introductio to sm

8/7/2019 Introductio to SM

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Introduction to service

What are Services? Why Service Marketing?

Services & Technology Differences between goods & Services The Service Marketing Mix

The Gap Mode of Service quality.


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What is a service?

Services to include all economic activitieswhose output is not a physical product or construction is generally consumed at the time it

is produced & provides added value in forms(I,e. Convenience amusement,timeliness,comfortor health) that are essentially intangible concernsof its first purchase.


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What is a service?

Kotler: it doest provide ownershipover anything.

Bateson: We talk about service, if the benefit is provided rather by the servicethan the product.

L.L. Berry: services can be defined asdeeds, efforts, or performances


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GoodsGoods

ServicesServices

Produced Sold Consumed

Sold Produced

Consumedeg. Airplane ticket is first bought then customer flies (service is provided andconsumed simultaneously)

Difference btw. goods and services


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How Important is the Service Sector inOur Economy?

The size of the service sector is increasing in almost alleconomies around the world

Services make up the bulk of todays economy and also account

for most of the growth in new jobs Even in emerging economies, service output is growing rapidly

and often accounts for half or more of GDP

Jobs range from high-paid professionals and technicians tominimum-wage positions

Service organizations can be any size from huge globalcorporations to local small businesses


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Changing Structure of Employment as EconomicDevelopment Evolves

Time, per Capita Income

Share of E mploym en t

Industry

Services

Agriculture

Source: IMF, 1997


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Estimated Size of Service Sector inSelected Countries

Services as Percent of GDP

Poland (66%), South Africa (65%)

Japan (74%), France (73%), U.K. (73%), Canada (71%)

Saudi Arabia (33%)

China (40%)

India (48%)

Argentina (53%), Brazil (51%)

Panama (80%), USA (79%)

Luxembourg (83%)

Cayman Islands (95%), Jersey (93%)Bahamas (90%), Bermuda ( 89%)

Mexico (69%), Australia (68%), Germany (68%)

Israel (60%), Russia (58%), S. Korea (56%)

30 40 50 60 70 80 90 20 10


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0%

10%

20%

30%

40%

50%60%

70%

80%

%of

G

NP

1850 1950 2050

AgricultureManufacturingServices

In the future services dominate theeconomy


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Why Study Services?

Services dominate economy in most nations Understanding services offers you personal competitiveadvantages

Importance of service sector in economy is growingrapidly: Services account for more than 60 percent of GDP

worldwide

Almost all economies have a substantial servicesector

Most new employment is provided by services Strongest growth area for marketing


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Distinguishing Characteristics of Services

Customers do not obtain ownership of services

Intangible elements dominate value creation

Greater involvement of customers in production process

Other people may form part of product experience Greater variability in operational inputs and outputs

Many services are difficult for customers to evaluate

Service products are ephemeral and cannot be inventoried Time factor is more important--speed may be key

Delivery systems include electronic and physical channels


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Services V/S Customer Services

Services:- Services is different from Customer services. Servicesencompass a wide range of industries like Banking , Insurance,Hotels,Consulting

firms, Advertising Firms, Air, Rail, Water transportations..So on.However Services can be offered to the Market place by

manufacturers & Technology companies as well Ex:- IBM, Compaq

Customer Service:- Customer Service is the service provided in supportof a companys Core products like dealing with billing issues, Handling Complaints , After sales services,Taking orders & Information sharing or support.


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Pure goods

Goods plus an element of service

Goods and services equal

Service with an element of goods

Pure service

Range of business types (based on theitangibility ):


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Scale of market entities

Tangibility spectrum


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Why Study Services Marketing?Services dominate economy in most nations:-

Job formation are in service industries & Importance of servicesector in economy is growing rapidly

Service as a Business imperative inManufacturing & IT:- Understanding services offers you

personal competitive advantages & industries have recognized the need to provide quality services in order to compete world wide.

Deregulated industries & professional service

needs:- Due to deregulation & globalization, drastic changeshas been noticed in the service industries like Airlines,Banking,Telecom & so on.

Service Marketing is different:- There is differencesin Marketing services & Managing Services. So, need for developing/designing new concepts & approaches for marketin & mana in business.


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Why Study Services Marketing?

Services equals profits:- A dedication to quality services has been the foundation for success for many companies. Since the mid 1990s firms have begun to demand the hard evidence of the bottom line effectiveness of servicestrategies & Customer Satisfaction,


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But Service Stinks

Theories of Declining customer satisfaction :-Customer perceive that the over all the

Quality of service is decaling.

More companies offering tiered service based on the calculated profitability of different market segments.

2. Self-service & technology-based service is perceived as less service(no humaninteraction/human personalization is provided)

3. Technology-based services are hard to implement & there are many failures4. Customers expectations are higher(because of excellent .service during these

days.5. Organizations have cut costs and are too lean to understand to provide quality

Service..6. Many companies give lip service to customers focus & service quality(instead

of providing the training,compensation, and support needed to actually deliver quality service.

7. Delivering consistent, high-quality service is not easy,yet many company

promises it.


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Service & Technology

Information Technology is currently shaping the field &influencing The practices of service marketing.

Technology is profoundly changing how services are deliveredenabling both customer & employee to provide more efficientcustomized services.

Internet , the king of current technology is one big service vehicle.

1.Potential for new service offering :- Explosion of the internet, New technology service are onthe horizon.GPRS technology for Cars,RFID,Mobileinternet-accessing the web via cell phone.


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Service & Technology

2. New ways to deliver service:- Face-to-face service totelephone based service,interactive voice response

systems,internet-based customer service & now wireless service.3. Enabling both customers & Employees:

With the advent of technology both are more effective in

getting & providing service through self service. On linebanking,On line ticket booking,CRM & sales support software.

4. Extending the global reach of Service:-with the advent of internet services has crossed its boundaries.

5. The Internet is a service:- Inter net is one big service. Business & organization operate largely on the net to provideessential services.


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Paradoxes & Dark side of Technology & Services

Technology can assimilate(digest/absorb) people while isolatingthem.

It can provide a sense of control & at the same time feelings of ineptitude(incompetence/uselessness).

With technology in fusion there is a loss of human contact,

In organization people become more & more reliant oncommunicating through technology.


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Characteristics of Services

intangibilityintangibility : difficult to sample and toevaluateinseparabilityinseparability :: difficult to separate servicesfrom the service provider; mainly direct sales;staff are essential to the delivery of qualityservicesheterogeneityheterogeneity : virtually every service isdifferent; very difficult to standardize qualitySimultaneous production &Consumption: Most services are sold first &then consumed Simultaneously.perish abilityperish ability :: those not sold can not bestored

fluctuating demandfluctuating demand :: demand for some


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The Service Marketing Mix

Marketing Mix:- Defined as the elements an organization controls that can beused to satisfy or communicate with customer

The Traditional Marketing Mix

1. Product ,- Packing,Product lines Branding, Quality level.

2. Price ,- price level,terms,flexibility,discounts allowance.

3. Place (Distribution) &,-- Storage,Channels,channel type,outlet locations, transportation.

4. Promotion- promotion blend,advertising,sales promotion,publicity

These elements appear as core decision variables in any marketing/marketing plan.they are inter related & depend on each other.


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The Service Marketing MixExpanded Mix for Services :- Services are produced & consumed

simultaneously, customer interact directly with the firm personnel & he is the part of the service production process.

1.People:- Customers themselves influencing delivery of service & thus affectingservice quality & their own satisfaction.- Employees,Recruiting,Training,Motivating,Team Work,Customer education,& training.

2.Physical evidence:- Tangible components that facilitate performance or communication of the service.- Facility design,Equipment,Signage, employee dress & other tangibles

i,e.Reports,Business cards,Statements & guarantees.

3.Process:- The actual procedures,Mechanisms & flow of activities by which theservice is delivered.- Flow of activities,Standardized,Customized,number of steps(simple,complex)

customer involvement


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PerceivedService

ExpectedService

CUSTOMER

COMPANY

Customer Gap

Gap 1

Gap 2

Gap 3

ExternalCommunications

to CustomersGap 4ServiceDelivery

Customer-DrivenService Designs and

Standards

Company Perceptionsof Consumer Expectations

Gaps Model of Service QualityGaps Model of Service Quality


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1. Knowledge Gap

2. Standards Gap

3. Delivery Gap

5. Perceptions Gap

7.S

erviceGap

Customer expectations

6. Interpretation Gap

4. CommunicationsGap

MANAGEMENT

CUSTOMER

4.

Customer perceptions of service execution

Management definition of these expectations

Translation into standards

Actual service delivered Advertising and salespromises

Customer interpretation of communications


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Expectedservice

Perceivedservice

Customer Gap

The Customer GapThe Customer Gap

Central focus of the gaps model is the customer gap

Expectations :- Expectations are the reference points customers have coming in toa service experience .Perceptions:- Perceptions reflect the service as actually received to satisfy their customers& build long-term relationships with them a firm needs to close this gap.

In order to close this gap the model suggests that 4 other gaps The PROVIDER gaps need to Be closed


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Provider Gap 1: Not knowing what customers expect

Provider Gap 2: Not selecting the right service designs and standards

Provider Gap 3: Not delivering to service standards

Provider Gap 4: Not matching performance to promises

Customer Expectations

Customer Perceptions

Key Factors Leading to the Customer Gap

Key Factors Leading to the Customer Gap

Customer Gap


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Company Perceptions of


Inadequate marketing research orientationInsufficient marketing researchResearch not focused on service qualityInadequate use of market research

Lack of upward communicationLack of interaction between management and customers

Insufficient communicationbetween contact employees andmanagers

Too many layers between contact personnel and top managementInsufficient relationship focus

Lack of market segmentationFocus on transactions rather than relationshipsFocus on new customers rather than relationshi p customers

Inadequate serv ice recoveryLack of encouragement to listen to customer complaintsFailure to make amends when things go wrongNo appropriate recovery mechanisms in place for service failures

Key Factors Leading to Provider Gap 1 Key Factors Leading to Provider Gap 1

Gap1


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Customer-Driven ServiceDesigns and Standards

Management Perceptions of Customer Expectations

Poor service designUnsystematic new service development processVague, undefined service designsFailure to connect service design to service positioning

Absence of customer-driven standards

Lack of customer-driven service standardsAbsence of process management to focus on customer

requirementsAbsence of formal process for setting service quality goals

Inappropriate physical evidence and servicescape Failure to develop tangibles in line with customer expectations

Servicescape design that does not mee t customer andemployee needsInadequate maintenance and updating of the servicescape


Gap2


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Service Delivery

Customer-Driven ServiceDesigns and Standards

DeficieIneffeRole


Gap3


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Service Delivery

Lack of i Tenden

Not inclExternal Communications to

Customers


Gap4

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