CHAPTER 4

Services
Marketing

Basic concept of services marketing and how
to go beyond

service to create experiences

Polytechnic Sultan Abdul Halim Mu’adzam Shah

4

CHAPTER FOUR

SERVICE
MARKETING
PROGRAMMED

Table of
Contents

Chapter 1: Introduction To Services
Marketing

Chapter 2 : Creating the Service Product

Chapter 3: Customer Behavior in Service
Encounters

CHAPTER 4 : SERVICE MARKETING
PROGRAMMED

Chapter 5: Managing Service Quality

Chapter 6: The Future of Services
Marketing

CHAPTER 4 SERVICE MARKETING
PROGRAMME

A. EXPLAIN COSTS AND DEVELOPING
PRICING STRATEGIES

i)Time
Times costs of service are
inherent in service
delivery.There’s an opportunity
cost to customers for the time
they are involved in the service
delivery process, since they could
spend that time in other ways.
They could even be working to
earn additional income

ii)Physical efforts

Physical efforts costs of
service(like fatigue, discomfort and
occasionally even injury)may be
incurred in obtaining services,
especially if customers must come
to the service factory and if delivery
entails self-service.

iii) Psychic costs

Psychic costs of service like mental
effort, feeling of inadequacy, or fear are
sometimes attached to evaluating service
alternatives, making a selection, and
then using a particular service.

iv) Sensory costs

Sensory costs of service relate to
unpleasant sensations affecting any of
the five senses. In a service environment
they may include putting up with noise,
unpleasant smells, drafts, excessive heat
or cold, uncomfortable seating(especially
true in high-density aircraft seating
configurations),visually unapealling
environments and even unpleasant
tastes.

B. EXPLAIN APPROACHES TO PRICING
STRATEGIES

i) Cost-based pricing

Cost-based pricing uses production costs
as its basis for pricing and, to this base
cost, a profit level must be added in
order to come up with the product price.
Cost-based pricing companies use their
costs to find a price floor and a price
ceiling

ii) Value-based pricing

Value-based pricing, also known as
customer-based pricing, is a pricing
concept which is defined as
follows: Value-based pricing is the setting
of a product’s price based on the
benefits it provides to consumers. In
other words, it is about finding the price
that your customers are willing to pay.
Companies using value-based pricing
consider the value of their product and
their customers’ perceptions of value as
the key to pricing, instead of production
costs

iii) Competition pricing

Competition-based pricing, also known
as competitive pricing, consists in setting
the price of a product based on what the
competition is charging. This pricing
method is normally used by businesses
selling similar products, since services
can vary from business to business, while
the attributes of a product remain
similar.In highly competitive markets,
consumers judge products with similar
features by the prices that rival
businesses charge for them.

C. DETERMINE SERVICE PRICING
QUESTIONS ASK INTO PRACTICE

1.HOW MUCH SHOULD BE CHARGED FOR
THE SERVICE?

A service charge is a fee collected to pay for the
services related to the primary product or
service being purchased. There charge is usually
added at the time of the transaction. Many
industries collect service charges, include
restaurants, banking and travel and tourism

Customers view price as a serious factor in a
purchase. Some customers view extremely low
prices as too good to be true and may assign a
poor value to a product without having to try it.
These types of prestige price customers often
refuse to purchase a product of lower cost.

2. WHAT SHOULD BE THE BASIS FOR
PRICING?

-Execution of a specific task.
-Admission to a service facility.
Units of time.
-Percentage commission on the value of
the transaction.

3. WHO SHOULD COLLECT PAYMENT?
-The organization that provides the
service.
-A specialist intermediaries. (travel or
ticket agent, bank, retailer)

4. WHERE SHOULD PAYMENT BE MADE?
-The location at which the service is
delivered. For example, Pos Laju, Skynet,
NINJAVAN, KFC, Mc Donald’s, Nationwide
and e.t.c.
-A convenient retail outlets or financial
intermediary. For example, bank or
mutual fund.

5. WHEN SHOULD PAYMENT BE MADE?
A payment should be made after the
company has fulfilled client’s order. Its
always the best to pay segments of work
once they’re completed.

6. HOW SHOULD PAYMENT BE MADE?
Cash with exact change
Stored value card (prepaid cards, credit
and debit cards, gift cards, smart cards).
Check (make sure the check is issued by a
legitimate bank and doesn’t have a fake
bank name.
Electronic funds transfer. For example,
PayPal.

D. Determine Communication Mix For
Services And Identify The Elements Of

Marketing Communication Mix

COMMUNICATION MIX

-The marketing communication mix is
refers to a set of tools used to promote
services or products to a target set of
customers. The key is communication,
meaning a list of important factors that
go into act of promoting product or
services.

-Communications is crucial to the success
of any organization. We need to use
different elements of the
communications mix to communicate the
message, value and benefits to
customers

EXAMPLE OF MARKETING COMMUNICATION MIS
FOR SERVICES

PERSONAL SELLING

-Personal selling is known as face-to-face
selling in which one person who is the
salesman tries to convince the customer
in buying a product. It is a promotional
method by which the salesperson uses
their and abilities in an attempt to make
a sale. The job of the sales person is to
make sure that he understands the need
of the customers and accordingly shows
various products that he keeps under
that category.

-A good example of personal selling is
found in department stores on the
perfume and cosmetic counters. A
customer can get advice on how to apply
the product and can try different
products.

-Another example is, in a small sized or
family business, selling may be
undertaken by a cashier, in the case of a
small retail store or family owned
restaurant. The cashier may double as
the sales person, making menu
suggestions in the case of the restaurant.

SALES PROMOTION

Sales promotion can also be part of the
communication mix because it is a
specific “promotion” type. It defined
“communication to an incentive”. The
sales promotion is mainly directed at the
consumer, however, it can be used
toward employees of a specific
organization or business. Examples of
sales promotion includes coupons, buy
one, get one free offers, product
samples, contests and prizes to name a
few.

ADVERTISING

-Advertising is defined as the action of
calling something to the attention of the
public especially by paid
announcements. It also defined as any of
those announcements that are paid and
available through print media, broadcast
media, or online banner advertising that
presents an offer or helps position a
product or service.
-While large organizations can spend
millions of dollars on advertising in
national magazines, newspapers, and
television, small businesses can also
employ advertising tactics on the local
level without spending a fortune.

-For example, Food panda or Grab food
use internet and television advertising to
promotes their services. They also use
banner to advertise their service.

PUBLIC RELATIONS

-Public relations or publicity refers to the
ability to generate interest about your
business, service, or product through
media outlets at very little to no cost.
Generating public relations is typically
done through well crafted press releases
and sent to various publications that may
have an interest in your product or
service.

-Small businesses can take advantage of
generating publicity through local
magazines or newspapers since the local
paper or publication is more readily
available to the local business, more so
than larger publications. For examples,
news worthy of a press release by a local
business could be an announcement for
a local veterinary hospital offering free
vaccination to pet owners, or a
restaurant sponsoring a free
entertainment night.

CORPORATE

-Corporate design is the official graphical
design of the logo and name of a
company or institution used on
letterheads, envelopes, forms, folders,
brochures, etc. The house style is created
in such a way that all the elements are
arranged in a distinctive design and
pattern.

-Provide a recognizable theme linking all
the firm’s operations in a branded service
experience through strategic use of
physical evidence.

For examples, Starbucks’s logo
which is two tailed mermaid or
called siren with green background.
Another example is Mesra’s logo at
Petronas , which is yellow and white
sun, half moon and stars.

INSTRUCTIONAL MATERIAL

Instructional materials are the
content or information conveyed
within a course. For example,
audiovisual materials of publicity in
(films. Multimedia, slide show,
music video, cassette).

E. Describe the promotion strategy
use in services and goods

Absences of inventories
-It means is service could not be saved
Reduced role of intermediaries
-There is services that set aside
intermediary in marketing
communication process.
-In field insurances, intermediary
involvement are important
Importance of contact personnel
-In involves organization’s relationship
with the employee

Customer involvement in production
-Involve customer in that services
delivery.

Alternatives promotion techniques
-Sample given customer are chance to try
the service free of charge.
-Coupon given by post are, are printed in
magazines, newspaper and so on.

F. IDENTIFY DISTRIBUTION SERVICE

4.3.1 state distribution in service

• Information and promotion flow
• To get customer interested in

buying the service
• Negotiation flow
• To sell the right to use a service
• Product flow
• To develop a network of local

sites

4.3.2 Distinguishing between Distribution
of Supplementary and Core Services

CORE SERVICES
- for people processing and possession
processing services require physical locations
- for mental stimulus processing and
information processing can be distributed
electronically
- a haircut or the services of lawyer or teacher.

Supplementary services
can be tangible or intangible in nature; latter
can be distributed widely and cost-effectively
via nonphysical channels
Telephone , Internet
that are rendered as a corollary to the sale of a
tangible product
- Home delivery options offered by restaurants
above a minimum bill value.

G. EXPLAIN DECISIONS ABOUT
PLACE AND TIME

WHERE SHOULD SERVICE BE DELIVERY
• cost, productivity, and access to labor often

are key determinants.
• Firms should make it easy for people to access

frequently purchased services, especially
those that face active competition.
• Examples:- retail banks and fast-food
restaurants.

EXAMPLE:
Retail bank have provision of savings and
transactional accounts, mortgages, personal loans,
debit cards, and credit cards, can make easy to
consumer to access their services

EXAMPLE:
Laundry self service(dobby) are usually open
near residential areas and operate 24 hours.

LOCATION CONSTRAINTS

❑ OPERATIONAL REQUIREMENT

For example: Airports
❑ GEOGRAPHICS FACTORS

For example: Ski resorts
❑ NEED FOR ECONOMIES OF SCALE

For example: Hospitals

MINISTORE

❑ Small service factories to maximize
geographic coverage

❑ For example: automatic kiosk like
ATM bank in supermarket

❑ firms offering one type of service
business are purchasing space
from another provider in a
complementary field.

❑ For example: dunkin donuts,
Tealive

Locating in multipurpose
facility

❑ Closer to customers residential/workplace
❑ For example: Petrol pump with retail chains

EXAMPLE:
❑ Modern buildings often are designed to be

multipurpose, featuring not only office or
production space but also such services as a
bank (or at least an ATM), a restaurant, a hair
salon, several stores,and maybe a health
club. Some companies even include a
children’s day-care facility to make life easier
for busy working parents
❑ For example: EcoWorld

WHEN SHOULD SERVICE BE DELIVERY

Traditionally, scheduled were restricted

❑ The situation inconvenienced working
people who had to shop either during their
lunch break or on Saturdays.

❑ Sunday opening was strongly discouraged in
most Christian cultures and often was
prohibited by law, reflecting a long tradition
based on religious practice

Today, the situation has changed.
❑ For some highly responsive service

operations, the standard has become “24/7”
service—24 hours a day, 7 days a week,
around the world.
❑ Some firms, however, have resisted the trend
to 7 day operations.
❑ For example: Chick-fifil-A that “

being closed on Sunday ,

: Bank

H. RECOGNIZE SERVICE DELIVERY
IN CYBERSPACE

❑ Developments in telecommunications and
computer technology have spurred many
new approaches to service delivery.

❑ In the hospitality industry, reservations are
increasingly handled via firms’ websites.

❑ For example, Swissôtel Hotels & Resorts

SERVICE DELIVERY INNOVATIONS FACILITIES BY
TECHONOLOGY
TECHNOLOGICAL INNOVATIONS
❑ Development of “smart” mobile telephones

and PDAs (personal digital assistants) and Wi-Fi
high-speed Internet technology that can link
users to the Internet wherever they may be.

VOICE RECOGNITION
❑ That allows customers to give information and request service

simply by speaking into a phone or microphone.
❑ For example: Apple siri, google assistant

WEBSITES
❑ That provide information, take orders, and even serve as a

delivery channel for information-based services.
❑ For example: Foodpanda, Trivago,Tesco online,

SMART CARD
❑ Containing a microchip that can store detailed information

about the customer and act as an electronic purse containing
digital money.
❑ For example: Debit card, credit card, IC card, Touch n go smart
card

E-COMMERCE: MOVE TO CYBERSPACE

❑ Internet facilitates 5 categories of “flow”
- Information
- Negotiation
- Service
- Transaction
- Promotion

❑ Electronic channels offer complement/alternative to traditional
physical channels

❑ Convenience (24-hour availability, save time, effort)
❑ Ease of obtaining information online and searching for desired

items.

❑ Better prices than in many bricks-and-mortar
stores

❑ Broad selection
❑For example: shoppee, Amazon, Alibaba, ebay
❑ Recent developments that link websites,

customer relationship management (CRM)
systems, and mobile telephony.
❑ Integrating mobile devices into the service
delivery infrastructure can be used as a
means to:

(1) access services

(2) alert customers to opportunities or
problems by delivering the right information or
interaction at the right time

(3) update information in real time to