Introductio to SM

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  • 8/7/2019 Introductio to SM


    Introduction to service

    What are Services? Why Service Marketing?

    Services & Technology Differences between goods & Services The Service Marketing Mix

    The Gap Mode of Service quality.

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    What is a service?

    Services to include all economic activitieswhose output is not a physical product or construction is generally consumed at the time it

    is produced & provides added value in forms(I,e. Convenience amusement,timeliness,comfortor health) that are essentially intangible concernsof its first purchase.

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    What is a service?

    Kotler: it doest provide ownershipover anything.

    Bateson: We talk about service, if the benefit is provided rather by the servicethan the product.

    L.L. Berry: services can be defined asdeeds, efforts, or performances

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    Produced Sold Consumed

    Sold Produced

    Consumedeg. Airplane ticket is first bought then customer flies (service is provided andconsumed simultaneously)

    Difference btw. goods and services

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    How Important is the Service Sector inOur Economy?

    The size of the service sector is increasing in almost alleconomies around the world

    Services make up the bulk of todays economy and also account

    for most of the growth in new jobs Even in emerging economies, service output is growing rapidly

    and often accounts for half or more of GDP

    Jobs range from high-paid professionals and technicians tominimum-wage positions

    Service organizations can be any size from huge globalcorporations to local small businesses

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    Changing Structure of Employment as EconomicDevelopment Evolves

    Time, per Capita Income

    Share of E mploym en t




    Source: IMF, 1997

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    Estimated Size of Service Sector inSelected Countries

    Services as Percent of GDP

    Poland (66%), South Africa (65%)

    Japan (74%), France (73%), U.K. (73%), Canada (71%)

    Saudi Arabia (33%)

    China (40%)

    India (48%)

    Argentina (53%), Brazil (51%)

    Panama (80%), USA (79%)

    Luxembourg (83%)

    Cayman Islands (95%), Jersey (93%)Bahamas (90%), Bermuda ( 89%)

    Mexico (69%), Australia (68%), Germany (68%)

    Israel (60%), Russia (58%), S. Korea (56%)

    30 40 50 60 70 80 90 20 10

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    1850 1950 2050


    In the future services dominate theeconomy

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    Why Study Services?

    Services dominate economy in most nations Understanding services offers you personal competitiveadvantages

    Importance of service sector in economy is growingrapidly: Services account for more than 60 percent of GDP


    Almost all economies have a substantial servicesector

    Most new employment is provided by services Strongest growth area for marketing

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    Distinguishing Characteristics of Services

    Customers do not obtain ownership of services

    Intangible elements dominate value creation

    Greater involvement of customers in production process

    Other people may form part of product experience Greater variability in operational inputs and outputs

    Many services are difficult for customers to evaluate

    Service products are ephemeral and cannot be inventoried Time factor is more important--speed may be key

    Delivery systems include electronic and physical channels

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    Services V/S Customer Services

    Services:- Services is different from Customer services. Servicesencompass a wide range of industries like Banking , Insurance,Hotels,Consulting

    firms, Advertising Firms, Air, Rail, Water transportations..So on.However Services can be offered to the Market place by

    manufacturers & Technology companies as well Ex:- IBM, Compaq

    Customer Service:- Customer Service is the service provided in supportof a companys Core products like dealing with billing issues, Handling Complaints , After sales services,Taking orders & Information sharing or support.

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    Pure goods

    Goods plus an element of service

    Goods and services equal

    Service with an element of goods

    Pure service

    Range of business types (based on theitangibility ):

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    Scale of market entities

    Tangibility spectrum

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    Why Study Services Marketing?Services dominate economy in most nations:-

    Job formation are in service industries & Importance of servicesector in economy is growing rapidly

    Service as a Business imperative inManufacturing & IT:- Understanding services offers you

    personal competitive advantages & industries have recognized the need to provide quality services in order to compete world wide.

    Deregulated industries & professional service

    needs:- Due to deregulation & globalization, drastic changeshas been noticed in the service industries like Airlines,Banking,Telecom & so on.

    Service Marketing is different:- There is differencesin Marketing services & Managing Services. So, need for developing/designing new concepts & approaches for marketin & mana in business.

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    Why Study Services Marketing?

    Services equals profits:- A dedication to quality services has been the foundation for success for many companies. Since the mid 1990s firms have begun to demand the hard evidence of the bottom line effectiveness of servicestrategies & Customer Satisfaction,

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    But Service Stinks

    Theories of Declining customer satisfaction :-Customer perceive that the over all the

    Quality of service is decaling.

    More companies offering tiered service based on the calculated profitability of different market segments.

    2. Self-service & technology-based service is perceived as less service(no humaninteraction/human personalization is provided)

    3. Technology-based services are hard to implement & there are many failures4. Customers expectations are higher(because of excellent .service during these

    days.5. Organizations have cut costs and are too lean to understand to provide quality

    Service..6. Many companies give lip service to customers focus & service quality(instead

    of providing the training,compensation, and support needed to actually deliver quality service.

    7. Delivering consistent, high-quality service is not easy,yet many company

    promises it.

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    Service & Technology

    Information Technology is currently shaping the field &influencing The practices of service marketing.

    Technology is profoundly changing how services are deliveredenabling both customer & employee to provide more efficientcustomized services.

    Internet , the king of current technology is one big service vehicle.

    1.Potential for new service offering :- Explosion of the internet, New technology service are onthe horizon.GPRS technology for Cars,RFID,Mobileinternet-accessing the web via cell phone.

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    Service & Technology

    2. New ways to deliver service:- Face-to-face service totelephone based service,interactive voice response

    systems,internet-based customer service & now wireless service.3. Enabling both customers & Employees:

    With the advent of technology both are more effective in

    getting & providing service through self service. On linebanking,On line ticket booking,CRM & sales support software.

    4. Extending the global reach of Service:-with the advent of internet services has crossed its boundaries.

    5. The Internet is a service:- Inter net is one big service. Business & organization operate largely on the net to provideessential services.

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    Paradoxes & Dark side of Technology & Services

    Technology can assimilate(digest/absorb) people while isolatingthem.

    It can provide a sense of control & at the same time feelings of ineptitude(incompetence/uselessness).

    With technology in fusion there is a loss of human contact,

    In organization people become more & more reliant oncommunicating through technology.

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    Characteristics of Services

    intangibilityintangibility : difficult to sample and toevaluateinseparabilityinseparability :: difficult to separate servicesfrom the service provider; mainly direct sales;staff are essential to the delivery of qualityservicesheterogeneityheterogeneity : virtually every service isdifferent; very difficult to standardize qualitySimultaneous production &Consumption: Most services are sold first &then consumed Simultaneous

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