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Unit

Underpinning Concepts of Services Marketing

What is a Service?
A service is an act or performance offered by one party to another. Although the process may be tied to a physical product, the performance is
essentially intangible and does not normally result in ownership of any of the factors of production. Services are economic activities that create
value and provide benefits for customers at specific times and places as a result of bringing about a desired change in the recipient of the service.
(Christopher Lovelock)

Services are deeds, processes, and performances. Services are not tangible things that can be touched, seen, and felt, but rather are intangible
deeds and performances. (Zeithaml and Bitner)1 Concepts in Service Marketing What is a Service?

Defintion-1

A service is an activity or series of activities of more or less intangible nature that normally, but not necessarily, take place in interactions between
customer and service employees and/or physical resources or goods and/or systems of the service provider, which are provided as solutions to
customer problems. (Christian Gronroos)

Defintion-2

Services include all economic activities whose output is not a physical product, is generally

1consumed Concepts in Service Marketingat the time it is produced, and provides added value in formsthat are

Ctd…

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essentially intangible concerns of it firs
 s t

Conceptualizing The Service ‘Offering’

Core services vs. augmented or supplementalServices

Charles Revson of Revlon : ‘In the factory we make cosmetics; in the drug store we sell hope.’

The augmented product , supplementary,

Conceptualizing The Service ‘Offering’

The ‘augmented product’ for services is usually in the form of further services and these are also referred to as.

Form of additional benefits:

Credit and financing,

Fast and reliable delivery,

Free-phone, Supportiveness, and

Repair and maintenance.

Conceptualizing the Service ‘Offering’

Examples of Core Benefits of Services:

Rail travel – safe and reliable transportation

Unit-1 Concepts in Service Marketing

peripheral an facilitating
: offer additiona
 d l

3
Tax Consultant – peace of mind

Education Course – career enhancement, self-actualization

Hotel– hospitality, rest and

Recuperation/recovery/convalescence Core and Secondary/Supplemental

Aspects of An Airline Service

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 Cleanliness of plane
and airport lounges
Regular & fast
Airport
Check -In
Transport Guidance and
Facilities
Addis Ababa- Directions
London Helpfulness of
Refreshment on
Request and Check -in & airline
Catering services staff
Entertainment/in -flight
movies/ games for
children

Unit-1 Concepts in Service Marketing

Concepts of Tangible and Intangible Dimensions

The tangible/intangible dimensions as a basis for conceptualizing different types of services, simple to complex.
5 Customer expectations have two dimensions: instrumental and psychological aspects. (Greenrooms)

The ‘instrumental’ dimension: the ‘what’ of service delivery.

The psychological dimension: the ‘functional’ aspects or ‘how’ of service delivery

Create good ‘functional’ quality as well as ‘technical’ quality and so contribute to the overall image of the service package and service
company.

Tangible and Intangible Dimensions of Service Delivery

Tangible Elements (Relatively Easy To Measure) Intangible Elements

( Relatively Difficult To Measure)

Physical facilities Image

Credit facilities Congenial atmosphere

Speed of delivery Security/confidentiality

Technical expertise/support Advice/guidance

Appearance of staff Competence of staff

Responsiveness

Accessibility/courtesy

Individual customer service

Service as an Organization,
That is the entire business or not-for-profit structure that resides within the service sector.
For example, a restaurant, an insurance company, a charity.
Service as Core Product:
•

Unit-1 Concepts in Service Marketing

7

Industries Classified Within the Service Sector

 Transportation

 Public utilities

 Communication

 Wholesale and retail trade

 Finance and banks

 Insurance

 Real estate

 Hotels

 Theatre halls

 Auto repair

 Health services

Services versus Customer Service

Services are provided for sale by a company and Customer service is the service provided in support of a company’s core products.

Unit-1 Concepts in Service Marketing

8
It includes:

 Answering questions

 Taking orders

 Dealing with billing issues

 Handling complaints

 Scheduling maintenance or repairs

 There is no charge for customer service

Quality customer service is essential to building

Tangibility Spectrum
Intangibility is a key determinant of whether an offering is or is not a service.

Very few products are purely intangible or totally tangible i.e., there are very few “pure services” or “pure goods”

Unit-1 Concepts in Service Marketing

•
 A Scale of Elemental Dominance

Source: Shostack (1982)

Why Services Marketing?

1. A Service Based Economy

Economic importance of services can explained by the following:

The service sector represents major share of GDP

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The service sector has become a major employer
2. Services as a business imperative in Manufacturing and IT

Manufacturing and technology industries revenues and profit are coming from services
Customers not only expect excellent, high-quality goods; they also expect high levels of services all with them.
3. Services Marketing Is Different
More variable exist in the marketing mix of services than for consumers goods.
Marketing and operations are more closely linked.

1 Concepts in Service Marketing

Customer/employee interface is high

Differences in Goods vs. Services Marketing

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 Goods Services Resulting Implications
Tangible Intangible Services cannot be inventoried

Services cannot be patented

Services cannot be readily

displayed or communicated.

Pricing is difficult
Standardized Heterogeneous Service delivery and customer satisfaction
(variable) depend on employee actions.

Service quality depends on many

uncontrollable factors.

There is no sure knowledge that the

service delivered matches what was
planned and promoted.
Production separate Simultaneous Customers participate in and affect the
from consumption production and transaction.
consumption
Customers affect each other.
(inseparable) Classification of
Service Employees affect the service outcome.

Decentralization may be essential. Mass

production is difficult
Nonperishable Perishable It is difficult to synchronize supply and
demand with services.
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Marketing Services cannot be returned or resold
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 Level 1: Nature of Organization

Category Option AAUCC

Purpose (satisfy needs of) Individuals Purpose is to satisfy the needs of both individuals, government agencies,
NGOs and business firms.
Business

Both

Concepts
in Structure Profit structure is a government
Service
Nonprofit organization

Type Public Private Type is a public institution

Level 2: Nature Of Service

Degree of tradability Embodied service Pure service Degree of tradability is a pure service

Service directed toward Individuals Things Service is directed toward individuals

Degree of merchantability High Degree of merchantability is low

Medium

Low

Marketing

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Level 4: Nature of Demand

Level of demand Demand exceeds capacity Demand exceeds capacity

Demand equals capacity

Capacity exceeds demand

Degree of fluctuation Wide Degree of fluctuation is variable

Narrow

Variable

No fluctuation

Level 5: Service Package

Number of services and goods One service Multiple service

One service, one good

One service, multiple goods

Multiple services

Multiple services, one good Multiple

services, multiple goods
Degree of equipment base High Degree of equipment base is medium

Unit-1 Concepts in Se Medium

rvice Marketing Low

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 • The services marketing triangle shows the three interlinked groups that work together to develop, promote and deliver services.
The key players are:
 The company
 The customers, and
 The providers
 There are three types of marketing that must be successfully carried out for a service to succeed:
 External marketing: Making promises
 Internal marketing: Enabling promises
 Interactive marketing: Keeping promises
1 Concepts in Service Marketing

The Service Marketing Triangle

External Marketing: Making Promises

External marketing is just the beginning for services marketers: Promises made must be kept.

1 Concepts in Service Marketing

A company makes promises to its customers

1.The Service Marketing Triangle

2) Interactive Marketing: keeping promises

Keeping promises or interactive marketing is critical from the customer's point of view.

3.Service promises

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 are kep or broke by
 t n
The Service Marketing Triangle

3) Internal Marketing: enabling promises

To deliver on the promises made, service providers must have the skills, abilities, tools, and motivation. i.e. they must be enabled.

Enabling involves:

Recruiting,

Training

Providing with tools and appropriate internal systems

Rewarding for good service

Internal marketing hinges on the assumption that

The Gaps Model of Service Quality

Parasuraman et al. (1985) proposed that service quality is a function of the differences between expectation and performance along the quality
dimensions.

The Gaps Model of Service Quality


Unit-1 Concepts in Service Marketing
 The Gaps Model of Service Quality

The various gaps visualized in the model are:

Gap 1: Difference between consumers’ expectation and management’s perceptions of those expectations, i.e. not knowing what
consumers expect.
Gap 2: Difference between management’s perceptions of consumer’s expectations and service quality specifications, i.e. improper
service-quality standards.
Gap 3: Difference between service quality specifications and service actually delivered i.e. the service performance gap.
Gap 4: Difference between service delivery and the communications to consumers about service delivery, i.e. whether promises
match delivery?
Gap 5: Difference between consumer’s expectation and perceived service. This gap depends on size and direction of the four gaps
associated with the delivery of service quality on the marketer’s side.

Unit-1 Concepts in Service Marketing

 The Gaps Model of Service Quality

Later SERVQUAL was revised in 1991 by Figure below. Replacing “should” word by “would” and in 1994 by reducing the total number of items
to 21, but five dimensional structure remaining the same.

Unit-1 Concepts in Service Marketing

 The Gaps Model of Service Quality

In addition to this empirical research, the authors characterized and further delineated the four gaps identified in their research of 1985.

This led to extended service quality model (Figure belo).

Unit-1 Concepts in Service Marketing

 Extended Model of Service Quality

Services Quality Dimensions

1 Concepts in Service Marketing

Technical dimensions are the ‘what’ or the instrumental dimensions of service delivery.
Functional dimensions are the ‘how’ dimensions of service delivery.
Tangible dimensions relate to the more concrete evidence of a service actually taking place.
Intangible dimensions are usually the core aspects of the service, the actual process, deed, act, performance central to the service
delivery.
Physicalfacilitiesand service-
1Scapes Concepts in Service Marketingreferto the immediate
Reliability entails the consistency of service performance and dependability.
Responsiveness concerns the willingness and readiness of staff to deliver the service and respond to customers’ requirements.
Competence refers to the ability of the service

Unit company- to actually deliver the service.

Credibility concerns the trustworthiness, believability and honesty experienced during the service encounter.
Empathy and understanding
1. Customer Concepts in Service Marketing is one of the most intangible
The SERVQUAL Scale

The scale was first published in 1988; improvements and revisions have been made since then.

There are 21 items distributed across the five quality dimensions.

One scale is devoted to perceptions, the other to expectations. Service quality is indicated by the gap between perceptions and expectations.

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environmen inwhere
dimensions practice
a. service activit
 t y
Extract from SERVQUAL: The reliability dimension – perception and expectation

.The SERVQUAL Scale

Statements

Unit-1 Concepts in Service Marketing

 The Major Criticisms SERVQUAL
Whilst SERVQUAL remains a significant contributor in the literature, a number of criticisms have been made.
A brief summary of the major criticisms is set out below:
1) It focuses on the functional aspects of the process (the ‘how’ of the service process), neglecting the outcome.
Of course services are by their very nature experiences, making the functional aspect of key importance.
However services can and do deliver a tangible
1 Concepts in Servoutcomeice Ma, e.g. plasticrketing surgery.
2) Its application across the service sector has been called into question.

Services can vary in many respects, revealing quite different and unique dimensions.

3) It is not clear how the evaluation of expectations and perceptions occurs, 17 i.e. as specific points on the scale.

Equally, how do expectations and perceptions change over time?

5) How are gaps between P and E to be interpreted particularly where the same gap score, in this case 1 can be produced in 6 different
ways (P 1, E 2; P 2, E 3; P 3, E 4; P 4, E 5; P 5, E 6; P 6, E 7).
Do these tied gaps mean equal perceived service quality? ETC:

Unit-1 Concepts in Service Marketing

SERVQUAL does not allo for that.