Services Marketing
A THEORITICAL AND PRACTICAL PERSPECTIVE
Definitions of MARKETING
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The performance of business activities that direct the flow of goods and services from producer to consumer. Getting the right goods , to the right people in the right place , at the right time , at the right price , with the right level of communication profitably. Identifying the needs, wants , desires of consumers and fulfilling them in such a way that the customer is delighted and the company objectives are met profitably. Solving customer problems profitably.
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Difference Between Marketing & Sales
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2. 3. 4.
Marketing
Focus on customer Is about profit this year Delighting the customer Both new and repeat customers important with focus on repeat customers Long term vision
Sales
Focus on seller (product) is about revenue this week converting product into cash New customers is a priority, not bothered much about repeat customers. Short Term Outlook (week/ month)
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SEGMENTATION Segmentation Base A) Geographic
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Variables
North South, East, West Major Metros, Sub –Metros, Town Hot, cold, humid
Region City Size
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Climate
B)
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Psychographic
Lifestyle Conservative, Status Seekers Extrovert, Introvert, Aggressive
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Personality
SEGMENTATION
C) Demographic ? Age ? Sex ? Family Size ? Education ? Occupation
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Income Religion
0-11,12-19,20-34 etc. Male, Female 1-2,3-4,5+ school, Graduate, PG Farmer, Professional, Housewife, Retired Even today it’s the leader. Law of Category : category be first in”. IBM::- First in mainframe DEC :- First in minicomputer DELL :- PC thru Direct Marketing “f you can’t be the first in a
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, set up a new category , you can
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Law of Mind the first
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Better to be first in mind then to be in the market
place.
World’s first PC:- MITS ALTAIR 8800 in the mind :- APPLE World’s first Mainframe : Remington Rand in the mind : IBM
Some Important Marketing LawsTrout & Ries
4.) Law of Perception: Marketing is not a battle of products , it’s a battle of perceptions. e.g. :- 3 largest selling Japanese imported cars in USA are Honda, Toyota, Nissan But in Japan , Toyota outsells Honda Because : In Japan Honda stands for motorcycle whereas in USA Honda is Motorcar. So in Japan , the perception is how can a motorcycle company make great motorcars. 5) Law of Focus :The most powerful concept in marketing Owning a word in the mind of the consumer. CREST :--? CAVITIES VOLVO :--? SAFETY MERCEDES :--? ENGINEERING PEPSI :----? YOUTH BMW :-----? DRIVING
6) Law of Exclusivity: Two companies cannot own the same word in the consumers mind. e.g. : DURACELL owns the long lasting word . Eveready’s Energizer just cannot own long lasting. Asian paints vs. NEROLAC EXCEL(YAMRAJ AD.) 7) Law of Ladder : The strategy to use depends on which rung you occupy on the ladder. Hertz:- Leader in car rental. AVIS: “ Avis is only no.2 in RENT-A-CARS. So why go with us? WE TRY HARDER”.
8) Law of Division : Over time a category will divide and become two or more categories. Computers
Mainframes(IBM)
MINIS(DEC) Workstations (SUN)
Super (CRAY) Fault Tolerant (Tandem)
PC (Apple, Compaq)
PRODUCT
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Defn: A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. e.g. :- Physical Goods :-- Cars, W/M Services :- Training Persons :- Michael Jackson Ideas : - Family Planning
Five Levels of Product Level 1 : Core Benefit : Fundamental benefit that the customer is buying . E.g. :- Hotel :-Rest, CTV :Entertainment
Product
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Level 2:- Generic Benefit : Basic version of the product. e.g. : Hotel : consists of a building with rooms. W/M : Metal/plastic body with console panel Level 3 : Expected Product : A set of attributes and conditions that buyers normally expect and agree when they purchase the product. e.g. : Hotel : Clean Bed, soap, towels, telephone CTV : Tuning on remote, cable ready.
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Product
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Level 4 : Augmented Product : includes additional services and benefits that distinguishes the company’s offer from competitor’s offers. e.g. : Hotel : Complimentary breakfast, Flat CTV, 24 Hrs checkout, etc. Level 5: Potential Product: All augmentations and transformations that the product might ultimately undergo in the future. e.g. : Computer compatible TV (which can operate at room temperatures)
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Product width : Different Product categories the company is in Product Length : In each product category how many products are available Product depth : Variants that are offered for each product.
Product Strategies
1) Downward Stretch 2) Upward Stretch 3) Two-way Stretch
BRANDING
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“Products don’t sell , Brands sell” The ultimate aim of product manager must be to convert the product into a successful brand. TOKYO TSHUSIN KOGYO KABUSHIKI KAISHA English name : Tokyo Telecommunications Engineering company
Japanese Name :
BRANDING
CITIBANK : The citi never sleeps. ? HSBC : The world’s local bank. ? Canara Bank: Growing to serve. Serving to grow. ? L’OREAL: Because you’re worth it. ? Maybelline: May be she’s born with it. May be its Maybelline. ? GO GOA : 365 days on a holiday. ? Kerala : God’s own country. ? Retreat : city ends. Life begins. ? KL : VISION CITY ? Malaysia : Truly Asia. ? Singapore : Singapore Roars ? Hong Kong: Live it up.
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BRANDING
BPL : Believe in the best. ? Videocon : Bring home the leader Technology for health and Pleasure. ? Sansui :Better then the best Born in Japan . Entertaining the world. ? LG
igitally yours. ? Nokia :Connecting people ? Motorola : Intelligence everywhere. ? Ceat Tyres : Born Tough. ? Femina : For the woman of substance. For generation W.
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BRANDING
Orange : Wherever you go, our network follows. ? Reliance India Mobile : Kar lo Duniya Mutthi Mein. ? Aaj Tak : Sabse Tej. ? Chevrolet optra : The new name for luxury. ? Santro Xing : The sunshine car. ? Tata Indigo: Spoil Yourself. ? Mitsubishi Lancer: Always in control. ? Raymond : For the complete man. ? Tata Salt : Desh ka namak. ? Louis Philippe: The upper crest.
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BRANDING
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Defn:- A name ,symbol, design which is intended to identify the goods ,services of one company and to differentiate the goods from those of competitors. BRAND NAME DECISION
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Individual Brand Name : P & G :- Ariel, Pantene A Blanket Family Name : Philips Company Name combined with individual product names:Britannia 50-50 Videocon Bazoomba
BRANDING
Brand Strategy ? Line Extension ? Brand Extension ? Multi Brand ? New Brands
PRICING
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Differential Pricing : Same brand is sold at different prices/different times to consumers. Competitive Pricing : Prices are set to exploit competitive position. Product Line Pricing : Related brands are sold at prices that exploit mutual dependencies.
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Pricing
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DIFFERENTIAL PRICING : 1) Periodic Discounting : -? “Skimming Strategy” Cater to early adopters ----after that the price reduced to cater to the next group of buyers. e.g. : BPL MOBILE/ORANGE. 2) Second Market Discounting : “Dumping” -?Firm’s selling Price in foreign market is below its average cost in home country. (e.g. dumping by china)
Pricing
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B) COMPETITIVE PRICING :
1) Penetration Pricing : Price substantially below main competitors. (AKAI, AMUL) 2) Geographic Pricing : In same country prices different to take advantage of sales tax/transportation savings.
Pricing
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Product Line Pricing : 1) Complementary Pricing : Captive Pricing : Razor & Blades, Cameras & Films , Auto & Spare Parts, VCD Player & Software. Two Part Pricing : Service Industry :Fixed + variable usage fee (MTNL) Entry fee + every ride /game/place separate pricing :-- SENTOSA ISLAND (SINGAPORE)
2) PREMIUM PRICING : Basic & Deluxe
Hotel rooms, Front & Tear Auditorium seats, Basic & Deluxe cars:Firms make profit on Premium versions
Pricing
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Product Line Pricing 3) Product Bundling : Season pass cheaper then daily tickets Car + accessories , the price is lesser then if each item is bought separately. 4) Image Pricing : Firms bring out an identical version of its current product with a different name/packaging and a higher price. The intention is to signal quality.
Promotion
Advertising ? Sales Promotion ? Personal Selling ? PR
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Sales promotion
Consumer Promotion (Manufacturer point of view) ? To increase sales of self brand ? To divert attention from competition brands. ? Enables manufacturers to adjust to periods of low demand. ? Induce customers to try new products/brands. Customer point of view. ? Enables customers to have a better understanding of real prices. ? Consumers feel good that they get value for money deals.
Sales Promotion
Consumer Promotion Tools: ? Samples : Free samples with TOI , Mid-day, Filmfare. ? Coupons: FMCG companies: 15% discount coupon or some rupees off for the next purchase. ? Price Packs: Pack of 2 or more at reduced price. ? Banded Pack : Two related products banded together (toothpaste with toothbrush, VCD player with software.) ? Contests : Answer a few questions, write a slogan. ? Free Trials: Free auto drives. ? Warranties: 3 yr on CTV, 7 yrs on compressor.
Sales Promotion
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Scratch ’n’ win offer: Money back offer Loyalty promotion: Frequent Flyer programs Cross promotion: Two related product categories promoting together , mostly the second product is free. Tie-in promotion : used in conjunction with consumer durables wherein total is lower then if bought separately.
Dealer promotion Tools
Annual Schemes ? Quarterly schemes: ? Scratch ’n’ win scheme:
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Distribution Strategies
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EXCLUSIVE DISTRIBUTION : Distributing through company outlets or franchisee e.g. : LG PLAZA, HONDA Showrooms:- only company products are available.
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INTENSIVE DISTRIBUTION : Placing the products in as many outlets as possible. Products : Soaps, cigarettes, soft drinks , BPL
MOTS etc. ( each outlet has various brands
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Distribution Strategies
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SELECTIVE DISTRIBUTION : Here companies select a combination of Exclusive distribution (only company’s products) & Intensive Distribution (some important outlets which are multibrand outlets) e.g. SAMSUNG , VIDEOCON
Criteria for choosing Channel Partners
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Financial Strength of Prospective Channel Partner : revenue, P& L statement , balance sheet etc. Sales Strength : no. of salesmen and their technical competency Product Lines: 1) Competitive products, 2) Compatible products 3) Complementary products. Reputation : 1) leadership 2) Well Established 3) Level of expertise. Market coverage : Geographic coverage , outlets per market area. Sales Performance.
Criteria for choosing channel partners
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Advertising & Sales promotion programs. Ordering & Payment Procedures. Willingness to share data : a) customers b) Inventory c) sales figures. Installation & Repair services .
Factors Retailers use in choosing companies
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Accepts unsold or damaged merchandise returns Has quick and easy ordering procedures Provides prompt delivery Maintains adequate supply Good reputation /Brand Name Has a large product range. Provides deliveries in lots as desired by retailer. Promotes brand on a regular basis. Provides adequate margins. Offers good schemes, quantity discounts Extends credit > 30 days. Has good competent sales team/product/technical team. Ensures prompt service Provides good store displays (POP)
Distribution
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Retailing : Consists of the activities involved in selling goods and services to ultimate consumers. A retail sale is one in which the buyer is an ultimate consumer and the buying motive for a retail sale is always personal or family satisfaction derived from the final consumption of item being purchased. Wholesalers: Wholesaling is concerned with the activities of those persons or establishments which sell to retailers and other merchants , and/or to industrial , institutional and commercial users , but who don’t sell in significant amount to ultimate consumers.
Functions Performed by wholesalers/Retailers for manufacturers.
Market coverage: Convenience to customers ? Sales contact : company sales force would be calling on a relatively small number of wholesalers/retailers rather then the much larger number of customers. ? Inventory Holding: Stock the products of the companies that they represent.They reduce the manufacturers financial burden and risk associated with holding large inventories. ? Market Information: ? Customer Support : service, spare parts.
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Functions Performed by wholesalers/Retailers for Customers
Product Availability: ready availability of range of products. ? Assortment,convenience: Brings together from a variety of manufacturers an assortment of products that can greatly simplify the customer’s selection and ordering tasks. ? Bulk-Breaking : Distributor buys in bulk and gives to customers in unit of one : SKU. ? Credit and Financial Assistance ? Advice and Technical Support
installation ->A/C,PC) ? Customer Service : Delivery , after sales help .
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Services Marketing
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Defn: A service is any act or performance that one party can offer to another that is essentially intangible and doesn't result in the ownership of anything . Its production may or may not be tied to a physical product. E.g : Airlines, hotels,banks,insurance,brokers , real estate companies, police,post office, colleges,hospitals.
Reasons for growth in service industry
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Changing lifestyle
Increase in affluency Increase in leisure time women in working places
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Changing world
Increased life expectancy Increased complexities in life
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Changing economies
Globalisation Privatisation/deregulation Changing technology Range of new products Range of complex products
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A Partial List of services
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Transportation services Railways,Airlines,Local/Interstate Passenger Transportation, Road transportation, 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
A Partial list of services
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Real Estate Services
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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.
A Partial List of Services
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Business & Professional Services Management Consultancy, Legal, Accounting(C.A) Other services Security, Lawn care, pet care, printing , data processing , internet café, 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
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Good is a set of tangible physical attributes assembled in an identifiable 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
GOODS-SERVICES CONTINUUM
PURE GOODS
Goods Related
Pizza-Food service Bus-Transport equipment leasing Hotel roomLodging
Service Related
Financing-car Warranty-mixer Service contractcomputer
Pure Services
Banking Legal Services Image Consulting Hairstyling
Televisions Lipstick oven car
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 buyer seller interactions can be stocked cannot be stocked Transfer of ownership no transfer of ownership customers donot participate customers participate in
Services Marketing
Characteristics of service
Intangibility ? Inseparability ? Perishability ? Variability
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4 Is of Service
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Intangibility Inconsistency Inseparability Inventory Intangibility: is characteristics of service indicating that it has no physical attributes and as a result impossible for a customer to taste , 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 has been 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.
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
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Inseparability: Services are typically produced and consumed simultaneously. Perishability: Services cannot be stored. Unused electric power, idle seats in bus, train represent business which is lost forever. Variability: Services are highly variable , since they depend on who provides them and when and where they are provided.
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Perishability
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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)
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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.
Detailed list of characteristics of services
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Intangibility Perishability Inseparability Variability/heterogeneity Ownershipconsumers 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.
Classification of serviceby degree of labour intensiveness
Services Marketing
Types of services
Equipment Based
People based
Automated Operated by semi ATM'S, skilled people Vending Machines e.g Dry cleaning, cinema
Operated by skilled people e.g Airlines
Unskilled people watchman
Skilled people Mechanics
Professionals Doctors C.A
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
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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 contact 1) 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, utilities 2)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 for MBA 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 not regulated , employ many coaches (degree of labor intensiveness ) and constant student and coach interaction(degree of customer contact)
Classification of servicesNature of service
PEOPLE
T a n g I b l e I n t a n g I b l e
THINGS Services directed at goods and other physical Possessions Freight transportation Laundry and dry cleaning Landscaping/lawn care Industrial equipment repairs Services directed at intangible assets Banking Legal services Securities Insurance Accounting
Services directed at peoples bodies Health care Passenger transportation Beauty saloons Exercise clinics Restaurants Clinics-medical Services directed at people’s mind Education Broadcasting Information services Theatres Museums
Type of relationship between service company and customers
C
o n t I n u o u s D I s c r e t e
Membership relationship Insurance Telephone/mobile subscription College enrollment Banking Trade associations Long distance phone calls Commuter pass or ticket Theatre series subscription
No formal relationship Radio station Police protection Lighthouse Public highway
Car rental Mail service Public transportation Restaurant
Classification of services-Scope of customization and judgement in service delivery High low
Extent to which customer contact personnel exercise Judgement in meeting individual Customer needs HIGH LOW Telephone service Hotel services Retail banking Family restaurant Public transport Routine appliance repair Fast food joints Movie theater Spectator sports Surgery Taxi services Beauty parlour Education (tutorials) Education (large classes) College food service
Classification of services- Nature of demand and supply for the service
Extent to which supply is constrained Peak demand can usually be met without major delay Peak demand regularly exceeds capacity Extent of demand fluctuation over time Wide Electricity Telephone
Passenger transportation Hotels and motels Restaurants Theaters
Narrow Insurance Legal services Banking Laundry Services similar to above but with insufficient capacity for their base level of business
Method of service delivery
Nature of interaction between customer and service organisation Customer goes to service organisation Single site Multiple sites
Theater Barbershop Beauty parlor Creche Service Lawn care service organization Pest control comes to customer Taxi on call Customer and Credit card service company organisation transact at arm’s length (mail and email
Bus service Fast –food chain
Mail delivery Pizza home delivery Emergency repair Broadcast network Telephone/electric ity company
Physical Evidence
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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 customer’s 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
Physical evidence
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2) Interior Facilities .Interior design Equipment Signage Layout Air quality/temperature 3) Other tangibles Business cards Stationery Billing statements Reports Employee dress/uniform Brochures
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Physical Evidence - customer point of view
SERVICE Airlines Physical Evidence Airline lounges Duty free shops Terminal Exteriors Air plane exterior Air plane interior décor seats ambience music Theme Park Gate area Parking area Signage Layout Rides Lighting Music Insurance Interiors décor seats ambience Other Tangibles Tickets Embarkation cards Uniformed employees Food beverages
Brochures Tickets costumed characters uniform
Policy document Brochures Periodic statements
Five Dimensions of Quality
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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.
Dimensions/Determinants of Quality-Berry., Parsuraman, Zeithml
Dimension Tangible Definition/feature Appearance of physical facilities, equipment, personnel and communicat ion materials Ability to perform the pro mised services dependably and accurately Examples 1)bank’s facilities 2) Modern airline fleet 3) Modern instruments used by the repair person. 1)When a loan officer says he will call back in 15 minutes , does he do so 2)Is my credit card statement free of error? 3)Airlines Ensuring That The Baggage Arrives On Same Flight At Same Destination 4)Waiters bringing the ordered dishes tot he right table 1) 2) Responding to a customer query quickly Is the electrician willing to give me specific time when he will co me and repair
Relaib ilitty
Responsiveness
Willingness to help customers and provide prompt service
Co mpetence
Possession of the required skills and knowledge to perform the service
Courtesy
Politeness , respect , consideration and friendliness of contact personnel
1)Tourist informat ion staff knowing exactly where places are located and best time to go and visit these places 2) When call is made to credit card co mpany, is the person at the other end able to answer all queries. 3) co mpetency of bank emp loyees to transact the requirements of customers 1)Does the bank employee have pleasant demeanour? 2) A re the telephone operators in the credit card company consistently polite when answering calls?
Dimensions/Determinants Of Quality
Cred itability Trustworthiness, 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 card company consistent with the service provided 1) 2) 3) 1) 2) 3) Co mmunicat ion Keeping customers informed in a language which they can understand and listening to them, explanation of services offered 1) 2) 3) Understanding the customer Taking efforts to know the customers and their needs 1) 2) 3) 4) A hotel providing “safe” for expensive items How safe is the banks ATM machines Is my credit card safe fro m unauthorised use Hotel answering call in 2-3 rings Tourist informat ion centers open 7 days a week and located near the tourist spot Cred it card co mpany having 24 hour service and toll free telephone number Does the bank exp lain the various loan schemes in simple non technical language? Does the repair firm call when they are unable to keep a scheduled appointment? Does the tourism emp loyee exp lain the various tourist spots/[packages available in simp le terms Hotel reception staff making guests feel welco me on arrival The bank employee calling you by name when you visit the bank I s the repair firm flexible enough to accommodate my schedule? Does the stock broker suggest the various investment plans possible after understanding the financial object ives?
Security
Freedom form danger, risk or doubt
Access
Approachability and ease of contact
The Parsuram, Ziethaml, Berry Model of service quality-1985
Consumer evaluates service quality experience as the outcome of gap between 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 and the 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
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A gap analysis research instrument
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SERVQUAL Model
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SERVQUAL Model Gaps
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Gap 1
? The difference between actual customer expectations and management’s idea or perception of customer expectations
Management Perceptions of Customer Expectations
Expected Service
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SERVQUAL Model Gaps
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Gap 2
? Mismatch between manager’s expectations of service quality and service quality specifications
Service Quality Specifications
Management Perceptions of Customer Expectations
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SERVQUAL Model Gaps
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Gap 3
? Poor delivery of service quality
Service Delivery
Service Quality Specifications
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SERVQUAL Model Gaps
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Gap 4
? Differences between service delivery and external communication with customer
Service Delivery
External Communications to Customers
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SERVQUAL Model Gaps
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Gap 5
? Differences between Expected and Perceived Quality
Expected Service
Perceived Service
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How customers apply quality determinantsexamples
Service Car Repair Reliab ility Mean Time failure, problem fixed right first time and delivered as promised Responsiveness No waiting, easy to access and willingness to respond to requests Assurance Knowledge of the mechanics to rectify the fault/problem Empathy Accessibility and understanding of the problem , calling customer by name and knowing the history of the car Understanding and anticipating needs and problems of customers Tangibles Unifo rmed emp loyees, comfo rtable waiting area , good lay out of workshop, modern equipment for repairing Physical facilities like waiting lounge, check-in – counter, baggage areas, uniformed emp loyees and aircraft.
Air Travel
Keeping the flights to published schedule
Pro mpt and speedy handling of ticketing, check in and baggage control
Trusted name , competence and experienced staff , high performance levels
Tangibles ? Reliability ? Responsiveness ? competence ? courtesy ? credibility ? security ? access ? Communication ? Understanding the customer
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Tangibles Reliability Responsiveness Assurance
Empathy
People
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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 to ensure 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
PEOPLE
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A) Employees : Recruitment Training Motivation Team Work B) Customers Education Training C) Communicating Culture and values D) Employee Research
People
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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.
Requirements for effective segmentation
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Measurable : The size , purchasing power and profile of the segments can be measured. Certain segmentation variables are difficult to measure. E.g It is difficult 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 respond differently to different marketing mix elements and programs . If married and unmarried women respond similarly to sale of fur coats , they don’t constitute separate segments.
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Actionable : Effective programs can be formulated for attracting and
PROCESS
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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 service provider. 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 a balance 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 service delivery 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 process
Blue Print of Gents barber -front stage.
Greet customer on arrival
Direct customer to waiting area
Ask customer for haircut requiremnts
cut hair
ask customer for product requirments
Receive Thank customer payments on departure.
Blue Print of Gents barber -.
front stage
Greet customer on arrival
Direct customer to waiting area
Ask customer for haircut requiremnts
cut hair
ask customer for product requirments
Receive Thank customer payments on departure.
back stage
opening times
select furniture order newspaper magazines training and update on style laundry towel And apron sweep and clear hair m eet prepare sales rep cash statement bank transfer.
Service Mapping
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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.
Service Mapping
Customer Front line employees support staff structure management services
Line of intetraction Line of visibility line of internal interaction line of implemetation
Service Map of “Overnight hotel stay”
customer
arrives at hotel
gives bags check in to bell boy
go to room receive bags
sleep
shower
call order room service food
eat
check out
contact person (visible
greets and takes registers bag registration system
delivers bag
delivers food
process check out
invisible process
take food order prepare food
doc_835151805.ppt
A THEORITICAL AND PRACTICAL PERSPECTIVE
Definitions of MARKETING
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The performance of business activities that direct the flow of goods and services from producer to consumer. Getting the right goods , to the right people in the right place , at the right time , at the right price , with the right level of communication profitably. Identifying the needs, wants , desires of consumers and fulfilling them in such a way that the customer is delighted and the company objectives are met profitably. Solving customer problems profitably.
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Difference Between Marketing & Sales
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1.
2. 3. 4.
Marketing
Focus on customer Is about profit this year Delighting the customer Both new and repeat customers important with focus on repeat customers Long term vision
Sales
Focus on seller (product) is about revenue this week converting product into cash New customers is a priority, not bothered much about repeat customers. Short Term Outlook (week/ month)
5.
SEGMENTATION Segmentation Base A) Geographic
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Variables
North South, East, West Major Metros, Sub –Metros, Town Hot, cold, humid
Region City Size
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Climate
B)
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Psychographic
Lifestyle Conservative, Status Seekers Extrovert, Introvert, Aggressive
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Personality
SEGMENTATION
C) Demographic ? Age ? Sex ? Family Size ? Education ? Occupation
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Income Religion
0-11,12-19,20-34 etc. Male, Female 1-2,3-4,5+ school, Graduate, PG Farmer, Professional, Housewife, Retired Even today it’s the leader. Law of Category : category be first in”. IBM::- First in mainframe DEC :- First in minicomputer DELL :- PC thru Direct Marketing “f you can’t be the first in a
2.
, set up a new category , you can
3.
Law of Mind the first
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Better to be first in mind then to be in the market
place.
World’s first PC:- MITS ALTAIR 8800 in the mind :- APPLE World’s first Mainframe : Remington Rand in the mind : IBM
Some Important Marketing LawsTrout & Ries
4.) Law of Perception: Marketing is not a battle of products , it’s a battle of perceptions. e.g. :- 3 largest selling Japanese imported cars in USA are Honda, Toyota, Nissan But in Japan , Toyota outsells Honda Because : In Japan Honda stands for motorcycle whereas in USA Honda is Motorcar. So in Japan , the perception is how can a motorcycle company make great motorcars. 5) Law of Focus :The most powerful concept in marketing Owning a word in the mind of the consumer. CREST :--? CAVITIES VOLVO :--? SAFETY MERCEDES :--? ENGINEERING PEPSI :----? YOUTH BMW :-----? DRIVING
6) Law of Exclusivity: Two companies cannot own the same word in the consumers mind. e.g. : DURACELL owns the long lasting word . Eveready’s Energizer just cannot own long lasting. Asian paints vs. NEROLAC EXCEL(YAMRAJ AD.) 7) Law of Ladder : The strategy to use depends on which rung you occupy on the ladder. Hertz:- Leader in car rental. AVIS: “ Avis is only no.2 in RENT-A-CARS. So why go with us? WE TRY HARDER”.
8) Law of Division : Over time a category will divide and become two or more categories. Computers
Mainframes(IBM)
MINIS(DEC) Workstations (SUN)
Super (CRAY) Fault Tolerant (Tandem)
PC (Apple, Compaq)
PRODUCT
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Defn: A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. e.g. :- Physical Goods :-- Cars, W/M Services :- Training Persons :- Michael Jackson Ideas : - Family Planning
Five Levels of Product Level 1 : Core Benefit : Fundamental benefit that the customer is buying . E.g. :- Hotel :-Rest, CTV :Entertainment
Product
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Level 2:- Generic Benefit : Basic version of the product. e.g. : Hotel : consists of a building with rooms. W/M : Metal/plastic body with console panel Level 3 : Expected Product : A set of attributes and conditions that buyers normally expect and agree when they purchase the product. e.g. : Hotel : Clean Bed, soap, towels, telephone CTV : Tuning on remote, cable ready.
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Product
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Level 4 : Augmented Product : includes additional services and benefits that distinguishes the company’s offer from competitor’s offers. e.g. : Hotel : Complimentary breakfast, Flat CTV, 24 Hrs checkout, etc. Level 5: Potential Product: All augmentations and transformations that the product might ultimately undergo in the future. e.g. : Computer compatible TV (which can operate at room temperatures)
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Product width : Different Product categories the company is in Product Length : In each product category how many products are available Product depth : Variants that are offered for each product.
Product Strategies
1) Downward Stretch 2) Upward Stretch 3) Two-way Stretch
BRANDING
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“Products don’t sell , Brands sell” The ultimate aim of product manager must be to convert the product into a successful brand. TOKYO TSHUSIN KOGYO KABUSHIKI KAISHA English name : Tokyo Telecommunications Engineering company
Japanese Name :
BRANDING
CITIBANK : The citi never sleeps. ? HSBC : The world’s local bank. ? Canara Bank: Growing to serve. Serving to grow. ? L’OREAL: Because you’re worth it. ? Maybelline: May be she’s born with it. May be its Maybelline. ? GO GOA : 365 days on a holiday. ? Kerala : God’s own country. ? Retreat : city ends. Life begins. ? KL : VISION CITY ? Malaysia : Truly Asia. ? Singapore : Singapore Roars ? Hong Kong: Live it up.
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BRANDING
BPL : Believe in the best. ? Videocon : Bring home the leader Technology for health and Pleasure. ? Sansui :Better then the best Born in Japan . Entertaining the world. ? LG
igitally yours. ? Nokia :Connecting people ? Motorola : Intelligence everywhere. ? Ceat Tyres : Born Tough. ? Femina : For the woman of substance. For generation W.?
BRANDING
Orange : Wherever you go, our network follows. ? Reliance India Mobile : Kar lo Duniya Mutthi Mein. ? Aaj Tak : Sabse Tej. ? Chevrolet optra : The new name for luxury. ? Santro Xing : The sunshine car. ? Tata Indigo: Spoil Yourself. ? Mitsubishi Lancer: Always in control. ? Raymond : For the complete man. ? Tata Salt : Desh ka namak. ? Louis Philippe: The upper crest.
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BRANDING
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Defn:- A name ,symbol, design which is intended to identify the goods ,services of one company and to differentiate the goods from those of competitors. BRAND NAME DECISION
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Individual Brand Name : P & G :- Ariel, Pantene A Blanket Family Name : Philips Company Name combined with individual product names:Britannia 50-50 Videocon Bazoomba
BRANDING
Brand Strategy ? Line Extension ? Brand Extension ? Multi Brand ? New Brands
PRICING
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Differential Pricing : Same brand is sold at different prices/different times to consumers. Competitive Pricing : Prices are set to exploit competitive position. Product Line Pricing : Related brands are sold at prices that exploit mutual dependencies.
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Pricing
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DIFFERENTIAL PRICING : 1) Periodic Discounting : -? “Skimming Strategy” Cater to early adopters ----after that the price reduced to cater to the next group of buyers. e.g. : BPL MOBILE/ORANGE. 2) Second Market Discounting : “Dumping” -?Firm’s selling Price in foreign market is below its average cost in home country. (e.g. dumping by china)
Pricing
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B) COMPETITIVE PRICING :
1) Penetration Pricing : Price substantially below main competitors. (AKAI, AMUL) 2) Geographic Pricing : In same country prices different to take advantage of sales tax/transportation savings.
Pricing
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Product Line Pricing : 1) Complementary Pricing : Captive Pricing : Razor & Blades, Cameras & Films , Auto & Spare Parts, VCD Player & Software. Two Part Pricing : Service Industry :Fixed + variable usage fee (MTNL) Entry fee + every ride /game/place separate pricing :-- SENTOSA ISLAND (SINGAPORE)
2) PREMIUM PRICING : Basic & Deluxe
Hotel rooms, Front & Tear Auditorium seats, Basic & Deluxe cars:Firms make profit on Premium versions
Pricing
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Product Line Pricing 3) Product Bundling : Season pass cheaper then daily tickets Car + accessories , the price is lesser then if each item is bought separately. 4) Image Pricing : Firms bring out an identical version of its current product with a different name/packaging and a higher price. The intention is to signal quality.
Promotion
Advertising ? Sales Promotion ? Personal Selling ? PR
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Sales promotion
Consumer Promotion (Manufacturer point of view) ? To increase sales of self brand ? To divert attention from competition brands. ? Enables manufacturers to adjust to periods of low demand. ? Induce customers to try new products/brands. Customer point of view. ? Enables customers to have a better understanding of real prices. ? Consumers feel good that they get value for money deals.
Sales Promotion
Consumer Promotion Tools: ? Samples : Free samples with TOI , Mid-day, Filmfare. ? Coupons: FMCG companies: 15% discount coupon or some rupees off for the next purchase. ? Price Packs: Pack of 2 or more at reduced price. ? Banded Pack : Two related products banded together (toothpaste with toothbrush, VCD player with software.) ? Contests : Answer a few questions, write a slogan. ? Free Trials: Free auto drives. ? Warranties: 3 yr on CTV, 7 yrs on compressor.
Sales Promotion
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Scratch ’n’ win offer: Money back offer Loyalty promotion: Frequent Flyer programs Cross promotion: Two related product categories promoting together , mostly the second product is free. Tie-in promotion : used in conjunction with consumer durables wherein total is lower then if bought separately.
Dealer promotion Tools
Annual Schemes ? Quarterly schemes: ? Scratch ’n’ win scheme:
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Distribution Strategies
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EXCLUSIVE DISTRIBUTION : Distributing through company outlets or franchisee e.g. : LG PLAZA, HONDA Showrooms:- only company products are available.
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INTENSIVE DISTRIBUTION : Placing the products in as many outlets as possible. Products : Soaps, cigarettes, soft drinks , BPL
MOTS etc. ( each outlet has various brands
)
Distribution Strategies
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SELECTIVE DISTRIBUTION : Here companies select a combination of Exclusive distribution (only company’s products) & Intensive Distribution (some important outlets which are multibrand outlets) e.g. SAMSUNG , VIDEOCON
Criteria for choosing Channel Partners
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Financial Strength of Prospective Channel Partner : revenue, P& L statement , balance sheet etc. Sales Strength : no. of salesmen and their technical competency Product Lines: 1) Competitive products, 2) Compatible products 3) Complementary products. Reputation : 1) leadership 2) Well Established 3) Level of expertise. Market coverage : Geographic coverage , outlets per market area. Sales Performance.
Criteria for choosing channel partners
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Advertising & Sales promotion programs. Ordering & Payment Procedures. Willingness to share data : a) customers b) Inventory c) sales figures. Installation & Repair services .
Factors Retailers use in choosing companies
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Accepts unsold or damaged merchandise returns Has quick and easy ordering procedures Provides prompt delivery Maintains adequate supply Good reputation /Brand Name Has a large product range. Provides deliveries in lots as desired by retailer. Promotes brand on a regular basis. Provides adequate margins. Offers good schemes, quantity discounts Extends credit > 30 days. Has good competent sales team/product/technical team. Ensures prompt service Provides good store displays (POP)
Distribution
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Retailing : Consists of the activities involved in selling goods and services to ultimate consumers. A retail sale is one in which the buyer is an ultimate consumer and the buying motive for a retail sale is always personal or family satisfaction derived from the final consumption of item being purchased. Wholesalers: Wholesaling is concerned with the activities of those persons or establishments which sell to retailers and other merchants , and/or to industrial , institutional and commercial users , but who don’t sell in significant amount to ultimate consumers.
Functions Performed by wholesalers/Retailers for manufacturers.
Market coverage: Convenience to customers ? Sales contact : company sales force would be calling on a relatively small number of wholesalers/retailers rather then the much larger number of customers. ? Inventory Holding: Stock the products of the companies that they represent.They reduce the manufacturers financial burden and risk associated with holding large inventories. ? Market Information: ? Customer Support : service, spare parts.
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Functions Performed by wholesalers/Retailers for Customers
Product Availability: ready availability of range of products. ? Assortment,convenience: Brings together from a variety of manufacturers an assortment of products that can greatly simplify the customer’s selection and ordering tasks. ? Bulk-Breaking : Distributor buys in bulk and gives to customers in unit of one : SKU. ? Credit and Financial Assistance ? Advice and Technical Support
installation ->A/C,PC) ? Customer Service : Delivery , after sales help .?
Services Marketing
n
Defn: A service is any act or performance that one party can offer to another that is essentially intangible and doesn't result in the ownership of anything . Its production may or may not be tied to a physical product. E.g : Airlines, hotels,banks,insurance,brokers , real estate companies, police,post office, colleges,hospitals.
Reasons for growth in service industry
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Changing lifestyle
Increase in affluency Increase in leisure time women in working places
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Changing world
Increased life expectancy Increased complexities in life
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Changing economies
Globalisation Privatisation/deregulation Changing technology Range of new products Range of complex products
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A Partial List of services
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Transportation services Railways,Airlines,Local/Interstate Passenger Transportation, Road transportation, 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
A Partial list of services
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Real Estate Services
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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.
A Partial List of Services
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Business & Professional Services Management Consultancy, Legal, Accounting(C.A) Other services Security, Lawn care, pet care, printing , data processing , internet café, 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
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Good is a set of tangible physical attributes assembled in an identifiable 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
GOODS-SERVICES CONTINUUM
PURE GOODS
Goods Related
Pizza-Food service Bus-Transport equipment leasing Hotel roomLodging
Service Related
Financing-car Warranty-mixer Service contractcomputer
Pure Services
Banking Legal Services Image Consulting Hairstyling
Televisions Lipstick oven car
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 buyer seller interactions can be stocked cannot be stocked Transfer of ownership no transfer of ownership customers donot participate customers participate in
Services Marketing
Characteristics of service
Intangibility ? Inseparability ? Perishability ? Variability
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4 Is of Service
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Intangibility Inconsistency Inseparability Inventory Intangibility: is characteristics of service indicating that it has no physical attributes and as a result impossible for a customer to taste , 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 has been 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.
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
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Inseparability: Services are typically produced and consumed simultaneously. Perishability: Services cannot be stored. Unused electric power, idle seats in bus, train represent business which is lost forever. Variability: Services are highly variable , since they depend on who provides them and when and where they are provided.
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Perishability
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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)
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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.
Detailed list of characteristics of services
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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.Classification of serviceby degree of labour intensiveness
Services Marketing
Types of services
Equipment Based
People based
Automated Operated by semi ATM'S, skilled people Vending Machines e.g Dry cleaning, cinema
Operated by skilled people e.g Airlines
Unskilled people watchman
Skilled people Mechanics
Professionals Doctors C.A
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
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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 contact 1) 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, utilities 2)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 for MBA 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 not regulated , employ many coaches (degree of labor intensiveness ) and constant student and coach interaction(degree of customer contact)
Classification of servicesNature of service
PEOPLE
T a n g I b l e I n t a n g I b l e
THINGS Services directed at goods and other physical Possessions Freight transportation Laundry and dry cleaning Landscaping/lawn care Industrial equipment repairs Services directed at intangible assets Banking Legal services Securities Insurance Accounting
Services directed at peoples bodies Health care Passenger transportation Beauty saloons Exercise clinics Restaurants Clinics-medical Services directed at people’s mind Education Broadcasting Information services Theatres Museums
Type of relationship between service company and customers
C
o n t I n u o u s D I s c r e t e
Membership relationship Insurance Telephone/mobile subscription College enrollment Banking Trade associations Long distance phone calls Commuter pass or ticket Theatre series subscription
No formal relationship Radio station Police protection Lighthouse Public highway
Car rental Mail service Public transportation Restaurant
Classification of services-Scope of customization and judgement in service delivery High low
Extent to which customer contact personnel exercise Judgement in meeting individual Customer needs HIGH LOW Telephone service Hotel services Retail banking Family restaurant Public transport Routine appliance repair Fast food joints Movie theater Spectator sports Surgery Taxi services Beauty parlour Education (tutorials) Education (large classes) College food service
Classification of services- Nature of demand and supply for the service
Extent to which supply is constrained Peak demand can usually be met without major delay Peak demand regularly exceeds capacity Extent of demand fluctuation over time Wide Electricity Telephone
Passenger transportation Hotels and motels Restaurants Theaters
Narrow Insurance Legal services Banking Laundry Services similar to above but with insufficient capacity for their base level of business
Method of service delivery
Nature of interaction between customer and service organisation Customer goes to service organisation Single site Multiple sites
Theater Barbershop Beauty parlor Creche Service Lawn care service organization Pest control comes to customer Taxi on call Customer and Credit card service company organisation transact at arm’s length (mail and email
Bus service Fast –food chain
Mail delivery Pizza home delivery Emergency repair Broadcast network Telephone/electric ity company
Physical Evidence
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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 customer’s 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
Physical evidence
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2) Interior Facilities .Interior design Equipment Signage Layout Air quality/temperature 3) Other tangibles Business cards Stationery Billing statements Reports Employee dress/uniform Brochures
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Physical Evidence - customer point of view
SERVICE Airlines Physical Evidence Airline lounges Duty free shops Terminal Exteriors Air plane exterior Air plane interior décor seats ambience music Theme Park Gate area Parking area Signage Layout Rides Lighting Music Insurance Interiors décor seats ambience Other Tangibles Tickets Embarkation cards Uniformed employees Food beverages
Brochures Tickets costumed characters uniform
Policy document Brochures Periodic statements
Five Dimensions of Quality
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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.
Dimensions/Determinants of Quality-Berry., Parsuraman, Zeithml
Dimension Tangible Definition/feature Appearance of physical facilities, equipment, personnel and communicat ion materials Ability to perform the pro mised services dependably and accurately Examples 1)bank’s facilities 2) Modern airline fleet 3) Modern instruments used by the repair person. 1)When a loan officer says he will call back in 15 minutes , does he do so 2)Is my credit card statement free of error? 3)Airlines Ensuring That The Baggage Arrives On Same Flight At Same Destination 4)Waiters bringing the ordered dishes tot he right table 1) 2) Responding to a customer query quickly Is the electrician willing to give me specific time when he will co me and repair
Relaib ilitty
Responsiveness
Willingness to help customers and provide prompt service
Co mpetence
Possession of the required skills and knowledge to perform the service
Courtesy
Politeness , respect , consideration and friendliness of contact personnel
1)Tourist informat ion staff knowing exactly where places are located and best time to go and visit these places 2) When call is made to credit card co mpany, is the person at the other end able to answer all queries. 3) co mpetency of bank emp loyees to transact the requirements of customers 1)Does the bank employee have pleasant demeanour? 2) A re the telephone operators in the credit card company consistently polite when answering calls?
Dimensions/Determinants Of Quality
Cred itability Trustworthiness, 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 card company consistent with the service provided 1) 2) 3) 1) 2) 3) Co mmunicat ion Keeping customers informed in a language which they can understand and listening to them, explanation of services offered 1) 2) 3) Understanding the customer Taking efforts to know the customers and their needs 1) 2) 3) 4) A hotel providing “safe” for expensive items How safe is the banks ATM machines Is my credit card safe fro m unauthorised use Hotel answering call in 2-3 rings Tourist informat ion centers open 7 days a week and located near the tourist spot Cred it card co mpany having 24 hour service and toll free telephone number Does the bank exp lain the various loan schemes in simple non technical language? Does the repair firm call when they are unable to keep a scheduled appointment? Does the tourism emp loyee exp lain the various tourist spots/[packages available in simp le terms Hotel reception staff making guests feel welco me on arrival The bank employee calling you by name when you visit the bank I s the repair firm flexible enough to accommodate my schedule? Does the stock broker suggest the various investment plans possible after understanding the financial object ives?
Security
Freedom form danger, risk or doubt
Access
Approachability and ease of contact
The Parsuram, Ziethaml, Berry Model of service quality-1985
Consumer evaluates service quality experience as the outcome of gap between 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 and the 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
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A gap analysis research instrument
? created by Parasuraman, Zeithamel, and Berry ? Introduced in 1988
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SERVQUAL Model
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SERVQUAL Model Gaps
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Gap 1
? The difference between actual customer expectations and management’s idea or perception of customer expectations
Management Perceptions of Customer Expectations
Expected Service
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SERVQUAL Model Gaps
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Gap 2
? Mismatch between manager’s expectations of service quality and service quality specifications
Service Quality Specifications
Management Perceptions of Customer Expectations
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SERVQUAL Model Gaps
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Gap 3
? Poor delivery of service quality
Service Delivery
Service Quality Specifications
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SERVQUAL Model Gaps
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Gap 4
? Differences between service delivery and external communication with customer
Service Delivery
External Communications to Customers
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SERVQUAL Model Gaps
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Gap 5
? Differences between Expected and Perceived Quality
Expected Service
Perceived Service
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How customers apply quality determinantsexamples
Service Car Repair Reliab ility Mean Time failure, problem fixed right first time and delivered as promised Responsiveness No waiting, easy to access and willingness to respond to requests Assurance Knowledge of the mechanics to rectify the fault/problem Empathy Accessibility and understanding of the problem , calling customer by name and knowing the history of the car Understanding and anticipating needs and problems of customers Tangibles Unifo rmed emp loyees, comfo rtable waiting area , good lay out of workshop, modern equipment for repairing Physical facilities like waiting lounge, check-in – counter, baggage areas, uniformed emp loyees and aircraft.
Air Travel
Keeping the flights to published schedule
Pro mpt and speedy handling of ticketing, check in and baggage control
Trusted name , competence and experienced staff , high performance levels
Tangibles ? Reliability ? Responsiveness ? competence ? courtesy ? credibility ? security ? access ? Communication ? Understanding the customer
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Tangibles Reliability Responsiveness Assurance
Empathy
People
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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 to ensure 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
PEOPLE
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A) Employees : Recruitment Training Motivation Team Work B) Customers Education Training C) Communicating Culture and values D) Employee Research
People
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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.
Requirements for effective segmentation
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Measurable : The size , purchasing power and profile of the segments can be measured. Certain segmentation variables are difficult to measure. E.g It is difficult 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 respond differently to different marketing mix elements and programs . If married and unmarried women respond similarly to sale of fur coats , they don’t constitute separate segments.
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Actionable : Effective programs can be formulated for attracting and
PROCESS
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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 service provider. 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 a balance 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 service delivery 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 process
Blue Print of Gents barber -front stage.
Greet customer on arrival
Direct customer to waiting area
Ask customer for haircut requiremnts
cut hair
ask customer for product requirments
Receive Thank customer payments on departure.
Blue Print of Gents barber -.
front stage
Greet customer on arrival
Direct customer to waiting area
Ask customer for haircut requiremnts
cut hair
ask customer for product requirments
Receive Thank customer payments on departure.
back stage
opening times
select furniture order newspaper magazines training and update on style laundry towel And apron sweep and clear hair m eet prepare sales rep cash statement bank transfer.
Service Mapping
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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.
Service Mapping
Customer Front line employees support staff structure management services
Line of intetraction Line of visibility line of internal interaction line of implemetation
Service Map of “Overnight hotel stay”
customer
arrives at hotel
gives bags check in to bell boy
go to room receive bags
sleep
shower
call order room service food
eat
check out
contact person (visible
greets and takes registers bag registration system
delivers bag
delivers food
process check out
invisible process
take food order prepare food
doc_835151805.ppt