Service Marketing

Service Economy An economic system or sector based on buying and selling of services Financial services Health services Hospitality Retail Human Services Education Information technology Knowledge-based economy Research Technology Consulting

Services Defined The American Marketing Association & the Asia Marketing Federation define services as follows: Service products, such as a bank loan or home security, that are intangible, or at least substantially so Services, as a term, is also used to describe activities performed by sellers and others that accompany the sale of a product and that aid in its exchange or its utilization

Services as a Percentage of GDP United States About 80% of GDP Projected to increase to 82% Finance, insurance, real estate Singapore About 66% of GDP Projected to increase to 72% Financial services and information technology

Service Characteristics Intangibility No physical characteristics (may have a tangible component) Cannot be inventoried Cannot be patented Cannot be readily displayed Inseparability Unable to separate service from provider Produced and consumed at the same time Perishability Services are perishable Services cannot be returned or resold Airlines: Output is perishable at the time it is produced

Service Characteristics Pricing strategy can be used to address these problems Off peak pricing consists of charging different prices during different times in days in order to stimulate demand during slow periods. Ryanair

Service Characteristics Customer involvement Higher in production of many types of services Airlines – internet reservations Quality of services more varied than the quality of goods Production process is complex for airlines Activities of many departments have to come together at the right time in the right way

Service Characteristics Client participation Two marketing challenges: Customer is uncertain about how genuine the professional’s concern for his or her satisfaction is. Even high-quality service delivery by the professional can lead to dissatisfied customers. Airlines must convey a caring attitude Address complaints quickly & positively Passenger does headstand on plane

Quality Service Subjective Expectations, perceptions, and experiences differ between the service provider and consumer. Service gaps The gap between consumer expectations and management perceptions of consumer expectations. The gap between management perceptions of consumer expectations and the firm’s service quality specifications. The gap between service quality specifications and actual service quality. The gap between actual service delivery and external communications about the service.

Service Marketing Difficulties Defining and improving quality Communicating and testing new services Maintaining a consistent image Motivating and sustaining employee commitment Setting prices Standardization versus personalization Source: http://www.slideshare.net/ch_paki/services-marketing

Internal Marketing Internal Marketing Service quality Marketing the firm and its policies to employees as if they were customers Service quality Customer satisfaction depends on employee actions Essential to have customer-oriented, frontline people Uncertain as to whether the service delivered match the service expected as a result of the firm’s promotion

Services Marketing Triangle Source: http://www.slideshare.net/ch_paki/services-marketing

Customer Satisfaction Research on customer satisfaction measurement (CSM) focuses on: Understanding the expectations and requirements of the customer Determining how well your company and its major competitors are delivering these expectations and requirements

Seven Ps for Services Traditional marketing mix Expanded marketing mix 4 Ps – product, place, price and promotion Expanded marketing mix Building customer relationships through People Employees, customers, communicating culture and values, employee research Processes Facility design, equipment, signage, employee dress Physical Evidence Flow of activities, number of steps, level of customer involvement Source: http://www.slideshare.net/ch_paki/services-marketing

Seven Ps for Services Who is the customer? What is the service? Effectiveness of the services marketing mix to communicate benefits and quality What changes or improvements are needed? Source: http://www.slideshare.net/ch_paki/services-marketing

Service in the Travel Industry Airline industries have been the leaders in the use of technology Use of Internet sites Technology helps airlines to make strategic pricing decisions through the use of yield management Use of elaborate computer programs enable managers to determine customer segments