CHARACTERISTICS OF SERVICE SECTOR MANAGEMENT, WITH SPECIAL ATTENTION TO BANKING Presented to : Prof. Anshu.

Introduction to Service
Growing significantly for more than fifty years. More people earn their living from producing services Three quarters of the population in the united states and the european union are employed in service industries. Manufacturing and technology industries have also recognized the need to provide services

Concept of Service Marketing

It is a managerial process of managing the services. It is an organized effort for providing a sound foundation for the development of an organization. It is a social process helping an organization to understand the emerging social problem and to take part in the social transformation process to justify its existence in the society.

Characteristics Of Service Marketing

Intangibility

Inseparability

Service Marketing

Heterogeneity

Perishability

Intangibility
Service is not tangible, as stated by Berry: A good is an object, a device, a thing; a service is a deed, a performance, an effort" (Berry, 1984). Services cannot be stored Services cannot readily be displayed, Demonstrated or Communicated Process is difficult to set and keep adjusted No patent protection if protection is possible for services

CURRENT SCENARIO
Significant opportunity is opening up for intangible asset-rich companies in the area of debt financing. Debt financing secured on tangible assets such as receivables, property and plant and machinery has increased significantly in recent years and is now relatively common place. Securitising intangible assets, however, is less common. If you consider that perhaps 70% of the value of most companies is in intangible assets such as brands, copyrights and patents, this represents a considerable opportunity indeed.

Inseparability
Services is that production takes place simultaneously with consumption. Generally, goods are first produced, sold, and then consumed. Services on the other hand are usually sold first, and then produced and consumed simultaneously. Customer interacts with service production and delivery systems and the service environment. Customer may be part of the product, production, and the delivery system. No clear distinction between marketing, human resource management and operations management can be made.

Example
a customer cannot get a home equity loan without, at some point, interacting with somebody at the bank. banks have installed PC banking system that enable customers to communicate, directly or through a third party, with their accounts on the banks computer; Telephone banking systems that enable customers to transfer funds between accounts; ATMs that enable customers to make deposits and withdrawals without entering a branch; and Cedit cards that allow approved customers to obtain credit repeatedly without interacting with a bank employee.

Heterogeneity
Compared to goods, service are normally less standardized and uniform. Services are not homogeneous. Service industries tend to differ regarding the extent to which they are "people based" or "equipment-based" (Thomas, 1978).

Services cannot be standardized Quality control is difficult

Example
Heterogeneity in the response of banks to a change in monetary policy is an important element in the transmission of this policy through banks. This paper examines the role of bank liquidity, capitalization and market power as internal factors influencing banks reaction in terms of lending and risktaking to monetary policy impulses. It is argued that the extensive heterogeneity in banks response identifies overlooked consequences of bank behaviour and highlights potential monetary sources of the current financial distress.

Perishability
Services cannot be stored, hence services are highly perishable, and e.g. empty tables in a restaurant can see as a revenue opportunity lost for ever. Time cannot be held over for future sale, thus, services cannot be inventoried.Service marketers need therefore to manage not only the demand, but also the supply so that a profitable equilibrium is consistently obtained. Services cannot be inventoried.

Example
A lockbox operation can process only a limited number of items in a day. Banks have responded by turning to electronic means of handling excess capacity. Most banks now provide a telephone customer-service center to answer many of the questions that tie up branch staff and keep them from performing other duties, such as selling.

STABILITY IN INDIAN BANKS

traditional competition-fragility view alternative competition-stability Theories - business environment, using data for 8,274 banks in 29 developed nations and 827 banks in 60 developing nations. For developing nations, the results are more mixed and dependent on the measure of market power.

STABILITY IN INDIAN BANKS

In India, banks lending to RBI issued market individual is based on their stabilization schemes and income. The banks do bonds and absorbed religiously verify an dollars; now if overseas individuals income and investors suck out dollars expenditure before after selling shares, there sanctioning any loans. is no shortage of dollars Mortgage loan still insists on to sell to them; and, there down payment (15% to will be no domestic 30%)& this prevented many liquidity crisis because who dreamt of having the RBI can buy back properties completely at those bonds and pump banks expense. rupees into the market. 70% of the banks in India are still nationalized.

STABILITY IN INDIAN BANKS

RBI has made banks keep 7.5 per cent of their deposits in cash, and another 25 per cent of their deposits in government bonds. So even if there were to be a run on a bank they still would have the liquidity to tackle the situation. RBI insists the bank to keep the capital ratios within the range of 11% to 13% (Regulation is 9 %) Indian banks are not focusing on the business structure like securitization and collateralized debt obligation (CDO) Again thanks to RBI regulations. Another crucial factor RBI had the right person in the right job at right time. He was Y V Reddy, the former RBI governor (6th Sept 2003 to 5th Sept 2008).

STABILITY IN INDIAN BANKS

Last but not the least Culture Indians are not very comfortable with credit. Indians generally think, If you spend more than you earn, you will get in trouble. In India, joint families still exist and family members help each other in times of economic crisis so they dont go to banks to borrow money.

FUTURE OF BANKING
Returning stability to the banks and the banking systems a speedy recovery directors are preoccupied with the short-term actions required to save their bank. economic conditions are so dire that management must rise above the distractions to take an uncompromising look at their businesses and not let long-term economic stability be consumed by crisis management. Strategy; Business model; Capital, risk and governance; and People and rewards.

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