Marketing of services an introduction and facts
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The document discusses key concepts related to marketing of services. It begins by defining services and distinguishing their characteristics from goods. Services are intangible deeds, processes and performances. They are heterogeneous, inseparable from their production and consumption, and perishable. The document then covers India's large and growing services sector. It contributes over 50% to India's GDP across sectors like trade, transport, finance and real estate. The growth of services has increased demand for services marketing. Deregulation of industries like airlines and telecoms has given firms more marketing control. The final sections discuss frameworks for understanding services like the core-supplementary spectrum and service typology based on customer and possession processing. It also covers customer
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Marketing of services an introduction and facts
- 1. MARKETING OF SERVICES MBA M&S III SEMESTER
- 2. MODULE I Understanding Services and Consumer Behaviour
- 3. SERVICE SECTOR & ITS STRUCTURE WHAT ARE SERVICES? “ Services are deeds, processes, and performances.” Example IBM offers repair and maintenance service for its equipment, consulting services for IT and e-commerce applications, training services, Web Design and hosting, and other services. These services may include a final, tangible report, a website, or in the case of training , tangible instructional materials. For the most part, the entire service is represented to the client through problem analysis activities, meetings with the client, follow-up calls, and reporting- a series of deeds, processes, and performances. ** Similarly, the core offerings of hospitals, hotels, banks, and utilities comprise primarily deeds and actions performed for customers
- 4. Definition“ All economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced, and provides added value in forms (such as convenience, amusement, timeliness, comfort, or health) that are essentially intangible concerns of its first purchaser.”
- 5. Services are Different GOODS SERVICES RESULTING IMPLICATIONS Tangible Intangible Services cannot be inventoried, Services cannot be displayed, communicated Standardized Heterogeneous Each time experience differs Service quality depends on many uncontrollable factors Production separate Simultaneous production Customer participate in from Consumption and consumption and effect the transaction Mass production is difficult Perishable Nonperishable Services can not be resold, Right of ownership No ownership returned or stored Cannot be owned
- 7. SERVICE SECTOR IN INDIA The Services Sector contributes the most to the Indian GDP. The Sector of Services in India has the biggest share in the country's GDP, it accounts for more than 50% contribution. The various sectors under the Services Sector in India are construction, trade, hotels, transport, restaurant, communicati on and storage, social and personal services, community, insurance, financing, business, services, and real estate. Services marketing concepts and strategies have developed in response to the tremendous growth of service industries. Most new employment is provided by services. Strongest growth area for marketing.
- 8. Deregulation and Services Marketing Specific demand for services marketing concepts has come from deregulated industries and professional services. Deregulatory moves by governments have affected service industries such as airlines, banking, and telecommunications. As a result, marketing decisions that used to be tightly controlled by government are now partially, and sometimes totally, within the control of individual firms
- 17. Drivers Of Service Sector Growth Technology Globalization Market Deregulation Customization Digitalization Connectivity Industry Convergence New types of intermediaries
- 18. 10 Keys to Successfully Competing In the New Economy Be customer oriented Excel in process management Designing winning value propositions Providing outstanding customer service Offer innovative and high quality products Forge strong relationships with collaborators and customers Stress Retention Marketing (RM) –keeping & growing accounts Seek ways to continually add value for customers Understand the changing nature of Global Business Environment Have a long-term management perspective
- 19. NATURE OF SERVICES- TANGIBILITY SPECTRUM Intangibility Inseparability Variability Perishability Tangibility Perspective Services tend to be more intangible than manufactured products, and manufactured products tend to be more tangible than services. For example, the fast-food industry, while classified as a service, also has many tangible components such as the food, the packaging, and so on.”
- 21. Inseparability Typically produced, consumed and evaluated simultaneously. If the availability of Service-producers are constrained - Use pricing to reduce demand - Increase service efficiency -Serving multiple customers simultaneously - Increase speed of service providing Focus efforts on training of front staff for better service evaluation .
- 22. Variability Service quality depends heavily on the person providing them. How to secure service quality - Good hiring and training procedures - Identify customer service evaluation criteria - Standardized the service- performance process Monitor customer satisfaction
- 23. Perishability Services can not be stored. Vulnerable to fluctuations in demand. Demand Side Supply Side Differential Pricing Part-time employees Nonpeak Demand Peak-time efficiency Complementary Services Increased consumer participation Reservation Systems Shared Services Facilities for future expansion
- 27. FLOWER OF SERVICE Dozens of supplementary services can be classified into one of the following eight clusters. FACILITATING SERVICES Information Order Taking Billing Payment ENHANCING SERVICES Consultation Hospitality Safekeeping Exceptions
- 29. FACILITATING ELEMENTS INFORMATION Examples of Information elements Directions to service sites Schedules/service hours Prices Instructions on using core product/supplementary services Reminders Warnings Conditions of sale/service Notification of changes Documentation Confirmation of reservations Summaries of account activity Receipts and tickets
- 30. ORDER-TAKING ELEMENTS APPLICATIONS Membership in clubs or programs Subscription services(e.g. utilities) Prerequisite-based services(e.g. financial credit, college enrollment) ORDER ENTRY On-site order fulfillment Mail/telephone order placement E-mail/Website order placement RESERVATIONS AND CHECK-IN Seats Tables Rooms Vehicles or equipment rental Professional appointments Admission to restricted facilities (e.g. museums, aquariums)
- 31. BILLING ELEMENTS Periodic statements of account activity Invoices for individual transactions Verbal statements of amount due Machine display of amount due Self-billing (computed by customer) PAYMENT ELEMENTS Self-service Direct To Payee Or Intermediary Exact change in machine Cash handling & change giving Cash in machine with change Check handling returned Insert prepayment card Credit/charge/debit card handling Insert token Coupon redemption Electronics funds transfer Tokens, vouchers etc. Mail a check Enter credit card number online
- 32. Automatic deductions from Financial Deposits (e.g. bank charges) Control & Verification Automated systems (e.g. machine-readable tickets that operate gates) Human systems (e.g. toll collectors, tickets inspectors) ENHANCING SERVICES CONSULTATION SERVICES Advice Auditing Personal counseling Tutoring/training in product use Management or technical consulting HOSPITALITY ELEMENTS Greeting Food & Beverages Toilets & washrooms Waiting Facilities and amenities- Lunges, waiting areas, seating, weather protection, magazines, entertainment, newspapers Transport Security
- 33. SAFEKEEPING ELEMENTS Caring for Possessions Customers Bring with them Child Care Pet Care Parking facilities for vehicles Valet parking Coatrooms Luggage handling Storage space Safe deposit boxes Security personnel Caring for Goods Purchased (or Rented) by customers Packaging Transportation Delivery Installation Inspection & diagnosis Cleaning Refueling Preventive maintenance Repairs & renovation Upgrade
- 34. EXCEPTIONS ELEMENTS Special Requests in Advance of Service Delivery Children’s needs Dietary requirements Medical or disability needs Religious observances Deviations from standard operating procedures Handling Special Communications Complaints Compliments Suggestions Problem solving Warranties & guarantees against product malfunction Resolving difficulties caused by accidents , service failures, and problems with staff or other customers Assisting customers who have suffer an accident or medical emergency
- 35. CATEGORIZING SERVICE PROCESSES What is the nature of service act TANGIBLE ACTIONS Who or what is the direct recipient of the PEOPLE POSSESSIONS People Processing Possession Processing INTANGIBLE ACTIONS Mental stimulus processing Information processing
- 36. PEOPLE PROCESSING Customers need to ne physically present. Customers must be prepared to spend time co-operating with service providers. Strategy- Design simple processes in service factory Design services cape around the customer Customize as far as possible Enhance the experience for repurchase People’s Bodies Tangible Actions Beauty Salons Passenger Transports Health care Gyms Restaurants Shopping
- 37. MENTAL STIMULUS PROCESSING Services that interact with people's mind include education, news and information. Strategy- Easy on the mind of the consumer Add tangible clues Feedbacks & follow ups People’s Mind Intangible Actions Education Broadcasting Museum Theatre
- 38. POSSESSION PROCESSING Physical treatment to customers belongings Production and consumption are often not simultaneous ~ quasimanufacturing Customers are less physically involved Drop off and pick up Service factory may have to go to the customer Strategy – Problem must be solved with some tangible enhancement Accompanied with a convenient service Service Guaranteed People’s Tangible Possession Tangible Actions Freight Transport Auto Repairs Laundry & Dry Cleaning Tailoring Veterinary care
- 39. INFORMATION PROCESSING Most intangible form of service output but may be transformed into more tangible forms Customer involvement may be fairly limited Face to face contact is not strictly necessary but often desirable Relationships and trust are important Strategy - Intensive use of IT “Anywhere, anytime” New service features through websites, email, internet More opportunities for self service. People’s Intangible Assets Intangible actions Banking Insurance Legal services Accounting
- 40. SELF SERVICE TECHNOLOGIES Ultimate form of customer involvement ◦ Customers undertake specific activities using facilities or systems provided by service supplier ◦ Customer’s time and effort replace those of employees e.g. Internet-based services, ATMs, self-service gasoline pumps Information-based services can easily be offered using SSTs ◦ Used in both supplementary services and delivery of core product e.g. eBay – no human auctioneer needed between sellers and buyers Many companies seek to encourage customers to serve themselves using Internet-based self-service ◦ Challenge: getting customers to try this technology
- 41. PSYCHOLOGICAL FACTORS RELATED TO THE USE OF SSTS SSTs advantages ◦ Time savings ◦ Cost savings ◦ Flexibility ◦ Convenience of location ◦ Greater control over service delivery ◦ High perceived level of customization SSTs disadvantages ◦ Anxiety and stress experienced by customers who are uncomfortable with using them ◦ Some see service encounters as social experiences and prefer to deal with people
- 42. CONSUMER BEHAVIOUR IN SERVICES Search Qualities attributes a consumer can determine prior to purchase of a product Experience Qualities attributes a consumer can determine only after purchase or during consumption of a product Credence Qualities characteristics that may be impossible to evaluate even after purchase and consumption
- 43. Continuum of Evaluation for Different Types of Products Most Goods Easy to evaluate Most Services Difficult to evaluate High in search qualities High in experience High in credence qualities qualities
- 44. SERVICE ENCOUNTERS & TYPES A service encounter is a period of time during which customer interact directly with a service. It is also called as "MOT”. The heart of a service is the encounter between the server and the customer. It is here where emotions meet economics in real time and where most people judge the quality of service. TYPES OF SERVICE ENCOUNTERS REMOTE ENCOUNTERS Encounters can occur without any direct human contact , such as, when a customer interacts with a bank through the ATM system. It also occur when the firm sends its billing statements or communicates other types of information to customers by mail. Tangible evidence of the service and the quality of the technical processes and systems become the primary bases for judging quality.
- 45. PHONE ENCOUNTERS In many organizations ( such as insurance companies, utilities, & telecommunications) , the most frequent type of encounter between an end customer and the firm occurs over the telephone. Tone of voice, employee knowledge, and the effectiveness/efficiency in handling customer issue become important criteria for judging quality in these encounters. FACE-TO-FACE ENCOUNTERS This type of encounter occurs between an employee and a customer in direct contact. For example- IBM, in a business-to-business setting direct encounters occur between the business customer and salespeople. Both verbal and non-verbal behaviour are important determinants of quality, as are tangible cues such as employee dress and other symbols of service(equipment, informational brochures, physical setting).
- 47. A Service Encounter Cascade for a Hotel Visit Check-In Bellboy Takes to Room Restaurant Meal Request Wake-Up Call Checkout
- 48. EXPANDED SERVICE MIX Product Price Place Promotion People Process Physical Evidence
- 49. PRODUCT PLACE PROMOTION PRICE Physical good Channel type features Promotion blend Flexibility Quality level Exposure Salespeople Price level Accessories Intermediaries Advertising Terms Packaging Warranties Outlet location Sales promotion Transportation Publicity Product lines Storage Branding Differentiation Allowances
- 50. PEOPLE PHYSICAL EVIDENCE PROCESS Employees Facility design Flow of activities Customers Equipment Number of steps Communicating culture and values Signage Level of customer involvement Employee research Employee dress Other tangibles
- 51. MODULE II FOCUS ON CUSTOMERS
- 52. Possible Levels of Customer Expectations
- 53. Dual customer expectations levels and the Zone of Tolerance Desired Service Zone of Tolerance Adequate Service
- 54. Zones of Tolerance for Different Service Dimensions Desired Service Level of Expectation Zone of Tolerance Desired Service Adequate Service Zone of Tolerance Adequate Service Reliability Tangibles
- 55. Factors That Influence Desired Service Lasting Service Intensifiers Desired Service Personal Needs Zone of Tolerance Adequate Service
- 56. Factors That Influence Adequate Service Temporary Service Intensifiers Desired Service Perceived Service Alternatives Self-Perceived Service Role Situational Factors Zone of Tolerance Adequate Service Predicted Service
- 57. Factors That Influence Desired and Predicted Service Explicit Service Promises Implicit Service Promises Word-of-Mouth Desired Service Zone of Tolerance Adequate Service Past Experience Predicted Service
- 58. ZONE OF TOLERANCE Services are heterogeneous i.e. performance may vary across providers, across employees of same provider. The extent to which customer recognize and are willing to accept this variation is called Zone of tolerance It is the range where customers do not particularly notice service performance Service Marketers can influence:
- 59. CUSTOMER PERCEPTIONS IN SERVICE Factors which influence consumers’ perceptions Factors which influence satisfaction Dimensions of service quality Service encounters
- 60. Customer Perceptions of Quality and Customer Satisfaction
- 61. Factors Influencing Customer Perception Product/service quality Specific product or service features Consumer emotions Attributions for service success or failure
- 62. Factors Influencing Customer Satisfaction Perceptions of equity or fairness Other consumers, family members, and coworkers Price Personal factors ◦ the customer’s mood or emotional state ◦ situational factors
- 63. Outcomes of Customer Satisfaction Increased customer retention Positive word-of-mouth communications Increased revenues
- 64. SERVICE QUALITY customer’s judgment of overall excellence of the service provided in relation to the quality that was expected. Service quality assessments are formed on judgments of: ◦ outcome quality ◦ interaction quality ◦ physical environment quality The
- 65. The SERVQUAL dimensions – Perceived Service Quality Reliability (dependability, accurate performance) Assurance (competence, courtesy, credibility & security) Tangibles (appearance of physical elements) Empathy (easy access, good communications & customer understanding) Responsiveness (promptness & helpfulness)
- 66. The Five Dimensions of Service Quality Reliability Assurance Tangibles Ability to perform the promised service dependably and accurately. Knowledge and courtesy of employees and their ability to inspire trust and confidence. Physical facilities, equipment, and appearance of personnel. Empathy Caring, individualized attention the firm provides its customers. Responsiveness Willingness to help customers and provide prompt service.
- 67. RELIABILITY Providing service as promised Dependability in handling customers’ service problems Performing services right the first time Providing services at the promised time Maintaining error-free records SERVQUAL Attributes EMPATHY RESPONSIVENESS Keeping customers informed as to when services will be performed Prompt service to customers Willingness to help customers Readiness to respond to customers’ requests ASSURANCE Employees who instill confidence in customers Making customers feel safe in their transactions Employees who are consistently courteous Employees who have the knowledge to answer customer questions Giving customers individual attention Employees who deal with customers in a caring fashion Having the customer’s best interest at heart Employees who understand the needs of their customers Convenient business hours TANGIBLES Modern equipment Visually appealing facilities Employees who have a neat, professional appearance Visually appealing materials associated with the service
- 68. IMPACT OF SERVICE FAILURES AND RECOVERY Service Failure occurs when service performance that falls below a customer’s expectations in such a way that leads to customer dissatisfaction. Service Recovery refers to the actions taken by an organization in response to a service failures. Failures occur for all kind of reasons -the service may be unavailable when promised -it may be delivered late or too slowly -the outcome may be incorrect or poorly executed -employees may be rude or uncaring
- 70. Customer Complaint Actions Following Service Failure
- 71. TYPES OF COMPLAINERS Passives: least likely to take any action, say anything to the provider, spread negative WOM, or complain to a third party; doubtful of the effectiveness of complaining Voicers: actively complain to the provider, but not likely to spread negative WOM; believe in the positive consequences of complaining - the service provider’s best friends!
- 72. Irates: more likely to engage in negative WOM to friends and relatives and to switch providers; average in complaints to provider; unlikely to complain to third parties; more angry, less likely to give provider a second chance Activists: above average propensity to complain on all levels; more likely to complain to a third party; feel most alienated from the marketplace compared to other groups; in extreme cases can become “terrorists”
- 74. Fixing the Customer When customers take the time to complain, they generally have high expectations. ◦ They expect the company to respond quickly and to be accountable. ◦ They expect to be compensated for their grief and for the hassle of being inconvenienced. ◦ They expect to be treated nicely in the process!
- 75. Treat Customers Fairly Outcome Fairness ◦ Outcome (compensation) should match the customer’s level of dissatisfaction; equality with what other customers receive; choices Procedural Fairness ◦ Fairness in terms of policies, rules, timeliness of the complaint process; clarity, speed, no hassles; also choices: “What can we do to compensate you…?” Interactional Fairness ◦ Politeness, care, and honesty on the part of the company and its employees; rude behavior on the part of employees may be due to lack of training and empowerment
- 76. Fixing the Problem After “fixing the customer” the company should address the actual problem that created the poor service delivery in the first place. If the problem is likely to recur for other customers, then the service delivery process may need to be fixed, too. Strategies for fixing the problem include encouraging and tracking complaints, learning from recovery experiences and from lost customers, and making the service fail-safe.
- 77. Service Guarantees Guarantee = an assurance of the fulfillment of a condition (Webster’s Dictionary) In a business context, a guarantee is a pledge or assurance that a product offered by a firm will perform as promised and, if not, then some form of reparation will be undertaken by the firm For tangible products, a guarantee is often done in the form of a warranty Services are often not guaranteed ◦ Cannot return the service ◦ Service experience is intangible (so what do you guarantee?)
- 78. Characteristics of an Effective Service Guarantee Unconditional ◦ The guarantee should make its promise unconditionally – no strings attached Meaningful ◦ The firm should guarantee elements of the service that are important to the customer ◦ The payout should cover fully the customer’s dissatisfaction Easy to Understand ◦ Customers need to understand what to expect ◦ Employees need to understand what to do Easy to Invoke ◦ The firm should eliminate hoops or red tape in the way of accessing or collecting on the guarantee
- 79. Benefits of Service Guarantees A good guarantee forces the company to focus on its customers. An effective guarantee sets clear standards for the organization. A good guarantee generates immediate and relevant feedback from customers. When the guarantee is invoked there is an instant opportunity to recover. Information generated through the guarantee can be tracked and integrated into continuous improvement efforts. A service guarantee reduces customers’ sense of risk and builds confidence in the organization.
- 80. When to Use (or Not Use) a Guarantee Reasons companies might NOT want to offer a service guarantee: ◦ Existing service quality is poor ◦ A guarantee does not fit the company’s image ◦ Service quality is truly uncontrollable ◦ Potential exists for customer abuse of the guarantee ◦ Costs of the guarantee outweigh the benefits ◦ Customers perceive little risk in the service