Global Services-2 Prof. Tarun Das

8/9/2019 Global Services-2 Prof. Tarun Das

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8/27/2010 Tarun Das- Services 1

Global Marketing of Services-Lecture-2Course Introduction

Prof. Tarun Das, IILMFormerly, Economic Adviser, Ministry of

Finance


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Contents

1. What is a service?

2. Differences between goods and services

3. 7-Ps Marketing Strategy for Services4. What did we learn?

5. Review Questions


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1.1 What is a Service?

Traditional definition: services are non-storable, non-tradable, invisible & intangible With growing globalisation and advances in

information and communications technology,many services today are portable, tradable,

visible and tangible. Broadly speaking, services are economic

activities that add value to other goods andservices, and provide benefits to consumersat specific times and places.

Services are embodied in the transactions ofgoods, capital, persons, knowledge andinformation and relate to production,distribution and consumption.


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1.2 Why should we study services marketingseparately when we have already studied

general marketing? How is service different from goods? Can

marketing techniques for goods be equallyapplied for marketing services?

The answer is no because services differsignificantly from goods.

In the case of goods, benefits come fromownership of physical objects and devices,whereas in services, benefits come fromactions and performances.

Goods are tangible and visible, whereasservices are mostly intangible in nature.

Goods can be stocked, while services needcontinuous flow.


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2.1 Difference between goods and services

(1) Services are not waned for their own sake butfor production of other goods and services.Examples: Telecom, Travel, education.

(2) Customers of services donot obtain ownershipof any tangible elements: Example: to rent

cars and hotels, to hire labor, to subscribe toa network, study for management degree.

(3) A service is a deed or performance, and so itis ephemeral- transitory and perishable- andcannot be stored as inventory. Examples:travel, telecom, education, health. If there isno demand during slack seasons, capacitiesare wasted; whereas in busy seasons, theremay be excess demand.


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(4) Intangible elements dominate value creationfor services- Examples: airline flight, healthclub, seeing a film in a multi-complex, a mealin a five-star hotel, plumbing, repair works.

(5) Many services require customers to participate

in the production process- Examples: self-service in a laundry, using ATMs.(6) Other people are often part of the product-

Example: watching a sporting event, lodgingin a hostel, traveling by a train or bus.

(7) There is greater variability in operationalinputs and outputs. Example:Mobile phone,education, health care.


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(8) Many services are difficult for customers toevaluate in terms of search, experience andcredence properties- Examples: medicalservices, legal and accounting services.

(9) Time factors assume great significance-customers like services to be delivered on realtime basis, and are willing to pay more forfaster services.

(10) Distribution channels for services takedifferent forms- Advancement ofIT, e-commerce, e-banking,Internet, e-mail.


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3.1 Services Marketing Mix- 7Ps

(1) Product elements- Marketing manager mustknow what the customers desire to have forthe core product (goods or services) and thesupplementary benefits.

(2) Place and time- Place and time of delivery andthe associated delivery channels are thecrucial factors influencing customers demandfor services.

(3) Promotion and education- No marketingprogram can succeed without effectivepromotional activities through the media andadvertisement (TV, radio, newspapers,magazines, posters, brochures, web sites).


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3.2 Services Marketing Mix- 7Ps

(4) Price and other user outlays-Besides price,other factors such as travel cost and time for

service stations, unwanted mental andphysical efforts are very important.

(5) Physical environment- Customers are

attracted by physical appearance of buildings,landscape, interior furnishing, staff attitudes.(6) Process- Badly designed processes may lead

to poor quality, slow and ineffective servicedelivery and customer dissatisfaction.

(7) People- Many services require direct inter-actions with service personnel. Successfulservice firms focus on training and motivationof employees.


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4. What did we learn in this session?

Whystudyservices?Because, servicesare the most dynamic and fastest growingsectors in both developing and developedcountries and have predominant shares in

their GDP, investment, employment, trade.Services differ from goods in many ways,

particularly, unlike goods, services are mostlyintangible and cannot be stocked.

Array of strategic tools for services marketingis broader than 4Ps for goods marketing(product, pricing, place and promotion) andincludes additional 3Ps (physical environment,process, people)


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5. Review Questions

1. What are basic differences between goodsand services? What is so distinctive aboutservices trade?

2. To what extent is the traditional 4-Ps

marketing strategy (viz. product, price, placeand promotion), which has been applied togoods, appropriate for the services sector?

3. Choose any service sector and show howeach element of the 7-Ps (viz. product, price,place, promotion, physical environment,process and people) is relevant for itsproduction and trade.


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6. Suggested Reading

Chapter-1: Introduction to servicesMarketing: pp.1-27.

Philip Kotler and Gary Armstrong-

Principles of Marketing, Prentice Hall ofIndia Private Limited, New Delhi.


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Thankyou

Havea Good Day

Global Services-2 Prof. Tarun Das

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