13049590 introduction-to-service-marketing

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13049590 introduction-to-service-marketing

  1. 1. Introduction to ServicesMarketing Module IFaculty: J.Rai, IIPM-School of Management, Kansbahal 1
  2. 2. Module – I Overview• Importance of Service sector.• Why study service marketing.• “Service”.• Nature of Services.• Characteristics of services• Goods vs Services• Service Mix• Classification of services• Service marketing framework• Challenges in Service Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 2
  3. 3. The Service Management Decision Framework W h a t B u s in e s s A r e W e In ? W h a t S e r v ice P r o ce s s e s C a n B e U s e d in 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 ld O u r O p e r a tio n ? W e R e la te 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 le m e n ta r y E le m e n ts o f O u r S e r v ic e P r o d u c t? W h a t P r ice S h o u ld W e C h a r g e H o w S h o u ld W e C o m m u n ic a te W h a t fo r O u r S e r v ic e s ? O u r S e r v ic e H a s to O ffe r ? W h a t A r e th e O p tio n s fo r D e liv e r in g H o w C a n W e B a la n c e P r o d u c tiv ity O u r S e r v ice ? a n d Q u a lity ? H o w S h o u ld W e M a tc h D e m a n d a n d P r o d u c tiv e C a p a c ity ? W h a t A r e A p p r o p r ia te R o le s fo r P e o p le a n d Te c h n o lo g y ? H o w C a n O u r F ir m A c h ie v e S e r v ic e L e a d e r s h ip ? Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 3
  4. 4. How Important is the Service Sector inOur 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 agencies and nonprofit organizations involve services Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 4
  5. 5. Why Study Services Marketing?• Significantly different from goods marketing• Relatively new discipline with a strong interdisciplinary base• 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 5
  6. 6. Evolving of Services• Changing pattern of government regulations.• Privatization of some public/ nonprofit service• Technological innovations.• Internationalization & Globalization.• Expansion of leasing & rental business.• Manufacturers as service providers.• Hiring of employees. Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 6
  7. 7. 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 7
  8. 8. What is a Service?• An act or performance offered by one party to another (performances are 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 8
  9. 9. Government Sector Courts Employment. Exchanges Services Hospitals Municipal Services Post Office Schools, Colleges etc Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 9
  10. 10. Business Sector Airlines Banks Services Insurance Management Consultants Lawyers Doctors Motion Pictures Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 10
  11. 11. Manufacturers Computers Operators Legal Staff Services Accountants Administrative Staff Supportive Staff Security Staff Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 11
  12. 12. “ Something that can be bought andsold but which cannot be dropped onyour foot !” Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 12
  13. 13. Examples of Service Industries• Health Care – 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 13
  14. 14. Internal Services• Service elements within an organization that facilitate creation of--or add value to--its final output• Includes: – accounting and payroll administration – 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 14
  15. 15. Need For Services & ProductsOld Age CareSenior CitizenHomeWheel Chair Dental Care Dental Chair Dental Equipments Photography Camera Films Printing Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 15
  16. 16. Module IFaculty: J.Rai, IIPM-School of Management, Kansbahal 16
  17. 17. The Nature of A Service “ The service product is essentially a bundle of activities, consisting of the core product - which in Federal Express’ case consists of transporting packages overnight and delivering them next morning to the addressee, plus a clusterFed Ex Example of supplementary services.” Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 17
  18. 18. The Nature of A Service The Example of Federal Express Advice and Communication Bill StatementsOrder Taking Overnight Transportation Problem SolvingSupplies and Delivery of Packages Tracking Pick-up Documentation Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 18
  19. 19. Characteristics of Services Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 19
  20. 20. INVEN TORY INSEPARABILITY INCONSISTENCYINTANGIBILITY Module IFaculty: J.Rai, IIPM-School of Management, Kansbahal 20
  21. 21. IntangibilityNo physical attributes Nobody cares As much ..TajImpossible to taste feel I’ve got a piece hear Of rock… smell before buying PrudentialCant be easily displayed Macdonald ..the Family restaurantInference from place,people price,symbols….. University Degree tangible evidence ofTransform intangibility to knowledge acquired tangibility Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 21
  22. 22. 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 22
  23. 23. Tangibilising the IntangiblesVisualization Hotels depicting benefits of dinning at restaurant through Advertisement Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 23
  24. 24. Tangibilising the Intangibles Association Air India Used Friendly Maharaja Shah Rukh with Air-tel Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 24
  25. 25. 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 25
  26. 26. 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 26
  27. 27. 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 27
  28. 28. 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 28
  29. 29. Tangibilising the Intangibles Promotion Personal Care through Promotion Campaigns offers life long Assurance scheme Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 29
  30. 30. 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 30
  31. 31. Tangibility of goods and services Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 31
  32. 32. Product qualities affect ease of evaluationEasy to Difficult toevaluate evaluate Clothing Furniture Vacation Motor vehicle Medical surgery Lawn Fertiliser Legal services Computer repair Consultancy project Restaurant meals High in search High in experience High in credence qualities qualities qualities Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 32
  33. 33. 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 33
  34. 34. Inconsistency Different servicesPerformance of an Artist Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 34
  35. 35. Implications of Strategies for Inconsistency Inconsistency • customer surveys and feedback Service delivery and customer satisfaction • training in interpersonal and depend on employee technical skills actions • provide product knowledge Service quality depends • ensure back-stage systems on many uncontrollable support front line staff factors • use standardisation strategies There is no sure – franchising, scripts knowledge that the • build quality into all processes service delivered matches what was planned and promoted Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 35
  36. 36. Module IFaculty: J.Rai, IIPM-School of Management, Kansbahal 36
  37. 37. Module IFaculty: J.Rai, IIPM-School of Management, Kansbahal 37
  38. 38. Inseparability•It can not be separated from the creator-seller of•The product simultaneous production and consumption•The customer is involved (partial employee)•Other customers may be present Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 38
  39. 39. Implications of Strategies forSimultaneous Production inseparabilityand Consumption • manage the service encounter Customers participate – scripts and roles in and affect the – front-line staff need both transaction technical and interpersonal skills (recruit & train) Customers affect – educate the customer each other (provider –marketer) Employees affect the • manage customer interactions service outcome • manage the physical evidence Decentralization may • develop customer service be essential policies and service recovery procedures Mass production is difficult Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 39
  40. 40. Services are typically producedAnd 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 40
  41. 41. Inventory•Services cannot be stored•Need to manage supply Empty seats at 10 amand demand flight to Bombay does not mean Seats may be available in the next flightEmpty seats in astadium for aCricket game can notbe carriedTo the next game Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 41
  42. 42. Strategies for Dealing With Inventory (Perishability)Result Of Demand VariabilityMatch Capacity by Shifting demand— Sunday openAdjusting Prices- lowering or increasing pricesStretch the existing Capacity- 24hrs bankingStretching Facilities- adding manpower/machines Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 42
  43. 43. Goods Vs Services Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 43
  44. 44. Basic Differences between Goods and Services Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 44
  45. 45. 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 45
  46. 46. An expanded marketing mix for services Product People (service) Process Place, Place & cyber- Customers Price Price Time space & Customers Customers time Promotion Physical evidence Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 46
  47. 47. People – All human actors who play a part in service delivery and thus influence the perceptions: 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 47
  48. 48. 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 48
  49. 49. 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 stageprocedurespolicies Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 49
  50. 50. Expanded Marketing Mix for Services Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 50
  51. 51. Classification of ServicesBased on Degree Of Cust. Involvement ( Lovelock) 3. People Processing 4. Possession Processing 5. Mental Stimulus Processing 6. Information Processing Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 51
  52. 52. 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 fluctuation.• Interaction with people. Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 52
  53. 53. Four Categories of Services Employing Different Underlying Processes What is the Who or What is the Direct Recipient of the Service?Nature of the DIRECTED AT PEOPLE DIRECTED AT POSSESSIONSService Act? TANGIBLE People Processing Possession Processing ACTS e.g., airlines, hospitals, e.g., freight, repair, cleaning, haircutting, restaurants hotels, landscaping, retailing, fitness centers recyclingINTANGIBLE Mental Stimulus Information Processing ACTS Processing (directed at intangible assets) e.g., broadcasting, consulting, e.g., accounting, banking, education, psychotherapy insurance, legal, research Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 53
  54. 54. ServiceMarketing Framework: Analysis Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 54
  55. 55. The Services Marketing Triangle Company (Management) Internal External Marketing Marketing“enabling the “setting thepromise” promise”Employees Interactive Marketing Customers “delivering the promise” Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 55
  56. 56. Ways to Use the Services Marketing TriangleOverall Strategic Assessment Specific Service Implementation • How is the service • What is being promoted and by whom? organization doing on all three sides of the triangle? • How will it be delivered and by whom? • Where are the weaknesses? • Are the supporting systems in • What are the strengths? place to deliver the promised service? Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 56
  57. 57. Marketing Framework 3 C’s Customers Competitors CompanyMarket Intelligence S T P (Segment) (Target) (Position) Product Promotion 4 P’s Price Place Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 57
  58. 58. 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• Coordinating marketing, operations and human resource efforts• Setting prices• Standardization versus personalization Module I Faculty: J.Rai, IIPM-School of Management, Kansbahal 58
  59. 59. Module IFaculty: J.Rai, IIPM-School of Management, Kansbahal 59

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