CHAPTER 4

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 Four

SERVICES
MARKETING
PROGRAMME

Chapter Four

LEARNING OUTCOME:

By the end of this chapter, students should be able to:

4.1 Organize the concept of costs and approaches to
pricing
❑4.1.1 Explain the concept of costs in services
❑4.1.2 Explain approaches to pricing

4.2 Demonstrate the communication mix for services
❑4.2.1 Describe the communication mix for services
❑4.2.2 Demonstrate the elements of marketing
communication mix

4.3 Demonstrate distribution services
❑4.3.1 Describe the elements of distribution in a services
context
❑4.3.2 Demonstrate the difference between the
distribution of core services and supplementary services
❑4.3.3 Organize decisions about place and time

4.1 ORGANIZE THE CONCEPT OF COSTS AND
APPROACHES TO PRICING

4.1.1 Explain the concept of costs in services

a) Time

❑ Most services require direct involvement of the consumers,
which consumer real time, and this includes the waiting time
too.

❑ Assuming two services having some monetary price but
having say different waiting periods are different in
total/overall pricing

❑ Example: Hospital and car park

4.1 ORGANIZE THE CONCEPT OF COSTS AND
APPROACHES TO PRICING

4.1.1 Explain the concept of costs in services

b) Physical costs

❑ Involved in finding out which services to go for. For goods
its easy, just compare the benefits/features with the price
tags.

❑ For services, one needs to experience to know the details and
generally no price tag of service are available.

❑ Example: Automatic car wash, ATM machine

4.1 ORGANIZE THE CONCEPT OF COSTS AND
APPROACHES TO PRICING

4.1.1 Explain the concept of costs in services

c) Psychological costs

❑ Most painful and frustrating experience or non-monetary
costs

❑ Example:
a) Fear of understanding, rejection, uncertainty. Some
customers are not comfortable going thro’ certain hassles of
the service consumption process.
b) Dropping cheques in drop boxes, paying thro’ internet
by credit card numbers.

4.1 ORGANIZE THE CONCEPT OF COSTS AND
APPROACHES TO PRICING

4.1.1 Explain the concept of costs in services

d) Sensory costs

❑ Include customers sensory.
❑ If the customer is convenience to avail or consume any

services, like travelling, putting an effort, rescheduling other
activities, sacrificing some other activities or time, etc.
❑ Example: noise, smells

4.1 ORGANIZE THE CONCEPT OF COSTS AND
APPROACHES TO PRICING

4.1.2 Explain approaches to pricing

4.1 ORGANIZE THE CONCEPT OF COSTS AND
APPROACHES TO PRICING

4.1.2 Explain approaches to pricing

a) Cost-based pricing

❑ Set prices relative to financial costs.
❑ Activity-based costing.
❑ Pricing implications of cost analysis.
❑ Example: Accountants, Lawyers and other

professionals charge a price for their services. Basically
by adding the cost of work with a certain proportion of
markup.

4.1 ORGANIZE THE CONCEPT OF COSTS AND
APPROACHES TO PRICING

4.1.2 Explain approaches to pricing

b) Value-based pricing

❑ Relate price to value perceived by customer.
❑ The price is not set after the production of the product,

but before the production.
❑ So this means that the organization considers the

customers along with their perception about certain
products or services.
❑ On this basis, the business sets a certain price and then
starts manufacturing that product.
❑ Thus the expected value and price provide guidelines
for the cost and design of the product. So that it can
match the perceptions of the customers.
❑ For this purpose these organizations conduct surveys
and experiments.
❑ If a business keeps the price of its product higher than
the perceived value of customers, then its sales are
affected. On the other hand, if a business keeps its
product’s price lower, then maybe its sales increase.

4.1 ORGANIZE THE CONCEPT OF COSTS AND
APPROACHES TO PRICING

4.1.2 Explain approaches to pricing

c) Competition pricing

❑ Monitor competitors’ pricing strategy.
❑ Dependent on the price leader.
❑ In this pricing model, businesses keep the price of

their products or services on the basis of the prices of
their competitors.
❑ Also, customers in the market perceived value to any
product or service in relation to prices of similar
products of competitors.
❑ Example: broadband (celcom-maxis)

4.2 DEMONSTRATE THE COMMUNICATION MIX FOR
SERVICES

4.2.1 Describe the communication mix for services

Different elements have different capabilities relative
to the types of message that they convey and the
market segments which are most likely to be exposed
to them.



4.2 DEMONSTRATE THE COMMUNICATION MIX FOR
SERVICES

4.2.2 Demonstrate the elements of marketing communication
mix

a) Personal Communication

Communication flows in both directions, allowing
the sales representative to learn more about
customers.
a)Personal Selling
b)Customer services
c)Word of mouth

4.2 DEMONSTRATE THE COMMUNICATION MIX FOR
SERVICES

4.2.2 Demonstrate the elements of marketing communication
mix

b) Advertising

Any paid form of nonpersonal presentation and
promotion of ideas, goods, or services by an
identified sponsor.
1-paid advertising media
2-direct marketing
3-retail display

4.2 DEMONSTRATE THE COMMUNICATION MIX FOR
SERVICES

4.2.2 Demonstrate the elements of marketing communication
mix

c) Sales Promotion

Set of marketing activities undertaken to boost sales
of the product or services.

a) coupon
b) gifts

4.2 DEMONSTRATE THE COMMUNICATION MIX FOR
SERVICES

4.2.2 Demonstrate the elements of marketing communication
mix

d) Publicity and Public relations

Building good relationships with the company’s
various publics by obtaining favourable publicity,
building up a good “corporate image”, and handling
or heading off unfavourable rumours, stories, and
events.
Example: magazines

4.2 DEMONSTRATE THE COMMUNICATION MIX FOR
SERVICES

4.2.2 Demonstrate the elements of marketing communication
mix

e) Instructional materials

Promotion and educate the customer in self service.
Example: 1-pamplets

4.2 DEMONSTRATE THE COMMUNICATION MIX FOR
SERVICES

4.2.2 Demonstrate the elements of marketing communication
mix

f) Corporate design

❑ Refers to consistent use of distinctive colors,
symbols, lettering and layout on such tangible
elements to provide a unifying and recognizable
theme linking all the firms operation.

❑ Example: a) Uniforms

4.3 DEMONSTRATE DISTRIBUTION SERVICES

4.3.1 Describe the elements of distribution in a services
context

a) Information and promotion flow

❑ Distribution of information and promo materials
relating to service offer

❑ Objective: to get the customer buy the services

4.3 DEMONSTRATE DISTRIBUTION SERVICES

4.3.1 Describe the elements of distribution in a services
context

b) Negotiation flow

❑ Reaching an agreement on service features and
configuration, terms of offer, so purchase contract
can be closed

❑ To sell the right to use service
❑ Example : sell a ticket

4.3 DEMONSTRATE DISTRIBUTION SERVICES

4.3.1 Describe the elements of distribution in a services
context

c) Product flow

❑ Services like people/possession processing require
a physical facility for service delivery.

❑ Strategy requires development of local sites.
❑ Example: internet banking

4.3 DEMONSTRATE DISTRIBUTION SERVICES

4.3.2 Demonstrate the difference between the distribution of
core services and supplementary services

Core Services

❑ What the consumer spends their money for.
❑ e.g – Servis utama politeknik adalah memberikan

pendidikan.

4.3 DEMONSTRATE DISTRIBUTION SERVICES

4.3.2 Demonstrate the difference between the distribution of
core services and supplementary services

Supplementary Services

❑ Extras that make the core service more appealing.
❑ E.g – Kemudahan peralatan seperti perpustakaan,

komputer untuk kegunaan pelajar.

4.3 DEMONSTRATE DISTRIBUTION SERVICES

4.3.3 Organize decisions about place and time

Place of service delivery

❑ Cost, productivity, and access to labour are key
determinants to locating a service facility.

❑ Place of service delivery:
❑ Self service electronic kiosk
❑ Airport sites
❑ Petrol station
❑ Public transport stop

Ministores Creating many small service factories
to maximize geographic coverage
(automated kiosks)

Locating in Proximity to where customers live or
multipurpose work (service station)

facilities

4.3 DEMONSTRATE DISTRIBUTION SERVICES

4.3.3 Organize decisions about place and time
Time of service delivery

Traditionally, schedules Today
were restricted

Service availability limited to Flexible, responsive service
daytime, 40 to 50 hours a operations.
week.
24/7 service all around the
world

Sunday rest day in Christian Flexible, responsive service
tradition, Friday in Muslim operations.

tradition. 24/7 service all around the
world

THANK YOU..