PRINCIPLES OF MARKETING-A2

Topic 11

Services Marketing

4/30/2020

Assoc. Prof. A. Popissakov 2009-2010

1

Topic Contents

1.

2.

3.

What is Services Marketing Services Marketing Management Interactive Marketing 4/30/2020 2

Introduction

 Service Society?

  UK, Canada,  Bulgaria???

 Although the basic principles of the

marketing mix

are followed, there are distinct

differences in marketing tangible products and services

4/30/2020 3

Perspectives on Service Markets

Services encompass a wide range of areas, each with a varying degree of service involved.  There are few pure services . In reality, many product 'packages' involve varying degrees of service.  Service products can be placed along a spectrum running from a high to a low level of service.

4/30/2020 4

Classifying Services

The services - product spectrum 4/30/2020 5

Special Characteristics of Service Markets 5 key features  Lack of ownership  Intangibility  Perishability  Inseparability  Heterogeneity 4/30/2020 6

Physical goods

ownership

Buy a product (physical good) as a customer act like an owner

E.g. cars

and

computers

 Personal access to the product (unlimited time)  Do whatever you like.

4/30/2020 7

Service Characteristics:

Lack of ownership

In contrast, service products lack that quality of ownership as there is no transfer of ownership nor do tangible goods exchange hands . The purchase itself is

transient.

  E.g. rent-a-car Go to the movie 4/30/2020 8

Service Characteristics:

Intangibility

Services cannot be readily displayed, so they

cannot be seen, tasted, felt, heard or smelt before they are bought.



The heart of the service is the experience created for the customer.

 customers use a combination of criteria based upon impressions, memories and expectations .

 E.g. Fly by BA 4/30/2020 9

Service Characteristics:

Perishability

Services are manufactured at the same time as they are used/consumed.

 Services cannot be stored for later sale or use.  E.g. “a brilliant concert” 4/30/2020 10

Service Characteristics:

Inseparability Services cannot be separated from their providers

, whether the providers are people or machines.  The type of customer can affect of the experience: positive customers may receive better service than uncooperative  E.g. Go to see a doctor the quality 4/30/2020 11

Service Characteristics:

Heterogeneity Quality of services depends on who provides them, as well as when, where and how they are provided

. It is difficult to standardise the service, as different employees within the same organisation can produce variable levels of customer service.

 E.g. How to standardise smiling?

4/30/2020 12

Services Marketing Management

This topic looks further at the implications of the service characteristics for marketers in terms of:  formulating strategy,  developing and measuring quality,  training staff and  maintaining productivity in the delivery of 13

1. Marketing Mix -12 Factors



Neil Borden

Mix” first used the term in 1964 when he listed “Marketing 12 factors , which a company can control in a marketing area.  He suggested that a cocktail or mix of these factors was necessary and that mix would be dependent on circumstances.

4/30/2020 14

Neil Borden’s

-12 Factors Marketing Mix



Internal – Controllable Variables

1. Product policy 2. Pricing 3. Branding 4. Distribution 5. Servicing 6. Physical handling 7. Promotion 8. Packaging 9. Display channels 10 Advertising 11. Personal selling 12. Fact finding and analysis 4/30/2020 15

2. Classic Marketing Mix -”4 P’s”



Jerome McCarthy

factors into “4 Ps’ grouped Borden’s 12 “ and this now appear in most marketing books as the key components for marketing actions.

4/30/2020 16

The “4 P’s” of Marketing MIX

Classical theory 4/30/2020

Product Price Place Promotion

Marketing Mix

This order can be reversed according to firm’s approach .

17

3. Extended Marketing Mix -”7 P’s”

Proposed by

Booms and Bitner (1981)

adding 

P

eople , 

P

rocesses and 

P

hysical evidence to the traditional 4Ps for the service sector in particular, more fully to describe the 18

The “7 P’s” Marketing MIX

Product Price Place Promotion People Processes Physical evidence

4/30/2020 Marketing mix specially proposed for service sectors 19

”7 P’s” Marketing Mix - People

The ability of service provider to cope with customers, to deliver the service reliability and present an image consistent with company

This relationship is called Interactive marketing 4/30/2020 20

”7 P’s” Marketing Mix - People

 E.g. A customer's satisfaction with

hairdressing

and

dentistry services

has as much to do with the quality and nature of the interaction between the customer and the service provider as with the end result.

 Sometimes the interaction is more important 4/30/2020 21

”7 P’s” Marketing Mix - Processes



Manufacturing processes

, once they are set up, are consistent and predictable and can run automatically. (FMS, CAD-CAM) 

Service Processess

, however, are “manufactured” and consumed live, on the spot, they do involve people and their skills , consistency can be rather more difficult than with normal manufacturing.

4/30/2020 22

”7 P’s” Marketing Mix - Processes

Service Processess

to be considered:  how the service is delivered ;  what QCs (quality controls) can be built in;  queueing mechanisms : preventing waiting to leave without purchase; (Billa’s queuing standard)  processing customer details etc.

4/30/2020 and payment, 23

”7 P’s” Marketing Mix - Processes

Application of Service Processess:  banks, insurance companies, other retailers of financial services,  fast food and super/hyper market outlets,  hairdressers and other personal service providers,  solicitors, doctors, management consultants,  hospitality industry, etc.

4/30/2020 24

”7 P’s” Marketing Mix Physical evidence

Physical

delivered.

evidence

is of particular importance to retailers who maintain premises from which a service is sold or

It emphasize factors as:  atmosphere,  image and design of premises,  prosperity of the company,  respect to customers, etc.

4/30/2020 25

”7 P’s” Marketing Mix Physical evidence

In other service situations, physical evidence would relate to:  aircraft in which you fly,  the hotel in which you stay,  the stadium in which you watch a match,  the lecture room in which you learn,  the washroom in which you powder your nose, etc.

26

Interactive Marketing: Service Quality

 Central to delivery of any service product is

interactive marketing

, or the

service encounter

between provider and customer.

 The

serivce encounter is an important determinant of quality

as it combines all the elements of the marketing mix. 4/30/2020 27

Interactive Marketing: Service Quality

The challenge for the marketer is to bring quality, customer service and marketing together to build and maintain customer satisfaction.

Quality Customer Service satisfaction Marketing

4/30/2020 28

Interactive Marketing: Service Quality

Some aspects of service can be measured objectively, especially where there are tangible elements to assess.

Berry, Parasuraman and Zeithaml

have developed criteria for assessing service quality through a survey called SERVQUAL™ that collects data relating to customer perceptions. 4/30/2020 29

10 criteria affecting the quality of service

1.

2.

3.

4.

Access

: access to service by the customer;

Reliability

: provider arrives on time; regularity

Credibility

: trustworthy and believable;

Security

: protected from risk or doubt;

5.

6.

7.

8.

9.

Understanding the customer

: use empathy, be helpful;

Responsiveness

: quick to respond to customer needs;

Courtesy

; smile, politness, manners …

Competence

: provider staff properly trained to meet the needs of the customer;

Communication

; listen and explain, help to understand;

10.

Tangibles

4/30/2020 : does the appearance of the staff inspire confidence?

30

Interactive Marketing: Service Quality 10 criteria affecting the quality of the

outcome

of the service experience:

1. Access 2. Reliability 3. Credibility

;

4. Security 5. Understanding the customer

Influece the quality of the

outcome

of the service experience

6. Responsiveness 7. Courtesy 8. Competence 9. Communication 10.Tangibles

4/30/2020 Influece the quality of the

input

of the service experience 31

Service Quality: expectations, perceptions and gaps  Marketing actions  Word-of-mouth  Experience

Expectations of

*Access * Responciveness *Reliability * Courtecy *Credibility * Competence *Security * Communication *Understanding * Tangibles Service experience either Satisfaction or Dissatisfaction

Perceived oucomes of

*Access * Responciveness *Reliability * Courtecy *Credibility * Competence *Security * Communication *Understanding * Tangibles Provider’s misconception of the customer 4/30/2020 Inadequate resources Inadequate or inconsistent service delivery Exaggerated promises 32

Internal Marketing: Training and Productivity The connection between staff performance and customer satisfaction within the service environment is relevant to:

Staff training

Training is essential to improve and maintain high standards of service delivery.

Staff productivity

Employees who are enthusiastic about their jobs communicate better and are more eager to serve customers.

4/30/2020 33

Internal Marketing: Staff in service function Direct invovment Indirect invovment 4/30/2020 Visible to customers  Airline cabin crew  Cashiers  Sales assistants  Medical staff  Receptionists  Hotel chamber maids  Supermarket shelf fillers  Security personel/ services/ Invisible to customers  Telephone services  Order takers  Custom  Phone banking  E-commerce  Office cleaners  Airline caterers  Administrative staff 34

Internal Marketing:

Staff productivity

There are several possibilities for delivering services more efficiently: 

Staff improvement



Systems and technology



Reduce service levels



Reduce mismatch between supply and demand

4/30/2020 35

Internal Marketing:

Staff productivity

Staff improvement

 Improved recruitment so staff have better skills.  Improve training  Empowering frontline staff to make appropriate decisions.  Staff given responsibility and flexibility to deal with real needs of customers.

4/30/2020 36

Internal Marketing:

Staff productivity

Systems and technology

 Introduction of service process monitoring technology.

Reduce service levels

 Fewer people responsible for greater number of services  Dangerous, as it can lead to the perception of reduced quality.

4/30/2020 37

Internal Marketing:

Staff productivity

Customer interaction

 Changing how the customer interacts with staff may improve productivity.

 Communication vital to support any changes.

4/30/2020 38

Internal Marketing:

Staff productivity

Reduce mismatch between supply and demand

 Accommodate fluctuations in demand: for example, open more checkout tills during peak periods to shorten queues. 4/30/2020 39

4/30/2020

The End

40