Services Marketing

The service sector

More than half of our GDP (59 – 60%) is accounted for from the services sector

This sector dominates with the best jobs, best talent and best incomes

What is a Service?A service is any act of performance that one party can offer another that is essentially intangible and does not result in the ownership of anything; its production may or may not be tied to a physical product.

Kotler

What is services?

It is the part of the product or the full product for which the customer is willing to see value and pay for it.

Services should meet Personal needs – haircuts, tuition, Business needs – courier services, office

cleaning services, delivering fresh flowers

Categories of Service Mix Pure tangible good Good with accompanying services Hybrid Service with accompany goods Pure service

The Nature of Services

regardless of the “product”, there is a services component to the offerings of all firms

in some cases, a service is the principal purpose of the transaction, as in the rental of a car, a haircut, or legal services -- we refer to this as the core servicecore service

in others, service is performed in support of the sale of a tangible product -- these are referred to as supplementary servicessupplementary services

Cannedfoods

Ready-madeclothes

Auto-mobiles

Carpets Rest-aurantmeals

Repairs: auto, house, landscaping

Airtravel

Insurance,Consulting,Teaching

MOSTLY GOODS MOSTLY SERVICES

The Goods-Services Continuum

The service Is intangible. does not result in ownership. may or may not be attached with a physical

product

Services Unique characteristic - 1

INTANGIBILITY

Customer is unable to experience the ‘product’ prior to ‘purchase’

Services Unique characteristic - 2

PERISHABILITY

Can’t be stored

Services Unique characteristic - 3

INSEPERABILITY

Production & consumption

happen at the same place and cannot be separated

Services Unique characteristic - 4

VARIABILITY

Difficulty in establishing consistency in quality across Providers or within providers across Time across Delivery Centers

Distinctive Characteristics of Services Intangibility - difficult to sample and to evaluate Inseparability - difficult to separate services from the

service provider; mainly direct sales; staff are essential to the delivery of quality services

Variability - every service is different; very difficult to standardize quality

Perishability - those not sold can not be stored

fluctuating demand -fluctuating demand - demand for some services fluctuates by season, or even by time of day

Difference between physical goods and servicesPhysical goods Services

tangible intangible

homogeneous heterogeneous

Production and distribution are separated from consumption

Production, distribution and consumption are simultaneous processes

A thing An activity or process

Core value processed in factory Core value produced in the buyer-seller interaction

Customers do not participate in the production process

Customers participate in production

Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership

The three additional ‘P’s of Service Marketing (7Ps) People Physical evidence Process

Managing Service Quality Quality is hard to define, measure, control, and communicate Quality is defined by the consumer It’s important to measure customer satisfaction with an

organization’s service quality. Customers see five important components:

Core serviceCore service must measure up. Quality of serviceQuality of service, meeting expectations. Technical aspectsTechnical aspects of delivery. InteractionInteraction with people who deliver service. Affective dimensionsAffective dimensions:: How customers feel.

Qualities of services Search qualities Experience qualities Credence qualities

Differentiation in services Offering Faster and better delivery Image

Managing Service quality Gap between management perceptions and

consumer expectations Gap between management perceptions and

service quality specifications Gap between service quality specifications and

service delivery Gap between service delivery and external

communication Gap between expected service and perceived

service

Patient Expectations Good Medical Care Good Nursing Care Less Waiting Time Excellent Hospitality Personal Attention Courteous Behavior Affordable Charges

Cleanliness Good Coordination Cooperation among the

Staff Discipline Communication &

Information Transparency in

charges and procedures

Determinants of service quality Reliability – delivering on promises Responsiveness – willing to help Assurance – inspiring trust and confidence Empathy – individualizing customers Tangibles- physical representation

Improving Service Quality Listening Reliability Basic service Service design Recovery

Surprising customers Fair play Teamwork Employee research Servant leadership

instant of truth

Every positive or negative experience of the consumer would have fall-out on the overall service experience

In services, the last experience remains uppermost in your mind. Therefore, it is not enough to be

good, you have to be consistently good

Service quality is directly proportional to employee

satisfaction

When customers visit a service firm

Their satisfaction will be influenced by Encounters with service personnel Appearance and features of service

facilities – exterior and interior Interactions with self service equipment Characteristics and behavior of other

customers

Customer Service Expectations Desired Service – the ‘wished for’ service Adequate Service – the service that would

be acceptable

Zone of Tolerance

Difference between the desired service and the adequate service

Service Encounter Themes Recovery Adaptability Spontaneity Coping

RecoveryDon’t

Ignore customer Blame customer Leave customer to

fend for himself Downgrade Act as if nothing is

wrong ‘pass the buck’

Do Acknowledge

problem Explain causes Apologies Compensate/upgrade Lay out options Take responsibility

AdaptabilityDon’t

Promise and fail to keep them

Show unwillingness to try

Embarrass the customer

Laugh at the customer Avoid responsibility

Do Recognize the

seriousness Acknowledge Anticipate Accommodate Adjust Explain rules/policies

SpontaneityDon’t

Exhibit impatience Yell/laugh/swear Steal from customers Discriminate Ignore

Do Take time Be attentive Anticipate needs Listen Provide information Show empathy

CopingDon’t

Take customer’s dissatisfaction personally

Let customer’s dissatisfaction affect others

Do Listen Try to accommodate Explain Let go of the

customer

Satisfied employees will produce satisfied customers

Morale Motivation Mood