The future is Services Marketing

By Suman Shakya

'Tapai haru ko bike aba hamro solid haath haru ma’ (Now your bikes are in our solid hands) scream neatly designed hoarding boards dotted around Kathmandu . The same advertisement can be found in several print media as well. These communications that talk about a modern servicing station and the services it provides are brought out by Hansaraj Hulaschand & Co. who market the Kawasaki Bajaj range of bikes in Nepal.

At first glance, you appreciate the advertisement and think ‘Oh! Bravo, another campaign well executed’. Yet, if you are to take a moment to reflect on it, there is a deeper understanding the changing dynamics of marketing has brought forth. Deliberate or otherwise! To battle with rivals and to succeed, service has become the competitive edge.

What we do see in the advertising is the growing acknowledgment of ‘service’ being an inclusive component in strategic marketing. Service, often a misunderstood and taken-for-granted element has suddenly catapulted into the reckoning. Surely, it is evident marketers and management must take note of it.

Is it time to say ‘Move over Philip Kotler! Let the new boys carry the mantle forward and direct the future of marketing’? New thinkers like Christopher Lovelock are building on the blocks made by Kotler and adding this new dimension of services.

Services Marketing

If you have to buy a branded TV set, will you buy it without guarantee/warranty and service backup? Nepali consumers have grown alert nowadays. Sensing this, the local authorised distributor of Sony, Nepa Him TradeLink in its recent advertisement campaign has purely focused on providing a warranty and after sales service on any Sony product bought locally. The message is crystal clear – Sony has great quality backed up by even greater warranty and services.

It is very clear that what the consumers get is basically a mix of product and services. There can be pure services, but there is almost nothing like pure products today. Services accompany almost all products or goods.

HP Compaq is understood to be currently having its local authorised dealer in Kathmandu, Kastamandap Asia Trading train their staff. The staffs have to qualify and meet the stringent global standards of service norms for HP Compaq products. Only when the service team is ready will they launch their new array of products in Nepal.

Globally, companies are striving to change the nature of their business. It is ‘service’ that is going to rake in the profits, product alone will not be sufficient. IBM is currently the world’s largest IT services company with $35 billion in annual revenue. And we thought they made only PCs, notebooks / laptops and servers. In 2002, they made their entry into services through the buyout of PWC consulting firm. Their range of clients now includes American Express which has commissioned IBM to develop the pay-as-you-go utility offering: a seven-year contract worth $4 billion.

GDP Distribution in some Countries
COUNTRY	PRIMARY SECTOR %	SECONDARY SECTOR %	TERTIARY SECTOR %
INDIA	27	25	48
CHINA	17	49	34
FRANCE	3	23	74
JAPAN	2	36	62
GERMANY	1	28	71
USA	8	14	78

Source: Statistical outline of India, Tata Services Ltd., 2001-02

GDP Distribution in India (Trend) YEAR PRIMARY SECTOR % SECONDARY SECTOR % TERTIARY SECTOR % GROWTH IN SERVICES 1950-51 55.4 16.1 28.5 - 1960-61 50.9 20.0 29.1 + 2.1 % 1970-71 44.5 23.6 31.9 + 9.6 % 1980-81 38.1 25.9 36.0 + 12.9 % 1990-91 30.9 30.0 39.1 + 8.6 % 1999-2000 27.5 24.6 47.9 + 22.5 %

Nepal’s GDP by Industrial Origin at Current Prices - 2005/2006
NPR in millions Percentage
Primary Sector		215,496	38.63
Agriculture, Fisheries & Forestry	212,827
Mining & Quarrying	2,669
Secondary Sector		110,834	19.87
Manufacturing	41,768
Electricity, Gas & Water	12,508
Construction	56,558
Tertiary Sector		231,539	41.50
Trade, Restaurant & Hotels	56,139
Transport, Communications & Storage	55,919
Finance & Real Estate	64,937
Community & Social Service	54,544
Total		557,869	100.00

Source: www.mof.gov.np

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Trends in Services Marketing

Worldwide, services dominate the modern economy and also account for the bulk of new job creation. In the US economy, services (tertiary sector) contribute 78 per cent to the GDP. The rest is made up by agriculture, forestry, mining, fishing and construction (primary sector) – 8 per cent and manufacturing (secondary sector) – 14 per cent (Nov 2002).

The global distribution of GDP share shows the same (see tables in previous page).

The growth in services has been phenomenal in India and recent publications and media reports put the service sector contribution to GDP at over 50 per cent in June 2006.

Is this phenomenon restricted to the developed and developing countries only? What about Nepal ? A predominantly agriculture based country would obviously have its GDP coming predominantly from the primary sector. This thought is shared by many and your guess is as good as mine. Interestingly and surprisingly, however, the Central Bureau of Statistics, Nepal (2005/2006) provides the latest figures as 38.6 per cent from primary sector, 19.8 per cent from secondary sector and a whopping 41.5 per cent from tertiary (services) sector.

The importance of the service sector in the economy cannot be ignored. In most countries, services add more economic value than agriculture, raw materials and manufacturing combined. Service organisations can be any size-from huge global corporations to local small businesses. Employment too is dominated by service jobs with most new jobs coming from services.

Moreover, most activities by government agencies and non-profit organisations in Nepal involve services.

A small box advertisement in the Nepali Times, the English weekly that seems irrelevant regularly smiles at you - 'Did you receive your newspaper on time? Call - Ram Krishna at 5543333'. A subscriber values this service as much as the power packed content of the publication and its glossy print.

These service-bundled instances continue to crop up as we start noticing. It has now become inevitable to make the business of marketing products into marketing of services. Services marketing, the future of marketing, has arrived.

(The author is a marketing expert. He is associated with bitarak.com, Bizmantra and Print Process and works as a faculty of Marketing)

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