2 Intro To Serv Mar
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INTRODUCTION TO SERVICES MARKETING
WHAT ARE SERVICES??
Industrial and economic activities can be categorized as under:
Primary: Agriculture, fishing and forestry Secondary: Manufacturing and construction Tertiary: Services and distribution
Gronroos describes services as “Objects of transaction offered by firms and institutions that generally offer services or that considers themselves as service organs.”
According to Kotler, a service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.
In most simple terms, services are deeds, processes and performances.
DISTINCT CHARACTERISTICS OF SERVICES The following can be regarded as distinctive features of services:
Intangibility. Like when you visit a mall the kind of comfort you get in the form of music that is being played, the AC which makes you feel cool is the intangible factor.
Inseparability. It is inseparable from the service provider.
Heterogeneity. Two services cannot be the same it depends on the situation.
Perishability. You cannot store the service.
Ownership. You cannot own the service you can use it and feel it.
Intangible
Services cannot be inventoried Cannot be patented Cannot be readily displayed or communicated Pricing is difficult
Inseparability: Simultaneous production and consumption
Customer participate in and affect the transaction Customers affect each other Employees affect the service outcome Decentralization is essential
Heterogeneous
Services delivery and customer satisfaction depend on employee actions Services quality depends on many uncontrollable factors There are no sure knowledge that the service delivered matches what was planned and promoted.
Perishable
It is difficult to synchronize supply and demand with services Services cannot be stored, saved, returned or resold. Therefore required strong recovery strategies
CHALLENGES AND QUESTIONS FOR SERVICE MARKETERS
Because of the basic differences between goods and services, marketers of services face some very real and distinctive challenges.
Challenges revolve around
Understanding customer needs and expectations for service Tangibilizing the service offering, Dealing with a myriad of people and Delivery issues Keeping promises made to customers
CHALLENGES AND QUESTIONS FOR SERVICE MARKETERS
How can service quality be defined and improved when the product is intangible and nonstandardized?
How can new services be designed and tested effectively when the service is essentially an intangible process?
How can the firm be certain it is communicating a consistent and relevant image when so many elements of the marketing mix communicate to customers and some of these elements are the service providers themselves?
CHALLENGES AND QUESTIONS FOR SERVICE MARKETERS
How does the firm accommodate fluctuating demand when capacity is fixed and the service itself is perishable?
How can the firm best motivate and select service employees who, because the service is delivered in real time, become a critical part of the product itself?
How should prices be set when it is difficult to determine actual cost of production and price may be related to the perceptions of quality?
CHALLENGES AND QUESTIONS FOR SERVICE MARKETERS
How should the firm be organized so that good strategic and tactical decisions are made when a decision in any of the functional areas of marketing, operations, and human resources may have significant impact on the other two areas?
How can the balance between standardization and personalisation be determined to maximise both the efficiency of the organisation and the satisfaction of its customers?
How can organisation ensure the delivery of consistent quality service when both organisation’s employees and the customers themselves can affect the service outcome?
ADDRESSING THE CHALLENGES
The basic frameworks/ models for addressing these questions, we will discuss Services
Marketing Triangle Services Marketing Mix Gaps model of service quality
THE SERVICES MARKETING TRIANGLE COMPANY EXTERNAL MARKETING
INTERNAL MARKETING “ENABLING THE PROMISE”
PROVIDER S
“SETTING THE PROMISE” TECHNOLOGY
CUSTOMER S INTERACTIVE MARKETING “DELIVERING THE PROMISE”
THE SERVICES MARKETING TRIANGLE
There are three types of marketing:
External marketing Internal marketing Interactive marketing
All these revolve around making and keeping promises to customers. For services, all three types of marketing activities are essential for building and maintaining relationships with customers.
External Marketing
A company makes promises to its customers regarding what they can expect and how it will be delivered. Traditional marketing activities: advertising, sales, special promotions etc. For services, some other factors like the service employees, the design and décor of the facility, the service process etc. also helps to set customer expectations. Tendency to overpromise also leads to shaky beginning of the customer relationship
Interactive Marketing: Keeping Promises
Promises made must be kept The most critical from customer point of view Also delivered through technology Interactive marketing occurs in the moment of truth when the customer interacts with the organisation and the service is produced and consumed. Reliability of services is tested every time the customer interacts with the organisation.
Internal Marketing: Enabling Promises
In order to deliver the promises made, the providers or service systems must have the skills, abilities, tools, and motivation to deliver. It also indicates that employee satisfaction and customer satisfaction are closely interlinked.
THE SERVICES MARKETING TRIANGLE
All three sides are essential to complete the whole and are critical for the success.
Without one of the sides in place, the triangle, or the total marketing efforts, cannot be optimally supported.
THE SERVICES MARKETING MIX
Another way to begin addressing the challenges of services marketing is to think creatively about marketing mix – extended marketing mix for services.
One of the most basic concepts in marketing is marketing mix.
Marketing Mix: The elements an organization controls that can be used to satisfy or communicate with customers.
THE SERVICES MARKETING MIX
Traditional Marketing Mix : 4Ps Product Place Promotion Price
The service marketing mix includes three more Ps People Physical Process
Evidence
People
All human actors who play a part in service delivery and thus influence the buyer’s perceptions;
The firm’s personnel, the customer and other customers in the service environment
Physical Evidence
The environment in which the service is delivered and where the firm and customer interact and any tangible components that facilitate performance or communication of the service
Process
The actual procedures, mechanisms, and flow of activities by which the service is delivered – the delivery and operating systems.
WHAT ARE SERVICES??
Industrial and economic activities can be categorized as under:
Primary: Agriculture, fishing and forestry Secondary: Manufacturing and construction Tertiary: Services and distribution
Gronroos describes services as “Objects of transaction offered by firms and institutions that generally offer services or that considers themselves as service organs.”
According to Kotler, a service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.
In most simple terms, services are deeds, processes and performances.
DISTINCT CHARACTERISTICS OF SERVICES The following can be regarded as distinctive features of services:
Intangibility. Like when you visit a mall the kind of comfort you get in the form of music that is being played, the AC which makes you feel cool is the intangible factor.
Inseparability. It is inseparable from the service provider.
Heterogeneity. Two services cannot be the same it depends on the situation.
Perishability. You cannot store the service.
Ownership. You cannot own the service you can use it and feel it.
Intangible
Services cannot be inventoried Cannot be patented Cannot be readily displayed or communicated Pricing is difficult
Inseparability: Simultaneous production and consumption
Customer participate in and affect the transaction Customers affect each other Employees affect the service outcome Decentralization is essential
Heterogeneous
Services delivery and customer satisfaction depend on employee actions Services quality depends on many uncontrollable factors There are no sure knowledge that the service delivered matches what was planned and promoted.
Perishable
It is difficult to synchronize supply and demand with services Services cannot be stored, saved, returned or resold. Therefore required strong recovery strategies
CHALLENGES AND QUESTIONS FOR SERVICE MARKETERS
Because of the basic differences between goods and services, marketers of services face some very real and distinctive challenges.
Challenges revolve around
Understanding customer needs and expectations for service Tangibilizing the service offering, Dealing with a myriad of people and Delivery issues Keeping promises made to customers
CHALLENGES AND QUESTIONS FOR SERVICE MARKETERS
How can service quality be defined and improved when the product is intangible and nonstandardized?
How can new services be designed and tested effectively when the service is essentially an intangible process?
How can the firm be certain it is communicating a consistent and relevant image when so many elements of the marketing mix communicate to customers and some of these elements are the service providers themselves?
CHALLENGES AND QUESTIONS FOR SERVICE MARKETERS
How does the firm accommodate fluctuating demand when capacity is fixed and the service itself is perishable?
How can the firm best motivate and select service employees who, because the service is delivered in real time, become a critical part of the product itself?
How should prices be set when it is difficult to determine actual cost of production and price may be related to the perceptions of quality?
CHALLENGES AND QUESTIONS FOR SERVICE MARKETERS
How should the firm be organized so that good strategic and tactical decisions are made when a decision in any of the functional areas of marketing, operations, and human resources may have significant impact on the other two areas?
How can the balance between standardization and personalisation be determined to maximise both the efficiency of the organisation and the satisfaction of its customers?
How can organisation ensure the delivery of consistent quality service when both organisation’s employees and the customers themselves can affect the service outcome?
ADDRESSING THE CHALLENGES
The basic frameworks/ models for addressing these questions, we will discuss Services
Marketing Triangle Services Marketing Mix Gaps model of service quality
THE SERVICES MARKETING TRIANGLE COMPANY EXTERNAL MARKETING
INTERNAL MARKETING “ENABLING THE PROMISE”
PROVIDER S
“SETTING THE PROMISE” TECHNOLOGY
CUSTOMER S INTERACTIVE MARKETING “DELIVERING THE PROMISE”
THE SERVICES MARKETING TRIANGLE
There are three types of marketing:
External marketing Internal marketing Interactive marketing
All these revolve around making and keeping promises to customers. For services, all three types of marketing activities are essential for building and maintaining relationships with customers.
External Marketing
A company makes promises to its customers regarding what they can expect and how it will be delivered. Traditional marketing activities: advertising, sales, special promotions etc. For services, some other factors like the service employees, the design and décor of the facility, the service process etc. also helps to set customer expectations. Tendency to overpromise also leads to shaky beginning of the customer relationship
Interactive Marketing: Keeping Promises
Promises made must be kept The most critical from customer point of view Also delivered through technology Interactive marketing occurs in the moment of truth when the customer interacts with the organisation and the service is produced and consumed. Reliability of services is tested every time the customer interacts with the organisation.
Internal Marketing: Enabling Promises
In order to deliver the promises made, the providers or service systems must have the skills, abilities, tools, and motivation to deliver. It also indicates that employee satisfaction and customer satisfaction are closely interlinked.
THE SERVICES MARKETING TRIANGLE
All three sides are essential to complete the whole and are critical for the success.
Without one of the sides in place, the triangle, or the total marketing efforts, cannot be optimally supported.
THE SERVICES MARKETING MIX
Another way to begin addressing the challenges of services marketing is to think creatively about marketing mix – extended marketing mix for services.
One of the most basic concepts in marketing is marketing mix.
Marketing Mix: The elements an organization controls that can be used to satisfy or communicate with customers.
THE SERVICES MARKETING MIX
Traditional Marketing Mix : 4Ps Product Place Promotion Price
The service marketing mix includes three more Ps People Physical Process
Evidence
People
All human actors who play a part in service delivery and thus influence the buyer’s perceptions;
The firm’s personnel, the customer and other customers in the service environment
Physical Evidence
The environment in which the service is delivered and where the firm and customer interact and any tangible components that facilitate performance or communication of the service
Process
The actual procedures, mechanisms, and flow of activities by which the service is delivered – the delivery and operating systems.
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