Thursday, 21 June 2012

MBA Notes - Service Marketing and Service Marketing

Mix

Question - What do you mean by Service Marketing? Discuss Nature of

Services, and Service Marketing Mix

Answer
Service Marketing
What is Service Marketing?
A Service is an economic activity, that is intangible or not be touched, not be stored, and not be owned.
Postal service Delivering mail is a Service, and the use of expertise like person visiting a doctor is also a
service. A service is consumed at the point of sale and does not result ownership.

A product is material or tangible in nature, can be touched, can be stored, and a product can also be
owned, but it is not so in case of a service.

Nature of Service
1. Lack of ownership
One cannot own or store a service as it can be done in case of a product. Service is consumed at the
point of sale and does not result ownership. Services are used or hired for a period of time. For example
buying a movie ticket the service lasts for two or three hours, but customer want and expect complete
entertainment and excellent service for that time period.

2. Intangible
Services are intangible in nature, you cannot touch it, cannot see it, cannot taste it. You cannot touch or
hold a service as you can do with a product. For example one cannot touch or hold the services provided
by his financial adviser. This makes it difficult to evaluate the quality of service prior to consuming it since
there are fewer attributes of quality in comparison to a product.

3. Inseparable
Service is inseparable in nature means to say that it cannot be separated from the service provider. A
product when produced can be taken away from its producer whereas a service is produced at or near
the point of purchase. For example visiting a restaurant, you order your meal, wait for the meal, meal
delivered to you and services provided by waiter/waitress are all part of service production process and is
inseparable.

4. Perishable
Service last for specific time period, it cannot be stored as like a product for future use. Service production
and utilisation goes simultaneously. For example watching a movie in cinema hall, service will only last
the duration of the show. Again because of this time constraint consumers demand more.

5. Heterogeneous
It is very difficult to make each service experience identical, for example you travelling by plane the
service quality may differ from the first time you travelled by that airline to the second, because the air
hostess is less or more experienced. Systems and procedures are followed in service production process
to minimise this heterogeneity and to provide consistent services all the time.

Service Firms
Customer Service in a service firm is highly interactive in nature. Customer interacts with the
firm physical facilities, personnel, tangible elements like the price of the service. The success of any
service firm depends on how its performance is judged and perceived by the customer. Today, Service
Firms are becoming highly competitive, so, it is essential for service firms to provide high quality services
for their survival.

Marketing Mix for a Service Firm

An expanded marketing mix for services was proposed by Booms and Bitner (1981), consisting of the 4
traditional elementsproduct, price, place, and promotion and three additional elementsphysical
evidence, participants, and process. These additional variables beyond the traditional 4 Ps
distinguish customer service for service firms from that of manufacturing firms.

Physical Evidence
Physical Evidence such as infrastructure, interior, decor, environmental design, business card, etc that
establishes firm's image and influences customer's expectations. Tangible clues help customer judging
the quality of service before service usage or purchase. Before service usage the service is known by the
tangible elements that surrounds it. In product marketing quality of product is judged by the product itself.

Participants
Participants in service environment also provides clues about what the customer should expect. There is
more variability among service outcomes in labour-intensive services than in machine-dominated service
delivery; bank customers who use human tellers will experience far more service variability than those
using automatic teller machines. Training the personnel adequately is a major factor influencing the
provision of quality service. Hence, providing customer service in a service industry depends not only on
recognising customer desires and establishing appropriate standards, but also on maintaining a workforce
of people both willing and able to perform at specified levels.

Process
The how of service delivery is called the process or the functional quality. The attitudes and behaviour of
service personnel influence perceived service performance. These behaviours are usually associated with
what is called the process. For example, when things go wrong in a service encounter, employees
frequently attempt to sooth disgruntled customers by apologising, offering to compensate, and explaining
why the service delivery failure occurred. Any of these behaviours may influence customer attributions
about the firms responsibility for the failure and the likelihood of it occurring again

7 Ps of the Service Marketing Mix

The customer service for a service firm cannot be explicitly divided into pre-transaction and post-
transaction elements, because production and consumption of a service occurs at the same time. The
service provided can prove effective in terms of satisfying the customer, only if the gap between expected
service and perceived service is bridged. The wider this gapthe more the number of disappointed
customers; and disappointed customers may cause the image of the firm to deteriorate.

1. Product/Service
Most services are intangible because they are performances rather than objects, precise manufacturing
specifications concerning uniform quality can rarely be set. Because of this intangibility, the firm may find
it difficult to understand how consumers perceive their services. For developing a good customer service,
the service marketer should stress on tangible cues and also create a strong organisational image. This
can be done by communicating clearly to the customers the features of the service being provided.

2. Price
Because of the intangible nature of the serviceprice becomes a pivotal quality indicator in situations
where other information is not available. It is essential, therefore that the service firm engage in
competitive pricing. Being an important tangible cue, price of the service is an area in which the service
marketer can concentrate to get a competitive edge. In the case of pure services, as in the
present context, like medical services or legal services price is an important factor because it is a basis
for the customer to make a final choice among several competing service organisations.

3. Place
Because services are performances that cannot be stored, service businesses frequently find it difficult to
synchronise supply and demand. Also, services cannot be inventoried for the same reason. Consequently
the service firms must make simultaneous adjustments in demand and capacity to achieve a closer match
between the two. Also, the firm could use multisite locations to make the service more accessible to the
users. If the service is located in a remote area, regardless of the other advantages of the service,
customers would not be motivated to use the service.

4. Promotion
The service marketer should constantly simulate word-of-mouth communications apart from using regular
advertising. If customers in an existing market, for some reason or another have an image of the firm
which does not correspond with reality, traditional marketing activities can be expected to be an effective
way of communicating the real image to the market. Communication includes informing the customers in
a language they can understand. Specially in services post-purchase communication is very important,
because retaining existing customers is as important, or even more important than attracting potential
customers.

5. Physical Evidence
Physical evidence, as already discussed under the services marketing mix, like the environmental decor
and design significantly influence the customers expectations of the service. Since services cannot
be readily displayed, firms should create a conducive environment that help the customers to develop a
positive perception of the service. For example, people would not like to wait for a medical service or a
legal service, if the atmosphere of the place they are made to wait is unpleasant. Customers can be put
off by a mere change in the layout of the service facility or even the absence of clear signboards.

6. Participants
Most services are highly labour intensive; the behaviour of the personnel providing the service and the
customers involved in production (due to the inseparable nature of services), have an effect on providing
efficient customer service. To achieve customer-oriented personnel, the organisation needs to recruit and
select the right people, and offer an appropriate package of employment, in order to enhance their skills
and encourage them. Because of the constant interaction between the employees involved in the service,
and the customersthere is a mutual dependence between the two. If the customers are dissatisfied,
employees experience discomfort working with unhappy customers, and customers are unhappy because
the employees were not trained in customer satisfaction. The extent of this mutual dependence
influences the customers perception of the service.

7. Process
In the how of the service delivery is extremely important because the service and the seller are
inseparable. The functional quality, or the how of service delivery is especially important to service
industries, as it is difficult to differentiate the technical quality, or the what of service delivery. Previous
experience with a service also influences the expectations of the customer. If the customer has had a bad
experience with the
service on any previous occasion, it will influence his or her future perceptions of the service. It is
essential to train the front line employees, whose actions and behaviour influence the customers opinions
of the organisation and the actual service provided.

Conclusion
What the customer actually gets out of the service, and how he or she perceives the service may not
always match. So the customers judgement or evaluation of the service is the crucial factor in the
delivery of a service. But service marketers can influence these perceptions to a large extent by
controlling favourably the service marketing mix variables. It is all the more difficult because a service
cannot be broken down into logical steps or sequences.

If service organisations pay more attention to their employees as well as their customers, it would
increase both employee motivation as well as customer satisfaction