SERVICE MARKETING

Nature, Importance and

characteristics
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…”
Tangible / Intangible Attributes
 Tangible  Intangible
• touch • can’t see
• see • can’t touch
• taste • can’t smell
• smell • can’t taste

Not in the text

 Service
A Service is a type of a product.

“… a deed performed by one party for

another…”
Discussions about the marketing of goods
apply to services as well.
Services have special characteristics that
make them different than products.
 Service

A product without physical characteristics;

a bundle of performance and symbolic
attributes designed to produce consumer
want satisfaction.
 What is Service Marketing?
 Examples: Defense, Postal, Education,
health, Religious Services, Hospitals,
Airlines, Hotels, Law Firms, Entertainment,
etc
 Definition: Activity or benefit that one
party can offer to another that is
essentially intangible and does not result
in the ownership of anything. Its
production may or may not be tied to a
physical product
 Service
For Marketing purpose it is categorized in
to two types:
• Services that are main purpose or
object of transaction
• Service that support or facilitate the
sale of good or any other service
 Nature and Importance of Service
Marketing
 Services are the major source of
employment (80% of labor force)
 The services account for over one
half of consumer expenditures
 Managers have found that calling on
specialized service providers is
effective and efficient (Outsourcing)
 Scope of Service Marketing (Profit
organization)
 Housing & other  Private Education
structures  Professional
 Household business services
operation  Financial services
 Recreation &
Entertainment
 Personal care
 Medical & Health
care
Scope of Service Marketing (Not for
profit organization)
 Educational
 Healthcare
 Professional & Trade
 Social concerns
 Characteristics of Services

1. Intangibility
2. Perishability
3. Inseparability
4. Variability
 Services
Unique characteristic - 1

INTANGIBILITY
Customer is unable to
experience the‘product’ prior
to ‘purchase’
 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
 Characteristics of Services

Intangibility

Visualization Association Physical Representation Documentation

Past performance

Future capability
 Services
Unique characteristic - 2

PERISHABILITY
Can’t be stored
 Characteristics of Services

2. Perishability - cannot be put in

inventory or stored for later use
i.e.. You can’t buy 2 haircuts

Demand fluctuates and changes, sometimes

depending on the season, or weather
e.g.. Taxi in the rain, vacation in summer
 Services
Unique characteristic - 3

INSEPERABILITY
Production & consumption
happen at the same place and
cannot be separated
 Characteristics of Services

3. Inseparability of Production (or

performing the service) and Consumption
(using the service) - happens at the same
time
• Many people involved in delivering a service
• mass production of services is hard to do
 Characteristics of Services

3. 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
Not in the text
• ie. Insurance sales come to your home
 Services
Unique characteristic - 4

VARIABILITY
 Difficulty in establishing
consistency in quality
• across Providers or within providers
• across Time
• across Delivery Centers
 Characteristics of Services

4. Heterogeneity - services are not always

delivered the same way
It is very difficult to standardize services
e.g.. 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
 Characteristics of Services

4. Variability - services are not always

delivered the same way
It is very difficult to standardize services
e.g.. A Taxi driver cannot drive you to the
office in exactly the same time each day
because the traffic patterns change
e.g.. A travel agent can sell you a vacation
package - but cannot guarantee you will like
the trip exactly the same way another tourist
did.
 Service Providers
service providers have product lines and product
mixes as well
examples
 MasterCard

 insurance

 telephone services

 cable services

 ISPs - internet service providers

 airlines, first class, economy class

Not in the text
 banks
Customer Satisfaction
and Service Marketing
 Who are the customers in a
hospital?

Patients
Family members
Referral Doctors
Suppliers
Employees

Who is the key customer in the

hospital?
 What is patient satisfaction?
 Patient Satisfaction is “hospital services
and its perception by the patient” minus
”patient expectations”
0 = Patient Satisfied
- = Patient Dissatisfied
+ = Patient Delighted
 Patient satisfaction measures need to be
developed from the patients perspective
 Patients are becoming better informed
 Involve patients for making improvements
 Patient satisfaction is not Static but
Dynamic
 Patient Expectations
 Good Medical Care  Cleanliness
 Good Nursing Care  Good Coordination
 Less Waiting Time  Cooperation
 Excellent among the Staff
Hospitality  Discipline
 Personal Attention  Communication &
 Courteous Information
Behavior  Transparency in
 Affordable charges and
Charges procedures
 Why customer satisfaction?
 Health care is generally becoming
competitive
 Providers must not only maintain
high clinical standards but also
service that satisfies the patients
 To meet the dual challenge,
providers must have an
understanding of what constitutes
both clinical excellence and
customer satisfaction
Challenges in Service Marketing

 Giving a feel for the “product”

 Managing Demand Fluctuations
 Maintaining Quality
 Cost Containment
 Attitudinal block in using proven
marketing principles in service
marketing
Promotional Mix
Strategies
Push versus Pull
and More
 Influences
 Push Strategy
calls for using the
sales force and trade
promotion.

 Pull Strategy
calls for spending on
advertising and sales
promotion to build
consumer demand.
 Push Strategy:
 Persuade wholesalers and retailers to carry
brands.
 Give a brand shelf space.
 Promote a brand in coop advertising.

Producer Wholesaler Retailer Customer

 Push Strategy:
 Be careful of those big displays at the end of the
aisles.
 End Aisle Displays. End Caps.

Only about 40% is
Look at the prices.
actually on sale.
 Because they are so bright, big and visual, we
feel it’s on sale.
Producer Wholesaler Retailer Customer
 Pull Strategy:
 Entice customers to try a new product.
 Lure customers from competitive products.
 Hold and reward loyal customers.

Producer Wholesaler Retailer Customer

 Push & Pull in public relations
“Public relations is doing good things &
talking about it”
 PULL TACTICS - 'Client'
Centered
 Begin with a clear identification of the
niche market(s) you work with?
 Lead with client problems and concerns?
 Use the two elements above to create a
picture that your target market can
identify with?
 Provide useful ideas that your target
market can use and that demonstrates
your expertise?
PUSH TACTICS - 'You' centered
 Focus on you, your services and
staff?
 Focus on glowing testimonials and
your client list?
 Summary:
 Sales promotion budgets are usually
divided into three categories:
1. Consumer advertising
2. Consumer promotion
3. Trade promotion

 Companies in same industry can put

emphasis on Push or Pull.
 Summary:
 Push strategy is appropriate with
low brand awareness in a category
and brand choice is made in store.
Can be an impulse purchase and
product benefits are understood.
 Pull strategy works best with high
brand awareness and loyalty, or high
involvement in category and
customers look for product
differences.