Service Marketing Unit 1

Examples of Service Industries
• Health Care
• hospital, medical practice, dentistry, eye care
• Professional Services
• accounting, legal, architectural
• Financial Services
• banking, investment advising, insurance
• Hospitality
• restaurant, hotel/motel, bed & breakfast
• ski resort, rafting
• Travel
• airline, travel agency, theme park
• Others
• hair styling, pest control, plumbing, lawn maintenance, counseling services, health club, interior design
Tangibility Spectrum
Comparing Goods and Services
Characteristics of Services Compared to Goods
Intangibility Heterogeneity
Inseparability Perishability
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
Why study Services Marketing?
• Service-based economies
• Service as a business imperative in manufacturing and IT
• Deregulated industries and professional service needs
• Services marketing is different
• Service equals profits

Servqual model
Challenges for Services
• Defining and improving quality
• Ensuring the delivery of consistent quality
• Designing and testing new services
• Communicating and maintaining a consistent image
• Accommodating fluctuating demand
• Motivating and sustaining employee commitment
• Coordinating marketing, operations, and human resource efforts
• Setting prices
• Finding a balance between standardization versus customization
Traditional Marketing Mix
• All elements within the control of the firm that communicate the firm’s
capabilities and image to customers or that influence customer satisfaction with
the firm’s product and services:
4Ps of Marketing (E. Jerome McCarthy, 1960)

Product
Price
Place
Promotion
Expanded Mix for Services – The 7 Ps
• Product
• Price
• Place
• Promotion
• People
• All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, 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 service
delivery and operating systems.
People
• People is one of the most elements of service marketing mix.
• People define a service.
• If you have an IT company, your software engineers define you.
• If you have a restaurant, your chef and service staff defines you.
• If you are into banking, employees in your branch and their behavior towards customers defines you.
• Thus, many companies nowadays are involved into specially getting their staff trained in
interpersonal skills and customer service with a focus towards customer satisfaction.
Process
• Service process is the way in which a service is delivered to the end customer.
• Let’s take the example of two very good companies – McDonalds and Fedex.
• Both the companies thrive on their quick service and the reason they can do that is their confidence
on their processes.
• On top of it, the demand of these services is such that they have to deliver optimally without a loss
in quality.
• Thus, the process of a service company in delivering its product is of utmost importance.
• It is also a critical component in the service blueprint, wherein before establishing the service, the
company defines exactly what should be the process of the service product reaching the end
customer.
Physical Evidence
• As said before, services are intangible in nature.
• However, to create a better customer experience tangible elements are also delivered with the service.
• Take an example of a restaurant which has only chairs and tables and good food, or a restaurant which has
ambient lighting, nice music along with good seating arrangement and this also serves good food.
• Which one will you prefer? The one with the nice ambience. That’s physical evidence.
• Several times, physical evidence is used as a differentiator in service marketing. Imagine a private hospital
and a government hospital.
• A private hospital will have plush offices and well-dressed staff. Same cannot be said for a government
hospital.
Expanded Marketing Mix for Services
Classification of services
Some services may include people, whereas other services (like online services)
may include people-managed objects.
• 1. Examples of services that include people can be a hair salon, education,

theater, restaurants, and public transportation.
• 2. Example of services that include objects include repairs and maintenance, dry
cleaning, banking, legal services, insurance, etc.
1) Classification of service based on tangible action
Wherever people or products are involved

directly, the service classification can be
done based on tangibility.
• A) Services for people – Like Health care,

restaurants, and saloons, where people
deliver the service to people.
• B) Services for goods – Like

transportation, repair and maintenance,
and others.
• Where people give services for objects
or goods.
2) Classification of services based on intangibility
There are objects in this world that

cannot be tangibly quantified.
• A) Services directed at people’s minds

– Services sold through influencing the
creativity of humans are classified
based on intangibility.
• B) Services directed at intangible assets

– Banking, legal services, and insurance
services are some of the benefits most
difficult to price and quantify.
Technological Development in Services
Marketing
• Online customer service: chatbots, social media platforms
• Personalisation: Analytics helps in customer satisfaction and loyalty
• Mobile optimization: for seamless and convenient experience for
customers
• Virtual reality and augmented reality: immersive and interactive
experiences
• Data analytics: insights into customer behavior and preferences
How does technological development affect
services marketing?
• Improve customer experience: convenient, personalized, and
engaging customer experience
• Enhanced data analysis: collect and analyse customer data more
effectively
• Increased efficiency: reduced marketing efforts by automating tasks
and streamlining processes
• Greater reach: helps businesses expand their reach and target
audiences
• Real-time feedback: allowing them to respond quickly to customer
concerns
Customer Involvement
• Customer involvement is the active involvement of customers in
different parts of a company’s business, such as product
development, marketing, and customer service.
• It involves talking to customers to learn about their needs,

preferences, and expectations so that products and services can
better meet their needs.
Importance of customer involvement
• Better understanding of customer needs
• Improved customer satisfaction and loyalty
• Increased innovation
• Improved brand reputation
• Reduced risk of product failure
Types of customer involvement
• Co-Creation
• Co-design
• Co-Production
• Customer feedback
• Crowdsourcing
1. Co-creation
• Co-creation entails working with customers to create novel goods and
services.
• This kind of customer participation is frequently used in sectors like

technology, where customer feedback is crucial to developing novel
products.
2. Co-design
• Customers are included in the design process to ensure the final
product satisfies their requirements.
• This kind of customer involvement is frequently used in sectors like

the fashion industry, where consumer feedback is crucial to
developing fashionable and useful goods.
3. Co-production
• To increase the finished product's quality, co-production involves
customers in the manufacturing process.
• In industries like food service, where customers can offer insightful

feedback on the flavor and quality of the food, this type of customer
participation is frequently used.
4. Customer feedback
• Gather customer feedback on their interactions with goods and
services to better future offerings.
• This kind of customer participation is frequently used in businesses

like retail, where customer input can enhance store layouts, product
displays, and customer service.
5. Crowdsourcing
• Crowdsourcing is soliciting input and suggestions from many people
via online platforms.
• This kind of customer participation is frequently used in advertising

and marketing, where businesses can use customer feedback to
develop successful campaigns and promotions.

Service Marketing Unit 1

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Examples of Service Industries

• Customer satisfaction and loyalty are driven by service excellence

• Services can be used as a differentiation strategy in competitive

• Service as a business imperative in manufacturing and IT

• Deregulated industries and professional service needs

• Services marketing is different

• Service equals profits

4Ps of Marketing (E. Jerome McCarthy, 1960)

• People define a service.

• If you have an IT company, your software engineers define you.

• 1. Examples of services that include people can be a hair salon, education,

Wherever people or products are involved

• A) Services for people – Like Health care,

• B) Services for goods – Like

There are objects in this world that

• A) Services directed at people’s minds

• B) Services directed at intangible assets

• It involves talking to customers to learn about their needs,

• This kind of customer participation is frequently used in sectors like

• This kind of customer involvement is frequently used in sectors like

• In industries like food service, where customers can offer insightful

• This kind of customer participation is frequently used in businesses

• This kind of customer participation is frequently used in advertising

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