Service Marketing

Services marketing is a specialised branch of marketing. Services marketing

emerged as a separate field of study in the early 1980s, following the recognition that
the unique characteristics of services required different strategies compared with the
marketing of physical goods.

Services marketing typically refers to both business to consumer (B2C) and business-
to-business (B2B) services, and includes marketing of services such as
telecommunications services, financial services, all types of hospitality, tourism leisure
and entertainment services, car rental services, health care services and professional
services and trade services. Service marketers often use an expanded marketing mix
which consists of the seven Ps: product, price, place, promotion, people, physical
evidence and process. A contemporary approach, known as service-dominant logic,
argues that the demarcation between products and services that persisted throughout
the 20th century was artificial and has obscured that everyone sells service. The S-D
logic approach is changing the way that marketers understand value-creation and is
changing concepts of the consumer's role in service delivery processes.

Introduction

A service is the action of doing something for someone or something. It is largely

intangible (i.e. not material). You cannot touch it. You cannot see it. You cannot taste it.
You cannot hear it. You cannot feel it. So a service context creates its own series of
challenges for the marketing manager since he or she must communicate the benefits
of a service by drawing parallels with imagery and ideas that are more tangible.

Search quality is the perception in the mind of the consumer of the quality of the product
prior to purchase through making a series of searches. So this is simple in relation to a
tangible product because you might look at size or colour for example. Therefore search
quality relates more to products and services.

Experience quality is easier to assess. In terms of service you need to taste the food or
experience the service level. Therefore your experiences allow you to evaluate the level
and nature of the service. You remember a great vacation because of the food or
service, but by the same token you remember an awful vacation because of the
hopeless food or poor services

Credence quality is based upon the credibility of the service that you undertake. This is
down to the reputation of a dentist or of a decorator. Credence is used where you have
little knowledge of the topic and where you rely upon the professionalism of the expert.

Scope of Marketing

A service business is one where the perceived value of the offering to the buyer is
determined more by the service rendered than the product offered. In this way the
nature and scope of services pose different challenges for managers in service
businesses. Such businesses include those that provide an almost entirely intangible
offering, such as legal services, health care and cleaning services and businesses that
offer both services and products such as restaurants and retail outlets.

The definition and scope of the service concept is wide and can mean any or all the
following: Table 1.1: Scope of services

Service Layout Service as a Concept

Customer Service A service organization
Service-based Activities As a core product
Added Value Activities As an augmented product
As product support
As an act

(a). Service as an organization: It is the entire business or not-for-profit structure that

resides within the service sector. For example, a restaurant, an insurance company a
charity.

(b). Service as core product: The commercial outputs of a service organization such as
a bank account, an insurance policy or a holiday.
 (c). Service as product augmentation: any peripheral activity designed to enhance the
delivery of a core product. For example, provision of a courtesy car, complimentary
coffee at the hairdresser.

(d). Service as product support: Any product or customer-oriented activity that takes
place after the point of delivery. For example, monitoring activities, a repair service,
updating facilities.

(e). Service as an act that is service as a mode of behaviour such as helping out and
giving advice.

However from a market or consumer point of view the relative importance of different
components of the service offering can range vastly from one customer to another. So a
service must be considered from the point of view of many types of customers. For
example, two people may pay the same amount for a service but may be paying for
different aspects of the service. A business person may dine regularly in an expensive,
upmarket restaurant because of the convenience to their place of work and the
perceived status of entertaining guests there. Other customers of the same restaurant
may eat there regularly because of the excellent food, modern décor and menu choice.

Customer Expectation and Perceptions

of service
An organization that understands customer expectations and is able to fulfill them to the
best of its ability is the one that succeeds in the competitive world of marketing. Fulfilling
customer expectations leads to satisfaction and exceeding expectations in terms of
service delivery results in delight. However, when a customer expects superior service
and his experience is otherwise, he feels dissatisfied. Dissatisfaction of customers may
result in several adverse effects such as spread of negative word of mouth. Hence, it is
important for a firm to promise only what they can deliver in order to abstain from having
dissatisfied customers.

Expectations:
People form expectations of the services they are about to avail based on their own
prior experience, familiarity or past experiences of near and dear ones. Perceptions are
affected by expectations. Examples of expectations and perceptions:
1. A student who has taken admission in a reputed University and has heard of the high
quality education being offered by it shall probably perceive the institute in the same
manner once he starts studying there.
2. A girl who has been told how horrifying a horror movie is will probably perceive it the
same way when she watches it.
3. A boy who goes to a salon for a haircut shall probably like the services offered if the
salon has previously been praised by his friends.

Perceptions of Service:

Perception, in general, is defined as a process through which people select organized

stimuli and interpret it such that it frames a meaningful picture. Perceptions vary from
one person to the other. For marketers, perception of customers is more important than
reality since customers make purchases on the basis of their perceptions.

For example, people perceive Dominos to deliver their pizzas in 30 minutes. This is
because they have positioned their product and services in that manner. Adhering to
promises and fulfilling them helps in building brand image.

Perceived Quality of Services:

A service may deliver high quality in reality, however it is not necessary that the quality
of service offered is perceived as superior by the consumer. Perceived quality of the
service shall be dependent on various cues that may be classified as extrinsic or
intrinsic cues. It is difficult to gauge the quality of service being availed since it is
intangible and perishable. At times, there exists a gap between what the customer
expects and what he receives. This is best explained by the framework called Gaps
Model. The larger the gap between expectations and perceptions, more is the
dissatisfaction. Hence, it is in a marketer’s best interest that he narrows the gap to the
maximum extent possible to be able to fulfill the customer’s expectations.
The SERVQUAL scale is used for measuring the “gaps” that exist between the
expectations of the consumer and his perceptions of service availed. The measurement
of these distances between expectations and perceptions, called gaps, is done based
on two major factors:
1. Outcomes:

These depend on the reliability of services being delivered to the consumer. For
example, whether or not a flight you took helped you reach the desired destination.

2. Processes:
These predominantly focus on how desired core services were delivered. This includes
aspects like assurance and empathy. For example, the behavior of flight attendants
while dealing with you in the flight.
Processes aid companies and service houses in not only meeting, but exceeding
customer expectations.
For example, the core service of Amazon is to sell varied products and brands.
However, what helps it succeed in a competitive market is the superior “processes” that
it follows, like timely and reliable delivery of products. One can also track the ordered
product while in transit. All of this contributes immensely in increasing the brand loyalty
of existing customers and also in customer acquisition.