SERVICE MARKETING

SUBJECT CODE:18MBA304A

Prepared By:
S Swetadipta
(Agribusiness & Marketing)
MBA Department
GIET,Baniatangi

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INTRODUCTION TO SERVICE MARKETING
Service marketing refers to the promotion and sale of services, as opposed to physical products. This can
include services such as consulting, legal advice, financial planning, and more. Service marketing
strategies often focus on building relationships with customers, highlighting the unique benefits of the
service being offered, and differentiating the service from competitors.

Key components of service marketing include:

 Understanding customer needs,

 Developing a service offering that meets those needs,
 Effectively communicating the value of the service, and
 Delivering the service in a way that exceeds customer expectations.

Service marketing is the process of promoting and selling services to customers. Services are intangible
and cannot be seen, touched, or held like physical products, so the marketing strategies for services are
different from those for products.

Service marketing includes identifying customer needs, developing a service offering that meets those
needs, effectively communicating the value of the service, and delivering the service in a way that
exceeds customer expectations.

FEATURES OF SERVICE MARKETING

Service marketing has several unique features that distinguish it from product marketing. These include:

1. Intangibility: Services are intangible and cannot be seen, touched, or held like physical products.
This makes it more challenging to communicate the value of the service to customers.
2. Inseparability: Services are often produced and consumed at the same time, which means that the
service provider and the customer must be in the same place at the same time. This makes it more
difficult to separate the service from the service provider.
3. Variability: The quality of a service can vary depending on the skills and attitudes of the service
provider, as well as the specific needs of the customer. This makes it more difficult to standardize
and control the service experience.
4. Perishability: Services cannot be stored or inventoried, so any unsold services are lost forever.
This makes it more difficult to manage service capacity and can create pressure to fill service
slots with any customer who is willing to pay.
5. Heterogeneity: Services can be highly variable, which makes it difficult to compare the quality of
different service providers.
6. Simultaneity: Services are often performed and consumed at the same time, which means that the
customer is involved in the service process and can influence the outcome.
7. People-based: Services often involve people, whether it is the service provider or the customer.
This means that the service experience can be influenced by the personalities and behavior of the
people involved.
8. Inscrutability: Services can be difficult to evaluate before they are consumed, which makes it
difficult for customers to judge the quality of the service in advance.

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These features of service marketing require different marketing strategies and techniques to be used, to
effectively communicate the value of the service and create a positive customer experience.

CHARACTERISTICS OF SERVICES COMPARED TO GOODS

EMERGENCE OF SERVICE ECONOMY

The emergence of a service economy refers to the shift from an economy based on manufacturing and
production of goods to one based on the provision of services. This shift has been driven by several
factors, including advances in technology, changes in consumer behavior, and globalization.

One of the main drivers of the service economy has been the increasing automation of manufacturing and
production processes, which has led to greater efficiency and lower costs for goods. As a result,
consumers have been able to purchase more goods at lower prices, leaving them with more disposable
income to spend on services.

In addition, changes in consumer behavior and preferences have also played a role in the emergence of
the service economy. Consumers are increasingly looking for experiences and personalized services that
cannot be found in products. This has led to the growth of service-based industries such as healthcare,
education, finance, and consulting.

Finally, globalization has also played a role in the emergence of the service economy. As businesses have
expanded into new markets, they have been forced to adapt their service offerings to meet the unique
needs of different cultures and customers. This has led to the growth of service industries such as tourism,
hospitality, and logistics.

Overall, the emergence of a service economy has led to significant changes in the way businesses operate
and compete, as well as the types of jobs and skills that are in demand.

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TYPES OF SERVICE MARKETING
There are broadly 3 types of service marketing:
1. B2C
This is the main customer service provided by companies to its end customers. These can be telecom,
hospitality, financial services, repair provided by providers. The main focus of the company can be
selling service. E.g. Vodafone provides telecom services to consumers and markets it as its core offering.
2. B2B
Many companies provide services to enterprises and organizations. These can be networks, finance,
travel, technology services etc. The motive is to show business value to an organization through usage of
their service. This forms the core part of the b2b service marketing.
E.g. many technology services firms showcase their references and case studies where they derived value
for similar organizations as the target customer. The value can be in terms of cost savings, revenue
increase.
3. Post Purchase Service
This category if service marketing focuses on the add on and complementary services offered by
companies in addition to the core product (or service in some cases). These can be warranty services,
customer support, service request resolution, helpdesk, repairs etc. These services can be differentiating
factor for customers when they buy the core offering. E.g. when a person buys a phone but gets 2 years of
free warranty service and support. This can become a differentiator and forms part of the service
marketing done by the phone manufacturer.

SERVICE MARKETING CHALLENGES

1. Communicating the intangible nature of services: Services are often difficult to describe or
demonstrate, making it challenging to effectively market them.
2. Ensuring consistency of service delivery: Services are often provided by multiple individuals,
making it difficult to ensure that the service being marketed is consistently delivered to
customers.
3. Building trust and loyalty: Services are often based on relationships and trust, and it can be
challenging to build these elements in a short period of time.
4. Managing customer expectations: Services can be difficult to standardize, which can lead to
customers having unrealistic expectations that are difficult to meet.
5. Measuring and improving service quality: Measuring the quality of a service can be difficult,
making it challenging to implement improvements.
6. Managing price perceptions: Services can be perceived as having higher value than goods,
making it challenging to price them competitively.
7. Managing customer complaints: Service failures can lead to customer complaints, which must be
handled effectively to maintain customer loyalty.
8. Dealing with competition: Services are easy to imitate, making it easy for competitors to enter the
market and offer similar services at lower prices.

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SERVICE ENCOUNTER
Service encounter is generally defined as a consumer’s direct contact with a service provider, including
both face-to-face interaction and experience. Voorhees et al. defines service encounter as “any discrete
interaction between the customer and the service provider relevant to a core service offering”.

A service encounter is a point of interaction between a customer and a service provider. It is a key
moment in the service experience, as it can greatly impact the customer's perceptions of the service and
their overall satisfaction. Service encounters can take place in various forms such as face-to-face
interactions, phone conversations, or online interactions.

During a service encounter, the customer and service provider interact to exchange information and
complete the service transaction. This can include the customer making requests, the service provider
providing information or assistance, and any other interactions that take place during the service process.
The service encounter can also include nonverbal communication, such as facial expressions and body
language, which can also greatly impact the customer's experience.

A positive service encounter can lead to customer satisfaction and loyalty, while a negative service
encounter can lead to dissatisfaction and a loss of business. Service providers should strive to ensure that
service encounters are efficient, friendly, and meet or exceed customer expectations.

SERVICE BLUEPRINT
A service blueprint is a diagram that visualizes the relationships between different service components —
people, props (physical or digital evidence), and processes — that are directly tied to touch points in a
specific customer journey.

A service blueprint gives a complete picture of how the service and related experience is delivered, end to
end, front to back and across channels. It is a powerful tool that simultaneously provides a high-level
view of the user experience and a detailed view of what is going on below the surface.

SERVICE TRIANGLE
The Service Triangle is a concept used in the field of service marketing that helps to define the three main
components of a successful service offering: people, place, and process.

 People refer to the customer service staff that is employed by businesses to interact with
customers and provide assistance. They are often the face of the business and should be
knowledgeable, professional, and friendly.
 Place refers to the physical location where customers come to access the service. This can be a
store, an office, or even a website. It should be conveniently located and attractive, with easy-to-
understand signage and instructions.
 Process is the most important and complicated part of the triangle. This refers to the steps and
procedures needed to complete the service. It involves finding out what the customer wants,
providing the service, and ensuring customer satisfaction. A well-defined process helps to ensure
that the customer's needs are met every time.

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SERVICE SCAPE
Servicescape refers to the physical and tangible elements that contribute to the overall atmosphere or
environment of a service. This includes the design, layout, and appearance of the service setting, as well
as the equipment, facilities, and technologies used in the delivery of the service. The servicecape serves as
a key element of the service experience and can have a significant impact on customer perceptions,
emotions, and behaviors.

When a consumer visits a place for a particular service or product, it is the surroundings that encourage or
discourages him from following a set course of action.

The elements of the servicescape in service marketing include:

 Physical environment: The physical design and layout of the service setting, including the
décor, lighting, and overall ambiance.
 Space and layout: The arrangement of the service setting, including the layout of the seating,
waiting areas, and service points.
 Furnishings and equipment: The type and quality of the furniture, fixtures, and equipment used
in the service setting, including the service counters, chairs, and payment systems.
 Technology: The use of technology in the delivery of the service, such as self-service kiosks,
digital signage, and mobile apps.
 Signage and way finding: The use of signs, symbols, and other forms of visual communication
to help customers navigate the service setting and find what they need.
 Employee attire: The appearance and uniform of the service employees, including their
grooming, attire, and behavior.
 Sound and music: The use of sound and music in the service setting, including background
music, announcements, and customer interactions.

These elements work together to create a cohesive and consistent atmosphere that can impact customers'
perceptions, emotions, and behaviors, and ultimately, the overall quality of their service experience.

SERVICE MARKETING MIX

Service marketing mix is a

set of 7 Ps that help organizations in the service sector to create an effective marketing strategy. The 7 Ps
of the service marketing mix are:

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 1. Product: The service that is being offered, including its features and benefits.
2. Price: The cost of the service and how it compares to similar offerings in the market.
3. Place: The location and accessibility of the service, as well as the channels through which it is
distributed.
4. Promotion: The communication and advertising strategies used to raise awareness and interest in
the service.
5. People: The employees who deliver the service and interact with customers, and their level of
training and skill.
6. Process: The steps involved in delivering the service, including the systems and procedures used.
7. Physical evidence: The tangible elements that support the service, such as the appearance and
cleanliness of facilities, signage, and packaging.

By considering these seven factors, organizations in the service sector can create a well-rounded
marketing strategy that addresses all the key aspects of their service offering.

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QUALITY ISSUES IN SERVICE MARKETING
Service quality is a measure of how an organization delivers its services compared to the expectations of
its customers. Customers purchase services as a response to specific needs. They either consciously or
unconsciously have certain standards and expectations for how a company's delivery of services fulfills
those needs. A company with high service quality offers services that match or exceed its customers'
expectations.

Here are some of the quality issues that can arise in service marketing:

1. Intangibility: Services are intangible, meaning that they cannot be seen, touched, or felt. This
can make it difficult for customers to evaluate the quality of a service before they purchase it.
2. Variability: Services can be highly variable because they depend on human interaction, which
can be inconsistent. For example, a customer may receive excellent service from one employee
but poor service from another.
3. Inseparability: Services are often produced and consumed simultaneously, which means that
customers are involved in the production process. This can lead to quality issues if customers are
not satisfied with their experience.
4. Perishability: Services cannot be stored or saved for later use, which means that they must be
consumed as soon as they are produced. This can lead to quality issues if there is a sudden
increase in demand that cannot be met by the service provider.
5. Lack of standardization: Unlike physical products, services are often customized to meet the
needs of individual customers. This can lead to quality issues if the service provider does not
have a clear set of standards for delivering the service.
6. Service recovery: Service recovery is the process of addressing and resolving customer
complaints or issues. Effective service recovery is essential for maintaining customer loyalty and
satisfaction, but it can be challenging to implement if the service provider does not have the
necessary resources or training.

Overall, managing service quality requires a holistic approach that considers all of these issues and takes
proactive measures to address them. Service providers must be committed to delivering high-quality
services and continuously improving their processes to meet the changing needs of their customers.

MODELS IN SERVICE MARKETING

There are several models of service quality in service marketing. Here are three commonly used models:

1. SERVQUAL: The SERVQUAL model was developed by Parasuraman, Zeithaml, and Berry in
1988. It is a widely used model for measuring service quality. The model consists of five
dimensions: reliability, responsiveness, assurance, empathy, and tangibles. The model uses a
questionnaire to measure the gap between customers' expectations and their perceptions of
service quality.
2. The RATER model: The RATER model was developed by Zeithaml, Berry, and Parasuraman in
1990. It is an acronym for five dimensions of service quality: reliability, assurance, tangibles,
empathy, and responsiveness. The model is used to measure service quality from the customer's
perspective.

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 3. The GAP model: The GAP model was developed by Parasuraman, Zeithaml, and Berry in 1985.
It identifies five potential gaps that can lead to a difference between customer expectations and
perceptions of service quality: the knowledge gap, the standards gap, the delivery gap, the
communication gap, and the perception gap. The model is used to identify areas for improvement
in service quality.

These models are useful tools for service providers to measure and improve service quality. By
identifying areas where customers' expectations are not being met, service providers can make
improvements to meet those expectations and increase customer satisfaction.

GAP ANALYSIS
Gap analysis is a useful tool in service marketing that helps identify gaps between customers' expectations
and perceptions of service quality. It provides a framework for service providers to identify areas for
improvement and implement strategies to close the gap between customer expectations and perceptions.

The GAP model was developed by Parasuraman, Zeithaml, and Berry in 1985 and identifies five potential
gaps that can lead to a difference between customer expectations and perceptions of service quality: the
knowledge gap, the standards gap, the delivery gap, the communication gap, and the perception gap.

Here's a brief description of each gap:

1. Knowledge gap: This gap occurs when the service provider does not have a clear understanding
of what customers expect from the service. This can be due to a lack of market research or
customer feedback.
Reasons for the gap:

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  Lack of management and customer interaction.
 Lack of communication between service employees and management.
 Insufficient market research.
 Insufficient relationship focus.
 Failure to listen to customer complaints.

2. Standards gap: This gap occurs when the service provider does not have clear standards for
delivering the service. This can lead to inconsistencies in service quality.
Reasons for the gap:
 Lack of customer service standards.
 Poorly defined service levels.
 Failure to regularly update service level standards.
3. Delivery gap: This gap occurs when the service provider fails to deliver the service according to
the established standards. This can be due to a lack of training or resources.
Reasons for the gap:
 Deficiencies in human resources policies.
 Failure to match supply to demand.
 Employee lack of knowledge of the product.
 Lack of cohesive teamwork to deliver the product or service.
4. Communication gap: This gap occurs when there is a disconnect between what the service
provider communicates to customers and what customers actually experience. This can be due to
a lack of transparency or misleading advertising.
Reasons for the gap:
 Overpromising.
 Viewing external communications as separate to what’s going on internally.
 Insufficient communications between the operations and advertising teams.

5. Perception gap: This gap occurs when customers have different expectations of the service than
the service provider. This can be due to cultural differences or previous experiences with similar
services.
Reasons for the gap:
 This gap can happen because of one of the other four gaps, or simply because the
customer perceives the quality of the service incorrectly. In a worst-case scenario, it
could lead to a business losing a large proportion of their customers overnight.
 Although the company thought there was no gap, the reality was that their customers
were just waiting for someone to fill their perceived gap.

SERVQUAL MODEL
The SERVQUAL model is a widely used model for measuring service quality in service marketing. It
was developed by Parasuraman, Zeithaml, and Berry in 1988. The model consists of five dimensions that
are used to assess the gap between customers' expectations and perceptions of service quality. The five
dimensions are:

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 i. Reliability: The ability to perform the promised service dependably and accurately. This
includes factors such as keeping promises, delivering on time, and providing accurate
information.
ii. Assurance: The knowledge and courtesy of employees and their ability to convey trust and
confidence. This includes factors such as employee expertise, professionalism, and ability to
inspire trust and confidence.
iii. Tangibles: The physical facilities, equipment, and appearance of personnel. This includes
factors such as the cleanliness of facilities, the appearance of employees, and the quality of
materials used in the service.
iv. Empathy: The provision of caring, individualized attention to customers. This includes
factors such as personalized service, understanding customer needs, and showing concern for
customer welfare.
v. Responsiveness: The willingness to help customers and provide prompt service. This
includes factors such as the speed of service, the willingness to answer questions, and the
ability to respond to customer complaints.

The SERVQUAL model uses a questionnaire to measure the gap between customers' expectations and
perceptions of service quality in each of the five dimensions. Customers rate the importance of each
dimension and their perceptions of how well the service provider performs in each dimension. The
difference between customers' expectations and perceptions is used to identify areas for improvement in
service quality.

The SERVQUAL model is a useful tool for service providers to measure and improve service quality. By
identifying areas where customers' expectations are not being met, service providers can make
improvements to meet those expectations and increase customer satisfaction.

Application of SERVQUAL Model:

The SERVQUAL model is a versatile tool that can be applied in a variety of contexts within service
marketing. Here are some of the applications of SERVQUAL:

 Measuring service quality: The primary application of SERVQUAL is to measure service

quality from the customer's perspective. By using the SERVQUAL questionnaire, service
providers can identify areas where their service falls short of customer expectations and make
improvements to increase customer satisfaction.
 Benchmarking: SERVQUAL can be used to benchmark a service provider's performance against
that of competitors or industry standards. By comparing their SERVQUAL scores to those of
competitors, service providers can identify areas where they are falling behind and take steps to
improve their service quality.
 Service design: SERVQUAL can be used in the design of new services to ensure that customer
expectations are met. By using the SERVQUAL model to identify customer expectations in each
of the five dimensions, service providers can design services that meet or exceed those
expectations.
 Customer satisfaction: SERVQUAL can be used to measure customer satisfaction with a
particular service. By comparing customers' expectations and perceptions of service quality,

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 service providers can identify areas where they are falling short and take steps to improve
customer satisfaction.
 Continuous improvement: SERVQUAL can be used as part of a continuous improvement
process to ensure that service quality is constantly improving. By regularly measuring service
quality using the SERVQUAL model, service providers can identify areas where they need to
improve and take steps to make those improvements.

Overall, the SERVQUAL model is a versatile tool that can be used in many different contexts within
service marketing to improve service quality and increase customer satisfaction.

SERVICE PRODUCT:
A service product is a type of product that is intangible and involves the delivery of a service rather than a
physical good. Service products are usually consumed or experienced by the customer at the time they are
delivered, and they cannot be stored for later use. Some examples of service products include haircuts,
consulting services, healthcare, and transportation services.

Service products are also characterized by the fact that they are often produced and consumed
simultaneously. This means that the customer is an active participant in the production and delivery of the
service. For example, a hair stylist will work with the customer to create the desired hairstyle, and a
consultant will work with the client to develop a solution to a problem.

NEW SERVICE DEVELOPMENT:

New service development (NSD) is the process of creating and launching new services to meet the
changing needs and preferences of customers. NSD involves a series of steps that service providers must
follow to create and introduce new services successfully. Here are the general steps involved in NSD:

 Idea generation: The first step in NSD is to generate ideas for new services. Ideas can come
from a variety of sources, including customer feedback, market research, and internal
brainstorming sessions.
 Screening: Once ideas are generated, they need to be screened to determine which ideas are
feasible and align with the organization's goals and resources.
 Concept development and testing: The most promising ideas are then developed into service
concepts, which are tested with potential customers to determine their interest and feedback.
 Business analysis: If the service concept is found to be viable, a business analysis is conducted to
evaluate the costs, revenue potential, and profitability of the new service.
 Service development: The next step is to develop the service in detail, including defining the
service features, creating the service delivery process, and designing the service environment.
 Testing and launch: Once the service is developed, it needs to be tested to ensure that it meets
customer needs and expectations. If testing is successful, the service is launched to the market.
 Evaluation: After the service is launched, it is essential to evaluate its performance to determine
if it is meeting its goals and objectives. This information can be used to refine the service and
make improvements.

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New service development is critical for service providers to remain competitive and meet changing
customer needs. By following a structured process for NSD, service providers can increase the likelihood
of success for new services and ensure that they align with their overall business strategy.

BRANDING, PACKAGING, PRICING AND PROMOTION OF NEW SERVICE PRODUCT:

Branding, packaging, pricing, and promotion are critical elements in the successful launch of a new
service product. Here's how these elements can be used to effectively market a new service:

a) Branding: Branding is the process of creating a unique name, logo, and identity for a service
product. A strong brand can help differentiate the new service from competitors and build
customer trust and loyalty. When developing the brand for a new service, it's important to
consider the target market, the service's unique features and benefits, and the overall brand
strategy of the organization.
b) Packaging: Packaging refers to the way the new service is presented to customers. This includes
the physical elements such as the service environment, equipment, and materials used in the
delivery of the service. The packaging of a new service should be designed to align with the
brand and create a positive customer experience.
c) Pricing: Pricing is the process of determining the appropriate price for the new service. The price
should be based on factors such as the cost of delivering the service, the value it provides to
customers, and the pricing strategies of competitors. When pricing a new service, it's important to
consider the target market, as well as any promotions or discounts that may be offered.
d) Promotion: Promotion refers to the various marketing tactics used to promote the new service to
potential customers. This includes advertising, public relations, and sales promotions. When
promoting a new service, it's important to consider the target market and choose tactics that will
effectively reach and engage potential customers.

Overall, branding, packaging, pricing, and promotion are all critical components of successfully
launching a new service product. By carefully considering each of these elements and creating a
comprehensive strategy, service providers can increase the likelihood of success for their new service
product and attract customers to their brand.

SERVICE DELIVERY CHANNEL:

Service delivery channels refer to the different ways that a service provider delivers its services to
customers. Service providers may use one or several delivery channels, depending on their business
model and the needs of their customers. It's essential for service providers to understand their customers'
preferences and behavior to ensure that they offer the right mix of service delivery channels to meet their
needs.

Direct Channels:-
Direct channels in service delivery refer to channels that involve direct interaction between the service
provider and the customer. These channels are typically used for services that require a high level of
personalization or expertise, and they can help build strong relationships between the service provider and
the customer.

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Examples of direct channels in service delivery include:

 Face-to-face interaction: This is the most traditional form of direct service delivery, where
customers meet service providers in person. Examples include retail stores, restaurants, and
healthcare providers.
 Telephone interaction: Some service providers offer telephone support or consultations, where
customers can speak directly with a representative to receive assistance or advice.
 Live chat or instant messaging: Many companies now offer live chat or instant messaging as a
direct channel for customer support or sales. This channel allows customers to receive immediate
assistance or information from a representative.
 Video conferencing: Video conferencing is a direct channel that is becoming increasingly
popular, especially for services that require a high level of personalization or expertise. Examples
include telemedicine appointments, online tutoring, or financial planning consultations.

Direct channels in service delivery can be highly effective for building strong customer relationships, as
they allow for personalized and engaging interactions between the service provider and the customer.
However, they can also be more expensive to operate than indirect channels, such as self-service or
automated channels, which may be more suitable for services with lower levels of personalization or
expertise.

Franchising:-
Franchising is a business model in which a franchisor grants a franchisee the right to use its business
model, brand, and support systems to sell goods or services in a particular territory or market. Franchising
can be used as a method of service delivery, where a service provider licenses its brand and business
model to franchisees, which then operate their own businesses under the franchisor's guidance.

In service delivery, franchising has several advantages:

 Increased market reach: Franchising allows service providers to expand their reach into new
markets without having to invest heavily in infrastructure or marketing. By partnering with
franchisees, service providers can tap into local knowledge and expertise to gain a foothold in
new markets.
 Consistent service quality: Franchise agreements typically include strict guidelines and
standards for service delivery, which helps ensure that customers receive a consistent level of
quality across all locations. Franchisees are also required to undergo training and follow
operational procedures to ensure that they meet the franchisor's standards.
 Reduced risk: Franchisees are responsible for the day-to-day operations of their businesses,
which can help reduce the risk for the franchisor. This can be particularly beneficial for service
providers that are expanding rapidly, as franchising allows them to grow their business without
taking on significant financial risk.
 Lower operating costs: Franchisees typically fund the startup costs for their businesses, which
can help reduce the financial burden on the franchisor. Additionally, franchisees are responsible
for paying ongoing fees and royalties to the franchisor, which can provide a steady source of
revenue for the franchisor.

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Overall, franchising can be an effective method of service delivery, particularly for service providers that
are looking to expand quickly or enter new markets. However, franchising also requires careful planning
and management to ensure that franchisees operate their businesses effectively and maintain the standards
set by the franchisor.

Brokers/agents:-
Brokers are intermediaries who connect customers with service providers, acting as a middleman in the
service delivery process. Brokers can be particularly useful in industries where there are many different
service providers, or where customers may have difficulty finding the right provider for their needs.

In service delivery, brokers can offer several advantages:

 Access to a wide range of service providers: Brokers typically work with multiple service
providers, which means they can offer customers a wider range of options than they would have
if they were searching for services on their own.
 Simplified service selection: Brokers can help customers navigate complex service offerings and
make informed decisions about which service providers to use. This can be particularly useful in
industries where there are many different providers with varying levels of quality and expertise.
 Streamlined service delivery: Brokers can help coordinate service delivery between the
customer and the service provider, which can help simplify the process and reduce the burden on
the customer.
 Reduced risk: Brokers typically have relationships with service providers and can vouch for
their reliability and quality. This can help reduce the risk for customers, who may be hesitant to
use a service provider they are not familiar with.

However, there are also some potential drawbacks to using brokers in service delivery. For example,
brokers may charge fees or commissions for their services, which can increase the overall cost of using a
service provider. Additionally, brokers may not always have the customer's best interests in mind and
may prioritize their own financial gain over finding the best service provider for the customer.

Internet channels:-
Internet channels in service delivery refer to the use of the internet to deliver services to customers.
Internet channels have become increasingly important in service delivery due to the widespread adoption
of digital technologies and the increasing demand for online services.

Examples of internet channels in service delivery include:

a. Websites: Service providers can use their websites to provide information about their services,
allow customers to book appointments or reservations, and facilitate online payments. Websites
can also be used to provide customer support through chatbots or other automated tools.
b. Mobile apps: Mobile apps can be used to provide a wide range of services, including retail,
banking, and healthcare services. Apps can be used to deliver personalized content, track user
behavior, and facilitate transactions.
c. Social media: Social media platforms such as Facebook, Twitter, and Instagram can be used to
deliver services through targeted advertising, customer support, and engagement with customers.

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 d. Online marketplaces: Online marketplaces such as Amazon, eBay, and Airbnb can be used to
deliver a wide range of services, including retail, travel, and hospitality services. These platforms
provide a centralized location for customers to browse and purchase services from a variety of
providers.

Internet channels in service delivery can be highly effective in reaching customers and providing
convenient, personalized services. However, they also require careful planning and management to ensure
that customers have a positive experience and that service providers can maintain their brand reputation
and quality standards in the online environment.

CHANNEL CONFLICTS & RESOLUTION:

Channel conflict can occur in service marketing when there is a disagreement or competition between
different channels or intermediaries that are involved in delivering a service to customers. Channel
conflict can arise due to differences in pricing, positioning, distribution, or other factors that affect the
relationships between service providers and intermediaries.

Examples of channel conflict in service marketing include:

 Pricing conflicts: Different intermediaries may offer different prices for the same service,
leading to price competition and undercutting of prices.
 Positioning conflicts: Intermediaries may position services in different ways, which can create
confusion or conflict for customers and service providers.
 Distribution conflicts: Intermediaries may compete for the same customers or territories, leading
to conflicts over distribution channels and sales territories.

To resolve channel conflicts in service marketing, service providers can use several strategies, including:

 Communication and negotiation: Service providers can engage with intermediaries to

understand their concerns and find ways to resolve conflicts through open communication and
negotiation.
 Channel design and management: Service providers can design and manage channels to ensure
that they are aligned with their overall service delivery strategy and that they provide clear
differentiation and value to customers and intermediaries.
 Conflict resolution mechanisms: Service providers can develop mechanisms such as mediation,
arbitration, or legal action to resolve conflicts when they arise.
 Collaboration and partnerships: Service providers can collaborate with intermediaries to
develop joint marketing and sales initiatives, co-branding, and other partnerships that can help
align their interests and resolve conflicts.

Overall, channel conflict is a common challenge in service marketing, but it can be resolved through
effective communication, channel design and management, and collaboration between service providers
and intermediaries.

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RELATIONSHIP MARKETING:
Relationship marketing is an approach to marketing that emphasizes building long-term relationships with
customers based on trust, loyalty, and mutual value creation. The goal of relationship marketing is to
create loyal customers who will continue to do business with the company over time, rather than focusing
solely on acquiring new customers.

Relationship marketing is based on the idea that customers are not just consumers of a company's
products or services, but are also valuable partners in the creation of value. By building strong
relationships with customers, companies can gain insights into customer needs and preferences, and use
that knowledge to create products and services that better meet their customers' needs.

Some key principles of relationship marketing include:

 Customer focus: Relationship marketing is based on a deep understanding of customer needs

and preferences, and a commitment to creating value for customers.
 Continuous communication: Relationship marketing involves ongoing communication with
customers, including feedback gathering, customer support, and relationship-building activities.
 Trust and loyalty: Relationship marketing is based on building trust and loyalty with customers,
through transparent and honest communication, high-quality products and services, and a
commitment to customer satisfaction.
 Personalization: Relationship marketing involves tailoring products, services, and
communications to the specific needs and preferences of individual customers.
 Long-term perspective: Relationship marketing emphasizes long-term relationships with
customers, rather than short-term transactions or one-time sales.

Relationship marketing can be an effective approach to building strong customer relationships and
creating long-term value for both customers and companies. By focusing on customer needs and
preferences, building trust and loyalty, and tailoring products and services to individual customers,
companies can create a sustainable competitive advantage and achieve long-term success.

RELATIONSHIP VALUE OF CUSTOMERS:

Relationship value of customers in service marketing refers to the long-term economic and strategic value
that a customer brings to a company through their ongoing relationship and interactions with the
company. The concept of relationship value is based on the idea that loyal customers are more profitable
than one-time or occasional customers because they are more likely to make repeat purchases, refer new
customers, and provide valuable feedback and insights to the company.

There are several key factors that contribute to the relationship value of customers in service marketing:

a. Lifetime value: The lifetime value of a customer is a measure of the total amount of revenue and
profit that the customer is expected to generate over the course of their relationship with the
company. Customers with a high lifetime value are more valuable to the company because they
provide a steady stream of revenue and are more likely to recommend the company to others.
b. Customer loyalty: Loyal customers are more likely to continue doing business with the company
over time, which can lead to higher sales and profits. Loyal customers are also more likely to

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 recommend the company to others, which can help attract new customers and increase brand
awareness.
c. Customer advocacy: Customers who are advocates for the company can help promote the
company to others through word-of-mouth marketing, social media, and other channels.
Advocates can also provide valuable feedback and insights to the company, which can help
improve products and services and enhance the customer experience.
d. Customer engagement: Engaged customers are more likely to be satisfied with the company's
products and services and are more likely to continue doing business with the company over time.
Engaged customers may also be more likely to provide feedback and ideas to the company, which
can help improve the customer experience and create new products and services.

Overall, the relationship value of customers in service marketing is a key factor in determining the long-
term success and profitability of a company. By focusing on building strong relationships with customers,
companies can create a sustainable competitive advantage and achieve long-term growth and success.

CUSTOMER PROFITABILITY SEGMENTATION:

Customer profitability segmentation is a process used in service marketing to group customers based on
their profitability to the company. By analyzing customer data such as purchase history, revenue
generated, and cost to serve, companies can identify which customers are most profitable and which are
least profitable. This allows the company to develop targeted marketing and service strategies that focus
on the most profitable customers and minimize the resources spent on less profitable customers.

There are several steps involved in customer profitability segmentation:

 Data collection: Companies must collect data on customer purchases, revenue generated, and
cost to serve. This data can be collected through customer surveys, sales reports, and other
sources.
 Data analysis: The collected data is analyzed to identify patterns and trends in customer
behavior. This analysis can help identify which customers are most profitable and which are least
profitable.
 Segmentation: Based on the analysis of customer data, customers are grouped into segments
based on their profitability to the company. These segments can be based on factors such as
purchase history, revenue generated, or cost to serve.
 Targeting: Once customers are segmented, the company can develop targeted marketing and
service strategies for each segment. This can include offering personalized promotions or
discounts to high-profit customers, or minimizing resources spent on low-profit customers.
 Evaluation: The effectiveness of the segmentation strategy is evaluated over time to ensure that
it is meeting the company's goals for customer profitability.

CUSTOMER LIFETIME VALUE:

Customer lifetime value (CLV) is a metric used in service marketing to estimate the total value that a
customer will bring to a company over the course of their relationship with the company. CLV takes into

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account the total revenue that a customer is expected to generate over their lifetime, as well as the costs
associated with acquiring and serving that customer.

CLV is important in service marketing because it helps companies make strategic decisions about
customer acquisition, retention, and loyalty. By understanding the lifetime value of different customer
segments, companies can make more informed decisions about how to allocate resources, design
marketing campaigns, and develop customer service programs.

Calculating CLV involves estimating several key variables, including:

 Average revenue per customer: This is the average amount of revenue that a customer generates
for the company over a given period of time.
 Customer acquisition cost: This is the total cost of acquiring a new customer, including
marketing, advertising, and sales expenses.
 Customer retention rate: This is the percentage of customers who continue to do business with the
company over time.
 Churn rate: This is the percentage of customers who stop doing business with the company over
time.
 Discount rate: This is the rate at which future revenues and costs are discounted to account for the
time value of money.

Once these variables are estimated, CLV can be calculated using a formula such as:

CLV = (Average revenue per customer x Customer lifetime) - Customer acquisition cost

or

CLV = (Average revenue per customer x (1 - Churn rate) x Customer lifetime) - Customer acquisition
cost

By calculating CLV for different customer segments, companies can identify high-value customers and
develop strategies to acquire and retain those customers over the long term. This can include personalized
marketing campaigns, loyalty programs, and targeted customer service initiatives that are designed to
build strong relationships with customers and enhance their lifetime value to the company.

RELATIONSHIP DEVELOPMENT STRATEGIES:

Relationship development strategies in service marketing are designed to build and maintain strong
relationships between a company and its customers. These strategies focus on creating positive
interactions, building trust, and demonstrating value to customers over time. Here are some key
relationship development strategies that companies can use in service marketing:

 Personalization: Personalization involves tailoring products and services to meet the specific
needs and preferences of individual customers. By offering personalized recommendations,
promotions, and experiences, companies can demonstrate their commitment to meeting the
unique needs of each customer.

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  Communication: Communication is key to building strong relationships with customers.
Companies can use a variety of channels, such as email, social media, and chatbots, to keep
customers informed and engaged throughout their interactions with the company.
 Customer service: Providing excellent customer service is essential to building and maintaining
strong relationships with customers. Companies can offer support through a variety of channels,
such as phone, email, and chat, and can provide quick and effective solutions to customer
problems and complaints.
 Loyalty programs: Loyalty programs are designed to reward customers for their repeat business
and encourage them to continue doing business with the company over time. These programs can
include discounts, free products, and exclusive access to events and promotions.
 Community building: Building a community around a brand or product can help create a sense
of belonging among customers and foster a deeper connection between the company and its
customers. Companies can use social media, forums, and other channels to create a space where
customers can connect with each other and share their experiences.
 Personal interaction: Creating opportunities for personal interaction, such as in-person events,
workshops, and customer service interactions, can help build trust and rapport between customers
and the company.

Overall, relationship development strategies are focused on creating positive experiences and building
long-term relationships with customers. By prioritizing these strategies, companies can create a loyal
customer base and achieve long-term success and profitability.

RELATIONSHIP CHALLENGES:
Relationships in service marketing face several challenges that can affect the company's ability to build
and maintain strong relationships with customers. Some of the key relationship challenges in service
marketing include:

 Managing expectations: Customers may have unrealistic expectations about the quality of
service that a company can provide. It's important for companies to be transparent about what
they can and cannot offer, and to manage customer expectations effectively.
 Building trust: Trust is essential to building strong relationships with customers. Companies
must work to establish trust through reliable and consistent service, open communication, and
effective problem-solving.
 Maintaining consistency: Service consistency is essential to building trust and maintaining
customer loyalty. Companies must ensure that they provide consistent service across all channels
and touch points.
 Dealing with complaints: Complaints are inevitable in service marketing. Companies must have
effective systems in place to deal with complaints promptly and professionally, and to resolve
them to the customer's satisfaction.
 Competing on price: In service marketing, customers are often price-sensitive and may be
willing to switch to a competitor if they can offer a lower price. Companies must find ways to
compete on value, rather than price, in order to build strong relationships with customers.
 Handling customer data: With the increasing use of technology in service marketing,
companies are collecting and using more customer data than ever before. It's essential for

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 companies to handle customer data responsibly and to be transparent about how they use
customer data.

Overall, the challenges in service marketing relationships can be overcome by prioritizing customer
needs, building trust and transparency, and providing consistent and reliable service. By addressing these
challenges effectively, companies can build strong and long-lasting relationships with their customers.

e-CRM, or ELECTRONIC CUSTOMER RELATIONSHIP MANAGEMENT:

e-CRM, or electronic customer relationship management, is the use of digital technologies to manage and
improve customer relationships. e-CRM allows companies to interact with customers through a variety of
digital channels, including email, social media, chatbots, and mobile apps.

e-CRM systems typically include a variety of tools and features designed to help companies manage
customer data, track customer interactions, and personalize communications. Some key features of e-
CRM systems include:

 Customer data management: e-CRM systems allow companies to collect and store customer
data, such as contact information, purchase history, and preferences, in a centralized database.
This data can be used to personalize communications and provide better service to customers.
 Multichannel communication: e-CRM systems allow companies to interact with customers
through multiple digital channels, including email, social media, chat, and mobile apps. This
allows companies to provide more convenient and accessible service to customers.
 Marketing automation: e-CRM systems can automate marketing processes, such as email
campaigns and social media posts, based on customer data and preferences. This helps companies
provide more personalized and relevant communications to customers.
 Customer service management: e-CRM systems can help companies manage customer service
interactions, such as inquiries, complaints, and support requests. This can improve response times
and provide more effective solutions to customer problems.
 Analytics and reporting: e-CRM systems provide data analytics and reporting tools that allow
companies to track customer behavior and measure the effectiveness of their e-CRM strategies.
This data can be used to make data-driven decisions and improve customer experiences.

Overall, e-CRM is a powerful tool for companies looking to build and maintain strong customer
relationships in the digital age. By leveraging digital technologies to personalize communications,
improve service, and provide more convenient interactions, companies can build loyal customer bases and
drive long-term success.

SERVICE CONSUMER BEHAVIOUR:

Service consumer behavior refers to the actions and decisions that customers make when purchasing or
using services. Service consumer behavior is influenced by a variety of factors, including personal
characteristics, social and cultural factors, and the characteristics of the service itself.

Some of the key factors that influence service consumer behavior include:

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  Personal characteristics: Personal characteristics such as age, gender, income, and education
can all impact how customers make decisions about services. For example, older customers may
prioritize service quality and reliability, while younger customers may be more interested in
convenience and accessibility.
 Social and cultural factors: Social and cultural factors, such as family background, social class,
and cultural norms, can also influence service consumer behavior. For example, customers from
collectivist cultures may prioritize relationships and social connections when making decisions
about services.
 Service characteristics: The characteristics of the service itself, such as the level of
customization, the degree of interaction with service providers, and the level of risk involved, can
all impact customer behavior. For example, customers may be more willing to try new services if
they perceive the risk to be low.
 Service quality: Service quality is a key driver of customer behavior in service marketing.
Customers are more likely to continue using a service if they perceive it to be of high quality, and
may switch to a competitor if they perceive the quality to be lacking.
 Customer expectations: Customer expectations play a key role in service consumer behavior.
Customers may have different expectations for different types of services, and may be more or
less forgiving if their expectations are not met.

Overall, service consumer behavior is complex and multifaceted, and is influenced by a wide range of
factors. By understanding these factors, service marketers can better understand customer needs and
preferences, and develop strategies to attract and retain customers over the long term.

SERVICE FAILURE & RECOVERY:

Service failure is a situation where a service does not meet the expectations of the customer, resulting in
dissatisfaction or disappointment. Service failures can occur due to a variety of reasons, including
mistakes by service providers, unexpected events, or poor communication.

Service recovery refers to the actions taken by service providers to address service failures and restore
customer satisfaction. Service recovery is important because it can help to minimize the negative impact
of service failures on customer relationships and loyalty.

Some key steps that service providers can take to recover from service failures include:

 Apologize: Apologizing is a simple but important step in service recovery. A sincere apology can
help to acknowledge the customer's disappointment and show that the service provider cares
about their experience.
 Listen and understand: Service providers should take the time to listen to the customer's
concerns and understand their perspective. This can help to identify the root cause of the service
failure and develop a solution that meets the customer's needs.
 Act quickly: Service providers should act quickly to address the service failure and provide a
solution. This can help to minimize the negative impact on the customer's experience and
demonstrate that the service provider is committed to resolving the issue.

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  Compensate if necessary: In some cases, compensation may be necessary to fully address the
impact of the service failure. Compensation can take many forms, such as a discount, a free
service, or a refund.
 Follow up: Following up with the customer after the service recovery can help to ensure that the
solution met their needs and that they are satisfied with the outcome. This can also provide an
opportunity to further build the customer relationship and demonstrate the service provider's
commitment to customer satisfaction.

Overall, service failure and recovery are important concepts in service marketing because they can have a
significant impact on customer relationships and loyalty. By understanding the steps involved in service
recovery, service providers can develop effective strategies to address service failures and build stronger
customer relationships over the long term.

SERVICE RESEARCH & INNOVATION

Financial Services Sector:

Service research and innovation are important for the financial services industry as it helps in improving
the customer experience and providing better services to customers. Here are some areas where service
research and innovation can be applied in financial services:

 Digital transformation: The financial services industry is rapidly moving towards digitalization,
and service research can help in identifying the customer needs and expectations when it comes
to digital services. Innovation in digital technologies such as mobile banking, online payments,
and digital wallets can help in improving the customer experience.
 Personalization: Service research can help in understanding the unique needs and preferences of
customers, and innovation in personalization technologies can help in providing customized
financial products and services that meet the needs of individual customers.
 Customer service: Service research can help in identifying the pain points and challenges that
customers face when it comes to customer service. Innovation in customer service technologies
such as chat bots, virtual assistants, and AI can help in improving the quality of customer service.
 Risk management: Service research can help in identifying the risks associated with financial
products and services, and innovation in risk management technologies can help in mitigating
those risks.

Overall, service research and innovation can help in improving the competitiveness of financial services
companies, by providing better services to customers, improving efficiency and reducing costs.

Tourism Service Sector:

Service research and innovation are crucial in the tourism sector, as they can help to enhance the
customer experience, attract more tourists, and boost the industry's competitiveness. Here are some areas
where service research and innovation can be applied in the tourism sector:

 Personalization: Service research can help in understanding the unique needs and preferences of
tourists, and innovation in personalization technologies can help in providing customized tourism
products and services that meet the needs of individual tourists. For example, personalized travel

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 itineraries, customized travel recommendations, and personalized hotel services can help in
enhancing the tourist experience.
 Digital transformation: The tourism industry is rapidly moving towards digitalization, and
service research can help in identifying the customer needs and expectations when it comes to
digital services. Innovation in digital technologies such as mobile apps, virtual and augmented
reality, and online booking systems can help in improving the tourist experience.
 Sustainability: Service research can help in identifying the sustainable tourism practices that are
important to tourists, and innovation in sustainable tourism technologies can help in reducing the
industry's impact on the environment. For example, eco-friendly hotels, carbon-offsetting
schemes, and sustainable transportation options can help in attracting environmentally conscious
tourists.
 Tourism safety: Service research can help in identifying the safety concerns that tourists have
when traveling, and innovation in safety technologies can help in addressing those concerns. For
example, technologies such as contactless payment systems, facial recognition technology, and
advanced security screening systems can help in improving the safety of tourists.

Overall, service research and innovation can help in improving the competitiveness of the tourism
industry, by providing better services to tourists, enhancing their experience, and addressing their
concerns.

Education Service Sector:

Service research and innovation are important in the education sector as they can help in enhancing the
quality of education, improving student outcomes, and creating a better learning environment. Here are
some areas where service research and innovation can be applied in the education service:

 Personalized learning: Service research can help in understanding the unique learning needs and
preferences of students, and innovation in personalized learning technologies can help in
providing customized learning experiences that meet the needs of individual students. For
example, adaptive learning platforms, personalized learning plans, and competency-based
education can help in improving student outcomes.
 Digital transformation: The education sector is rapidly moving towards digitalization, and
service research can help in identifying the customer needs and expectations when it comes to
digital services. Innovation in digital technologies such as online learning platforms, virtual
classrooms, and educational apps can help in improving access to education and providing a
better learning experience.
 Student support services: Service research can help in identifying the challenges that students
face when it comes to accessing support services, and innovation in student support technologies
can help in addressing those challenges. For example, online tutoring services, career counseling
services, and mental health support services can help in improving student outcomes.
 Teacher training and development: Service research can help in identifying the training and
development needs of teachers, and innovation in teacher training technologies can help in
providing professional development opportunities that improve teaching effectiveness. For
example, online teacher training programs, micro-credentialing, and mentorship programs can
help in improving teaching quality.

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Overall, service research and innovation can help in improving the competitiveness of education service
providers, by providing better services to students, improving student outcomes, and enhancing the
quality of education.

Health Service Sector:

Service research and innovation are crucial in the health service sector, as they can help to improve
patient outcomes, enhance the patient experience, and increase efficiency in the delivery of healthcare
services. Here are some areas where service research and innovation can be applied in the health service
sector:

 Personalized medicine: Service research can help in understanding the unique needs and
preferences of patients, and innovation in personalized medicine technologies can help in
providing customized treatment plans that meet the needs of individual patients. For example,
genetic testing, precision medicine, and targeted therapies can help in improving patient
outcomes.
 Digital transformation: The health service sector is rapidly moving towards digitalization, and
service research can help in identifying the customer needs and expectations when it comes to
digital services. Innovation in digital technologies such as telemedicine, online patient portals,
and wearable devices can help in improving access to healthcare services and enhancing the
patient experience.
 Patient engagement: Service research can help in identifying the barriers that patients face when
it comes to engaging with healthcare services, and innovation in patient engagement technologies
can help in addressing those barriers. For example, patient engagement platforms, mobile apps,
and patient education materials can help in improving patient outcomes.
 Healthcare delivery and coordination: Service research can help in identifying the
inefficiencies in the delivery of healthcare services, and innovation in healthcare delivery
technologies can help in increasing efficiency and reducing costs. For example, electronic health
records, clinical decision support systems, and care coordination tools can help in improving the
quality of healthcare services.

Overall, service research and innovation can help in improving the competitiveness of health service
providers, by providing better services to patients, improving patient outcomes, and enhancing the quality
of healthcare services.

Telecom Service Sector:

Service research and innovation are important in the telecom service sector as they can help in improving
the quality of services, enhancing the customer experience, and increasing the efficiency of operations.
Here are some areas where service research and innovation can be applied in the telecom service sector:

 Network quality: Service research can help in identifying the factors that impact network
quality, and innovation in network technologies can help in improving network performance. For
example, 5G networks, network function virtualization, and software-defined networking can
help in providing faster and more reliable network services.
 Digital transformation: The telecom service sector is rapidly moving towards digitalization, and
service research can help in identifying the customer needs and expectations when it comes to
digital services. Innovation in digital technologies such as artificial intelligence, the Internet of

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 Things, and cloud computing can help in providing more advanced and personalized services to
customers.
 Customer service: Service research can help in understanding the needs and preferences of
customers, and innovation in customer service technologies can help in providing better customer
support. For example, chat bots, virtual assistants, and self-service portals can help in improving
the customer experience.
 Value-added services: Service research can help in identifying the additional services that
customers are looking for, and innovation in value-added services can help in increasing revenue
streams. For example, content services such as video streaming and music streaming, and IoT-
based services such as smart homes and smart cities can help in providing additional services to
customers.

Overall, service research and innovation can help in improving the competitiveness of telecom service
providers, by providing better services to customers, enhancing the customer experience, and increasing
efficiency in the delivery of telecom services.

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