Module - 1

Introduction to Services
 Contents of the Module
• Meaning of Services,
• Differences between goods and services,
• Characteristics of Services,
• Service marketing mix,
• Challenges in services marketing,
• Classification of Services,
• Significance of services marketing,
• Growth of service sector,
• Factors responsible for growth of service sector in India.
 Class activity
• Which service did you recently avail of?
• What were your expectations before using the service?
• How was your overall experience with the service?
• Were there any specific aspects of the service that stood out to you, either
positively or negatively?
• Were your expectations met after using the service? Why or why not?
• How would you rate the service on a scale of 1 to 10?
 Services - Meaning
• Services are deeds, processes, and performances provided, coproduced, or
cocreated by one entity or person for and/or with another entity or person.
• Services are activities, benefits or satisfactions which are offered for sale or
are provided in connection with the sale of goods.
• Services include a wide range varying from education, transportation,
hospitality, finance, real estates, accounting, banking, insurance, taxation,
consultancy, health care etc. These services are together called the services
sector or the tertiary sector.
• An activity which has some element of intangibility associated with it which
involves some interaction-with customers for property in their possession, and
does not result in a transfer ownership.
 Services - Meaning
A service as a deed refers to a one-time Performance provider involves a dynamic
action or task performed for someone else. interaction where the provider delivers an
It's a discrete activity with a clear experience directly to the recipient. It
endpoint. often requires specific skills and expertise.
Examples: House cleaning, automobile repair, Examples: HR training, Financial advisory
landscaping, haircut, tutoring, delivery services services, market research, workshops, fitness
etc., training, stand up comedy show etc.,

• Services are deeds, processes, and performances provided, coproduced, or

cocreated by one entity or person for and/or with another entity or person.
Process involves a series of interconnected
actions or steps that lead to a desired
outcome. It's a more complex and ongoing
set of activities.
Examples: Software development, Event
planning, healthcare treatment, supply chain
management, project management, BPO, content
marketing strategy etc.,
 Differences between Goods and Services
Goods Services Resulting Implications

Tangible Intangible Services cannot be inventoried.

Services cannot be easily patented.
Services cannot be readily displayed or communicated.
Pricing is difficult.
Standardized Heterogeneous Service delivery and customer satisfaction depend on
employee and customer actions.
Service quality depends on many uncontrollable factors.
There is no sure knowledge that the service delivered
matches what was planned and promoted.
Production Simultaneous production Customers participate in and affect the transaction.
separate and consumption Customers affect each other.
from consumption Employees affect the service outcome.
Decentralization may be essential.
Mass production is difficult.
 Differences between Goods and Services contd…
Goods Services Resulting Implications

Nonperishable Perishable It is difficult to synchronize supply and demand with services.

Services cannot be returned or resold.
Services for any given time-period cannot be sold or
delivered at a later date.
 Characteristics of Services
• Intangibility: Cannot be seen, touched and smelt.
• Perishability: Cannot be resold, saved, stored, and returned once utilized.
• Inseparability: Production and consumption at the same time.
• Heterogeneity: Reviews of same day customers differ.
• Ownership: Skill of a service provider cannot be owned.
• Simultaneity: Services don’t move through the channel of distribution.
• Quality Measurement: Difficult to rate
 Characteristics of Services
• Intangibility: The services provided by any service provider cannot be seen,
touched and smelt. Services don’t have a physical existence. One of the most
defining features of service that sets it apart from a product.
• Perishability: The benefits derived from services cannot be resold, saved,
stored, and returned once utilized. Once service is delivered, it cannot be taken
back or transferred to another user.
• Inseparability: The service is produced by the service provider and consumed
by the customer at the same time. A cobbler polishing his customer’s shoes is
delivering his service, and the customer is getting his problem solved then and
there.
• Heterogeneity: Every service has its unique offering, and hence, its benefits
cannot be copied. Products can be mass-produced in factories, but the services
provided cannot be repeated.
 Characteristics of Services contd…
• Ownership: Every service has its unique offering, and hence, its benefits cannot
be copied. Products can be mass-produced in factories, but the services provided
cannot be repeated. Service cannot be owned as the customer can utilize the
skill of the service provider for short time but not own it.
• Simultaneity: Services can’t be delivered to customers or users. Services don’t
move through the channel of distribution. For availing the services, it is
essential that the users are brought to the providers or the providers go to the
users. It is right to say that the services have limited geographical areas.
• Quality Measurement: The quality of service requires another tool for
measurement. We can’t measure it in terms of service level. It is very difficult to
rate or quantify the total purchase.
 Classification of Services Explanation
• People processing service: Physical presence of the customer at the service
system or location, to avail the service.
• Examples: Dental service, fitness sessions, restaurants, theme parks etc.,
• Product possession service: Related to a specific product or its possession with
limited or no involvement of the customer.
• Examples: Storage facilities, packers & movers, automobile maintenance etc.,
• Mental stimuli service: Influence the consumer’s mental abilities, religious
believes, behavior, perception, lifestyle and attitude.
• Examples: Counselling and life coaching, religious counseling, hypnotherapy, education
etc.,
• Information service: Intangible products where the information acts as a
product, or information technology is used.
• Examples: Digital marketing services, weather apps, navigation apps, Government
information portals, online travel guides etc.,
 Classification of Services
• People processing service: People processing here refers to the physical presence of the
customer at the service system or location, to avail the service. For example, a person
needs to be physically present at the ‘salon’ to get a hair cut. Service of dentist etc.,
• Product possession service: Such services are related to a specific product or its
possession with limited or no involvement of the customer. For instance, the services
offered by ‘packers and movers’ are primarily concerned with the safe shifting of
customer’s belongings, i.e., furniture and assets from one place to another.
• Mental stimuli service : The services which influence the consumer’s mental abilities,
religious believes, behavior, perception, lifestyle and attitude are termed as mental
stimulus processing services. Like, educational institutes deliver knowledge which
develops the mental ability of a person.
• Information service : These are a unique form of intangible products where the
information acts as a product, or information technology is used. Such decisions are
considered to be critical due to massive investment and a high level of risk; therefore,
absolute customer involvement can be seen over here.
 Broader Classification – Activity
• Business services.
• Communication services.
• Construction and related engineering services.
• Distribution services.
• Educational services.
• Environmental services.
• Financial services.
• Health-related and social services.
• Tourism and travel-related services.
• Recreational, cultural, and sporting services.
• Transport services.
 Service Marketing Mix
• Services are usually produced and consumed simultaneously, customers are
often present in the firm’s factory, interact directly with the firm’s personnel,
and are actually part of the service production process.
• Also, because services are intangible, customers will often be looking for any
tangible cue to help them understand the nature of the service experience.
• For example, in the hotel industry the design and decor of the hotel as well as the
appearance and attitudes of its employees will influence customer perceptions and
experiences.
• Product: In the context of services, the "product" refers to the service offering
itself. This includes defining the core service, the additional features, and any
value-added elements. It's about identifying what the customer is buying and the
benefits they will receive.
 Service Marketing Mix contd….
• Price: Pricing services can be complex due to the intangible nature of services.
Pricing strategies need to consider factors such as perceived value, customer
willingness to pay, and cost structure. Pricing can be based on hourly rates,
fixed fees, subscription models, or performance-based pricing.
• Place: Place refers to the distribution channels and methods used to deliver the
service to customers. This includes physical locations, online platforms, and any
intermediaries involved in service delivery.
• Promotion: Promotion involves marketing communication strategies to create
awareness, interest, and desire for the service. It includes advertising, public
relations, direct marketing, social media, and other methods to reach the target
audience.
 Service Marketing Mix contd….
• People: People play a significant role in service delivery. All human actors who play a part in
service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the
customer, and other customers in the service environment. Staff training, attitude, and
professionalism are crucial for delivering a positive service experience.
• Physical Evidence: The environment in which the service is delivered and where the firm
and customer interact, as well as any tangible components that facilitate performance or
communication of the service. Since services are intangible, physical evidence helps
customers evaluate and judge the quality of a service. This includes the tangible aspects like
facilities, equipment, branding, and any visual cues that communicate the service quality.
• Process: The procedures, mechanisms, and flow of activities by which the service is
delivered, consumed, and cocreated—the service delivery and operating systems. The
process refers to the procedures, systems, and interactions that customers go through when
receiving the service. Efficient and customer-centric processes contribute to customer
satisfaction. Process design includes steps to enhance convenience and minimize wait times.
Service Marketing Mix
 Product: Price: Promotion:
Place:
Tangible or intangible Amount a customer Marketing
Customer Access
item pays for a product Communication
• Design • Price Strategy • Franchising • Advertising, Public
• Branding • Allowance: rebate • Market Coverage Relations, Direct
• Packaging for distributors • Assortments marketing, Sales
• Guarantees & • Discounts • Location decisions promotions
warranties • Payment terms • • Message strategy
Transport, warehouse
• Returns & PLC • Message frequency

People: Process: Physical evidence:

Human factors who Procedures, mechanisms and environment in which service
participate in service delivery flow of activities occurs/ tangible cues
• Process design & Blueprinting • Physical appearance & ambiance
• Employees of service facilities
• Recruitment & training • Standardization Vs.
• Signage and Symbols: airports &
• Attitude Customization roads
• Handling Complaints • Diagnosing fail-points • Equipment and Tools: state of art
• Customers • Monitoring & tracking service machines, well equipped labs
performance • Uniforms and Dress Code
• Managing customer
• Alignment with best practices • Sensory Elements: music, scents
interactions and lighting
Example of a Service Blueprint
 Challenges of Service Marketing
• Tangibility : A product is tangible, which means the customer can touch and see the product before
deciding to make a purchase. Items such as packaging and presentation may compel a customer to
purchase a product. Services, on the other hand, are not tangible, which can make them more difficult to
promote and sell than a product.
• Relationship and Value : A service is more about selling a relationship and the value of the relationship
between the buyer and seller of the service. For example, a car is something a buyer can touch and see as
well as use. A service, such as lifestyle coaching, for example, is not tangible. A lifestyle coach may be
able to assist clients in creating a life plan and implementing steps to transform his life into one that the
client wants to live, but it is not something tangible that the client can place in his home and look at
every day.
• One Versus Many : Marketing products tends to involve multiple products that make up the line. For
example, cleaning product manufacturers tend to market not just one cleaning product. Instead, they
have a line of cleaning products to serve the various needs of their customers. Services, on the other
hand, typically have a single option. It can be harder to promote and sell the reputation of one single
service over the benefits of many different products.
 Challenges of Service Marketing
• Comparing Quality : Measuring the quality of a product is easier than measuring that of a
service. If a customer buys a cleaning product to clean the kitchen sink and it doesn't do
product is zero. On the other hand, it is harder to measure the quality of a service
• Return Factor : If a customer purchases a product, the customer and can return it the does
product for her money back or at least to receive a store credit. A service is consumed as it is
offered, so it lacks the return factor that a product has. Some service providers overcome this
by offering money-back guarantees.
• Services are often produced and consumed simultaneously : his creates special challenges
in service quality management that product companies do not even consider. Products are
tested before they go out the door. If a product has quality problems while in production the
company can fix them and customers are none the wiser. Service production happens with
the customer present, creating a very different and challenging dynamic.
• Trust : Some level of trust in the service organization and its people must be established
before clients will engage services. This is as important, sometimes more important, than the
service offerings and their value proposition is necessary.
 Challenges of Service Marketing
• Competition : Competition for product companies are other product companies.
Competition for service companies are often the clients themselves.
• Proactive lead generation is difficult : Many service companies have tried,
and failed, at using lead generation tactics that work wonders for product
companies. Implemented correctly, traditional product techniques, such as direct
marketing and selling, can work for services, but the special dynamics of how
clients buy services must be carefully woven into your strategy.
 Significance of Service Marketing
• Development of Secondary and Primary Sector :The smooth running of primary and
secondary sectors depends on different services. Thus, the service industry, as a whole
plays an important role in the efficient working of these sectors.
• Rise in employment : Aviation, brokerages, tourism, hospitality, software, entertainment,
retail, BPO’s are some of the sectors that get employments from the service industry. The
entire country gets benefited as a result.
• Upturn in National Income : If the service sector is expanding and growing, this will
help in National Income. There would be the same amount of development and growth in
the country as any other sector.
• Assistance to basic services : Basic services of the country like post offices, insurance,
courts, transport, banks, telecommunications, educational institute, hospitality get
assistance from the service sector. These services are vital for a common man in their
daily lives
• Boost a nation’s image : Services like ITES, BPO will enhance a country’s image in front
of the world. This portrays a bright future for the nation in front of the world.
 Significance of Service Marketing contd…
• Upturn in exports : Quality service sectors will bring in more demand from
countries outside the international borders. These, in turn, boost the exports and
helps to rake in foreign currency that adds to the economic stability of a country.
• Opportunities for more women : There is a rise in demand for working
women in the service sector. This has opened up new avenues for women to
work and be equal to men at work.
 Service Sector in India – Self learning
• Services Sector in India: Overview, Market Size, Growth, Companies...IBEF
 Factors responsible for growth of service sector in India
• The major contribution to GDP in India comes from the service sector which has grown largely
since liberalization. The major factors responsible for the high growth of the service sector are as
follows:
• High Income Elasticity of Demand: It has been noticed that income elasticity of demand for services is more
than one. Hence, the demand for services increases at a faster rate than demand for commodities, with the
increase in income.
• Technical and Structural Changes: The technical and structural changes in the economy have made it an
attractive destination for outsourcing, thus contributing towards the growth of service sector.
• Information Technology Revolution: With the advent of the information technology revolution, it has
become possible to deliver services over a long distance at a reasonable cost. Thus, trading in services has
increased worldwide, also benefitting India.
• Increase in population: As the population grows, there is a greater demand for services like schools, colleges,
and hospitals to meet the needs of the expanding communities. This population-driven demand not only
stimulates economic growth but also creates employment opportunities within the service sector, as more
teachers, doctors, and healthcare professionals are needed to meet the increased demand for services.
• Women in workforce: the increasing participation of women in the workforce has generated a higher demand
for services that assist with household and childcare responsibilities. This trend not only reflects societal
changes but also stimulates the growth of the service sector by creating new job opportunities and businesses
catering to these evolving needs.
End of Module 1