Service marketing ch.7

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Service marketing ch.7

  1. 1. Service Marketing Management Chapter 7 Service Decisions2/15/2013 Presentation by Prof. H.Ganguly 1
  2. 2. Services -- People solve their problems or fulfill expectations by acquiring a ‘bunch of benefits or values’ may be in exchange of money. -- When this bunch of value is contained in ‘tangible’ objects, it is called Product. -- Whereas when this value is delivered through ‘intangible’ entities i.e. non-goods, it is termed as Service and also referred to as ‘Offers’. Therefore, ‘Services’ may be defined as intangible offers made by service-providers to prospective customers to satisfy their needs or expectation in exchange of payment.2/15/2013 Presentation by Prof. H.Ganguly 2
  3. 3. 1. Constituents of Service -- Similar to products, services also comprise of * Core Service -- i.e. the basic service to satisfy customers’ expectation e.g. a customer books a hotel room basically for a bed to have peaceful sleep in night. * Expected Service – In addition to bed in the room, the customer expects services of clean toilet, hygienic drinking water, undisturbed environment at minimum. * Augmented Service – The customer, may look for good quality food, room service etc. for full satisfaction. These services ‘add value’ to core service of ‘bed in a room’ and help in differentiating it from competitors, it is called Augmented Services.2/15/2013 Presentation by Prof. H.Ganguly 3
  4. 4. * Potential Service – May comprises of other possible benefits that the customer did not expect e.g. an welcome drink, pick up and drop at airport/ railway station, flower in room etc. Generally these services help in developing loyal relationship of customer with service – provider. 2. Service Mix Assortment of services offered by service-providers comprising of similar and dissimilar kind of services are called Service Mix. For example, a retail bank provides services like savings & current a/c, cheque clearance, safe deposit lockers, money transfer, bank guarantee, loans, ATM, internet banking etc. These are called retail banking Service Mix and individual services like cheque clearance or ATMs are called Service Items.2/15/2013 Presentation by Prof. H.Ganguly 4
  5. 5. A number of similar service items like home, automobile, education and personal loans may be clubbed together in a Service Line. The number of service items in a service line is called Depth of Service Line. And number of service lines in service mix is called Width of Service Mix. 3. New Service Decisions Generally service-providers face challenge in new services from competitors, erosion of market share, drop in gross profit etc. make them decide ‘New Services Strategy’. They make use of Ansoff Matrix of Growth Options for these decisions.2/15/2013 Presentation by Prof. H.Ganguly 5
  6. 6. Ansoff Matrix of Growth Option Existing New Services Service Existing Markets Market Service Penetration Development New Market Market Diversifi – Development cation2/15/2013 Presentation by Prof. H.Ganguly 6
  7. 7. Option I : Market Penetration [ Existing markets -- existing services] -- Service providers increase emphasis on existing markets through existing services by focused positioning. It provides increased gain of repeat business at increased frequency from existing segments. Option II : Market Development [ New markets – existing services ] -- Through improved promotion of existing services newer groups of customer are attracted e.g. company opens new hotels in other areas. Option II requires substantial resources. Option III : Service Development [ Existing markets –new services] A. Start Up Business : New services introduced in existing markets in innovative ways e.g. ATMs, internet-2/15/2013 banking for selected customers etc. Presentation by Prof. H.Ganguly 7
  8. 8. B. New Services : Introducing new services not available earlier e.g. ‘city tour by luxury coaches’ intended for present customers. C. Service Line Extension : Augmenting existing service lines by additional services e.g. a hotel starts foreign exchange counter, business school starts computer education course or large library starts coffee bar facility. D. Service Improvement : Making services more customer- friendly to improve their quality e.g. introducing ‘Sunday’ banking, tea/coffee making facility at hotel rooms etc. E. Style Change : These are mostly changes in ‘Physical Evidence’ like renovation to change décor, insignia, uniform of workers etc.2/15/2013 Presentation by Prof. H.Ganguly 8
  9. 9. Option IV : Diversification [ New services – new markets] Among ‘New Service decisions’ these carry maximum risk. It calls for : i) extensive secondary and primary research ii) scientific selection of target market segment iii) proper development of ‘service’ iv) proper training of frontline service-providers v) motivation of marketing and public relations staff Source of New Service Ideas * Internal -- R&D Laboratory, Manufacturing, Marketing, Service delivery and other employees of company * External – Customers’ suggestions, complaints, competitors, suppliers, consultants etc.2/15/2013 Presentation by Prof. H.Ganguly 9
  10. 10. Stages of Development – New Services Stage I : Exploration and Idea generation Stage II : Screening of new ideas in keeping with company’s objectives and resources Stage III : Concept Testing. Successful ideas are developed into service offerings and put to qualitative research Stage IV : Business analysis. Successful ideas are put to market tests for potential, market size, sales revenues at different marketing mix, launch cost etc Stage V : Service Development – optimum Price-Volume- Profit relationship is established. Stage VI : Test Marketing. Customers’ response to new service is assessed in limited area. Stage VII : Commercialisation. Successful services are then introduced in market.2/15/2013 Stage VIII : Evaluation. Progress of service is monitored. 10 Presentation by Prof. H.Ganguly -------

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