services marketing mms sem 2

8/7/2019 services marketing mms sem 2

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ServicesServicesMarketingMarketing

Services care activities, benefits orServices care activities, benefits orsatisfactions which are offered for sale orsatisfactions which are offered for sale or

are provided in connectionare provided in connectionwith the sale of goods.with the sale of goods.

American Marketing AssociationAmerican Marketing Association


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What is productWhat is product Products as anything that can be

offered to a market for attention,acquisition, use or consumption thatmight satisfy a want or need.

Whereas service is an act orperformance offered by one party toanother.

Although the process may be tied to aphysical product, the performance isessentially intangible and does notnormally result in ownership of any ofthe factors of production.


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What is services?

It is the part of the product or thefull product for which the customer iswilling to see value and pay for it.


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DefinitionDefinition According to Bitner-

Services as deeds, process andperformances.

Deeds- actions of the service provider.

Processes- steps in the provision ofservice.

Performance- Customersunderstanding of how the service hasbeen delivered.


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--Theodore LevittTheodore Levitt--

There are no such thing asservice industries. There are onlyindustries whose service

components are greater or lessthan those of other industries.Everybody is in service.


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IntroductionIntroduction

The industrial revolution involved changes notonly in production, but also in financialstructures and in transportation andcommunication networks.

Developed countries have changed frombeing goods dominated to service dominated.

The service sector accounts for moreemployment, contribution in GDP and moreconsumption than manufactured goods.


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The service sectorThe service sector

The services sector has been growingat a rate of 8% per annum in recentyears

More than half of our GDP isaccounted for from the servicessector

This sector dominates with the bestjobs, best talent and best incomes


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Development of IndianDevelopment of IndianEconomy GDP in %Economy GDP in %

Year Agricultural

%

Industry

%

Services

%

2001-2002 24.23 26.67 49.10

2003-2004 21.71 26.86 51.43

2005-2006 19.66 26.23 54.11

DNA newspaper,23 rd Feb,07


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Significant growth in serviceSignificant growth in servicesectorsector

Countries % of GDP in

Manufacturing

In

Service

% ofemploymentin service

sectorUSA 21 74 80

Japan 29 58 60

UK 32 69 77Australia 22 72 75

Canada 24 70 79

India 29 47 601998 Statistical year book, Dept of International Economic & Social affairs, New york


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Service Sector of IndianEconomy

Contributes to around 55 percent of India'sGDP during 2006-07. This sector plays aleading role in the economy of India, and

contributes to around 68.6 percent of theoverall average growth in GDP between2002-03 and 2006-07.

There has been a 13 percent hike in theservice sectors of trade, hotels, transportand communication in India's economy ascompared to the 10.4 percent rise in theprevious year.


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Service Sector of IndianEconomy

The financial services that comprise ofbanks, real estate, insurance, and businessservices witnessed a rise of 11.1 percent

during 2006-07 against the 10.9 percentgrowth in the previous year.

Service sectors including community, social,and personal services experienced a growthof 7.8 percent during 2006-07 as against 7.7percent growth in the previous year.


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REASONS FOR GROWTH IN

SERVICE SECTOR

Increase in population creates a new

market for different kind of services.

The economic reforms have conducted

consumerism & middle class is emerging as

Consumption Community.


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Increase in govt. interaction in the trade sector

has increased trade relationships between nationsleading to development of tourism & hotel

industry.

Changing lifestyles due to cultural exchange &

communication networks resulted in continued

emphasis on services.

The boom in I.T industry & computer sciences

encouraged the shift in service industry like

Travel, Banking, Education, Financial services etc.


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Difference between physical goodsDifference between physical goodsand servicesand services

Physical goods Services

Tangible intangible

homogeneous heterogeneous

Production and distribution areseparated from consumption

Production, distribution andconsumption are simultaneousprocesses

A thing An activity or process

Core value processed in factory Core value produced in the buyer-

seller interaction

Customers do not participate in theproduction process

Customers participate in production

Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership


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Different Service MarketingDifferent Service MarketingActivitiesActivities

MarketingActivities

Analysis Strategy Tactics Management


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Marketing ActivitiesMarketing Activities

Analysis:It includes analyzing the consumerhis needs, wants & desires and using

this information to design serviceproducts.

It includes intangible features like

experience, reputation, guaranteesetc. and tangible like colour, shapesand size etc.

It consists of-


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AnalysisAnalysis Environment Analysis: Used to identify

and analyze the forces that surroundthe service firms and consumer andscope of their influences.

Buyers Analysis: This needs to beanalyzed to enable service firms toknow the rationale behind consumerdecisions.

Marketing Research Analysis: Thisincludes collecting data on environmentand market and translating them ininformation for better quality decisions.


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StrategyStrategy

Strategy: For marketer is a plan ofaction that is long term andcomprehensive, which affects thewhole organization

Target marketing consist of-

Market segmentation

Market targeting

Market positioning


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TacticsTactics

Tactics are tools a marketers uses toachieve his strategic goals. They aredifferent plan of action.

In service marketing tactical toolsare the marketing mix variables.


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ManagementManagement

After analysis, strategy and tactics theservice marketer can focus onmanagement, which is a process of

using inputs of resources to derivesome output of goods and services.


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Services could meetServices could meet

Personal needs haircuts, tuition, massage parlours, healthcare, restaurants. Etc.

Business needs

courier services, office cleaning services,delivering fresh flowers, consultation,finance, banking. Etc.

Trade needs

retailing, maintenance and repair. Etc. Infrastructure needs

communication, transportation, hospitals,

bridge, dams. Etc.


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Characteristics of servicesCharacteristics of services

Intangibility: Intangible in nature, it isdifficult to experience their benefits beforethey are bought. A consumer can not see,touch, hear, smell or taste them before

purchases. E.g. Airline sells a flight ticketsfrom A destination to B destination.

Perishability: services are also of perishablescommodity, unutilized or underutilized

services are an economic waste. Theycannot be stored for later sale or use e.g.Person unemployment, credit unutilized,empty rooms in 5 star hotels etc.


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Characteristics in serviceCharacteristics in service

Inseparability: services generally arecreated and supplied simultaneously.

Goods Produced Sold Consumed

Services Sold Produced Consumed

e.g. The entertainment industry, healthexperts, other professional create offertheir service.

Heterogeneity: Impossible to set astandards for any service.heterogeneity of service can not bestandardised.


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Ownership: In case of sale of goods,the goods are transferred in the nameof buyer, making him the owner of thegoods

Whereas in case of services users areonly given a access to the services andcannot own the same.

E.g. A consumer can use personalcare services such as personalgrooming medical services, thebenefits if staying in hotel room etc.


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Characteristics in serviceCharacteristics in service Simultaneity: Service do not move through

the channels of distribution and cannot bedelivered to the potential customers.

E.g. consumers have to individuallyaccess the benefits and services provided by

hospitality industry like hotels, taxies, trainfacilities etc.

Quality measurements: It requires a potentialtool for quality measurements. It is very

difficult to rate or quantify total purchase.E.g. It is possible for customers to

quantify food served in a hotel but the way awaiter serves the customers or otherbehavior can not be ignored.


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Nature of demand: Services aregenerally considered to be fluctuating innature and particularly in an abnormal

increase in the demand for services.E.g. Tourism service industry.


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Marketing Strategies forMarketing Strategies forService FirmsService Firms

The service profit chain:

In a service business, the customer and front-line service employee interact to create the

service.

Successful service companies focus their attentionon both their customers and their employees.

They understand the service profit chain, whichlinks service firm profits with employees andcustomer satisfaction.

This chain consists of five links


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Internal service quality: superioremployee selection and training, a qualitywork environment, and strong support forthose dealing with customer. Which

results..

Satisfied and productive serviceemployees: more satisfied, loyal and

hardworking employees, which results..

Greater service value: more effective andefficient customer value creation andservice delivery, which results..


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Satisfied and loyal customers: satisfiedcustomers who remain loyal. Repeatpurchase, and refer other customers,

which results..

Healthy service profits and growth:

superior service firms performance.

Thus, service marketing requires more thanjust traditional external marketing


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Types of service marketingTypes of service marketing

Employees Customers

Company

ExternalMarketing

InternalMarketing

Interactive Marketing

Setting thePromise

Enabling thePromise

Delivering the promise * *Philip KotlerMarketing Management


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Internal marketing: Service firms mustorient its customer-contact employees andsupporting service people to work as a teamto provide customer satisfaction. The firms

must carried out to train, motivate, andreward its employees.

Interactive marketing: Service qualitydepends on buyers and sellers interactionduring the service encounter. Trainingservice employees in the fine art ofinteracting with customers to satisfy theirneeds.


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External Marketing: The firm engaged into set up its customers expectations andmake promised to customers regardingwhat is to be delivered. Anything that

communicates to the customer beforeservice delivery.

In service firms there are many factorsthat communicate to customers such asadvertising, sales promotions, sales andpublic relations etc.


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Marketing Strategies for ServiceMarketing Strategies for ServiceFirmsFirms

Service companies face three majormarketing task: They want to increase theirservice differentiation, service quality andservice productivity.

Service differentiation: To develop adifferentiated offer, delivery, and image. Theoffer can include innovative features that setone company's offer apart from competitorsoffers.

E.g. Hotels can offer car rental, banking,and business centre services in their lobbiesand free high speed internet connections intheir rooms.


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Managing service quality: A servicefirms can differentiate itself bydelivering consistently higher quality

than its competitors do. Most of havejoined the customer-driven qualitymovement. However, good servicerecovery can turn angry customersinto loyal ones.


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Marketing Strategies forMarketing Strategies for

Service FirmsService Firms Managing Service productivity:Service firms under great pressure toincrease service productivity. They

can train current employees better orhire new ones who will work harderor more skillfully. Or they canincrease the quantity of their service

by giving up some quality. Theprovider can industrialize the serviceby adding equipment andstandardizing production.


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The three additional Ps ofThe three additional Ps ofService MarketingService Marketing

The services are usually produced andconsumed simultaneously, and itconcludes that they can use additional

variables to communicate with andsatisfy their customers.

E.g. In hotel industry the design and

dcor of the hotel as well as theappearance and attitude of itsemployees will influence customerperceptions and experiences.


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PeoplePeople All human actors who play a part in service

delivery influence the buyers perceptionsnamely firms personnel, customers in theservice environment. Personal appearance,and their attitudes and behaviors allinfluence the customers perceptions of theservice.

In some service industry service provider

or contact person can be very importantsuch as consulting, counseling, teaching, andother professional relationship basedservices.


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Physical EvidencePhysical Evidence

The environment in which the serviceis delivered and where the firm andcustomer interact and any tangiblecomponents that facilitate performance

or communication of the service.The physical evidence of service

includes all of the tangiblesrepresentation of the service such asbrochures, letterhead, business cards,report formats, equipments whichincludes the where the service is

offered.


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ProcessProcess

The actual procedures, mechanisms,and flow of activities by which theservice is delivered- the service

delivery and operating systems.The actual delivery steps the

customer experiences, or operational

flow of the service, will also providecustomers with evidence on which tojudge the service.


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Determinants of service qualityDeterminants of service quality

Reliability perform promised servicedependably and accurately. Deliveringthe services as promised. E.g. The

concern of reliability get reflected instatement like: This bank promises to clear outstation

cheques in two days. Will it really?

This courier company promises deliveryof packets next morning before 10oclock. But will they deliver my letter

tomorrow?


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Responsiveness willing and ready to

provide service promptly. E.g. avoidkeeping customers waiting for no apparentreason. If I develop some problems up inthe air, will the employees of this airlinehelp me?

I have applied for a loan in this bank. Willthe staff help me in documentation?

Assurance ability to convey trust andconfidence. E.g. being polite and showingrespect for customer.


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Credibility: Concerned with serviceproviders trustworthiness, honestyand believability.

E.g. The insurance company hasmade a claim that in case ofaccident, they would settle the claimwithout any delay and paper work.

Can I believe them without anydoubt?


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Understanding Customer: concern

whether service providers will makegenuine efforts to understand customersneeds.

E.g. Will this hair stylist try to learn my

specific preferences or give me anordinary cut?

Access: Refers to expectationssurrounding the issue of ease with whichthe staff or service can be approached.

E.g. In this college, it is difficult to contactthe principal to register any complaints.


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Managing service QualityManaging service Quality

Gap 1: Between managementperceptions and consumer expectations.Not knowing what customers except

Gap 2:Between managementperceptions and service qualityspecifications. Not selecting the rightservice designs and standards.

Gap 3: Between service qualityspecifications and service delivery. Notdelivering to service standards


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Managing service QualityManaging service Quality

Gap 4: Between service delivery andexternal communication. Notmatching performance to promises.

Gap 5: Between expected service andperceived service.


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Importance PerformanceImportance PerformanceAnalysisAnalysis

high imp/lowperformance

Concentrate

Here

High imp/highperformance

Keep up the good

Work

Low imp/ lowperformance

Lowpriority

Low imp/highperformance

Possible over skill

P E R F O R M A N C E

IMPO

RTANCE

S i lit i di tlS i lit i di tl


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Service quality is directlyService quality is directlyproportional to employeeproportional to employee

satisfactionsatisfaction


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How customers contribute toHow customers contribute toquality and valuequality and value

For each scenario, ask Which

customer A or B) will be most satisfied

and receive the greatest quality an

value, and why?

S i 1S i 1


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Scenario 1:Scenario 1:A major international hotel. Guest A called

the desk right after check-in to report that his

TV was not working and that the light over

the bed was burned out; both problems were

fixed immediately. The hotel staff exchanged

his TV for one that worked and fixed the light

bulb. Later they brought him a fruit plate tomake up for the inconvenience. Whereas

GUEST B did not communicate to

management until checkout time that his TV

did not work and he could not read in hisbed. His complaints were overheard by

guests checking in who wondered whether

they had chosen the right place to stay.


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SCENARIO 2SCENARIO 2

Office of a professional tax preparer.

Client A has organized into categoriesthe information necessary to do hertaxes and has provided all documentsrequested by the accountant.

Client B has a box full of papers and

receipts, many of which are notrelevant to her taxes but which shebrought along Just in case.

SCENARIO 3SCENARIO 3


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SCENARIO 3SCENARIO 3An airline flight from London to New York.

Passenger A arrives for the flight with aportable tape player and reading material

and wearing warm clothes; passenger A also

called ahead to order a special meal.

Passenger B, who arrives empty-handed,

becomes annoyed (angry) when the crew

(group) runs out of blankets, complains

about magazines selection and the meal,

and starts fidgeting after the movie.


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First Impressions From aFirst Impressions From aRestaurant in EnglandRestaurant in England -- casecase

This story comes from my good friend,Graham Agass.

For several years Graham has had afavorite Indian restaurant in our hometown. The food has always been verygood and the service has been

excellent. Graham was a real fan. Onhis most recent visit, Graham used thetoilet.


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Graham washed his hands beforereturning to the restaurant.

The waiter didnt!

Graham doesnt use that restaurant

anymore.As always, I think it is important to tell

stories of bad service but not so that

we can share the business concerned.What I want you to do is to take this asa case study. Use it with your ownteam.


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What are the little things that reallymake a difference for yourcustomers?

And sometimes your customers might

feel that procedures need to be takenmore seriously.

Im reminded of a quotation by JanCarlzon from Scandinavian Airlines. He

said," Coffee stains on the flip trays tellthe customer that we dont service ourengines properly.


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Thank You

services marketing mms sem 2

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