SEMESTER III / BANGALORE UNIVERSITY MBA

PRESIDENCY COLLEGE, BANGALORE 24

Moti restaurant

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Amol booked a table in a restaurant for 15 people at the beginning of Diwali to celebrate the festival season with his family and friends. He had been a regular visitor to Moti Restaurant and had developed loyalty for this place famous for South Indian food. Most of the friends were from the North who liked to eat South Indian food once in a while. Moti Restaurant served authentic South Indian fare. This was the reason Amol preferred to treat his family and friends at Moti. The patron of Moti Restaurant Mr. Rajkumar Pai was someone whom Amol knew well. Since Amol was a regular visitor to the restaurant, he was confident that the dinner party would be a great success.

Four days prior to the scheduled get-together dinner Amol spoke to Rajkumar and asked him to increase the booking to 20. Amol told Rajkumar, “ Raj, I am meeting some of these friends after a long time. So, the party has to be really rocking. Are you sure you can accommodate 20 of us?” Rajkumar, though busy, informed Amol that there was nothing to worry and that all the arrangements would be in order. He also added that he looked forward to seeing Amol and his friends at the party.

On the scheduled day, Amol’s friends met at his residence at 7 pm on the appointed day and after having a cup of coffee left for Moti to be present at the restaurant at 8.30 pm sharp. They were relaxed and were cracking jokes and reached the restaurant at 8.20 pm. With some difficulty, they were able to park all their cars in the close vicinity. Though it took some time, Amol told them that these were minor glitches in comparison to the quality of food served by Moti.

The guests arrived at the restaurant on time. Amol was taken aback to find that the table was booked only for 15 persons. Seeing them, Rajkumar came forward. Amol reminded Rajkumar that four days ago, he had informed him about the increase in the number of guests. He had called on Rajkumar’s mobile but as there was no response, he had asked him to be connected to Raj via the board. Amol told Raj, “ May be there has been an oversight. Can you reset the table for 20 persons please ?” The guests were waiting and Amol found it embarrassing.

Amol was out of his wits when Rajkumar feigned ignorance about the whole telephonic conversation that they had. He argued with Amol that he had received no such phone call from Amol requesting for amendments in the booking. “ Mr. Amol, you must have been mistaken” , said Rajkumar.

A red-faced Amol tried to explain things to Rajkumar Pai but Pai was too stubborn and continued to insist that he had not received any such call and that the booking was for 15 people only. The restaurant was full and Amol asked Rajkumar to resolve the matter as his guests had been waiting for some time. Rajkumar pleaded helplessness and said that there was nothing that he could do at the moment. There was a lawn outside the restaurant (but within the restaurant campus) which was quite neat and well illuminated.

It was getting late. Left with little choice, Amol & his family along with another couple opted to wait even as his friends protested. The 15 members of the group began having their lunch squirming at the thought of the hosts having to wait to join the group.

At 930 pm, after some of the other guests in Moti Restaurant left, Amol & the other members could be accommodated with the group. All of them settled for the dinner but the focus of

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discussion remained the service at the hotel. After the dinner was over, Amol settled the bill but did not leave any tip for the waiters. Amol met Rajkumar Pai on his way out and explained to him that this was his last visit to the restaurant. Rajkumar admitted that he may have been hasty but felt Amol was being unreasonable as it was his busiest evening and that Amol should make allowances.

Amol and his friends never visited Moti Restaurant ever again. They also posted their feedback on Face book and spread word about their experience to all their colleagues, friends and associates.

Questions :

1. Was there a service failure ? How could there have been a service recovery ? If you were in Rajkumar’s place, list at least two ways in which you would have triggered a service recovery

2. What was the main reason for the service failure ?

3. If you were Amol, how would you have reacted to Rajkumar’s behavior ?

4. What are the problems and issues that lead to such situations and such behavior of service providers ?

5. In today’s world of Google, blogs, Face book, Linked In, do you think that Moti’s restaurant can afford to have more such service failures ?

6. What steps should Rajkumar Pai take to take the issue as a learning , how soon and how can he bring back Amol into the fold as a customer ? Remember – the damage has already been done.

7. Comment : Customer Complaint is a Gift.

8. Comment : After a service failure, the expectations of the customer from the service shoot up. Why?

SSD INFOTECH

During the boom times, many firms providing computer education to students used to survive and thrive in the Indian market. But the boom did not last forever and the bust that followed took its toll on the educational IT services sector. Aptech sold off its business to SSI and many other firms exited the business.

SSD InfoTech also found its business squeezed and had to think of new segments. The company refocused attention on the corporate segment which also requires computer training for its employees. Over a period, the business that came from the corporate sector swelled from 20% of its total to 65% of the total. At the same time, its affiliate channels through whom a lot of its consumer(student) business was done came down from 200 to 125 in number, signaling a decline in that segment.

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In bad times, it makes sense to have a re-look at the segmentation and the overall marketing strategy. This may involve re-positioning yourself at times, in line with the requirements of the new segments being targeted. Also it could involve changes in 7Ps of marketing.

Questions :

1.What are the 7-Ps in Services marketing ?

2.What is the 8th P in Services marketing ?

3. What changes should SSD InfoTech make in its positioning and its 7Ps to successfully serve the corporate market ?

4. Why do you think that services’ marketing needs the expanded marketing mix ? (ie. Additional 3Ps – People, Process, Physical Evidence). Explain.

B N RAO SUITS

B N Rao suits is a 146-year old firm that has branches at 3 places in Bangalore - Domlur, Kalyan Nagar and Vijay Nagar. They have plans to open another branch at Electronic City. Though B N Rao suits specializes in suits, they also have a good collection of formal shirts, trousers and T-Shirts. Needless to add, their apparels are priced at a premium. But they have been doing good business because of their services and brand reputation. They have been very few quality complaints and even if there were some, the in-house tailors whom they had ensured that the problem was rectified in a matter of minutes.

Dr.Amarkant Tripathi who works in a top notch IT firm in Bangalore decided to explore B N Rao suits for the first time. He was scheduled to attend a meeting in Chennai on Friday 15 th May 2012 and he decided to visit B N Rao suits on 1st May itself. But as it was labour day, he visited the shop at Vijay Nagar the next day. The measurements were taken and he was assured that the delivery would be given on 13th May – two days before his scheduled departure to Chennai.

On 13th May, Dr Tripathi got the delivery but to his dismay the trouser was tight. To add to his woes, the store manager politely informed him that the in-house tailor was scheduled to return from his native place in the evening and that he can be rest assured that his trousers will be delivered to him in the evening. There were 4 tailors in the Vijay Nagar branch but three of them had been diverted to the Domlur branch because of a large order there. As there were not many orders in the Vijay Nagar branch, the store manager was confident that they could manage with 1 in-house tailor. Unfortunately, after stitching the suit of Dr Tripathi, the tailor had to rush to his native place at Kolar on an emergency.

When Dr Tripathi called up B N Rao on 13th, he was asked to come on 14th and the store manager profusely apologized to him for the delay saying that the tailor was delayed. The deadlines for the large order in the Domlur branch were tight, so no tailor could be spared from that branch. The Kalyan Nagar branch was a recent branch and there was only one tailor there who was busy with the present order.

On 14th morning, when Dr Tripathi called up the store manager the alteration was not yet done. Livid about the delay, Dr Tripathi blew his fuse. The store manager listened to him patiently and

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asked him if Dr Tripathi could share details of his programme. Dr Tripathi was in no mood to oblige and said that he would come back from Chennai and then collect his suit the next week. He decided to wear one of his older suits for the meeting.

Dr Tripathi left for Chennai on 14th evening. On 15th May, 2-hours before the scheduled meeting in the hotel where Dr Tripathi was put up, he received a package. When he opened it, he found his trouser neatly packed along with a bunch of handkerchieves and an apology note from the store manager. The trouser fitted him well. But Dr Tripathi was perplexed. How did B N Rao suits come to know of his plan ? He got his answers when he returned to Bangalore on 17 th May 2012. The store manager had called up Dr Tripathi’s home, had spoken to his daughter and had explained the problem to her. He had arranged for the suit to be taken to the Domlur branch personally and got it mended. He then arranged for the suit to be delivered by Express Delivery on 14th evening so that it could reach Chennai the next day.

Explain : Service Recovery Paradox in the above context.

Taj west end hotel case study

In Bangalore there are 5 major players in 5 star hotel category. These are

a. Windsor Manor Hotel, Near Palace Road / Sivananda Circle

b. Oberoi, M G Road

c. Ashok, an ITDC run hotel

d. Le Meridien (earlier it was called Hotel Holiday Inn)

e. Taj West End, Race Course Road – Part of Taj Group of Hotels, 5 star deluxe category hotel in Bangalore.

Competitive Strategy of West End Hotel :

1. Target Customer – domestic and foreign business travelers, the elite, top management.

2. Positioning – office away from office to service the business customer and for non business travelers, it is a home away from home.

3. Differentiation – this is through physical ambience. Natural Green Environment gives a relaxed atmosphere to business travelers.

4. Marketing Mix :

a. Product : The Service Offer has tangible products in it. There are 6 types of rooms. Club rooms, normal rooms, superior cottages, suites, deluxe rooms & old British Raj ambience rooms.

b. Restaurants – Thai food served in Paradise, Italian food in Island Café. Banquet halls with capacities ranging from 10 to 1000. Hotel has a business centre with facilities like Internet, interview centre, Fitness centre and laundry.

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c. Pricing – Differential pricing for different rooms. Hotels have an unofficial cartel for deciding the room tariff.

d. Place – Race Course Road – away from city, less pollution, relatively less traffic congestion.

The USP is 23 acres of beautiful landscape.

e. Promotion : West End is not into heavy promotion. But the Group advertises via magazines, hoardings. Some amount of event sponsoring too. They rely more on direct marketing sans any channels.

f. Physical ambience : Maintains its natural environment and latest state of the art facilities

g. People – They understand the role played by people in a service organization and market their service offer to their own employees so that the employees understand the need for maintaining high quality and standards.

h. There are seasonal variations in demand [peak season, off season] : More demand in the beginning of the week as business travelers tend to go back during weekends.

To meet these variations, Taj West End is :

o Doing tie ups with corporate clients for regular inflow of clientele,

attractive discounts are offered.

o Regular sales calls to potential and existing customers.

o Intra-Group tie ups : West end has tie ups with other Taj Group Hotels in

Bangalore

o International Tie ups with hotels like Shangrila in Middle East.

o Benchmarking of its operations against Ritz Scaldon of UK as this is the

hotel that has got a Quality Award.

o Training of employees

o Improve quality of service

o Earn Loyalty – Retention of Customers

o Increase revenue and profitability

o Have regular customer feedback

o Data mining (details of customers)

Questions :

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1. Analyze why and how West End is different from other hotels. How should the services be changed or developed if Taj wants to achieve world class status and fight competition ?

2. Can capacity and supply be balanced better ? Suggest solutions.

3. Do you agree with the statement ? Explain the rationale behind your decision.

“Soft aspects of TQM – Behaviours, attitudes, leadership, Customer Focus, Empowerment – all these have better chances of implementation of TQM in services.

EAST WEST AIRLINES CASE

In April 1990, after the open sky policy, many entrepreneurs backed by NRIs entered the aviation scene. In 1994, there were 4 private operators – Damania, Jet, Modiluft, East West. Private strategies used strategies to retain customer like :

Return Air Tickets

Price undercutting

Free Gifts

Hotel Discounts

Luck draws

Pamper passengers in all possible ways

East West had a large network of efficient air service. Damania gave first class service at economy fare. Jet Airways offered service of international standards. ModiLuft offered personalized service. Indian Airlines gave complimentary tours for package travel, point to point fares.

Characteristics of Airline Services Marketing

o Intangibility – Passengers look for better service – good interiors,

speedy grievance handling, hospitality.

o Inseparability – Ground and inflight service in an airline are produced

and consumed at the same time. The service can’t be kept in the inventory to be used at a later time. Since client and service provider interact face to face, service efficiency matters a lot.

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o Personalized attention – Service is person dependent

o Perishability – Timely Service is important

o Irreplaceability – A bad service once offered cannot be replaced.

o Subjectivity – Service can be tested only by experiencing it.

East West was a Mumbai based company with an investment of Rs 70 crores. It operated 68 flights per day to 24 destinations across the country. In Feb 1992 it had a single Boeing 737 but in Dec 1993, it had 8 Boeings, 3 Fokker F-27s. It had 2387 staff with 292 engineers, 96 cock pit crew, 198 cabin crew. It had 26 offices all over India. It had better check-in facilities. It had a tie up with a foreign company for assistance in maintenance and spares. East West Airlines had a novel in flight entertainment, lucky draws and it planned to start frequent flier programs too. Capacity utilization was 75-80%. There were 63 agents in Bangalore (highest than others) and they had suggestion cards where customers could give feedback. No feedback was obtained from Agents.

Survey Results

36% Indian Airlines

35% Damania

15% Modi Luft

2% East West Airlines

The check-in system and in-flight service in East West Airlines was poor. In 1993, there was a strike by Indian Airlines pilots and at that time, East West created a not-so-clean image in the minds of most respondents.

33% said that their inflight service was good, 46% said it was fair and 21% said it was poor.

Best Service prior to boarding

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Damania – 38%

Indian Airlines – 22%

East West – 3%

Others – 37%

Question :

1.From a customer’s point of view, what went wrong with the service of East West ? Was it marketing strategy or its implementation ?

2.What should EW Airlines have done to remain in business ? How could it have refurbished its image ?

3.A new Air Traffic Operator goes through this case. What lessons should he learn ? How should it go about achieving a good sales growth ?

MOONBEAM RESORTS

Moonbeam Resorts was founded in 1996 under a time-share agreement. Members had to pay the membership fees (1 week for 99 years) and join Moonbeam resorts as a member. Subsequently, members were entitled to one week stay annually in any of the resorts of Moonbeam in India. Moonbeam Resorts had resorts in places like Munaru, Tirupati, Mysore,

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Tanjore, Coorg, Yercadu, Ooty, Simla, Goa, Lonavala.,Their turnover was Rs.5 crores in 1998 which grew to Rs.75 crores in the year 2009.

Moonbeam Resorts tasted success because they kept on growing their business by exploring new places, acquiring places on lease and hire. Their growth was more inorganic than organic. They also encouraged their existing members to bring in new customers and for this, the members got a few gifts and discounts during their stay in resorts. To be honest, this enticement was not great enough. One could say that Moonbeam Resorts literally took its customers for granted.

Services in Moonbeam though good in the 90’s and late 90’s had started deteriorating steadily. This was because though their marketing strategy was a combination of relationship marketing as well as transactional marketing, they started adopting cost cutting measures without realizing that such initiatives were actually diluting the level of customer service. Customer perceptions about Moonbeam resorts began to change rapidly. Growth in new customers began to gradually whittle down.

Swimming pools in some of the resorts were not maintained well. Salaries that Moonbeam resorts paid to permanent and temporary staff were low and not as per market conditions. Working hours of staff were excruciatingly long and some of the staff poured out their woes to guests. Guests staying in resorts were fleeced by charging exorbitant rates on almost anything that they wanted to eat. The charges were 5-star rates but the service was simply not value for money. The strategic advantage that Moonbeam always capitalized on was that their resorts were located far from the hub of main township and so those guests who did not have their own vehicles had to depend on the transportation services of the resort. The charges were always 20% more than the prevailing market rate. To add to the woes, there was hardly any sort of communication from the Resort Management to the customers, some of whom had joined membership in 1996. Moonbeam Resorts also charged a maintenance fee during the stay of guests in the resort.

In the earlier days, Moonbeam Resorts had provided a kitchenette service whereby guests could cook a simple meal in the room itself. They could make sandwiches, noodles, cook rice and dal. A pressure cooker and a few utensils were provided. There was also a mini fridge. Soon, Moonbeam replaced the gas with an oven and customers had to bring their own microwave compatible vessels. The mini fridge continued to remain. Many customers of Moonbeam Resorts were forced to eat from the Resort Hotel where a buffet lunch for four cost Rs.2500. Soon some of the resorts used strategies like “Masti Magic” wherein customers could opt for a breakfast cum lunch cum dinner package for Rs.4000 per day. This scheme dissuaded many customers who had come in groups, so these groups started to eat out in local restaurants where quality food was affordable. Moonbeam further tried to reduce expenses by hiring graduates from hotel management institutes and labeled them as trainees. Attrition in Moonbeam resorts was high.

Even in the entertainment programs within the resort, trekking, games – all these were not that great. The department arranging for sight seeing and tours was manned mostly by demotivated staff who had not seen a pay hike in years and the charges for sight seeing were exorbitant too.

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The only good thing was that all resorts of Moonbeam were located in natural locales so one could get lot of fresh air to breathe. But those who travelled to their resort once did not wish to travel to the same resort again. But Moonbeam resorts continued to have business from existing customers who had no choice as they had already paid the money (membership fees) in advance. Some of the local resorts in hill stations have recently revamped their pricing strategies to attract customers and this is denting the business of Moonbeam.

Question :

1. Do you think Moonbeam’s marketing strategy will sustain in the long run, considering the service quality that they were delivering ? Write reasons in support of your answer.

2. If Moonbeam had commenced its business in 2012 instead of 1996, do you think it would have managed to succeed? Write reasons in support of your answer. [Hint : Today’s customer is more demanding as he is spoilt for choice].

VIJAYA BANK CASE STUDY

One of the oldest banks in India, Vijaya Bank , a public sector bank has grown manifold in recent times. They have huge number of deposits, advances & loans. Vijaya Bank is not exactly a customer centric bank as the attitude of bank employees is similar to those who are working in the government sector. In Bangalore, they have an entire building that

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houses the corporate office near the M G Road metro station. Due to their large network and their presence in India for many many years, Vijaya Bank has continued to be profitable. They have their own loyal customer base.

Many of the employees in Vijaya Bank are above 50 years of age. Recruitment drive by Vijaya Bank in Bangalore did not meet with great success because the pay packets were average. Some youngsters joined Vijaya Bank but after 1 or 2 years experience, they joined software companies like SAP where their banking experience was found to be handy in designing software & erp packages for banks. In the last 5 years, Vijaya Bank has introduced CBS – Core Banking Solutions – ATM cum Debit card, Phone banking, Net banking. But though they have all these services, customers tend to consider the service of Vijaya Bank as just about ok.

This case pertains to the bank branch in HAL III Stage. Here, all the employees were in their late 50’s. Service was slow. The branch was located bang in the middle of the market area so a lot of traders and shop keepers in HAL III stage opened current accounts in Vijaya Bank. These people did not know how to use ATM machine, so many of them queued up in the cash counter. The cashier Ms Arati Bhattacharya took 5 minutes to handle each cash transaction. Another gentleman who was given the task of updating passbooks took 10 minutes as he was not at all computer savvy. On most days, one could see long queues in Vijaya Bank for updating passbooks and withdrawal of cash. There was only one cash counter. The bank locker room was leaking. But customer’s complaints did not move the branch manager until a new manager Srikanta joined the bank as a branch manager.

The bank premises were last renovated in 1983. Since then, there was no painting of the premises which were on lease. In 2010, Mr Jagannath Reddy, the landlord informed Vijaya Bank that he wanted his premises back as he wasn’t happy with the rentals. Moreover, he was planning to sell it and Vijaya Bank could not afford to invest capital in purchasing property. The branch manager Mr Srikanta Shetty was a worried man. He spoke to Head Office and soon enough, Mrs Chandra Iyengar, an IT expert visited the branch along with Admin Manager Suryaprakash. They saw for themselves the pathetic state of affairs in the branch. Even when the senior employees were trained in computers, they still could not operate computers fast enough as their typing speed was slow.

Srikanta, Chandra and Surya formed a team and decided to improve things.

March 2012. Vijaya Bank opened its new branch in HAL Stage III near Kodihalli that was not very far from HAL Stage III. It took 6 months for approval by top team but the core team worked very hard to realize their goal. The premise was modern and had an aesthetic appeal. The ATM room was located next to the branch. Chandra, took approvals, to install an automatic passbook updating machine that was extremely easy even for illiterate customers to operate. For the first few months, a trainee was posted near the passbook updating machine. The machine cost Rs.15 lacs but was a good return on investment because it did not need much maintenance. Due to this machine, there was no need of a bank clerk to update passbooks. Chandra had also got approval for a paying slip depositing machine at a cost of Rs.5 lacs. This machine also gave an acknowledgement to the customer by giving copies of cheques and paying slips. There was one trainee who was

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posted near the paying slip depositing machine. She was also there to help people operate ATM Machines near by.

Some services like bank lockers, Fixed deposits, Loans were still carried out manually but service levels had reached a new high. As the new branch was in Kodihalli, many employees of Bagmane Tech Park located closeby found it convenient to open an account as there was place to park their vehicles for a few minutes at least near the bank. The earlier branch of Vijaya Bank had 18 permanent employees and 2 contractual staff. The new branch at Kodihali had 8 permanent employees and 4 contract staff which resulted in savings in manpower cost for Vijaya Bank to the tune of 20%. Needless to add, the business in the new branch of Vijaya Bank swelled and the core team got lot of appreciation from the top management.

BARISTA COFFEE COMPANY /CAFÉ COFFEE DAY

Please refer to pages 182-185 and pages 364-365 in the book “ Services Marketing ‘ – Text and Cases by Rajendra Nargundkar.

DABBAWAALA CASE STUDY

Please refer to pages 30-32 in the book “ Services Marketing ‘ – Text and Cases by Rajendra Nargundkar.

NAMDARI AGRO CASE STUDY - This will be given separately by faculty.

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