Services Marketing is Marketing Based on Relationship and Value

8/8/2019 Services Marketing is Marketing Based on Relationship and Value

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SERVICE MARKETING

Services marketing is marketing based on relationship and value. It may be used to market aservice or aproduct.

Marketing a service-base business is different from marketing a goods-base business.

There are several major differences, including:

1. The buyer purchases are intangible2. The service may be based on the reputation of a single person3. It's more difficult to compare the quality of similar services4. The buyer cannot return the service

The major difference in the education of services marketing versus regular marketing is that

apart from the traditional "4 P's," Product, Price, Place, Promotion, there are three additional"P's" consisting of People, Physical evidence, and Process.[1]

Service marketing also includes the

servicewomen referring to but not limited to the aesthetic appearance of the business from theoutside, the inside, and the general appearance of the employees themselves. Service Marketing

has been relatively gaining ground in the overall spectrum of educational marketing as developedeconomies move farther away from industrial importance to service oriented economies. What is

marketing? Marketing is the flow of goods and services from the producer to consumer. It isbased on relationship and value. In common parlance it is the distribution and sale of goods and

services. Marketing can be differentiated as:

y Marketing of products

y

Marketing of services.

Marketing includes the services of all those indulged may it be then the wholesaler retailer,Warehouse keeper, transport etc. In this modern age of competition marketing of a product or

service plays a key role. It is estimated that almost 50% of the price paid for a commodity goesto the marketing of the product in US. Marketing is now said to be a term which has no particular

definition as the definitions change everyday.


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"Managing the evidence" refers to the act of informing customers that the service encounter hasbeen performed successfully. It is best done in subtle ways like providing examples or

descriptions of good and poor service that can be used as a basis of comparison. The underlyingrationale is that a customer might not appreciate the full worth of the service if they do not have

a good benchmark for comparisons.

However, it is worth remembering that many of the concepts, as well as many of the specifictechniques, will work equally well whether they are directed at products or services. In

particular, developing a marketing strategy is much the same for products and services, in that itinvolves selecting target markets and formulating a marketing mix. Thus, Theodore Levitt

suggested that "instead of talking of 'goods' and of 'services', it is better to talk of 'tangibles' and'intangibles'"

[2]. Levitt also went on to suggest that marketing a physical product is often more

concerned with intangible aspects (frequently the `product service' elements of the total package)than with its physical . sales after service is very imporatant in service sector. properties. Charles

Revson made a famous comment regarding the business of Revlon Inc.: `In the factory we makecosmetics. In the store we sell hope.' Arguably, service industry marketing merely approaches

the problems from the opposite end of the same spectrum

[3]

.

7 ps of service marketing

The service marketing mix comprises off the 7ps. These include: Product

Price

Place

Promotion

People

P

rocess Physical evidence.


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Product

To begin with, develop the habit of looking at your product as though you were an outside marketing

consultant brought in to help yourcompany decide whether or not it's in the right business at this time. Ask

critical questions such as, "Is your current product or service, or mix of products and services, appropriate andsuitable for the market and the customers of today?"

Whenever you're having difficulty selling as much of your products or services as you'd like, you need to

develop the habit of assessing your business honestly and asking, "Are these the right products or services for

our customers today?"

Is there any product or service you're offering today that, knowing what you now know, you would not bringout again today? Compared to your competitors, is your product or service superior in some significant way to

anything else available? If so, what is it? If not, could you develop an area of superiority? Should you be

offering this product or service at all in the current marketplace?

Price

The second P in the formula is price. Develop the habit of continually examining and reexamining the prices of

the products and services you sell to make sure they're still appropriate to the realities of the current market.

Sometimes you need to lower your prices. At other times, it may be appropriate to raise your prices. Many

companies have found that the profitability of certain products or services doesn't justify the amount of effort

and resources that go into producing them. By raising their prices, they may lose a percentage of their

customers, but the remaining percentage generates a profit on every sale. Could this be appropriate for you?

Sometimes you need to change your terms and conditions of sale. Sometimes, by spreading your price over a

series of months or years, you can sell far more than you are today, and the interest you can charge will more

than make up for the delay in cash receipts. Sometimes you can combine products and services together with

special offers and special promotions. Sometimes you can include free additional items that cost you very little

to produce but make your prices appear far more attractive to your customers.


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In business, as in nature, whenever you experience resistance or frustration in any part of your sales or

marketing activities, be open to revisiting that area. Be open to the possibility that your current pricing

structure is not ideal for the current market. Be open to the need to revise your prices, if necessary, to remain

competitive, to survive and thrive in a fast-changing marketplace.

Promotion

The third habit in marketing and sales is to think in terms of promotion all the time. Promotion includes all the

ways you tell your customers about your products or services and how you then market and sell to them.

Small changes in the way you promote and sell your products can lead to dramatic changes in your results.

Even small changes in your advertising can lead immediately to higher sales. Experienced copywriters canoften increase the response rate from advertising by 500 percent by simply changing the headline on an

advertisement.

Large and small companies in every industry continually experiment with different ways of advertising,

promoting, and selling their products and services. And here is the rule: Whatever method of marketing and

sales you're using today will, sooner or later, stop working. Sometimes it will stop working for reasons you

know, and sometimes it will be for reasons you don't know. In either case, your methods of marketing and

sales will eventually stop working, and you'll have to develop new sales, marketing and advertising

approaches, offerings, and strategies.

Place

The fourth P in the marketing mix is the place where your product or service is actually sold. Develop the habit

of reviewing and reflecting upon the exact location where the customer meets the salesperson. Sometimes a

change in place can lead to a rapid increase in sales.

You can sell your product in many different places. Some companies use direct selling, sending theirsalespeople out to personally meet and talk with the prospect. Some sell by telemarketing. Some sell through

catalogs or mail order. Some sell at trade shows or in retail establishments. Some sell in joint ventures with

other similar products or services. Some companies use manufacturers' representatives or distributors. Many

companies use a combination of one or more of these methods.


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In each case, the entrepreneur must make the right choice about the very best location or place for the customer

to receive essential buying information on the product or service needed to make a buying decision. What is

yours? In what way should you change it? Where else could you offer your products or services?


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People

An essential ingredient to any service provision is the use of appropriate staff and people.

Recruiting the right staff and training them appropriately in the delivery of their service is

essential if the organisation wants to obtain a form of competitive advantage. Consumers makejudgments and deliver perceptions of the service based on the employees they interact with. Staffshould have the appropriate interpersonal skills, aptititude, and service knowledge to provide the

service that consumers are paying for. Many British organisations aim to apply for the InvestorsIn People accreditation, which tells consumers that staff are taken care off by the company and

they are trained to certain standards.

Process

Refers to the systems used to assist the organisation in delivering the service. Imagine you walk

into Burger King and you order a Whopper Meal and you get it delivered within 2 minutes. Whatwas the process that allowed you to obtain an efficient service delivery? Banks that send outCredit Cards automatically when their customers old one has expired again require an efficient

process to identify expiry dates and renewal. An efficient service that replaces old credit cardswill foster consumer loyalty and confidence in the company.

Physical Evidence

Where is the service being delivered? Physical Evidence is the element of the service mix whichallows the consumer again to make judgments on the organisation. If you walk into a restaurant

your expectations are of a clean, friendly environment. On an aircraft if you travel first class youexpect enough room to be able to lay down!

Physical evidence is an essential ingredient of the service mix, consumers will make perceptionsbased on their sight of the service provision which will have an impact on the organisations

perceptual plan of the service.


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Types of service marketing :

Service marketing involves 3 types of marketing:

1. EXTERNAL MARKETING2. INTERNAL MARKETING

3. INTERACTIVE MARKETING

1. External Marketing : "Setting the Promise"

Marketing to END-USERS. Involves pricing strategy, promotional activities, and all communication withcustomers.

Performed to capture the attention of the market, and arouse interest in the service.

2. Internal Marketing : "Enabling the Promise"

Marketing to EMPLOYEES. Involves training, motivational, and teamwork programs, and all communication with

employees. Performed to enable employees to perform the service effectively, and keep up the

promise made to the customer.

3. Interactive Marketing : (Moment of Truth, Service Encounter) This refers to the decisive moment of interaction between the front-office employees

and customers, i.e. delivery of service. This step is of utmost importance, because if the employee falters at this level, all prior

efforts made towards establishing a relationship with the customer, would be wasted.


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Service marketing triangle


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5.


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The model is applied to the example of a typical university registry (London GuildhallUniversity) in tabular form on the next page.

The Model University/Registry

Company Management Directorate

Registry managers/management team

Employees All registry staff

Customers Students

University staff

External bodies

External Marketing

Setting the promise

the service product

Consultation with Customers to identify needs and obtain feedback on

performance:

y Course Organisers Forum

y Student Union Liaison meetings

y Student Services Committee

y Undergraduate Student Questionnaire

y Enrolment review

Service Statements/Plans:

y Service Provision Statement

y

Departmental Plan

Internal Marketing

Enabling the promise

the service

Culture & philosophy

Staff recruitment


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environment Staff development/training

Motivation and involvement in planning

Team meetings/briefings

Technical resources

Interactive Marketing

Delivering the

promise

service delivery

The serviscape and service encounter:

Delivery ofservice

Physical environment

Meetings

Telephone

Post

E-mail

To ensure quality management, the movement to provide services that conform to requirement,

with constant quality improvements, a balanced triangle must be achieved.

The Gaps Model

Devised by Berry, Zeithaml and Parasuraman, the model is premised upon disconfirmationtheory, the idea that consumers evaluate services by comparing their expectations of what willhappen during a service encounter with their perceptions of the actual service received. Where

service encounter experiences are better than expected there is positive disconfirmation andcustomers are satisfied but where the experience is worse than expected there is negative

disconfirmation and customers are dissatisfied. The difference between expected service andperceived actual service is conceptualised as a gap. To achieve customer satisfaction service

providers should aim to close this gap.

Zeithaml and Bitner have developed the model further.

In a broad sense, the process of closing the customer gap .. can be subdivided into fourcompany gaps within the organisation that inhibitservice quality (Zeithaml & Bitner 1996)


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The four provider gaps can be identified as follows:

y Not knowing what customers expect the gap between customer expectations of a service and

the company understanding of those expectations.

y Not selecting appropriate service designs/standards the gap between the companyunderstanding of customer expectations and development of customer focussed service

designs.

y Not delivering to service standards the gap between development of customer focussed

service designs and actual service delivery by service providers.

y Not matching performance to promises the gap between service delivery and external

communications to customers.

The four provider gaps are summed in gap five, that between customer expectations ofservice

and the perceived service actually delivered. Thus,

The key to closing the customer gap is to close gaps 1 through 4 and keep them closed. To theextent that one or more gaps 1 through 4 exist, customers perceive service quality shortfalls

(Zeithaml & Bitner 1996)

The Gaps model should prompt organisations seeking to improve the quality of theirservice

provision to ask some reflective questions.

Again, this model is applied to the example of a university registry (London Guildhall

University) in tabular form on the next page.


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The

Model

Question Prompts Registry

Gap 1 To what extent do we know what ourcustomers expect? To what extent do we

consult or survey and to what extent do

we assume or guess?

Some consultation through Student Union liaisonmeeting and Course Organisers forum.

Employment of students as temporary staff

provides some insight. Assumption and guesswork

occurs.

Gap 2 To what extent are our procedures

customer driven? To what extent are

procedures driven by financial

requirements and resource constraints?

To what extent do we have a philosophyand commitment to raise service

standards.

Some Tell-Tale signs exist that procedures are

company and resource driven:

y opening hours designed to meet

organisational needs rather thancustomer needs

y procedures designed to fit logistical

requirements rather than meet customer

needs

y staffing levels set on a basis of financial

constraint rather than service needs

Managers and staff committed to improving

service levels, evidenced in departmental plan.

Measurements ofservice provision made to assistassessment of performance against ServiceProvision Statement.

Gap 3To what extent do employees understand

their role/perform services well and to

standard? To what extent is performance

measured? To what extent are declared

standards backed by appropriate human

and technical resources? To what extent

are customers made aware of the role they

are required to play in meetingservice

standards?

Recruitment activities emphasise need for staff to

demonstrate good interpersonal skills.

Commitment to staff development and training.

Overall competence of staff measured through

Undergraduate questionnaire but no individual

appraisals. Human resources and technical

resources subject to financial constraint.

Service provision statement identifies requirements

from customers to allow service standards to be

met, but not fully understood.

Gap 4 To what extent does the service delivered

match the promised service both

explicit and implicit? To what extent are

Service provision measured but nor yet tested

against Service Provision Statement.


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customers made aware of the invisible

organisation and systems that underpin

service provision?

Customers made aware of invisible organisationand system orbackstage service environment

only as a means to explain events more fully in the

context of complaint (See Service Encounter

Journals 1 and 4)

A preliminary application of the Services MarketingTriangle and the Gaps models for

managing service quality to the current position of a registry suggests certain actions whichcould be undertaken to either achieve a more balanced triangle or close gaps and, consequently,

improve overall service quality. An action plan is given later.

Customer Expectations and Satisfaction

Customer expectations play a central role in understanding evaluations ofservice quality. Theexpectancy construct is a key aspect of the Services MarketingTriangle and underpins the

Gaps model, as shown earlier. It is instructive to explore the expectancy construct further.

The Expectancy Construct

Levels of expectancy and satisfaction can be identified.

Service

Encounter

Satisfaction

The customers satisfaction or

dissatisfaction with a discrete

service encounter.

Expectations are based on beliefs of what is likely to

be, using past experiences as a frame of reference. In

discussion the customer focuses on events and

employee behaviour during a specific transaction.

Perceptions of

Overall ServiceSatisfaction

The customers overall

satisfaction or dissatisfactionwith an organisation, based

on all encounters and

experiences

In discussion the customer focuses on aggregate past

personal experiences

Perceptions of The customers overall Expectations are based on beliefs of what ought to


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Service Quality impression of the relative

inferiority or superiority of an

organisation and its services

be, either because it was explicitly promised or can

be assumed as implicit through comparison

elsewhere. In discussion, customers focus on

perceptions and broader topics, including

experiences of others, elsewhere.

Individual service encounters comprise moments of truth for customers that can be aggregated

over time, allowing them to develop an overall picture (Bitner & Hubbert 1994). Over time,multiple positive or negative encounters will lead to overall high or low levels of satisfaction.

Each service encounter therefore provides opportunities for service providers to reinforcepositive perceptions and gives customers opportunity for re-evaluation.

It is important to recognise that service satisfaction occurs at multiple levels. A customer may bedissatisfied with a discrete encounter but perceive overall satisfaction, due to other experiences.

For these reasons, overall feelings, obtained for example from annual questionnaires, do notprovide full measure of satisfaction.

It should be noted that customers do not all have the same expectations. Each customerapproaches each service encounter with expectations based on their own understandings of past

experiences and beliefs of what is likely to be and what ought to be. This is a facet of theheterogeneity of services.

In the example of a university registry, as given earlier, all three main customer groupings have

expectations based on beliefs of what is likely to be, linked largely to their past experience of theservice, and also expectations of what ought to be, based largely on perceptions of the ideal.

Customers internal to the university, in particular those who do not have experience of similarregistry service functions elsewhere, such as new students, may arrive at their understandings of

service encounters largely from the perspective of subjective experience. Customers external tothe university, such as staff in LEAs who deal constantly with comparitor institutions, may have

a greater disposition to arrive at their understandings of service encounter from the perspective ofobjective expectation.


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Satisfiers and Dissatisfiers in Services

Service encounters suggest that there are a number of generic satisfiers and dissatisfiers in thecontext of service provision. The dimensions presented below are derived from the aggregated

service encounter journals of the presenters and are not exhaustive.

Satisfiers Dissatisfiers

Prompt service

Delivery to expectation

Equity/constancy

Good personnel encounters

Immediate complaint/recoverysystems

Perceived good quality

Queues/Waiting

Failure to deliver to expectation

Inequity/lack of constancy

Poor personnel encounters

Poor on non-existent complaint/recoverysystems

Perceived poor quality

The length of waiting time is a feature of almost all service encounters. In the case of oneencounter the length of time a student waited for a service to be completed led to complaint andin another was a contributory factor leading to an incidence of student aggression. In other

encounters prompt service was noted and appreciated by the customers. Prompt service in oneexample involved compromise on quality in order to meet deadlines but was considered adequate

and satisfactory by the customer.


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Marketing challenges in service marketing?

Managing, growing, and profiting with both product and service businesses are challenging tasks. But

the challenges are different from one to the other. Listed below are some of the most common and

difficult challenges of growing and managing consulting, professional, or technology service businesses

that don't necessary apply to product businesses.

1. Clients can't see or touch services before they purchase them. This makes services difficult

to conceptualize and evaluate from the client perspective, creating increased uncertainty and

perception of risk. From the firm's perspective, service intangibility can make services difficult

to promote, control quality, and set price.

2. Services are often produced and consumed simultaneously. This creates special challenges

in service quality management that product companies do not even consider. Products are

tested before they go out the door. If a product has quality problems while in production, the

company can fix them and customers are none the wiser. Service production happens with

the customer present, creating a very different and challenging dynamic.

3. Trust is necessary. Some level of trust in the service organization and its people must be

established before clients will engage services. This is as important, sometimes more

important, than the service offerings and their value proposition.

4. Competition is often not who you think. Competition for product companies are other

product companies. Competition for service companies are often the clients themselves.

Sure, sometimes you find yourself in a competitive shootout (some firms more than others),

but often the client is asking 'should we engage this service at all' and 'if so, should we just do

it in-house'.

5. Brand extends beyond marketing. Brand in service businesses is about who you are as much

as what you say about yourself. And internal brand management and communications can be

equally as vital to marketing success as are external communications.


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6. Proactive lead generation is difficult. Many service companies have tried, and failed, at using

lead generation tactics that work wonders for product companies. Implemented correctly,

traditional product techniques, such as direct marketing and selling, can work for services,

but the special dynamics of how clients buy services must be carefully woven into your

strategy.

7. Service deliverers often do the selling. Many product companies have dedicated sales

forces. For services, the selling is often split between sales, marketing, professional, and

management staff.

8. Marketing and sales lose momentum. Most product companies have dedicated marketers

and sellers. They market and sell continuously, regardless of the revenue levels they

generate. In many services companies the marketers and sellers also must manage and

deliver. This can often lead to the Services Revenue Rollercoaster-wide swings between

revenue and work overflow, and revenue and work drought.

9. Passion is necessary, yet elusive. The more passion, spirit, hustle, and desire your staff brings

to the organization every day, the more revenue and success you will have. The correlation

between staff passion and financial success is direct and measurable (as is the correlation

between lack-of-passion and organizational failure). Yet institutionalizing passion, while

necessary, is agonizingly elusive.


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Significance of service marketing :

1. Least dependence on technology :- Our dependence on sophisticated technolgy has

increased. Developed countries are technologically advanced whereas developing

countries are technologically backwards. If they import technology, the pressure on

foreign exchange reserves increases. The best solution is to raise our dependence on

service sector so that the demand for advanced technolgies is minimised.

2. Raises the standard of living : Their should be an increase in the rate of capital

formation, national income to raise the standard of living. It is also important to note

that the masses are aware of the living style and behaviour.

How is it earned is not only important for raising the standard of living ? when to spend

? How much to spend ? How to develop our personality ? How to arrange priorities ?

plays a crucial role.

Service marketing concentrates its attention to all these components and helps humanresources to transform their internal and external values.

3. Optimum utilsation of untapped resources : Service marketing provides opportunity for

optimum utilisation of untapped respurces. By marketing services, resources have to be

properly utilised.

It is more rational if we shift our priority in the best interest of national resources.

4. Provides avenues for capital formation : The contribution of capital formation to the

process of socio- economic transformation is appreciable for transforming nationaleconomy. It is essential that we activate our efforts for capital formation. It means our

investments are productive.

For accelerating the rate of capital formation, it is essential; for us to explore

opportunities and identify important services in the background of national socio-

economic condition.

In us economy spends 47 % of dollar for service marketing. But it is unfortunate that the

same trend is not followed in developing countries.


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Services Marketing is Marketing Based on Relationship and Value

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