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MBA Notes - Service Marketing and Service Marketing Mix

Question - What do you mean by Service Marketing? Discuss Nature of Services, and Service Marketing Mix

Service Marketing
What is Service Marketing?
A Service is an economic activity, that is intangible or not be touched, not be stored, and not be owned. Postal service Delivering mail is a Service, and the use of expertise like person visiting a doctor is also a service. A service is consumed at the point of sale and does not result ownership.

A product is material or tangible in  nature, can be touched, can be stored, and a product can also be owned, but it is not so in case of a service.

Nature of Service
1. Lack of ownership
One cannot own or store a service as it can be done in case of a product. Service is consumed at the point of sale and does not result ownership. Services are used or hired for a period of time. For example buying a movie ticket the service lasts for two or three hours, but customer want and expect complete entertainment  and excellent service for that time period.

2. Intangible
Services are intangible in nature, you cannot  touch it,  cannot see it, cannot taste it. You cannot touch or hold a service as you can do with a product. For example one cannot touch or hold the services provided by his financial adviser. This makes it difficult to evaluate the quality of service prior to consuming it since there are fewer attributes of quality in comparison to a product. 

3. Inseparable
Service is inseparable in nature means to say that it cannot be separated from the service provider. A product when produced can be taken away from its producer whereas a service is produced at or near the point of purchase. For example visiting a restaurant, you order your meal, wait for the meal, meal delivered to you and services provided by waiter/waitress are all part of service production process and is inseparable. 

4. Perishable
Service last for specific time period, it cannot be stored as like a product for future use. Service production and utilisation goes simultaneously. For example watching a movie in cinema hall, service will only last the duration of the show. Again because of this time constraint consumers demand more. 

5. Heterogeneous
It is very difficult to make each service experience identical, for example you travelling by plane the service quality may differ from the first time you travelled by that airline to the second, because the air hostess is less or more experienced. Systems and procedures are followed in service production process to minimise this heterogeneity and to provide consistent services all the time.

Service Firms
Customer Service in a service firm is highly interactive in nature. Customer interacts with the firm physical facilities, personnel, tangible elements like the price of the service. The success of any service firm depends on how its performance is judged and perceived by the customer. Today, Service Firms are becoming highly competitive, so, it is essential for service firms to provide high quality services for their survival.

Marketing Mix for a Service Firm
An expanded marketing mix for services was proposed by Booms and Bitner (1981), consisting of the 4 traditional elements–product, price, place, and promotion and three additional elements–physical evidence, participants, and process. These additional variables beyond the traditional 4 Ps distinguish ‘customer service’ for service firms from that of manufacturing firms.

Physical Evidence
Physical Evidence such as infrastructure, interior, decor, environmental design, business card, etc that establishes firm's image and influences customer's expectations. Tangible clues help customer judging the quality of service before service usage or purchase. Before service usage the  service is known by the tangible elements that surrounds it. In product marketing quality of product is judged by the product itself.

Participants in service environment also provides clues about what the customer should expect. There is more variability among service outcomes in labour-intensive services than in machine-dominated service delivery; bank customers who use human tellers will experience far more service variability than those using automatic teller machines. Training the personnel adequately is a major factor influencing the provision of quality service. Hence, providing customer service in a service industry depends not only on recognising customer desires and establishing appropriate standards, but also on maintaining a workforce of people both willing and able to perform at specified levels.

The how of service delivery is called the ‘process’ or the ‘functional’ quality. The attitudes and behaviour of service personnel influence perceived service performance. These behaviours are usually associated with what is called the ‘process’. For example, when things go wrong in a service encounter, employees frequently attempt to sooth disgruntled customers by apologising, offering to compensate, and explaining why the service delivery failure occurred. Any of these behaviours may influence customer attributions about the firm’s responsibility for the failure and the likelihood of it occurring again

7 Ps of the Service Marketing Mix
The customer service for a service firm cannot be explicitly divided into pre-transaction and post-transaction elements, because production and consumption of a service occurs at the same time. The service provided can prove effective in terms of satisfying the customer, only if the gap between expected service and perceived service is bridged. The wider this gap–the more the number of disappointed customers; and disappointed customers may cause the image of the firm to deteriorate.

1. Product/Service
Most services are intangible because they are performances rather than objects, precise manufacturing specifications concerning uniform quality can rarely be set. Because of this intangibility, the firm may find it difficult to understand how consumers perceive their services. For developing a good customer service, the service marketer should stress on tangible cues and also create a strong organisational image. This can be done by communicating clearly to the customers the features of the service being provided.

2. Price
Because of the intangible nature of the service–price becomes a pivotal quality indicator in situations where other information is not available. It is essential, therefore that the service firm engage in competitive pricing. Being an important tangible cue, price of the service is an area in which the service marketer can concentrate to get a competitive edge. In the case of pure services, as in the present context, like medical services or legal services price is an important factor because it is a basis for the customer to make a final choice among several competing service organisations.

3. Place
Because services are performances that cannot be stored, service businesses frequently find it difficult to synchronise supply and demand. Also, services cannot be inventoried for the same reason. Consequently the service firms must make simultaneous adjustments in demand and capacity to achieve a closer match between the two. Also, the firm could use multisite locations to make the service more accessible to the users. If the service is located in a remote area, regardless of the other advantages of the service, customers would not be motivated to use the service.

4. Promotion
The service marketer should constantly simulate word-of-mouth communications apart from using regular advertising. If customers in an existing market, for some reason or another have an image of the firm which does not correspond with reality, traditional marketing activities can be expected to be an effective way of communicating the real image to the market. Communication includes informing the customers in a language they can understand. Specially in services post-purchase communication is very important, because retaining existing customers is as important, or even more important than attracting potential customers.

5. Physical Evidence
Physical evidence, as already discussed under the services marketing mix, like the environmental decor and design significantly influence the customer’s expectations of the service. Since services cannot be readily displayed, firms should create a conducive environment that help the customers to develop a positive perception of the service. For example, people would not like to wait for a medical service or a legal service, if the atmosphere of the place they are made to wait is unpleasant. Customers can be put off by a mere change in the layout of the service facility or even the absence of clear signboards.

6. Participants
Most services are highly labour intensive; the behaviour of the personnel providing the service and the customers involved in production (due to the inseparable nature of services), have an effect on providing efficient customer service. To achieve customer-oriented personnel, the organisation needs to recruit and select the right people, and offer an appropriate package of employment, in order to enhance their skills and encourage them. Because of the constant interaction between the employees involved in the service, and the customers–there is a mutual dependence between the two. If the customers are dissatisfied, employees experience discomfort working with unhappy customers, and customers are unhappy because the employees were not trained in customer satisfaction. The extent of this mutual dependence influences the customer’s perception of the service.

7. Process
In the ‘how’ of the service delivery is extremely important because the service and the seller are inseparable. The functional quality, or the ‘how’ of service delivery is especially important to service industries, as it is difficult to differentiate the technical quality, or the ‘what’ of service deliveryPrevious experience with a service also influences the expectations of the customer. If the customer has had a bad experience with the
service on any previous occasion, it will influence his or her future perceptions of the service. It is essential to train the front line employees, whose actions and behaviour influence the customer’s opinions of the organisation and the actual service provided.

What the customer actually gets out of the service, and how he or she perceives the service may not always match. So the customer’s judgement or evaluation of the service is the crucial factor in the delivery of a service. But service marketers can influence these perceptions to a large extent by controlling favourably the service marketing mix variables. It is all the more difficult because a service cannot be broken down into logical steps or sequences.

If service organisations pay more attention to their employees as well as their customers, it would increase both employee motivation as well as customer satisfaction.

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