servicesmarketingpm

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Definitions of MARKETING

The performance of business activities that direct theflow of goods and services from producer to consumer.

Getting the right goods , to the right people in the rightplace , at the right time , at the right price , with theright level of communication profitably.

Identifying the needs, wants , desires of consumers andfulfilling them in such a way that the customer isdelighted and the company objectives are metprofitably.

Solving customer problems profitably.1


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Difference Between Marketing & Sales

Marketing Sales Focus on customer Focus on seller (product)

Is about profit this year is about revenue this week

Delighting the customer converting product into cash Both new and repeat New customers is a priority,

customers important not bothered much about

with focus on repeat customers repeat customers.

5. Long term vision Short Term Outlook (week/

month)

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The 11 Ps

PRODUCT

PLACE

PRICE

PROMOTION

PACE

PACKAGING

PROCESS PLANNING

PEOPLE

POSITIONING

PHYSICAL EVIDENCE3


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Services MarketingServices Marketing

nn Defn: A service is any act or performance that one party canDefn: A service is any act or performance that one party can

offer to another that is essentially intangible and doesn't result inoffer to another that is essentially intangible and doesn't result inthe ownership of anything . Its production may or may not bethe ownership of anything . Its production may or may not be

tied to a physical product.tied to a physical product.

E.g : Airlines, hotels,banks,insurance,brokers , real estateE.g : Airlines, hotels,banks,insurance,brokers , real estate

companies, police,post office, colleges,hospitals.companies, police,post office, colleges,hospitals.

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Reasons for growth in service industry

Changing lifestyle

Increase in affluency

Increase in leisure time

women in working places

Changing world

Increased life expectancy

Increased complexities in life

Changing economies

Globalisation

Privatisation/deregulation

Changing technology

Range of new products

Range of complex products 5


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A Partial List of services

Transportation services

Railways,Airlines,Local/Interstate Passenger Transportation, Roadtransportation, Helicopter services, Private aircraft services, water transport

Public utilities services

water supply , electric supply,gas supply.

Communication

Telephone,mobile, postal and courier, radio/TV broadcasting/satellite,

tele-conferencing

Trading services

wholesaling/retailing

Financial and Insurance Services

Banking, Leasing, Security , Brokerage, Investment/retail

Banking,Insurance , credit reporting

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A Partial list of services

Real Estate Services

Renting, Investment consultants, Property consultants, Building

and real estate management.

Marketing related services

Marketing consultancy, Advertising, PR, Tele-marketing,

Marketing research, event management.

Government Provided services

Defence, Police, Transport, Broadcasting, education ,

medical, infrastructural etc.

Hospitality services

Hotels and restaurants,catering, home delivery

Entertainment services

motion pictures, video parlour, game parlours, theme

parks, discos, bowling alleys, clubs etc.

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A Partial List of Services

Business & Professional Services

Management Consultancy, Legal, Accounting(C.A)

Other services

Security, Lawn care, pet care, printing , data processing, internet caf, training (software, airhostess, public speaking etc.),

educational, travel and tourism , health and hospital, creche services,

equipment rental , interior designing , laundry and cleaning , computer

programming , BPO (CALL CENTERS etc.) , old age homes,

warehousing , annual repairs and maintenance ,brand consultants etc.

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GOODS & SERVICES

Good is a set of tangible physical attributes assembled in anidentifiable form to provide want satisfaction to consumers.

Goods can be durable or non durable.

Non -durable goods are those which are made of material other then

metal, hard plastic or wood and become dated or out of fashion . They

need to be bought and consumed quickly Service is an identifiable , intangible activity that is main object of

transaction designed to provide want satisfaction to consumer.

Service marketing encompasses the rental goods,

alteration/maintenance/repair of goods owned by consumers and

personal services

Rental goods services : computer on hire, rent-a -car, equipment

leasing

own good services : computer maintenance, A/C repair and dry

cleaning

non-goods services: consultancy services, training etc.

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GOODS-SERVICES CONTINUUM

PURE GOODS Goods

Related

Service

Related

Pure

Services

Televisions

Lipstick

oven

car

Pizza-Food

service

Bus-Transport

equipment -

leasing

Hotel room-

Lodging

Financing-car

Warranty-mixer

Service contract-computer

Banking

Legal Services

Image Consulting

Hairstyling

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Differences between Goods and services

Goods services

Tangible Intangible

Homogeneous Variable/heterogeneous

Production and distribution Production, distribution and

are separated from consumption consumption are simultaneous

processes.

A thing An activity or a process

core value produced in factory core value produced in buyerseller interactions

can be stocked cannot be stocked

Transfer of ownership no transfer of ownership

customers donot participate customers participate in the

in the production process production process

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Services Marketing

Characteristics of service

Intangibility

Inseparability

Perishability

Variability

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4 Is of Service

Intangibility Inconsistency

Inseparability

Inventory

Intangibility: is characteristics of service indicating that it has no

physical attributes and as a result impossible for a customer totaste , feel, hear or smell before they buy it.

Services products are mostly intangible:>>> they have to be

marketed with tangible evidence :.>>>. TANGIBILIZE THE

INTANGIBLES

A seal on the electric meter provides evidence that it hasbeen tested by competent authority.

A certificate issued by pollution control agency is a tangible

evidence of pollution under control.

A university degree is the tangible evidence of knowledge

acquired by you.

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Services Marketing

Intangibility : Cannot be seen , tasted,felt, heard or

smelled before purchase.

Tangibilize the intangible

e.g HDFC bank

1) People : quick service,courteous,helpful

2) Machinery : state of the art ATMs, WAN network etc will

connote modern and effective bank.

3) Place : Exterior, Interior ambience : should connote class.

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Services Marketing

Inseparability: Services are typically produced and

consumed simultaneously.

Perishability: Services cannot be stored.

Unused electric power, idle seats in bus, trainrepresent business which is lost forever.

Variability: Services are highly variable , since they

depend on who provides them and when and where theyare provided.

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Perishability

Empty seats in a stadium for a cricket match cannot be carried over to

provide more seating in the next match.

Empty seats in a 10.30 Sahara airlines flight from Mumbai to Delhi

cannot be carried over to provide more seating in next flight.

In a bank, hours on weekdays when tellers are idle cannot be stored

and used for Saturday when long lines are forming

INCONSISTENCY (variability) Indian airlines doesn't give the same quality of service on its each

flight. The performance of an artist in a theater is not of the dame standard in

each performance.

The front office manager in a hotel doesn't provide the same quality of

service to each customer he deals. 16


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Detailed list of characteristics of services

Intangibility

Perishability

Inseparability

Variability/heterogeneity

Ownership:(consumers cannot own the services)

Simultaneity: either users go to the service provider (beauty parlor) or

providers go to the users:----> channel of distribution is short

Quality measurement

Nature of demand : demand fluctuates considerably by season and by

day of the week and even hour of the day

e.g : public transport has maximum traffic during peak morning

and evening hours

Restaurant have peak lunch and dinner times

Heavy rush during Diwali /april, may school holidays for

trains etc. 17


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Classification of service-

by degree of labour intensiveness

Services MarketingServices Marketing

AutomatedATM'S,VendingMachine

Operatedbysemiskilledpeoplee.gDrycleaning,

cinema

Operatedbyskilledpeoplee.gAirlines

Equipment Based

Unskilledpeoplewatchman

SkilledpeopleMechanics

ProfessionalsDoctorsC.A

Peoplebased

Typesof services

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Classification of services-

By degree of tangibility:

1) rental goods: car rental, book rental, hotel room rental etc.

2) Owned goods: television repair, computer repair etc.

3) Non-goods: college education, tutoring, legal services

By market segment :

1) Final consumer: coaching, car wash, life insurance

2) Organizational consumer: Management accounting, legal

services, machinery repair etc.

By goals of provider:

1) Profit: Insurance firms, executive recruiting, airlines etc.

2) Non-profit : Museums, police force, postal service, libraries

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Classification of services

By skills of service provider:

1) Professional : Legal service, accounting services, medical

services

2) Non-professional : Uniform security, shoe shining, taxi etc.

By degree of customer contact1) High contact : universities, appliance repair, air travel, hotel

2) Low contact : Lawn care, automated car wash etc.

By degree of regulation:

1) Highly regulated: Mass transportation,hospitals, insurance,

utilities2)Limited regulated : catering, fast food

3) Non-regulated: house painting, leisure etc

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The above classifications of services is for general

guidelines. In practice services classification will be

combination of above factors

e.g : An organization providing coaching services forMBA aspirants appeals to final consumer (market

segment), offers an intangible service (degree of

tangibility), requires skills by the coach (skills of

provider), is profit oriented (goal of provider) , is notregulated , employ many coaches (degree of labor

intensiveness ) and constant student and coach

interaction(degree of customer contact)

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Classification of services-

Nature of service

PEOPLE THINGS

Services directed at peoplesbodies

Health carePassenger transportation

Beauty saloons

Exercise clinicsRestaurants

Clinics-medical

Services directed at goodsand other physical

PossessionsFreight transportation

Laundry and dry cleaning

Landscaping/lawn careIndustrial equipment repairs

Services directed at peoples

mind

Education

BroadcastingInformation servicesTheatres

Museums

Services directed at

intangible assets

Banking

Legal servicesSecuritiesInsurance

Accounting

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Type of relationship

between service company and customers

Membership relationship No formal relationship

InsuranceTelephone/mobile

subscriptionCollege enrollmentBanking

Trade associations

Radio stationPolice protection

LighthousePublic highway

Long distance phone calls

Commuter pass or ticketTheatre series subscription

Car rental

Mail servicePublic transportation

Restaurant

Co

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Classification of services-Scope of customization

and judgement in service deliveryHigh low

Extent to which

customer contactpersonnel exercise

Judgement in

meeting individual

Customer needs

HIGH

Surgery

Taxi servicesBeauty parlour

Education (tutorials)

Education (large

classes)College food

service

LOWTelephone serviceHotel services

Retail banking

Family restaurant

Public transportRoutine

appliance repair

Fast food jointsMovie theater

Spectator sports

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Classification of services- Nature of demand and

supply for the service

Extent to which

supply is

constrained

Extent of demand

fluctuation over

time

Wide Narrow

Peak demand can

usually be metwithout major

delay

Electricity

Telephone

Insurance

Legal servicesBanking

Laundry

Peak demand

regularly exceeds

capacity

Passenger

transportation

Hotels and motels

Restaurants

Theaters

Services similar to

above but with

insufficient

capacity for their

base level of

business

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Method of service deliveryNature of

interaction

between customerand service

organisation

Single site Multiple sites

Customer goes toservice

organisation

TheaterBarbershop

Beauty parlor

Creche

Bus serviceFast food chain

Service

organizationcomes to customer

Lawn care service

Pest controlTaxi on call

Mail delivery

Pizza homedelivery

Emergency repair

Customer andservice

organisation

transact at armslength (mail and e-

mail

Credit cardcompany Broadcast networkTelephone/electric

ity company

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Physical Evidence

Customers judge the service quality through the physical evidence

defn : The environment in which the service is delivered and where the

firm and the customers interact;and any tangible commodities that

facilitate performance or communicate the service.

Physical evidence enhances customers perception of quality.

The general elements of physical evidence include

(Organisational Physical facilities)(service scape)

1) Exterior facilities

Exterior design

Signage

Parking

Landscape

Surrounding environment 27


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Physical evidence

2) Interior Facilities

.Interior design

Equipment

Signage

LayoutAir quality/temperature

3) Other tangibles

Business cards

StationeryBilling statements

Reports

Employee dress/uniform

Brochures28


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Physical Evidence - customer point of viewSERVICE Other Tangibles

Airlines Airline lounges Tickets

Duty free shops Embarkation cards

Terminal Exteriors Uniformed employees

Air plane exterior Food

Air plane interior beverages

Theme Park Brochures

Tickets

costumed characters

uniform

Insurance Policy document

Brochures

Periodic statements

Physical Evidence

dcor

seats

ambiencemusic

Gate area

Parking area

Signage

Layout

Rides

ambience

Interiors

Lighting

Music

dcor

seats29


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Five Dimensions of Quality

Reliability: Ability to perform the promised service dependably and

accurately.

Assurance: Knowledge and accuracy of employees and their ability to

convey trust and confidence.

Tangibles: Appearance of physical facilities ;equipment , personnel,

and communication materials(physical evidence of facilities).

Empathy : caring , individualized attention the firm provides its

customers.

Responsiveness : willingness to help customer and provide prompt

service.

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Dimensions/Determinants of Quality-Berry.,

Parsuraman, ZeithmlDimension Definition/feature Examples

Tangible Appearance of physical facilities,equipment, personnel andcommunication materials

1)banks facilities2) Modern airline fleet3) Modern instruments used by the repair person.

Re laib ilitty Ability to perform the pro misedservices dependably and

accurately

1)When a loan officer s ays he will call back in 15minutes , does he do so

2)Is my credit card s tatement f ree of e rror?3)Air lines Ensuring That The Baggage Arrives OnSame Flight At Same Destination

4)Waiters br inging the ordered dishes tot he right table

Responsiveness Wil lingness to help customersand provide prompt s ervice

1) Responding to a cus tomer query qu ickly2) Is the electrician willing to give me specific time

when he will come and repair

Co mpetence Poss ess ion of the required s killsand knowledge to perform the

service

1)Tourist information staff knowing exactly whereplaces are located and best time to go and visit these

places

2) When call is made to credit card company, is theperson at the other end able to ans wer all queries.

3) competency of bank employees to transact therequirements of cus tomers

Courtesy Politeness , respect ,consideration and friendliness of

contact personnel

1)Does the bank employee have p leasant demeanour?2) Are the telephone operators in the credit card

company cons istently polite when answering calls?

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Dimensions/Determinants Of QualityCred itability Trus tworthiness , believability,

honesty of the service provider

1)Travel agent offering advice about long haul flights

2)Reputation of the bank

3)Are the interest rates/fees charged by the credit cardcompany consistent with the service provided

Security Freedom form danger, risk or

doubt

1) A hotel providing safe for expensive items2) How safe is the banks ATM machines3) Is my c redit card safe from unauthorised use

Access Approachability and ease of

contact

1) Hotel answering call in 2-3 rings2) Tourist information centers open 7 days a week

and located near the tourist spot3) Credit card company having 24 hour service and

toll free telephone number

Communication Keeping customers informed in a

language which they can

understand and listening to them,

explanation of services offered

1) Does the bank explain the various loan schemesin simple non technical language?

2) Does the repair firm call when they are unable tokeep a s cheduled appointment?

3) Does the tourism employee explain the various

tourist spots/[packages available in simple terms

Understanding thecustomer

Taking efforts to know thecustomers and their needs

1) Hotel reception staff making guests feel welcomeon arrival

2) The bank employee calling you by name when

you visit the bank

3) I s the repair firm flexible enough toaccommodate my schedule?

4) Does the stock broker suggest the variousinvestment plans possible after understanding the

financial objectives? 32


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The Parsuram, Ziethaml, Berry Model of

service quality-1985

Consumer evaluates service quality experience as the outcome of gapbetween expected and perceived quality.

The model identifies five gaps that can cause unsuccessful service

delivery.

Gap 1 : The Knowledge Gap or Lack of Understanding (gap between

consumer expectation and management perception)

e.g : Management team at a hotel might decide that provision of a

newspaper at bedroom door is not required but customer expects that.

This gap can be narrowed through adequate research

Gap 2: The standard Gap or Lack of Development ( Gap between

management perceptions and service quality specifications) e.g : The

management may not be committed to implement what is necessary

either due to ignorance, lack of vision , limited resources or wrong

strategy.

This gap be closed by standardizing service delivery process

wherever possible and setting right organization goals

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Gap 3: Delivery Gap ( gap between service quality specifications andthe service actually delivered). The management understands the

level of service desired by customer and specifies an appropriate set of

standards. However service delivery may not be of appropriate quality

owing to poor employee performance may be due to improper training

or less motivation.This gap can be eliminated by providing employees with

adequate support system and HR policies and improving teamwork

Gap 4 : Unrealistic expectations or the Internal Communication Gap (

Gap between service delivery and what is communicated about the

service to the consumers)This gap can be eliminated through efficient and effective

communication system and also by not giving false promises to

customers that leads to higher expectations

gap 5 : Service gap or Perception gap : ( Gap between perceived and

expected service) By bridging gaps 1-4 , gap 5 can be reduced

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SERVQUAL

A gap analysis research instrument

created by Parasuraman, Zeithamel, and BerryIntroduced in 1988

5

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SERVQUAL Model

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SERVQUAL Model GapsGap 1The difference between actual customer

expectations and managements idea or

perception of customer expectations

ManagementPerceptionsof CustomerExpectations

ExpectedService

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SERVQUAL Model GapsGap 2

Mismatch between managers expectations of

service quality and service qualityspecifications

ServiceQuality

Specifications

ManagementPerceptionsof Customer

Expectations8

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Poor delivery of service quality

ServiceDelivery

ServiceQuality

Specifications

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Differences between service delivery and

external communication with customer

ServiceDelivery

ExternalCommunications

to Customers

10

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Differences between Expected and Perceived

Quality

Expected

Service

Perceived

Service

11

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How customers apply quality determinants-examples

Service Reliability Responsiveness Assurance Empathy Tangibles

Car Repair Mean Time

failure,

problem fixed

right first time

and delivered

as promised

No waiting, easy

to access and

willingness to

respond to

requests

Knowledge of

the mechanics

to rectify the

fault/problem

Accessibility

and

understanding

of the problem

, calling

customer byname and

knowing the

history of the

car

Uniformed

employees,

comfortable

waiting area ,

good lay out of

workshop,modern

equipment for

repairing

Air Travel Keeping the

flights to

publishedschedule

Prompt and

speedy handling

of ticket ing,check in and

baggage control

Trusted name ,

competence

andexperienced

staff , high

performance

levels

Understanding

and

anticipatingneeds and

problems of

customers

Physical

facilities like

waiting lounge,check-in

counter,

baggage areas,

uniformed

employees and

aircraft. 42


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Tangibles Tangibles

Reliability Reliability

Responsiveness Responsiveness

competence Assurance

courtesy

credibility

security

access Empathy

Communication

Understanding the customer43


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People

Service encounter : For service marketers, the core of the service

element is the interaction between those providing services and the

customer , which is known as service encounter. Carlzon(1987)

described this interaction as moment of truth .

To achieve customer satisfaction appropriate processes are designed toensure that the service encounter meets customer expectations.

To deliver the satisfactory services , the employees of a company have

tio play an important role.

Employees must possess personal qualities , ability to understand and

satisfy customer needs , flexibility , skills and knowledge.

Friendly and warm employees increase customer loyalty.

The management in order to deliver satisfactory service must develop

jobs to satisfy individuals needs of employees and address following

issues:--- 44


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PEOPLE

A) Employees :

Recruitment

Training

MotivationTeam Work

B) Customers

Education

Training

C) Communicating

Culture and values

D) Employee Research45


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People

Employees

Customer perceives quality of service from appearance,

interpersonal behavior , attitude of contact personnel.

The frontline managers are the impression makers of an

organization In many services like hair dressing, ticketing,legal services, medical services, child care, it is the contact employee

who is delivering service .

The employees should be developed to deliver the quality dimensions

Reliability, Assurance, Tangibles, Empathy and Responsiveness.

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Requirements for effective segmentation Measurable : The size , purchasing power and profile of the segments can be

measured. Certain segmentation variables are difficult to measure. E.g It isdifficult to find the size of segment of teenage smokers who smoke primarily

to rebel against their parents.

Accessible .: The segment can be effectively reached and served. Suppose a

perfume company finds that heavy users of its brand are single women who

are out late at night and frequent bars . Unless these women live or shop at

certain places and are exposed certain media , they will be difficult to reach. Substantial : The segments are large and profitable enough to serve. A segment

should be the largest possible homogeneous group worth going after with a

tailored marketing program. e.g It would not be worthwhile for an automobile

manufacturer to develop cars for persons who are shorter then 4 feet.

Differentiable : segments are conceptually distinguishable and responddifferently to different marketing mix elements and programs . If married and

unmarried women respond similarly to sale of fur coats , they dont constitute

separate segments.

Actionable : Effective programs can be formulated for attracting and serving

the segments. For e.g A small airline identified 7 market segments but its staff

was too small to develop separate marketing programs for each segment

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PROCESS

Process is the way of undertaking transaction , supplying information

and providing services in a way which is acceptable to the customer

and effective to the organization.

Services are rendered and experienced simultaneously.(Inseparability).

It is the process through which consumers interact with serviceprovider.

E.g Tourism : booking systems for travel and accommodation.,

use of credit cards for payments, design of queuing system at visitor

attraction.

While designing a process , the process designer has to maintain abalance between functionality, security , aesthetics and ease of use by

customer..

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Critical Moments : Customer remains an integral part from pre-

consumption stage through to post-visit feedback.

By monitoring service encounters it is possible to design servicedelivery systems which guide the interaction between

1) front-line staff and customers

2) front-line and support staff

3) pre-delivery, delivery, post delivery

4) staff and suppliers.The above concept is called service blueprinting .

Service Blue Print : is a visual portrayal of a service plan.

It is a detailed map or flow chart. This is a

technique which is used when planning a new or revised process and

prescribing how it ought to function.Preparation of Blue Print :

1) Represent the service in the form of its molecular structure.

2) Break down the process into logical steps.

3) Recognize the variability in the process

4) Identify the back stage elements in the process49


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Blue Print of Gents barber -front stage.

Greet customer Direct Ask cut ask Receive Thank customer

on arrival customer to customer hair customer payments on departure.

waiting for for productarea haircut requirments

requiremnts

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Blue Print of Gents barber -.

front stage

Greet customer Direct Ask cut ask Receive Thank customer

on arrival customer to customer hair customer payments on departure.

waiting for for product

area haircut requirments

requiremnts

back stage

select

opening times furniture

training and update m eet prepare

order on style laundry towel sales rep cash statement

newspaper And apron

magazines bank transfer.sweep and

clear hair

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Service Mapping

Service Mapping is a technique which is used to portray an existing

service situation and provides an useful tool to assess and identify

service evidence opportunities.The process of service delivery, role of

customers and employees and the visible elements of the service are

simultaneously displayed by the service map. Service maps provides 2 additional features

1) provides greater attention to customer interaction

2) provides a visual representation of the structure of the service.

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Service Mapping

Line of intetraction

Line of visibility

line of internal interaction

line of implemetation

structure

Customer

Front line employees

support staff

management services

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Service Map of Overnight hotel stay

customer arrives gives bags check in go to room receive bags sleep shower call order eat check out

at hotel to bell boy room service food

contact person greets delivers bag delivers process

(visible and takes registers food check out

bag

invisible process registration take food

order

system

prepare food54

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