SERVICES

MARKETING
Presentation by,
Dr. Basavaraj S.Kudachimath
 Discussion Points
• Reasons for the growth of services sector and its contribution;
• difference in goods and service marketing;
• characteristics of services;
• concept of service marketing triangle;
• service marketing mix;
• GAP models of service quality.
• Consumer behaviour in services:
• Search, Experience and Credence property,
• consumer expectation of services,
• two levels of expectation,
• Zone of tolerance,
• Factors influencing customer expectation of services.
• Customer perception of services-
• Factors influencing customer perception of service,
• Service encounters,
• Customer satisfaction,
• Strategies for influencing customer perception
 Introduction to Services
Marketing
What is service:
Any helpful activity performed
to satisfy needs of someone.
In business terms Services are a
special form of product which
consists of activities, benefits or
satisfactions offered for sale that
are intangible and do not result
in the ownership of anything.
 Concept of Services.
Definition of services?
A service is an act or performance that one party can offer to another
that is necessarily intangible and does not result in the ownership of anything. Its
production may or may not be tied to a physical product.
By Philip Kotler.

Based on this the nature of service is.

1.Lack of physical output
2.Benefit to the receiver from the service rather than product
3.Services are intangible.
Because of the above special nature of service,
marketing of pure service needs special skills.
So it includes
Deeds ( Action of service provider),Processes ( Steps in the provision of
service), Performance. (Customers understanding of how the service has
delivered ie effect)
 Contribution and reasons for the
growth of services sector.
A: Contribution of Service Sector to GDP
GVA (Rupees in Crore) at current prices
Sl.No 2011- 2012- 2013- % 2014- %
Sector
12 13 14 share 15 share

Agricultur
1 1,505,580 1,668,676 1,881,152 17.95 1,964,506 17.01
e Sector

Industry
2 2,713,467 2,954,565 3,219,942 30.73 3,466,996 30.02
Sector

Services
3 3,976,498 4,628,810 5,376,045 51.31 6,118,738 52.97
Sector

GVA ( Gross Value Added)

GDP ( Gross Domestic Product)
GDP= GVA+Taxes- Subsidies.
Contribution of Service sector to
employment generation
FDI Inflow in service sector in India
 Reasons for Growth of Service Sector
in India
1. Increase in Wealth. ( Gardeners/ Car drivers)
2. More Leisure time. (Tourism/ TV channels)
3. Greater Life Expectancy. ( Health industry/ Jim
etc)
4. Greater Complexity of Products. (Car repairs
etc)
5. Higher Percentage of Working women
6. Increasing complexity of life. (Marriage
bureau/Legal cell etc).
7. Increasing number of new products. ( Computer
needs software industry)
Source: http://managementgurukalpesh.blogspot.in/2008/10/major-reasons-for-growth-of-service.html
Difference between goods and services
Goods Services Resulting Implications
Tangible Intangible Services cannot be inventoried.
Services cannot be patented.
Services cannot be readily displayed or communicated.
Pricing is difficult.
Standardized Heterogeneous Service delivery and customer satisfaction depend on
employee actions.
Service quality depends on many uncontrollable factors.
There is no sure knowledge that the service delivered
matches what was planned and promoted.
Production Simultaneous Customers participate in and affect the transaction.
separate from production and Customers affect each other.
consumption consumption Employees affect the service outcome.
Decentralization may be essential.
Mass production is difficult.
Nonperishable Perishable It is difficult to synchronize supply and demand with
services.
Services cannot be returned or resold.
 Difference in goods and service in
marketing
1. Ownership is not transferred
2. Intangibility
3. Involvement of customer 
4. Quality.
5. Evaluation of services is tougher
6. Inventories are absent 
7. Time is very important in services
Source: http://www.marketing91.com/difference-between-goods-and-services/
 Myths about services
1. Most customers complain when they encounter
problem.
2. If we receive more complaints we have spend
more money to keep our customers happy.
3. Few complaints means we are giving better
services.
4. More complaints means lower profits.
5. It is better to invest in marketing and advertising
rather that good customer services.
Source: http://www.desk.com/success-center/customer-service-myths-infographic
Characteristics of services
 Services marketing triangle
Company
(Management)

Internal External
Marketing Marketing
“setting the
promise”

Employees Interactive Marketing Customers

“delivering the promise”
Service Marketing Mix
Service Marketing Mix
GAPS MODEL OF
SERVICE QUALITY
 What is quality
 In the words of crosby:-Quality is
conformance to requirements
 ASQC Define:- Quality is the totality of

features and characteristics of a product,

or service that bear on it’s ability to
satisfy stated or implied needs.
 Fully satisfy customer requirements at

the lower cost.

What is service quality?
An assessment of how well a delivered
service conforms to the client's
expectations. Service business operators
often assess the service quality provided
to their customers in order to improve
their service, to quickly identify problems,
and to better assess client satisfaction.
GAP model of service quality
 Provider Gap 1

CUSTOMER
Expected
Service

GAP 1

Company
COMPANY Perceptions of
Consumer
Expectations

For Instance- A café owner may think that the consumer wants a better ambience in the café,
but the consumer is more concerned about the coffee and food they serve.
 GAP-1 Gap between customer expectation of service and
company perception of customer services
Problem Reason
• Not knowing what customer • Lack of interaction between
expects customer and management
• Insufficient communication
between contact employees
and managers.
• Insufficient marketing
research
• Lack of market sigmentation
• Focus on transactions rather
than customer relationship.
Provider Gap 2 Antellexample would be restaurant Managers who may
the waiters to provide the order of the consumer
quick, but do not specify “How Quick”.
CUSTOMER

COMPANY Customer-Driven
Service Designs and
Standards

GAP 2
Company
Perceptions of
Consumer
Expectations
 GAP-2 Customer expected service standards and
company perception of customer service standards

Problem Reason
Not selecting the right service • Poor service design
designs and standards. • In appropriate physical
evidence
• Unsystematic service
delivery process.
• Failure to proper positioning
of services.
• Lack of focussing on
customer expectations of
standards.
Provider Gap 3 specific
 An example would be a restaurant having very
standards of the food communicated but the
restaurant staff may not be given proper instruction
CUSTOMER as to how to follow these standards.

COMPANY Service Delivery

GAP 3
Customer-Driven
Service Designs and
Standards of delivary

Company perception of delivery

 GAP-3 Delivery GAP
Problem Reasons
• Difference between • Ineffective recruitment of
employees
standards of • Lack of team work and control
performance delivery of • Role ambiguity and role conflict
delivery team and • Inappropriate valuation of
actual delivery of services.
• Failure to match supply and
services. demand.
• Customers lack of their roles and
responsibilities.
 An example would be a restaurant that has printed
Provider Gap 4 on its menu that it serves 100% Vegetarian Food but
in reality, it serves Non-Vegetarian Food as well. In
this situation, consumer expectations are not met. 
CUSTOMER

COMPANY Service Delivery External

Communications
GAP 4 to Customers
 GAP-4 Communication Gap ( Advertising
communication and its understanding by customers)

Problem Reasons
• Not matching performance • Tendency to view each
to the level of promises communication as independent.
made by service • Wrong communication or not
managing customers querries
organaization through proper communication.
• Not educating customers.
• Overpromising
• Differences in policies and
procedures across branches or
units.
 Marketing challenges in the service industry

• Defining and improving quality

• Communicating and testing new services
• Communicating and maintaining a consistent image
• Motivating and sustaining employee commitment
• Coordinating marketing, operations and human
resource efforts
• Setting prices
• Standardization versus personalization
 Consumer behaviour in services
• Search, Experience and Credence property in services.
• Meaning and types of expected services
• Factors that influence customer expectation of services.
• Two levels of expectation,
• Zone of tolerance,
• Factors influencing customer expectation of services.
• Customer perception of services-
• Factors influencing customer perception of service,
• Service encounters,
• Customer satisfaction,
• Strategies for influencing customer perception
 Search, Experience and Credence property,
The definitions provided earlier for SEC qualities
can be summarized as follows:
• Search qualities are those that can be verified
easily prior to purchase by actual inspection of
the goods;
• Experience qualities are those that can only be
verified after purchase and consumption of the
product; and
• Credence qualities are those that cannot be
verified even after purchase and consumption.
Consumer Expectation of Services
• Beliefs about service delivery
• Service as standard reference points against
which performance is judged.
• Customer comparison of services with these
reference points when evaluating services.
• Knowledge of customer about services.
Possible levels/ Types of customer
expectations
• Ideal expectations
• Should expectations
• Experience based norms.
• Acceptable expectations
• Minimum tolerance Expectations
 Two levels of Customer
Expectations
1. Desired Services: Desired services that
customer hopes to receive.
2. Adequate services: Level of service that
customer will accept
 Zone of Tolerance
• Zone of tolerance is the
Desired Service
range or window in
which customers do not
notice service
performance Zone of Tolerance
• When the service falls
outside this range
(Either very high or very
low) the service gets Adequate Service
the customer attention
either in positive or
negative way.
Factors that influence customer
expectation of services
Customer Perception of Services
 What is Perception
1. It is the process by which individuals organized and interpret
their sensory impressions in order to give meaning to their
environment.
2. According to Joseph Reitz, “ Perception includes all those
processes by which an individuals receives information about
his environment- seeing, hearing, feeling, tasting and
smelling.”
3. It is the process through which the information from outside
environment is selected, received, organized and interpreted to
make it meaningful to us.
 Service Quality
Service quality is a measure of how an
organization delivers its services compared to
the expectations of its customers. Customers
purchase services as a response to specific
needs. They either consciously or unconsciously
have certain standards and expectations for
how a company's delivery of services fulfils
those needs. A company with high service
quality offers services that match or exceed its
customers' expectations.
Dimensions of Service Quality
 Customer Satisfaction
Customer satisfaction is defined as a
measurement that determines how happy
customers are with a company's products,
services, and capabilities.
Customer satisfaction information, including
surveys and ratings, can help a company
determine how to best improve or changes its
products and services.