Service Marketing

SERVICE MARKETING

Subject: Marketing Management

Introduction to ServiceA service is an intangible product

involving a deed, performance, or an effort that cannot be physically possessed.

Characteristics of Service:1. Intangibility2. Inseparability3. Perishability4. Heterogeneity

Intangibility

You cannot hold or touch a service unlike a product.

However, the experience consumers obtain from the service has an impact on how they will perceive it. What do consumers perceive from customer service? The location, and the inner presentation of where they are purchasing the service?

InseparabilityA product when produced

can be taken away from the producer.

But Services cannot be separated from the service providers. For instance, the service provided by a waiter in a restaurant is all a part of the service production process and is inseparable. The staff in a restaurant as well as the quality of food provided are a part of the service production process .

Services last a specific time and cannot be stored like a product for later use.

If travelling by train or air the service will only last the duration of the journey. The service is developed and used almost simultaneously. Again because of this time constraint consumers demand more.

Perishibility

HeterogeneityIt is very difficult to make each

service experience identical. If travelling by plane the service

quality may differ from the first time you travelled by that airline to the second. A concert performed by a group on two nights may differ in some ways as it is very difficult to standardize every dance move.

Systems and procedures are put into place to make sure that the service provided is consistent at all times. Training in service organizations is thus essential However there will always be subtle differences.

The Service Industry

Transportation servicesCommunication servicesFinancial services (banking, insurance, real estate etc.)Tourism servicesHealth servicesAuto repair servicesBusiness servicesLegal servicesGovernment servicesEducation

Service marketing• Starbucks CEO Howard Schultz quoted-

“customer always comes in second-employees matter more”

• The idea is that happy employees will unleash their enthusiasm on customer, creating even greater customer satisfaction.

• Service marketing requires more than just external marketing using 4 Ps.

Type of service marketing

Three kinds of service marketing exists-• Internal: Company

to employees

• External: Company to customers

• Interactive: Employees to

customers

External Marketing: It is a promise a company makes to a customer

about the service and its delivery. External marketing uses all the elements of communicating and reaching the customers through advertising, sales promotion, selling, merchandising and all.

 Internal Marketing: It is all about applying marketing concepts to your

own employees. You should be able to first convince or market your concept to your own employees and enable them to deliver the service of the customers. For this it is important to identify and fulfill your internal customers i.e. employee needs. Internal marketing is thus a key to meeting the promises made through interactive marketing.  

Marketing mix for services

•Process

•People

•Physical Evidence

7 Ps of The

Banking Sector

Product Mix

ATM Network

7-Day Banking

Telebanking

iConnect-Internet Banking

It includes all different product lines a company offers to its customers.

SAVINGS ACCOUNT

CREDIT CARDSRewards

Dial-A-Draft

Credit Limit Increase

24-Hour ATMs

Concession on Personal Remittances

Overdraft Facility, etc.

PRICE MIX

It is nothing but the interest rates charged by the different banks.

ATM Card Issue Free – 2 ATM cards issued free if it joint account

Add – on Card RS. 100 – Beyond 2 cards

Duplicate Card Rs. 100

Other General Charges

  Current Account Savings Account 

Transaction Charges

NIL NIL

Charges for issue of Cheques book

NIL NIL

Issue of duplicate statement

Rs. 25 per page Rs. 25 per page

Account closure Rs.100 Rs.100

Place MixIt is the location analysis for banks branches. Some of the factors affecting the location analysis are :- The Trade Area

Population Characteristics

Commercial Structure

Proximity to other convenient Outlets

Real Estate Rates

Proximity to Public Transportation

Location of Competition

Visibility

Access

Promotion mixIt is making the customer more and more aware of the services and benefits provided by the banks.

Different ways of promotion are :-

Public Relations

Personal Selling

Sales Promotion

Word-of-mouth Promotion

Telemarketing

Internet

PROCESS• The process mix constitutes the overall

procedure involved in using the services offered by the bank. A process should be such that the customer is easily able to understand and easy to follow.

• Let’s take for example the process for application for a car loan.

Now this mainly involves 3 things.  Producing of proper documents1.Filling up of application form2.Paying for the initial down payment.

Process cont…..The smaller and simpler the procedure, the better the process, and the customer will be more

satisfied. It Refers to the systems used to assist the

organisation in delivering the service.

For example:- Banks that send out Credit Cards automatically when their customers old one has expired again require an efficient process to identify expiry dates and renewal. An efficient service that replaces old credit cards will foster consumer loyalty and confidence in the company.

Physical evidence• Physical evidence is the overall layout of

the place i.e. how the entire bank has been designed. Physical evidence refers to all those factors that help make the process much easier and smoother.

• For example, in case of a bank, the physical evidence would be the placement of the customer service executive’s desk, or the location of the place for depositing cheques.

The more the bank does to make the service easier

and better the more satisfied will be the customer.

PeopleAn essential ingredient to any service provision is

the use of appropriate staff and people. Recruiting the right staff and training them appropriately in the delivery of their service is essential if the organization wants to obtain a form of competitive advantage.

Consumers make judgments and deliver perceptions of the service based on the employees they interact with. Staff should have the appropriate interpersonal skills, aptitude, and service knowledge to provide the service that consumers are paying for. Many British organizations aim to apply for the Investors In People accreditation, which tells consumers that staff are taken care off by the company and they are trained to certain standards.

The service-profit chain

Ethics In Service Marketing

Various ethical issues and concerns:• Aggressive promotions through

telemarketing and personal selling

• Invasion of customer’s privacy

• Misleading claims backed by poor service performance

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

Determinants of service quality

• Reliability – delivering on promises• Responsiveness – willing to help• Assurance – inspiring trust and

confidence• Empathy – individualising customers• Tangibles- physical representation

Managing Service Productivity

• Giving quality service is an expensive business

• Not every consumer is willing to pay extra for service quality

• Service providers would have to find their optimum service quality/cost ratios

• Making services obsolete by product innovations