8/8/2019 unit 1 ch

1/20

UNIT-1

Services Definition :-

The American Marketing Association(1960):- The American Marketing Associationhas taken a lead in defining services as activities, benefits or satisfactions which are

offered for sale or provided in connection with the sale of goods.

Regan (1963):- Regan in this definition classified services into two categories.

According to him services represent either tangibles, Yielding satisfaction directly(transport, housing) or intangibles, yielding satisfaction jointly when purchased

either with commodities or other services credit, delivery.

William J. Stanton (1974) :- A comprehensive view of services was provided by

Stanton. According to him services are separately identifiable, intangible activates

which provide want satisfaction when marketed to consumers and/or industrial usersand which are not necessarily tied to the sale of a product or another service.

8/8/2019 unit 1 ch

2/20

8/8/2019 unit 1 ch

3/20

Matchbox

Soft drinksCosmetics

Automobiles

Television

Restaurant

Transport

Hospitality

Health Care

Communication network

Consultancy

Teaching

The tangibility spectrum

8/8/2019 unit 1 ch

4/20

CHARACTERISTICS OF SERVICES

Intangibility

Inseparability

Variability

Perishability

Customer Participation

No Ownership

8/8/2019 unit 1 ch

5/20

REASONS FOR GROWTH IN SERVICES SECTOR

Intermediate Demand from Firm

Final Demand from Customers

More Leisure time

Working woman

Growth in population

Greater life expectancy

Greater complexity of products

Greater complexity in life

Greater concern for resource scarcity and ecology

Increasing number of new products

The Young

8/8/2019 unit 1 ch

6/20

Contribution of the Services Sector to the Economy

Table 1.1 Percentage share of sectors in Indias gross domestic product at constant

prices.

Year Primary Sector

(Agriculture

Mining)

Secondary

Sector(Industry and

Manufacturing)

Tertiary

Sector

Growth Over

Previous Period

(%) in Services

1950-51 55.4 16.1 28.5 -

1960-61 50.9 20.0 29.1 + 2.1

1970-71 44.5 23.6 31.9 + 9.6

1980-81 38.1 25.9 36.0 + 12.9

1990-91 30.9 30.0 39.1 + 8.6

1999-2000 27.5 24.6 47.9 + 22.5

8/8/2019 unit 1 ch

7/20

Table 1.2 Global distribution of GDP in the year 2000 ( share in GDP)

Country Primary Sector (%) Secondary Sector(%) Tertiary Sector(%)

India 27 25 48China 17 49 34

France 3 23 74

Japan 2 36 62

Germany 1 28 71

USA 8 19 73

Sector / Year 1981 (%) 1991(%)

Primary Sector (Cultivators, Agricultural labour, Mining,Construction, etc.)

Secondary Sector (Manufacturing)

Tertiary Sector (Services)

Total

69.4

12.9

17.7

100.0

67.3

12.2

20.5

100.0

Table 1.3 Share in employment of different sectors in the Indian economy

8/8/2019 unit 1 ch

8/20

Country Population Employed in Services in 1996 (%)

(a) Highly Developed Economiesi. Australia

ii. Canada

iii. United Kingdom

iv. United States of America

74

75

73

78

(b) Moderately DevelopedEconomies

i. Australia

ii. Canada

iii. United Kingdom

iv. United States of America

49

53

53

59

(c) Developing Economies

i. Bangladesh

ii. Ethiopia

iii. India

iv. Mexico

28

9

21

30

Table 1.4 Relative levels of employment internationally

8/8/2019 unit 1 ch

9/20

Major Differences Between Services and Goods

Services are Intangible in Nature

Inseparability of Production and Consumption

Variability in Specifications Delivery

Perishable Nature of Services

Lack of Ownership

8/8/2019 unit 1 ch

10/20

8/8/2019 unit 1 ch

11/20

Table 1.6 Contribution of customers in service processes

Process Impact Customer Action Comment

Awareness of the

need

Become aware good and services Common to both buying

Search for possible

solutions

Use means available for search Common to both goods and

services buying

Finding out

information

Receive and compare offers Common to both goods and

services buying

Deciding on the

provider

Decision made Common to both goods and

services buying

Selection of

service

specifications

Customers get actively involved in

the design of the service to be

received

Unique to services

Receipt of the

service

Due to inseparability from production

process, the service is enjoyed

immediately

Unlike services, products can

even be enjoyed at a later time.

Post-purchase

evaluation

Draw up a balance sheet between the

need and the satisfaction

For services, the evaluation is

dependent on perception of

service rather than physical facts

Post-purchase

dissonance

If there are gaps or if other similar

priced offering are made available,

the dissonance is higher.

If customer wrongly specified the

service then dissonance could be

lower.

8/8/2019 unit 1 ch

12/20

Customer Perception

Perception is the impression created in the mind of the customer. There may or

may not be physical evidence existing to support such an impression. Perceptionis intangible and hence is difficult to control. In addition, customer perceptions

may be tinted by customer attitudes and perceptions may be tinted by customer

attitudes and preconceived notions.

It is the Endeavour of all marketing organizations to aim at customer

satisfaction. Thus profit or gain through customer satisfaction has been the

strongest theme in all the marketing efforts. As a result, quality delivery, valuedelivery, and customer satisfaction

8/8/2019 unit 1 ch

13/20

Classification of Different Types of Services

Classification of Services by Industry

Industry Services(a) Entertainment Industry (i) Movie/television programmes etc. production and

exhibition

(ii) Amusement and recreation services.

(b) Hospitality Industry (i) Hotels and lodging places.

(ii) Restaurants and cafes

(iii) Food catering and event organization

(c) Trading (i) Wholesale trade

(ii) Retail trade

(iii) Online trade

(d) Finance and Insurance (i) Loans and advances

(ii) Credit cards(iii) Banking

(iv) Investment, brokerage and advice

(v) Real estate

(vi) Consultancy services such as credit rating

(e) Education (i) School, colleges, etc.

(ii) Training and consultancy

8/8/2019 unit 1 ch

14/20

Industry Services

(f) Transportation (i) Air, sea, road, and train travel

(ii)C

ar hire, charter, and leasing(iii) Goods transport by all means

(iv) Pipeline

(v) Mail and courier services

(g) Public utilities (i) Electricity supply

(ii) Water supply

(iii) Drainage and sewerage

(iv) Garbage collection and disposal

(h) Government services (i) Defence

(ii) Police and protection

(iii) Health and education

(iv) Foreign relations

(i) Health (i) Hospitals and clinics(ii) Gymnasium and spa

(iii) Weight reduction and recuperation programmes

(j) Business services (i) Cleaning

(ii) Catering

(iii) Security

(iv) Training

8/8/2019 unit 1 ch

15/20

(k) Telecommunications (i) Telephone, fax, e-mail

(ii) Data transfer

(iii) Mobile telephone

(iv) Video conferencing

8/8/2019 unit 1 ch

16/20

8/8/2019 unit 1 ch

17/20

Service Marketing Triangle

Company

Employee Customer

External Marketing

(Making the promise)

Internal Marketing

(Enabling the

promise)

Interactive Marketing

(Delivering the

promise)

8/8/2019 unit 1 ch

18/20

Service marketing mix

TRADITIONALMARKETING

MIX

Place-channel type

Exposure

Intermediaries,Outlet location

transportation

Storage

managing

channels

Price-price

level,flexibility,discount,Differentiantion,

allowances

product-features

qualityaccessories

packaging

warranties

productlines

branding

Promotion-advertising

sales promotionpublicity

public relation

8/8/2019 unit 1 ch

19/20

EXTENDEDMARKETING MIX

People-

Employees

recruiting

training

Motivation

Reward

team work

customereducation

training

Process-flow of activity

standardized

customized

Number of people

Simple

complexCustomer

involvement

Physicalevidence-

Equipment

signage

Employees dress,

Reports

Business cardsstatements

guarantees

8/8/2019 unit 1 ch

20/20