SERVICE MARKETING

Basic concept of services marketing and how to go
beyond

service to create experiences

TABLE OF CONTENTS

1 Introduction To Services Marketing
2 Creating The Service Product
3 Model of Services Consumption
4 Service Marketing Programmed
5 Service Quality and Productivity
6 Assessment

Conclusion

Chapter Two

CREATING THE
SERVICES PRODUCT

Chapter Two

LEARNING OUTCOME:
By the end of this chapter, students should
be able to:
❑ Provide differences between the core

product and its supplementary services
❑ Provide information on the new service

product development
❑ Examine the branding of service products

2.1 PROVIDE DIFFERENCES BETWEEN THE
CORE PRODUCT AND ITS SUPPLEMENTARY

SERVICES

2.1.1 Elaborate on the differences between the
core product and its supplementary services

• Core Product
- Central component that supplies the

principle, problem, solving benefits
customers seek.

• Supplementary Services
- Augment the core product facilitating

its use and enhancing its value and appeals.

2.1 PROVIDE DIFFERENCES BETWEEN THE
CORE PRODUCT AND ITS SUPPLEMENTARY

SERVICES

2.1.1 Elaborate on the differences between the
core product and its supplementary services

SERVICES
PRODUCT

1) CORE PRODUCT 2) SECONDARY/
SUPPLIMENTARY SERVICES
✓ PROBLEM SOLVING
✓ BENEFIT CUSTOMER ✓ FACILITATING
(memudahkan
SEEK pelanggan )

✓ ENCHANCING (added
extra value)

2.1 PROVIDE DIFFERENCES BETWEEN THE
CORE PRODUCT AND ITS SUPPLEMENTARY

SERVICES

2.1.1 Elaborate on the differences between the
core product and its supplementary services

CORE Characteristic

SUPPLEMENTARY

- Must be offered to meet - Not necessarily offered
customer needs

- Have to pay some money to get - Sometimes does not have to
it pay more money to enjoy it

- Purchasing process - Process of collecting
information
- Covers the main purpose of
purchasing goods and services - Refers to additional features
that will complement a product
or service

2.1 PROVIDE DIFFERENCES BETWEEN THE
CORE PRODUCT AND ITS SUPPLEMENTARY

SERVICES

2.1.1 Elaborate on the differences between the
core product and its supplementary services

Example

Services Core Product Supplementary Services

PLUS Services to consumer and Restaurant, Mosque, Petrol
communication highway for Pam, and toilet
travel comfort

Post Office Sending a letters to users Payment of bills such as
electricity, water, road tax,
payment, and withdrawals
and deposits Amanah Saham
Nasional Berhad (ASNB)

Malaysia Airlines System Offering air transportation foods, drinks, magazines,
(MAS) services for passengers television, duty free shop
and luggage storage
KFC Fast food services
Great services, foods,
packaging and toilet

2.1 PROVIDE DIFFERENCES BETWEEN THE
CORE PRODUCT AND ITS SUPPLEMENTARY

SERVICES

2.1.1 Elaborate on the differences between the
core product and its supplementary services

Hotel Example

Cashier Reservation

Valet
Parking

Business A Bed for the Night in Reception
Center an Elegant Private
Room with a Bathroom Baggage
Room Service
Service

Wake-up Entertainment/ Cocktail
Call Sports/ Exercise Bar

Internet Restaurant

2.1 PROVIDE DIFFERENCES BETWEEN THE
CORE PRODUCT AND ITS SUPPLEMENTARY

SERVICES

2.1.2 Supplementary services (the flower of service)

2.1 PROVIDE DIFFERENCES BETWEEN THE
CORE PRODUCT AND ITS SUPPLEMENTARY

SERVICES

2.1.2 Supplementary services (the flower of service)

The Flower of Service:
Facilitating Services—Information

Core Customers often require information
about how to obtain and use a
product or service.

Examples of elements:

▪ Directions to service site
▪ Schedule/service hours
▪ Prices
▪ Conditions of sale
▪ Usage instructions

2.1 PROVIDE DIFFERENCES BETWEEN THE
CORE PRODUCT AND ITS SUPPLEMENTARY

SERVICES

2.1.2 Supplementary services (the flower of service)

The Flower of Service:
Facilitating Services—Order Taking

Core Customers need to know what is
available and may want to secure
commitment to delivery. The
process should be fast and
smooth.

Examples of elements:

▪ Applications
▪ Order entry
▪ Reservations and check-in

2.1 PROVIDE DIFFERENCES BETWEEN THE
CORE PRODUCT AND ITS SUPPLEMENTARY

SERVICES

2.1.2 Supplementary services (the flower of service)

The Flower of Service:
Facilitating Services—Billing

Core “How much do I owe you?”
Bills should be clear,
Accurate, and intelligible.

Examples of elements:

▪ Periodic statements of
account activity

▪ Machine display of amount
due

2.1 PROVIDE DIFFERENCES BETWEEN THE
CORE PRODUCT AND ITS SUPPLEMENTARY

SERVICES

2.1.2 Supplementary services (the flower of service)

The Flower of Service:
Facilitating Services—Payment

Core Customers may pay faster
and more cheerfully if you
make transactions simple
and convenient for them.

Examples of elements:

▪ Self service payment
▪ Direct to payee or intermediary
▪ Automatic deduction

2.1 PROVIDE DIFFERENCES BETWEEN THE
CORE PRODUCT AND ITS SUPPLEMENTARY

SERVICES

2.1.2 Supplementary services (the flower of service)

The Flower of Service:
Enhancing Services—Consultation

Core Value can be added to goods and
services by offering advice and
consultation tailored to
each customer’s needs and
situation.

Examples of elements:

▪ Customized advice
▪ Personal counseling
▪ Management consulting

2.1 PROVIDE DIFFERENCES BETWEEN THE
CORE PRODUCT AND ITS SUPPLEMENTARY

SERVICES

2.1.2 Supplementary services (the flower of service)

The Flower of Service:
Enhancing Services—Hospitality

Core Customers who invest time and effort in
visiting a business and using its services
deserve to be
treated as welcome guests—
after all, marketing invited them!

Examples of elements:

▪ Greeting
▪ Waiting facilities and amenities
▪ Food and beverages
▪ Toilets and washrooms
▪ Security

2.1 PROVIDE DIFFERENCES BETWEEN THE
CORE PRODUCT AND ITS SUPPLEMENTARY

SERVICES

2.1.2 Supplementary services (the flower of service)

The Flower of Service:
Enhancing Services—Safekeeping

Core Customers prefer not to worry about
looking after the personal
possessions that they bring with
them to a service site.

Examples of elements:

▪ Looking after possessions
customers bring with them

▪ Caring for goods purchased
(or rented) by customers

2.1 PROVIDE DIFFERENCES BETWEEN THE
CORE PRODUCT AND ITS SUPPLEMENTARY

SERVICES

2.1.2 Supplementary services (the flower of service)

The Flower of Service:
Enhancing Services—Exceptions

Core Customers appreciate some
flexibility when they make special
requests and expect responsiveness
when things don’t go according to
plan.

Examples of elements:

▪ Special requests in advance
▪ Complaints or compliments
▪ Problem solving
▪ Restitution

2.2 PROVIDE INFORMATION ON THE NEW
SERVICE PRODUCT DEVELOPMENT

2.2.1 New service product development

A. Hierarchy of New Service Categories

❑ Major service innovations
New core products for previously undefined markets
Eg: Astro, Tabung Haji, FEDEX

❑ Start-up business
Using new processes to deliver existing products with
added benefits.
Eg: cyber café, university, insurance

❑ Product-line extensions
Additions to current product lines
Eg: Bank Islam

2.2 PROVIDE INFORMATION ON THE NEW
SERVICE PRODUCT DEVELOPMENT

2.2.1 New service product development

A. Hierarchy of New Service Categories

❑ Supplementary service innovations
Additions of new or improved facilitating or enhancing
elements
Eg: KFC added new menu

❑ Service improvements
Modest changes in the performance of current
products.
Eg: laundry

❑ Style changes
Visible changes in service design or scripts
Eg: tagline, corporate uniform, logo

2.2 PROVIDE INFORMATION ON THE NEW
SERVICE PRODUCT DEVELOPMENT

2.2.1 New service product development

B. Searching for new ideas

❑ Goods + + + Service
Eg: Boutique + jahit baju + kelas jahitan

❑ Service + + + Goods
Eg: Saloon + trainee new employee + sell hair treatment
product
❑ Ideas and new services come from many different

angles
❑ Marketers and operation should be aware of the

opportunity to add value and functionality to extend
the value of new goods or services and the use of the
products.
❑ Other services can be created including finance,
installations, operator training, insurance,
maintenance and disposal.

2.2 PROVIDE INFORMATION ON THE NEW
SERVICE PRODUCT DEVELOPMENT

2.2.1 New service product development

B. Searching for new ideas

I. TURNING GOOD INTO SERVICES

❑ Services can be built around rentals : Alternatives to
owning a physical good and/ or doing work oneself.

❑ Customers can rent goods/use and return for a fee
instead of purchasing them.

❑ Customers can be hire personnel to operate own or
rented equipment.

❑ Any new durable good may create need for after sales
services now and in future possession processing.

2.2 PROVIDE INFORMATION ON THE NEW
SERVICE PRODUCT DEVELOPMENT

2.2.1 New service product development

B. Searching for new ideas

II. Transforming service into goods.

❑ Technology allows the benefits of services that
formerly had to be delivered by service personnel in
a real time environment to be captured in a physical
products.

❑ New easy to use technology allow individual and
cooperate users to replace services professional in a
variety of other fields.

❑ Ex: washing machine and dryers for home use
replace laundry services.

2.2 PROVIDE INFORMATION ON THE NEW
SERVICE PRODUCT DEVELOPMENT

2.2.1 New service product development

C. Using research to design new services

❑ Design research is foundation to creating:-
- Product
- Services
- System

❑ Respond to human need are critical for improved
livelihoods and better governance

❑ Support the strategic design & development of
product, services and program.

❑ Founded in the belief that we already know the
optimal market and consumer leverage point, human
need.

❑ Unearthing and satisfying those needs is thus the
surest measure of success

❑ This process can earn people respect & loyalty.

2.2 PROVIDE INFORMATION ON THE NEW
SERVICE PRODUCT DEVELOPMENT

2.3.1 Branding strategies for services

❑ Branding plays an important role in services, as
explained by Leonard Berry:

“Strong brands enable customers to better visualize and
understand intangible products. They reduce customers’
perceived monetary, social, or safety risk in busying
services, which are difficult to evaluate prior to purchase.
Strong brands are surrogates when the company offers
no fabric to touch, no trousers to try on, no watermelons
or apples to scrutinize, no automobile to test drive”.

2.2 PROVIDE INFORMATION ON THE NEW
SERVICE PRODUCT DEVELOPMENT

2.3.1 Branding strategies for services

❑ Branding can be employed at both the corporate and
product levels by almost any service business.

❑ Applying distinctive brand names to individual
products enables the firm to communicate the
distinctive experiences and benefits associated with a
specific service concept to the target market.

❑ In short, it helps marketers to establish a mental
picture of the service in customers’ minds and to
clarify the nature of the value proposition.

❑ Branding individual service products helps to
differentiate one bundle of output from another.

❑ For example, is Banyan Tree Hotels & Resorts, which
carefully crafted specified products for its various
target segments branded as “Heavenly Honeymoon”,
“Spa Indulgence”, or “Intimate Moments

2.2 PROVIDE INFORMATION ON THE NEW
SERVICE PRODUCT DEVELOPMENT

2.3.1 Branding strategies for services

2.2 PROVIDE INFORMATION ON THE NEW
SERVICE PRODUCT DEVELOPMENT

2.3.1 Branding strategies for services

A. Branded house

❑ The term branded house is used to describe a
company, such as the Virgin Group, that applies its
brand name to multiple offerings in often unrelated
fields.

❑ Virgin’s core business areas are travel, entertainment,
and lifestyle, but it also offers financial services,
healthcare, media, and telecommunications services.

❑ The danger of such a branding strategy is that the
brand gets overstretched and weakened.

2.2 PROVIDE INFORMATION ON THE NEW
SERVICE PRODUCT DEVELOPMENT

2.3.1 Branding strategies for services

B. Sub-brands

❑ A sub-brand is a brand within a brand. A sub-brand
uses a unique name for a product and service that can
develop its own brand. Sub-brands have their own
customer expectations and personalities that are
different from the parent brand.

❑ Sub-brands can be a powerful tool for marketers
because of these effects. We explore some case
studies of sub-brands that have been successfully used
to distinguish a product or target a niche market.

❑ Examples of successful sub-brands:
• Samsung Galaxy
• Toyota Prius
• McDonald’s Big Mac
• Coca-Cola Zero Sugar
• Lenovo Legion

2.2 PROVIDE INFORMATION ON THE NEW
SERVICE PRODUCT DEVELOPMENT

2.3.1 Branding strategies for services

C. Endorsed brands

❑ For endorsed brands, the product brand dominates
but the corporate name is still featured. Many hotel
companies use this approach.

❑ They offer a family of sub brands and/or endorsed
brands.

❑ For instance, Intercontinental Hotel Group in itself is
well known. However, its product brands are
dominant.

❑ They include the Intercontinental Hotels & Resorts, the
Crowne Plaza Hotels & Resorts, Hotel Indigo, Holiday
Inn, Holiday Inn Club Vacations, Holiday Inn Resort,
Holiday Inn Express, Staybridge Suites, Candlewood
Suites, Even Hotels, and Hualuxe, and its loyalty
program IHG Rewards Club.

❑ A multi-brand strategy is aimed at encouraging
customers to continue buying from within the brand
family

2.2 PROVIDE INFORMATION ON THE NEW
SERVICE PRODUCT DEVELOPMENT

2.3.1 Branding strategies for services

C. Endorsed brands

❑ At the far end of the spectrum is the house of brands
strategy. A good service example is Yum! Brands, Inc.
Yum! Brands has nearly 43,000 restaurants in more
than 130 countries and territories, with revenues of
more than $13 billion in 2015.

❑ While many may not have heard of Yum! Brands,
people certainly are familiar with their restaurant
brands — KFC, Pizza Hut and Taco Bell — the global
leaders of the chicken, pizza and Mexican-style food
categories.

❑ Worldwide, the Yum! Brands system opens over six
new restaurants per day on average, making it a leader
in global retail development

THANK YOU..