SUBJECT: MARKETING OF SERVICES Marks: 20

1. Explain the characteristic of Services with examples? (10 Marks)

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. Its production may or may not be
tied to a physical product.

Services have a number of characteristics which make them so different from

products. These are;

A) Intangibility
B) Inseparability
C) Heterogeneity
D) Perishability
E) Ownership

Intangibility
Services are activities performed by the provider, unlike physical products they cannot be seen,
tasted, felt, heard or smelt before they are consumed. Since, services are not tangibles, they do
not have features that appeal to the customer senses, their evaluation, unlike goods, is not
possible before actual purchase and consumption. The marketer of service cannot rely on
product-based clues that the buyer generally employs in alternative evaluation prior to purchase.
So, as a result of this, the services are not known to the customer before they take them. The
service provider has to follow certain things to improve the confidence of the client:
The provider can try to increase the tangibility of services. For example, by displaying a plastic
or a clay model showing patients an expected state after a plastic surgery.
The provider can emphasize on the benefits of the service rather than just describing the
features. Not all the service product has similar intangibility. Some services are highly intangible,
while the others are low i.e. the goods (or the tangible component) in the service product may
vary from low to high.
For example: Teaching, Consulting, Legal advices are services which have almost nil tangible
components; While restaurants, fast food centers, hotels and hospitals offer services in which
their services are combined with product (tangible objective) , such as food in restaurants, or
medicines in hospitals etc. Services are said to be intangible - they cannot be seen or tasted,
This can cause lack of confidence on the part of the consumer As was apparent earlier, in
considering pricing and services marketing, it is often difficult for the consumer to measure
service value and quality. To overcome this, consumers tend to look for evidence of quality and
other attributes, for example in the decor and surroundings of the beauty salon, or from the
qualifications and professional standing of the consultant

Inseparability
Services are typically produced and consumed simultaneously. In case of physical goods, they
are manufactured into products, distributed through multiple resellers, and consumed later. But,
in case of services, it cannot be separated from the service provider. Thus, the service provider
would become a part of a service.
For example: Taxi operator drives taxi, and the passenger uses it. The presence of taxi driver is
essential to provide the service. The services cannot be produced now for consumption at a later
stage / time. This produces a new dimension to service marketing. The physical presence of
customer is essential in services. For example: to use the services of an airline, hotel, doctor,
etc a customer must be physically present. Inseparability of production and consumption
increases the importance of the quality in services. Therefore, service marketers not only need
to develop task-related, technical competence of service personnel , but also , require a great
input of skilled personnel to improve their marketing and inter personal skills. Services are
produced and consumed at the same time, unlike goods which may be manufactured, then
stored for later distribution. This means that the service provider becomes an integral part of the
service itself. The waitress in the restaurant, or the cashier in the bank, is an inseparable part of
the service offering. The client also participates to some extent in the service, and can affect the
outcome of the service. People can be part of the service itself, and this can be an advantage for
services marketers

Perish ability
Services are deeds, performance or act whose consumption take place simultaneously; they
tend to perish me the absence of consumption. Hence, services cannot be stored. The services
go waste if they are not consumed simultaneously i.e. value of service exists at the point when it
is required.
The perishable character of services adds to the service marketer problems. The inability of
service sector to regulate supply with the changes in demand; poses many quality management
problems. Hence, service quality level deteriorates during peak hours in restaurants, banks,
transportation etc. This is a challenge for a service marketer. Therefore, a marketer should
effectively utilize the capacity without deteriorating the quality to meet the demand. Services are
perishable; they cannot be stored. Therefore an empty seat on a plane, for example, is a lost
opportunity forever. Restaurants are now charging for reservations which are not kept, charges
may be made for missed appointments at the dental clinic. Perishability does not pose too much
of a problem when demand for a service is steady, but in times of unusually high or low demand
service organizations can have severe difficulties.

Variability
Services are highly variable, as they depend on the service provider, and where and when they
are provided. Service marketers face a problem in standardizing their service, as it varies with
experienced hand, customer, time and firm. Service buyers are aware of this variability. So, the
service firms should make an effort to deliver high and consistent quality in their service; and
this is attained by selecting good and qualified personnel for rendering the service.

Heterogeneity Invariability
Because a service is produced and consumed simultaneously, and because individual people
make up part of the service offering, it can be argued that a service is always unique; it only
exists once, and is never exactly repeated. It is very difficult to achieve standardization of
services. This can give rise to concern about service quality and uniformity issues. Personnel
training and careful monitoring of customer satisfaction and feedback can help to maintain high
standards. For example a doctor who has given complete attention to u in last visit may behave
a little differently next time. The new bank clerk who cashes your cheque may not be as efficient
as the previous one ans you have to spend more time for the same activity .

Ownership
When you buy a product you became its owner but in case of service you pay for its benefit but
never own it. In case of service the payment is not for purchase but only for the use to hire
items or facilities. Ex. By paying the charges you can have a market research firm survey into
the reasons for your products poor sale performance.
A service is purchased for the benefits it provide it provide. We brought a product not only for its
physical tangible features we find that they brought intangible benefits and satisfaction.
2. Explain Marketing Mix for services with reference to examples? (10 Marks)

What is services marketing?

A service is the action of doing something for someone or something. It is largely intangible (i.e.
not material). A product is tangible (i.e. material) since you can touch it and own it. A service tends
to be an experience that is consumed at the point where it is purchased, and cannot be owned since
is quickly perishes. A person could go to a café one day and have excellent service, and then return
the next day and have a poor experience. So often marketers talk about the nature of a service as:

The service marketing mix comprises off the 7’p’s. These include:
• Product
• Price
• Place
• Promotion

• People
• Process
• Physical evidence.

Product

The important issue in the service product understands what benefits and satisfaction the consumer
is seeking from the service. The marketing of service can be successful only if there is match
between the service product from the consumers view point and the suppliers view point. To find
this match a manager has to analyze service at following levels;

1) Costumer benefit concept: the service product which you offer in the market must have its
origin in the benefit which consumer is seeking.
2) Service concept: it defines the benefits which the service offers.
3) Service offer: it is concerned with greater detailed shaping of the service concept. Decisions
are taken on service elements i.e. tangible or intangible, service forms i.e in what way and
how, service levels i.e. quality and quantity.
4) Service delivery systems: i.e. creation and delivery of service using guidelines build into the
service offer. it is also concerned with people processes and facilities.
As a manger you would like to market not just one service but a range of services. You would need
to take decision on the length and the width of services , the manner in which they complement
and support each other and how well they face up to the competitors offering. The service which
you are offering must be targeted at a specific market segment.

Pricing
In determining the price of services the perish ability has great impact and that the fluctuation in
demand cannot be met through inventory. Another characteristics of service that create problem in
price determination is the intangibility component. the higher the intangibility the more difficult it is
to calculate cost, in that case the price may sometime be settled by negotiation between the buyer
and seller. Whereas in services where the tangibility component is higher the service provided is
uniform and it is easy to calculate the per unit cost and have a uniform policy. Another
characteristic of service to be kept in mind while pricing is the rules and regulation if governing
units.
Methods used to determine price of services are
Cost based pricing: the price is regulated by the government or industry association on the basis
of the cost incurred by the most efficient unit.
Market oriented pricing: it can be either competition oriented pricing where the price is fixed at
the level which the competitor is charging or customer oriented pricing which varies according to
the ability of the ability of the customer to pay.

Promotion

Let us look at the individual components of the promotions mix in more detail.

1. Personal Selling. Personal Selling is an effective way to manage personal customer

relationships. The sales person acts on behalf of the organization. They tend to be well trained in
the approaches and techniques of personal selling. However sales people are very expensive and
should only be used where there is a genuine return on investment. For example salesmen are
often used to sell cars or home improvements where the margin is high.

2. Sales Promotion. Sales promotion tends to be thought of as being all promotions apart from
advertising, personal selling, and public relations. For example the BOGOF promotion, or Buy One
Get One Free. Others include couponing, money-off promotions, competitions, free accessories
(such as free blades with a new razor), introductory offers (such as buy digital TV and get free
installation), and so on. Each sales promotion should be carefully costed and compared with the
next best alternative.

3. Public Relations (PR). Public Relations is defined as 'the deliberate, planned and sustained
effort to establish and maintain mutual understanding between an organization and its publics. It is
relatively cheap, but certainly not cheap.

4. Direct Mail. Direct mail is very highly focused upon targeting consumers based upon a
database. As with all marketing, the potential consumer is 'defined' based upon a series of
attributes and similarities. Creative agencies work with marketers to design a highly focused
communication in the form of a mailing. The mail is sent out to the potential consumers and
responses are carefully monitored. For example, if you are marketing medical text books, you would
use a database of doctors' surgeries as the basis of your mail shot.

5. Trade Fairs and Exhibitions. Such approaches are very good for making new contacts and
renewing old ones. Companies will seldom sell much at such events. The purpose is to increase
awareness and to encourage trial. They offer the opportunity for companies to meet with both the
trade and the consumer.

6. Advertising. Advertising is a 'paid for' communication. It is used to develop attitudes, create

awareness, and transmit information in order to gain a response from the target market. There are
many advertising 'media' such as newspapers (local, national, free, trade), magazines and journals,
television (local, national, terrestrial, satellite) cinema, outdoor advertising (such as posters, bus
sides).

Distribution

People

An 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, attitude, 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.

Process

Refers to the systems used to assist the organization in delivering the service. Imagine you walk
into Burger King and you order a Whopper Meal and you get it delivered within 2 minutes. What
was the process that allowed you to obtain an efficient service delivery? 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

Where is the service being delivered? Physical Evidence is the element of the service mix which
allows the consumer again to make judgments on the organization. If you walk into a restaurant
your expectations are of a clean, friendly environment. On an aircraft if you travel first class you
expect enough room to be able to lay down!
Physical evidence is an essential ingredient of the service mix, consumers will make perceptions
based on their sight of the service provision which will have an impact on the organizations
perceptual plan of the service.