to customer complaints.

36. Using the Model to Address Gaps
• When using the Gap Model of Service Quality, then
once you have identified a gap you can use one of the
following actions to reduce the gap.
Gap 1: The Knowledge Gap
Close this gap by learning what customers expect. Options
to consider include:
• Using customer research.
• Increasing interactions between management and customers.
• Increasing interactions between management and service staff.
• Act on other customer insights you receive once validated.

37. Customer perception of services
What exactly does your customer think about your
brand, products, services, quality is consumer
perception. In other words, the customer’s
viewpoint about your business, his
feelings about your brand, one’s direct/indirect
experiences etc
OR
Customer perception encompasses the way
consumers select, organize and interpret both
information and stimuli related to a brand

38. Factors influencing customer
perception of service
1. Service Encounter
2. Service Evidence
3. Organizational image
4. price
People
Process
Physical
Environment

39. 1.Service encounter:- A customer estimate the
quality of service throughout his/her interaction
with a service providers
2.Service Evidence :- Because services are
intangible ,customer are searching for evidence
of service in every interaction they have with an
organization

40. The 3 major categories of evidence as experienced
by the customer are:-
people, process and physical environment. These
categories together represent the service and
provide the evidence that tangiblizes the
offerings.
a) People/ Service personnel- service personnel
play an important role in defining the quality of
service encounter in the mind of the customers.

41. b) Process of service delivery- It involves various
steps in the process of delivering a service and the
flow of operational activities. The service process
is also evaluated on the basis of the number of
flexible or standard policies and the technological
or human modes involved in delivering the
service.
c) Physical Environment- it creates an impact on
customer perception. The physical environment
consist of the ambience offered by a service
provider and the design of the interiors or
exteriors of the service facility.

42. 3.Organizational Image- Image of organization
has a profound effect on perception of
consumers. An organization with a positive image
is considered to be providing good quality
service, whereas an organization with not
favorable image is considered to be providing bad
quality service.
4.Price- Perception of consumer is affected by the
price of service. If a service company prices a
product low, then consumer may perceive it of
low quality. Whereas, if the price is high,
consumer expect high quality service.

43. Service Encounter
A service encounter is defined as a
moment when a customer interacts with a
service or product for the first time. It is the
customer's actual interaction with a service
company. ... Traditionally, marketers were
focused mainly on selling a product.

44. Type of service Encounters
Remote Encounter: Encounter can occur without any
direct human contact is called as Remote Encounters.
Such as, when a customer interacts with a bank through
the ATM system, or with a mail-order service through
automated dial-in ordering.

45. Phone Encounters:- In many organizations, the
most frequent type of encounter between a
customer and the firm occurs over the telephone
is called as phone encounter. Almost all firms
(whether goods manufacturers or service
businesses) rely on phone encounters in the form
of customer-service, general inquiry, or order-
taking functions.

46. Face-to-Face Encounters: A third type of
encounter is the one that occurs between an
employee and a customer in direct contact is
called as Face-to-Face Encounter. In a hotel,
face—to—face encounters occurs between
customers and maintenance personnel,
receptionist

47. Customer satisfaction
Customer satisfaction is defined as a measurement
that determines how happy customers are with a
company’s products, services, and capabilities.
Customer satisfaction information, including
surveys and ratings, can help a company
determine how to best improve or changes its
products and services.

52. Strategies for influencing customer
perception
1.Measure and manage customer satisfaction service quality:
Track the trends, diagnose problems, and link to other customer
focused strategies.
2.Aim for customer quality and satisfaction in every service
encounter.
• Every service encounter is critical to customer retention. Thus
many firms aim for zero defects or 100% satisfaction.
• Clear documentation of all the points of contact between the
organsiation and its customers. Development of understanding of
customer expectation by developing appropriate strategy.

53. 3.Plan for effective recovery
When service customers have been disappointed on the
first try doing right the 2nd time is essential to maintain
customer loyalty. This implies a need for service process
and system analysis to determine the root cause of
failure and redesign the service system.
4.Facilitate adaptability and flexibility:
The existence of this encounter theme suggested the
need to know when and how the system can flexed ,
and when and how to explain why

54. 5.Encourage spontaneity:
Recruitment and selection procedures can be used to
hire employees with strong service orientation whose
natural tendency is to be service minded. Strong service
culture, employee empowerment, effective supervision
and monitoring should be done.

55. 6.Help employees cope with problem customers:
Employees need appropriate training and tools to deal
with problem customers. Training the customers is
essential so that they know what to expect and know the
appropriate behavior in the situations.
7.Manage the dimensions of quality at the encounter
level:
Whenever the customer is encountering the service, the
service firm should take measures to maintain the
dimensions of service of service quality.
-Thank You -