29 March 2014

Service Marketing

SERVICE MARKETING:
SERVICE:
“Activities, benefits and satisfactions, which are offered for sale or are provided in connection with the sale of goods.”
“Services include all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced, and provides added value in forms (such as convenience, amusement, timeliness, comfort or health) that are essentially intangible concerns of its first purchaser”.

DEREGULATION AND SERVICES MARKETING:
·         Specific demand for services marketing concepts has come from deregulated industries and professional services.
·         Deregulation moves by governments have affected service industries such as airlines,banking, and telecommunications

·         As a result, marketing decisions that used to be tightly controlled by government are now partially, and sometimes totally, within the control of individual firms 
SERVICE MARKETING MIX (7Ps):

Product:
·         The ‘product’ is intangible, heterogeneous and perishable.
·         Moreover, its production and consumption are inseparable.
·         Hence, there is scope for customizing the offering as per customer requirements and the actual customer encounter therefore assumes particular significance.
·         However, too much customization would compromise the standard delivery of the service and adversely affect its quality. Hence particular care has to be taken in designing the service offering.


Pricing:
·         Pricing of services is tougher than pricing of goods.
·         In the case of services, attendant costs - such as labor and overhead costs - also need to be factored in.
·         Thus, a restaurant not only has to charge for the cost of the food served but also has to calculate a price for the ambience provided.
·         The final price for the service is then arrived at by including a mark up for an adequate profit margin.
Promotion:
·         Since a service offering can be easily replicated, promotion becomes crucial in differentiating a service offering in the mind of the consumer.
·         Thus, service providers offering identical services such as airlines or banks and insurance companies invest heavily in advertising their services.
·         This is crucial in attracting customers in a segment where the services providers have nearly identical offerings.
The final three elements of the services marketing mix - people, process and physical evidence - are unique to the marketing of services.

People:
·         People are a defining factor in a service delivery process, since a service is inseparable from the person providing it.
·         Thus, a restaurant is known as much for its food as for the service provided by its staff.
·         The same is true of banks anddepartment storesConsequently, customer service training for staff has become a top priority for many organizations today.

Process:
·         The process of service delivery is crucial since it ensures that the same standard of service is repeatedly delivered to the customers.
·         Therefore, most companies have a service blueprint which provides the details of the service delivery process, often going down to even defining the service script and the greeting phrases to be used by the service staff.


Physical Evidence:
·         Since services are intangible in nature most service providers strive to incorporate certain tangible elements into their offering to enhance customer experience.
·         Thus, there are hair salons that have well designed waiting areas often with magazines and plush sofas for patrons to read and relax while they await their turn.
·         Similarly, restaurants invest heavily in their interior design and decorations to offer a tangible and unique experience to their guests.
CHARACTERISTICS OF SERVICES:
The services have unique characteristics which make them different from that of goods. The most common characteristics of services are:
Intangibility
·        Services are activities performed by the provider, unlike physical products they cannot be seen, tasted, felt, heard or smelt before they are consumed.
·        Since, services are not tangibles, they do not have features that appeal to the customers senses, their evaluation, unlike goods, is not possible before actual purchase and consumption.
·        The marketer of service cannot rely on product-based clues that the buyer generally employs in alternative evaluation prior to purchase. So, as a result of this, the services are not known to the customer before they take them.
·        Not all the service product has similar intangibility. Some services are highly intangible, while the others are low i.e. the goods (or the tangible component) in the service product may vary from low to high.
·        For example: Teaching, Consulting, Legal advices are services which have almost nil tangible components; While restaurants, fast food centers, hotels and hospitals offer services in which their services are combined with product (tangible objective) , such as food in restaurants, or medicines in hospitals etc.

Inseparability
·        Services are typically produced and consumed simultaneously. Incase of physical goods, they are manufactured into products, distributed through multiple resellers, and consumed later. But, incase of services, it cannot be separated from the service provider. Thus, the service provider would become a part of a service.

·        For example: Taxi operator drives taxi, and the passenger uses it. The presence of taxi driver is essential to provide the service. The services cannot be produced now for consumption at a later stage / time. This produces a new dimension to service marketing. The physical presence of customer is essential in services.

·        Inseparability of production and consumption increases the importance of the quality in services. Therefore, service marketers not only need to develop task-related, technical competence of service personnel , but also , require a great input of skilled personnel to improve their marketing and inter personal skills.

Perish ability
·        Services are deeds, performance or act whose consumption take place simultaneously; they tend to perish me the absence of consumption. Hence, services cannot be stored.
·        The services go waste if they are not consumed simultaneously i.e. value of service exists at the point when it is required.
·        The perishable character of services adds to the service marketers problems. The inability of service sector to regulate supply with the changes in demand; poses many quality management problems. Hence, service quality level deteriorates during peak hours in restaurants, banks, transportation etc.
·        This is a challenge for a service marketer. Therefore, a marketer should effectively utilize the capacity without deteriorating the quality to meet the demand.
Variability
·        Services are highly variable, as they depend on the service provider, and where and when they are provided.
·        Service marketers face a problem in standardizing their service, as it varies with experienced hand, customer, time and firm.
·        Service buyers are aware of this variability. So, the service firms should make an effort to deliver high and consistent quality in their service; and this is attained by selecting good and qualified personnel for rendering the service.

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