Services Marketing

By: Smriti
What is a Service?
 • A service is an act or performance offered
by one party to another The process may be
tied to a product, but the performance is
essentially intangible and does not normally
result in ownership of any tangible element
and does not normally result in ownership
of any tangible element.
What is a Service?
 • Services are economic activities that create
value and provide benefits for customer at
specific times and places as a result of
bringing about a desired change in – or on
behalf of – the recipient of the service.
 It is something that can be bought or sold,

but cannot be dropped on your foot.

Overview: Why Services Matter

 • Services dominate all the economies

worldwide
 • Services are growing dramatically
 • Service leads to customer retention and

loyalty
 • Service leads to profits
 • Services help manufacturing companies

differentiate themselves
Why do firms focus on Services?
• Services can provide higher profit
margins and growth potential than
products
 • Customer satisfaction and loyalty

are driven by service excellence

 • Services can be used as a

differentiation strategy in competitive

markets
Characteristics of a Service
 Services have unique characteristics, which
differentiate it from goods. This is means that
management and marketing of services
require a different approach than goods
marketing. Following are the four unique
characteristics of services.
1. Intangibility:
 Services are intangible. Intangibility of a service
implies that a customer cannot see , touch or feel
the service product.
 The characteristic of intangibility makes the job

difficult for both the customers as well as the

marketer. Without buying the product, it is pretty
difficult for the customers to either believe in the
product or comprehend the product.
 A service like insurance , hotel, restaurant,

medical care can not be fully understand without

availing the same.
 That is why the service product takes the form
of concept selling , where the customers needs
to immerse himself into buying the services.
 It also leaves no scope of impulse purchases.

 As there is no concept of ownership ,

possession or acquisition for the customer after

the service transaction , it becomes difficult for
the customer to understand the value . On the
marketer side, it becomes difficult to convince
the customer about the value proposition of the
same .
2. Perishability:
Unlike goods, services cannot be stored for
future sales. Services need to be transacted
during the given time. Otherwise , it will lose its
value . For example –Airline .
The characteristics of perishability also points
out to a characteristics of simultaneous
production and consumption in services. Unlike
goods , where the goods are first manufactured ,
sold and then consumed ; the services are
produced and consumed simultaneously.
3.Hetrogeneity or Variability;
 Services also have the unique characteristics of
heterogeneity or variability or say non
standardisation . The service product is never
consistent in quality and delivery . The service
product is never the same for all its customers
.It happens due to human beings being
involved in the service delivery. A customer
may receive differentiated services from
different employees of the bank or even from
the same employee in different time frames.
 There is another aspect also related to variability .
As the services are delivered with customer being
the part of the delivery; customer also affects the
same. For example, in a B-school, all the students
will not receive the same level of education and
training from a faculty member; as their own
background like education, IQ level, attitude mood
and personality may be different from their
classmates. Although companies are trying hard
to create the processes to deliver similar service
quality , but still there may be heterogeneity.
4.Inseperability;
 Services are inseparable. The service provider
and the customer need to be present at the time
of service delivery. An artist can only perform in
a single place at a given point of time. During
surgery , a surgeon as well as the patient should
be present for the service delivery. It also means
that the services cannot be replicated and made
available in many places simultaneously .That is
why the service marketer concentrates on
bringing both together under on roof , the
customer as well as the service provider.
Classification of services:
 Services can be classified in many ways.
Following are the most popular ones.
 1.Degree of Tangibility: On the basis of the
tangibility , services offerings may be
categorized on the following basis.
 A) Pure stand alone services: In the case of pure
stand alone services , the services cannot be
touched , felt or seen, like consultancy,
physiotherapy, counselling etc. Tcs and
Accenture fall into this category , where these
companies offer pure stand alone services.
 B. Hybrid: Hybrid as the name suggests , is a
combination of services and goods . These
kinds of services are inclusive of the product ,
like a restaurant, where a customer gets a
tangible good in the form of say a Masala Dosa
or a burgur and gets it served at his table.
 C. Tangible goods with accompanying service:

In this case, services are bundled as a part of

components of goods in the total marketing
mix. Cars , two wheelers appliances are the
various categories , where the product is sold
and bundled with after sales service promise .
Process Perspective :
 From the process perspective , Christopher
H.Locelock has classified services into four
broad categories .
 The nature of the services act in the first two

categories is tangible in nature, while the

other two is based on intangible actions.
Tangible actions are performed on peoples
bodies or to their physical possessions; while
intangible actions are performed on peoples
mind or to their intangible assets .
 A)People processing : in the case of people
processing as the services are directed at
peoples bodies., customers must physically
enter the service system to avail the services.
For example: A barber can only cut the hair
when the customer is present at the time of
delivery.
 You need to be present there and then only

services can be availed.

Possession processing
 In the case of possession processing the
customer can avail the services without being
physically present there; as the service is
directed towards the physical possession. For
example: if a car needs to be serviced the car
needs to be present at the service station not
the owner or the driver. Similarly you can send
a package from New Delhi to Mumbai by just
availing the services from DHL or DTDC. Thus
consumers are less Physically involved with
this kind of service.
 Mental stimulus processing: In the case of
mental stimulus processing services are
directed at people’s mind like education ,
news and information . In this case , the
customer may be present at the site or he
may be off site.
 Ex: IIM Kolkatta proff:
 In both the cases , the customers mind can

be processed .
 The possibility of services being available at a
later date or time benefits this kind of services
being inventoried.in this case it is also
essential that a customer is mentally present
to receive the service benefit. Otherwise the
services will not get transferred . But in the
people processing the services can be availed
by the customer if he is just physically
present.. For eq, if a passenger sleeps in the
flight still he will reach the destinition
 Information Processing: In the case of
information processing , services are directed
at intangible assets. These services are
dependent on effective collection and
processing of information like law, marketing
research , ,medical diagnosis accounting etc.
3. Degree of contact:
 Services can also be classified in to two
categories on the basis of the type of contact
that service providers have with their
customers.
 A)High Contact : as the very name suggests ,

in the high contact service, the service

provider have high degree of contact with the
customers .All the services under people
processing comes under this. It also includes
services under mental stimulus processing.
 Low contact: in the case of low contact,
service providers interact very little with the
customers and most of the processes are
automated like banking through automatic
teller machine