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Service Marketing

By HWA | Publish On: January 6, 2011 | Posted In:

Service Marketing Assignment

It is difficult to provide one single definition of a service, but let’s try:

  • Level 1: service is an intangible offering with little or no transfer of physical products to the customer. Ex; car rentals, insurance, education
  • Level 2: service is a one part of product-service mix being offered to customers. Ex; restaurants. The physical goods are as important as the service part of the offering & customers have to be satisfied with both
  • Level 3: the main offering is the product but the supplier also provides some service. Ex; car service & installation of equipment
  • Level 4: every product or service or any combination of a mix of the two ultimately is supposed to provide service for customer. The customer buys a car because it provides him transportation services. This idea is gaining ground as companies are increasingly trying to become customer oriented

Service Marketing

Characteristics of Service Marketing
Intangibility: the customer decision is completely dependent on is understanding of the service product at a given point of time & his belief in the marketer’s promise of future performance

  • Low Price Sensitivity: performance & price sensitivity are inversely related
  • No Inventory: profitability & viability are extremely critical for the service provider is to deliver exemplary service to the customer
  • Value Creation Process: in service industry is through people, process, proof of performance & the pace at which the service is delivered
  • Tangibility: is provided to the service product by the service provider, communication & the speed at which the service is delivered. The ambiance of the service product helps in creating an appropriate set of beliefs which will help reassure the customer. In the context of internet services like call centers, or dedicated websites like or, etc
  • Inseparability: services can not be separated from the creator-seller of the service. Eg: Dentists create & dispense almost all their services at the same time, & they require the presence of the consumer for the services to be performed
  • Heterogeneity: it is difficult of not impossible for a service firm, or even an individual seller of services, to standardize output . Each unit of service is somewhat different from every other unit of the same service
  • Perishability: the services cannot be stored or inventoried for future use.

Importance of Services Marketing
In most industrialized economies, expenditure on services is growing due to:

  • Advances in technology that has led to more sophisticated products that require more services
  • Growth of per capita income has given rise to a greater percentage of income being spent on luxuries such as restaurants, overseas holidays, etc.,
  • A trend towards outsourcing means that manufacturers are buying services that are outside the firm’s core expertise (warehousing, catering)
  • Deregulation has increased level of competition in certain service industries like telecom
  • Due to growth in per capita income, people are buying more goods, which has contributed to making retailing an important service

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