2003 Project Desin

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Chapter - 13

Chapter - 13


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EveryEvery

businessbusiness

is a serviceis a service

business.business.

Does yourDoes yourservice putservice put

a smile ona smile on


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SERVICE


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The service sector accounts for more than 50%of India's GDP. It is growing at a much fasterrate than other two sectors.

SERVICE INDUSTRIES ARE :SERVICE INDUSTRIES ARE :


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CATEGORIES OF SERVICE MIX :


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Services have four distinctive characteristicsthat greatly affect the design of marketingprograms


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Inseparability expresses the notion that aInseparability expresses the notion that aservice cannot be separated from the serviceservice cannot be separated from the service

provider.provider.

-Services are produced and consumed at the-Services are produced and consumed at the

same time (air travel)same time (air travel)

-Service providers and sometimes other-Service providers and sometimes other

customers become part of the servicecustomers become part of the service

(restaurant)(restaurant)-Strong preferences for service providers exist-Strong preferences for service providers exist

--A product when produced can be taken awayA product when produced can be taken away

from the producer. However a service isfrom the producer. However a service is

produced at or near the point of purchase.produced at or near the point of purchase.


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Groups of people with diverse habits, attitudes,

circumstances, tasks and requirements

Heterogeneous markets -Markets in which all customers have

different requirements

Variability in the quality of service because services are

provided by people, and people perform inconsistently

Service providers vary with respect to attitudes, skills, mood,

etc. Even the same provider may give different service on a

different day.

QUALITY CONTROL IS CRITICALQUALITY CONTROL IS CRITICAL:Hiring the right peopleHiring the right people

Standardizing serviceStandardizing service

Monitoring satisfactionMonitoring satisfaction


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Service Sector the part of industry or business whichdeals with the marketing and selling of intangibleproducts rather than physical goods

characteristic of services whereby unused capacity on

one occasion cannot be stockpiled or inventoried forfuture occasions

Services can not be inventoried or otherwise stored

CAPACITY / DEMAND MANAGEMENT IS CRITICAL:CAPACITY / DEMAND MANAGEMENT IS CRITICAL:

DEMAND SIDE STRATEGIESDEMAND SIDE STRATEGIES

SUPPLY SIDE STRATEGIESSUPPLY SIDE STRATEGIES


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ON THE DEMAND SIDEON THE DEMAND SIDEDIFFERENTIALPRICING

NONPEAK DEMANDCOMPLEMENTARYSERVICES

RESERVATIONSYSTEMS

ON THE SUPPLY SIDEON THE SUPPLY SIDEPART-TIME EMPLOYEES

PEAK-TIME EFFICIENCY

INCREASEDCONSUMERPARTICIPATION

SHARED SERVICES

FACILITIES FOR

FUTURE EXPANSION


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A SHIFTING CUSTOMER RELATIONSHIP

In former times, service company'sIn former times, service company'sheld out a welcoming hand to allheld out a welcoming hand to all

customers, but these companys nowcustomers, but these companys now

have so much data on individuals theyhave so much data on individuals they

are able to classify their customersare able to classify their customersinto profit tiers. So service is notinto profit tiers. So service is not

informally bad for all customers.informally bad for all customers.


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Internalmarketing

CompanyCompany

CustomersCustomers

Externalmarketing

EmployeesEmployees Interactivemarketing

Cleaning/maintenance

services

Financial/bankingservices

Restaurantindustry


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PRICINGPRICING

-High price-High price

-Price increases-Price increases

-Unfair pricing-Unfair pricing

INCONVENIENCEINCONVENIENCE

-Location/hours-Location/hours

-Wait for appointment-Wait for appointment-Wait for service-Wait for service

CORE SERVICE FAILURECORE SERVICE FAILURE

-Service mistakes-Service mistakes

-Billing errors-Billing errorsINVOLUNTARY SWITCHINGINVOLUNTARY SWITCHING

-Customer moved-Customer moved

-Provider closed-Provider closed

SERVICE ENCOUNTER FAILURESSERVICE ENCOUNTER FAILURES

-Uncaring-Uncaring-Impolite-Impolite

-Unresponsive-Unresponsive

-Unknowledgeable-Unknowledgeable

RESPONSE TO SERVICE FAILURERESPONSE TO SERVICE FAILURE

-Negative response-Negative response

-No response-No response

-Reluctant response-Reluctant response

COMPETITIONCOMPETITION

-Found better service-Found better service

ETHICAL PROBLEMSETHICAL PROBLEMS

-Cheat-Cheat

-Hard sell-Hard sell

-Unsafe-Unsafe


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ANAGING SERVICE QUALITY

The service quality of a firm is tested at each

service encounter.

If the salesmen of a retail shop are bored, and they

cannot answer simple questions of their customers,

then the customer will think twice of doing business

again with that retailer because there is no individual

attention given to him.


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Customer Expectations

Customers form service expectations from many sources,such as past experiences, word of mouth, and advertising.

Customers always compare the perceive service with theirexpected service.

Most of the successful companies surprise and delight themby adding benefits to their offerings.

One company can differentiate it by providing more accurate

and reliable service to their customers.


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Expected service

Management perceptionsof consumer expectations

Marketer

Markete

r

Consumer

Consumer

Gap 1Service delivery (including

pre- and post-contacts)

Gap 3Translation of perceptions

to service-quality specifications

Gap 2

Gap 5 Perceived service

Externalcommuni-cations to

consumers

Gap 4

Personal needs Past experienceWord-of-mouthcommunications


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ere are five gaps that cause unsuccessful delivery a

own in the Service Quality model.

ap between consumer expectation and

anagement perception

It is impossible for any management to perceive

hat customers exactly wants at each and every time.

ap between management perception and

ervice-quality specificationsSometimes it may happen that the management

ight perceive exactly their customers needs but they

a lack at setting a performance standard.


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Gap between service-quality specifications and

service delivery

Sometimes it may happen that the employees arepoorly trained or incapable to meet the standards. They

may lack at listening to customers and serving them fast.

Gap between service delivery and externalcommunications

The representatives and advertisements of a

company make statements more then what they perceive.

Gap between perceived service and expected serv

This gap occurs when customer misperceives the

service quality.


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Strategic concept :In order to give the best service to their customer

the company should know their target customers andtheir needs well, and then develop a distinctive strategfor satisfying these needs.

Top-Management commitment :

The top management should not look only atfinancial performance, most of the successfulOrganizations also look at their service performance.

High standards :The best service providers set high service-quality standards. Successful companies offerbreakthrough service aim at being 100% defect free.


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Self-Service technologies :Nowadays Self-service technologies are booming

For example : ATMs ,self-ticket purchase on the internet.An auto insurance company can made available a

step-by-step guideline in internet telling the insuredPerson what to do? to assess the damage incase ofaccident.

Monitoring systems :Top firms audit service performance of both their own

and their competitors on a regular basis. They take the

customer surveys, suggestion and complaint forms andletters to know where they lack. Most of the customerwant the job to be done right at the first time.


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Satisfying customer complaints :Studies show that the customers are dissatisfied

With their 25% of the time but only about 5% complain.About 95% people feel complaining is not worthier.

Of 5% who complain about 50% are satisfied witTheir problem resolution.

Satisfying employees :Excellent service companies know that positive

Employee attitudes will promote stronger customer

loyalty.


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DEVELOPING BRAND STRATEGIES FOR SERVICESThe service offerings can be differentiated in many different

ways.The offering can include innovative features.

THE PRIMARY SERVICE PACKAGE It is what the customerexpects from the service offering.THE SECONDARY SERVICE PACKAGE The extra things which

the provider can add. Some of the services are using the human element to combat

the competition from the online businesses. Sometimes the companies can be differentiated through the

sheer range of service offerings and the success of its cross-selling efforts.

The company the offers frequent innovations, will gain atemporary advantage on the competitors and can bedifferentiated.


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To develop brand strategies for the services, it

requires close attention to

CHOOSING BRAND ELEMENTS Because a

physical product does not exist, brand recallbecomes critically important and thus an easy to

remember brand name becomes critical. Thus,

the physical facilities of the service provider its

primary and secondary signage, environmental

design and reception area and so on become

especially important.


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DEVICING BRANDING STRATEGIES The

services must also consider developing a

brand hierarchy and brand portfolio the

permits positioning and targeting of different

market segments. Sometimes there is a

necessity for sub-branding strategies, where in

the corporate name is combined with an

individual brand name or modifier.


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The product-based industries that must provide aThe product-based industries that must provide a

service bundle are no less important than the serviceservice bundle are no less important than the service

industries.industries.These product-based industries should alwaysThese product-based industries should always

provide product support services which is becoming aprovide product support services which is becoming a

major battleground for competitive advantage.major battleground for competitive advantage.

Firms that provide high-quality services outperformFirms that provide high-quality services outperform

their less-service-oriented competitors.their less-service-oriented competitors.


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The company must design customer needs carefully a

service support program.

The customers have three specific worries

They worry about reliability and failure frequency.

They worry about downtime. He longer the downtime,

the higher the cost. The customer also depends on the

sellers service dependability the sellers ability to fixthe machine quickly or at least lend him a loaner.

They worry about the out-of-pocket costs.


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The customer choices are increasing and the

companies need to innovate ways to hold onto the

existing customers and create a new band of

customers.

The postsale service strategy is creating a strong

ground for competitiveness.

The better the postsale service strategy, better is

the growth of the company.

This is because of the three risks thats the

customers are worried about as mentioned in the

previous slide.


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SRINIVAS DSRINIVAS D MUKESHMUKESH

2003 Project Desin

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