What is Services Marketing? Definition, Concepts, Marketing Mix, 7 Ps

What is Services Marketing?

Services marketing essentially deals with the products, which are intangible in nature. Services are created through a direct interaction between the service provider and the customers. Goods are physical, tangible articles, while Services are nonphysical and intangible in nature and can also satisfy a need like goods.

Table of Content

Marketing, on the whole, can be divided into goods marketing and services marketing. Although according to Philip Kotler, besides goods and services, a marketer also markets eight other entities like Events, Experiences, Persons, Places, Properties, Organisations, Information and Ideas; yet it is generally clubbed together and is widely known as goods and services.

Financial services, Telecom, Courier, Hotel, Airline, Multiplex, Train, Doctors, Lawyers, Healthcare and Management Consultancy are all examples of services.

Definition of Services

A service is any activity or benefit that one party can offer to another, which is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.<span class="su-quote-cite">Kotler, Armstrong, Saunders and Wong</span>

The services are largely delivered as per the customer’s prescription unlike products which are often standardized. The interior consultants, tailors, restaurants etc. render customized services. However, there are some services that have standardized deliveries like ATM services of banks.

Service Concepts

Services are the major component and somehow influenced by the service motives of any business. The service is much needful to develop and make safeguards of customers interest. Moreover, services are complementary and decisional part of marketing.

The concepts of Services are

  • It is a core area or an activity or a task of business,
  • It is a major component in the size of business,
  • It may be collateral activity with supplementary service to support the core area of business, A service is an act or performance offered by one party to another.
  • It is an ideology or concept or an approach based on customers’ orientation,
  • It is an economic activity that creates values and provides benefits for customers,
  • The service process may be tied to a physical product and the performance is temporary,
  • Services are based on the concepts of rational behavior and the norms of ethical values,
  • It is prominent task to serve at the input as well as output stages in any value creation process,
  • It is provided by a person who processes a particular skill, quality, competencies and learning aspects,
  • Services having the continuous process within their performance,
  • Services may be characterized as intangibleness, inseparability, perishability, heterogeneity in nature and does not normally result in ownership of any resource,
  • Service is based on different environmental factors.

Characteristics of Services

Services require to be studied separately due to its distinctive characteristics.

Intangibility

Services cannot generally be seen, tasted, felt, smelt, heard before being bought. The potential customer’s is unable to perceive the service before the service delivery.

E.g., Computerised representation of hairstyle to prospective client. Sometimes the customer may have difficulty in knowing what is on offer before and even after in receipt of the service. E.g., Maintenance service of a vehicle. Service cannot be stored.

When more in demand, it is likely to be sold at higher price. E.g., Hotel room rent in peak season. Services cannot be readily displayed or easily communicated to customers, so quality may be difficult for consumers to assess. Advertising and other promotional campaigns are challenging task for services. The actual cost is difficult to be determined and so price quality relationship is complex.

Levitt

suggested that there are no so such things as service industries, only industries where the service components are relatively greater than those in other industries.

Shostackargued

That there are few industries or activities that are purely goods based or a purely service based, and presents a variety from tangible dominant goods to intangible dominant services.

Kotler

Identifies four distinct categories of offerings, ranging from purely tangible goods, to tangible goods with accompanying services, to a major service with some accompanying goods, to pure services.

Inseparability

Goods and Service have difference in the sequence of production and consumption. While the goods are first produced, stored and finally sold and consumed, Services are first sold then produced and consumed simultaneously. For some services, the customer must be present.

E.g., counselling, rail travel, etc. For some others, services are produced and delivered in the absence of customers. E.g., plumbing, etc. Proper selection and training of customer contact personnel are necessary to ensure the delivery of quality of services. Service encounters involves an appreciation of a complex set of behaviours on the part of all involved in them. Like – waiting time, personal interaction, expectations and perceptions – of service adequacy and quality.

Variability

A variability in performance of a service creeps in, depending on who provides it and how it is provided. E.g., An employee may be courteous and helpful, while others may be inefficient and rude. This unsuitable personality trait in an employee is difficult at to assess at the time of recruitment.

For services variability may also occur during the process of production. For marketers, brand building in services possesses bigger challenge than tangible goods as it is often difficult to obtain standardisation of output in services.

Perishability

Services cannot be stored for later use. E.g., unoccupied hotel rooms, unpurchased airline seats cannot be reclaimed later. If demand exceeds supply it cannot be met, even if capacity exceeds demands, the revenue is lost. An airline has to fly at the scheduled time even its few seats are empty.

This characteristics of the perishability results in greater attention on scheduling services. Pricing and promotion are two of the tools usually adopted to tackle this situation.

Heterogeneity

Though ensuring to bring a standardisation, it is actually difficult to ensure the same level of output in terms of quality. From customers viewpoint also it is difficult to judge quality without using it. Capacity levels should be available to meet demand before service levels falls.

Equal attention has to be given in times of low levels of usage to manage the spare service, for E.g., different programmes can be adopted to compensate for uneven demand in theatre halls. Heterogeneity clearly has wide–ranging implications for the operational side of service provision :

Service Personnel – highly dependent upon the activities and actions of those members of staff in the “front–line.”

Service Standards – must be established and made clear, to assist quality control and more effective management of service encounters.

Lack of Ownership

Lack of ownership is the basic difference between a service industry and a product industry is that a customer gets an access for a service after paying for it but not owns it. E.g., hotel rooms, hospitals beds, etc. Service industry should offer easier payment terms in order to facilitate better growth.


Importance of Marketing of Services

A Key Differentiator

Marketers can leverage on the service offering to differentiate themselves from the competition and attract consumers.

For E.g. – In case of two competing fast food chains, serving similar product, more than the product it is the service quality that distinguishes the two brands from each other.

Importance of Relationships

The need to listen to the needs of the customer and fulfil them through the appropriate service offering and build a long–lasting relationship which would lead to repeat sales and positive word of mouth.

Customer Retention

Since services are usually generated and consumed simultaneously, they actually involve the customer. Thus, they offer greater scope for customization according to customer requirement thus offering increased satisfaction and higher customer retention.

Relationships are Key

In service marketing, because there is no tangible product, relationships are key. Service marketers must listen to and understand the needs of customers and prospective customers to build loyalty and trust. Ultimately, effective relationships in service marketing will lead to repeat sales and positive word of mouth.

Multiple Touchpoints

Service marketing involves many interactions with multiple people and experiences that are less tangible than when buying an actual product. These touchpoints work together to establish a perception in the consumer’s mind.

Services Proliferate

Consumers have many service options competitive serve providers to choose from, and because the product is intangible, the challenge for the service marketer is to somehow make their services stand.

Feedback Improves Service

As the customer is engaged in the process and contributes to a positive outcome. For this reason, it is important to seek consumer feedback and to use that feedback to improve service marketing effectiveness.

Technology Impacts

Technology has a major impact on the service economy streamlining service activities and provide do it yourself options for consumers. Internet based services, for example, allow consumers to participate actively in the service marketing process, often never involving contact with another human being ATMs, Internet Banking.


Categories of Offerings

Any offering in the market can be for physical goods, or services, or a combination of both.

Philp Kotler has listed five categories of offerings

Pure Tangible Good

This offering is a pure physical product like toothpaste, packaged food, soaps, sugar, etc. There is no service associated except the courteous response and help from the sales people.

Tangible Good with accompanying services

The tangible offering is made available along with few services for a better customer experience. Most of the technologically advanced products have quality services associated with their sale. Like – free installation, free servicing for a certain period. Mobile manufacturers emphasise the number of service centres.

Hybrid

The offering is an equal combination of the tangible good and the intangible service. For E.g., a premium restaurant with quality food and service, and a fast–food centre offering with free delivery within promised time.

Major Service with accompanying minor Goods and Services

In this category a major service is provided along with some additional service and/ or goods. For example, travel by airline or a first–class train travel accompanies food, drinks, books, magazine, internet, etc.

The passenger pays for the transportation and these additional / complementary food items and services from the staff enhance the travel experience of the passenger.

Pure Service

The offering is purely a service provided without any accompanying tangible product or additional service. For E.g., Courier Service, Financial Consultant etc.

Classification of Services

There are different ways of classification of services. Services are bought differently by different buyers in different ways. The presence of a buyer is sometimes needed and sometimes not. Similarly, the service can be provided by the seller or by a machine.

People based and Machine based

People based service refers to the presence of a human being with skills in providing the service. For E.g., a doctor needs to be present with the patient. Similarly, a carpenter, barber, with their clients. Machine based service is provided by ATM machines or robots doing car wash or vending machines for soft drinks. The presence of the seller is not required.

Consumer services and Industrial or Business services

The users of Consumer services are individual buyers and households in consumer market. E.g., Hotels, Life insurance, Repairs, Education, Personal security, etc. In Business, services are provided to firms involved in production of products for end users.

E.g., Advertising, Consultancy, Market Research, Transportation, Training etc. Many services like Financial, Transportation, Consultancy, Engineering, Hotel, Food, etc. are sold and provided to both consumer as well as business markets.

Buyer’s presence and Buyer’s absence

There are services that can be provided only in the presence of the buyer like a Haircut, Hospital, Education etc. Certain services don’t require the presence of the buyer of that particular service. For E.g., car repairs, gardening, courier, market research, promotion services, etc.

Services for Non–Profit and Services for Profit

There are services from individuals as well as organisations that are inclined towards social cause and not for profit alone. Like NGOs in Education offering services free of charge. Services which are offered firms in ‘Services–for–profit’ category. E.g., Entertainment, Tourism, Housekeeping, etc.


Differentiation in Service

A customer can travel by any airline basis the lowest airline fare. There could be a competitive edge when airlines would differentiate their offering – quicker check in, smooth seating sequence etc. An organisation can differentiate its offering, its delivery, and brand image and communication. This way the organisations avoid price wars.

Offering

The effort should be to have uniqueness in the service offering – doing things differently. HDFC Bank offers its customers a dedicated personal Relationship Manager (RM) for its long–tie customers. RM ensures that the customer does not have to go to the bank, to get many services.

Effective Delivery

Factors like personal touch, immediate delivery or delivery as promised, attitude of the people and quality of service all go a long way in making a business successful. E.g. – Domino’s commitment on delivering the product in 30 minutes.

Brand Image and communication

An organisation can create its band logos and symbols that confer an image of high quality and professionalism. E.g., McDonald’s, FedEx, Blue Star are international and well recognised brands.


Maintaining and Improving Service Quality

There are two ways in maintaining and improving service quality

Internal setup – The organisation should set systems in place internally to constantly monitor and improve on the service.

Setting high standards

The organisation should build a culture for constant improvement in its quality of service as well as its delivery. E.g. – customer emails to be answered within hours of being received.

Conducting surveys

The data through surveys and questionnaires helps analyse the needs and wants of the target audience or launch a new offering.

Gap analysis

The management may have certain perception about a service quality which may be not matching to customer expectation, delivery, etc. Identifying various gaps in service delivery and improving on them.

Motivating and training employees

A satisfied employee working for an organisation helps make business grow. A well trained and loyal employee gets loyal customers.

External Inputs

The organisation may receive customer complaints through employees or from other sources. The communication channel from customer to managerial staff can help resolve issues fast. The customer level of satisfaction can be measured with the help by recording telephone calls for better understanding the customer’s needs and expectations.

Similarly, emails with customers can be audited by the quality team to ensure high quality of service and regular training of the employees. Marketing Mix is about putting the right product in the place, at the right time, and at the right price.

Marketing mix is predominately associated with :

Traditional – 4 Ps of Marketing

Marketing Mix – 7 Ps

The 7 Ps of marketing give the framework needed to attract the people ready to buy the product.

These are :

  1. Product
  2. Price
  3. Promotion
  4. Place
  5. People
  6. Physical Evidence
  7. Process

1.Product (or Service) Customer cares foremost about

what the product or service can do for them. Therefore, the manufacturer has to prioritize making the product the best he can.

In a marketing mix, product considerations involve every aspect of what is being sold :

  • Design
  • Quality
  • Features
  • Options
  • Packaging
  • Market positioning

Five components to successful product–led marketing

  1. Let the product or service sell itself – let them try what is being offered.

Know the customer’s needs – use that knowledge to help communicate the product’s value.

Always be helping – creating informative content that meets the target customers’ needs.

Share authentic stories – encourage happy customers to share their experiences.

Grow a product mindset – focus on product development and quality.

2. Price

Factors go into a pricing strategy. Brands may :

  • Price a product higher than competitors creating impression of a higher–quality offering.
  • Price a product similar to competitors, then draw attention to features or benefits other brands lack.
  • Price a product lower than competitors to break into a crowded market or attract value–conscious consumers.
  • Plan to raise the price after the brand is established or lower it to highlight the value of an updated model.
  • Set the base price higher to make bundling or promotions more appealing.

Some questions to ask

Will it have higher–end offer at an additional cost ?

  • Should the cost be covered right away, or can it be set at a lower price and consider it as an investment in growth ?
  • How low can it go without people questioning the quality ?
  • How high can it go before customers think it is overpriced ?
  • Is it being perceived as a value brand or a premium brand ?

3.Promotion

Promotion is the part of the marketing mix that the public notices most. It includes television and print advertising, content marketing, coupons or discounts, social media strategies, email marketing, pay–per– click ads, digital strategies etc. All these promotional channels tie the whole marketing mix together into a strategy that creates a unified experience for the customer.

For E.g. : A customer sees an in–store promotion and uses their phone to check prices and read reviews. They view the brand’s website, which focuses on a unique feature of the product. The brand that has solicited reviews addressing that features, appear on high–ranking review sites. The customer buys the product and the seller sends a ‘thank–you– email’ using marketing automation.

Ways that the channels together

  • Make sure all the channels are known and available.
  • Grip the move toward personalized marketing.
  • Segment the promotional efforts based on the customers’ behavior.
  • Test responses to different promotions and adjust the marketing spend accordingly.

4. Place

Where is the product being sold ?
Some considerations when it comes to place :

  • Where will people be looking for the product ?
  • Will they need to hold it in their hands ?
  • Will there be more sales by marketing directly to customers from the e–commerce website, or will buyers be looking on third–party marketplaces ?
  • Does the product require conversation directly with the customers as they purchase ?

5. People

People refers to anyone who comes in contact with the customer, even indirectly. It is therefore, essential to recruit the best talent at all levels, including customer service.

To ensure the people are making the right impact on the customers :

  • Develop the marketers’ skills so marketing mix strategy can be effective.
  • Think about company culture and brand personality.
  • Hire professionals to design and develop the products or services.
  • Focus on customer relationship management, which creates genuine connections and inspires loyalty on a personal level.

6. Physical Evidence

Almost all services include some physical elements even if the bulk of what the consumer is paying for is intangible. For example, a hair salon would provide their client with a completed hairdo and an insurance company would give their customers some form of printed material receiving a “physical product” by this definition.

7. Process

Prioritize processes that overlap with the customer experience. The more specific and seamless the processes are, the more smoothly the staff can carry them out.

Some processes to consider

  • How are the scheduling and delivery logistics ?
  • Will the third–party retailers run out of product at critical times ?
  • Is there enough staff to cover busy times ?
  • Do items ship reliably from the website ?

On getting a complaint about any process, how soon can it be fixed ?Though in place since the 1980’s the 7 Ps are still widely taught due to their fundamental logic being sound in the marketing environment and marketers’ abilities to adapt the Marketing Mix to include changes in communications such as social media.

Are there any more Ps

In some spheres of thinking, there are several other Ps added in the Marketing Mix :

  • Packaging – designing, innovation opportunity
  • Productivity – better quality, cleaning service
  • Portfolio – wide range, tap different markets
  • Payment – choice of payment methods
  • Profit
  • (and even) Politics

Contribution by some Major Service Industries

Traditionally, India had six major industries. These were Iron and Steel, Textiles, Jute, Sugar, Cement, and Paper. To this was added Petrochemical, Automobile, Information Technology (IT), and Banking & Insurance. These industries are important for India’s economy.

Information Technology (IT) Industry

One of the latest entrants to the list, the IT industry has spread fast. Many US and EU firms working with contract agencies in India for IT software and services, outsourcing has acquired an international dimension. This is a win–win situation since the US firms save around 58% of its costs by outsourcing work to India and the local economy benefits from global exposure.

Banking and Insurance Industry Banking

Over the years, as technology advanced, the banking industry absorbed the changes with open arms. From Electronic Funds Transfer to online banking, it was a new era for the industry. Currently, in India, there are different types of banks :

  • Savings Banks

Commercial Banks. These are of the following types :

  • Scheduled Banks
  • Public Sector Banks
  • Private Sector Banks
  • Foreign Banks
  • Non–Scheduled Commercial Banks
  • Industrial or Development Banks
  • Land Mortgage or Land Development Banks
  • Indigenous Banks
  • Central or Federal or National Bank (Reserve Bank of India)
  • Cooperative Banks
  • Foreign Exchange Banks
  • Consumer Banks

FAQ

What is Services Marketing?

Services marketing essentially deals with the products, which are intangible in nature. Services are created through a direct interaction between the service provider and the customers.

What are the 7 PS of marketing?

The 7 Ps of marketing give the framework needed to attract the people ready to buy the product.
Theses 7PS are :
Product

Price

Promotion

Place

People

Physical Evidence

Process

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