Description
These are the notes of service marketing and it is usefull for every mba student or faculty of marketing management
Service marketing
BY: Dr. Pankaj Singh
SERVICE MARKETING
Because of their diversity, services have traditionally been difficult to define. The way in which services are created and delivered to customers is often hard to grasp since many inputs and outputs are intangible. Most people have little difficulty defining manufacturing or agriculture, but defining service can elude them. Here are two approaches that capture the essence of the word. y A service is an act or performance offered by one party to another. Although the process may be tied to a physical product, the performance is essentially intangible and does not normally result in ownership of any of the factors of production. y Services are economic activities that create value and provide benefits for customers at specific times and places, as a result of bringing about a desired change in or on behalf of- the recipient of the service. Different between service and product: 1. Tangibility versus Intangibility Products are tangible. You can buy pork as a tangible product. You buy it, you ship it and sell it. In the same way as you buy stamps, cigarettes and cars. 2. Transfer of ownership In product after selling the ownership of the product belongs to the consumer ( like Car, tv, home etc) while in service the ownership belongs to the service organization the consumer can avail the service but cannot own the tangible product belong to it ( like Bus belong to its owner but transportation service is avail by the consumer) 3. Homogeneity vs. Heterogeneity. (Variability) The product provide by a firm are always same in performance while the service may be vary. Because the service is related to people so there may be difference in performance. Ex: car or computer manufactured by a firm i.e. HCL and Ford always perform and give the same result either it purchased by north India or south India. While same cook can prepare same food differently in different day or time. 4. Perishability and unperishability: Product can be store for further use such as the car can store in dealers shop and it can be sold in a month or two. But on the other hand service is useless after the time of delivery or use i.e. the empty seat in an aircraft or in cinema hall cannot be used in their next schedule 5. Inseparability The production of the services can't be separated from its consumption. i.e. there must be an active service provider at the time when the customer is using the service. There are some more different like the customer can use a product before purchase (like test drive of a car, or can see the performance of a product in friend s house or so). But he has to purchase service either it is good or bad. Distinctive Characteristics and classification Of Services Various proposals have been made for classifying services. Among the meaningful ways by which we can understand the characteristics of service and classified them are as follows 1. Degree of Tangibility or Intangibility of Service Processes Tangibility or intangibility are the two characteristics by which the service can be classified. Does the service do something physical and tangible (like food services or dry cleaning), or do its processes involve a greater amount of intangibility (like teaching or telephoning)? Different levels of intangibility in service processes shape the nature of the service delivery system and also affect the role of employees and the experience of customers. 2. Direct Recipient of the Service Process Some services, like haircutting or public transportation, are directed at customers themselves. Customers also seek services (like dry cleaning) to restore or improve objects that belong to them, but they remain uninvolved in the process of service delivery and do not consume the benefits until later. The characteristics of the service encounter between service suppliers and their customers varies widely according to the extent to which customers themselves are integrally involved in the service process. 3. Place and Time of Service Delivery
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Service marketing
BY: Dr. Pankaj Singh
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When designing delivery systems, service marketers must ask themselves whether customers need to visit the service organization at its own ( like haircut) or whether service should come to the customer (like the Internet weather information service and the pizza delivery to consumers apartment). Customization versus Standardization Services can be classified according to the degree of customization or standardization involved in service delivery. An important marketing decision is whether all customers should receive the same service or whether service features should be adapted to meet individual requirements. Ex: insurance policy is probably one of several standard options but bus service is standardized, with a fixed route and Nature of the Relationship with Customers Some services involve a formal relationship, in which each customer is known to the organization and all transactions are individually recorded and attributed (like bank). But in other services, unidentified customers undertake fleeting transactions and then disappear from the organization's sight (like customer uses the restaurant of refreshment centre and den flyaway ). Extent to which Demand and Supply Are in Balance Some service industries face steady demand for their services, whereas others encounter significant fluctuations. When the demand for service fluctuates widely over time, capacity must be adjusted to accommodate the level of demand or marketing strategies must be implemented to predict, manage, and smooth demand levels to bring them into balance with capacity. Some demand fluctuations are tied to events that marketers can't control. For example, over capacity of restaurant on weekends causes the long waiting time and shortage of empty tables.
Emergence Of Service Economy
The Service Economy is a relatively new coinage arising out of the popularity of the service sector. The service sector has gained a lot of importance in the world economy. Most of the developed countries are earning millions from the service sector alone. In US the service sector accounts for a greater percentage of GDP than it used to a couple of years back. The term Service Economy also known as Functional Economy is used to refer to the relative significance of service attached to a product offered by a company. In today s economy every product has a service value attached to it. The old dichotomy between product and services has been reduced and a service-product continuum has been established. In management this phenomenon is referred to as the Servitization of Products. When a company proceeds from maximizing its sales towards customer satisfaction it puts emphasis on the aspect of service. It helps the company to enhance its goodwill in the market. Advantages of the Service Economy y The concept of service economy will eventually give rise to a decentralized means of producing skilled jobs. y The individual enterprises will receive the competitive advantage in entering open markets while the big shots remain engrossed in selling products. y Product-life extension is a scheme that will reduce the material and energy consumption required to satisfy the needs of the consumers. It will enhance the productivity per unit. y The enhancement in resource productivity is eventually transformed into competency and profitability. Example: IBM is an unique example. In spite of being a manufacturing company it tends to call itself a services company. This has been the scenario since it realized that the price elasticity of demand for business solutions is less elastic than for hardware. The company now benefits from the revenue of the elongated contracts rather than receiving payment in a single mode. Studies reveal that service economy jobs can enjoy double productivity through the better application of information technology. Intranets can also produce double employee productivity. Usability is the key to enhancing the productivity of service economy. By analyzing which job is more useful than the other we humans might be able to crea te more jobs and save billions as well.
Service Marketing Mix
The services marketing mix is an extension of the 4-Ps framework. The essential elements of product, promotion, price and place remain but three additional variables people, physical evidence and process are included to 7 Ps mix. The need for the extension is due to the high degree of direct contact between the CE providers and the customers, the highly visible nature of the service process, and the simultaneity of the production and consumption. While it is possible to discuss people, physical evidence and process within the
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Service marketing
BY: Dr. Pankaj Singh
original-Ps framework (for example people can be considered part of the product offering) the extension allows a more thorough analysis of the marketing ingredients necessary for successful services marketing. 1. Service Product or Service Package: A service is a bundle of features and benefits. However these benefits have relevance to a specific target market. Hence while developing a service package it is important that the package of benefits in the service offer must have a customer perspective. Services product consists of 3 levels. y The first level is that of basic service package which includes core service, facilitating services and supporting services. y The second level is that of an augmented service offering where accessibility interaction and customer participation is given equal importance in delivering the service product . y the third level is that of the market communication of the service offering as in its absence the augmentation service package doesn t have any relevance to the customer. The service package: The package concept of service product suggests that what you offer to the market is a bundle of different services, tangible and intangible, but there is a main or substantive or core service and around it are built the auxiliary or peripheral or facilitator services. It is important to note that facilitating services are mandatory and if these were left out, the entire service would collapse. In the service package there are yet other type of services called supporting services. The basic difference between the two is that supporting services don t facilitate the consumption of core services but are used to increase the value and thus differentiate it from competition Example: In a 500 room hotel the core service is lodging and room service, bellboy services are facilitating services and health club , car rental are support services. However it may not always be possible to draw a line of distinction between facilitating and support services. For e.g. in a typical city hotel business centre might be the support service but in a business and convention hotel the same service would be facilitating service The augmented service offering. 2. Pricing A particular product or service is acceptable to the customer at a particular price and if the price ids increased it is likely that the same product or service might become less acceptable to the customer. Another issue related to pricing is that of perceptions about quality. Generally to most customers high price means high quality. Service pricing follows the principles and practices of pricing of goods and therefore they are either cost based or market based. Following aspects should be taken into consideration while pricing services: i. Demand fluctuations should be successfully handled ii. Service prices should be based on costs so as to take into account the tangible clues iii. Service pricing should be such as to provide value addition and quality indication iv. The pricing strategy should come up with the degree of competition. The pricing of services is greatly influenced by the basic service characteristics. However in setting price objectives several factors in relation to the overall marketing strategy of the corporation should be considered. Factors effecting the pricing are: y Product life cycle: the stage of life cycle of the service product is of utmost importance. For instance, At the introductory stage if there is no competition and the demand is high you may opt for high price, to make maximum gains in the short term (skimming policy). In a similar situation but with a low demand you may opt for low prices to penetrate into the market. Also you have to consider the elasticity of demand i.e. whether the demand is sensitive to the change in price or not. y Competition: competition should be studied both from the point of interbrand and also from the viewpoint of the brand that provides the same need satisfaction. For e.g. a private airline is facing competition from the national and other private airlines but also from the railways faster trains on the same routes during convenient timings y Strategic role of pricing: Lastly it is important to understand the strategic role of pricing in your overall marketing strategy. For e.g. a hotel chain might offer a package of low price or discount with a view to making people try out their services. It is likely that in the short run it might be a losing proposition but in the long run, it may give more customer satisfaction and thereby better utilization of services 3. Place: Because of intangibility of services they cannot be stored, transported and inventoried. Also because of inseparability, they must be created and sold at the same time. These 2 characteristics make the channel very short and direct. Most service is distributed through direct sales at best one direct agent and middleman can
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Service marketing
BY: Dr. Pankaj Singh
be added to it. For e.g.: an insurance agent, courier service. Keeping in view the characteristics and potential management problems, there are distinct channel configurations that can be noticed: The dominant channel configuration in the service sector is where agents and brokers play an imp role. The major function of these agents and brokers is to bring together the producer and consumer of service. These agents can be classified as broker or sales agents. E.g.: travel agents The agents may be trained in the creation and production of service and then franchised to sell it. E.g.: Shehnaz Hussain beauty parlours. In some cases actual product is not transferable & therefore tangible representations are created and transferred. This kind of tangible is used for marketing insurance services where a contact document exists as a physical & tangible representation of the service. 4. Promotion There are clear differences in information usage between goods and services. First, the difference is that the consumers of services are less likely to purchase without information, than those of goods. Second, the consumer of services will prefer personal sources to impersonal sources of information. And third, the basic characteristics of services have implications for communication strategies. The above three differences influence the decisions regarding the Communications objectives, Target audiences and Planning of each of the sub elements in the promotion mix Promotion objectives: the basic objective of promotion would be to develop public relations and create a brand image. The promotion mix should use indirect selling techniques, packaging and customization. Target audiences: In service sector there should be a direct contact between the customers and there service providers. Therefore some promotion should be directed towards the employees so as to motivate them to serve the customers better. The target audience also includes buyers, influencer and the decider or user of the buying cycle. Planning the Promotion mix: a customer is buying the performance of the service personnel and therefore the advertising in service industry shouldn t only restrict itself to encouraging consumption, but also it should encourage employees to perform well. Effective advertising programs should be such that they have a positive effect on contact personnel, capitalize on word of mouth, provide tangible clues, make offer easily understandable and contribute continuity. 5. People because of the simultaneity of production and consumption in services the staff occupy the key position in influencing customer s perceptions of product quality. In fact the service quality is inseparable from the quality of service provider. An important marketing task is to set standards to improve quality of s ervices provided by employees and monitor their performance. Without training and control employees tend to be variable in their performance leading to variable service quality. Training is crucial so that employees understand the appropriate forms of behaviour and trainees adopt the best practises of the and ragogy. 6. Physical evidence this is the environment in which the service is delivered and any tangible goods that facilitate the performance and communication of the service. Customers look for clues to the likely quality of a service also by inspecting the tangible evidence. For example, prospective customers may look to the design of learning materials, the appearance of facilities, staff, etc. 7. Process this means procedures, mechanism and flow of activities by which a service is acquired. Process decisions radically affect how a service is delivered to customers. The service includes several processes e.g. first contact with customers, administrative procedure regarding course delivery, preparation, delivery and evaluation of the courses. The following guideline can be useful for successful service management: y ensure that marketing happens at all levels from the marketing department to where the service is provided y consider introducing flexibility in providing the service; when feasible customize the service to the needs of customers y recruit high quality staff treat them well and communicate clearly to them: their attitudes and behavior are the key to service quality and differentiations y attempt to market to existing customers to increase their use of the service, or to take up new service products y sep up a quick response facility to customer problems and complaints y employ new technology to provide better services at lower costs y use branding to clearly differentiate service offering from the competition in the minds of target customers
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Service marketing
BY: Dr. Pankaj Singh
Understanding customer needs and expectations
process of market segmentation
The process of market segmentation, involves the creation of market segments or parts or sub-sets. A segment of the market is basically a sub-set, in terms of goods, service or product, of the entire market and is identified or created by the marketing department in such a manner that the individuals (or organizations) in that very segment would demand a certain set of goods and services that have similar features. In short, a segment is a division of market, the elements of which depict common needs. The meritorious features of a market segment includes the following: 1. Geographically or product-wise or even need wise, a single market segment is distinct from other segments, though one can also count on the existence of some minute similarities. 2. Products that are demanded by the consumers are homogeneous and in some cases also tend to have similar price levels. 3. A product introduction into such a segment stimulates similar and almost congruent reactions from a majority of consumers. Market Segmentation as a Process There are some specialized theories based upon which markets can be easily segmented into different sections. Market segmentation can be positive segmentation, negative segmentation or top-down segmentation. Companies also derive separate segmentation techniques for every product and brand. Market segmentation process is usually done with the help of past data, on filed surveys and consumer interactions. Volumes of goods supply in every segment is made with the help of economic indexes and average income and demand figures. Steps for Market Segmentation Process As mentioned above, one of the basic objectives of market segmentation is to maximize sales and profits. Hence, the three important objectives of any segmentation process is to gain new customers, sustain the existing consumers and introduce newer products into the market for the existing consumers and there by gain new consumers. The five step process of market segmentation goes as follows. 1. The first step in the market segmentation process is to establish the market and targeted consumers. This process involves tremendous paper work and surveys. Economic and demographic factors are also analyzed in the process. In addition to that this step might also include advertising about the product 2. The second step is often termed as market mapping and involves structuring the entire marketing procedures based upon the need of the said market. Logistics cost, retail and whole sale cost, etc, are some important parameters that are set up during this stage. Another very important factor involved in this step is the targeting of consumers who are also known as decision makers. The remaining three steps are derived on the basis of this step. 3. The third step is entirely dependent upon the consumers as the demand by consumers and their suggestions are largely viewed, surveyed, taken into consideration and in many cases implemented. 4. In this step, the actual segment begins to take shape as like minded consumers having same demands are placed together and are analyzed as a group. Launching of a parallel or a totally new product is viewed in this situation. This segregation is often based upon economic indexes, demographic, geographic situations. 5. The last step is catering to the needs of existing consumers and finding new markets. This step is purely the first step towards a new 5-step-cycle that begins with finding a new market.
creating valued relations with customer customer loyalty
The term customer loyalty is used to describe the behavior of repeat customers, as well as those that offer good ratings, reviews, or testimonials. Some customers do a particular company a great service by offering favorable word of mouth publicity regarding a product, telling friends and family, thus adding them to the number of loyal customers. However, customer loyalty includes much more. It is a process, a program, or a group of programs geared toward keeping a client happy so he or she will provide more business. Customer loyalty can be achieved in some cases by offering a quality product with a firm guarantee. Customer loyalty is also achieved through free offers, coupons, low interest rates on financing, high value trade-ins, extended warranties, rebates, and other rewards and incentive programs. The ultimate goal of customer
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Service marketing
BY: Dr. Pankaj Singh
loyalty programs is happy customers who will return to purchase again and persuade others to use that company's products or services. This equates to profitability, as well as happy stakeholders. Customer loyalty may be a one-time program or incentive, or an ongoing group of programs to entice consumers. Buy-one-get-one-free programs are very popular, as are purchases that come with rebates or free gifts. Another good incentive for achieving customer loyalty is offering a risk free trial period for a product or service. Also known as brand name loyalty, these types of incentives are meant to ensure that customers will return, not only to buy the same product again and again, but also to try other products or services offered by the company. Excellent customer service is another key element in gaining customer loyalty. If a client has a problem, the company should do whatever it takes to make things right. If a product is faulty, it should be replaced or the customer's money should be refunded. This should be standard procedure for any reputable business, but those who wish to develop customer loyalty on a large-scale basis may also go above and beyond the standard. They may offer even more by way of free gifts or discounts to appease the customer.
service encounters
"Service encounters are critical moments of truth in which customers often develop indelible impressions of a firm... From the customer's point of view, these encounters ARE the service" Service marketers are interested in the participants of the service encounter because to many customers, it is the face-to-face encounter which is the essence of the service product. In addition customers' interactions with other customers can create the potential for satisfaction or dissatisfaction with the service. Thus service marketers must attempt to exert some control over the many personal interactions which take place in the service environment. Yet for all its importance, the personal encounter is one of the most difficult aspects to manage because of the human dimension. The interaction between service personnel and customers is known as the service encounter that is concerned with the human dimensions of the exchange. Remember, this differs from the service experience , which is concerned with the customer's total experience before, during and after their purchase. As we have mentioned, there are two main participants in the service encounter, the customer and the service personnel. We shall discuss the role of the customer first.
Customers
Customers are important to the service process because: y they are the users/purchasers of the service y they perform part of the production process y satisfied customers represent potential word of mouth referrals y they represent a source of repeat business y they interact with other customers and thus influence satisfaction levels. Extraordinary as it seems, customers are co-producers of the service, contributing time and energy. In the maritime industry, for example, a customer may pack his or her own container and deliver it. As the production and consumption of a service are inseparable, customers often have to go to where the service is available and can adversely affect the quality of service, for example, by crowding the store. Just as there is cooperation, there can also be conflict due to the customers' interactions with other customers creating the potential for satisfaction and dissatisfaction within the service encounter. More important is the idea of customers influencing other customers in the consumption of a service. A flight on an airline is as much affected (or more so) by the type of fellow passengers you have as the flight attendants. Thus, airlines segregate passengers into first, business and economy class and not just for the service levels they provide for each group. Turn now to the next reading that explains in greater detail the importance of customers in the delivery of services and the types of roles they can fulfil. Service personnel While consumers of physical products seldom see the factory or meet the people who produce them, consumers of services do both. Service personnel are a vital, tangible criterion by which an intangible like a service is evaluated. These employees vary to the extent in which they have contact with the customer and are visible to him or her. A characteristic phenomenon is that there always seems to be a back office and a front
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Service marketing
BY: Dr. Pankaj Singh
office in services. In fact many organisations have their own terminology for these positions, for example, front stage/back stage, front-of-house/back-of-house. Cowell (1987) has used the dimensions of contact and visibility to classify service personnel as shown in Table below Table: Personnel involved in service product performance and delivery Contact with client Non-contact with client Visible to client Waitress Cook in steak house Service engineer Computer operator Non-visible to client Telephone operator Airline pilot Maintenance worker Accountant
Like customers, services personnel are a required and important component to the service process because they: y are producers of the service y represent the firm to customers and non-customers y are difficult to separate from the service product y have a close proximity to customers which provides a unique source of market research y are a differentiating feature of a service y impact on customer satisfaction. Managing the service encounter Being an effective service manager demands more than just the direct management of service encounters. We shall cover some different approaches to managing services in an indirect way. 1. Role theory Role theory is a learned set of behaviours that guides or directs how an individual operates in a given setting. Roles are passed down from employee to employee through on-the-job training. Thus, by understanding the frameworks of roles, managers can exert indirect control over the service encounter. Customers' satisfaction derives from how well both the consumers and service providers have performed their roles relative to expectations. This is called role congruence . Most roles in organisations are paired, some examples from different industry sectors are: y host and guest ¾ hospitality y master and servant ¾ personal service y mentor and student ¾ education y buyer and seller ¾ retailing. 2. Script theory
Script theory is an extension of role theory. In role theory, employees are likened to actors on a stage, so with script theory, we think of them as using scripts. Script theory is concerned with the use of key words and phrases which both participants recognise, and in effect can be used by employees to guide the customer through a transaction. Many organisations prepare scripts for emergency situations such as bomb threats and handling customer complaints because during service interruptions, panic or stress can interfere with the ability of an employee to think clearly. The script then becomes a device for coping with problems. A basic difference between role and script theory is that role theory is based on the commonality of behaviour across individuals with the focus on only the interpersonal service encounter. Script theory however, is based on the individual differences arising from social and cultural experience and relates to the total service experience. Below is an example of a simple script fo r telephone use in a company: 1. The telephone is to be answered within three rings by the nearest person. But do not leave a customer you are attending in order to answer the phone 2. Company phones are not to be used for personal business. Incoming calls for employees will not be permitted except in emergencies 3. Employees answering the telephone should say 'Good (morning/afternoon/ evening) (name of organisation) (your location) (your name) speaking, how may I help you?' 4. Always thank the caller. Say 'Thank you for calling' before hanging up.
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Service marketing
BY: Dr. Pankaj Singh
Now that we have some background of the participants in the service encounter, the next section discusses the next important element in the expanded marketing mix: process.
customer satisfaction
Customers are important asset to the organization, satisfied customers will buy more, and buy more frequently, and pay their bill promptly. In a manufacturing and service organization, customer satisfaction is considered as a measure of quality.TQM implies an organizational drive with meeting or exceeding customer needs. Understanding the customer's needs and expectations is essential to winning new business. To attain this level, the organization should examine their quality system to respond to their ever changing customer's needs. Characteristics of customer satisfaction. 1. it is far from simple. 2. it is not an objective statistic, but more of feeling and attitude. 3. therefore like people's opinion and feeling, it is subjective by nature. 4. because of this subjective nature, it is difficult to measure. 5. the measurement of customer satisfaction is not precise. 6. the customer satisfaction should not be viewed in vacuum, i.e., it should be compared with the level of satisfaction they have with competitor's product are service. Customer perception of quality. In an orgabnization there is no acceptable quality level because the customer's needs, values and expectations are constantly changing and becoming more demanding. An American Society for Quality (ASQ) survey reveals the following en d-user perception of quality 1.Performance 2.Features 3.Service 4. Warranty 5. Price 6. Reputation.
Measuring Customer Satisfaction:
Customer satisfaction measurement is a systematic process for collecting customer data (e.g. surveys, audits, etc.), analyzing these data to make it into actionable information, driving the results throughout an organization, and implementing satisfaction improvement plan. Thus, customer satisfaction measurement (CSM) is a management information system that continuously captures the voice of the customer through the assessment of performance from the customer s point of view Such measurement could me made by using any of the following methods:
Surveys Formal and informal feed back from customers Use of customer account data Complaints However, survey is the most common method.
Understand how customers perceive your organization and whether your performance meets their expectation. Identify PFI s (priorities for improvement) areas where improvement in performance will produce the greatest gain in customer satisfaction Set goals for service improvement and monitor progress against a customer satisfaction index Benchmark your performance against other organization Increase profits through improved customer loyalty and goodwill
The organization s process for requesting, measuring and monitoring feedback of customer satisfaction and dissatisfaction should provide information on continual basis. It should address conformance to requirements, meeting needs and expectations of customers, as well as price and delivery of product.
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1 Obtain Top Manage ent Buy In etermine Survey Objectives 2 3 ploratory Researc 4 Plan Sampling and Data collection 5 Design of Questionnaire 6. Actual Survey 7. Data Refining and Analysis 8. Recommendation and Implementation Plan 9. Plan timing of ne t Survey One must begin with essential preliminaries such as obtaining top management buy in and conducting e ploratory research. From there the sampling and data collection details should be worked out and the key business processes identified. Monitoring of Customer Satisfaction is now very important for a distribution company as it will lead to better l customer e perience and thereby goodwil . A quality survey is required to be undertaken periodically.
SERVQUAL and GAP Mod l
? This is the formal means to identify and correct gaps between desired levels and actual levels of performance ? This model is used by organizations to analyze certain processes of any division of their company which helps to improve the service quality ? This model is giving formal idea of the e pected level of service vs. Actual level of service provided to the consumer by an organization The Model is given in fig. below
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Management Perceptions of Customer Expectations
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Service marketing
BY: Dr. Pankaj Singh
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Managers and employees have a very internal process-oriented view of their business, it is tough to break this view and to see things the way the customer does This gap of the SERVQUAL Model can help management with customer service
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Gap 2
Mismatch between manager s expectations of service quality and service quality specifications
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To implement a system to improve this gap, management must first understand exactly what the customer wants If this understanding is not present, it will be impossible for management to know whether their expectations are aligned with customer specifications.
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Gap 3 ± Poor delivery of service quality
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Once the specifications from gap 2 are aligned the next step is to deliver these services in a perfect manner Quality of delivery must be perfected during the interaction with the customer The employees that are responsible for these actions are referred to as contact personnel Some reasons for a lack of quality include poor training, communication, and preparation
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Gap 4
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Differences between service delivery and external communication with customer
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Customers are influenced by what what they hear and see about a company s service Word-of-mouth publicity and advertising are main outlets which customers open their opinions to The difference between what a customer hears about a company s service and what is actually delivered is represented by gap 4 This gap can lead to dangerously negative customer perceptions
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Service marketing
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Gap 5
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Differences between Expected and Perceived uality
Expected Service
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Perceived Service
This gap is directly related to everyone s perception of service quality Customers expect certain things from certain companies When someone goes into a McDonalds to order their favorite meal a Big Mac, they are expecting exactly what they are accustomed to getting (a quick, no hassle, tasty big burger with all the works). If it takes 15 minutes to get a Big Mac that doesn t even have the famous special sauce on it the customer s perceived service of McDonalds is going to plummet. - If gaps 1 through 4 are closed to a minimum then gap 5 should follow, if there are any gaps left in steps 1 through 4 the perceived customer service quality will be negatively affected - The way to make sure these gaps are closed is through thorough systems design, precise communication with customers, and a well-trained workforce. SERV AL methodology Clearly, from a Best Value perspective the measurement of service quality in the service sector should take into account customer expectations of service as well as perceptions of service. However, as Robinson (1999) concludes: "It is apparent that there is little consensus of opinion and much disagreement about how to measure service quality". The SERVQUAL instrument has been the predominant method used to measure consumers perceptions of service quality. It has five generic dimensions or factors and are stated as follows. (1) Tangibles. Physical facilities, equipment and appearance of personnel. (2) Reliability. Ability to perform the promised service dependably and accurately. (3) Responsiveness. Willingness to help customers and provide prompt service. (4) Assurance (including competence, courtesy, credibility and security). Knowledge and courtesy of employees and their ability to inspire trust and confidence. (5)Empathy (including access, communication, understanding the customer). Caring and individualized attention that the firm provides to its customers. In the SERVQUAL instrument, 22 statements measure the performance across these five dimensions, using a seven point likert scale measuring both customer expectations and perceptions. It is important to note that without adequate information on both the quality of services expected and perceptions of services received then feedback from customer surveys can be highly misleading from both a policy and an operational perspective. Just as the SERVQUAL instrument is extensively used to assess external service quality, the instrument can also be modified to assess the quality of the internal service provided by departments and divisions within a company to employees in other departments and divisions. The results of the current study illustrate that organizations can at least assess five dimensions of service quality to ascertain the level of services provided, and to determine which dimensions need improvement.
@9
handling complaints
Even with the best organizations, failures can just happen. They may be due to the service not available when promised, may be delivered late or too slowly, the outcome may be incorrect or poorly executed. All this types of failures bring about negative experiences. If they are left unsolved, they can result in customers leaving, telling others about the negative experiences or even challenging through customer courts. Some complaints are made while service delivery is still taking place, while others are made afte r the fact. In both the cases, how the complaint handled may determine whether the customer remains with the firm or seeks new suppliers in the future.
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Service marketing
BY: Dr. Pankaj Singh
MEANING OF COMPLAINT: service failure and recovery Complaint data can be invaluable to the development of your business, Allowing you to assess your performance, identify any complaint trends and better align your services to suit customer expectation. Adopting a narrow definition of a complaint will mean you are not Able to assess accurately the real needs of your customers or the true level of dissatisfaction. Definition of a complaint is very broad: ..An expression of dissatisfaction made to a supplier in relation to, (a) Carrying on business as a carrier(b) Carrying on business as a carriage service provider,(c) Supplying a content service using a listed carriage service; and (d) Supplying a telecommunications product s amongst your customer base. INTROD CTION: Even with the best organizations, failures can just happen. They may be due to the service not available when promised, may be delivered late or too slowly, the outcome may be incorrect or poorly executed. All this types of failures bring about negative experiences. If they are left unsolved, they can result in customers leaving, telling others about the negative experiences or even challenging through customer courts. Some complaints are made while service delivery is still taking place, while others are made after the fact. In both the cases, how the complaint handled may determine whether the customer remains with the firm or seeks new suppliers in the future. MEANING OF COMPLAINT:
A
Complaint data can be invaluable to the development of your business, Allowing you to assess your performance, identify any complaint trends and better align your services to suit customer expectation. Adopting a narrow definition of a complaint will mean you are not Able to assess accurately the real needs of your customers or the true level of dissatisfaction. Definition of a complaint is very broad: ..An expression of dissatisfaction made to a supplier in relation to, (a) Carrying on business as a carrier(b) Carrying on business as a carriage service provider,(c) Supplying a content service using a listed carriage service; and (d) Supplying a telecommunications product s amongst your customer base. C STOMER RESPONSE CATOGORIES TO SERVICE FAIL ERS: When service is faiulre or not satisfied, the customers can take may a kind of public action or public process or may take some kind of private action or private movement or they may can not take any kind of action as they are enough of thire findings. If customer take public action or government action , they can complain directile to the service firm or to the organization or they can complain to the third party or they may take any kind of legal action to seek their redress or to get thire right or benefits. If customer take any kind of private action, they can used to defects or switch directly to the provider or may be used any kind of negative word of mouth to the organization. And if customer is comfortable to their recommendations anout their complaints or they get benefits they can not take any kind of action. Understanding Customer Responses to Service Failure:
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Why do customers complain? o Obtain compensation o Release their anger o Help to improve the service o Because of concern for others What proportion of unhappy customers complain? Generally 9% to 37% of unhappy customers can make complaints to the firms.
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Service marketing
BY: Dr. Pankaj Singh
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Why don t unhappy customers complain? There are three primary reasons why dissatisfied customers don t complaint: 1] They think that it is not worth the time or effort. 2] They further think that no one would be concerned about their problem or solving it. 3] They do not know where to go or what to do. Who is most likely to complain? Where do customers complain? What do customers expect once they have made a complaint? Dealing with Complaining Customers and Recovering from Service Failure Take complaints professionally and not personally. Be prepared to deal with angry customer who may behave in an insulting way to service personnel who may not be at fault. Take the perspective that customer complaints allow firm a chance to o Correct problems,. o Restore relationships. o Improve future satisfaction for all. Develop effective service recovery procedures. COMPLAINT HANDLING PROCED RE:
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According to TIO- a telecommunication industry, there is a specific & suitable procedure of complaint handling which is necessary to be followed in any organization. But you will need to tailor your own procedures to suit the size of your business and the services you offer. At a minimum your complaint handling procedure should require the following for your staff or organization: 1] An acknowledgement of receipt of the complaint: It is a strong need that you acknowledge the receipt of all complaints, verbal or written. It is a good idea to allocate a complaint reference number and provides the customer with a contact point for further correspondence. 2] An accurate and accessible record of complaint information: Be sure that your recorded version of the complaint matches exactly that of the customer. Also make sure that the complaint record is accessible by any area of the organization that the customer may contact. 3] Attachment to timeframes for resolution: According to TIO, the company or firm should attempt to resolve complaints on first contact, but if this isn t possible, then a complaint should be finalized within 30 days. 4]Customers must be inform about any delays in resolving a complaint: As soon as the company realizes that they are unable to resolve a complaint in the timeframes given, contact the customer, advising him or her of the delay and set a new timeline. 5] Rewarding Attachment amongst Your Staff: The complaint handling procedures should be a standard component of your employee induction training and should also be included in Ongoing training as required. 6] Inform Customers Of Complaint Handling Procedures: A brochure or fact sheet is a great way to make customers aware of your Complaint handling procedures. You should outline the main components of your procedure and send it to customers with your first bill and when they lodge a verbal or written complaint with you. If a brochure is too expensive or not practical, place some information on your website, or consider sending your customers an email outlining your policies and procedures. Just make sure that you make it accessible and easy to read and understand. MEANING OF SERVICE RECOVERY: Service Recovery refers to the actions taken by an organization in response to a service failure. Failures occur for all kinds 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 and employees may be rude. All this type of failures brings about negative feelings and responses from customers. Left unfixed, they can result in customers leaving, telling other customers about their negative experiences and even challenging the organization through customer s rights or legal channels. Research has shown that,
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resolving customer problem effectively has a strong impact of customer s satisfaction, loyalty and bottom- line performance. That is customer who experience service failure, but ultimately satisfied based on recovery efforts by the firm, will be more loyal than those whose problems are not resolved. Those who complain and have their problems resolved quickly, are much more likely to come again than those whose complaints are not resolved. Those who never complaint is less likely to come. SERVICE RECOVERY STAGES: Service Recovery in an organization progresses through a series of stages, shown in the following points: Stage 1, Expiring: The service of the consumer in this stage is expire means finished. There is no complaint handling. Angry customers are ignored. Letters to VIPs and even the CEO about a damaged shipment go unanswered. Stage 2: Reactive: Customer complaints are heard, and a response is made. But it's a careless process with no defined goals for the response and no one owning this business process. Stage 3: Active Listening: At this stage, the response to issues voiced by customers is structured. Specific people have the responsibility to respond to complaints and guidelines are in place for the response. However, it is still reactive. Stage 4: Attentiveness: The critical change from Stage 3 to 4 is the move from reactive to proactive solicitation of customers with issues. The reason this is so important is that most customers don't bother to complain. They just move on to other suppliers of products. Haven't we all done this? It's a lot of work to complain! Stage 5: Rechecking/ Frequentness: The pinnacle of Service Recovery Practices is achieved when the complaint identification merges with business process improvement or six sigma programs to support root cause identification and resolution. The owners of business processes that cause customer issues are notified of the occurrences to prompt reexamination of the process design. In essence, we see two levels of feedback loops. First, feedback from the customer to the organization. Second, feedback from the customer-facing groups to its business partners within the organization.
Positioning a service in the market
that communication can only take place at the right time and under the right circumstances." The main positioning strategy is to either developing or reinforcing a particular image for the brand in the mind of the customer. Positioning is the result of differentiatio n decisions. It is the act of designing the company's offering and identity (that will create a planned image) so that they occupy a meaningful and distinct competitive position in the target customer's minds. The end result of positioning is the creation of a market-focused value proposition, a simple clear statement of why the target market should use the service.
Search for Competitive Advantage in Services Requires Differentiation and Focus Intensifying competition in service sector threatens firms with no distinctive competence and undifferentiated offerings Slowing market growth in mature service industries means that only way for a firm to grow is to take share from competitors Rather than attempting to compete in an entire market, firm must focus efforts on those customers it can serve best Must decide how many service offerings with what distinctive (and desired) characteristics
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Se ice m
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1. Must est lish position for firm or product in minds of customers 2. Position should be distincti e, providing one simple, consistent message 3. Position must set firm/product apart from competitors 4. Firm cannot be all things to all people--must focus Uses of Positioning in Marketing Management Understand relationships bet een products and markets compare to competition on specific attributes evaluate product¶s abilit to meet consumer needs/expectations predict demand at specific prices/performance levels Identify market opportunities introduce new products redesign existing products eliminate non-performing products Make marketing mix decisions, respond to competition distribution/service delivery pricing communication The main approaches to positioning strategy are: Product attributes Price quality relationships Reference to competitors (usually shortcomings Usage occasions User characteristics Product class
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BY: Dr. Pankaj Singh
Service marke ing
New service development
Services marketing is built on carefully understanding the deeper needs of your customers and then providing services that will help to make them more successful. There is a great deal of leverage in providing services since after your organization has started to delight your customers with your first services you'll have the opportunity to hear your customers articulate progressively higher impact areas that they'd like you to address. This is when a virtuous cycle emerges your most demanding, early adopter customers help you to identify services that will subsequently address the needs of your mainstream market customers months or years later. When this occurs you have succeeded in building a services business based on a deep understanding of your customers The diagram identifies the four phases of the Service Development Lifecycle
a a a b b c
Customer Pain Point Identifying the Customer Pain Point is the starting point in the Service Development Lifecycle. The choice of the words "pain point" is intentional: only something that is severe enough to be nfu to your customer will pa cause them to act to relieve the pain. This pain doesn't necessarily have to be in a negative sense the pain can easily be that of the frustration of wanting your product to do even more than it does today. If you've established good communications with your customers, they'll tell you their pain points. What will the pain points sound like They might be articulated as "I can't allocate headcount to have a staff person do software patch management. I'd like to have your organization do this for me" or "I need to increase the production availability of your product to at least 90 ". The identification of the customer pain point can involve the use of formal and informal market research methods. Among the many techniques are: 1. In-depth interviews with your field support staff. 2. Requests from your most important customers. 3. One-on-one customer interviews. 4. Customer focus groups. This is a formal market research method in which your customers participate in a group discussion with other customers. 5. Customer user group meetings. These can provide a ready-made forum for discussions of current challenges. 6. Review of customer support calls or warranty claims to identify systemic problems. For e ample, you might find that customers who don't have trained operators have a higher rate of warranty and out of warranty repair claims than those who train their operators. Service Definition The second phase of the Service Development Lifecycle is Developing the Service Definition. During this phase the detailed characteristics of the service are developed. A clear, concise statement of service deliverables and impact will enhance customer satisfaction. Very importantly, a well -defined set of deliverables will clearly identify an end point for the service engagement. Without this, the engagement can drag on and pull down your profit margin. A number of methods can be used to define the service: 1. Restate the customer pain point into an action statement.
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Service marketing
BY: Dr. Pankaj Singh
2. Dissect the customer pain point statement. The detailed points can then be used as the basis for the components of the service. 3. Define and bound the range of work to be performed. Provide a detailed description of which product areas and interfaces will be examined. 4. Develop a clearly stated definition for the completion of the services engagement. 5. Develop a service methodology. . 6. Seek alignment with the goals and capabilities of other functional organizations in your company: 7. Identify roles and responsibilities for your staff and the customer staff. Identify any equipment to be provided by either organization, the decision making process, timelines, et al. 9. For higher priced, higher risk services, identify an executive sponsor for the engagement within the customer organization. This person can remove organizational roadblocks, and work though problems. 10. Identify whether the customer wants a knowledge transfer to their staff or for your organization to provide operations staffing as well 11. Craft methods to measure and track customer satisfaction. Marketing & Selling The next phase of the Service Development Lifecycle is Marketing & Selling your new support service. This phase packages the service into an offering that can readily be communicated and sold by your company. This is also the phase in which to develop a "business model" which identifies your financial targets, pricing approach, sales channel(s), channel selling, resource requirements, et al. The amount of time and effort that you put into the development of the business model is of course commensurate with the anticipated level of impact of the service product on your organization and the overall company. Delivering & Supporting The final phase of the Service Development Lifecycle is Delivering & Su pporting the new service product with a customer. To use a well worn phrase, "the rubber meets the road" during this phase. If the prior phases have been implemented carefully, the customer has a clear understanding of: 1 . The components of service that will be delivered 2. How the service will be delivered (e.g., engineers on site from 8:00 AM to 5:00 PM every business day, or, once per month visits to install system updates and retune the system) 3. Prerequisites and requirements to be fulfilled by the customer before and during the services engagement 4. Who will deliver the service, whether jointly, or solely by your company. The management structure and reporting relationships for the engagement are clearly identified, with specified roles and responsibilities. 5. Service methodology to be used 6. Timeline & milestones 7. Payment terms and conditions 8. Client training and support 9. Warranty 10. Engagement closure During delivery of the service is a great time to actively engage in the first phase of the Service Development Lifecycle: Identifying the Customer Pain Point. Your team will now have significant access to key audiences in the customer organization, who may be very eager to articulate their needs to a good listener. You'll then be on your way to developing another service, with a launch customer from the very beginning! Conclusion Services can be readily identified and brought to market by product support organizations. The Service Development Lifecycle provides a straightforward process by which to identify, develop and bring to market services that are unique and relevant to your customers. The right services will simultaneously enhance customer satisfaction and provide revenue and profit growth for your company.
pricing the service product
The difference between cost and value Knowing the difference between cost and value can increase profitability: y the cost of your product or service is the amount you spend to produce it y the price is your financial reward for providing the product or service y the value is what your customer believes the product or service is worth to them For example, the cost for a plumber to fix a burst pipe at a customer's home may be £5 for travel, materials costing £2.50 and an hour's labour at £10. However, the value of the service to the customer - who may have water leaking all over their house - is far greater than the £17.50 cost, so the plumber may decide to charge a total of £50.
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Service marketing
BY: Dr. Pankaj Singh
Pricing should be in line with the value of the benefits that your business provides for its customers, while also bearing in mind the prices your competitors charge. To maximise your profitability, find out: y what benefits your customers gain from using your product or service y the criteria your customers use for buying decisions - for example, speed of delivery, convenience or reliability y what value your customers place on receiving the benefits you provide Wherever possible, set prices that reflect the value you provide - not just the cost. Covering fixed and variable costs Every business needs to cover its costs in order to make a profit. Working out your costs accurately is an essential part of working out your pricing. Divide your costs under two headings: y fixed costs are those that are always there, regardless of how much or how little you sell, for example rent, salaries and business rates y variable costs are those that rise as your sales increase, such as additional raw materials, extra labour and transport When you set a price, it must be higher than the variable cost of producing your product or service. Each sale will then make a contribution towards covering your fixed costs - and making profits. Cost-plus versus value-based pricing There are two basic methods of pricing your products and services: cost-plus and value-based pricing. The best choice depends on your type of business, what influences your customers to buy and the nature of your competition. Cost-plus pricing This takes the cost of producing your product or service and adds an amount that you need to make a profit. This is usually expressed as a percentage of the cost. It is generally more suited to businesses that deal with large volumes or which operate in markets dominated by competition on price. But cost-plus pricing ignores your image and market positioning. And hidden costs are easily forgotten, so your true profit per sale is often lower than you realise. Value-based pricing This focuses on the price you believe customers are willing to pay, based on the benefits your business offers them. Value-based pricing depends on the strength of the benefits you can prove you offer to customers. See our guide on planning to sell. If you have clearly-defined benefits that give you an advantage over your competitors, you can charge according to the value you offer customers. While this approach can prove very profitable, it can alienate potential customers who are driven only by price and can also draw in new competitors. How to build a pricing strategy You need to decide whether to use cost-plus or value-based pricing. See the page in this guide on cost-plus versus value-based pricing. It's important to find out what your competitors offer and what they charge. If you phone your rivals and ask them for a quote, you can use this information as a framework. It's probably unwise to set your prices too much higher or lower without a good reason. If you price too low, you will just be throwing away profit. If you price too high, you will lose customers, unless you can offer them something they can't get elsewhere. The perception of your product or service is also important. In many markets, a high price contributes to the perception of your product as being of premium value. This might encourage customers to buy from you - or it might deter price-conscious customers. It can be useful to charge different prices to different customers, eg to customers who purchase repeatedly, or buy add-on or related products, as a thank you for their loyalty. Bear in mind that customers who are expensive to satisfy will be less profitable, unless you charge them higher prices. One-off sales may cost you more than repeat business. You can also use pricing tactics to attract customers. See the page in this guide on different pricing tactics. Whatever prices you set, check that they cover your costs and can deliver a profit. See the page in this guide on covering fixed and variable costs.
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Different pricing tactics Different tactics can help you attract more customers and maximise profits. Discounting Offering specially-reduced prices can be a powerful tool. This could be a clearance discount to sell old stock, a discount for making multiple purchases of the same or similar products, or you could offer bulk discounts to encourage larger orders. You should be able to make these more profitable through lower costs. But be careful. If you discount too much, customers may question your full-rate pricing or see you as a cheap option, making it difficult to charge full -rate prices in the future. Odd value pricing Using the retailer's tactic of selling products for £9.99 instead of £10 can be useful if price is an essential part of customers' buying decisions. Some customers perceive odd value prices like this as being more attractive. Loss leader This involves selling a product at a low or even loss-making price. Although you may not make a profit selling this product, you could attract customers who will also buy other, more profitable products. Skimming If you have a unique product or service, you can sell it at a high price. This is known as skimming - but you need to be sure that what you are selling is unique. Otherwise you may just price yourself out of the market if there is credible competition. Penetration This is the opposite of skimming - starting at a low price and gaining market share before competitors catch up with you. Once you have a loyal customer base, you should be able to find ways to raise prices later. See the page in this guide on raising or lowering prices. Raising or lowering prices There will be times when you need to change your prices. But before you do, you should analyse the impact on your profitability of any proposed price change. There are two key questions you will need to answer: y What effect will the price change have on the volume of sales? y What will the effect be on the profit per sale? Increasing prices Increasing prices can improve your profitability even though your sales volume may drop. If you are increasing your prices, always explain to your customers why you are doing it. You can use the price change as an opportunity to re-emphasise the benefits you offer. For more information, see our guide on planning to sell . A good explanation can also strengthen your relationship with a customer. There are also ways that you can hide price increases. For example, you might: y introduce new, higher-priced products or services and make older, cheaper ones obsolete y lower the specification - and your costs - while maintaining the same price But be aware that hiding price increases can risk adverse reactions from customers if they realise what you are doing. Reducing prices You should never take the decision to lower prices lightly. Low prices often go hand-in-hand with poor-quality service - is this the image you want to create for your business? Concentrate on building profits rather than cutting prices to build up sales. In most circumstances, your customers decide to buy from you because of the benefits you offer, along with your price. It is rare for the decision to be made based solely on the price.
Marketing Communication in Service Industry
There are some difficulty in to communicate the utility and requirement of a particular service to the customer. Marketing communication in the case of the product is easier than service because we can show a lot of product attribute, we can use free sample, test drive , and different demonstration of the product to the customer. In the case of the service i.e. airlines, banking, entertainment, hospitals, education etc it is not
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always easy to create advertising and therefore a lot of other activities like telemarketing, personal selling etc. has to be used for better communication to the consumer. Requirement of the marketing communication: The requirement of the communication is as follows 1. To attract new customers 2. To retain existing customers 3. To maintain communication between organizations 4. To introduce a new service 5. After any service development 6. To maintain better relationship with customers 7. To know the feedback of existing service 8. To know the requirement of any supplementary service 9. To know the marketing strategy of competitors Communication efforts serve not only to attract new users but also to maintain contact with an organization's existing customers and build relationships with them. Techniques for keeping in touch with customers and building their loyalty include direct mail and contacts by telephone or other forms of telecommunication, including faxes, e-mail, and Web sites. Doctors, dentists, and household maintenance services often post annual check up reminders to their customers. Some businesses even send birthday and anniversary cards to valued customers. Banks and utility companies often include a brief newsletter with their account statements or print customized information on each statement in an effort to cross-sell additional services. COMM NICATION STRATEGIES FOR SERVICES Several of the differences distinguishing services from goods have important marketing communications implications. Thus communication strategies need to reflect the special characteristics of services. Intangible Nature of Service Performances Since services are performances rather than objects, their benefits can be difficult to communicate to customers. Service providers should use tangible cues whenever possible in their advertising campaigns, especially for low-contact services that involve few tangible elements. It is also helpful to include "vivid information" that will produce a strong, clear impression on the senses, especially for services that are complex and highly intangible. For example, an ad by a Bank showed a picture of Credit and debit cards, ATMs, Bank exteriors and interiors, peoples etc. Similarly, MasterCard television and print advertisements emphasize the tangible things that can be purchased with its credit card complete with a listing of the price of each item. Customer Involvement in Production In high-contact services, customers are often concerned about the risks associated with service delivery and consumption. Sometimes these risks are financial or psychological in nature, but there can also be physical risks as in many outdoor sports and organized adventure activities like rock climbing, skiing, and water rafting. The providers of such services have both a legal and a moral responsibility to educate their clients. The better informed customers are of potential dangers, and what to do in the event of, say, a raft tipping its occupants into a stretch of foaming rapids, the more likely they are to remain safe and have an enjoyable experience. Basic information on signs and in instruc-tional brochures may need to be reinforced by personal briefings from employees. Evaluating Service Offerings Even if you understand what a service is supposed to do, you may have difficulty distinguishing one firm from another and knowing what level of performance to expect from a particular supplier. What can a service business do to attract your attention and your patronage? Possible solutions include: providing tangible clues related to service performance; highlighting the quality of equipment and facilities; and emphasizing employee characteristics such as their qualifications, experience, commitment, and professionalism. In low-contact services "where much of the firm's expertise is hidden, firms may need to illustrate equipment, procedures, and employee activities that are taking place backstage. For instance, how do prospective buyers know if they are getting the best value from insurance services? One approach is to show how the firm is trying to reduce losses due to acci-dents or to cut costs. Supply-and-Demand Management Many live service performances like a seat at the Metropolitan Opera for Friday evening's performance of Carmen, a room at the Marriott on Monday, or a haircut at Supercuts on Tuesday morning are time-specific and can't be stored for resale at a later date. Advertising and sales promotions can help to change the timing of customer use and thus help to match demand with the capacity available at a given time. Demand management strategies include reducing usage during peak demand periods and stimulating it during off-peak
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periods. Low demand outside peak periods poses a serious problem for service industries with high fixed costs, like hotels. One strategy is to run promotions that offer extra value such as a room upgrade and a free breakfast, in an attempt to stimulate demand without decreasing price. When demand increases, the number of promotions can be reduced or eliminated. Importance of Contact Personnel In high-contact services, service personnel are central to service delivery. Their presence makes the service more tangible and, in many cases, more personalized. An ad that shows employees at work helps prospective customers understand the nature of the ser- vice encounter and implies a promise of the personalized attention that they can expect to receive. Advertisers must be realistic, since these messages help set customers' expectations. If a firm's brochures and ads show friendly, smiling workers but, in reality, most employees turn out to be glum, frazzled, or rude, customers will most certainly be disappointed. Advertising can also be effective in showing employees what cus-tomers are being promised. At a minimum, service personnel should be informed about the content of new advertising campaigns or brochures. Reduced Role for Intermediaries Intermediaries like retailers often play a key role in promoting products and teaching customers about their characteristics. Services are less likely than goods to be sold through channel intermediaries. Many service providers (such as universities, lawn care specialists, banks, restaurants, health clubs, and professional firms) sell directly to customers. But some service providers do rely on intermediaries for help in selling their products. Firms in the travel and insurance industries, which make extensive use of independent agents and brokers, must compete with other brands not only for physical display space but also for "top-of-mind" recall if they are to obtain adequate push from intermediaries in the distribution channels. Internal communication, personal selling, motivational promotions, and effective public relations can be critical in maintaining successful working relationships between intermediaries and service firms. THE MARKETING COMM NICATIONS MIX Most service marketers have access to numerous forms of communication, referred to collectively as the marketing communications mix. Different communication elements have distinctive capabilities relative to the types of messages that they can convey and the market segments most likely to be exposed to them. Communication experts draw a broad division between personal communications, involving personalized messages that move in both directions between two par- ties, and impersonal communications, in which messages move in only one direction and are generally targeted at a large group of customers and prospects rather than at a single individual.
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Personal Communications
Personal communications include personal selling, telemarketing, customer training, customer service, and word of mouth. Personal Selling Interpersonal encounters in which efforts are made to educate customers and promote preference for a particular brand or product are referred to as personal selling. For infrequently purchased services like property, insurance, and funeral services, the firm's representative may act as a consultant to help buyers make their selections. Because face-to-face selling is usually expensive, it's most often used in business-tobusiness markets. A lower-cost alternative is telemarketing, involving use of the telephone to reach prospective customers. It's used by about 75 percent of all industrial companies. Relationship marketing strategies are often based on account management pro- grams, where customers are assigned a designated account manager who acts as an interface between the customer and the supplier. Account management is most commonly practiced in industrial and professional firms that sell relatively complex services, resulting in an ongoing need for advice, education, and consultation. Examples of account management for individual consumers can be found in insurance, investment management, and medical services. Customer Service Employees in customer service positions are often responsible for delivery of a variety of supplementary services, including providing information, taking reservations, receiving payments, and problem solving. New customers, in particular, often rely on customer service personnel for assistance in learning how to use a service effectively and how to resolve problems. Customer Training Some companies, especially those selling complex business-tobusiness services, offer formal training courses to familiarize their customers with the service product and teach them how to use it to their best advantage.
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Word of Mouth Recommendations from other customers can have a powerful influence on people's decisions to use a service, but word of mouth is a difficult form of communication for firms to control. Some advertisers try to encourage positive comments from customers who have already used a service since positive word of mouth can act as a powerful and highly credible selling agent.9 In an effort to extend the reach of word of mouth, advertising and brochures sometimes feature comments from satisfied customers. Public relations Public relation involves efforts to stimulate positive interest in an organization and its products by sending out news releases, holding press conferences, staging special events, and sponsoring newsworthy activities put on by third parties. A basic element in public relations strategy is the preparation and distribution of press releases (including photos and/or videos) that feature stories about the company, its products, and its employees. PR executives also arrange press conferences and distribute press kits when they feel a story is especially newsworthy. A key task performed by corporate PR spe-cialists is to teach senior managers how to present themselves well at news conferences or in radio and television interviews.
Impersonal Communications
Advertising As the most dominant form of communication in consumer marketing, advertising is often the first point of contact between service marketers and their customers, serving to build awareness, inform, persuade, and remind. It plays a vital role in providing factual information about services and educating customers about product features and capabilities. One of the challenges facing by advertisers is how to get their messages noticed. Television and radio broadcasts are cluttered with commercials, while newspapers and magazines sometimes seem to contain more ads than news and features. How can a firm hope to stand out from the crowd? Longer, louder commercials and bigger format ads are not necessarily the answer. Some advertisers stand out by using a sharply different format. Advertising Media: New Media Internet - websites and search engines Magazines Others...
Outdoor (Posters or transport) Newspapers (Local and National) Radio
New Media - Mobile devices Television Cinema
Planning for advertising: Advertising agencies and their clients plan for advertising. Any plan should address the following stages: y Who is the potential TARGET AUDIENCE of the advert? y WHAT do I wish to communicate to this target audience? y Why is this message so IMPORTANT to them? y What is the BEST MEDIUM for this message to take (see some of the possible media above)? y What would be the most appropriate TIMING? y What RESOURCES will the advertising campaign need? y How do we CONTROL our advertising and monitor success? There are two key categories of advertising, namely 'above-the-line' and 'below-the-line.' The definitions owe a lot to the historical development of advertising agencies and how they charge for their services. In a nutshell, 'above-the-line' is any work done involving media where a commission is taken by an advertising agency, and 'below-the-line' is work done for a client where a standard charge replaces commission. So TV advertising is 'above-the-line' since an agency would book commercial time on behalf of a client, but placing an advert in a series of local newspapers is 'below-the-line,' because newspapers tend to apply their own costing approach where no commission is taken by the agency i.e. instead the agency charges the client a transparent fee. There are many facets and elements to advertising - too many to be covered in this short lesson. Try some of the other lessons to build your knowledge.
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BY: Dr. Pankaj Singh
challenges in distribution of services
Distribution of services: There are two type of distribution in service Physical Distribution and electronic Distribution. Physical distribution happens in high contact service while electronic distribution happens in low contact service. Now a days almost every type of service have both physical as well as electronic distribution happens. In physical distribution the two thing happens either the customer goes to the service provider of the service provider comes to the customer itself. Customers Visit the Service Site The convenience of service factory locations and operational schedules becomes an important marketing issue when customers are required to be physically present throughout service delivery or even just to initiate and terminate the transaction. Retail gravity models and other elaborate statistical techniques are sometimes used to help decide how to locate businesses relative to where prospective customers live or work. Traffic and pedestrian counts are used to establish how many prospective customers pass certain locations each day. Construction of a new highway or the introduction of new rail or bus service may have a significant effect on travel patterns and, in turn, determine which sites are now more desirable and which, less so. Providers Come to the Customer For some types of services, the supplier visits the customer. This is, of course, essential when the target of the service is some immovable physical object like a building that needs cleaning, a large machine that needs repair, a house that requires pest-control treatment, or a garden that needs landscaping. Since it's more expensive and time consuming for service personnel and their equipment to travel to the customer than vice versa, the trend has been away from this approach where possible (few doctors make house calls nowadays!). The services delivery process goes through the different king of challenges before creating any strategy of the service distribution the service providers has to be go through lots of decision making processes some of the decisions which has to be taken are y What should be the nature o contact between the service provider and its customers! Should customers come to the provider or the other way around? Or should the two parties deal at arm's length, using mail and telecommunications (ranging from telephone to the Web)? y What should be the sequencing o the various steps in the service delivery process! Both operational and customer preferences need to be taken into account in making this decision. The blueprinting methods we discussed in Chapter 7 can be used in exploring alternative delivery sequences. y Where (location) and when (scheduling) should these steps take place! The choice today is not only between different physical locations but also between physical space and cyberspace. y What should be the nature o customer involvement at each step! If customers are required to be present, should they be served in batches or individually? Alternatively, should they serve themselves? y What imagery and atmosphere should the service delivery environment (or service space) try to create? For a high-contact service, this concerns decisions on: facility design and layout; staff uniforms, appearance, and attitudes; the type of furnishings and equipment installed; and the use of music, lighting, and decor. y Should a service irm take responsibility or the entire delivery process or delegate some steps to intermediaries? Some supplementary services, like information and reservations, can be handled very efficiently and cost-effectively by intermediaries. y What should be the serving protocol? Should the firm operate a reservations system or work on a first-come, first-served basis, using queuing when necessary? Or should a priority system be established for certain types of customers (like many firms do for their larger industrial accounts or airlines do for their gold card frequent flyers)? There are a lot of more challenges a service distribution has to be go through. Some of them are as follows i. Physical Evidence: This is the biggest challenge a service distribution system is go through because is the customer has to come to the service site where the production and distribution of the service is being together i.e Barber shop, Restaurant, Banking, Movie theatres etc then these cautions has to be taken y The customer waiting time should be minimum y If the customer has to wait for long time then the proper entertainment like TV, Newspapers, Good atmosphere etc should be provided y The place of the production of the service has to be clean and free from dirt and bad smell ii. People:
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Service marketing
BY: Dr. Pankaj Singh
In the high contact service the distribution is done by people it self i.e. the working or delivery staff of the service . so it is a big challenge of the delivery process. Some cautions should be taken as follows y People should be well dressed and clean y The way of talking is polite and convenient to the consumer y The process of delivery should be smooth so the customer feel his importance y The proper training program for staff should be up dated iii. Reliability: Reliability is a big challenge for service delivery and it is important for both low as well as high contact services. In high contact service like Barber shop, Hospitals, Restaurants the service has to be delivered carefully. In electronic delivery like ATM, online banking, online shopping, online ticket booking etc the reliability is most important and it is a very big challenge for service providers iv. Process: Process means the no of steps taken by the consumer to avail the service. The shorter and easier the process is the better the delivery will be. The paperwork for availing the service should be minimum and the time taken between the requirement request and delivery should be as less as possible So these are some challenges of service delivery and it can be easily understand that the delivery of the service is much harder than the delivery of the product.
role of employees
Before going on to discuss the employees role in services, we feel it is important to differentiate between products and services. Services in most simple terms are deeds, processes and performances. Services may also be defined as any activity or benefit that one party offer to another that is essentially intangible and does not result in the ownership of anything. These simple definitions give us good idea about what services are. We can give examples of a barber, a tailor, or a restaurant as services. Products on the other hand are offerings that are tangible in nature like for example a car. In today's world, services are becoming more and more significant in any country's economy. As Louis V. Gerstner said in 2001 "Services are going to move in this decade to being the front edge of the industry". This quote comes from the former CEO of a company which claims to be the world's largest service business in the world, IBM. The importance of services in today's world can be further emphasized by the fact that services comprised of almost 80% of United States of America's Gr oss Domestic Product in 2003 . The fifth P i.e. People include both employees and customers as customers also play an important role in the service delivery process. But we are going to focus on employees as far as this article is concerned. From the above discussion it is obvious that employees play an important role in the services marketing because of the vary reason that employees are involved in the process of delivery of any service e.g. a waiter in a restaurant is actually the conductor of all the process related to the customers. So it is of great importance that he gives the right image to the customer otherwise the customer might never return. So those employees that are a part of service delivery, we can call them customer-contact service employees, play an absolutely crucial role in building a repute for any service. The importance of customer-contact service employees can be understood because of the following statements, which will also show that why employees may be the most valuable asset of a services organization. Customer-contact service employees are very important because: o They are the service o They are the organization in the customer's eyes o They are the brand o They are marketers In many cases, in a service, there is just the employee and nothing else i.e. employee is the service e.g. hair cutting, physical trainers, legal services etc. This means that the service being offered by the business is the employee. Thus, investing in the employee is same as investing in the manufacture of a product. A customer-contact service employee may reflect the image of the service organization even if he or she is not directly providing the required service. If you enter a hospital, every employee that you encounter from the receptionist to the clerk might influence your opinion about that organization. Thus, employees sometimes do become the organization in customer's eyes. Employees also become the brand for a service. A very good example can be of a university which is well reputed amongst students. The quality of most universities is judged by the caliber of the teachers that are teaching there. When a student interacts with a professor, he has positive emotions about the university only
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when he feels that the teacher is knowledgeable and understanding and has complete control over his subject. We can say that one reason, among others, LUMS is thought to be better than other universities is due to the perception that its faculty contains more PhDs than anybody else, hence having better educational quality than others. Thus, an employee also becomes the brand for a service. Because contact employees represent the organization and can directly influence customer satisfaction, they perform the role of marketers. They physically embody the service and are walking billboards from a promotional point of view [4] If we are on the road and we see a person sitting on a motorcycle, going to deliver a free delivery, or to deliver letters or documents, you can tell from their appearance, clothing or even kind of vehicle that which organization they belong to. So, even when the service employees are just doing their duty, they are acting as marketers for their organization. Here we would like to refer to Mr. Dennis Harting who says "What is the most valuable asset that a company has? Is it the name, customers, goodwill, physical resources, or product line? The answer is that it is none of these. A company's most valuable resource is its' employees. Any organization will go only as far as the people who are driving it. In fact, a company is really just a group of people who interact for a common purpose. They are the ones who make up the organization." He also states that "It is important that managers and owners begin to realize that the employees are the most valuable asset any organization can have. Those who accept this new business model will structure their compensation and bonus program to reflect this belief." Above discussion only points to one thing, generally for every business, and particularly for any services business, employees are definitely the most valuable assets. We personally feel that in Pakistan employees are still not given the right place and importance. One feels that more and more attention should be paid to role of employees in services and investments should be made to improve the most valuable asset of services.
e-services Internet Marketing The Concept The Internet has changed lives... for the better. Whether it is the professional arena or personal spaces, the World Wide Web has impacted every aspect of urban living. Not only has it fostered better connectivity, over the years, it has also enhanced the prospects of global trade. However, the biggest drawback of marketing on the Internet is the inability to forge relationships based on trust. Since it is a virtual medium, it becomes exceedingly difficult to make users trust your product. Moreover, cyber frauds and connectivity problems often surface as nuisances of the online marketplace. E- MARKETING SERVICES The sphere of Web marketing is unbelievably vast. It encompasses numerous services that can aid marketers in promoting their businesses online. Some of the most widely-used services are: 1) Email Marketing It works on the simple principle of marketing through emails. Advertisers send promotional mails to their potential customers, in expectation that they will follow the mentioned links and eventually land up making purchases on their websites. Building an extensive list of target audience is a prerequisite in this form of marketing. Apart from email addresses, your mailing list should have adequate information on the general preferences, likes and dislikes of the users in question. It also facilitates the process of viral marketing, which means spreading promotional content like a virus. Using online social networks, this strategy relies on the natural human behaviour of voluntarily passing on the word about something liked or disliked. It works at creating brand awareness using the 'word-of-mouth' publicity campaign. Extremely feasible and cost-efficient, email marketing is being practised by the biggest of businesses in the world today. 2) Search Engine Marketing This Internet marketing strategy revolves around promoting products/services or websites on search engines. Millions of surfers make use of the 'search' query on search engines everyday. Websites listed amongst the top 20 ranks of result pages stand the chance of being visited, whereas, the others are simply indexed and rarely seen. Therefore, search engine marketers optimise their sites in order to earn higher listings on SERPs.
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SEM has two dimensions Organic and Inorganic Marketing. While the former deals with the 'natural' means of optimizing a site, using On-Page and Off-Page techniques. On-page techniques are used on a web page itself - keyword research, site navigation, RSS feeds, content syndication, etc., are some of the most common of them all. Off-page techniques use external sources like article submission, link exchange, blog postings, etc., to optimize a web page. Inorganic search engine marketing is a paid advertising process that works on the Pay per Click module. Advertisers bid to place their ads on search engines, which in turn, receive a predetermined amount of commission for every click generated through the ads on their pages. 3) Affiliate Marketing This form of marketing comprises two entities merchants (advertisers) and affiliates (publishers). The latter serves as a platform for promotion of the former's products and services. There are numerous online affiliate networks that work as a forum for the coming together of both these entities in order to achieve increased profits. This concept works on the principle of Pay Per Click or Pay Per Lead the merchant places his ad on an affiliate's website, and pays him for every click that's generated through that site. 4) Guerilla Marketing Better known as an undercover promotional strategy, it is increasingly used by low-budget businesses because of its inexpensiveness. In this form of Web marketing, the target audience usually does not realise that they have been subjected to a promotional activity. It often involves advertisements that are take offs on one's competitors. 5) Niche Marketing Choosing a niche audience is of paramount importance when it comes to this online marketing service. Rather than wasting time and money in promoting their products to anyone and everyone, advertisers work for a targeted customer base that is sorted out on the basis of tastes and preferences. Thus, marketers have the advantage of reaching out to people who can actually be converted into buyers. 6) Orthodox Marketing The world of Internet marketing still continues to sway the orthodox way. Despite revolutionary strategies like SEM and Affiliate Marketing making a foray into world businesses, many companies still rely on conventional advertising techniques for the promotion of their products. Placing banners, text ads and classifieds on various forums are still considered viable options, even though these are not as inexpensive as the newer methods.
Implications with promotion: 1. 2. 3. 4. Consumers use search engines on both global and local level Result pages are scanned for context corresponding to a supplied search term Pace of search decreases in proportion to the depth of the research Intrusive advertising campaigns can create negative image
Place of purchase and product information: 1. 2. 3. 4. Amount of information online directly affects consumer search behaviour Online consumers value integrated timesaving features Information breakdown is required to prevent information overload Consumers value human reviews more than automated recommendations
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doc_164379492.docx
These are the notes of service marketing and it is usefull for every mba student or faculty of marketing management
Service marketing
BY: Dr. Pankaj Singh
SERVICE MARKETING
Because of their diversity, services have traditionally been difficult to define. The way in which services are created and delivered to customers is often hard to grasp since many inputs and outputs are intangible. Most people have little difficulty defining manufacturing or agriculture, but defining service can elude them. Here are two approaches that capture the essence of the word. y A service is an act or performance offered by one party to another. Although the process may be tied to a physical product, the performance is essentially intangible and does not normally result in ownership of any of the factors of production. y Services are economic activities that create value and provide benefits for customers at specific times and places, as a result of bringing about a desired change in or on behalf of- the recipient of the service. Different between service and product: 1. Tangibility versus Intangibility Products are tangible. You can buy pork as a tangible product. You buy it, you ship it and sell it. In the same way as you buy stamps, cigarettes and cars. 2. Transfer of ownership In product after selling the ownership of the product belongs to the consumer ( like Car, tv, home etc) while in service the ownership belongs to the service organization the consumer can avail the service but cannot own the tangible product belong to it ( like Bus belong to its owner but transportation service is avail by the consumer) 3. Homogeneity vs. Heterogeneity. (Variability) The product provide by a firm are always same in performance while the service may be vary. Because the service is related to people so there may be difference in performance. Ex: car or computer manufactured by a firm i.e. HCL and Ford always perform and give the same result either it purchased by north India or south India. While same cook can prepare same food differently in different day or time. 4. Perishability and unperishability: Product can be store for further use such as the car can store in dealers shop and it can be sold in a month or two. But on the other hand service is useless after the time of delivery or use i.e. the empty seat in an aircraft or in cinema hall cannot be used in their next schedule 5. Inseparability The production of the services can't be separated from its consumption. i.e. there must be an active service provider at the time when the customer is using the service. There are some more different like the customer can use a product before purchase (like test drive of a car, or can see the performance of a product in friend s house or so). But he has to purchase service either it is good or bad. Distinctive Characteristics and classification Of Services Various proposals have been made for classifying services. Among the meaningful ways by which we can understand the characteristics of service and classified them are as follows 1. Degree of Tangibility or Intangibility of Service Processes Tangibility or intangibility are the two characteristics by which the service can be classified. Does the service do something physical and tangible (like food services or dry cleaning), or do its processes involve a greater amount of intangibility (like teaching or telephoning)? Different levels of intangibility in service processes shape the nature of the service delivery system and also affect the role of employees and the experience of customers. 2. Direct Recipient of the Service Process Some services, like haircutting or public transportation, are directed at customers themselves. Customers also seek services (like dry cleaning) to restore or improve objects that belong to them, but they remain uninvolved in the process of service delivery and do not consume the benefits until later. The characteristics of the service encounter between service suppliers and their customers varies widely according to the extent to which customers themselves are integrally involved in the service process. 3. Place and Time of Service Delivery
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When designing delivery systems, service marketers must ask themselves whether customers need to visit the service organization at its own ( like haircut) or whether service should come to the customer (like the Internet weather information service and the pizza delivery to consumers apartment). Customization versus Standardization Services can be classified according to the degree of customization or standardization involved in service delivery. An important marketing decision is whether all customers should receive the same service or whether service features should be adapted to meet individual requirements. Ex: insurance policy is probably one of several standard options but bus service is standardized, with a fixed route and Nature of the Relationship with Customers Some services involve a formal relationship, in which each customer is known to the organization and all transactions are individually recorded and attributed (like bank). But in other services, unidentified customers undertake fleeting transactions and then disappear from the organization's sight (like customer uses the restaurant of refreshment centre and den flyaway ). Extent to which Demand and Supply Are in Balance Some service industries face steady demand for their services, whereas others encounter significant fluctuations. When the demand for service fluctuates widely over time, capacity must be adjusted to accommodate the level of demand or marketing strategies must be implemented to predict, manage, and smooth demand levels to bring them into balance with capacity. Some demand fluctuations are tied to events that marketers can't control. For example, over capacity of restaurant on weekends causes the long waiting time and shortage of empty tables.
Emergence Of Service Economy
The Service Economy is a relatively new coinage arising out of the popularity of the service sector. The service sector has gained a lot of importance in the world economy. Most of the developed countries are earning millions from the service sector alone. In US the service sector accounts for a greater percentage of GDP than it used to a couple of years back. The term Service Economy also known as Functional Economy is used to refer to the relative significance of service attached to a product offered by a company. In today s economy every product has a service value attached to it. The old dichotomy between product and services has been reduced and a service-product continuum has been established. In management this phenomenon is referred to as the Servitization of Products. When a company proceeds from maximizing its sales towards customer satisfaction it puts emphasis on the aspect of service. It helps the company to enhance its goodwill in the market. Advantages of the Service Economy y The concept of service economy will eventually give rise to a decentralized means of producing skilled jobs. y The individual enterprises will receive the competitive advantage in entering open markets while the big shots remain engrossed in selling products. y Product-life extension is a scheme that will reduce the material and energy consumption required to satisfy the needs of the consumers. It will enhance the productivity per unit. y The enhancement in resource productivity is eventually transformed into competency and profitability. Example: IBM is an unique example. In spite of being a manufacturing company it tends to call itself a services company. This has been the scenario since it realized that the price elasticity of demand for business solutions is less elastic than for hardware. The company now benefits from the revenue of the elongated contracts rather than receiving payment in a single mode. Studies reveal that service economy jobs can enjoy double productivity through the better application of information technology. Intranets can also produce double employee productivity. Usability is the key to enhancing the productivity of service economy. By analyzing which job is more useful than the other we humans might be able to crea te more jobs and save billions as well.
Service Marketing Mix
The services marketing mix is an extension of the 4-Ps framework. The essential elements of product, promotion, price and place remain but three additional variables people, physical evidence and process are included to 7 Ps mix. The need for the extension is due to the high degree of direct contact between the CE providers and the customers, the highly visible nature of the service process, and the simultaneity of the production and consumption. While it is possible to discuss people, physical evidence and process within the
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original-Ps framework (for example people can be considered part of the product offering) the extension allows a more thorough analysis of the marketing ingredients necessary for successful services marketing. 1. Service Product or Service Package: A service is a bundle of features and benefits. However these benefits have relevance to a specific target market. Hence while developing a service package it is important that the package of benefits in the service offer must have a customer perspective. Services product consists of 3 levels. y The first level is that of basic service package which includes core service, facilitating services and supporting services. y The second level is that of an augmented service offering where accessibility interaction and customer participation is given equal importance in delivering the service product . y the third level is that of the market communication of the service offering as in its absence the augmentation service package doesn t have any relevance to the customer. The service package: The package concept of service product suggests that what you offer to the market is a bundle of different services, tangible and intangible, but there is a main or substantive or core service and around it are built the auxiliary or peripheral or facilitator services. It is important to note that facilitating services are mandatory and if these were left out, the entire service would collapse. In the service package there are yet other type of services called supporting services. The basic difference between the two is that supporting services don t facilitate the consumption of core services but are used to increase the value and thus differentiate it from competition Example: In a 500 room hotel the core service is lodging and room service, bellboy services are facilitating services and health club , car rental are support services. However it may not always be possible to draw a line of distinction between facilitating and support services. For e.g. in a typical city hotel business centre might be the support service but in a business and convention hotel the same service would be facilitating service The augmented service offering. 2. Pricing A particular product or service is acceptable to the customer at a particular price and if the price ids increased it is likely that the same product or service might become less acceptable to the customer. Another issue related to pricing is that of perceptions about quality. Generally to most customers high price means high quality. Service pricing follows the principles and practices of pricing of goods and therefore they are either cost based or market based. Following aspects should be taken into consideration while pricing services: i. Demand fluctuations should be successfully handled ii. Service prices should be based on costs so as to take into account the tangible clues iii. Service pricing should be such as to provide value addition and quality indication iv. The pricing strategy should come up with the degree of competition. The pricing of services is greatly influenced by the basic service characteristics. However in setting price objectives several factors in relation to the overall marketing strategy of the corporation should be considered. Factors effecting the pricing are: y Product life cycle: the stage of life cycle of the service product is of utmost importance. For instance, At the introductory stage if there is no competition and the demand is high you may opt for high price, to make maximum gains in the short term (skimming policy). In a similar situation but with a low demand you may opt for low prices to penetrate into the market. Also you have to consider the elasticity of demand i.e. whether the demand is sensitive to the change in price or not. y Competition: competition should be studied both from the point of interbrand and also from the viewpoint of the brand that provides the same need satisfaction. For e.g. a private airline is facing competition from the national and other private airlines but also from the railways faster trains on the same routes during convenient timings y Strategic role of pricing: Lastly it is important to understand the strategic role of pricing in your overall marketing strategy. For e.g. a hotel chain might offer a package of low price or discount with a view to making people try out their services. It is likely that in the short run it might be a losing proposition but in the long run, it may give more customer satisfaction and thereby better utilization of services 3. Place: Because of intangibility of services they cannot be stored, transported and inventoried. Also because of inseparability, they must be created and sold at the same time. These 2 characteristics make the channel very short and direct. Most service is distributed through direct sales at best one direct agent and middleman can
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be added to it. For e.g.: an insurance agent, courier service. Keeping in view the characteristics and potential management problems, there are distinct channel configurations that can be noticed: The dominant channel configuration in the service sector is where agents and brokers play an imp role. The major function of these agents and brokers is to bring together the producer and consumer of service. These agents can be classified as broker or sales agents. E.g.: travel agents The agents may be trained in the creation and production of service and then franchised to sell it. E.g.: Shehnaz Hussain beauty parlours. In some cases actual product is not transferable & therefore tangible representations are created and transferred. This kind of tangible is used for marketing insurance services where a contact document exists as a physical & tangible representation of the service. 4. Promotion There are clear differences in information usage between goods and services. First, the difference is that the consumers of services are less likely to purchase without information, than those of goods. Second, the consumer of services will prefer personal sources to impersonal sources of information. And third, the basic characteristics of services have implications for communication strategies. The above three differences influence the decisions regarding the Communications objectives, Target audiences and Planning of each of the sub elements in the promotion mix Promotion objectives: the basic objective of promotion would be to develop public relations and create a brand image. The promotion mix should use indirect selling techniques, packaging and customization. Target audiences: In service sector there should be a direct contact between the customers and there service providers. Therefore some promotion should be directed towards the employees so as to motivate them to serve the customers better. The target audience also includes buyers, influencer and the decider or user of the buying cycle. Planning the Promotion mix: a customer is buying the performance of the service personnel and therefore the advertising in service industry shouldn t only restrict itself to encouraging consumption, but also it should encourage employees to perform well. Effective advertising programs should be such that they have a positive effect on contact personnel, capitalize on word of mouth, provide tangible clues, make offer easily understandable and contribute continuity. 5. People because of the simultaneity of production and consumption in services the staff occupy the key position in influencing customer s perceptions of product quality. In fact the service quality is inseparable from the quality of service provider. An important marketing task is to set standards to improve quality of s ervices provided by employees and monitor their performance. Without training and control employees tend to be variable in their performance leading to variable service quality. Training is crucial so that employees understand the appropriate forms of behaviour and trainees adopt the best practises of the and ragogy. 6. Physical evidence this is the environment in which the service is delivered and any tangible goods that facilitate the performance and communication of the service. Customers look for clues to the likely quality of a service also by inspecting the tangible evidence. For example, prospective customers may look to the design of learning materials, the appearance of facilities, staff, etc. 7. Process this means procedures, mechanism and flow of activities by which a service is acquired. Process decisions radically affect how a service is delivered to customers. The service includes several processes e.g. first contact with customers, administrative procedure regarding course delivery, preparation, delivery and evaluation of the courses. The following guideline can be useful for successful service management: y ensure that marketing happens at all levels from the marketing department to where the service is provided y consider introducing flexibility in providing the service; when feasible customize the service to the needs of customers y recruit high quality staff treat them well and communicate clearly to them: their attitudes and behavior are the key to service quality and differentiations y attempt to market to existing customers to increase their use of the service, or to take up new service products y sep up a quick response facility to customer problems and complaints y employ new technology to provide better services at lower costs y use branding to clearly differentiate service offering from the competition in the minds of target customers
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Understanding customer needs and expectations
process of market segmentation
The process of market segmentation, involves the creation of market segments or parts or sub-sets. A segment of the market is basically a sub-set, in terms of goods, service or product, of the entire market and is identified or created by the marketing department in such a manner that the individuals (or organizations) in that very segment would demand a certain set of goods and services that have similar features. In short, a segment is a division of market, the elements of which depict common needs. The meritorious features of a market segment includes the following: 1. Geographically or product-wise or even need wise, a single market segment is distinct from other segments, though one can also count on the existence of some minute similarities. 2. Products that are demanded by the consumers are homogeneous and in some cases also tend to have similar price levels. 3. A product introduction into such a segment stimulates similar and almost congruent reactions from a majority of consumers. Market Segmentation as a Process There are some specialized theories based upon which markets can be easily segmented into different sections. Market segmentation can be positive segmentation, negative segmentation or top-down segmentation. Companies also derive separate segmentation techniques for every product and brand. Market segmentation process is usually done with the help of past data, on filed surveys and consumer interactions. Volumes of goods supply in every segment is made with the help of economic indexes and average income and demand figures. Steps for Market Segmentation Process As mentioned above, one of the basic objectives of market segmentation is to maximize sales and profits. Hence, the three important objectives of any segmentation process is to gain new customers, sustain the existing consumers and introduce newer products into the market for the existing consumers and there by gain new consumers. The five step process of market segmentation goes as follows. 1. The first step in the market segmentation process is to establish the market and targeted consumers. This process involves tremendous paper work and surveys. Economic and demographic factors are also analyzed in the process. In addition to that this step might also include advertising about the product 2. The second step is often termed as market mapping and involves structuring the entire marketing procedures based upon the need of the said market. Logistics cost, retail and whole sale cost, etc, are some important parameters that are set up during this stage. Another very important factor involved in this step is the targeting of consumers who are also known as decision makers. The remaining three steps are derived on the basis of this step. 3. The third step is entirely dependent upon the consumers as the demand by consumers and their suggestions are largely viewed, surveyed, taken into consideration and in many cases implemented. 4. In this step, the actual segment begins to take shape as like minded consumers having same demands are placed together and are analyzed as a group. Launching of a parallel or a totally new product is viewed in this situation. This segregation is often based upon economic indexes, demographic, geographic situations. 5. The last step is catering to the needs of existing consumers and finding new markets. This step is purely the first step towards a new 5-step-cycle that begins with finding a new market.
creating valued relations with customer customer loyalty
The term customer loyalty is used to describe the behavior of repeat customers, as well as those that offer good ratings, reviews, or testimonials. Some customers do a particular company a great service by offering favorable word of mouth publicity regarding a product, telling friends and family, thus adding them to the number of loyal customers. However, customer loyalty includes much more. It is a process, a program, or a group of programs geared toward keeping a client happy so he or she will provide more business. Customer loyalty can be achieved in some cases by offering a quality product with a firm guarantee. Customer loyalty is also achieved through free offers, coupons, low interest rates on financing, high value trade-ins, extended warranties, rebates, and other rewards and incentive programs. The ultimate goal of customer
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loyalty programs is happy customers who will return to purchase again and persuade others to use that company's products or services. This equates to profitability, as well as happy stakeholders. Customer loyalty may be a one-time program or incentive, or an ongoing group of programs to entice consumers. Buy-one-get-one-free programs are very popular, as are purchases that come with rebates or free gifts. Another good incentive for achieving customer loyalty is offering a risk free trial period for a product or service. Also known as brand name loyalty, these types of incentives are meant to ensure that customers will return, not only to buy the same product again and again, but also to try other products or services offered by the company. Excellent customer service is another key element in gaining customer loyalty. If a client has a problem, the company should do whatever it takes to make things right. If a product is faulty, it should be replaced or the customer's money should be refunded. This should be standard procedure for any reputable business, but those who wish to develop customer loyalty on a large-scale basis may also go above and beyond the standard. They may offer even more by way of free gifts or discounts to appease the customer.
service encounters
"Service encounters are critical moments of truth in which customers often develop indelible impressions of a firm... From the customer's point of view, these encounters ARE the service" Service marketers are interested in the participants of the service encounter because to many customers, it is the face-to-face encounter which is the essence of the service product. In addition customers' interactions with other customers can create the potential for satisfaction or dissatisfaction with the service. Thus service marketers must attempt to exert some control over the many personal interactions which take place in the service environment. Yet for all its importance, the personal encounter is one of the most difficult aspects to manage because of the human dimension. The interaction between service personnel and customers is known as the service encounter that is concerned with the human dimensions of the exchange. Remember, this differs from the service experience , which is concerned with the customer's total experience before, during and after their purchase. As we have mentioned, there are two main participants in the service encounter, the customer and the service personnel. We shall discuss the role of the customer first.
Customers
Customers are important to the service process because: y they are the users/purchasers of the service y they perform part of the production process y satisfied customers represent potential word of mouth referrals y they represent a source of repeat business y they interact with other customers and thus influence satisfaction levels. Extraordinary as it seems, customers are co-producers of the service, contributing time and energy. In the maritime industry, for example, a customer may pack his or her own container and deliver it. As the production and consumption of a service are inseparable, customers often have to go to where the service is available and can adversely affect the quality of service, for example, by crowding the store. Just as there is cooperation, there can also be conflict due to the customers' interactions with other customers creating the potential for satisfaction and dissatisfaction within the service encounter. More important is the idea of customers influencing other customers in the consumption of a service. A flight on an airline is as much affected (or more so) by the type of fellow passengers you have as the flight attendants. Thus, airlines segregate passengers into first, business and economy class and not just for the service levels they provide for each group. Turn now to the next reading that explains in greater detail the importance of customers in the delivery of services and the types of roles they can fulfil. Service personnel While consumers of physical products seldom see the factory or meet the people who produce them, consumers of services do both. Service personnel are a vital, tangible criterion by which an intangible like a service is evaluated. These employees vary to the extent in which they have contact with the customer and are visible to him or her. A characteristic phenomenon is that there always seems to be a back office and a front
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Service marketing
BY: Dr. Pankaj Singh
office in services. In fact many organisations have their own terminology for these positions, for example, front stage/back stage, front-of-house/back-of-house. Cowell (1987) has used the dimensions of contact and visibility to classify service personnel as shown in Table below Table: Personnel involved in service product performance and delivery Contact with client Non-contact with client Visible to client Waitress Cook in steak house Service engineer Computer operator Non-visible to client Telephone operator Airline pilot Maintenance worker Accountant
Like customers, services personnel are a required and important component to the service process because they: y are producers of the service y represent the firm to customers and non-customers y are difficult to separate from the service product y have a close proximity to customers which provides a unique source of market research y are a differentiating feature of a service y impact on customer satisfaction. Managing the service encounter Being an effective service manager demands more than just the direct management of service encounters. We shall cover some different approaches to managing services in an indirect way. 1. Role theory Role theory is a learned set of behaviours that guides or directs how an individual operates in a given setting. Roles are passed down from employee to employee through on-the-job training. Thus, by understanding the frameworks of roles, managers can exert indirect control over the service encounter. Customers' satisfaction derives from how well both the consumers and service providers have performed their roles relative to expectations. This is called role congruence . Most roles in organisations are paired, some examples from different industry sectors are: y host and guest ¾ hospitality y master and servant ¾ personal service y mentor and student ¾ education y buyer and seller ¾ retailing. 2. Script theory
Script theory is an extension of role theory. In role theory, employees are likened to actors on a stage, so with script theory, we think of them as using scripts. Script theory is concerned with the use of key words and phrases which both participants recognise, and in effect can be used by employees to guide the customer through a transaction. Many organisations prepare scripts for emergency situations such as bomb threats and handling customer complaints because during service interruptions, panic or stress can interfere with the ability of an employee to think clearly. The script then becomes a device for coping with problems. A basic difference between role and script theory is that role theory is based on the commonality of behaviour across individuals with the focus on only the interpersonal service encounter. Script theory however, is based on the individual differences arising from social and cultural experience and relates to the total service experience. Below is an example of a simple script fo r telephone use in a company: 1. The telephone is to be answered within three rings by the nearest person. But do not leave a customer you are attending in order to answer the phone 2. Company phones are not to be used for personal business. Incoming calls for employees will not be permitted except in emergencies 3. Employees answering the telephone should say 'Good (morning/afternoon/ evening) (name of organisation) (your location) (your name) speaking, how may I help you?' 4. Always thank the caller. Say 'Thank you for calling' before hanging up.
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Service marketing
BY: Dr. Pankaj Singh
Now that we have some background of the participants in the service encounter, the next section discusses the next important element in the expanded marketing mix: process.
customer satisfaction
Customers are important asset to the organization, satisfied customers will buy more, and buy more frequently, and pay their bill promptly. In a manufacturing and service organization, customer satisfaction is considered as a measure of quality.TQM implies an organizational drive with meeting or exceeding customer needs. Understanding the customer's needs and expectations is essential to winning new business. To attain this level, the organization should examine their quality system to respond to their ever changing customer's needs. Characteristics of customer satisfaction. 1. it is far from simple. 2. it is not an objective statistic, but more of feeling and attitude. 3. therefore like people's opinion and feeling, it is subjective by nature. 4. because of this subjective nature, it is difficult to measure. 5. the measurement of customer satisfaction is not precise. 6. the customer satisfaction should not be viewed in vacuum, i.e., it should be compared with the level of satisfaction they have with competitor's product are service. Customer perception of quality. In an orgabnization there is no acceptable quality level because the customer's needs, values and expectations are constantly changing and becoming more demanding. An American Society for Quality (ASQ) survey reveals the following en d-user perception of quality 1.Performance 2.Features 3.Service 4. Warranty 5. Price 6. Reputation.
Measuring Customer Satisfaction:
Customer satisfaction measurement is a systematic process for collecting customer data (e.g. surveys, audits, etc.), analyzing these data to make it into actionable information, driving the results throughout an organization, and implementing satisfaction improvement plan. Thus, customer satisfaction measurement (CSM) is a management information system that continuously captures the voice of the customer through the assessment of performance from the customer s point of view Such measurement could me made by using any of the following methods:
Surveys Formal and informal feed back from customers Use of customer account data Complaints However, survey is the most common method.
Understand how customers perceive your organization and whether your performance meets their expectation. Identify PFI s (priorities for improvement) areas where improvement in performance will produce the greatest gain in customer satisfaction Set goals for service improvement and monitor progress against a customer satisfaction index Benchmark your performance against other organization Increase profits through improved customer loyalty and goodwill
The organization s process for requesting, measuring and monitoring feedback of customer satisfaction and dissatisfaction should provide information on continual basis. It should address conformance to requirements, meeting needs and expectations of customers, as well as price and delivery of product.
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1 Obtain Top Manage ent Buy In etermine Survey Objectives 2 3 ploratory Researc 4 Plan Sampling and Data collection 5 Design of Questionnaire 6. Actual Survey 7. Data Refining and Analysis 8. Recommendation and Implementation Plan 9. Plan timing of ne t Survey One must begin with essential preliminaries such as obtaining top management buy in and conducting e ploratory research. From there the sampling and data collection details should be worked out and the key business processes identified. Monitoring of Customer Satisfaction is now very important for a distribution company as it will lead to better l customer e perience and thereby goodwil . A quality survey is required to be undertaken periodically.
SERVQUAL and GAP Mod l
? This is the formal means to identify and correct gaps between desired levels and actual levels of performance ? This model is used by organizations to analyze certain processes of any division of their company which helps to improve the service quality ? This model is giving formal idea of the e pected level of service vs. Actual level of service provided to the consumer by an organization The Model is given in fig. below
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Management Perceptions of Customer Expectations
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Managers and employees have a very internal process-oriented view of their business, it is tough to break this view and to see things the way the customer does This gap of the SERVQUAL Model can help management with customer service
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Gap 2
Mismatch between manager s expectations of service quality and service quality specifications
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To implement a system to improve this gap, management must first understand exactly what the customer wants If this understanding is not present, it will be impossible for management to know whether their expectations are aligned with customer specifications.
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Gap 3 ± Poor delivery of service quality
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Once the specifications from gap 2 are aligned the next step is to deliver these services in a perfect manner Quality of delivery must be perfected during the interaction with the customer The employees that are responsible for these actions are referred to as contact personnel Some reasons for a lack of quality include poor training, communication, and preparation
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Differences between service delivery and external communication with customer
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Customers are influenced by what what they hear and see about a company s service Word-of-mouth publicity and advertising are main outlets which customers open their opinions to The difference between what a customer hears about a company s service and what is actually delivered is represented by gap 4 This gap can lead to dangerously negative customer perceptions
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Service marketing
BY: Dr. Pankaj Singh
?
Gap 5
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Differences between Expected and Perceived uality
Expected Service
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Perceived Service
This gap is directly related to everyone s perception of service quality Customers expect certain things from certain companies When someone goes into a McDonalds to order their favorite meal a Big Mac, they are expecting exactly what they are accustomed to getting (a quick, no hassle, tasty big burger with all the works). If it takes 15 minutes to get a Big Mac that doesn t even have the famous special sauce on it the customer s perceived service of McDonalds is going to plummet. - If gaps 1 through 4 are closed to a minimum then gap 5 should follow, if there are any gaps left in steps 1 through 4 the perceived customer service quality will be negatively affected - The way to make sure these gaps are closed is through thorough systems design, precise communication with customers, and a well-trained workforce. SERV AL methodology Clearly, from a Best Value perspective the measurement of service quality in the service sector should take into account customer expectations of service as well as perceptions of service. However, as Robinson (1999) concludes: "It is apparent that there is little consensus of opinion and much disagreement about how to measure service quality". The SERVQUAL instrument has been the predominant method used to measure consumers perceptions of service quality. It has five generic dimensions or factors and are stated as follows. (1) Tangibles. Physical facilities, equipment and appearance of personnel. (2) Reliability. Ability to perform the promised service dependably and accurately. (3) Responsiveness. Willingness to help customers and provide prompt service. (4) Assurance (including competence, courtesy, credibility and security). Knowledge and courtesy of employees and their ability to inspire trust and confidence. (5)Empathy (including access, communication, understanding the customer). Caring and individualized attention that the firm provides to its customers. In the SERVQUAL instrument, 22 statements measure the performance across these five dimensions, using a seven point likert scale measuring both customer expectations and perceptions. It is important to note that without adequate information on both the quality of services expected and perceptions of services received then feedback from customer surveys can be highly misleading from both a policy and an operational perspective. Just as the SERVQUAL instrument is extensively used to assess external service quality, the instrument can also be modified to assess the quality of the internal service provided by departments and divisions within a company to employees in other departments and divisions. The results of the current study illustrate that organizations can at least assess five dimensions of service quality to ascertain the level of services provided, and to determine which dimensions need improvement.
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handling complaints
Even with the best organizations, failures can just happen. They may be due to the service not available when promised, may be delivered late or too slowly, the outcome may be incorrect or poorly executed. All this types of failures bring about negative experiences. If they are left unsolved, they can result in customers leaving, telling others about the negative experiences or even challenging through customer courts. Some complaints are made while service delivery is still taking place, while others are made afte r the fact. In both the cases, how the complaint handled may determine whether the customer remains with the firm or seeks new suppliers in the future.
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Service marketing
BY: Dr. Pankaj Singh
MEANING OF COMPLAINT: service failure and recovery Complaint data can be invaluable to the development of your business, Allowing you to assess your performance, identify any complaint trends and better align your services to suit customer expectation. Adopting a narrow definition of a complaint will mean you are not Able to assess accurately the real needs of your customers or the true level of dissatisfaction. Definition of a complaint is very broad: ..An expression of dissatisfaction made to a supplier in relation to, (a) Carrying on business as a carrier(b) Carrying on business as a carriage service provider,(c) Supplying a content service using a listed carriage service; and (d) Supplying a telecommunications product s amongst your customer base. INTROD CTION: Even with the best organizations, failures can just happen. They may be due to the service not available when promised, may be delivered late or too slowly, the outcome may be incorrect or poorly executed. All this types of failures bring about negative experiences. If they are left unsolved, they can result in customers leaving, telling others about the negative experiences or even challenging through customer courts. Some complaints are made while service delivery is still taking place, while others are made after the fact. In both the cases, how the complaint handled may determine whether the customer remains with the firm or seeks new suppliers in the future. MEANING OF COMPLAINT:
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Complaint data can be invaluable to the development of your business, Allowing you to assess your performance, identify any complaint trends and better align your services to suit customer expectation. Adopting a narrow definition of a complaint will mean you are not Able to assess accurately the real needs of your customers or the true level of dissatisfaction. Definition of a complaint is very broad: ..An expression of dissatisfaction made to a supplier in relation to, (a) Carrying on business as a carrier(b) Carrying on business as a carriage service provider,(c) Supplying a content service using a listed carriage service; and (d) Supplying a telecommunications product s amongst your customer base. C STOMER RESPONSE CATOGORIES TO SERVICE FAIL ERS: When service is faiulre or not satisfied, the customers can take may a kind of public action or public process or may take some kind of private action or private movement or they may can not take any kind of action as they are enough of thire findings. If customer take public action or government action , they can complain directile to the service firm or to the organization or they can complain to the third party or they may take any kind of legal action to seek their redress or to get thire right or benefits. If customer take any kind of private action, they can used to defects or switch directly to the provider or may be used any kind of negative word of mouth to the organization. And if customer is comfortable to their recommendations anout their complaints or they get benefits they can not take any kind of action. Understanding Customer Responses to Service Failure:
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Why do customers complain? o Obtain compensation o Release their anger o Help to improve the service o Because of concern for others What proportion of unhappy customers complain? Generally 9% to 37% of unhappy customers can make complaints to the firms.
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Service marketing
BY: Dr. Pankaj Singh
y
Why don t unhappy customers complain? There are three primary reasons why dissatisfied customers don t complaint: 1] They think that it is not worth the time or effort. 2] They further think that no one would be concerned about their problem or solving it. 3] They do not know where to go or what to do. Who is most likely to complain? Where do customers complain? What do customers expect once they have made a complaint? Dealing with Complaining Customers and Recovering from Service Failure Take complaints professionally and not personally. Be prepared to deal with angry customer who may behave in an insulting way to service personnel who may not be at fault. Take the perspective that customer complaints allow firm a chance to o Correct problems,. o Restore relationships. o Improve future satisfaction for all. Develop effective service recovery procedures. COMPLAINT HANDLING PROCED RE:
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According to TIO- a telecommunication industry, there is a specific & suitable procedure of complaint handling which is necessary to be followed in any organization. But you will need to tailor your own procedures to suit the size of your business and the services you offer. At a minimum your complaint handling procedure should require the following for your staff or organization: 1] An acknowledgement of receipt of the complaint: It is a strong need that you acknowledge the receipt of all complaints, verbal or written. It is a good idea to allocate a complaint reference number and provides the customer with a contact point for further correspondence. 2] An accurate and accessible record of complaint information: Be sure that your recorded version of the complaint matches exactly that of the customer. Also make sure that the complaint record is accessible by any area of the organization that the customer may contact. 3] Attachment to timeframes for resolution: According to TIO, the company or firm should attempt to resolve complaints on first contact, but if this isn t possible, then a complaint should be finalized within 30 days. 4]Customers must be inform about any delays in resolving a complaint: As soon as the company realizes that they are unable to resolve a complaint in the timeframes given, contact the customer, advising him or her of the delay and set a new timeline. 5] Rewarding Attachment amongst Your Staff: The complaint handling procedures should be a standard component of your employee induction training and should also be included in Ongoing training as required. 6] Inform Customers Of Complaint Handling Procedures: A brochure or fact sheet is a great way to make customers aware of your Complaint handling procedures. You should outline the main components of your procedure and send it to customers with your first bill and when they lodge a verbal or written complaint with you. If a brochure is too expensive or not practical, place some information on your website, or consider sending your customers an email outlining your policies and procedures. Just make sure that you make it accessible and easy to read and understand. MEANING OF SERVICE RECOVERY: Service Recovery refers to the actions taken by an organization in response to a service failure. Failures occur for all kinds 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 and employees may be rude. All this type of failures brings about negative feelings and responses from customers. Left unfixed, they can result in customers leaving, telling other customers about their negative experiences and even challenging the organization through customer s rights or legal channels. Research has shown that,
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Service marketing
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resolving customer problem effectively has a strong impact of customer s satisfaction, loyalty and bottom- line performance. That is customer who experience service failure, but ultimately satisfied based on recovery efforts by the firm, will be more loyal than those whose problems are not resolved. Those who complain and have their problems resolved quickly, are much more likely to come again than those whose complaints are not resolved. Those who never complaint is less likely to come. SERVICE RECOVERY STAGES: Service Recovery in an organization progresses through a series of stages, shown in the following points: Stage 1, Expiring: The service of the consumer in this stage is expire means finished. There is no complaint handling. Angry customers are ignored. Letters to VIPs and even the CEO about a damaged shipment go unanswered. Stage 2: Reactive: Customer complaints are heard, and a response is made. But it's a careless process with no defined goals for the response and no one owning this business process. Stage 3: Active Listening: At this stage, the response to issues voiced by customers is structured. Specific people have the responsibility to respond to complaints and guidelines are in place for the response. However, it is still reactive. Stage 4: Attentiveness: The critical change from Stage 3 to 4 is the move from reactive to proactive solicitation of customers with issues. The reason this is so important is that most customers don't bother to complain. They just move on to other suppliers of products. Haven't we all done this? It's a lot of work to complain! Stage 5: Rechecking/ Frequentness: The pinnacle of Service Recovery Practices is achieved when the complaint identification merges with business process improvement or six sigma programs to support root cause identification and resolution. The owners of business processes that cause customer issues are notified of the occurrences to prompt reexamination of the process design. In essence, we see two levels of feedback loops. First, feedback from the customer to the organization. Second, feedback from the customer-facing groups to its business partners within the organization.
Positioning a service in the market
that communication can only take place at the right time and under the right circumstances." The main positioning strategy is to either developing or reinforcing a particular image for the brand in the mind of the customer. Positioning is the result of differentiatio n decisions. It is the act of designing the company's offering and identity (that will create a planned image) so that they occupy a meaningful and distinct competitive position in the target customer's minds. The end result of positioning is the creation of a market-focused value proposition, a simple clear statement of why the target market should use the service.
Search for Competitive Advantage in Services Requires Differentiation and Focus Intensifying competition in service sector threatens firms with no distinctive competence and undifferentiated offerings Slowing market growth in mature service industries means that only way for a firm to grow is to take share from competitors Rather than attempting to compete in an entire market, firm must focus efforts on those customers it can serve best Must decide how many service offerings with what distinctive (and desired) characteristics
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Se ice m
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1. Must est lish position for firm or product in minds of customers 2. Position should be distincti e, providing one simple, consistent message 3. Position must set firm/product apart from competitors 4. Firm cannot be all things to all people--must focus Uses of Positioning in Marketing Management Understand relationships bet een products and markets compare to competition on specific attributes evaluate product¶s abilit to meet consumer needs/expectations predict demand at specific prices/performance levels Identify market opportunities introduce new products redesign existing products eliminate non-performing products Make marketing mix decisions, respond to competition distribution/service delivery pricing communication The main approaches to positioning strategy are: Product attributes Price quality relationships Reference to competitors (usually shortcomings Usage occasions User characteristics Product class
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BY: Dr. Pankaj Singh
Service marke ing
New service development
Services marketing is built on carefully understanding the deeper needs of your customers and then providing services that will help to make them more successful. There is a great deal of leverage in providing services since after your organization has started to delight your customers with your first services you'll have the opportunity to hear your customers articulate progressively higher impact areas that they'd like you to address. This is when a virtuous cycle emerges your most demanding, early adopter customers help you to identify services that will subsequently address the needs of your mainstream market customers months or years later. When this occurs you have succeeded in building a services business based on a deep understanding of your customers The diagram identifies the four phases of the Service Development Lifecycle
a a a b b c
Customer Pain Point Identifying the Customer Pain Point is the starting point in the Service Development Lifecycle. The choice of the words "pain point" is intentional: only something that is severe enough to be nfu to your customer will pa cause them to act to relieve the pain. This pain doesn't necessarily have to be in a negative sense the pain can easily be that of the frustration of wanting your product to do even more than it does today. If you've established good communications with your customers, they'll tell you their pain points. What will the pain points sound like They might be articulated as "I can't allocate headcount to have a staff person do software patch management. I'd like to have your organization do this for me" or "I need to increase the production availability of your product to at least 90 ". The identification of the customer pain point can involve the use of formal and informal market research methods. Among the many techniques are: 1. In-depth interviews with your field support staff. 2. Requests from your most important customers. 3. One-on-one customer interviews. 4. Customer focus groups. This is a formal market research method in which your customers participate in a group discussion with other customers. 5. Customer user group meetings. These can provide a ready-made forum for discussions of current challenges. 6. Review of customer support calls or warranty claims to identify systemic problems. For e ample, you might find that customers who don't have trained operators have a higher rate of warranty and out of warranty repair claims than those who train their operators. Service Definition The second phase of the Service Development Lifecycle is Developing the Service Definition. During this phase the detailed characteristics of the service are developed. A clear, concise statement of service deliverables and impact will enhance customer satisfaction. Very importantly, a well -defined set of deliverables will clearly identify an end point for the service engagement. Without this, the engagement can drag on and pull down your profit margin. A number of methods can be used to define the service: 1. Restate the customer pain point into an action statement.
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Service marketing
BY: Dr. Pankaj Singh
2. Dissect the customer pain point statement. The detailed points can then be used as the basis for the components of the service. 3. Define and bound the range of work to be performed. Provide a detailed description of which product areas and interfaces will be examined. 4. Develop a clearly stated definition for the completion of the services engagement. 5. Develop a service methodology. . 6. Seek alignment with the goals and capabilities of other functional organizations in your company: 7. Identify roles and responsibilities for your staff and the customer staff. Identify any equipment to be provided by either organization, the decision making process, timelines, et al. 9. For higher priced, higher risk services, identify an executive sponsor for the engagement within the customer organization. This person can remove organizational roadblocks, and work though problems. 10. Identify whether the customer wants a knowledge transfer to their staff or for your organization to provide operations staffing as well 11. Craft methods to measure and track customer satisfaction. Marketing & Selling The next phase of the Service Development Lifecycle is Marketing & Selling your new support service. This phase packages the service into an offering that can readily be communicated and sold by your company. This is also the phase in which to develop a "business model" which identifies your financial targets, pricing approach, sales channel(s), channel selling, resource requirements, et al. The amount of time and effort that you put into the development of the business model is of course commensurate with the anticipated level of impact of the service product on your organization and the overall company. Delivering & Supporting The final phase of the Service Development Lifecycle is Delivering & Su pporting the new service product with a customer. To use a well worn phrase, "the rubber meets the road" during this phase. If the prior phases have been implemented carefully, the customer has a clear understanding of: 1 . The components of service that will be delivered 2. How the service will be delivered (e.g., engineers on site from 8:00 AM to 5:00 PM every business day, or, once per month visits to install system updates and retune the system) 3. Prerequisites and requirements to be fulfilled by the customer before and during the services engagement 4. Who will deliver the service, whether jointly, or solely by your company. The management structure and reporting relationships for the engagement are clearly identified, with specified roles and responsibilities. 5. Service methodology to be used 6. Timeline & milestones 7. Payment terms and conditions 8. Client training and support 9. Warranty 10. Engagement closure During delivery of the service is a great time to actively engage in the first phase of the Service Development Lifecycle: Identifying the Customer Pain Point. Your team will now have significant access to key audiences in the customer organization, who may be very eager to articulate their needs to a good listener. You'll then be on your way to developing another service, with a launch customer from the very beginning! Conclusion Services can be readily identified and brought to market by product support organizations. The Service Development Lifecycle provides a straightforward process by which to identify, develop and bring to market services that are unique and relevant to your customers. The right services will simultaneously enhance customer satisfaction and provide revenue and profit growth for your company.
pricing the service product
The difference between cost and value Knowing the difference between cost and value can increase profitability: y the cost of your product or service is the amount you spend to produce it y the price is your financial reward for providing the product or service y the value is what your customer believes the product or service is worth to them For example, the cost for a plumber to fix a burst pipe at a customer's home may be £5 for travel, materials costing £2.50 and an hour's labour at £10. However, the value of the service to the customer - who may have water leaking all over their house - is far greater than the £17.50 cost, so the plumber may decide to charge a total of £50.
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Service marketing
BY: Dr. Pankaj Singh
Pricing should be in line with the value of the benefits that your business provides for its customers, while also bearing in mind the prices your competitors charge. To maximise your profitability, find out: y what benefits your customers gain from using your product or service y the criteria your customers use for buying decisions - for example, speed of delivery, convenience or reliability y what value your customers place on receiving the benefits you provide Wherever possible, set prices that reflect the value you provide - not just the cost. Covering fixed and variable costs Every business needs to cover its costs in order to make a profit. Working out your costs accurately is an essential part of working out your pricing. Divide your costs under two headings: y fixed costs are those that are always there, regardless of how much or how little you sell, for example rent, salaries and business rates y variable costs are those that rise as your sales increase, such as additional raw materials, extra labour and transport When you set a price, it must be higher than the variable cost of producing your product or service. Each sale will then make a contribution towards covering your fixed costs - and making profits. Cost-plus versus value-based pricing There are two basic methods of pricing your products and services: cost-plus and value-based pricing. The best choice depends on your type of business, what influences your customers to buy and the nature of your competition. Cost-plus pricing This takes the cost of producing your product or service and adds an amount that you need to make a profit. This is usually expressed as a percentage of the cost. It is generally more suited to businesses that deal with large volumes or which operate in markets dominated by competition on price. But cost-plus pricing ignores your image and market positioning. And hidden costs are easily forgotten, so your true profit per sale is often lower than you realise. Value-based pricing This focuses on the price you believe customers are willing to pay, based on the benefits your business offers them. Value-based pricing depends on the strength of the benefits you can prove you offer to customers. See our guide on planning to sell. If you have clearly-defined benefits that give you an advantage over your competitors, you can charge according to the value you offer customers. While this approach can prove very profitable, it can alienate potential customers who are driven only by price and can also draw in new competitors. How to build a pricing strategy You need to decide whether to use cost-plus or value-based pricing. See the page in this guide on cost-plus versus value-based pricing. It's important to find out what your competitors offer and what they charge. If you phone your rivals and ask them for a quote, you can use this information as a framework. It's probably unwise to set your prices too much higher or lower without a good reason. If you price too low, you will just be throwing away profit. If you price too high, you will lose customers, unless you can offer them something they can't get elsewhere. The perception of your product or service is also important. In many markets, a high price contributes to the perception of your product as being of premium value. This might encourage customers to buy from you - or it might deter price-conscious customers. It can be useful to charge different prices to different customers, eg to customers who purchase repeatedly, or buy add-on or related products, as a thank you for their loyalty. Bear in mind that customers who are expensive to satisfy will be less profitable, unless you charge them higher prices. One-off sales may cost you more than repeat business. You can also use pricing tactics to attract customers. See the page in this guide on different pricing tactics. Whatever prices you set, check that they cover your costs and can deliver a profit. See the page in this guide on covering fixed and variable costs.
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Service marketing
BY: Dr. Pankaj Singh
Different pricing tactics Different tactics can help you attract more customers and maximise profits. Discounting Offering specially-reduced prices can be a powerful tool. This could be a clearance discount to sell old stock, a discount for making multiple purchases of the same or similar products, or you could offer bulk discounts to encourage larger orders. You should be able to make these more profitable through lower costs. But be careful. If you discount too much, customers may question your full-rate pricing or see you as a cheap option, making it difficult to charge full -rate prices in the future. Odd value pricing Using the retailer's tactic of selling products for £9.99 instead of £10 can be useful if price is an essential part of customers' buying decisions. Some customers perceive odd value prices like this as being more attractive. Loss leader This involves selling a product at a low or even loss-making price. Although you may not make a profit selling this product, you could attract customers who will also buy other, more profitable products. Skimming If you have a unique product or service, you can sell it at a high price. This is known as skimming - but you need to be sure that what you are selling is unique. Otherwise you may just price yourself out of the market if there is credible competition. Penetration This is the opposite of skimming - starting at a low price and gaining market share before competitors catch up with you. Once you have a loyal customer base, you should be able to find ways to raise prices later. See the page in this guide on raising or lowering prices. Raising or lowering prices There will be times when you need to change your prices. But before you do, you should analyse the impact on your profitability of any proposed price change. There are two key questions you will need to answer: y What effect will the price change have on the volume of sales? y What will the effect be on the profit per sale? Increasing prices Increasing prices can improve your profitability even though your sales volume may drop. If you are increasing your prices, always explain to your customers why you are doing it. You can use the price change as an opportunity to re-emphasise the benefits you offer. For more information, see our guide on planning to sell . A good explanation can also strengthen your relationship with a customer. There are also ways that you can hide price increases. For example, you might: y introduce new, higher-priced products or services and make older, cheaper ones obsolete y lower the specification - and your costs - while maintaining the same price But be aware that hiding price increases can risk adverse reactions from customers if they realise what you are doing. Reducing prices You should never take the decision to lower prices lightly. Low prices often go hand-in-hand with poor-quality service - is this the image you want to create for your business? Concentrate on building profits rather than cutting prices to build up sales. In most circumstances, your customers decide to buy from you because of the benefits you offer, along with your price. It is rare for the decision to be made based solely on the price.
Marketing Communication in Service Industry
There are some difficulty in to communicate the utility and requirement of a particular service to the customer. Marketing communication in the case of the product is easier than service because we can show a lot of product attribute, we can use free sample, test drive , and different demonstration of the product to the customer. In the case of the service i.e. airlines, banking, entertainment, hospitals, education etc it is not
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Service marketing
BY: Dr. Pankaj Singh
always easy to create advertising and therefore a lot of other activities like telemarketing, personal selling etc. has to be used for better communication to the consumer. Requirement of the marketing communication: The requirement of the communication is as follows 1. To attract new customers 2. To retain existing customers 3. To maintain communication between organizations 4. To introduce a new service 5. After any service development 6. To maintain better relationship with customers 7. To know the feedback of existing service 8. To know the requirement of any supplementary service 9. To know the marketing strategy of competitors Communication efforts serve not only to attract new users but also to maintain contact with an organization's existing customers and build relationships with them. Techniques for keeping in touch with customers and building their loyalty include direct mail and contacts by telephone or other forms of telecommunication, including faxes, e-mail, and Web sites. Doctors, dentists, and household maintenance services often post annual check up reminders to their customers. Some businesses even send birthday and anniversary cards to valued customers. Banks and utility companies often include a brief newsletter with their account statements or print customized information on each statement in an effort to cross-sell additional services. COMM NICATION STRATEGIES FOR SERVICES Several of the differences distinguishing services from goods have important marketing communications implications. Thus communication strategies need to reflect the special characteristics of services. Intangible Nature of Service Performances Since services are performances rather than objects, their benefits can be difficult to communicate to customers. Service providers should use tangible cues whenever possible in their advertising campaigns, especially for low-contact services that involve few tangible elements. It is also helpful to include "vivid information" that will produce a strong, clear impression on the senses, especially for services that are complex and highly intangible. For example, an ad by a Bank showed a picture of Credit and debit cards, ATMs, Bank exteriors and interiors, peoples etc. Similarly, MasterCard television and print advertisements emphasize the tangible things that can be purchased with its credit card complete with a listing of the price of each item. Customer Involvement in Production In high-contact services, customers are often concerned about the risks associated with service delivery and consumption. Sometimes these risks are financial or psychological in nature, but there can also be physical risks as in many outdoor sports and organized adventure activities like rock climbing, skiing, and water rafting. The providers of such services have both a legal and a moral responsibility to educate their clients. The better informed customers are of potential dangers, and what to do in the event of, say, a raft tipping its occupants into a stretch of foaming rapids, the more likely they are to remain safe and have an enjoyable experience. Basic information on signs and in instruc-tional brochures may need to be reinforced by personal briefings from employees. Evaluating Service Offerings Even if you understand what a service is supposed to do, you may have difficulty distinguishing one firm from another and knowing what level of performance to expect from a particular supplier. What can a service business do to attract your attention and your patronage? Possible solutions include: providing tangible clues related to service performance; highlighting the quality of equipment and facilities; and emphasizing employee characteristics such as their qualifications, experience, commitment, and professionalism. In low-contact services "where much of the firm's expertise is hidden, firms may need to illustrate equipment, procedures, and employee activities that are taking place backstage. For instance, how do prospective buyers know if they are getting the best value from insurance services? One approach is to show how the firm is trying to reduce losses due to acci-dents or to cut costs. Supply-and-Demand Management Many live service performances like a seat at the Metropolitan Opera for Friday evening's performance of Carmen, a room at the Marriott on Monday, or a haircut at Supercuts on Tuesday morning are time-specific and can't be stored for resale at a later date. Advertising and sales promotions can help to change the timing of customer use and thus help to match demand with the capacity available at a given time. Demand management strategies include reducing usage during peak demand periods and stimulating it during off-peak
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Service marketing
BY: Dr. Pankaj Singh
periods. Low demand outside peak periods poses a serious problem for service industries with high fixed costs, like hotels. One strategy is to run promotions that offer extra value such as a room upgrade and a free breakfast, in an attempt to stimulate demand without decreasing price. When demand increases, the number of promotions can be reduced or eliminated. Importance of Contact Personnel In high-contact services, service personnel are central to service delivery. Their presence makes the service more tangible and, in many cases, more personalized. An ad that shows employees at work helps prospective customers understand the nature of the ser- vice encounter and implies a promise of the personalized attention that they can expect to receive. Advertisers must be realistic, since these messages help set customers' expectations. If a firm's brochures and ads show friendly, smiling workers but, in reality, most employees turn out to be glum, frazzled, or rude, customers will most certainly be disappointed. Advertising can also be effective in showing employees what cus-tomers are being promised. At a minimum, service personnel should be informed about the content of new advertising campaigns or brochures. Reduced Role for Intermediaries Intermediaries like retailers often play a key role in promoting products and teaching customers about their characteristics. Services are less likely than goods to be sold through channel intermediaries. Many service providers (such as universities, lawn care specialists, banks, restaurants, health clubs, and professional firms) sell directly to customers. But some service providers do rely on intermediaries for help in selling their products. Firms in the travel and insurance industries, which make extensive use of independent agents and brokers, must compete with other brands not only for physical display space but also for "top-of-mind" recall if they are to obtain adequate push from intermediaries in the distribution channels. Internal communication, personal selling, motivational promotions, and effective public relations can be critical in maintaining successful working relationships between intermediaries and service firms. THE MARKETING COMM NICATIONS MIX Most service marketers have access to numerous forms of communication, referred to collectively as the marketing communications mix. Different communication elements have distinctive capabilities relative to the types of messages that they can convey and the market segments most likely to be exposed to them. Communication experts draw a broad division between personal communications, involving personalized messages that move in both directions between two par- ties, and impersonal communications, in which messages move in only one direction and are generally targeted at a large group of customers and prospects rather than at a single individual.
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Personal Communications
Personal communications include personal selling, telemarketing, customer training, customer service, and word of mouth. Personal Selling Interpersonal encounters in which efforts are made to educate customers and promote preference for a particular brand or product are referred to as personal selling. For infrequently purchased services like property, insurance, and funeral services, the firm's representative may act as a consultant to help buyers make their selections. Because face-to-face selling is usually expensive, it's most often used in business-tobusiness markets. A lower-cost alternative is telemarketing, involving use of the telephone to reach prospective customers. It's used by about 75 percent of all industrial companies. Relationship marketing strategies are often based on account management pro- grams, where customers are assigned a designated account manager who acts as an interface between the customer and the supplier. Account management is most commonly practiced in industrial and professional firms that sell relatively complex services, resulting in an ongoing need for advice, education, and consultation. Examples of account management for individual consumers can be found in insurance, investment management, and medical services. Customer Service Employees in customer service positions are often responsible for delivery of a variety of supplementary services, including providing information, taking reservations, receiving payments, and problem solving. New customers, in particular, often rely on customer service personnel for assistance in learning how to use a service effectively and how to resolve problems. Customer Training Some companies, especially those selling complex business-tobusiness services, offer formal training courses to familiarize their customers with the service product and teach them how to use it to their best advantage.
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Service marketing
BY: Dr. Pankaj Singh
Word of Mouth Recommendations from other customers can have a powerful influence on people's decisions to use a service, but word of mouth is a difficult form of communication for firms to control. Some advertisers try to encourage positive comments from customers who have already used a service since positive word of mouth can act as a powerful and highly credible selling agent.9 In an effort to extend the reach of word of mouth, advertising and brochures sometimes feature comments from satisfied customers. Public relations Public relation involves efforts to stimulate positive interest in an organization and its products by sending out news releases, holding press conferences, staging special events, and sponsoring newsworthy activities put on by third parties. A basic element in public relations strategy is the preparation and distribution of press releases (including photos and/or videos) that feature stories about the company, its products, and its employees. PR executives also arrange press conferences and distribute press kits when they feel a story is especially newsworthy. A key task performed by corporate PR spe-cialists is to teach senior managers how to present themselves well at news conferences or in radio and television interviews.
Impersonal Communications
Advertising As the most dominant form of communication in consumer marketing, advertising is often the first point of contact between service marketers and their customers, serving to build awareness, inform, persuade, and remind. It plays a vital role in providing factual information about services and educating customers about product features and capabilities. One of the challenges facing by advertisers is how to get their messages noticed. Television and radio broadcasts are cluttered with commercials, while newspapers and magazines sometimes seem to contain more ads than news and features. How can a firm hope to stand out from the crowd? Longer, louder commercials and bigger format ads are not necessarily the answer. Some advertisers stand out by using a sharply different format. Advertising Media: New Media Internet - websites and search engines Magazines Others...
Outdoor (Posters or transport) Newspapers (Local and National) Radio
New Media - Mobile devices Television Cinema
Planning for advertising: Advertising agencies and their clients plan for advertising. Any plan should address the following stages: y Who is the potential TARGET AUDIENCE of the advert? y WHAT do I wish to communicate to this target audience? y Why is this message so IMPORTANT to them? y What is the BEST MEDIUM for this message to take (see some of the possible media above)? y What would be the most appropriate TIMING? y What RESOURCES will the advertising campaign need? y How do we CONTROL our advertising and monitor success? There are two key categories of advertising, namely 'above-the-line' and 'below-the-line.' The definitions owe a lot to the historical development of advertising agencies and how they charge for their services. In a nutshell, 'above-the-line' is any work done involving media where a commission is taken by an advertising agency, and 'below-the-line' is work done for a client where a standard charge replaces commission. So TV advertising is 'above-the-line' since an agency would book commercial time on behalf of a client, but placing an advert in a series of local newspapers is 'below-the-line,' because newspapers tend to apply their own costing approach where no commission is taken by the agency i.e. instead the agency charges the client a transparent fee. There are many facets and elements to advertising - too many to be covered in this short lesson. Try some of the other lessons to build your knowledge.
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Service marketing
BY: Dr. Pankaj Singh
challenges in distribution of services
Distribution of services: There are two type of distribution in service Physical Distribution and electronic Distribution. Physical distribution happens in high contact service while electronic distribution happens in low contact service. Now a days almost every type of service have both physical as well as electronic distribution happens. In physical distribution the two thing happens either the customer goes to the service provider of the service provider comes to the customer itself. Customers Visit the Service Site The convenience of service factory locations and operational schedules becomes an important marketing issue when customers are required to be physically present throughout service delivery or even just to initiate and terminate the transaction. Retail gravity models and other elaborate statistical techniques are sometimes used to help decide how to locate businesses relative to where prospective customers live or work. Traffic and pedestrian counts are used to establish how many prospective customers pass certain locations each day. Construction of a new highway or the introduction of new rail or bus service may have a significant effect on travel patterns and, in turn, determine which sites are now more desirable and which, less so. Providers Come to the Customer For some types of services, the supplier visits the customer. This is, of course, essential when the target of the service is some immovable physical object like a building that needs cleaning, a large machine that needs repair, a house that requires pest-control treatment, or a garden that needs landscaping. Since it's more expensive and time consuming for service personnel and their equipment to travel to the customer than vice versa, the trend has been away from this approach where possible (few doctors make house calls nowadays!). The services delivery process goes through the different king of challenges before creating any strategy of the service distribution the service providers has to be go through lots of decision making processes some of the decisions which has to be taken are y What should be the nature o contact between the service provider and its customers! Should customers come to the provider or the other way around? Or should the two parties deal at arm's length, using mail and telecommunications (ranging from telephone to the Web)? y What should be the sequencing o the various steps in the service delivery process! Both operational and customer preferences need to be taken into account in making this decision. The blueprinting methods we discussed in Chapter 7 can be used in exploring alternative delivery sequences. y Where (location) and when (scheduling) should these steps take place! The choice today is not only between different physical locations but also between physical space and cyberspace. y What should be the nature o customer involvement at each step! If customers are required to be present, should they be served in batches or individually? Alternatively, should they serve themselves? y What imagery and atmosphere should the service delivery environment (or service space) try to create? For a high-contact service, this concerns decisions on: facility design and layout; staff uniforms, appearance, and attitudes; the type of furnishings and equipment installed; and the use of music, lighting, and decor. y Should a service irm take responsibility or the entire delivery process or delegate some steps to intermediaries? Some supplementary services, like information and reservations, can be handled very efficiently and cost-effectively by intermediaries. y What should be the serving protocol? Should the firm operate a reservations system or work on a first-come, first-served basis, using queuing when necessary? Or should a priority system be established for certain types of customers (like many firms do for their larger industrial accounts or airlines do for their gold card frequent flyers)? There are a lot of more challenges a service distribution has to be go through. Some of them are as follows i. Physical Evidence: This is the biggest challenge a service distribution system is go through because is the customer has to come to the service site where the production and distribution of the service is being together i.e Barber shop, Restaurant, Banking, Movie theatres etc then these cautions has to be taken y The customer waiting time should be minimum y If the customer has to wait for long time then the proper entertainment like TV, Newspapers, Good atmosphere etc should be provided y The place of the production of the service has to be clean and free from dirt and bad smell ii. People:
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Service marketing
BY: Dr. Pankaj Singh
In the high contact service the distribution is done by people it self i.e. the working or delivery staff of the service . so it is a big challenge of the delivery process. Some cautions should be taken as follows y People should be well dressed and clean y The way of talking is polite and convenient to the consumer y The process of delivery should be smooth so the customer feel his importance y The proper training program for staff should be up dated iii. Reliability: Reliability is a big challenge for service delivery and it is important for both low as well as high contact services. In high contact service like Barber shop, Hospitals, Restaurants the service has to be delivered carefully. In electronic delivery like ATM, online banking, online shopping, online ticket booking etc the reliability is most important and it is a very big challenge for service providers iv. Process: Process means the no of steps taken by the consumer to avail the service. The shorter and easier the process is the better the delivery will be. The paperwork for availing the service should be minimum and the time taken between the requirement request and delivery should be as less as possible So these are some challenges of service delivery and it can be easily understand that the delivery of the service is much harder than the delivery of the product.
role of employees
Before going on to discuss the employees role in services, we feel it is important to differentiate between products and services. Services in most simple terms are deeds, processes and performances. Services may also be defined as any activity or benefit that one party offer to another that is essentially intangible and does not result in the ownership of anything. These simple definitions give us good idea about what services are. We can give examples of a barber, a tailor, or a restaurant as services. Products on the other hand are offerings that are tangible in nature like for example a car. In today's world, services are becoming more and more significant in any country's economy. As Louis V. Gerstner said in 2001 "Services are going to move in this decade to being the front edge of the industry". This quote comes from the former CEO of a company which claims to be the world's largest service business in the world, IBM. The importance of services in today's world can be further emphasized by the fact that services comprised of almost 80% of United States of America's Gr oss Domestic Product in 2003 . The fifth P i.e. People include both employees and customers as customers also play an important role in the service delivery process. But we are going to focus on employees as far as this article is concerned. From the above discussion it is obvious that employees play an important role in the services marketing because of the vary reason that employees are involved in the process of delivery of any service e.g. a waiter in a restaurant is actually the conductor of all the process related to the customers. So it is of great importance that he gives the right image to the customer otherwise the customer might never return. So those employees that are a part of service delivery, we can call them customer-contact service employees, play an absolutely crucial role in building a repute for any service. The importance of customer-contact service employees can be understood because of the following statements, which will also show that why employees may be the most valuable asset of a services organization. Customer-contact service employees are very important because: o They are the service o They are the organization in the customer's eyes o They are the brand o They are marketers In many cases, in a service, there is just the employee and nothing else i.e. employee is the service e.g. hair cutting, physical trainers, legal services etc. This means that the service being offered by the business is the employee. Thus, investing in the employee is same as investing in the manufacture of a product. A customer-contact service employee may reflect the image of the service organization even if he or she is not directly providing the required service. If you enter a hospital, every employee that you encounter from the receptionist to the clerk might influence your opinion about that organization. Thus, employees sometimes do become the organization in customer's eyes. Employees also become the brand for a service. A very good example can be of a university which is well reputed amongst students. The quality of most universities is judged by the caliber of the teachers that are teaching there. When a student interacts with a professor, he has positive emotions about the university only
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Service marketing
BY: Dr. Pankaj Singh
when he feels that the teacher is knowledgeable and understanding and has complete control over his subject. We can say that one reason, among others, LUMS is thought to be better than other universities is due to the perception that its faculty contains more PhDs than anybody else, hence having better educational quality than others. Thus, an employee also becomes the brand for a service. Because contact employees represent the organization and can directly influence customer satisfaction, they perform the role of marketers. They physically embody the service and are walking billboards from a promotional point of view [4] If we are on the road and we see a person sitting on a motorcycle, going to deliver a free delivery, or to deliver letters or documents, you can tell from their appearance, clothing or even kind of vehicle that which organization they belong to. So, even when the service employees are just doing their duty, they are acting as marketers for their organization. Here we would like to refer to Mr. Dennis Harting who says "What is the most valuable asset that a company has? Is it the name, customers, goodwill, physical resources, or product line? The answer is that it is none of these. A company's most valuable resource is its' employees. Any organization will go only as far as the people who are driving it. In fact, a company is really just a group of people who interact for a common purpose. They are the ones who make up the organization." He also states that "It is important that managers and owners begin to realize that the employees are the most valuable asset any organization can have. Those who accept this new business model will structure their compensation and bonus program to reflect this belief." Above discussion only points to one thing, generally for every business, and particularly for any services business, employees are definitely the most valuable assets. We personally feel that in Pakistan employees are still not given the right place and importance. One feels that more and more attention should be paid to role of employees in services and investments should be made to improve the most valuable asset of services.
e-services Internet Marketing The Concept The Internet has changed lives... for the better. Whether it is the professional arena or personal spaces, the World Wide Web has impacted every aspect of urban living. Not only has it fostered better connectivity, over the years, it has also enhanced the prospects of global trade. However, the biggest drawback of marketing on the Internet is the inability to forge relationships based on trust. Since it is a virtual medium, it becomes exceedingly difficult to make users trust your product. Moreover, cyber frauds and connectivity problems often surface as nuisances of the online marketplace. E- MARKETING SERVICES The sphere of Web marketing is unbelievably vast. It encompasses numerous services that can aid marketers in promoting their businesses online. Some of the most widely-used services are: 1) Email Marketing It works on the simple principle of marketing through emails. Advertisers send promotional mails to their potential customers, in expectation that they will follow the mentioned links and eventually land up making purchases on their websites. Building an extensive list of target audience is a prerequisite in this form of marketing. Apart from email addresses, your mailing list should have adequate information on the general preferences, likes and dislikes of the users in question. It also facilitates the process of viral marketing, which means spreading promotional content like a virus. Using online social networks, this strategy relies on the natural human behaviour of voluntarily passing on the word about something liked or disliked. It works at creating brand awareness using the 'word-of-mouth' publicity campaign. Extremely feasible and cost-efficient, email marketing is being practised by the biggest of businesses in the world today. 2) Search Engine Marketing This Internet marketing strategy revolves around promoting products/services or websites on search engines. Millions of surfers make use of the 'search' query on search engines everyday. Websites listed amongst the top 20 ranks of result pages stand the chance of being visited, whereas, the others are simply indexed and rarely seen. Therefore, search engine marketers optimise their sites in order to earn higher listings on SERPs.
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Service marketing
BY: Dr. Pankaj Singh
SEM has two dimensions Organic and Inorganic Marketing. While the former deals with the 'natural' means of optimizing a site, using On-Page and Off-Page techniques. On-page techniques are used on a web page itself - keyword research, site navigation, RSS feeds, content syndication, etc., are some of the most common of them all. Off-page techniques use external sources like article submission, link exchange, blog postings, etc., to optimize a web page. Inorganic search engine marketing is a paid advertising process that works on the Pay per Click module. Advertisers bid to place their ads on search engines, which in turn, receive a predetermined amount of commission for every click generated through the ads on their pages. 3) Affiliate Marketing This form of marketing comprises two entities merchants (advertisers) and affiliates (publishers). The latter serves as a platform for promotion of the former's products and services. There are numerous online affiliate networks that work as a forum for the coming together of both these entities in order to achieve increased profits. This concept works on the principle of Pay Per Click or Pay Per Lead the merchant places his ad on an affiliate's website, and pays him for every click that's generated through that site. 4) Guerilla Marketing Better known as an undercover promotional strategy, it is increasingly used by low-budget businesses because of its inexpensiveness. In this form of Web marketing, the target audience usually does not realise that they have been subjected to a promotional activity. It often involves advertisements that are take offs on one's competitors. 5) Niche Marketing Choosing a niche audience is of paramount importance when it comes to this online marketing service. Rather than wasting time and money in promoting their products to anyone and everyone, advertisers work for a targeted customer base that is sorted out on the basis of tastes and preferences. Thus, marketers have the advantage of reaching out to people who can actually be converted into buyers. 6) Orthodox Marketing The world of Internet marketing still continues to sway the orthodox way. Despite revolutionary strategies like SEM and Affiliate Marketing making a foray into world businesses, many companies still rely on conventional advertising techniques for the promotion of their products. Placing banners, text ads and classifieds on various forums are still considered viable options, even though these are not as inexpensive as the newer methods.
Implications with promotion: 1. 2. 3. 4. Consumers use search engines on both global and local level Result pages are scanned for context corresponding to a supplied search term Pace of search decreases in proportion to the depth of the research Intrusive advertising campaigns can create negative image
Place of purchase and product information: 1. 2. 3. 4. Amount of information online directly affects consumer search behaviour Online consumers value integrated timesaving features Information breakdown is required to prevent information overload Consumers value human reviews more than automated recommendations
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