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Introduction To Service Marketing
Introduction To Service Marketing
Characteristics:
• Intangibility
• Inseparability
• Perishability
• Variability
• Ownership
tangible intangible
homogeneous heterogeneous
You cannot own and store a service like you can a product. Services are used or
hired for a period of time.
For example when buying a ticket to the USA the service lasts maybe 9 hours
each way , but consumers want and expect excellent service for that time.
Because you can measure the duration of the service consumers become more
demanding of it.
Intangibility
You cannot hold or touch a service unlike a product. In saying that although
services are intangible 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?.
Inseparability
Perishibility
Services last a specific time and cannot be stored like a product for later use. If
travelling by train, coach 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.
Heterogeneity
Pricing Services
Distribution of Services
• because most services are tied directly to a specific service provider, most have
been distributed directly to customers
• with advancing technology, many firms are now delivering services through
machines
• channels of distribution are necessarily short; some firms use one agent
intermediary, such as insurance, real estate, and travel agents
• some firms use franchises to distribute services
Promotion of Services
• Retention
• Referrals
• Relationships
• Recovery
Defining and Managing Service Quality
What is Quality?
■ "The totality of features and characteristics of a product or service that bear on its
ability to satisfy stated or implied needs." (Kotler)
■ Quality must provide goods and services that completely satisfy the needs of both
internal and external customers.
■ Quality serves as the "bridge" between the producer of goods or services and its
customer. (Johnson & Weinstein)
Service Quality
Customers also form perceptions of quality during the service transaction - how
effectively and efficiently the service was delivered and the speed and
convenience of completing the transaction
Finally, customers evaluate support activities that occur after the transaction, that
is post-sale services
■Functional Quality has more to do with how the technical quality is transferred to the
consumer. Service quality attributes such as responsiveness and access would be
important in helping the customer judge the functional quality of the service encounter.
Basic Principles of Service Quality
Credibili
Employee selection, job design and training are crucial to building customer
satisfaction and SQ
1. Knowledge Gap
Management definition
of these needs
MANAGEMENT
2. Standards Gap
Translation into
design/delivery specs 4. Internal
3. Delivery Gap Communications Gap
Execution of 4. Advertising and
design/delivery specs sales promises
7. Service Gap
Customer experience
relative to expectations
Service Guarantee
Unconditional
Easy to understand and communicate
Meaningful
Simple to invoke
Easy and quick to collect on - Hart (1988)
Pricing of Services
Buyer’s Perception of Value
Product value
Image Value
Buyer’s perception
of value
Monetary cost
Psychic cost
Demand Considerations
End-benefit Effect
Price-Quality Effect
Expenditure Effect
• Switching Costs
– higher levels of perceived risk
– uncertainty involved in changing providers
– consequences associated with a bad outcome
• Difficult Comparison Effect
– high number of experience attributes
– inherent heterogeneity
• Price-Quality Effect
– price acts as a quality indicator when consumers:
• believe that quality differs among providers
• believe that low quality imposes greater consequences
• lack other sources of objective information
• Expenditure Effect
– amount of expenditure relative to consumer household income
• End-benefit Effect
– the more price sensitive consumers are to the cost of the end-benefit, the
more sensitive they will be to purchases that contribute to the end-benefit.
• Price bundling adds value to the consumer’s end-benefit
• Shared-cost Effect
– consumer price sensitivity decreases as the shared-costs with third parties
increase
• Fairness Effect
– fairness is typically assessed by comparing the price to:
• previous prices paid for similar services
• prices paid for similar services under similar circumstances
• the benefit gained
– assessing “service” fairness is difficult
• Inventory Effect
– consumers are able to protect themselves from future price increases by
building inventories
3. No opportunity should exist for individuals in one segment who have paid a low
price to sell their tickets to those in other segments.
Cost Considerations
• Price is sometimes not know until after the service has been produced
• Cost-oriented pricing is more difficult
– activity-based costing breaks down the organization into a set of activities,
and activities into tasks, which convert materials, labor, and technology
into outputs
• High fixed cost to variable cost ratio
• Economies of scale tend to be limited
Customer Considerations
Profit Considerations
Product Considerations
• Satisfaction-based pricing
– primary goal is to reduce the amount of perceived risk
– service guarantees
– benefit-driven pricing: charges customers for services actually used as
opposed to overall membership fees
– flat-rate pricing: customer pays a fixed price and the provider assumes the
risk of price increases and overruns
• Relationship Pricing
– primary objective is to enhance the firm’s relationship with its targeted
consumers.
• long-term contracts: offers price and nonprice incentives for
dealing with the same provider over a number of years
• pricing bundling: marketing two or more services as a single
package for a single price
• Efficiency Pricing
– primary objective is to appeal to economically-minded consumers by
delivering the best and most cost-effective service for the price.
Marketing of Financial Services
Intangibility – the financial services are generally intangible , but the service
providers go to some extent to make them tangible. Ex- bank statements, society
passbook.
Inseparability – the degree of inseparability depends upon the type of service and
the actual supplier. Ex- ATM’s
Heterogeneity – it makes it difficult to establish standard. The quality of service
can’t be standardized.
Perishability – it depends on the type of service. Ex- if a cheque needs to be
cleared by certain date and the system causes a delay then the benefits to the
customer are lost, so the service could be said perishable.
Merchant Banking
Leasing
Mutual Funds
Venture Capital
Derivative Security
Merchant Banking
Leasing
Mutual Funds
The mutual funds refers to the fund raised by a financial service company by
pooling the savings of the public.
The funds provide investment avenue for small investors who cannot participate
in the equities of big companies.
It ensures low risk, steady returns, high liquidity and better capital appreciation on
the long run.
Venture Capital
Introduction
The hotel is a public place where all possible facilities are made available to a
person or persons who stays.
The facilities like entertainment, food, accommodation etc are the core services of
a hotel.
Classification
1. Residential hotel
2. Commercial hotel
3. Resorts hotel
4. International hotels
5. Floating hotel
Residential hotel
The Residential hotel works as apartment house. That is why we call them
apartment hotels.
The hotel charges rent on monthly , half or yearly basis.
The hotels are generally located in big cities and towns where no meals are served
to the customers.
Initially, the residential hotels were developed in USA.
The services given in the residential hotels is a well managed home.
Commercial hotel
The commercial hotel is meant for the people who visit a place for trade and
commerce or for business purpose.
The hotels are located at the commercial or industrial centre.
The commercial hotels focus their attention on individuals travellers and are
generally run by the owners.
Resorts hotel
The resort hotel are meant for the holiday makers, tourist and for those who need
a change in the atmosphere mainly on the health ground.
The resort hotels are located near sea, mountain and other areas having an
attractive landscape and healthy climate condition.
The tourist visit hotels mainly to relax.
The entertainment and recreation facilities like swimming pool, tennis courts,
boating and other sports is also added in the restaurant and cafeteria, conference
room, lounge and entertainment etc. become significance in the resort hotel.
International hotels
The international hotels are modern luxurious hotels, classified on the basis of
international guidelines.
The international hotels are placed in various star categories :
Five star deluxe, five star, four star, three star, two star, one star.
The international hotels are mostly owned by the public companies were a board
of directors is constituted for its control.
The overall management control is in the hands of senior executives.
Floating hotel
The floating hotel are located on the water surface. The place are sea, river and
lake.
Floating hotels provide all the facilities and services that are available in a good
hotel.eg. “Shrikaras”.
They are:
1. Approved hotels
2. Unapproved hotels
Approved hotels – they are based on the criteria lead down by the ministry of tourism.
they have the stamp of official recognition and the customers have trust on them.
Unapproved hotels – they may also provide quality services but they lack official
recognition so customer don’t have trust on them.
They are:
1. Classified
2. Unclassified
The hotels having star are included in the classified group e.g.. Hotel Sayaji.
The hotels which are no star are included in unclassified hotels. E.g. Crown Place.