Service Marketing

Service Marketing
Major Sectors of Indian Economy

Primary Sector
Secondary Sector Tertiary Sector
Service Management
A service is an act or performance offered
by one party to another An economic activity that creates value and provides benefit for customers at specific times and places by bringing about a desired change in, or on behalf of, the recipient of the services
The Service Sector

The Service Sector has been growing at
a rate of 8% per annum in recent years More than half of our GDP is accounted from the Service Sector This sector dominates with the best jobs, best talents, and best incomes
Difference between Goods & Services

On the Basis of: Ownership Intangibility Perishability Variability or Heterogeneity Inseparability
Dissatisfaction level in Service Industry vs. Manufacturing Industry

Service based on calculated profit Increasing use of self-service & technology based
service Customers expectation are higher because of excellent service at other place The intensely competitive job market results in lessskilled people working in front line; talented workers soon get promoted or leave for better prospects Many Cos give only lip-service to customer focus and service quality Delivering consistent, high quality service is not easy
Customer complaints
It pays to resolve customer complaints
On an average only 5 % dissatisfied customers
complain. Others simply go over to the competitor A satisfied consumer speaks to an average of 3 people on his/her experience A dissatisfied consumer gripes to on an average 11 persons about his/her unpleasant experience
Companies that pay importance to resolving customer complaints

Pay attention to quality and training of
manpower recruited Have clear benchmarks on service quality and communicate to employees Take remedial steps to improve customer satisfaction and prevent repeats of customer dissatisfaction Have a data base on customer complaints that is periodically analysed and policies adjusted
Satisfied employees will produce satisfied customers

Morale
Motivation Mood
Evaluation for Different Types of Products/Services

Most Goods Most Services
High in search qualities
High in experience High in credence qualities qualities
Classification of Service
People Processing
Possession Processing Mental stimulus Processing
Information Processing
Classification of Service
People
Services directed at peoples bodies. ( People Processing )
Things
Services directed at goods and other physical possessions ( Possession Processing ) Freight Transportation Repair / Maintenance Dry Cleaning Software Installation Services directed at intangible assets. ( Information Processing ) Banking Legal Services Insurance
Tangible Actions
Health & Fitness Care Beauty Salons Medical Service Public Transportation
Intangible Actions
Services directed at peoples minds. ( Mental Stimulus Processing) Education Theaters Information Services
People Processing
Customers must physically enter the
system Sometimes, service provider goes to customer with necessary tools People must be prepared to spend time actively cooperating with the service operation Level of involvement can vary
Possession Processing
Working to tight deadlines to restore customers
possessions to good working order.

People are less physically involved and usually,
no real need for them to enter the service; often limited to requesting the service; explaining the problem or paying the bill only.
The output in each instance, whether, installing
software or repairing car etc. should be a satisfactory solution to a stated problem
Mental Stimulus Processing

Services that interact with peoples mind. Anything touching peoples mind has power to
shape attitudes and influence behaviour. Recipients should spend time but not necessarily be physically present in a service factory; just mentally in communication with information being presented. Information based content can be converted to digital bits, recorded or transformed into manufactured products viz. CDs, Videos, which can be packed and sold like any physical product
Information Processing
Most intangible form of service output. Customer involvement determined more by
tradition or personal desire to meet face to face and not by the needs of the operational process.
Customer / Supplier learn each others needs,
capabilities and personalities by personal meetings, however this relationship can also be build / sustained on trust or telephonic contact.
CUSTOMER EXPECTATION OF SERVICE

Customer expectations are the beliefs
about service delivery that serve as standards or reference points against which performance is judged.
LEVELS OF EXPECTATION
THE ZONE OF TOLERANCE

Desired Service
Zone of Tolerance
Adequate Service
Difference between the desired service and the adequate service
FACTORS THAT INFLUENCE DESIRED AND PREDICTED SERVICE

Explicit Service Promises
Implicit Service Promises
Desired Service
Word-of-Mouth
Zone of Tolerance Adequate Service
Past Experience
Predicted Service
THE SERVICE ENCOUNTER

It is the Moment of Truth
It occurs any time the customer interacts with
the employee Service Encounter can potentially be critical in determining customer satisfaction and loyalty is an opportunity to:

Build trust Reinforce quality Build brand identity Increase loyalty
The Service Encounter Triangle

Company (Management)
Internal Marketing
Enabling the Promise
External Marketing
Setting the Promise
Employee
Customer
Interactive Marketing
Delivering the Promise Moment of Truth
8-22
The Service Encounter Triangle

External Marketing- The company does this for
customers. It promises benefits, features, pricing strategy through advertisement & public relations. Internal Marketing- The company does this for its employees. It gives training, motivational and teamwork programs to its employees. Provide infrastructure and amenities to channel partner and franchisees. Interactive Marketing- Both the customer as well as the employees get instant feedback about each other during a service transaction. The employee delivers the promise made by the company to the customers.
CUSTOMER PERCEPTION OF SERVICE

Customers perceive services in terms of
quality of service & how satisfied they are overall with their experiences.
CUSTOMER PERCEPTIONS OF QUALITY AND CUSTOMER SATISFACTION
CUSTOMER SATISFACTION
It is a judgment that a product or service
feature or the product or service itself provides a pleasurable level of consumption related fulfillment. It is the customers evaluation of a product or service in terms of whether it has met the customers needs & expectations. Its failure leads to dissatisfaction.
DETERMINANTS OF CUSTOMER SATISFACTION

PRODUCT & SERVICE FEATURES
CUSTOMER EMOTIONS- your mood ATTRIBUTION FOR SERVICE SUCCESS OR
FAILURE: how much the customer blames or credits the failure or success of a service on the service provider PERCEPTION OF EQUITY OR FAIRNESS: have I been treated fairly compared to other customers? PERCEPTION OF FAMILY MEMBERS, FRIENDS, PEERS ETC
OUTCOMES OF CUSTOMER SATISFACTION

Increased customer retention Positive word-of-mouth communications Increased revenues
RELATIONSHIP BETWEEN CUSTOMER SATISFACTION AND LOYALTY IN COMPETITIVE INDUSTRIES
Source: James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger, The Service Profit Chain, (New York, NY: The Free Press, 1997), p. 83.
SERVICE QUALITY
The customers judgment of overall
excellence of the service provided in relation to the quality that was expected.
Service quality assessments are formed
on judgments of:
outcome quality interaction quality physical environment quality
THE FIVE DIMENSIONS OF SERVICE QUALITY

Reliability Ability to perform the promised service
dependably and accurately.
Assurance Knowledge and courtesy of employees and their

ability to inspire trust and confidence.
Tangibles Physical facilities, equipment, and appearance of

personnel.
Empathy
Caring, individualized attention the firm provides its customers.
Responsiveness Willingness to help customers and provide

prompt service.
Buying Behaviour of Service Consumer
Decision Making Process (Eight-stage model)

1.
2. 3. 4.
5. 6. 7.
8.
Need Arousal Recognition of the need Choice of level of involvement Search for information & identification of alternatives Evaluation of Alternatives Decision- buy or not buy Purchase Action and other decisions Post purchase feeling & behaviour
Demand and Supply Management of Services

Fluctuation of demand in services like restaurants,
vacation resorts, courier services, consulting firms, tax authorities etc As the service cannot be stockpiled, the resources should be used as productively as possible The following can be scenario with the Service Industry:

Excess Demand Demand exceeds optimum capacity Demand and supply are well balanced Excess Capacity
Capacity level can be stretched or shrunk

Transport and BEST buses; aircraft
switching to higher capacity on a busy day; a restaurant may add extra chairs & tables Minimising slack time , when bill is presented promptly to a group of diners Restaurant opening early for dinner, universities & colleges offering evening classes
Adjusting capacity to match demand (chasing demand)

Schedule downtime during periods of low
demand eg., repair and holidays Use part - time employees Rent or share extra facilities and equipments Cross train employees
Techniques for managing service demand

Use price and other costs to manage demand
(eg., theatre & hotel stay in peak time) Change product element Modify the place and time of delivery Promotion and Education
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Service Marketing

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Service Marketing

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Service Marketing

Major Sectors of Indian Economy

The Service Sector

Difference between Goods & Services

Dissatisfaction level in Service Industry vs. Manufacturing Industry

Companies that pay importance to resolving customer complaints

Satisfied employees will produce satisfied customers

Evaluation for Different Types of Products/Services

High in search qualities

High in experience High in credence qualities qualities

possessions to good working order.

software or repairing car etc. should be a satisfactory solution to a stated problem

Mental Stimulus Processing

CUSTOMER EXPECTATION OF SERVICE

THE ZONE OF TOLERANCE

Difference between the desired service and the adequate service

FACTORS THAT INFLUENCE DESIRED AND PREDICTED SERVICE

Implicit Service Promises

Zone of Tolerance Adequate Service

THE SERVICE ENCOUNTER

It occurs any time the customer interacts with

Build trust Reinforce quality Build brand identity Increase loyalty

The Service Encounter Triangle

The Service Encounter Triangle

CUSTOMER PERCEPTION OF SERVICE

CUSTOMER PERCEPTIONS OF QUALITY AND CUSTOMER SATISFACTION

DETERMINANTS OF CUSTOMER SATISFACTION

OUTCOMES OF CUSTOMER SATISFACTION

RELATIONSHIP BETWEEN CUSTOMER SATISFACTION AND LOYALTY IN COMPETITIVE INDUSTRIES

outcome quality interaction quality physical environment quality

THE FIVE DIMENSIONS OF SERVICE QUALITY

Assurance Knowledge and courtesy of employees and their

Tangibles Physical facilities, equipment, and appearance of

Caring, individualized attention the firm provides its customers.

Responsiveness Willingness to help customers and provide

Buying Behaviour of Service Consumer

Decision Making Process (Eight-stage model)

Demand and Supply Management of Services

Capacity level can be stretched or shrunk

Adjusting capacity to match demand (chasing demand)

Techniques for managing service demand

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