Service Marketing – Module 4AVenkatesh G

Differences between Services

marketing & goods marketing• Intangibility

• Perishability

• Inseparability

• Heterogeneity

• Lack of Ownership

Strategies to deal with Intangibility

• Branding of services important to meet intangibility

• Focus on benefits

• Brand names – Use personalities to personalize service

Strategies to deal with Inseparability

• Work faster.

• Train more service personnel

• Motivate Front Line Employees

• FRONT LINE EMPLOYEES – KINGPINS IN SERVICE DELIVERY.

Strategy to deal with Heterogeneity

• Difficult to standardize quality• Heterogeneity results due to

▫ Different expectations of different customers▫ Different expectations from same customer at different

times due to moods, emotions etc▫ Differing performance of different employees▫ Different performance of the same service employee at

different times due to different frame of mind, moods etc.

▫ Careful selection and training of personnel.▫ Define behavior norms▫ Reduce role of human element (Use Technology ??)

Strategy to deal with perishability

• Services cannot be stored,

• Demand fluctuates

• Strategy is to match between supply and demand by price reduction season wise.

Strategy to deal with lack of

ownership• Customer has access to services but no

ownership of activity.

• In this case, the strategy has to be to stress on advantages of non-ownership.

SERVUCTION

• SERVICE + PRODUCTION = SERVUCTION

• VALUE ADDITION AT EACH STEP

• UNIQUE EXPERIENCE FOR CUSTOMER

• COMPELLING EXPERIENCE THAT IS A COMPETITIVE WEAPON AGAINST SERVICE COMMODITIZATION.

Service commoditization

• Opposite of service differentiation

• Commoditization – all services look the same. Customer cannot make out which one is a better service because there is no differentiation.

• The key is how you can transform customer experience into a memorable one and capitalize on it.

RAW COFFEE

PROCESSED, PACKAGED SOLD (COFFEE POWDER)

CUP OF COFFEE IN A RESTAURANT

COFFEE SOLD IN STARBUCKS, CCD, MOCHA, BARISTA

Value enhanced, physical, customer paying for enhanced

experience

Invisible component in Servuction

model• Organization’s processes, systems, rules and

procedures.

Servuction model (Cont’d)

• Core service personnel – people who are actually performing the service

• Contact personnel – Receptionist, Office Boy

• Physical environment – Lighting, Music, Furniture, Flooring, Aesthetic appeal, ambience

• These are part of visible component

Customers

• Are always involved in the service delivery process

• Interaction between service provider and customer represents critical incidents or moments of truth.

• Quality of these interactions can become the driving force for the customer’s service evaluation.

Classification of services

• People focus• Equipment focus• Extent of customization needed• Level of intangibility• Whether service has a product focus (Maruti Car

service centre) or a process focus (e.g.. Higher courses in education).

• A successful service firm differentiates itself from mediocre ones by a customer retention strategy.

• Retention costs less than acquisition costs• Existing customers purchase frequently, familiar

with the firm’s personnel and procedures.

Top most services in India

• Tourism and Travel

• Telecom

• Health Services

• IT

• Insurance, Banking & Financial Services

Six basic elements in consumer

promotion in services market• Product scope

• Market scope

• Value

• Timing

• Identification of beneficiaries

• Competitive strategies

Physical Evidence in ServicesKey Aspects

Evidence

• Proof

• Physical evidence – physical environment, facilities, atmosphere.

Distinguish: Peripheral & Essential

EvidencePERIPHERAL EVIDENCE ESSENTIAL EVIDENCE

PART OF A SERVICE BUT HAVE LITTLE VALUE WITH RESPECT TO CORE SERVICES

EVIDENCE THAT CANNOT BE POSSESSED.

EXTERIOR OF BUILDINGS, FURNITURE, COLORS, INTERIORS, CARRY BAGS, CASH MEMOS, TICKETS

CAR RENTAL SERVICE – CAR TAKEN ON RENT IS ESSENTIAL EVIDENCE ; CROCKERY, PLATES, NAPKINS IN A RESTAURANT

EVEN IF THESE ARE GOOD, BUT SERVICE IS BAD, IT SERVES LITTLE PURPOSE

PERIPHERAL EVIDENCE CAN SUPPLEMENT THE CORE SERVICE

To note..

• Physical evidence (essential evidence) can make a service more tangible.

• But

• Physical evidence cannot be a substitute for core service.

Process

• Availability of services• Their consistent quality• Process planning control• Operations planning• Facilities Design• Scheduling• Inventory Planning & Control• Quality Control• Operational control• Demand forecasting

Expectancy Disconfirmation Model

• Consumers evaluate service by comparing expectations with perceptions.

• Perceived service more important than actual service.

• Engagement with customers will lead to positive perception.