Chapter 1 Services Marketing PDF

CHAPTER 1: INTRODUCTION TO SERVICE MARKETING The American Marketing Association defines service marketing as: an organizational function and a set of processes for identifying or creating, communicating, and delivering value to customers  managing customer relationship in a way that...

CHAPTER 1: INTRODUCTION TO SERVICE MARKETING The American Marketing Association defines service marketing as: an organizational function and a set of processes for identifying or creating, communicating, and delivering value to customers  managing customer relationship in a way that benefit the organization and stake-holders. Services are (usually) intangible economic activities offered by one party to another. In 1963, by Regan suggested that: services represent either intangibles yielding satisfaction directly (transportation, housing) intangibles yielding satisfaction jointly when purchased either with commodities or other services (credit, delivery). services were considered as pure intangibles capable of providing satisfaction to the customer which could be marketed like tangible products. This definition takes into account the following important features of services: Services are by and large activities or they are series of activities rather than things. As a result services are intangible.  They take place in the interaction between the customer and the service provider, which means that services are produced and consumed simultaneously. Customer has a role to play in the production process as the services are provided in response to the problems of customers as solution. CHARACTERISTICS OF SERVICES Intangibility: Services are intangible and do not have a physical existence. services cannot be touched, held, tasted or smelt. it poses a unique challenge to those engaged in marketing a service as they need to attach tangible attributes to an otherwise intangible offering. Heterogeneity/Variability: Given the very nature of services, each service offering is unique and cannot be exactly repeated even by the same service provider. While products can be mass produced and be homogenous the same is not true of services. eg: All 3 burgers of a particular flavor at McDonalds are almost identical. However, the same is not true of the service rendered by the same counter staff consecutively to two customers. Perishability: Services cannot be stored, saved, returned or resold once they have been used. Once rendered to a customer the service is completely consumed and cannot be delivered to another customer.  A customer dissatisfied with the services of a barber cannot return the service of the haircut that was rendered to him. At the most he may decide not to visit that particular barber in the future. Inseparability/Simultaneity of production and consumption: refers to the fact that services are generated and consumed within the same time frame. Eg: a haircut is delivered to and consumed by a customer simultaneously unlike, a takeaway burger which the customer may consume even after a few hours of purchase.  it is very difficult to separate a service from the service provider. Eg: the barber is necessarily a part of the service of a haircut that he is delivering to his customer. TYPES OF SERVICES. Core Services: A service that is the primary purpose of the transaction. Eg: a haircut or the services of lawyer or teacher. Supplementary Services: Services that are rendered as a corollary to the sale of a tangible product. Eg: Home delivery options offered by restaurants above a minimum bill value. Periodical transaction volume: The volume of a transaction in a given time period stands as a major consideration in service industry. The hyper-market has very different operation challenges from the local grocery store, not least in simply managing the flow of hundreds of customers in store. Mode of service Delivery: the retail sector provides a good example of this diversity, with face-to- face service in traditional store remote service through mail order and telephone shopping and the lost latest internet based service RELATIONSHIP MARKETING It focuses on partners and customers rather than on the company‘s products. It puts more emphasis on customer retention and growth than on customer acquisition.  It relies on cross-functional teams rather than on departmental-level work. It relies more on listening and learning than on talking. Relationship Marketing Mix Product Products are customized to the customers‘ preferences. New products are developed and designed cooperatively with suppliers and Price The company will set a price based on the relationship with the customer and the bundle of features and services ordered by the customer. In business-to-business marketing, there is more negotiation because products are often designed for each customer.  Distribution More direct marketing to the customer, thus reducing the role of middlemen. Offering alternatives to customers to choose the way they want to order, pay for, receive, install, and even repair the product. Communication More individual communication and dialogue with customers. More integrated marketing communications to deliver the same promise and image to the customer. Extranets with large customers to facilitate information exchange, joint planning, ordering, and payments