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MMS 4th Sem
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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
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Some Service Industries Hotels- Hospitality
Airlines-Transportation
Weight ReducingCenters-Beauty and
Health care
Advertising
Legal services
Hospitals –Health care
Banking
Railway-Public service
organization
Education
Design Services
Investment Banking andSecurities Dealing
Management Consulting
Services
Satellite Telecommunications-
telecom
Telemarketing Bureaus
Entertainment-Media
Tourism
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efining 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)
• …Services…anything 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
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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
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Finance, Insurance,
Real Estate
20%
Wholesale and
Retail Trade
16%
Transport, Utilities,
Communications
8%Health
6%
Business
Services
5%
Other Services 11%
Government
(mostly services)
13%
Manufacturing 14%
Agriculture, Forestry,
Mining, Construction 8%
SERVICES
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Performed by individuals (babysitter,domestic help)
Performed by machine (vending machine,ATM )
Directed to customers (men, women)
Directed to customer’s possession (money,
property, car)
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A pure tangible product (includescommodities like toothpaste, rice, cerealsetc., where no service accompanies theproduct)
A tangible good with accompanying services(consumer durables like television,
refrigerators which have installation & aftersales services)
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A major service accompanying minor goodsservices (first class air travel has customizedservices)
A pure service (consultancy, teaching,babysitting)
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Fast food restaurant Plumbing repair
Office cleaning
Health club Airline flight
Retail bankingInsurance
Weather forecast
Salt
Soft drinks
CD Player Golf clubs
New car Tailored clothing
Furniture rental
Lo Hi
Hi
Intangible Elements
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Intangibility
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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
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Inseparability of
Production andConsumption
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In production of goods production &consumption are said to be separable
For services, producer & consumers mustinteract in order to realize the benefits of aservice
Production consumption of services is
hand-in-hand
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(E.g.: 1. A slight misbehavior of hotel
receptionist may turnoff the customerforever. The same is not true in goodspurchases
2.The marketing class in b-school is cancelleddue to non arrival of faculty although the
students were present in full strength3. During surgery both doctors & patientshould be present)
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Perishability
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Services cannot be stored or inventoried Has to be transacted during the given time
If there is no transaction, the service loses itsvalue
(Eg: 1. An empty seat in movie theatre & anaero plane is an opportunity lost forever
2. Empty seats for B-school session is alost opportunity )
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No constant pattern of demand throughout Daily variation (restaurants at lunchtime)
Seasonal variation (hotels during summervacation)
Cyclical variation (mortgages)
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Severe difficulties during exceptionally highor low demands
Hence, service quality deteriorates duringpeak 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)
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Heterogeneity/Variability
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Service is always unique-it cannot beduplicated
2 service reps will always give different levelsof service
Eg: the customer experiences different
quality/levels of service of two differentbranches of the same bank
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Can be reduced by building strong brands
Can also be reduced by computerized voicesystems & automation of services
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The students of a B-school could have acertain subject taught by 3 different faculties,& each delivery would be vastly different
A theatre actor in a play would give differentlevels of performances in different stageshows
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Lack of Ownership
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When goods are brought ownership istransferred from seller to buyer
When a service is performed, no ownership istransferred from seller to the buyer
The buyer merely buys a right to a service
process
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Intangibility
Inseparability ofProduction andConsumption
Difficult for Customer to Evaluate
Customer Does Not Take PhysicalPossession
Difficult to Set and Justify Prices
Service Processes Usually Not Protectableby Patents
Service Provider Cannot Mass-ProduceServices
Customer Must Participate in Production
Other Consumers Affect Service
Outcomes
Service
Characteristics Resulting Marketing Challenges
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, DeliveringQuality Service: Balancing Customer Perceptions and Expectations (New York: Free Press, 1990); andLeonard L. Berry and A. Parasuraman, Marketing Services: Competing Through Quality (New York: Free
Press, 1991), p. 5.
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Service
Characteristics Resulting Marketing Challenges
Perishability
Heterogeneity
Services Cannot Be Stored
Very Difficult to Balance Supplyand Demand
Unused Capacity Is Lost Forever
Demand May Be Very Time-Sensitive
Service Quality Is Difficult toControl
Difficult to Standardize Service
Delivery
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, DeliveringQuality Service: Balancing Customer Perceptions and Expectations (New York: Free Press, 1990); andLeonard L. Berry and A. Parasuraman, Marketing Services: Competing Through Quality (New York: Free
Press, 1991), p. 5.
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The Anil Dhirubhai Ambani Group has developed a logo afterhaving worked on it for almost nine months.
According to company sources, the logo consists of the wordReliance in capital letters in an entirely new font along with thelineage - Anil Dhirubhai Ambani Group.
A combination of blue and red colours is meant to conveysolidity and the alphabet `A' in the Reliance name has beenconverted into two arrows arching upwards.
The new logo had to reflect the group's business interests from
telecommunications to entertainment, urban infrastructure tofinancial 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
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How are ServicesDifferent from
Products??
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1. Nature of the Product –goods are objects,services are performances
2. People as Part –interactions with othercustomers & employees
3. Quality Control Problem –due to variability
problem quality of service is difficult tocontrol
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4. Service for customers to evaluate
5. Services should be delivered in real time
6. No inventories for service
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Characteristic Goods Service
Product Tangible Intangible
Form Manufactured Created
Customer perception Standardized To be evaluated
Measurability Objective SubjectiveUnits definition Precise General
Production/consumption Gap exists Instant
Shelf life Days to years Zero
Delivery Consistent VariablePossession Physical In the mind
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Important Differences Existamong Services
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People Processing Possession Processing
Mental Stimulus
Processing
Information Processing
(directed at intangible assets)
e.g., airlines, hospitals,
haircutting, restaurants hotels,
fitness centers
e.g., repair, cleaning,
e.g., consulting,
education, psychotherapy
e.g., accounting, banking,
insurance, legal
TANGIBLE
ACTS
INTANGIBLE
ACTS
DIRECTED AT PEOPLE DIRECTED AT POSSESSIONS
What is the
Nature of the
Service Act?
Who or What is the Direct Recipient of the Service?
Tangible Actions to Customers bodies Physical Actions to Customers Goods
Intangible Actions to Customers minds Intangible Actions to Customers Assets
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The ServicesMarketing Mix
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Product=core product + supplementary product Core elements respond to basic need of the
customers
Supplementary services enhance the use of coreservice
Supplementary services range from neededinformation, advice, problem solving & acts ofhospitality
Benefits delivered to customers (customers don’tbuy a hotel room, they buy a good night’s sleep)
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Core offer: Fast travel Secondary service offer1. Tangibles: tickets , aircrafts , cuisine, , brochures
2. Quality: class, standards of the airline
3. Features: check-in, departure, comfort, cuisine
4. Accessibility: ease of booking, location of agents
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Decisions about the---average level of prices,
---discount structures,
---terms of payment
---extent to which price discrimination between twodifferent groups of customers
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Online insurance comes cheaper
Priority banking accounts
Higher the premium, higher is the sumassured in case of insurance
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Ease of access, which potential customershave 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)
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Delivery Decisions: Where, When, and How
Geographic locations served
Electronic channels
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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
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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
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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 servicedelivery system improvement
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Managing the Human Side of the Enterprise
The right customer-contact employees performing tasks wellto achieve specific standards
◦ job design
◦ recruiting/selection
◦ training◦ motivation
◦ evaluation/rewards
◦ empowerment/teamwork
Eg: During the car repair, the customer is not interested inproduction worker’s attire but the same is not true customerservice rep in a bank
Promotional activities of airline
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Advertisement hoardings at airportsdepicted the stylish interiors of the
“Fun liners”, which conveyed
youthful, fun-filled, and world classimage
The UB groups monthlymagazine called “Pegasus”
published information about KFAalong with other information related
to UB groupKFA launched many attractive offersto promote its sales like the “King
Card” in association with ICICIBank, in August 2005.
Multiple touch points and finer
Promotional service working for thePromotional activities.
Loyalty and frequent flyer programswere also carried out
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TANGIBLE DOMINANT
credit card
savings account
bank loan
investment fund
life insurance
home insurance
company insurance
INTANGIBLE DOMINANT
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Financial services are not only intangible,they are very complex in nature
Relationship management is becoming moreimportant
The service level of selling the credit card is
very different as compared to a life insuranceor home insurance
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Company
CustomersEmployee
ExternalMarketing
InteractiveMarketing
InternalMarketing
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On the R.H.S, are the external marketingefforts-anything that communicates to thecustomer before service delivery
It comprises marketing communications likeadvertising, sales promotion, sales
management, direct marketing & publicrelations
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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, customerhandling, in addition to motivation
The basic objective is to develop deeply
motivated & customer conscious employees
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At the bottom of the triangle is the interactivemarketing
Focus is on skills of employees in handlingcustomer contact
Actual delivery of service takes place
Services marketing triangle will collapse ifemployees are unable to deliver the promises
made Customer judges on both technical &
functional parameters