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Sales Management (MBA 333) Module 1 Amity


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Sales Management (MBA 333) Module 1 Amity

  2. 2. AMITY GLOBAL BUSINESS SCHOOLBefore We Discuss Mkt. of Services We shall discuss the following questions1. What is the dominant logic of business and has it changed over the years?2. What is marketing and has the meaning and role of marketing changed?
  4. 4. AMITY GLOBAL BUSINESS SCHOOLWhat is the Logic of Business?
  5. 5. AMITY GLOBAL BUSINESS SCHOOLWhat is Business? An organization engaged in the trade of goods, services, or both to consumers (Sullivan & Sheffrin, 2003). An economic system in which goods and services are exchanged for one another or money, on the basis of their perceived worth. Every business requires some form of investment and a sufficient number of customers to whom its output can be sold at profit on a consistent basis (
  7. 7. AMITY GLOBAL BUSINESS SCHOOLSome of Those Changes… Evolution of human needs… Transaction to Selling to Marketing And now from Marketing to Relationships and Partnerships! The emergence of institutions of business… Increased complexity and competitiveness… Technology…… Movement of goods and people…. Movement of Information!
  8. 8. AMITY GLOBAL BUSINESS SCHOOLOne Such Change The encounter with the customerThe focus was on The product & money―exchange‖ and the are still important. But―tangibles‖… like marketing battles are―money‖, ―product‖, ―qu won on ―intangibles‖ likeantity‖…. how a customer feels & how long he stays…
  9. 9. AMITY GLOBAL BUSINESS SCHOOLWith Such Changes…The way business is done changed… Thereasons of success and failure of companieschanged…It was no longer enough to have a “goodproduct”…. “a good brand”…. “be rich”….“be an old and respected company”…
  10. 10. AMITY GLOBAL BUSINESS SCHOOLThese changes are driven by changes inprimarily two constituencies Ability & Know The How of Companies
  11. 11. AMITY GLOBAL BUSINESS SCHOOLAbility & Know How of Companies Technology: Increased ability to understand customers, manufacture, deliver, service, maintain relations New Markets: Local, Global and Glocal Orientation: Inward to Outward, Selling to Marketing Human Resources: More people who are able to plan, innovate and
  12. 12. AMITY GLOBAL BUSINESS SCHOOLThe Consumer Income Levels: More people in cities and villages are earning more, so have more money to spend, thus have more power. Consumerism: The Indian customer is becoming ―consumption‖ oriented rather than ―save money‖ oriented Media: Satellite TV, Internet, FM… More information to customers…. ―Information Symmetry‖ More Choice: More companies offering more products means much more choice!
  13. 13. AMITY GLOBAL BUSINESS SCHOOLImplications For MarketingThe way we define marketing had to be adjusted toaccommodate the changes and the way we market…..So the definition of marketing had to change!Marketing had to grow beyond its foundations on―products‖ and acknowledge the need for a dedicatedscience of marketing of the intangibles…
  14. 14. AMITY GLOBAL BUSINESS SCHOOL For a discussion on evolution of how we define marketing, please visit:
  15. 15. AMITY GLOBAL BUSINESS SCHOOLWhy Discuss Services? Services sector accounts for more than 55% of the GDP of India. (GDP of India = 1.85 Trillion $)
  16. 16. AMITY GLOBAL BUSINESS SCHOOL Emergence of Services Marketing Emergence of a stand alone field of Services Marketing occurred in three distinct stages The Crawling Out Stage (Pre 1980s) The Scurrying About Stage (1980 - 1985) The Walking Erect StageTracking the Evolution of the Services Marketing Literature (Post 1986)Fisk, Raymond P; Brown, Stephen W; Bitner, Mary Jo, Journal of Retailing; Spring 1993; 69, 1
  17. 17. AMITY GLOBAL BUSINESS SCHOOLWhat We Used to Think of Services? A technical after-sale function that is provided by the service department The old view of explaining the meaning of services was rooted in the traditional 4Ps school of marketing That relegated services to a support function to be undertaken by the company independent of and post culmination of the marketing
  18. 18. AMITY GLOBAL BUSINESS SCHOOLWhat are Services? “Deeds, processes and performances provided or co-produced by one entity or person for another entity or person” ―All economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced, and provides added value in forms that are essentially intangible concerns of its first purchaser‖
  20. 20. AMITY GLOBAL BUSINESS SCHOOLTerms Clarified Service Companies: Whose core product is a service. Services as Products: Intangible product offerings which customers value and will pay for. Customer Service: Service provided in support of the company’s core products which do not necessarily have to be services themselves. Derived Service: The service derived from the purchase and use of a tangible
  21. 21. AMITY GLOBAL BUSINESS SCHOOLIHSP – The Characteristics of Services Intangibility Heterogeneity Nature of Services Simultaneity
  22. 22. AMITY GLOBAL BUSINESS SCHOOLIntangibility Incapable of being perceived by the sense of touch, as incorporeal or immaterial things Services cannot be inventoried Services cannot be easily patented Services cannot be readily displayed or communicated Pricing is
  23. 23. AMITY GLOBAL BUSINESS SCHOOLHeterogeneity Service delivery and customer satisfaction depend on employee and customer actions Service quality depends on many uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and
  24. 24. AMITY GLOBAL BUSINESS SCHOOLSpontaneity Customers participate in and affect the transaction Customers affect each other Employees affect the service outcome Decentralization may be essential Mass production is
  25. 25. AMITY GLOBAL BUSINESS SCHOOLPerishability It is difficult to synchronize supply and demand with services Services cannot be returned or
  26. 26. AMITY GLOBAL BUSINESS SCHOOLSelf Service Technologies Self-Service Technologies are technological interfaces that enable customers to produce a service independent of direct service employee involvement Phone based (interactive voice response systems) Internet or online based Free standing kiosks
  27. 27. AMITY GLOBAL BUSINESS SCHOOLBenefits of SST Increased speed, efficiency and accuracy Expanding sales through more information and choice Lower costs for sellers and the buyer Higher customer loyalty and
  28. 28. AMITY GLOBAL BUSINESS SCHOOLSSTs Fail! 44% of SST users recall dissatisfying experience (Journal of Marketing) None of top 50 retail web sites rated as ―excellent‖ (Gartner) Just 25% of kiosk triers think it’s valuable, will use again (WSJ) Only 12% of online inquiries to top 150 financial cos. answered and satisfactorily (Microsoft) 10 of 12 reasons for online dissatisfaction is poor customer service (Resource Marketing)
  29. 29. AMITY GLOBAL BUSINESS SCHOOLWhy Do SSTs Fail? Most frequent dissatisfaction is technical failure (43%) Next is process failure (36%) Third is technical design (17%) Only 4% is customer’s
  30. 30. AMITY GLOBAL BUSINESS SCHOOLSSTs offer opportunity to magnify the customerexperience. If it works, it will magnify the positiveexperience and if it fails, it will magnify customernegativity.In the current competitive business environment, youneed the benefits SSTs offer but just imagine what canhappen if it fails!!
  32. 32. AMITY GLOBAL BUSINESS SCHOOLHeterogeneity Service delivery and customer satisfaction depend on employee and customer actions Service quality depends on many uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and
  33. 33. AMITY GLOBAL BUSINESS SCHOOLSimultaneity Customers participate in and affect the transaction Customers affect each other Employees affect the service outcome Decentralization may be essential Mass production is
  34. 34. AMITY GLOBAL BUSINESS SCHOOLPerishability It is difficult to synchronize supply and demand with services Services cannot be returned or
  35. 35. AMITY GLOBAL BUSINESS SCHOOL Money is in Services!! Even in the Manufacturing Sector! Personal Computers Locomotives Automobiles annual cost of total annual cost of rail average annual household PC use: $6,259 operations: $29 billion expenditure: $6,064The sale of aproduct accounts 100% network administration yard operations, otherfor only a small railroad administration, network financeportion of overall other 80% technical supportrevenues. repair network equipmentProviding nonproductive operations insurance 60% train operationsservices to by end user (downtime,customers is gas file management, etc.)where the real Infrastructure 40%money is. used car purchase administration freight car services technical support 20% locomotive services new car purchase desktop hardware 0% locomotives Total expenditure: Total expenditure: Total expenditure: 5X product costs 21X product costs 5X product costs
  36. 36. AMITY GLOBAL BUSINESS SCHOOLService Marketing Challenges Defining and improving quality Ensuring the delivery of consistent quality Designing and testing new services Communicating and maintaining a consistent image Accommodating fluctuating
  37. 37. AMITY GLOBAL BUSINESS SCHOOLService Marketing Challenges Motivating and sustaining employee commitment Coordinating marketing, operations, and human resource efforts Setting prices Finding a balance between standardization versus
  38. 38. AMITY GLOBAL BUSINESS SCHOOL7 Ps of Service Marketing The 4 Ps – Product, Price, Place, Promotion People All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment. 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. Process The actual procedures, mechanisms, and flow of activities by which the service is delivered—the service delivery and operating
  40. 40. AMITY GLOBAL BUSINESS SCHOOLThe Flower of Service Core service surrounded by a cluster of facilitating and value enhancing services Eight petals; 4 Facilitating Supplementary Services and 4 Value Enhancing Supplementary Services Facilitating: Information, Order Taking, Billing and Payment Value Enhancing: Consultation, Hospitality, Safekeeping and
  41. 41. AMITY GLOBAL BUSINESS SCHOOLFacilitating Information: Customer needs information about various elements and aspects of the service to evaluate it and make decisions Order Taking: As services cannot be stored, the customer needs to place the order as the first step in the whole transaction. Order taking can also be facilitated Billing: Accuracy in billing and the customer friendliness of the bill is now a major decision point for the customer Payment: Credit period, accepted methods, payment points… Don’t all these influence our judgment of services?
  42. 42. AMITY GLOBAL BUSINESS SCHOOLValue Enhancing Consultation: Interaction with the customer to understand their needs with an aim to design a tailor made customer solution (service) Hospitality: Customers may need to be at your premises, for brief durations or for longer periods. When they are at your place, how are they treated? Safekeeping: Sometimes your customers may be required to part with their belongings to co-produce the service. Keep their stuff safe! Exceptions: Non routine services as special considerations granted on request or on
  43. 43. AMITY GLOBAL BUSINESS SCHOOLThe Flower of Service The producer and the marketing intermediaries add the petals to achieve desired customer
  44. 44. AMITY GLOBAL BUSINESS SCHOOL The Flower of ServiceThe Flower of Service clarifies the issues a serviceprovider should focus upon to develop a completecustomer solution in the form of a service and ensurethat the customer’s experience while purchasing andconsuming the service is exceptional
  45. 45. AMITY GLOBAL BUSINESS SCHOOLSearch, Experience & Credence Economics of Information: Symmetric information concerning product ―quality‖ is needed to ensure efficiency in marketsConsumers must know what it is they are buying so they candetermine and then pay their actual willingness to pay for anitem of that quality.Asymmetric or incomplete information lowers quality in amarket and may even completely drive out higher qualitygoods &
  46. 46. AMITY GLOBAL BUSINESS SCHOOLSearch, Experience & CredenceInformational Quality of Goods and Services Search Experience
  47. 47. AMITY GLOBAL BUSINESS SCHOOLSearch, Experience & Credence All goods possess physical properties called search attributes that customers can feel, taste, and see prior to their purchase decision. Services are, in contrast, characterised by their experience and credence attributes. Experience attributes can be evaluated only during and after consumption ……Theatre, Beauty , Hotel etc Credence attributes cannot be evaluated confidently even immediately after consumption Car Servicing – Did you get ripped off?
  48. 48. AMITY GLOBAL BUSINESS SCHOOLThe Service Encounter The ―moment of truth‖ Occurs any time the customer interacts with the firm Critical in determining customer satisfaction and loyalty Types of encounters: Remote encounters, Phone encounters, Face-to-Face encounters An opportunity to build trust, reinforce quality, build brand identity, increase
  49. 49. AMITY GLOBAL BUSINESS SCHOOLThe Service Encounter
  50. 50. AMITY GLOBAL BUSINESS SCHOOLA B2C Service Encounter Cascade A
  51. 51. AMITY GLOBAL BUSINESS SCHOOLA B2C Service Encounter Cascade AGBS Buying New
  52. 52. AMITY GLOBAL BUSINESS SCHOOLManaging Service Encounters The principle of ―thirds‖ About one-third of service problems employee based (failure to follow policies and procedures) Another third company based: e.g. marketing over- promises and products and services not meeting specifications Final third customer based: incorrect expectations or customer incompetence About 20% of service encounters cause 80% of complaints!
  53. 53. AMITY GLOBAL BUSINESS SCHOOL Contemporary Issues in Service Encounters Service Failure & Adaptability Coping RecoveryEmployee response to Employee response Employee responseservice delivery system to customer needs to problem customersfailure and requests Spontaneity Unprompted and unsolicited employee actions and attitudes
  54. 54. AMITY GLOBAL BUSINESS SCHOOLService Encounters - Recovery DOs DONTs Acknowledge problem Ignore customer Blame customer Explain causes Leave customer to fend for Apologize him/herself Compensate/upgrade Downgrade Lay out options Act as if nothing is wrong Take responsibility ―Pass the buck‖
  55. 55. AMITY GLOBAL BUSINESS SCHOOLService Encounters - Adaptability DOs DONTs Recognize the seriousness Ignore of the need Promise, but fail to follow Acknowledge through Anticipate Show unwillingness to try Attempt to accommodate Embarrass the customer Adjust the system Laugh at the customer Explain rules/policies Avoid responsibility Take responsibility ―Pass the buck‖
  56. 56. AMITY GLOBAL BUSINESS SCHOOLService Encounters - Spontaneity DOs DONTs Take time Exhibit impatience Be attentive Ignore Anticipate needs Yell / laugh / swear Listen Steal from customers Provide information Show empathy
  57. 57. AMITY GLOBAL BUSINESS SCHOOLService Encounters - Coping DOs DONTs Take customer’s Listen dissatisfaction personally Try to accommodate Let customer’s Explain dissatisfaction affect others Let go of the