Marketing Of Services MBA-SEM-III TERM-01-2012

MODULE-01 Duration-3 Lectures. INTRODUCTION TO SERVICES MARKETING Definitions. Characteristics & classification of services Services economy Nature and scope of service market potential

g o o d s and s e r v i c e s Goods - things you can touch - “tangible” Services - things you can’t touch - but you can see their effect “intangible” “… services are not physical, they are intangible…”

Service A Service is a type of a product. “… a deed performed by one party for another…” Services have special characteristics that make them different than products.

Service Defination A product without physical characteristics; a bundle of performance and symbolic attributes designed to produce consumer want satisfaction.

Definition of Service-2 A service is an act for performance of an essentially intangible nature that does not result in the ownership of tangible product or commodity but serves to create value and benefits for customer.

“There are no such thing as service industries “There are no such thing as service industries.There are only industries whose service components are greater or less than those of other industries. Everybody is in service.” -Theodore Levitt-

Tangible / Intangible Attributes touch see taste smell Intangible can’t see can’t touch can’t smell can’t taste GOODS SERVICES Not in the text

What is a service Services are deeds, processes and performances. Service industries and companies – industries and companies typically classified within the service sector whose core product is a service. Services as products – a wide range of intangible product offerings that customers value and pay for in the marketplace. Customer service – the service provided in support of a company's core product. Derived service – the value derived from physical goods is really the service provided by the good, not the good itself.

Definitions James Schorr At Procter & Gamble: “ A product is something a consumer purchases and takes away with him or consumes or otherwise uses. If it is not physical, not something that they can take away or consume, then we call it a service” At Holiday Inns: “…people are buying a hotel experience. I’m selling the room, the way they treat you at the front desk, the way the bellman treats you, the way the waitress treats you – it’s all mixed together in a consumer’s mind when he makes a hotel decision”

Services (examples) Medical Centers Industrial Design Services Investment Banking Management Consulting Services Satellite Telecommunications Internet Search Engine provider Casino / Hotels Continuing Care Retirement Communities Diet and Weight Reducing Centers Environmental Consulting Golf Courses and Country Clubs Hazardous Waste Collection

Goods and Services: Scale of Elemental Dominance Not in the text

4 Characteristics of Services 1. Intangibility - “u can’t touch this” 2. Production (or performing the service) and Consumption (using the service) - happens at the same time 3. Heterogeneity - services are not always delivered the same way 4. Perishability - cannot be put in inventory or stored for later use ie. You can’t buy 2 haircuts

Characteristics of Services 1. Intangibility - “u can’t touch this” Services cannot be stored Services cannot be protected through patents - therefore a really great travel package and service can be copied a really great physical object can be patented, and NOT allowed to be copied

Characteristics of Services 1. Intangibility - “u can’t touch this” Hard to explain and display Services if you can’t see them Prices are difficult to set - depends on customers expectations Not in the text

Characteristics of Services 2. Inseparability of Production (or performing the service) and Consumption (using the service) - happens at the same time mass production of services is hard to do Not in the text

Characteristics of Services 2. Inseparability of Production (or performing the service) and Consumption (using the service) - happens at the same time Marketing Strategies Emphasize how much you train your people - so their ability to give you good service will be high Have many locations so customers can get to you ie. Insurance sales come to your home Not in the text

Characteristics of Services 3. Heterogeneity - services are not always delivered the same way It is very difficult to standardize services eg. A machine can make ice cream cones a standard size 100% of the time A person filling an ice cream cone with a scoop cannot do it the same amount each time, unless you use a machine to dispense the ice cream Not in the text

Characteristics of Services 3. Heterogeneity - services are not always delivered the same way It is very difficult to standardize services eg. A Taxi driver cannot drive you to the office in exactly the same time each day because the traffic patterns change eg. A travel agent can sell you a vacation package - but cannot guarantee you will like the trip exactly the same way another tourist did. Not in the text

Characteristics of Services 4. Perishability - cannot be put in inventory or stored for later use ie. You can’t buy 2 haircuts Demand fluctuates and changes, sometimes depending on the season, or weather eg. Taxi in the rain, vacation in summer Not in the text

Characteristics of services Intangible Variable Service Characteristics Inseparable Perishable Temporary ownership

So what’s it all about? No ownership Not inventoried Intangible dominated Customer involvement in production Other customers may form part of the product More variability than products More difficult to evaluate Time = important

Key factors behind the growth of services Consumer Business Demographics Social norms and working 2 income families Increase in quality of life Greater life complexity International travel and mobility Increasing aspirations Globalisation E- business IT linked to competitive advantage Globalisation Growth in government services Mergers and acquisitions Too expensive to retain service expertise Outsourcing of services

Results in… In the US 80% of employment and 77% of GDP is attributable to the service sector. In the UK 63% of employment and 76% of GDP is attributable to the service sector. Across Europe, services account for most growth in new jobs Business services are growing even where manufacturing is in decline Service sector accounts for >50% of GNP and employs >50% of work force in many Latin American countries Now growing rapidly in developing nations (World Bank)

Services dominate the Economy: GDP by Industry, 2001 Agriculture, Forestry, Mining, Construction 8% Finance, Insurance, Real Estate 20% Manufacturing 14% Government (mostly services) 13% Wholesale and Retail Trade 16% Other Services 11% Transport, Utilities, Communications 8% SERVICES Business Services 5% Health 6% Source: Bureau of Economic Analysis, November 2002

In China (2004) share of the economy Services sector contributed $265 billion of its economic growth service 46% Small factory 13% primary 41% industries

Assignment Prepare a PPT of. 5 organizations providing services in different categories . How these companies tangibalise their intangible services. TOTAL OF 8 SLIDES. Presentation Time- 5 minutes. Give one page write up on services industry relevance in today’s economy with facts and figures- Mention along the sources. Date of presentation-