MMS 4th Sem

Deeds, processes and performance

Service: Deeds, processes and performances

Deeds- actions of the service provider

Process- steps in the provision of the service Performance Customer understanding of how the service has been delivered
Zeithmal

Some Service Industries

Hotels- Hospitality

Education
Design Services Investment Banking and Securities Dealing Management Consulting Services Satellite Telecommunicationstelecom Telemarketing Bureaus Entertainment-Media Tourism

Airlines-Transportation Weight Reducing Centers-Beauty and Health care Advertising Legal services Hospitals Health care Banking Railway-Public service organization

Defining the Essence of a Service

An act or performance offered by one party to another An economic activity that does not result in ownership(Philip Kotler) Servicesanything that cannot be dropped on your foot (The Economist) There is no such thing such as service industries. There are only industries whose service component is greater or less than other industries. Everybody is in service industry (Theodore Levitt) Eg: A car rental is handled in a standardized manner, whereas an insurance contract requires a high level of personal interaction

Internal Services
Service elements within an organization that add value to its final output Includes: accounting and payroll administration recruitment and training legal services catering and food services cleaning and landscaping

Increasingly, these services are being outsourced

Sector Contribution to the Indian GDP

Agriculture: 17.2% Industry: 29.1% Services: 53.7%

Agriculture, Forestry, Mining, Construction 8% Manufacturing 14%

Finance, Insurance, Real Estate 20% Wholesale and Retail Trade 16% Transport, Utilities, Communications 8%

Government (mostly services) 13% Other Services 11%

SERVICES

Business Services 5%

Health 6%

Performed by individuals (babysitter,

domestic help)
ATM )

Performed by machine (vending machine,

Directed to customers (men, women) Directed to customers possession (money,

property, car)

A pure tangible product (includes commodities like toothpaste, rice, cereals etc., where no service accompanies the product) A tangible good with accompanying services (consumer durables like television, refrigerators which have installation & after sales services)

A major service accompanying minor goods & services (first class air travel has customized services) A pure service (consultancy, teaching, babysitting)

Hi
Salt Soft drinks CD Player Golf clubs New car Tailored clothing Furniture rental Fast food restaurant Plumbing repair Office cleaning Health club Airline flight Retail banking Insurance Weather forecast Intangible Elements

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Hi

Intangibility

A pure service cannot be seen, touched , tasted or smelt Can be only experienced by customers Cannot be examined before purchase Quality cannot be measured

 Inseparability

of Production and Consumption

In production of goods production & consumption are said to be separable For services, producer & consumers must interact in order to realize the benefits of a service Production & consumption of services is hand-in-hand

(E.g.: 1. A slight misbehavior of hotel receptionist may turnoff the customer forever. The same is not true in goods purchases 2.The marketing class in b-school is cancelled due to non arrival of faculty although the students were present in full strength 3. During surgery both doctors & patient should be present)

 Perishability

Services cannot be stored or inventoried Has to be transacted during the given time If there is no transaction, the service loses its value

(Eg: 1. An empty seat in movie theatre & an aero plane is an opportunity lost forever 2. Empty seats for B-school session is a lost opportunity )

No constant pattern of demand throughout Daily variation (restaurants at lunchtime) Seasonal variation (hotels during summer vacation) Cyclical variation (mortgages)

Severe difficulties during exceptionally high or low demands Hence, service quality deteriorates during peak hours Some measures to counter perish ability

(Movie theatres-matinee shows & shows before 12pm have cheaper tickets) (Discounts on resorts/hotels on week days) (Happy hours @ restaurants)

 Heterogeneity/Variability

Service is always unique-it cannot be duplicated 2 service reps will always give different levels of service Eg: the customer experiences different quality/levels of service of two different branches of the same bank

Can be reduced by building strong brands

Can also be reduced by computerized voice systems & automation of services

The students of a B-school could have a certain subject taught by 3 different faculties, & each delivery would be vastly different A theatre actor in a play would give different levels of performances in different stage shows

 Lack

of Ownership

When goods are brought ownership is transferred from seller to buyer When a service is performed, no ownership is transferred from seller to the buyer The buyer merely buys a right to a service process

Service Characteristics Intangibility

Resulting Marketing Challenges

Difficult for Customer to Evaluate Customer Does Not Take Physical Possession Difficult to Set and Justify Prices Service Processes Usually Not Protectable by Patents Service Provider Cannot Mass-Produce Services Customer Must Participate in Production Other Consumers Affect Service Outcomes

Inseparability of Production and Consumption

Sources: K. Douglas Hoffman and John E. G. Bateson, Essentials of Services Marketing, (Fort Worth: Dryden Press, 1997) pp. 25-38; Valerie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, Delivering Quality Service: Balancing Customer Perceptions and Expectations (New York: Free Press, 1990); and Leonard L. Berry and A. Parasuraman, Marketing Services: Competing Through Quality (New York: Free Press, 1991), p. 5.

Service Characteristics Perishability

Resulting Marketing Challenges

Services Cannot Be Stored Very Difficult to Balance Supply and Demand Unused Capacity Is Lost Forever Demand May Be Very TimeSensitive Service Quality Is Difficult to Control Difficult to Standardize Service Delivery

Heterogeneity

Sources: K. Douglas Hoffman and John E. G. Bateson, Essentials of Services Marketing, (Fort Worth: Dryden Press, 1997) pp. 25-38; Valerie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, Delivering Quality Service: Balancing Customer Perceptions and Expectations (New York: Free Press, 1990); and Leonard L. Berry and A. Parasuraman, Marketing Services: Competing Through Quality (New York: Free Press, 1991), p. 5.

The Anil Dhirubhai Ambani Group has developed a logo after having worked on it for almost nine months. According to company sources, the logo consists of the word Reliance in capital letters in an entirely new font along with the lineage - Anil Dhirubhai Ambani Group. A combination of blue and red colours is meant to convey solidity and the alphabet `A' in the Reliance name has been converted into two arrows arching upwards. The new logo had to reflect the group's business interests from telecommunications to entertainment, urban infrastructure to financial services, and energy to a new area such as healthcare. The need, therefore, was to evolve a logo that did not reflect any specific product category

How are Services Different from Products??

1.

Nature of the Product goods are objects, services are performances People as Part interactions with other customers & employees Quality Control Problem due to variability problem quality of service is difficult to control

2.

3.

4.

Service for customers to evaluate Services should be delivered in real time

5.

6.

No inventories for service

Characteristic

Goods

Service

Product Tangible Form Manufactured Customer perception Standardized Measurability Objective Units definition Precise Production/consumption Gap exists Shelf life Days to years Delivery Consistent Possession Physical

Intangible Created
To be evaluated

Subjective General Instant Zero Variable In the mind

Important Differences Exist among Services

What is the Nature of the Service Act?

TANGIBLE ACTS

Who or What is the Direct Recipient of the Service?

DIRECTED AT PEOPLE DIRECTED AT POSSESSIONS

People Processing
e.g., airlines, hospitals, haircutting, restaurants hotels, fitness centers
Tangible Actions to Customers bodies

Possession Processing
e.g., repair, cleaning,
Physical Actions to Customers Goods

INTANGIBLE ACTS

Mental Stimulus Processing

e.g., consulting, education, psychotherapy
Intangible Actions to Customers minds

Information Processing
(directed at intangible assets)

e.g., accounting, banking, insurance, legal

Intangible Actions to Customers Assets

The Services Marketing Mix

Product=core product + supplementary product Core elements respond to basic need of the customers Supplementary services enhance the use of core service Supplementary services range from needed information, advice, problem solving & acts of hospitality Benefits delivered to customers (customers dont buy a hotel room, they buy a good nights sleep)

1. 2. 3. 4.

Core offer: Fast travel Secondary service offer

Tangibles: tickets , aircrafts , cuisine, , brochures Quality: class, standards of the airline Features: check-in, departure, comfort, cuisine Accessibility: ease of booking, location of agents

Decisions about the

---average level of prices, ---discount structures, ---terms of payment ---extent to which price discrimination between two different groups of customers

Online insurance comes cheaper Priority banking accounts

Higher the premium, higher is the sum assured in case of insurance

Ease of access, which potential customers have to a service

Eg: (Involve branch locations, service outlets (ATMs) & overseas locations Mobile offices (banker comes to the doorsteps of the customer rather than the other way round) ATMs in non financial institution buildings Shared ATM networks)

Delivery Decisions: Where, When, and How

Geographic locations served Electronic channels

Informing, Educating, Persuading, and Reminding Customers

Marketing communication tools

media elements (print, broadcast, outdoor, retail, Internet, etc.) personal selling, customer service sales promotion publicity/PR Direct mail

Imagery and recognition branding corporate design

Content customer education/training

Providing tangible evidence of service performances

Create and maintaining physical appearances buildings/landscaping interior design/furnishings vehicles/equipment staff grooming/clothing sounds and smells broachers signage business cards internet/ web pages equipment

Method and Sequence in Service Creation and Delivery

Design of activity flows Nature of customer involvement Role of contact personnel Role of technology, degree of automation

Process --means of guaranteeing the quality of service delivery & system improvement

Managing the Human Side of the Enterprise

The right customer-contact employees performing tasks well to achieve specific standards job design recruiting/selection training

motivation
evaluation/rewards empowerment/teamwork Eg: During the car repair, the customer is not interested in production workers attire, but the same is not true customer service rep in a bank

Promotional activities of airline Advertisement hoardings at airports depicted the stylish interiors of the Fun liners, which conveyed youthful, fun-filled, and world class image The UB groups monthly magazine called Pegasus published information about KFA along with other information related to UB group KFA launched many attractive offers to promote its sales like the King Card in association with ICICI Bank, in August 2005. Multiple touch points and finer Promotional service working for the Promotional activities. Loyalty and frequent flyer programs were also carried out

TANGIBLE DOMINANT

credit card
savings account bank loan investment fund life insurance home insurance company insurance

INTANGIBLE DOMINANT

Financial services are not only intangible, they are very complex in nature Relationship management is becoming more important The service level of selling the credit card is very different as compared to a life insurance or home insurance

Company

Internal Marketing

External Marketing

Employee

Interactive Marketing

Customers

On the R.H.S, are the external marketing efforts-anything that communicates to the customer before service delivery

It comprises marketing communications like advertising, sales promotion, sales management, direct marketing & public relations

On the L.H.S, is the internal marketing Employees are the first internal market for the organization Can be enhanced by the way of product knowledge, product handling, customer handling, in addition to motivation The basic objective is to develop deeply motivated & customer conscious employees

At the bottom of the triangle is the interactive marketing Focus is on skills of employees in handling customer contact Actual delivery of service takes place Services marketing triangle will collapse if employees are unable to deliver the promises made Customer judges on both technical & functional parameters