Introduction to Services Marketing
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Module – I Overview •
Importance of Service sector.
•
Why study service marketing.
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“Service”.
• Nature of Services. •
Characteristics of services
•
Goods vs Services
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Service Mix
•
Classification of services
•
Service marketing framework
•
Challenges in Service Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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The Service Managem Management ent Decision Framework W h a t B u s in e s s A r e W e I n ?
W h a t S e r v ic e P r o ce s se s C a n B e U s e d i n O u r O p e r a ti ti o n ?
W h o A r e O u r C u s to m e r s a n d H o w S h o u l d W e R e l a t e to T h e m ?
W h a t S h o u ld b e th e C o r e a n d S u p p l e m e n ta r y E l e m e n t s o f O u r S e r v i c e P r o d u c t? t? W h a t P r ic ic e S h o u l d W e C h a r g e f o r O u r S e r v i ce ce s ?
H o w S h o u ld ld W e C o m m u n i c a t e W h a t O u r S e r v ic i c e H a s to to O f f e r ?
W h a t A r e th t h e O p t i o n s f o r D e l iv iv e r i n g O u r S e r v ic e ?
H o w C a n W e B a l a n c e P r o d u c ti ti v i t y a n d Q u a lity ?
H o w S h o u l d W e M a t c h D e m a n d a n d P r o d u c ti ti v e C a p a c i t y ? W h a t A r e A p p r o p r ia t e R o l e s fo r P e o p le a n d Te c h n o l o g y ? H o w C a n O u r Fir m A ch i e v e S e r v ice L e a d e r sh i p ? Faculty: J.Rai, IIPM-School of Management, Kansbahal
Module I 3
How Important is the Service Sector in Our Economy? • In most countries, services add more economic value than agriculture, raw materials and manufacturing combined • In developed economies, employment is dominated by service jobs and most new job growth comes from services • Jobs range from high-paid professionals and technicians to minimum-wage positions • Service organizations can be any size—from huge global corporations to local small businesses • Most activities by government organizations involve services
agencies
and
nonprofit
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Why Study Services Marketing? • Significantly different from goods marketing • Relatively new discipline interdisciplinary base
with
a
strong
• Importance of services sector – 70% - 80% GDP in highly dev. economies – Service sector in India approx 50%
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Evolving of Services • Changing pattern of government regulations. • Privatizat Privatization ion of some public/ nonprofit service • Technologica Technologicall innovations. • Internationalization & Globalization. • Expansion of leasing & rental business. • Manufacture Manufacturers rs as service providers. • Hiring of employees. Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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What is a Product? Anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. – Includes: Goods, services, events, persons, places, organizations, ideas, or some combination thereof.
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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What is a Service? • An act or performance offered by one party to another (performances are intangible intangible,, but may involve use of physical products) • An economic activity that does not result in ownership • A process that creates benefits by facilitating a desired change in customers themselves, physical possessions, or intangible assets
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Government Sector Courts Employment. Exchanges Hospitals Municipal Services Post Office Schools, Colleges etc
Services
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Business Sector
Airlines Banks Insurance Management Consultants Lawyer's Doctors Motion Pictures
Services
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Manufacturers
Computers Operators Legal Staff Accountants Administrative Staff Supportive Staff Security Staff
Services
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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“ Something that can be bought and sold but which cannot be dropped on your foot !”
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Examples of Service Industries •
Health Care
– hospital hospital,, medical practice, dentistry, eye care •
Professional Services
– accounting, legal, architectural •
Financial Services
– banking, investment advising, insurance •
Hospitality
– restaurant, hotel/motel, bed & breakfast, – ski resort, rafting •
Travel
– airlines, travel agencies, theme park •
Others:
– hair styling, pest control, plumbing, lawn maintenance, counseling services, health club Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Internal Services • Service elements within an organization that facilitate creation of--or add value to--its final output • Includes: – accounting and payroll administrat administration ion – recruitment and training – legal services – transportation – catering and food services – cleaning and landscaping • Increasingly, these services are being outsourced Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Need For Services & Products Old Age Care Senior Citizen Home Wheel Chair Dental Care Dental Chair Dental Equipments Photography Camera Films Printing
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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The Nature of A Service
Fed Ex Example
“ The service product is essentially a bundle o activities, consisting o the core product - which in Federal Express’ case consists of transporting packages overnight and delivering them next morning to the addressee, plus a cluster of supplementary services.” Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal
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The Nature of A Service The Example of Federal Express
Advice and Communication Bill Statements Order Taking
Supplies
Overnight Transportation and Delivery of Packages
Problem Solving
Tracking
Pick-up Documentation
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Characteristics of Services
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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INVEN
TORY
INSEPARABILITY
INCONSISTENCY
INTANGIBILITY Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Intangibility No physical attributes Impossible to
taste feel hear smell before buying
Nobody cares As much ..Taj
I’ve got a piece Of rock… Prudential
Cant be easily displayed Inference from place,people
Macdonald ..the Family restaurant
price,symbols….. Transform intangibility to
tangibility
University Degree tangible evidence of knowledge acquired Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Tangibilising the Intangibles: Strategies Visualization Association Physical Representation Documentation People Involvement Place Advantage Promotion Branding
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Tangibilising the Intangibles
Visualization
Hotels depicting benefits of dinning at restaurant through Advertisement
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Tangibilising the Intangibles
Association
Air India Used Friendly Maharaja Shah Rukh with Air-tel
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Tangibilising the Intangibles
Physical Representation
Citibank credit Card in Gold or Platinum Symbolizes wealth & Status Airlines Dress Symbolizes visibility, reliability and cleanliness
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Tangibilising the Intangibles Documentation
Citing fact & figures in support of performance
• Major Awards Won By Jet Air • % Of People Preferring Jet Air • Number. One Company in Market Share Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Tangibilising the Intangibles
People Involvement
People are often Critical Element in service Delivery Training People To be courteous in Hotel for Service Delivery
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Tangibilising the Intangibles
Place Advantage
The clean, well laid down interiors of a Hotel Room depicts the quality of service
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Tangibilising the Intangibles
Promotion
Personal Care through Promotion Campaigns offers life long Assurance scheme
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Tangibilising the Intangibles
Branding The family Restaurant
Branding helps in differentiation of the service from competitors
The world on time
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Tangibility of goods and services
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Product qualities affect ease of evaluation
Easy to evaluate
g e n r i u t h i t n o r l u C F
e l c i h e v r o t o M
s l a e m t n a r u a t s e R
r e s i l i t r e F n w a L
n o i t a c a V
r s e i a i c p v e r r e r s e t l u a p g e m L o C
y r e t c g j r e u r s o p l a c y c i n d a e t l M u s n o C
Difficult to evaluate
High in search High in experience High in credence qualities qualities qualities Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Heterogeneity (Variability/Inconsistency ) • service quality varies across service encounters • service encounter is the interaction between service employee and customer – ‘moments of truth’ • service people are central to service delivery • service is delivered in ‘real’ time
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Inconsistency Different services
Performance of an Artist
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Implications of Inconsistency Service delivery and customer satisfaction depend on employee actions
Service quality depends on many uncontrollable factors
There is no sure knowledge that the service delivered matches what was planned and promoted
Strategies for
Inconsistency • customer surveys and feedback • training in interpersonal and technical skills • provide product knowledge • ensure back-stage systems support front line staff • use standardisation strategies – franchising, scripts • build quality into all processes
Faculty: J.Rai, IIPM-School of Management, Kansbahal
Module I 35
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Inseparability
•It can not be separated from the creator-seller cr eator-seller of •The product simultaneous production and consumption •The customer is involved ( partial employee) •Other Other customers customers may be present
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Strategies for inseparability
Implications of Simultaneous Production and Consumption •
Customers participate
– scripts and roles
in and affect the transaction
– front-line staff need both technical and interpersonal skills (recruit & train)
Customers affect
– educate the customer (provider –marketer)
each other
Employees affect the service outcome
Decentralization may be essential
Mass production is
manage the service encounter
•
manage customer interactions
•
manage the physical evidence
•
develop customer service policies and service recovery procedures
difficult Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Services are typically produced And consumed simultaneously oCo-production.. dentist/patient oIsolated production.. T.V.serial oSelf-services… ATM, weighing Machine
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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•Services cannot be stored • Need to manage supply and demand
Inventory Empty seats at 10 am flight to Bombay does not mean Seats may be available in the next flight
Empty seats in a stadium for a Cricket game can not be carried To the next game Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Strategies for Dealing With Inventory (Perishability) Result Of Demand Variability
Match Capacity by Shifting demand — — Sunday Sunday open Adjusting Prices- lowering or increasing prices Stretch the existing Capacity- 24hrs banking Stretching Facilities- adding manpower/machines
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Goods Vs Services
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Basic Differences between Goods and Services
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Services Marketing Mix Traditional Marketing Mix • All elements within the control of the firm that communicate the firm’s capabilities and image to customers or that influence customer satisfaction with the firm’s product and services:
– Product – Price – Place – Promotion Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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An expanded marketing mix for services
Product (service)
People Place, Place & cyberTime space & time
C ustomers Customers Customers
Process Pr i c e Price
Promotion
Physical evidence Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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People
– All human actors who play a part in service delivery and thus influence the perceptions: namely namely the firm’s personnel, the customer, and other customers in the service environment.
customer service employees other customers Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Physical Evidence
– The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.
•Atmosphere, décor, music etc. •equipment •facilities •uniforms Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Process
– The actual procedures, mechanisms, and flow of activities by which the service is delivered—the service delivery and operating systems.
service delivery systems • back stage •front stage procedures policies Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Expanded Marketing Marketing Mix for Services
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Classification of Services Based on Degree Of Cust. Involvement ( Lovelock) 3. People Processing 4. Possession Processing 5. Mental St Stimulus Pr Processing 6. Information Pr Processing Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Some other classification includes• The degree of tangibility. • Whether customer directed/possessions. • Time and place of delivery. • Level of Customization/Standardization. • Relationship with customer. • Demand supply fluctuati fluctuation. on. • Interaction with people. Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Four Categories of Services Employing Different Underlying Processes
What is the Nature of the Service Act? TANGIBLE ACTS
INTANGIBLE ACTS
Who or What is the Direct Recipient of the Service? DIRECTED AT PEOPLE
People Processing e.g., airlines, hospitals, haircutting, restaurants hotels, fitness centers
Mental Stimulus Processing e.g., broadcasting, consulting, education, psychotherapy
DIRECTED AT POSSESSIONS
Possession Processing e.g., freight, repair, cleaning, landscaping, retailing, recycling
Information Processing (directed at intangible assets)
e.g., accounting, banking, insurance, legal, research Module I
Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Service Marketing Framework: Analysis
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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The Services Marketing Triangle Company (Management) Internal Marketing
External Marketing
“enabling the promise”
Employees
“setting the promise”
Interactive Marketing
Customers
“delivering the promise” Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Ways to Use the Services Marketing Triangle Overall Strategic Assessment • How is the service organization doing on all three sides of the triangle? • Where are the weaknesses? • What are the strengths?
Specific Service Implementation • What is being promoted and by whom? • How will it be delivered and by whom? • Are the supporting systems in place to deliver the promised service?
Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Marketing Framework
3 C’s
Customers
Competitors
e c n e g i l l e t n I (Segment) t e k r a M Product
Company
T
S
P
(Target)
(Position)
Promotion 4 P’s
Price
Place
Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Challenges for Services •
Defining and improving quality
•
Communicating and testing new services
•
Communicating and maintaining a consistent image
•
Motivating and sustaining employee commitment
•
Customer Relation Management.
•
Bridging Demand- Supply
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Coordinating marketing, operations and human resource efforts
•
Setting prices
•
Standardization versus personalization Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal
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