INTRODUCTION. Salt Soft Drinks Detergents Automobiles Cosmetics Advertising Agencies Airlines...
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Transcript of INTRODUCTION. Salt Soft Drinks Detergents Automobiles Cosmetics Advertising Agencies Airlines...
SaltSoft Drinks
DetergentsAutomobiles
Cosmetics
AdvertisingAgencies
AirlinesInvestment
ManagementConsulting
Teaching
Fast-foodOutlets
Fast-foodOutlets
SELL THE FOLLOWING PRODUCTS
Characteristics of Services Compared to Goods
Intangibility
Perishability
Simultaneous
Productionand
Consumption
(Inseparability)
Heterogeneity
Tangibility Spectrum
TangibleDominant
IntangibleDominant
SaltSoft Drinks
DetergentsAutomobiles
Cosmetics
AdvertisingAgencies
AirlinesInvestment
ManagementConsulting
Teaching
Fast-foodOutlets
Fast-foodOutlets
Characteristics of Services Compared to Goods
An act or performance performed by one party to another
An economic activity that does not result in ownership
Essence of Service
Examples of Service Industries
Health Care◦ hospital, medical practice, dentistry, eye care
Professional Services◦ accounting, legal, architectural
Financial Services◦ banking, investment advising, insurance
Hospitality◦ restaurant, hotel/motel, bed & breakfast
Travel◦ airline, travel agency, theme park
Others◦ hair styling, pest control, plumbing, lawn maintenance, counseling services,
health club, interior design
Chirstopher Lovelock :
Services are economic activities offered by one party to another, most commonly employing time-based performances to bring about desired results in recipients themselves or in objects or other assets for which purchasers have responsibility.
DEFINITION : SERVICES
1. Intangibility
Problems
• Lack of service inventories
• Lack of patent protection
• Difficulty in displaying or communicating services
• Difficulty in pricing services
Solutions
• Use of tangible clues• Use of personal source
of information• Creation of a strong
organizational image
2. Inseparability
Problems
• Physical connection• Involvement of
customers in the production process
• Involvement of other customers in the production process
• Special challenges in mass production
Solutions
• Selecting & training public contact personnel
• Consumer management
• Use of multi-site locations
3.Heterogeneity
Problems
• Difficult to standardize service quality control
Solutions
• Customization• Standardization
4.Perishability
Problems
• Higher demand than maximum availably supply / optimal supply level
• Lower demand than optimal supply level
• Demand & supply at optimal levels
Solutions
• Creative pricing• Reservation system• Development of
complementary services
• Development of non peak demand
Customer has access to but not ownership of activity or facility
Stress advantages of non-ownership (eg. Easier payment systems)
5. Lack of ownership
Basis Goods Services
Tangibility Goods are tangible. Can be patented
Services are intangible. Cannot be patented
Transfer of ownership Possible Not possible
Perishability Less Perishable. It can be stored as inventory
Highly perishable. Cannot store for future use
Heterogeneity Goods can be standardized. Less heterogeneity
High heterogeneity. Difficult to standardize
Reselling Possible Not possible
Production & consumption
Takes place at different places
Both process take place simultaneously
DISTINGUISH : GOODS & SERVICES
Basis Goods Services
Customer relationship Low High
Marketing mix 4 P’s – Traditional marketing mix
7 P’s – Extended marketing mix
Customer Involvement
Low High
Mass Production Easy Difficult
DISTINGUISH : GOODS & SERVICES
1. Crawling out stage prior to 1980- Marketing channels- Marketing theories- Identified characteristics of services2. Scurrying about stage : 1980-1986- Services classification- Managing quality in service operations- GAP model- Expanded marketing mix- Service encounter, Relationship marketing,
Internal marketing etc.,- Emergence of Service marketing
Evolution of Services Marketing
3. Walking erect stage : 1986-2000Focus on marketing problems of servicesService encounters, Service design,
perceived service quality, customer satisfaction, Internal marketing & Relationship marketing.
4. Galloping stage : 2000 till dateIncrease in growth of service sectorMain contributors to GDP of the country.
Service Sector Related activities
Wholesale and Retail trade Sales to business / individuals
Transportation & Warehousing
Transportation or storage. Modes : Air, Water, Rail, Road & Pipeline
Utilities Establishments that provide electricity, natural gas, steam, water, sewage removal
Information Establishments that produce and distribute information and provide the means to distribute or transmit these products and / or process data
Financial Activities
Finance & Insurance Engaging in financial transactions
Real estate, rental & leasing Selling or allowing the use of assets
Government Public Administration
Services Economy : Components
Service Sector Related Activities
Professional & Business Services
Professional, scientific & technical
Legal advice, accounting, architectural, engineering, computer services, consulting, health care, research & others
Management of companies and enterprises
Undertake a decision making role in the company or enterprises
Administrative support & Waste management
Performing routine support activities for other organisation
Education & health services
Education Provide instruction & training
Health care and social assistance Provide medical care & social assistance
Leisure & Hospitality
Arts, entertainment & recreation Services to meet cultural, entertainment and recreational interests
Accommodation & food services
GovernmentPolicies
BusinessTrends
Social Changes
Advances in IT
Globalization
Innovation in service products & delivery systems, stimulated by better technology
Customers have more choices and exercise more power
Success hinges on:● Understanding customers and
competitors● Viable business models● Creation of value for customers and
firm
● New markets and product categories● Increase in demand for services● More intense competition
Forces Transforming the Service Economy
GovernmentPolicies
BusinessTrends
Social Changes
Advances inIT
Globalization
●Changes in regulations
●Privatization
●New rules to protect customers, employees, and the environment
●New agreement on trade in services
Forces Transforming the Service Economy (1)
GovernmentPolicies
BusinessTrends
Social Changes
Advances inIT
Globalization
●Rising consumer expectations
●More affluence
●Personal Outsourcing
● Increased desire for buying experiences vs. things
●Rising consumer ownership of high tech equipment
● Easier access to more information
●Migration
●Growing but aging population
Forces Transforming the Service Economy (2)
Government Policies
BusinessTrends
Social Changes
Advances inIT
Globalization
●Push to increase shareholder value
● Emphasis on productivity and cost savings
●Manufacturers add value through service and sell services
●More strategic alliances
● Focus on quality and customer satisfaction
●Growth of franchising
●Marketing emphasis by nonprofits
Forces Transforming the Service Economy (3)
GovernmentPolicies
BusinessTrends
Social Changes
Advances in IT
Globalization
●Growth of Internet
●Greater bandwidth
●Compact mobile equipment
●Wireless networking
● Faster, more powerful software
●Digitization of text, graphics, audio, video
Forces Transforming the Service Economy (4)
GovernmentPolicies
BusinessTrends
Social Changes
Advances in IT
Globalization
●More companies operating on transnational basis
● Increased international travel
● International mergers and alliances
● “Offshoring” of customer service
● Foreign competitors invade domestic markets
Forces Transforming the Service Economy (5)
Increase in Affluence More leisure time
Working women Growth in population of DINKS
Greater life expectancy Greater complexity of products
Greater complexity in life Greater concern for resource scarcity & Ecology
Increasing number of new product
Young generation
Cultural changes Technology – Key driver
Consciousness of healthcare Migration
Economic liberalization
Reasons : Growth – Service sector
Service Triangle Management Framework Molecular Model Servuction Model Services triangle Marketing model Six market model
SERVICES MODEL
Focus : Revenues & operating cost
Ignores : Role personnel play – customer satisfaction & sustainable profits.
Beliefs : Difficult to find good employees Better to rely on technical machines / systems Employees are indifferent, unskilled,
incapable of fulfilling any duties.
1. Service Triangle Management FrameworkA. Industrial management model
Focus : To serve customers / Service delivery
Beliefs : Firms should be organized
Framework : Depicts 6 key relationships
B. Market focused management model
6 KEY RELATIONSHIPS
1. Firms service strategy communicated to the customer
2. Service strategy communicated to firm’s employees
3. Focus on consistency of service strategy & systems developed to run day to day operations
4. Impact of organisational system upon customers.
5. Importance of organisational systems & employee efforts
6. Customer/service provider interaction.
MOMENTS OF TRUTH
( MOT )
Interaction between customer and service provider give rise to service encounters or critical incidents.
The quality of these interactions is the source of customer satisfaction.
Jan Carlzon, CEO, Scandinavian Airline System
Pictorial representation of the relationship
between the tangible and intangible
elements of a firm’s operation
2. Molecular Model - G.Lynn Shostack
Depicts the factors that influence the
service experience
I a. Contact personnel
Eg. Parking attendants, Receptionist,
hostesses
I b. Service providers
Eg. Waiter, Dentist, Physician, Instructors
3. Servuction Model- Langeard et al
THE SERVUCTION MODEL
Invisible organizations and systems
Contact personnel/
Service providers
Other customers Servicescap
e
Customer
II Other customers
III Invisible organisation systems
- Rules, regulations & processes upon which organisation is based.
IV Servicescape- Use of physical evidence to design service
environmentAmbient conditions : Eg. Room temperature&
MusicInanimate Objects : Eg. Assist firm in
completing tasks such as furnishings & business equipment
Physical evidence : Eg. Sign / symbols and personal artifact
THE SERVUCTION MODEL
I The company
II The customer
III The provider (Internal customers)Eg. Employees, franchisees, channel
partners, distributors, wholesalers, retailers etc.,
3 entities : Service transaction
Game of promises
I External marketing : “Makes promises”
II Internal marketing : “Keeps promises”
III Interactive marketing : “Enables promises”
Types of marketing : 3 entities
1. Customer Markets
2. Referral Markets3. Influence Markets4. Recruitment
Markets5. Supplier Markets6. Internal Markets
5. Six market model :(Proposed by Adrian Payne)
◦ Most service products cannot be inventoried◦ Intangible elements usually dominate value
creation◦ Services are often difficult to visualize and
understand◦ Customers may be involved in co-production◦ People may be part of the service experience◦ Operational inputs and outputs tend to vary more
widely◦ The time factor often assumes great importance◦ Distribution may take place through nonphysical
channels
Challenges : Service Marketing
I Marketing issuesA. Managing Differentiation1. Services premises2. Packaging3. Service personnel4. Tools and equipment use5. Customers6. ConvenienceB. Managing productivityC. Managing service quality
Issues : Service Marketing
II Ethical issues1. Aggressive promotion 2. Invasion of privacy3. Misleading claims backed by poor service
performanceIII Communication issues4. Management of technology5. Management for budgetary provisions for
communication6. Management of communication content
Differences, Implications & Marketing related tasks
Difference
Most service products
cannot be inventoried
Intangible elements
usually dominatevalue creation
Services are oftendifficult to visualize
&understand
Customers may beinvolved in co-Production
Implications
Customers may beturned away
Harder to evaluateservice & distinguishfrom competitors
Greater risk &uncertainty
perceived
Interaction betweencustomer & provider; but poor task
execution could affect
satisfaction
Marketing-Related Tasks
Use pricing, promotion, reservations to smooth demand; work with ops
to manage capacity
Emphasize physical clues, employ metaphors and vivid images in advertising
Educate customers onmaking good choices;
offer guarantees
Develop user-friendlyequipment, facilities & systems; train
customers, provide good support
Differences, Implications & Marketing related tasks
Implications
Behavior of servicepersonnel & customerscan affect satisfaction
Hard to maintain quality,
consistency, reliability Difficult to shield customers from
failures
Time is money; customers want
serviceat convenient times
Electronic channels or voice
telecommunications
Difference
People may be part of
service experience
Operational inputs and
outputs tend to vary more widely
Time factor often assumes great importance
Distribution may take
place through nonphysical
channels
Marketing-RelatedTasks
Recruit, train employees to
reinforce service conceptShape customer
behavior
Redesign for simplicity and
failure proofingInstitute good service recovery procedures
Find ways to compete on
speed of delivery; offer extended hours
Create user-friendly,secure websites and
freeaccess by telephone