Service Marketing

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Chapter 1 Introduction to Services Marketing
In general, goods can be defined as objects, devices, or things, whereas products refer to both goods and services. A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. The distinction between goods and services is not perfectly clear. Service is the sum of all encounters between a customer and a service provider, while buying/using service, feelings about such encounters immediately after the event and sometimes, the recollections about the event after a period of time. For example, many things happen when a customer undertakes a bus journey. The reservation process, timely departure/arrival, luggage arrangement, leg space, comfort in the bus, audio/video entertainment, functioning of AC etc. make up the total experience of a journey for the customer. Hence, it is appropriate to think of a service as an experience comprising many tangible, intangible, process and encounters. Services Economy All developed economies now have large service sector contribution to their country’s GDP; it was about 76.9% in USA, 75.4% in Japan about 70% in the European Community. Service industry is employed nearly 79% in USA and majority of industries in the U.S. economy do not produce, they perform. When we look at the contributions of each sector to the GDP in India, the share of agriculture has declined from 52.60% in 1950-51 to about 14.70% in the 2009-10. The industry grew from 14.50% in 1950-51 to 28.00% in 2009-10. The most notable feature is the steady growth of the tertiary or service sector from 32.90% in 1950-51 to about 57.20% in 2009-10. The service industry has outpaced manufacturing and agriculture to contribute more than half the gross domestic product of the country. It is growing at a much faster rate and it is projected to be more than 70 percent by 2020. The environment in India has undergone dramatic changes in the last decade from controlled environment to autonomous settings. For example, an autonomous regulatory authority namely Telecom Regulatory Authority of India (TRAI) has been formed to oversee the telecom industry, Insurance Regulatory and Development Authority to regulate insurance services etc. There is increasing private participation in many government controlled service industries. Percent share of services in GDP given in Table-1. Table-1: Percent share in GDP of India Year 2007-08 2008-09 2009-10 2010-11 2011-12 (Source: Ministry of Finance website)

Service 55.70 57.30 57.20 57.70 59.00

Industry 26.50 25.80 28.10 27.80 27.00

Agriculture 17.80 17.00 14.70 14.50 13.90

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Service Industries Services are everywhere; airlines, courier services, hotels, restaurants, beauty salons, marketing research, theme parks, advertising, consultancy, education-schools, colleges, tutorials, legal service, medical service-labs, hospitals, doctor’s, retailing, maintenance of homes or equipment, warehousing & storage, infrastructure, repair and maintenance, IT services, product design, banking services, investment advice, accounting and taxing services. The government sector is mostly in the areas of hospitals, banking, defense services, police and fire department, postal services, regulation, schools etc. The private sector is largely in the business of telecommunication, hotels, hospitals, insurance, retail marketing, law firms, consultancy, motion picture production etc. Employees working as computer operators, accountants, legal-staff in manufacturing sector are service providers and form a “service factory”. Similarly, cashiers, clerks, salesperson and customer service representatives are also service providers. In a highly competitive globalized economy, companies seek to develop a reputation for superior performance in delivery, a better and faster response to queries and quicker resolution of...
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