Dr.

Vandana T Khanna

Services Marketing-Mix
Services has extended marketing-mix. The 7Ps are:
Product (All Aspects of Service Performance that Create

Value)
Physical goods features

Quality level
Accessories
Guaranties
Product lines
Branding

For services, it is also referred as an outcome. It has two

components:
Technical (What)
Functional (How)

Services Marketing-Mix
Price (Marketers Must Recognize that Customer Outlays

Involve More than the Price Paid to Seller)

Flexibility
Price level
Terms
Differentiation
Discounts
Allowances

In services the word pricing is used in different terms keeping in

mind the nature and type of the service. Prices are to be set which
are consistent with customers perceived value and perceived
quality.

Services Marketing-Mix
Place (Delivery Decisions: Where, When, and How)

Channel type

Exposure

Intermediaries

Outlet locations

Managing channels

Distribution embraced three interrelated elements

Information and promotion flow
Negotiation flow
Product flow

Services Marketing-Mix
Promotion (Informing, Educating, Persuading, and

Reminding Customers)

Promotion blend
Sales people (Number, Selection, Training & Incentives)
Advertising (Targets, Media Types, Types of Ads)
Sales promotion
Publicity
Word-of-mouth

Services Marketing-Mix
People (Managing the Human Side of the Enterprise)

Employees (recruiting, training, motivation, rewards,

teamwork)

Customers (education, training)

There is need to develop Service Culture & Service Attitude.

Service attitude includes:
Commitment to excellence, willingness to put customer first
Mind-set attitude
Dont give cold NO

Services Marketing-Mix
Physical Evidence (Designing the Servicescape and

providing tangible evidence of service performances)

Facility design
Equipment
Signage
Employee dress
Other tangibles (Reports, Business Cards, Statements, etc.)

The physical evidence of any organization can broadly be broken

into two categories:
Dominant/Essential Evidence
Peripheral Evidence

Services Marketing-Mix
Process (Method and Sequence in Service Creation and

Delivery)

Flow of activities
Number of steps
Customer involvement

There is no clear cut input or output. It is a process of adding

value or utility to the inputs to create outputs which are of utility
and gives satisfaction to the customers.

Product
A product is anything that can be offered to a market
for attention, acquisition, use or consumption, that
might satisfy a want or need. It includes physical objects,
services, persons, places, organizations and ideas.
Philip Kotler

Service Products
A service product comprises of all elements of service performance,
both tangible and intangible, that create value for customers.
Service products consist of:
Core Product central component that supplies the principal,
problem-solving benefits customers seek
Supplementary Services augments the core product, facilitating
its use and enhancing its value and appeal

Delivery Processes used to deliver both the core product and each
of the supplementary services

Designing a Service Concept

Service concept design must address the following issues:
How the different service components are delivered to the

customer
The nature of the customers role in those processes
How long delivery lasts
The recommended level and style of service to be offered

Service Product
Service Level is a measure of the levels of the explicit
and implicit benefits provided to the consumer and is
comparable to the quality level of manufactured goods
in the sense that it specifies performance characteristics
of the product.
It includes different activities like booking time, waiting
time, processing time, greeting, thanking, etc.

The Service Package

Explicit Services: Benefits readily observable by the
senses. The essential or intrinsic features. Examples are
quality of meal, attitude of the waiter, on-time
departure.
Implicit Services: Psychological benefits or extrinsic
features which the consumer may sense only vaguely.
Examples are privacy of loan office, security of a well
lighted parking lot.

The Service Package

Supporting Facility: The physical resources that must
be in place before a service can be sold. Examples are
golf course, ski lift, hospital, airplane.
Facilitating Goods:
The material purchased or
consumed by the buyer or items provided by the
consumer. Examples are food items, auto parts, legal
documents, golf clubs.

Service Decision Framework:

Decisions Involving Product Elements

Core and Supplementary Product

Design: What Do We Offer and How Do We
Create and Deliver It?

Supplementary
services offered
and how created
and delivered

Delivery Concept
For Core Product
Scheduling Process
Core

Service
Level

Customer
Role

Core and Supplementary Services in a

Luxury Hotel (Offering Guests Much More than a
Budget Motel!)
Reservation
Cashier

Valet
Parking

Business
Center

Room
Service

Reception
A Bed for the
Night in an
Elegant Private
Room with a
Bathroom

Wake-up
Call
Telephone

Baggage
Service

Cocktail
Bar
Entertainment/
Sports / Exercise

Restaurant

Temporal Dimension to Augmented

Product
Reservation
Parking

Get car
Check out
Internet

Check in
Internet
Use
Room

USE
GUESTROOM OVERNIGHT
internet

Porter
Meal

Before Visit

Pay TV
Room service

Time Frame of an Overnight Hotel Stay

(real-time service use)

Service Products, Product Lines, and

Brands
Service Product: A defined and consistent bundle of output
Supported by supplementary services (assembly of elements that are built

around the core product)

Differentiated by bundle of output

Product Line: Most service organizations offer a line of products rather

than just a single product.

There are three broad alternatives for product lines:

Single brand to cover all products and services

A separate, stand-alone brand for each offering

Some combination of these two extremes

Branding of services

Brand contacts
by Gronroos (2000), p.288

Spectrum of Branding Alternatives

Source: Derived from Aaker and Joachimsthaler

Example: British Airways Sub-brands

British Airways offers seven distinct air travel products
Intercontinental Offerings

Intra-European
Offerings

First

Club World

(Deluxe

(Business

Service)

Class)

World

World

Traveller

Euro-

Traveller

Plus (Premier

Traveller

(Economy)

(Economy)

economy)

Club Europe
(Business

Shuttle

Class)

Offering a Branded Experience

Branding can be employed at corporate and product levels

Corporate brand:
Easily recognized,
Holds meaning to customers,
Stands for a particular way of doing business

Product brand:
Helps firm communicate distinctive experiences and

benefits associated with a specific service concept.

Moving Towards a Branded Experience

Create brand
promise

Shape truly
differentiated
customer
experience

Give employees
skills, tools, and
supporting
processes to deliver
promise

Measure and
monitor

Offering A Branded Experience

The brand promise or value proposition is not a tag line, an icon, or a
color or a graphic element, although all of these may contribute.

It is, instead, the heart and soul of the brand.

Don Schultz

Service Development Process

Service Blueprinting
Gives visual description
Focus on customer experiences and expectations
Positioning

New Service
Development Cycle
Full-scale launch
Post-launch
review

Full Launch

Service design
and testing
Process and
system
design and testing
Marketing program
design and testing
Personnel training
Service testing
and pilot run
Test marketing

Enablers

Formulation
of new services
objective / strategy
Idea generation
and screening
Concept
development and
testing

People

Product

Technology

Development

Systems

Tools

Design

Analysis
Business analysis
Project
authorization

The Dynamics of NSD

Standardization of Service Offering
Low
High

Low

Face-to-Face
Delivery

Current
Service

People
Systems

Industrialization Level

Product
Technology

Product

Systems

People

Technology

Telephone or
Courier Delivery

Systems

Product

High

Incremental
Service Innovation

Technology
-Based
Self Service

Technology

People

Technology -driven
Service Innovation

People

Product
Technology

Systems

Radical
Service Innovation

Service Development Process

Simple Style Changes: modest visible changes
in appearances
Service Improvements: changes in features of
currently offered service
Supplementary Service Innovations: new
services to customers of an organization
Process-line Extensions: augmenting delivery
to existing customers

Service Development Process

Service-line Extensions: augmentation of existing
service line (e.g. new menu items)
Major Process innovations: new ways to deliver
services

Major Service Innovations: new service driven by

information and computer based technology
Start-up Business: new service for existing market

Reengineering Service Processes

Service processes affect customers and also cost, speed, and
productivity
Reengineering analyzing and redesigning processes to
achieve faster and better performance

Examination of processes can lead to creation of alternative

delivery methods:
Add or eliminate supplementary services
Re-sequence delivery of service elements
Offer self-service options

New Service Development:

Physical Goods as Source of Service Ideas
Customers can rent goods - use and return for a fee - instead of
purchasing them

Customers can hire personnel to operate their own or rented

equipment
Any new durable product may create need for after-sales
services (possession processing)

Shipping
Installation
Problem-solving and consulting advice
Cleaning
Maintenance
Repair
Upgrading
Disposal

Technology Driven Service Innovation

Power/energy - International flights with jet aircraft
Physical design - Enclosed sports stadiums
Materials - Astroturf
Methods - JIT and TQM
Information - E-commerce using the Internet

Classification of Service Automation

Fixed-sequence (F) - Parking lot gate
Variable-sequence (V) - ATM
Playback (P) - Answering machine
Numerical controlled (N) - Animation
Intelligent (I) - Autopilot
Expert system (E) - Medical diagnosis
Totally automated system (T) - EFT

Creating Services as Substitutes for

Owning and/or Using Goods
Rent Use of a
Own a Physical Good

Perform Work
Oneself

Hire Someone
to Do Work

Physical Good

Drive Own Car

Rent a Car and Drive it

Use Own Computer

Rent Use of Computer

Hire a Chauffeur to Drive

Hire a Taxi or Limousine

Hire a Typist to Type

Send Work Out to a

Secretarial Service

Achieving Success in Developing New

Services
In developing new services
Core

product is of secondary
importance
Ability to maintain quality of the
total service offering is key
Accompanying marketing support
activities are vital
Market knowledge is of utmost
importance

Adoption of New Technology in

Services
Challenges of Adopting New Technology
The Process is the Product
Back Office VS Front Office Changes

Need for Standardization

Managing the New Technology Adoption Process

Service Failures
Lot of the services firms observes service failures
due to:

Lack in unique benefits to be offered

Setting up the unrealistic goals for the new
services product
Meeting insufficient demands
Non availability of the proper location
Poor fitting of the new services with others in an
organizations portfolio
Lack of the sufficient financial banking or failure
to take the necessary time for developing and
introducing the new service product.

Success Factors in New Service

Development
Market synergy

Good fit between new product and firms image/resources

Advantage vs. competition in meeting customers needs
Strong support from firm during/after launch
Firm understands customer purchase decision behavior

Organizational factors
Strong inter-functional cooperation and coordination
Internal marketing to educate staff on new product and its

competition
Employees understand importance of new services to firm

Success Factors in New Service

Development
Market research factors
Scientific studies conducted early in development

process
Product concept well defined before undertaking field
studies