Services Unit -1

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When I am an ORGANISATION I wantCustomers to Give BACK

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Acceptance towards Products & Services Larger Wallet Share & Brand Recall andpreference towards offerings Loyalty and Positive Word-of Mouth Regular Feedback to serve better Referrals to grow bigger at reasonable cost

Co-operation at times of Crisis and Opportunityfor Service Recovery .


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Changing Service Scenario-GlobalScenario

77%

74%

76%69%

69%

50%

Contribution of Services inGDP (YEAR 2001)

USA

UK

FRANCE

GERMANY

JAPANINDIA

78%

78%

78%74%

70%

56%

Contribution of Services inGDP (YEAR 2010)

USA

UK

FRANCE

GERMANY

JAPANINDIA

5Source: Economic Survey 2011-12, Ministry ofFinance


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Changing Service Scenario- IndianEconomy

55%33%

12%

Contribution of VariousSectors in GDP (Year 1950-

51)

Agriculture

Services

Industry

13.90%

56.30%

29.80%

Contribution of VariousSectors in GDP (Year 2011-

12)

Agriculture

Services

Industry

6Source: Economic Survey 2011-12, Ministry ofFinance


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Share of Different Services Sub-Sector

17%

16%

14%

8%

Figure for 2010-11

Trade, Hotels & Restaurants

Financing, Insurance,BusinessServices & Real Estate

Community, Social &Personal Services

Construction

7Source: Economic Survey 2011-12, Ministry of

Finance


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State wise Comparison of Services(Share of services in Gross State Domestic Product)_

86%

82%

35%

40%

40%

Chandigarh

Delhi

Chhattisgarh

Himachal Pradesh

Others (TN,Bengal , Bihar,Maharastra)

0% 20% 40% 60% 80% 100%

Series 1

Series 1

Source: Economic Survey 2011-12, Ministry ofFinance 8


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Baby

sitting or Day Care Services Investment Advisory & Financial Services Event Management Services Transportation/ Logistics/ Maintenance Services Retailing & Online Shopping Consultancy & Market Research Leisure & Life style Management Services. R& D Services.

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Need for Services Why?????? Services today are not just complimentary to products but a newer

method of tackling competition & Survival-Growth Plan To reduce complexity of products To manage Life style changes in order to cope with changing social

roles

Increasing Affluence ( Change in disposable income as a result ofdouble- income households) and improved quality of Life Change in pattern of thinking SPEND rather than SAVE Preference for Leisure . Rise of Life Expectancy requiring more advanced and alternative

medical/ Nursing Care. Greater concern about Ecology & Resource scarcity. Source of Foreign Direct Investment (FDI) in economy

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Factors Stimulating Transformation ofEconomy ---- Service Economy

(Reasons for Growth of Service Sector)

Changes in Regulation Privatization New Rules to Protect Customers, Employees & Ecology New Agreements on Trade in Services

GovernmentPolicies

Rising Consumer Awareness & Expectations, Competition More Affluence More people Short of Time Increased Desire for Buying Experiences Vs. Things More Working Women & Mobility of Labour

Rising Ownership of Technologically Advanced devices &applications

SocialChanges

Manufacturers Add Value through Services & Sell Services Emphasis on Quality Movement, Productivity, Cost-Saving&

Innovative practices ,Internet, Use of Advancedcommunication Medium & Media

Focus on Alliances & Transnational Operations to driverofitabilit & rowth.

Business Trends

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WHAT IS A SERVICE?

As per Philip Kotler Service is an act or

performance offered by one

party to another, that isessentially INTANGIBLE & does not result inownership of anything. Its

production may or may not be tied to a physical product.

As per Adrian Payne An Economic activity that

creates value & provides benefits for customers atspecific TIME & PLACE

by bringing about a desiredchange in, or on behalf of,the recipient of the service

( Either with thecustomers or with theproperty belonging tocustomers)

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Features of Services & Its MarketImplications

1. INTANGIBILITY Product is physical.--- Can

be felt , seen , smelt, tested.

Service is not tangible till itis experienced or consumed. Different people have

different expectations withregard to the same service.

IMPLICATIONS Services cannot be

inventoried

Services cannot be patented Services cannot be readily

displayed or communicated. Consumers perceives it as a

High

Risk proposition Uses Price as a basis for

assessing Quality

So, Organization Needs to Stress on 1. Tangible Clues 2. WOM

3. Focus on Service Quality 13


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2. HETEROGENEITY No two service providers are

same and even the service personnel within the sameorganization makes a completedifference.

The same service can not beeven same to differentcustomers.

IMPLICATIONS Service delivery and

customer satisfactiondepend on employee actions

Service quality depends on

many uncontrollable factors There is no sure knowledge

that the service deliveredmatches what was planned

and promotedSo, Organization should focus on : 1. Careful Employee

Selection, Recruitment, Orientation & Training.2. Communicating Standards and conforming to its adherence.

3. Focus on Quality control. 14


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3. PERISHABILITY

As services can not bestored , if unavailed , theyare treated as Lost.

IMPLICATIONS Services can not be Stored

for Future. Problems with Demand

Fluctuations

So, organization should: 1. Better match between Supply &Demand by way of discounts, promotional schemes etc.

Example: Airlines & Movies Weekend Specials, Early- birddiscounts, Off-Season specials, Group, Senior Citizen rates

or Family Rates.Even Banks today have arranged for privilege banking hoursto map and manage peak hour demands and ensure smooth

flow of operations15


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4.INSEPARABILITY

SEQUENCE OF PRODUCTION &CONSUMPTION PHYSICAL

GOODS

Production

Storage

Sale

Consumption

SEQUENCE OF PRODUCTION &CONSUMPTION SERVICES

Sale

As a result of this feature it leads to customers being Co-Producers of the service & often have to travel to the point ofservice production. Here the Management has to emphasis onimproving service delivery systems and Process. 16

Produced & Consumed at Sametime


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5. LACK OF OWNERSHIP

Whenever a customer pays for a service or utility, he/ she hasaccess to the action or experience , but its only for a stipulatedtime frame and does not own the activity or facility.

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IMPLICATIONS: Stress on advantages of Non-ownership& easier payment systems


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6. SIMULTANEITY

Unlike products, services are produced and consumedsimultaneously. They cant be stocked. As the customer requiresservice (point of sale), services are produced and consumed at thesame time.

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IMPLICATIONS: Due to simultaneity as one of thecharacteristics, In case if services, it is necessary that

buyer and seller should be at the same place unlike products. The production process of services is called Servuction Process


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The 4 Components of a Service

Physical

Product

ServiceProduct

ServiceDelivery

ServiceEnvironment

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Services As a System

The components of Service as a Systemincludes:

1. Service Operations System ( Back & Front End activity)

2. Service Delivery System (Back & Front End activity +Interaction to customer)

3. Service Marketing System (Includes all elements whichcontribute to customers overall view of organization)

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SERVICES AS SYSTEM DIAGRAM.doc

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http://localhost/var/www/apps/conversion/tmp/scratch_2/SERVICES%20AS%20SYSTEM%20DIAGRAM.dochttp://localhost/var/www/apps/conversion/tmp/scratch_2/SERVICES%20AS%20SYSTEM%20DIAGRAM.doc


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Types of Goods & Services

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DurableGoods

Non-DurableGoods

GOODS SERVICES

RentalGood

Services

OwnGood

Services

Non-Goods

Services


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Product V/S Services- Differences No PRODUCT SERVICES

1 Product is a Physical object/ good Service is an Action

2 Product is homogenous Heterogeneous in nature3 Product can be inventoried Services can not be inventoried

4 Can be readily displayed on Shelf Cannot be readily be displayed onShelf

5 Production and consumption takes place at different time

Service is produced and consumed atsame time

6 Customer participation does notalways affect transaction

Customer participation affectstransaction

7 Product can be returned or resold Services once rendered cannot bereturned or resold.

8 Mass production is easy Mass production is difficult

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No PRODUCT SERVICES

9 Sure knowledge that product

delivered is same as planned and promoted.

No surety that service delivered is

same as planned and promoted

10 Employees involved in producing product is not a matter of concernfor customers

Employees providing services are amatter of concern for customer.

11 Transfer of Ownership takes place Transfer of Ownership does not take place

12 Easy for customers to assess theQuality of Product & Services

Difficult for consumers to assessQuality

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Classification of Services

People processing : Institutes or education center Possession processing: Bike service center etc.

Mental stimulus processing: Advertising agency, consultancy

Information Processing: Data processing, Lawyers/legalconsultants etc.

1. Based on degree of Customer Involvement


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2. Classification Based on Service Tangibility

Highly tangible: Bicycle on rent Service linked to tangible products: Free after sales services of

Bikes Tangible goods linked to services: Facilities in Rajdhani

Express (Train) Highly intangible: Hair saloon


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Goods Services Continuum

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Pure Goods ServiceRelatedGoods

RelatedPure

Services


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Services Tangibility Spectrum

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3. Classification Based on Service Skills andExpertise Required

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Professional services: Doctors, lawyers Non-professional services: Baby sitting, housekeeping etc.

4. Classification Based on Business

Orientation of Service Provider Not-for-profit organization Commercial organizations

5. Classification Based on Type of End User Customer services Industrial services


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The Services Marketing Triangle

InternalInternal

Marketingarketingz

Interactive Marketing

ExternalMarketing

Company(Management)

CustomersEmployees

Enabling the promise

delivering the promise

Setting the promise

Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler


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Development Frameworks forAnalyzing Services

Type of service Nature of relationship shared by the customer with service

organization Service delivery Type of demand and supply of services Extent to which service provider need to customize services


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Myths About Services

Services is a necessary evil for manufacturingfirms

Service sector is labor-intensive and less productive

Service firms earn less revenue when comparedto other two sectors Growth in service economy is linked to growth

of the public sector services Marketing a service is not different from

marketing a product Growth in service sector eliminates jobs from the

manufacturing

GE, Motorola

Wal-Mart

ICICI Prudential,HDFC, TATA-AIG

Examples


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Limitations in Growth of Services

External Forces: Customers can perform services themselves (Eg: People can

cook instead of going to eatery)

Manufactured goods will be produced which replace serviceroles (Eg: Tools replace the service of skilled labour, like easy care fabrics replace cleaning & laundry services)

Manufactured goods will be produced which require less

service attention (Eg: Cars with longer service intervals,equipments with throwaway replaceable parts)

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Internal Forces: Shortage of people with specialized skills Lack of resources and small size of firm Limited competition in some service sub-sectors (Eg: Rail

transport)

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Extended Marketing Mix

Extended Marketing Mix.JPG

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http://localhost/var/www/apps/conversion/tmp/scratch_2/Extended%20Marketing%20Mix.JPGhttp://localhost/var/www/apps/conversion/tmp/scratch_2/Extended%20Marketing%20Mix.JPG


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Dimensions Of SEC Qualities

SearchQualities

ExperienceQualities

CredenceQualities

Tangibility AccessCompetence

Credibility Courtesy Security

Reliability &Responsiveness

Understanding theCustomer

Communications


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Consumer Decision Making Process

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Need Perception

Search forInformation

Evaluation of alternatives

Purchase decision

Post-purchaseevaluation

EnvironmentalFactors Culture Subculture Social class Reference groups Family

MarketerActivities

External sources Personal sources Commercial sources Public sources

Internal sources


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Implications for Service Providers

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Customers rely on information obtained from personalsources.

Customers need assistance of service provider to assess the

value of service Co-production Time Intangibility Quality and customization


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Services Unit -1

Documents

Transcript of Services Unit -1