Concept of service marketing

By Priya Chetty on October 30, 2010

Services are deeds, processes and performances. Services include all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced and provides added value in forms (such as convenience, amusement, timeliness, comfort or health) that are essentially intangible concerns of its first purchaser. Eg.: Transportation, Communication, Educational services etc.

Definition of service marketing

Service marketing is defined by the American Marketing Association (AMA) as “the activities, benefits or satisfactions which are offered for sale are provided in connection with the sale of goods.” (Kapoor, 2011). For instance, when a customer pays for a night at a hotel, he is not only getting accommodation for the night but also a homely environment. This extra benefit given by the hotel is called service marketing.

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Benefits of service marketing

Service marketing has grown exponentially in the past decade because of the various benefits it offers to companies. Following are a few of the advantages of service marketing (Kapoor, 2011):

  1. Recurring sales: When service marketing is focused towards satisfying customers’ needs perfectly, it leads to repeat sales. Happy customers tend to come back for another purchase. For example, a customer who has a savings account with Citibank and is happy with its services like online banking, phone banking, etc. will go to Citibank for applying for a loan. Thus, Citibank’s service marketing efforts are being translated into more sales.
  2. Reviews and word-of-mouth: A happy customer is likely to spread the word about his experience to a number of people. Today, in the age of the internet and swift communication, reviews play an important role in determining whether or not to buy a product. Negative reviews about a product/ service spread fast. Through appropriate service marketing strategy, companies can ensure that customers are satisfied enough to spread word-of-mouth about their good experience.
  3. Contribution to economic growth: Service marketing is especially beneficial for developing countries. It gives them an opportunity to showcase their talents and commitment to quality when it comes to services. By using proper service marketing strategies, companies are able to gain the trust of customers. On a national scale, this leads to an increase in employment level, increase in foreign exchange reserves, increase in exports and Gross Domestic Product.

Service marketing and consumer psychology

Any service characterized by human interaction is strongly dependent on the moods and emotions of the service providers and customers receiving services at the same time (Zeithaml, 2011). Ways in which mood can affect the behaviour of service customers:

  • Positive moods can make customers more obliging and willing to participate in behaviours that help service encounters succeed.
  • Moods and emotions influence service encounters are to bias the way they judge service encounters and providers. Evaluation of service is consistent with the polarity (positive or negative) mood or emotion.
  • Moods and emotions affect the way information about service is absorbed and retrieved.

Service marketers need to be aware of the moods and emotions of customers and service employees and should attempt to influence those moods and emotions in positive ways.


  • Kapoor, R., Paul, J., and Halder, B. (2011). Service marketing: Concept and practices. New Delhi: Tata McGraw Hill
  • Zeithaml, V. (2011). Services marketing. New York: Tata McGraw Hill.

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