smu mba mk0015 set 2 solved assignment

RANJAN PAL , 511110942 Page 1

Assignment Set- 2

Q.1 Explain the types of new service developments and its stages

ANS. Types of New Service Development and its stages

Before discussing about the types of services, let us first learn the meaning of new service development. Products that are not developed within a framework are less likely to succeed when compared to those developed and implemented within a structured planning framework. The new service development system must have four basic characteristics because of the intangible nature of service. The four basic characteristics are: . Service must not be subjective, it should be objective. . It should be well defined not vague or ambiguous. . It must be based on facts rather than opinions. . It should be a step wise procedure rather than a philosophical one. The process of development of a new service should indeed follow a structure and a set of defined steps but this structure need not be too rigid. Service involves the interaction of customers and employees. Services are consumed as soon as it is produced. The involvement of employees in the design and implementation of new service design is beneficial since they are in direct contact with customers and know exactly what the customers expect. Customers are also often involved in the design of new service as they sometimes play an active role in service delivery.

Let us now discuss about the different types of new services.

Types of new services The following could be considered as different types of new services:

Major or radical innovations are services associated with markets that are not defined yet.

Start-up businesses consist of new services for markets that already have products that meet customer needs.

New services for currently served market are associated with offering customers with new services that were previously not offered by the company.

Service line extensions are the expansion of the existing service line.


Service improvements represent changes in the already existing services; this could changes in features of existing services.

Style changes are the simplest service innovation and have a significant effect on customer perception, emotions and attitudes.

Stages in new service development Let us now discuss the stages in new service development. Figure shows the stages involved in new service development.

Figure : Stages in New Service Development

As shown in figure, the first two stage of new service development include front-end planning and implementation. Let us first discuss the frontend planning. Front end planning Let us learn the different development stages involved in front end planning, 1. Business strategy development or review: Every organisation has a unique vision and mission. A new service can be developed by first reviewing this vision and mission. The new service developed should align itself with the strategic vision and mission of the organisation. The growth efforts of the organisation must also be considered while developing the new service. 2. New service strategy development: A product portfolio strategy and defined organisational structure for a new product or service development is critical for the success of an organisation.


The goals, vision, capabilities, and growth plans of the organisation need to be considered while developing new types of services. A new service strategy could be defined in terms of markets, types of services, time horizon for development, profit criteria, or other factors. 3. Idea generation: Generation of new ideas is the next step in the process. The new service strategy screen screens the idea developed at this phase. Brainstorming, ideas from employees and customers, lead user research, learning about competitors are the methods used for idea generation. 4. Service concept development and evaluation: The development phase begins once the idea is regarded to fit both the business and new service strategies. For a tangible product, forming the product description and drawings and presenting it to customers would be the next step. Service being intangible, places complex demands on this phase of the process. Describing an intangible service in concrete terms is difficult. 5. Business analysis: Estimating the economic feasibility and potential profit implications form a part of the next step after development. Demand analysis, revenue projections, cost analyses and operational feasibility are assessed at this stage. After learning about the front-end planning, let us now discuss about the implementation. Implementation We shall now learn the different development stages involved in implementation, which include: 1. Service development and testing: This is the step where product prototypes are constructed and customer acceptance is tested. This step presents unique challenges due to the intangible nature of service and the fact that the production and consumption is simultaneous. These challenges can be addressed by involving all those who are involved in the new service in this step of the process. It is in this step that the service is refined and service blueprint is drawn out. 2. Market testing: This is the stage where market acceptance is evaluated by introducing the new service in a test market. Due to the nature of services, it is difficult to test services in isolation. The new services might be offered to employees and their families for a time to assess their responsiveness to variations in the marketing mix. 3. Commercialisation: The service goes live and is introduced in the marketplace in this stage of the process. This step involves the building and maintaining acceptance of the new service in the market. Excellent internal marketing will contribute significantly to the success of the new service. 4. Post introduction evaluation: At this point, the information gathered during commercialisation of the service can be reviewed and changes made to the delivery process, staffing, or marketing mix variables on the basis of actual market response to the offering. Service never


remains the same. Hence it is necessary to evaluate the changes so as to improve service quality.

Q.2 What is service differentiation? Explain service differentiation strategies.

Ans. Service Differentiation Strategies

As we have learnt the various types of strategies used for positioning, let us now discuss about service differentiation strategies. Differentiation of service depends on the type of business. For example if you are in a highly regulated business, your may have limited choices. Identify a totally new market or type of product or service, however, and the possibilities around. Successful differentiation needs you to understand your customers and talk to them often, and then you will know the requirements of the customers. It also needs you to offer your service long before your competitors offer. Offer services to your customers in such a way that they should feel really good about doing business with you. The following are some of the ways through which you can make customers feel good about your business: .

Fast delivery of the services: Deliver the services before one day or one hour before customers think possible.

Select unique channel for the service: Use unique channels like phone or internet to offer a service.

Before/during/after-sales support: Make sure to ensure that you will be there to support your customers in case of any issues with you service.

Guarantee/warranty: Provide offers like 100% money-back, or free servicing. The following are the keys for successful differentiation:

Uderstand your customers very well.

Choose a combination of differentiation methods that gives you a separate place in the market.

Differentiate your service with reference to customer benefits.

Update your differentiation often by listening to changing customer needs.

Q.3 What are the different stages in which organisations choose innovative operational methods?


Ans. We already know that services marketing concentrate on selling services. However,

selling process and marketing approach for services can be tricky. Organisations will have to offer innovative operational methods, as part of its Strategies for attracting customers and delivering quality services. They can implement their own innovative operational methods for delivering quality service, and use it as a key component in its competitive strategy. Let us see the manner in which various service firms embrace operational Competitiveness in following four stages: 1. Available for service: In this stage, operations department attempts to avoid errors and reduce back office support in order to reduce costs. They also attempt to minimise technological investment and investment in training for front-line personals. 2. Journeyman: when operations department reach this stage, the level of competitiveness would have increased. Organisation seeks feedback from clients on costs and perceived quality of service. At this specific point, operations department become more outward looking and focus on benchmarking. 3. Achieving of competitiveness: In this stage, service operations reach a point where organisation master service and realise complexity of changing such operations. The back office will be seen as valuable as front office personal and technology will be used to improve the quality of delivery process to customers. 4. World class service delivery: To maintain high quality level of performance, organisation will have to not only excel, but also be fast and innovative. The back office must be proactive, develop capabilities and generate opportunities. Involvement of customer in production process Customers are an integral part of service process irrespective of whether their participation is active or passive. Customer involvement reduces risk and accelerates speed with which new products or services are developed. The dual roles played by customer as a provider, as well as, a consumer during service delivery process also helps to prohibit companies from getting responses from customers in advance. Involving customers reduces cost of R&D and increases probability of success. The presence of customer in factory ensures that changes made to product will be visible to them. For example, when convenience stores in US were opened initially, gasoline was not part of the product offering. Advent of gasoline brought new challenges to customer. Customer had to learn the way in which a gas pump works. This forced gas pump manufacturers and convenience store owners to build up gas pumps and monitor procedures for this self-service operation. The thought of purchasing gasoline from the place where food products were sold resisted manufacturers from going for it. Managers of service firms should understand interactive nature of services and significance of consumer involvement in the production process. Customers will have a framework of themselves for services that are often used. Changes in service factory indicate changes in


consumer script. New developments coming from customer and factory indicate a change in both factory and in customer. In addition, it helps organisation to provide differential services compared to its competitors, improve market acceptance, and also establish a long term relationship with customers. Service design Service design is the process of arranging and organising persons, infrastructure, communication, and material elements of a service to improve its quality and to facilitate interaction between service provider and customers. It is a multi-disciplinary field. It helps to innovate and improve existing services to make them useable and desirable for clients and effective for organisation. For example, a restaurant might opt for a service design agency which asks them to change the way menu is written or room layout to attract more customers. Service design is a continuous process that works with components, projects, and workshops to integrate innovative service practices into organisation. Service design adapts well to organisational requirements and can be converted into business structures and processes: It helps in unveiling opportunities, generating ideas, resolving problems and implementing productive solutions. It generates specifications, strategies, and guidelines. It uses different methods to explain and share complex structures and procedures. .It makes use of prototyping to test results and process maps to implement solutions. In short, it includes stating and constructing technically networked social practices. Design of a service includes organising or re-organising the activities that are offered by service provider. This also involves internal processing of queries/letters sent by customers and redesigning media used by customers to contact service provider. For example, website, telephone, blog, inperson and so on. Process is performed based on service users' insights. This technique provides more insights into usability of a service and is more effective than surveys. These collected ideas are captured in sketches or in service prototypes. Service design is used by many of public sector organisations as a method to change customer requirements with regard to service experience. Service design agencies implement new tools and techniques in order to improve their existing services or to create new ones. Service design has its own characteristics. It is difficult to prescribe exact result of an interaction between customers and service providers. It is impossible to state the form and characteristics of an emotional value produced by the service. In services marketing, active involvement of customers stresses need for a proper design activity that systematizes interaction between them and employees of organisation. Involvement of customers implies that service design can be analysed not only from functional side, but also from emotional side. Challenges in service design: As services are intangible, it is difficult to communicate and describe service design. There is an increase in their complexity if services are delivered after a long period. Services are variable as employees deliver it to customers. As per experts, there are four risks involved in describing services. First risk is over simplification as words would


become in adequate to describe a complex service system. Second risk is incompleteness. This means employers or managers tend to omit service aspects, which are not familiarised. Third risk is subjectivity where a person describing services will be influenced by his or her own personal experiences with service. Fourth risk is biased interpretation as word 'flexibility' or 'responsiveness' is likely to be misinterpreted by employees. Following Figure explains various risks involved in explaining services.

Figure : Various Risks in Explaining Services

Q.4 What are the various levels of customer satisfaction? How important is a plan or methodology to initiate customer responses?

Ans. Services are actions that are produced and consumed at the same time. The role of the

customer is important in the production and delivery of a service. There are many cases when the employees and customers interact with each other to produce a successful product. Even in a simple service such as retail mail order, customer's active participation will have a great impacton the service delivery. There are various levels of customer satisfaction and they are low, medium, and high. In low level of customer satisfaction, the physical presence of the customer is required. For example, in a symphony concert, the employees of the firm will be doing all the production work. There are very less work for the symphony goers. In medium level or moderate level of customer


satisfaction, the inputs of the customer are required in helping the organisation in creating the service. The inputs here, means information, effort or physical possession. These are required to prepare the tax return of the client in an effective manner. In high level of customer satisfaction customers are the active participators in the creation of the service. These services require high level of participation from the customer. In these services, lack of active participation from the client will affect the successful delivery of the service. The examples are marriage counselling and personal training centres. At all levels, the effectiveness of the client satisfaction will make a positive impact on the organisational efficiency, services quality, and the client satisfaction. Table below explains the various levels of customer satisfaction across various services. Level of Client Expectations level of Client Expectations

LOW MODERATE HIGH

The presence of the customer is required during service delivery.

Consumer inputs are required for creation of the service.

Customer co-creates the service product.

Standardised products The inputs from client modify a standard service.

Active client participation guides the customized service.

Service is provided irrespective of any individual purchase.

Provision of service need customer purchase

Lack of customer's participation makes it difficult to create the service.

Payment will be the only output in this case.

The inputs from the client are essential to get adequate income, but the service will be provided by the service organisation.

The inputs from the customer are essential and the outcome is co created with an active participation from the client.

Customer Responses in Services Most organisations undervalue the importance of good customer response and the harmful effects of bad customer response. Customer response is very crucial as a profitable customer response strategy is very much valuable. Before developing the customer response master plan, each organization must have a clear distinction between the customers and consumers of its services and products. Irrespective of the people who consume the product, one should develop a good relationship with the customer. Every services organisation must have a well-written plan or methodology to ensure that customer response is initiated. Irrespective of the size of the organisation, there must be a customer response initiative to make sure that questions raised, issues, complaints, problems, and suggestions are resolved in a quick and timely manner. Even if you provide the best


service in the world, the response that you give to your customers determines your durability in the market. A well-planned customer initiative ensures the presence of someone, for resolving customer issues. For example, you will feel good when someone greets you once you walk into a store. Let us examine the framework used to produce a feasible customer response initiative:

Develop a customer response policy: This can be considered as a business plan to satisfy the customers. It should begin with a mission statement that summarise the objectives, goals, and procedures to improve the customer service experience

Develop a customer response centre: This is regarded as the infrastructure to carry on with the customer response policy. There should always be a person in the centre to resolve the customer issues.

Develop a customer response service team: Those people who provide services are the most important aspects in customer satisfaction. You can divide the teams into various functional areas such as hardware, software, and services. The team members must be allowed to take the ownership and be creative. They must also be given adequate training in solving and dealing with the clients.

Provide a customer response reward program: The organisations can increase the client loyalty by being pro-active. Organisations can announce incentives and discounts for loyal customers.

Q.5 Categorise the marketing mix in insurance sector & airline industry . Ans. Marketing in Insurance Sector

As we know insurance protects the financial well being of an individual, company or an entity in case of unexpected loss. The insurance provided to the customer can be categorised into two, namely life insurance and non-life insurance. The insurance companies provide various policies for the Personnel seeking these two types of insurance. Life insurances are provided by Government agencies like LlC and private Agencies like Max New-York life insurances and so on. The various types of Insurance policies that these companies provide are:

Term insurance: this insurance service is offered to customers who seek life insurance protection for selected number of years. Under this type of service the policy holder obtains all the benefits if he/she dies during the selected period, else the policy normally expires without providing any benefits to the policy holder.

Whole life insurance: this insurance service is offered to customers who seek life insurance protection during one's lifetime. Here the benefits are payable to the policy holder only after his/her death.


Endowment insurance: this insurance service is offered to customers who seek life insurance protection for selected number of years. Here the insurance is paid out whether the policy holder lives or dies on maturity date of the term.

Annuities: this insurance service is offered to customers who seek life insurance protection and agrees to pay the policy holder on a series of regular periodical payments for a fixed period of time or during someone's life time.

Companies like Baja Allianz, Tata AIG general insurance, and Reliance General Insurance Ltd insurance offer non-life insurance or general services. They provide insurance services for property against fire, burglary and so on, personal insurance like accident and health insurance, and Liability insurance, which covers legal liabilities. These days there is competition among the various insurance providers in the market. To meet this competition each provider markets their policies and offers to meet the requirement of the customers. For example these days mobile sellers like Sangeetha, Universal and many other shops also provide insurance for expensive mobile phones. While purchasing an expensive phone, you can get insurance for your mobile phone by paying some amount of money. In case you lose or misplace your phone, you can claim your insurance amount. This is similar to insuring your car or vehicles. Insurance marketing involves marketing of policies and various features of those policies, which dominate the scene of involvement with the purpose of ensuring appropriate profits to the policy holder and to the company. The insurance companies hire representatives to convince the customer about their insurance offer and explain the benefits obtained from their policies. Many insurance companies are adopting the approach of the direct marketing for their products. They setup large customer services and follow analysis in a more planned way for directly marketing their products to the targeted customers. The insurance marketing focuses on their customers and develops the marketing strategies for their products. The marketing mix is used by the insurance companies in order to attract the majority of the customers. All elements within the control of the organisation, which display the organisation's capabilities and image to customers or that influence customer satisfaction with the organisation's product and services, are used for the marketing. Companies are coming up with new offers and are applying more aggressive promotion. They are also providing the online access and services to the customers for their convenience. The key difference between the marketing of the banking and insurance services remain the orientation. Banking services are inclined towards fulfilling the financial need of the customer whereas insurance marketing is inclined towards providing the assurance to the customer to come handy in time of adversity, when the customer requires the service most. Airlines marketing The Indian Aviation sector is one of the fastest growing aviation industries in the world. It can be broadly divided into the following main categories:


Scheduled air transport service includes domestic and international flights. For example Indian Airlines, Kingfisher airlines, Golndigo airlines.

Non scheduled transport service includes charter operators and air taxi operators. For example Pawan Hans, Air Charters India.

Cargo service includes air transportation of cargo and mail. For example QuickJet, AirCargo Express, Aryan Air.

The aviation sector is witnessing strong competition as the numbers of Operators are rising. Marketing strategies employed by the aviation industry are:

Marketing planning: Marketing analysis, benchmarking, and competitive analysis are the techniques used for the marketing planning so that the marketing can generate the desired results.

Branding: Branding plays an important role in the marketing of the company and its product or service. It differentiates the company and its services from the competitors. So it is of paramount importance to maintain the brand value and put effort in the brand management.

Communication strategy: communicative strategies to' customers should be clear and with motive. It should deliver what the company wants to deliver to its customer without any ambiguity.

Online marketing: Online marketing is one of the premier marketing media for every organisation for its marketing needs. The reach of internet is very large and deep and as most of the banking services are online, so the airlines are also getting online to attract maximum customers towards them.

For instance, most airlines provide online booking, status check. They provide discounts and gifts for online booking. Some companies like Golndigo and SpiceJet have targeted the budget travelers providing them cheap flying options. Some companies like Kingfisher airways target the high-end users and provide them luxury facilities. Kingfisher flights also have on-demand multi-Channel video services. Many airlines also offer accredited taxis enabling pickup-and-return service. Plan for entertainment offerings are also on track that includes having hi-tech shopping models for its customers during their flight.

Q.6 Define the elements of strategic management. Mention the technical options in the service marketing.

Ans. Strategic Approach in Services Marketing

In the previous unit we learnt how the various sectors market their services. Marketing is done with some strategy developed by the organisation. So let's discuss the strategy part of the service marketing. Strategy defines the major decisions taken by the organisation to compete in


the market, present their services to customers and develop itself as a brand. It is for the long term duration and helps the organisation to achieve' high growth. Figure below provides a diagrammatic look of the major strategic decisions elements and shows the interrelationship between them.

Figure : Elements of Strategic Management

Major business decisions are strategic in nature and they mainly focus on the following points:

Business definition: The business definition defines the areas in which the organisation will compete. The policies are defined by keeping in touch with the external competitive environment. All the policies of the organisation should be relevant to the business area of the organization.


Core competency: The organisation offering services must keep track of current and the future market environment and competition. The strategies of the organisation must exhibit the future perspective of the organisation. This process has major resource implications, both in terms of resources and investments.

Integrity: The strategy planned by the organisation has far reaching effect on all the working areas of the organisation. A well formed strategy can help in achieving greater level of performance goals and help in Building up a more profitable organisation. As all the units work in mutual Cooperation with each other to achieve the goals, the whole organization view would help the managers to have better integrity between various units and generate a synergy among them.

Consistency of approach: The consistency of the strategy should be maintained and must focus on the organisational growth. The tactical activities may change to encounter the change in the competitive market but the strategic instructions should remain constant.

Johnson and Scholes provided a model that summarises the elements of the strategic planning.

Figure: Elements of Strategic Development


The figure above shows three main stages about the strategy: strategic analysis, strategic planning, and strategic implementation. Brief descriptions of the three stages are as follows:

Strategic analysis: This analysis is followed to generate detail information about the environment of the organisation, stakeholders, the culture and the expectations of the stake holders, resources, and capabilities of the organisation to deliver services.

Strategic choice: after all the details have been studied, the best strategy is chosen. The strategy that closely represents the overall business objective of the organisation and provides the competitive edge on the competitors must be chosen. The strategy should exhibit the integrity, focus on the competitive market and also consider the long term effect on the organisation.

Strategic implementation: The implementation of the chosen strategy is very important, as implementation remains the most crucial element among for the success or failure of the strategy. While implementing the strategy, the management of the strategic change should be handled effectively. The organisational structure and design should also be considered while implementing. This would help us to decide as which level would receive the changes first and where resource planning should be done to ensure proper implementation of the strategy.

Marketing of the strategic services should handle all the discussed topics effectively so that the organisation could get the benefit of the resources that it poses and develop the competitive edge. Marketing of the strategic services should be done with the proper market mix and some physical elements should be added to the services to override the intangible nature of the services. INNOVATION AREAS: We are familiar with the fact that services sector plays an important role in the economic development of the country. In country like India where services contribute to more than 50% to the GDP, it becomes very important to be aware of the new and emerging trends in the service marketing. In an emerging economic power like India, service sector has seen high growth rates in past couple of decades. This has also caused several new competitors coming into the market, which led to the demand for marketing. Service providers are forced to come up with new and different ideas so as to remain in market and maintain their market share. The development in the technology has also boosted this trend of using new and innovative ideas in the service sector. e-Commerce and e-marketing are the trends that started as the effect of technological development and need of new marketing strategy in the service sector and helps the organizations to reach the technologically aware public and provides them the ability to search the potential customers. Even customers can directly reach the service providers and seek service, making it more cost effective than the traditional approaches. Approach like telemarketing helps companies to target customers individually and provide the desired service. It can generate good sales figure if telemarketing is done effectively. The new emerging issues in the service marketing also affect the market. Different organisations are trying different strategies to find out the answers to these new emerging issues. Innovative marketing strategies for services are required not only in urban and global marketing, but also in the rural


marketing. In context to Indian economy, rural market provides great potential for the organisation in order to utilize them. But the service marketing strategies in rural market differ from the global market. This unit presents and makes you aware of the various new issues emerging in the service marketing sector. It also tells how you can handle and develop a new perspective toward these issues. Working on these issues are must for the service sector organisations, so that they can maintain their competitive edge over their competitors. This unit will provide the description about the various service marketing methods, an overview about the global and rural market. It also discusses the ethical aspect that must be followed by personnel while delivering a service. Objectives: After studying this unit, you should be able to:

describe strategic service marketing

classify service marketing in e-Marketing and e-Commerce

define telemarketing services

evaluate service marketing research in global and rural markets

identify innovations in service marketing

assess ethical aspect in service marketing

smu mba mk0015 set 2 solved assignment

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