SERVICES MARKETING: INTEGRATING PEOPLE,

TECHNOLOGY, STRATEGY
MODULE - 3

DR. ZILLUR RAHMAN

PROFESSOR
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

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 Understanding Service Products, Consumers, and Markets
Module 1, 2, & 3: New Perspectives on Marketing in the Service Economy
Module 4, 5, & 6: Consumer Behavior in the Service Context
Module 7 & 8: Positioning Services in Competitive Markets

Applying the 4 Ps of Marketing

to Services Managing the Customer
Module 9, 10, & 11: Developing Interface
Service Products Module 20 & 21: Designing and Developing Customer
Module 12 & 13: Distributing Managing Service Processes Relationships
Services through Physical and Module 22, 23, & 24: Balancing Module 30, 31, & 32: Managing
Electronic Channels Demand and Productive Capacity Relationships and Building Loyalty
Module 14, 15, & 16: Setting Module 25 & 26: Crafting Service Module 33, 34, & 35: Complaint
Prices and Implementing Revenue Environment Handling and Service Recovery
Management Module 27, 28, & 29: Managing
Module 17, 18, & 19: Promoting People for Service Advantage
Services and Educating Customers

Striving for Service Excellence

Module 36, 37, & 38: Improving Service Quality and Productivity
Module 39 & 40: Striving for Service Leadership & Creating the Seamless
Service Firms
NEW PERSPECTIVES ON MARKETING IN THE SERVICE
ECONOMY
MODULE - 3

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 MODULE OVERVIEW
1. Understand the components of the traditional marketing mix
applied to services.
2. Describe the components of the extended marketing mix for
managing the customer interface.
3. Appreciate that the marketing, operations, and human
resource management functions need to be closely integrated
in service businesses.

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 MODULE OVERVIEW
4. Understand the implications of the Service-Profit Chain for
service management.
5. Know the framework for developing effective service
marketing strategies.

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 THE 7 ‘P’S OF SERVICES MARKETING
The 4 ‘P’s
• product,
• price,
• place (or distribution), and
• promotion (or communication)
Extended Marketing Mix for Services – The 3 ‘P’s
• process,
• physical environment, and
• people
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 THE TRADITIONAL MARKETING MIX APPLIED TO
SERVICES
• Place and Time
– Service distribution may take place through physical or electronic
channels (or both), depending on the nature of the service.
– Banks offer a wide range of distribution channels, including visiting
a bank branch, using a network of ATMs, online banking on a
desktop, and using apps on a smartphone etc.
– In particular, many information-based services
can be delivered almost instantaneously to any
location in the world that has internet access.

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 THE TRADITIONAL MARKETING MIX APPLIED TO
SERVICES
• Distribution of core versus supplementary services
– Internet is reshaping distribution strategy for numerous industries.
– But, we need to distinguish between its potential for delivering
information-based core products (those that respond to customers’
primary requirements) and simply providing supplementary services
that facilitate purchase and use of physical goods.
– Example of information-based core products
include online educational programs offered by
NPTEL.

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 THE TRADITIONAL MARKETING MIX APPLIED TO
SERVICES
– In contrast, if you book a flight online, the delivery of the core
product itself must still take place through physical channels and
you’ll have to go to the airport in person to board your flight.

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 THE TRADITIONAL MARKETING MIX APPLIED TO
SERVICES
• Importance of the time factor
– Speed and convenience of place and time have become important
determinants of effective distribution and delivery of services.
– Many services are delivered in real time while customers arephysically
present.
– Today’s customers are highly time-sensitive, mostly in
a hurry, and see wasted time as a cost to avoid.

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 THE TRADITIONAL MARKETING MIX APPLIED TO
SERVICES
– Increasingly, busy customers expect service to be available when it
suits them, rather than when it suits the supplier.
– If one firm responds by offering extended hours, its competitors
often feel obliged to follow suit.
– Nowadays, a growing number of services are available 24/7, and via
more delivery channels.

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 THE TRADITIONAL MARKETING MIX APPLIED TO
SERVICES
• Promotion and Education
– Few marketing programs can succeed without effective
communications. This component plays three vital roles.

– Providing needed information and advice,

– Persuading target customers to buy the service product, and
– Encouraging them to take action at specific times

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 THE TRADITIONAL MARKETING MIX APPLIED TO
SERVICES
– In services marketing, much communication is educational in
nature, especially for new customers.
– Suppliers need to teach their customers about the benefits of the
service, where and when to obtain it, and how to participate in
service processes to get the best results.

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 THE TRADITIONAL MARKETING MIX APPLIED TO
SERVICES
• Services are Often Difficult to Visualize and Understand as
Intangible Elements Tend to Dominate Value Creation.

– Intangibility can consist of both mental and physical dimensions.

– Mental intangibility means that it is difficult for customers to
visualize the experience in advance of purchase and to understand
the value and benefits they will be getting, while
– Physical intangibility is that which cannot be
touched or experienced by the other senses.

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 THE TRADITIONAL MARKETING MIX APPLIED TO
SERVICES
– Intangible elements, such as processes, Internet-based transactions,
and the expertise and attitudes of service personnel — often create
the most value in service performances.
– Therefore, an important role of a service firm’s communications is to
create confidence in the firm’s experience, credentials, and expertise
of its employees.
– For example, firms can use physical images and metaphors to promote
service benefits and demonstrate the firm’s
competencies.

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 THE TRADITIONAL MARKETING MIX APPLIED TO
SERVICES
• Customer–Customer Interactions Affect the Service
Experience.
– Other customers at a service facility, too can affect your satisfaction.
• how they’re dressed,
• who they are, and
• how they behave
– Can reinforce or negate the image a firm is trying
to project and the experience it is trying to create.
– Marketing communications needs to be careful to
attract the right segment to the service facility, and
once there, it needs to educate them on the proper
behavior.

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 EXTENDED MARKETING MIX REQUIRED FOR SERVICES
• Process
• Creating and delivering product elements requires design and
implementation of effective processes.
• Badly designed service processes leads to
– slow, bureaucratic, and ineffective service delivery
– wasted time
– a disappointing experience
– low productivity and
– increased likelihood of service failure

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 EXTENDED MARKETING MIX REQUIRED FOR SERVICES
• Operational Inputs and Outputs Can Vary Widely
– Vary more widely for services, and can make customer service
process management a challenge.
– Best service firms reduce variability by
• Carefully designing customer service processes,
• Adopting standardized procedures and equipment,
• Training employees more carefully and
• Automating tasks previously performed by humans.

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 EXTENDED MARKETING MIX REQUIRED FOR SERVICES
• Customers Are Often Involved in Co-production
– Some services require customers to participate actively in co-
producing the service product.
– For example, you’re expected to help the investment banker
understand what your needs are, how much you want to invest
financially, the kind of risks you are willing to take, etc.
– This will enable the banker to advise you on what
to invest in.
In fact, service scholars argue that customers often
function as partial employees.

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 EXTENDED MARKETING MIX REQUIRED FOR SERVICES
• Demand and Capacity Need to be Balanced
– Manufacturing can ensure a smooth process flowby having an
inventory of materials and parts ready for use.
– For services, suchbuffering means having customers wait in the
service process. This requires:
– Balancing of demand and capacity,
– Design of waiting and queuing systems, and
– Management of the impact of waiting on the
customer’s psychology.

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 EXTENDED MARKETING MIX REQUIRED FOR SERVICES
• Physical Environment
– Physical environment or servicescape play an important role where
customers are required to enter the service factory.
– Appearance of buildings, landscaping, interior furnishings, equipment,
staff members’ uniforms, signs, printed materials, and other visible
cues provide tangible evidence of a firm’s service quality.
– The servicescape also facilitates service delivery, and guides customers
through the service process.
– Have profound impact on customer satisfaction
and service productivity.

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 EXTENDED MARKETING MIX REQUIRED FOR SERVICES
• People
– Service firms need to devote special care in selecting, training, and
motivating their service employees.
– The difference between one service supplier and another often lies
in the attitude and skills of their employees.
– In addition to possessing the technical skills, individuals also need
good interpersonal skills and a positive attitude.
– Loyal, skilled and motivated employees represent
a key competitive advantage.

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 EXTENDED MARKETING MIX REQUIRED FOR SERVICES

Hospitality is shown throughemployees wearing a ready smile and being ready to serve
customers

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INTEGRATION OF MARKETING WITH OTHER
MANAGEMENT FUNCTIONS

These functions must

collaborate to serve the
customer.

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 INTEGRATION OF MARKETING WITH OTHER
MANAGEMENT FUNCTIONS
• Marketers working in a service business cannot expect to operate
successfully in isolation from managers in other functions.
• In fact, four management functions play central and interrelated roles
in meeting the needs of service customers: marketing, operations,
HR, and IT.
• Top management should ensure that each of these functions don’t
operate in departmental silos.

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 INTEGRATION OF MARKETING WITH OTHER
MANAGEMENT FUNCTIONS
• Operations is the primary line function in a service business,
responsible for managing service delivery through equipment,
facilities, systems, and many tasks performed by customer-contact
employees.
• Operations managers are actively involved in product and process
design, many aspects of the physical environment, and
implementation of productivity and quality
improvement programs.

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 INTEGRATION OF MARKETING WITH OTHER
MANAGEMENT FUNCTIONS
• HR is responsible for job definition, recruitment, training, reward
systems, andquality of work life — all of which are, central to the
people element.
• Service organizations cannotafford to have HR specialists who do not
understand customers.
• Marketing and operations activities are easier to manage and are
more likely to be successful, when employees
have the skills and training needed to succeed
in their jobs, and recognize the importance of
creating and maintaining customer satisfaction.
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 INTEGRATION OF MARKETING WITH OTHER
MANAGEMENT FUNCTIONS
• IT is a key function as service processes are information-heavy — at
almost every customer touchpoint, real-time information is needed.
• Operations, HR, andmarketing are critically dependent on IT to
manage their functions and create value for the organization’s
customers.

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 INTEGRATION OF MARKETING WITH OTHER
MANAGEMENT FUNCTIONS
• As a service manager you need to be concerned about:
– Satisfying your customers on a daily basis,
– Operational systems running smoothly and efficiently,
– Employees are not only working productively, but are also delivering good
service.
– Problems in any one of these areas can negatively affect the execution of
tasks in other functions and might result in
dissatisfied customers.
– In short, integration of activities between these
functions is the name of the game in services.

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THE SERVICE-PROFIT CHAIN

Heskett, JL., Jones, T.O.,

Loveman, G.W., Sasser
Jr., W.E., and Schlesinger,
L.A. (March–April 1994),
“Putting the Service–Profit
Chain to Work,” Harvard
Business Review, p.166

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THE SERVICE-PROFIT CHAIN

Links in the Service-Profit Chain

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A FRAMEWORK FOR DEVELOPING EFFECTIVE SERVICE
MARKETING STRATEGIES
(1) Understanding service products, consumers, and markets;
(2) Applying the 4 Ps of marketing to services;
(3 Designing and managing the customer interface (i.e., the additional
3 Ps of services marketing);
(4) Developing customer relationships; and
(5) Striving for service excellence.

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 CONCLUSION
In this module we started with the components of traditional (Place and
Promotion)and extended marketing mix as applied to services.
Next we emphasized on how integrating various functional areas can help
in catering to the needs of service customers in a better way.
We also learnt about the concept of service-profit chain.
Finally we touched upon on how to develop effective service marketing
strategies.

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 REFERENCES

• Wirtz, J., Lovelock, C., & Chatterjee, J. (2017) Services Marketing:

People Technology Strategy, Pearson Education, Eighth Edition.
• Zeithaml, V. A., Bitner, M. J., Gremler, D. D., and Pandit, A. (2009)
Services Marketing: Integrating customer focus across the firm, Tata
McGraw-Hill Education Pvt. Ltd., Fourth Edition.
• Hoffman, K. D., & Bateson, J. E. G. (2007) Services
Marketing : Concepts, strategies, & cases, Thomson
Publication, Third Edition.

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Thank You

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