Syllabus topics (RTMNU)
- Services Marketing Concept
- Distinctive Characteristics of Services
- Services Marketing Triangle
- Purchase Process for Services
- Marketing Challenges of Services
- Role of Services in Modern Economy
- Services Marketing Environment
- Goods vs Services Marketing
- Type of Contact: High Contact Services and Low Contact Services
Services Marketing Concept
A service is an act or performance offered by one party to another that is essentially intangible and does not result in ownership of anything (Philip Kotler). Examples: banking, insurance, hotel stay, haircut, education, mobile network.
Services marketing is the process of planning, pricing, promoting and delivering services to satisfy customers' needs at a profit, while managing the special features of services (intangibility, people involvement).
Distinctive Characteristics of Services (IHIP)
- Intangibility: cannot be seen, touched or tasted before purchase. Marketers use physical evidence (clean office, uniforms) to build trust.
- Heterogeneity (variability): quality varies with who gives the service, when and where. Solution: training and standard procedures.
- Inseparability: production and consumption happen at the same time; the customer is often present (doctor and patient).
- Perishability: services cannot be stored β an empty flight seat or hotel room today is lost revenue.
- No ownership: the customer gets use or experience, not ownership.
Why services marketing is needed: growth of the service economy, intense competition, rising customer expectations, and the special nature of services that the traditional 4 Ps cannot handle alone.
Services Marketing Triangle
The triangle (Kotler; Zeithaml and Bitner) shows three groups β Company, Employees and Customers β linked by three types of marketing:
- External marketing (company β customers): making promises through advertising, pricing.
- Internal marketing (company β employees): enabling promises through training, motivation, tools.
- Interactive marketing (employees β customers): keeping promises at the "moment of truth".
Purchase Process for Services
- Pre-purchase stage: need awareness, information search (reviews, word of mouth), evaluation of alternatives, perceived risk is high.
- Service encounter stage: the customer interacts with staff, facilities and other customers; experience is formed.
- Post-encounter stage: evaluation of satisfaction, repurchase, loyalty, word of mouth or complaints.
Marketing Challenges of Services
- Hard to show and explain an intangible product.
- Maintaining consistent quality.
- Matching demand with capacity (perishability).
- Difficult pricing β cost is hard to calculate.
- Customer participation can affect quality.
- Difficult to protect ideas (no patents for most services).
- Managing employees who are part of the product.
Role of Services in Modern Economy
The services sector is the largest contributor to India's GVA (over half β check latest Economic Survey figure) and to world trade. Role: employment generation; growth of GDP; foreign exchange through IT and IT-enabled service exports; supports agriculture and industry (banking, transport, logistics); improves quality of life (health, education, tourism); encourages entrepreneurship and start-ups.
Services Marketing Environment
Micro environment: company, suppliers, intermediaries, customers, competitors, public. Macro environment (PESTLE): political, economic, social, technological (digital payments, apps), legal (Consumer Protection Act 2019, IRDAI and RBI rules), and environmental factors.
Goods vs Services Marketing
| Basis | Goods | Services |
|---|---|---|
| Nature | Tangible | Intangible |
| Storage | Can be stored | Perishable |
| Quality | Standardised | Variable |
| Production & consumption | Separate | Simultaneous |
| Ownership | Transferred | Not transferred |
| Marketing mix | 4 Ps | 7 Ps |
| Customer role | Little | Co-producer |
High-Contact and Low-Contact Services
- High-contact services: customer visits the service facility and interacts closely with staff for a long time β hospitals, hotels, salons, schools, airlines. Staff behaviour and physical surroundings are very important.
- Low-contact services: little or no physical contact; delivered through technology β internet banking, mobile recharge, online insurance, courier tracking. Ease of use and reliability of technology matter most.
Likely exam questions
- (Long, 8/16 marks) Define services. Explain the distinctive characteristics of services and the marketing challenges they create.
- (Long, 8/16 marks) Explain the services marketing triangle and distinguish between goods marketing and services marketing.
- (Short, 4 marks) Explain the purchase process for services.
- (Short, 4 marks) Distinguish between high-contact and low-contact services.
- (Short, 4 marks) State the role of services in the modern economy.