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Chapter-1

Introduction to service marketing


Services marketing
Services marketing are a sub field of marketing which covers the marketing of both goods and
services. Goods marketing include the marketing of fast moving consumer goods and durables.
Services marketing typically refer to the marketing of both business to consumer and business to
business services. Common examples of service marketing are found in telecommunications, air
travel, health care, financial services, all types of hospitality services, car rental services, and
professional services.
A service is the application of specialized competences (knowledge and skills) through deeds,
processes, and performances for the benefit of another entity or the entity itself. Services are
economic activities, rather than tangible products, offered by one party to another. Rendering a
service to recipients, objects, or other assets depends on a time-sensitive performance to bring
about the desired result. In exchange for money, time, and effort, service customers expect value
from access to goods, labor, professional skills, facilities, networks, and systems; but they do not
normally take ownership of any of the physical elements involved.[1]
The American Marketing Association defines services as - Activities, benefits and satisfactions
which are offered for sale or are provided in connection with the sale of goods.

Characteristics of Services
The defining characteristics of a service are:

Intangibility: Services are intangible and do not have a physical existence. Hence services
cannot be touched, held, tasted or smelt. This is most defining feature of a service and that
which primarily differentiates it from a product. Also, it poses a unique challenge to those
engaged in marketing a service as they need to attach tangible attributes to an otherwise
intangible offering.
Heterogeneity/Variability: Given the very nature of services, each service offering is unique
and cannot be exactly repeated even by the same service provider. While products can be
mass produced and be homogenous the same is not true of services. e.g.: All burgers of a
particular flavour at McDonalds are almost identical. However, the same is not true of the
service rendered by the same counter staff consecutively to two customers.
Perishability: Services cannot be stored, saved, returned or resold once they have been used.
Once rendered to a customer the service is completely consumed and cannot be delivered to
another customer. e.g.: A customer dissatisfied with the services of a barber cannot return the

service of the haircut that was rendered to him. At the most he may decide not to visit that
particular barber in the future.

Inseparability/Simultaneity of production and consumption: This refers to the fact that


services are generated and consumed within the same time frame. E.g.: a haircut is delivered
to and consumed by a customer simultaneously unlike, say, a takeaway burger which the
customer may consume even after a few hours of purchase. Moreover, it is very difficult to
separate a service from the service provider. E.g.: the barber is necessarily a part of the
service of a haircut that he is delivering to his customer.
Service and technology

Difference between Goods and Services


Given below are the fundamental differences between physical goods and services:
Goods

Services

A physical commodity

A process or activity

Tangible

Intangible

Homogenous

Heterogeneous

Production and distribution are separation Production, distribution and consumption are
from their consumption
simultaneous processes

Can be stored

Cannot be stored

Transfer of ownership is possible

Transfer of ownership is not possible

Services marketing mix

Traditional Marketing Mix Traditional Marketing Mix comprised of the following


components i.e. the 4Ps:-

a. Product
Service is an intangible product. It consists of a bundle of features and benefits that have
relevance to a specific target market. There is high level of flexibility and opportunity to be
innovative in designing product offer.
b. Place
Service is intangible as well as inseparable. So it cannot follow the same channel as goods
marketing.
Production, distribution and consumption takes place simultaneously in the services industry.
However services have an advantage of used direct selling approach at a low cost.
There are other channels of distribution like agents, brokers, franchisers and electronic channels
that are used for distribution of services.
c. Price
The pricing decision is critical in services too, as this component alone determines the revenue of
the firm. Consumer sensitivity will be higher in services than in goods. The pricing strategies for
services depend upon value perceptions of various groups of people that are targeted by the
service firms.
d. Promotion
Consumers are co-producers in the service business. The quality of service will not only depend
upon the performance of the service provider but also on the performance of the service
consumer.
It is the responsibility of the service organizations to educate and if necessary, train customers so
as to make them use the services efficiently.
A well designed service promotion programmes is of immense
organization to inform, persuade and train customers to better their experiences.

help

to

the

Extended Marketing Mix


In services industry sincere there is intangibility, variability, customer participation, we have
7Ps and these three extra Ps are known as the Extended Marketing Mix.
People:-

All of the human actors participating in the delivery of a service provide cues to the customer
regarding the nature of the service itself. How these people are dressed, their personal
appearance, and their attitudes & behaviors all influence the customers perception of the service.
CHAPTER-2

Consumer behavior in service


Consumer Decision Process
This means the process that a consumer follows to final down to a decision.
Consumers generally follow the following stage process in making purchase decisions: Prepurchase stage
In this stage activity occurs before and leading up to the acquisition of the service. In his period
decision related to the buying a service is done.
Problem Identification: We take a decision to purchase something when there is some
unfulfilled need or want. So the first step is to identify the problem.
Information Search: Once the problem is identified then we have to start searching for the
alternatives which will satisfy our need/want.
Alternatives Evaluation: After finding out the alternatives, we must evaluate which
alternative best suits us. We identify the best alternative on tge basis of benefit and risk for final
decision
Service encounter stage
Before purchasing decision, customer contacts with other service provider and their experience
related to it.
Post purchase stage
Purchase, consumption and divestment: Once, we have zeroed on to an alternative, then we
go ahead and purchase that product. After purchasing, we consume it/use it. After using it, we
dispose/divest that product. Customer evaluate the service quality and their satisfaction or
dissatisfaction with the service experience result of this process will affect the future decision
whether to remain loyal provider that deliver service.
Factors that influence the customer expectation of service

Personal need

It refers to the physical, social, psychological needs. e.g. .customer with limited time for lunch
desire quick service.

Enduring service intensifier

Some customers are more demanding; having a higher expectation of service-enduring service
intensifier is individual, which lead to the customer to a heightened sensitivity to the service.
This can based on the desired expectation appropriated from and based on expectation of others.
For e.g. in a factory canteen, if worker state a spicy and rich food to be good, then desired level
may be influenced by it. The HR manager may want a service provider to provide this kind of
food.

Derived service expectations


It is the derived service expectation by another person or group. E.g. when husband buys a TV
then his expectation is shaped by wife expectation.
Perceived service alternatives
Perceived service alternatives are comparable service customers. They believe they can obtain
else where and/or produce themselves. For e.g. when we have only one BBA collage then
customer would find it adequate. The movement more than one alternatives is available then
customer would start to compare the two services. Thus, if one collage offers quality education
with affordable price then, he expects the other service provider to provide similar facilities.
Self perceived self role
It refers to the input a customer believes he is required to present in order to produce a
satisfactory service encounter. We know the customers are strongly involved in the process of
service delivery. They can clearly see their own role. if , in their opinion, they did not perform
their role satisfactorily, their definition of adequate level would be correspondingly lower. For
e.g. most of the airlines upon prior request would provide meals of choice such as diabetic meal,
low cholesterol meal, etc. the customer , when he boards the flights and demand the special
diabetic meal, may be disappointment to find not available.
Others
Situational factors
Personal philosophy

Service Quality
It is perception/attitude formed by customer to the overall firm service/product. Its related to
customer satisfaction. The word quality is major important for marketer because quality derives
the development of all marketing strategies. It means that before making marketing strategy,
marketers should focus on quality. So, quality and service marketing are interrelated and has a
relationship.
Service Quality is a predictable degree of uniformity and dependability at low cost with a
quality suited to the market.
Service Quality is consistent conformance to customers expectation.

Higher Service quality has a beneficial effect on both revenues & costs.
Service quality then refers to the extent to which service is what it claims to be and does what it
claim to do. High quality satisfying service requires that the firm understand consumer needs in
detail and also the operational constraints. It remained the service provider to focus on quality,
and the process should be designed to support this system by proper control and delivery.
Service quality= (perceived performance/ desired expectation) *100
Dimension of service quality

Credibility

Trustworthiness, believability, honesty of the service provider appears. E.g. does the school have
good education or only reputation, does the financial advisor present all the options or only those
which earns her/his most commission/profit.

Security

Service to customer is free from danger, risk or doubt. E.g. does the repair firm guarantee its
work? Are the medical reports of patients kept confidential? Is it safe for me to use the banks
ATMs at night?

Accessibility

Service is accessible and delivered with little waiting. It is approachability and ease of contract.
e.g. do the hair dresser clients have to wait a months before getting an appointment to have their
hair cut.

Communication

It refers to the clarity and understandability of information given to the client. E.g. how good is
organization at communicating effectively? Does the teacher take a time to explain in the terms
the student can understand?

Understanding

Effort made by the organization to get to know its customers and understand their needs. E.g. Is
the moving company willing to accommodate my schedule, does someone in the hotel recognize
me as a regular customer.

Tangible

Appearance of physical facilities, equipment, personnel and communication materials. In an


organization or service enterprise, customer often relay on the tangible things likes desks,

lightening, carpet, wall colors, appearance of firm personnel etc. E.g. Does the staff in an office
are good dress and loyal to customer.

Responsiveness

Willing and readiness of employee to help customers and to deal with their specific problem. For
e.g. is the accountant available to talk over a specific problem whenever client rings up?

Competence

Possession of skills and knowledge required to perform the service. E.g. when I call my travel
agent is she able to obtain the information I needs.

Couresy

The firms personnel should interact with the customer in the polite and the friendly manner and
with consideration. E.g. is the receptionist friendly, helpful and polite?

Service encounters
Services are often about the process rather then the tangible outcomes, and for many services,
customers are closely involved in production process. The point or duration of interaction is
often called service encounter. It is also the interaction between service provider and customer.
Service encounter is an opportunity to build satisfaction and quality of services.
Factor influencing encounters

Atmosphere

It represent the physical setting related to service i.e temperature, space available, color and
paintaining of wall, dress or uniform etc. E.g. hotel premises have to look and serve healthy
food.

Training

Employee of organization have to be well trained to their job must needed. E.g receptionist has
to know all about room charges, reservations, discount, mode of payment etc. to manage the
encounter. If employees are trained then customer feels confidence to rely on the service.

Expectation management

Customer expectation are drives by explicit (clear) and implicit (not plainly expressed) promises
and previous the experience with a similar service. Management of expectation would play a
large role in the service satisfaction. Customer expectations have to be raised to meet with the

level of services delivery. Thus, dating service agency has to raise the customer enthusiasm, as
he first date may not produce the perfect match sought by the customer.

Personality and attitude

Personality and attitude of front end employee also affect the expectation of customer. Soft and
tolerant attitude towards the customer may also become counter productive. Polite voice, tolerant
attitude, good dress up, loyalty. Employee should recruit for the front end responsibilities.

Service delivery rules

Time limit provided for the each customer is fixed. So, the employee should not cross the limit.
Management have fixed in advance the time he or she would spent with the client during the
interaction. The time, effort and materials that can be spent on one customer may be limited. If
the distance between two is not kept, it may bring up excess familiarity.
Types of encounters

Remote encounter

In this encounter there is no human interaction. customer interact remotely. E.g ATM, face book,
mail etc.
Customers interact to bank through ATM.
Customer use face book, internet for communication.

Telecommunication encounter

Interaction to customer with phone. Its different and affective then remote. Tone of voice,
employee knowledge and effienciency in handling the customer in handling the customer issue
become important criteria for judging the quality in the encounters.

Face to face encounter

In this there is direct contract with employee and customer. its more complex than other .e.g.
education services, hospital services, hotel services and other direct contact services are face to
face encounter. in face to face encounter the customer also play a role creating quality service for
himself through his own behavior during interaction.
Service satisfaction verse service quality

Chapter-4

Service recovery
concept
It is an effort made by firm to correct the problem related to its service. It can turn the customer
dissatisfaction to the satisfaction. Service recovery refers to the actions a service provider takes
in response to service failure. By including also customer satisfaction into the definition, service
recovery is a thought-out, planned, process of returning aggrieved/dissatisfied customers to a
state of satisfaction with a company/service. Service recovery differs from complaint
management in its focus on service failures and the companys immediate reaction to it.
Complaint management is based on customer complaints, which, in turn, may be triggered by
service failures. However, since most dissatisfied customers are reluctant to complain, service
recovery attempts to solve problems at the service encounter before customers complain or
before they leave the service encounter dissatisfied. Both complaint management and service
recovery are considered as customer retention strategies
Customer expectations about their complains
When a service failure occurs, people expect to be adequately compensated in the fair manner.
Customers usually feel that they were not treated fairy and didnt receive adequate justice. When
this happen, customer reaction tends to be immediate, emotional, and enduring. Stephen tax and
Stephen brown found that as much as 85 percent of the variation in the satisfaction with a service
recovery was determined by the three dimensions of fairness
Procedural justice has to do with the policies and rules that any customer will have to go through
in order to seek fairness. Here, customers expect the firm to assume responsibility, which is the
key to the start of a fair procedure, followed by a convenient and responsive recovery process.
That includes flexibility of the system and consideration of customer inputs into the recovery
process.
Interactive justice involves the firms employees who provide the service recovery and their
behavior toward the customer. Giving an explanation for the failure and making an effect to
resolve the problem are very important. However, the recovery effort must be perceived as
genuine, honest and polite.
Outcome justyice pertains to be compensation that a customer receives as a result of the losses
and inconveniences incurred because of the service failure. This includes compensation for not
only the failure but also the time, effort, and energy spent during the process of service recovery.

Service recovery strategy

Dealing with the complaining customers

Both managers and frontline employees must be prepared to deal with angry customers who are
confrontational and sometimes behave in insulting ways towards service personnel who arent
fault in any manner; management memo provides specific guidelines for effective problem
resolution, designed to help calm upset customers and to deliver a resolution they will see as fair
and satisfying

CHAPTER-.5

New service development


ConceptOne of the important aspects of products/services strategies relates to the issue of development of
new products strategy which is becoming increasingly important as the intensity of the
competitive environment increases. He cost associated with the development and launch of a
completely new product can be recovered from the sale of the service or it should meet the need
of the customers. But if the products fail to meet the target sales figures, then company may be
difficult to survive. often new service are introduced on the basis of managers and employees
subjective opinions about what the services should be and whether they will succeeds, rather
than on objective designs incorporating data about customer perceptions, market needs, and
feasibility. A new service design process may be imprecise in defining the nature of the service
concept because the people involved believe either that intangible processes cannot be defined
precisely or that everyone knows what we mean. Neither of these explanations or defenses of
imprecision is justifiable.

Types of new services


Change of style- style changes represents most modest service innovations, although they
are often highly visible and can have significant impacts on customer perceptions, emotions
and attitude. This may include changes in dcor or design or logo of product and changing
the color scheme of a restaurant.
Service improvement- this includes the actual change to a feature of the service which is
already an offer to an established market. For e.g. introducing computer reservation system in
the travel agency to improve the efficiency of operations to satisfy the customers.
Service line extension- service line extension represents most common types of service
innovation. This may be development of additional services to the existing service product
range. E.g. airlines offering additional legal services.
New service-the new services that are offered to its existing customer although they may be
currently available from its competitors. For e.g. , ATM services if offered by commercial
banks
Major innovation-majors innovations are new services for market as yet undefined. there
are purely new services through innovations for new markets

New service development process (stages \strategies)


a. Front end planning
In it first of all business strategy development should be studied
Every organization may have overall strategy vision and mission, which should be thoroughly
reviewed and it should be clear. So, new service strategy and specific new service idea must be
matched with the larger specific picture of organization.
New service strategy development
The types of new services that will be appropriate will depend on the organizations goal, vision,
capabilities, and growth plan. By defining the new service strategy(possibly in terms of markets,
types of services, time horizon for development, profit criteria, or other relevant factors), the
organization will be in the better position to generating of specific ideas..

Idea generation

The new service must satisfy all relevant criteria absolutely before it should be allowed to
progress to next steps. The next step in the process is the formal solicitations of new ideas. The
ideas generated at this stage can be passed through the new service strategy screen described in
the preceding step.

Service concept development and evaluation

The idea formulated for service offering which might suit a market segments. The concept will
be tested by the way of qualitative research, possibly in group discussion or following in- depth
interviews to ascertain whether potential customers think about benefits of the new offerings.
Based on the insight gained through the qualitative research it is possible to design a meaningful
questionnaire for quantitative research to generate data that are scientifically sound with respect
to probable market response to service offerings. This type of research enables identification of
particular market segment to which the service offering is most attractive.

Business analysis

Assuming the service concept is favorably evaluated by customers and employees at the concept
development stage, the next step is to determine its feasibility and potential profit implications.
Demand analysis, revenue projections, cost analysis and operational feasibility are assessed at
this stage. Because of development of the service concepts is so clearly tied to the operational
system of organization, this stage will involve preliminary assumptions about the costs of hiring
and training personnel, delivery system enhancement, faculty changes, and any other projected
operation costs.
The organization will pass the results of the business analysis through its profitability and
feasibility screen to determine whether the new service idea meets the minimum requirements.

b. Implementation
After the new service concept has passed all of the front-end planning process, it is ready for the
implementation stages. During this phase, the concept is refined to the point where detail service
processes are shown for the implementation of service production. Before launching any new
service or redesigning the service, meeting or experiments are conduced to fulfill the consumer
requirement.
Once the new service concept has passed all of the front-end planning process it will be ready for
the implementation stages of the process. Service development and testing activities are carried
on.

Market testing

In this stage, usually the organization tries out the new product in the market. The consumer
response can be accessed through test marketing. The test marketing is time consuming and
expensive. As there is danger of quick imitation by the competitor, the test marketing should be
kept for minimum and move from test marketing to commercialization should be too quick.

Commercialization

At this stage, an organization undertakes full scale introduction of service offering to the market.
Huge money is invested in advertising and sales promotion. The training department undertakes
the training of customer contact employees to ensure that one thoroughly understands the service
and how to sell the service. Employees incentives and customer premiums must be planned and
offered for making the service offering launch a success.

Post introduction evaluation

At this point, the information gathered during commercialization of service can be reviewed and
changes made to the delivery process, staffing, or marketing-mix variables on the basis of actual
market response to the offering. No service will ever stay the same. Whether deliberate or
unplanned, changes will always occurs. Therefore, formalizing the review process to make those
changes that enhance service quality from the customers point of view is critical. The service
blueprint serves a valuable purpose in providing a focal point for discussing and planning
changes in the offerings
Branding of service
Brands are meant to influence the purchase behavior, in the case of goods. It reduces the risk of
purchase for customers. The transplantations of exciting, localized service experience to other
locations and sites have always been difficult. It has been difficult to establish national service
brand that cross across states and cities. Part of reason is brand quality. This was not a case in
government and non government Owner Corporation, whose brands enjoys the brand qualities

and represents risk reduction for the customer. For example Unit trust of India and Life Insurance
Corporation were recognized as risk free investments, and nationalized banks as risk free
banking channels.

Chapter-6
Pricing of services
Concept
Pricing is one of the most important elements in marketing mix. Pricing decision for service
offer is of a major importance and should ideally be related to achievement of marketing and
organizational goal. Pricing of any product or service to be acceptable to the customer has to b
competitive. Many a time the customer links the price of the product or service with the quality.
In other words, it is the perceived quality of the service by the customers that influences pricing
to a large extent.
The amount paid for good or service or an idea is price. The meaning of price is quite
complicated. It can be said that price is the amount one pay for getting satisfaction of purchase.
The price of the service is the value attached to it by the service provider and it must correspond
with the customer perception of value.

Objectives and foundation for setting prices:


Pricing strategy must be based on the clear understanding of a companys pricing objectives.

Revenue and profit objectives

It is the objective of every business organization to maximize long term revenue, contribution,
and profits. Top management of an organization is eager to reach a particular financial target or
seeks a specific percentage return on investment. This requires pricing to be set based on a good
knowledge of costing, competition and price elasticity of the market and value percentage.

Building demand

Sometimes instead of maximizing profit, achieving a certain minimum level of profits may be
more important. This may be the one of the objectives in some organization like getting full
house in a theatre, sports stadium, or rack track usually creates excitement that enhances
customer experiences. It also helps to create image of success that attracts new customers.

Developing the user base

It will be very difficult to attract customers for newly established organization. However, in order
to create the impression of a successful launch and to enhance the image of the firm, it is
important that the firm is seen to be attracting a good volume of business from the right types of
customers. Introductory price discounts are often used to stimulate trial and sign up customers,
sometimes in combination with promotional activities such as contest
Approach to pricing services
The relationship between price and demand is well known. For items or service of normal use,
the higher the price, lower the demand and vice versa. In the case of services, each of the pricing
approaches represents a marketing solution to the service provider. Some of the approaches are
as follows

Cost based pricing

In cost based pricing the company determines the prices by adding the direct material cost, direct
labor cost, overhead and percentages of profit. This method is widely used by industries such as
utilities, contracting, wholesaling and advertising agencies etc. the basic formula for cost based
pricing is:
Price = direct cost + profit margin
Direct cost involves a materials and labour that are associated with the service, overhead cost are
a share of fixed costs, and the profit margin in a percent of full cost(direct + overhead).
Problem
a. Cost based difficulties to trace
One of the major difficulties in cost based approach involves defining the units in which a
service is purchased. Thus the price per unity is the vague entity. For this reason many services
are sold in terms of input units rather than units of measured output. For examples must
professional (such as consulting, engineering, psychotherapy etc) service are sold by the hour
b. labour is more difficulties to price than material
c. since most of the service offers are usually not totally comparable, the utility and cost
comparisons based on cost-based prices is confusing to the customers.

Competition based pricing

It is another way I which the prices are set by he service provider. An example of this is the
Indian context is the air-travel prices between metropolitan cities. When Indian airlines was the
sole service provider, the price ware quite high and ware based on the cost of operation.
Competition between jet airways, Sahara, and Indian airlines has forces all of them to reduce the

prices of two way airfares by as much as 40%, thus , competition leads to tremendous benefits
for customers.
Going rate pricing is another form of competitive pricing. When there are a large number of
service provider, or when a new applicant comes into market, usually the price cannot be fixed
by new applicant or any single provider.

Demand based pricing

The third major approach of pricing is demand based pricing that involves setting prices
consistent with customer perception of value prices which are based on what customers will pay
for the service provider.
It is the buyers perception of total value that prompts the willingness to pay particular prices for
a service. To transform the customer value perceptions into a appropriate price for a specific
service offering the marketer must answer the number of questions. What benefits does the
service provide? How important is each of these benefits to the others? At what price will be
service is economically acceptable to potential buyers? In what context is the customer
purchasing the service?
Problems
a. Monetary price must be adjusted to reflect the value of non monetary costs.
b. Information on service costs is less available to customer: hence price may not be central
factor.

Value based pricing

Value is defined as perceived benefits for the total cost of acquisition. Thus, the value based
pricing can be divided into following depending on:
a. Higher value perception due to lower price for the service
b. Higher value due to higher perceived benefits, which may accrue due to high quality of the
service or other value perceptions.
Revenue management: What it is and how it works
Revenue management requires a detailed understanding of customer needs and preferences and
their willingness to pay. With this information product and revenue manager together can design
effective product that consists of core service. Many service businesses are now focusing on
strategies to maximize the revenue, or contribution that can be derived from available capacity at
any given time. Revenue maximization is one strategy of many service businesses. Revenue can
be derived from the available capacity utilization at any given time of the firms. It is important in

value creation: it creates value through the effective utilization of available capacity for higher
paying customer segments. It is a sophisticated approach to managing supply and demand under
varying degree of constraints. Airline and hotel, in particular have become adopt at varying their
prices in respond to the price sensitivity and need of different marker segment at different times
of the day, week or season.

Reserving capacity for higher yield customer


In practice, revenue management involves setting prices according to predicted demand levels
among different market segments. The least price sensitive segment is the first to be allocated
capacity, paying the highest price, other segment segments follows at progressively lower prices.
Because the higher paying segments, often book close to the time of actual consumption, firms
need a disciplined approach to save capacity for them instead of simply selling on a first come,
first served basis.
Effect of competitors pricing on revenue management
Because revenue management systems monitor booking pace, competitor pricing is indirectly
picked up. If a firm prices too low, it will experience a higher booking pace, and its cheaper seats
will fill up quickly. That is generally not good, as it means a higher share of late booking but
high fare paying customers will not be able to get their seats confirmed and will therefore fly on
competing airlines. If the initial pricing is too high, the firm will get too low a share of earlybooking segments (which still tend to offer a reasonable yield) and may later have to sell excess
capacity last minute at very low prices to still recover some contribution towards its fixed costs.
Price elasticity
Effective revenue management requires two or more segments tht attach different value to the
service and have different price elasticity. To allocate and price capacity effectivekllly, the
revenue manager needs to determine how sensitive demend is to price and what newt revenues
will be generated at different prices for each target segment. He concept of elasticity describes
how sensitive demand is to changes in price and is computed as follow
Price elasticity = %change in demand/ % change in price
When price elasticity is at unity, sales of a service rise (or fall) by the same percentage that price
falls (or rises). When a small change in price has a big impact on sales, demand for that product
is said to be price elastic. But when a change in price has little effect on less, demand is
described as price inelastic

Chapter- 7
Distributing service
Concept
Delivery about the service to a customer involves decision about where, when, and how. The
rapid growth of internet means that services marketing strategy must address issues of place,
cyberspace, and time, paying at least as much attention to speed, scheduling, and electronic
access as to more traditional notion of physical location. A service product and its means of
distribution and delivery system have a powerful impact on the customers experiences.
For high contact services, the design of physical environment and the way in which tasks are
performed by customer- contact personnel jointly play a vital role in creating a particular identity
for a service firms, shaping the nature of customers experience and enhancing both productivity
and quality. Low- contact services are expanding in number, thanks to advances in electronic
technology. More and more, these services, often designed specifically with improved
productivity in mind, are being delivered through self service.
Types of contact

Options for service delivery

customer visit the service sites


For some specific types of service customer visit own self to the service sites like as, beauty
parlor, theater, grocery etc. so it is very important to locate a service center where customer
feels Convience to visit physically to the sits. Traffics counts and pedestrian counts help to
established how many prospective customers a day pass by certain locations. Construction of
an express way or introduction of new bus or railway service may have significance effect on
travel patterns and, in turn, determine which sites are now more desirable and which are less
so.

The tradition of having customers visits the services other than those in the peopleprocessing category is now being challenged by advances in telecommunications and
business logistics, which are leading to shift to services delivered from a distance

provider come to the customer


For some types of service supplier visit the customers. This approach is essential whenever
the objects of the service is some immovable physical item, such as a large machine that
needs repair, house painting etc. because it is more expensive and time consuming for service
personnel and their equipment to travel to the customer than vive versa, the trend has been
away from this approach(fewer doctor make house call now a day).however, there may still
be a profitable niche in serving customers who are willing to pay a premium price for the
time saving and convenience of receiving personnel visits from service providers. Other
recently established customer services that are taken to the customer include mobile car
washing, office and in-home catering etc.

Arm length transaction


In this approach customer never sees the service facilities and never meets the personnel face
to face. In it number of service encounter tends to be fewer and those encounters that do take
place with service personnel are more likely to be make by telephone, or even moor
remotely, by mail, fax, or e- mail. The out come of the service activity remains very
important to the customer, but much of the process of service delivery may be hidden. Credit
card and insurance are examples of such services
Decision about place and time
How the service managers make decisions on the places where service is delivered and the
times when it is available
a. Where should service be delivered?
It is great challenges for the manager o decide where to locate a service facility that will be
visited by customers. It involves very different considerations from decisions related to
locating the backstage elements, where cost saving and access to labor are often key
determinants. Customers may willing to travel further for specialty that fit their needs well.

Locational constraints

Although the customer convinces is important, operational requirement set tight constraints
for some services. It is noticed that airports are often inconveniently located relative to
travelers homes, offices, or destination. Because of noise and environmental factors, finding
suitable sites for construction of new airports or expansion of existing ones is a very difficult

task. As a result airport sites are often far from the city centers to which many passengers
wish to travel.
The need of economics of scale is another operational issue that may restricts choice of
locations. Major hospitals offers the many different health care services even a medical
school at a single location, requiring a very large facility

Ministores

A great innovation of service firm is to create service factories on very small scale to
maximize coverage with in geographical area. Automation is one approach, as exemplified
by the ATM, which offers many of the functions of a bank ranch with in small, self service
machine that can be located with in the hospitals, colleges, airports, and office building.

Locating in multipurpose facilities

The most obvious locations for consumer service are close to where customers lie or work.
Modern building are designed to be multipurpose, featuring not only office or production
space but also such services as a bank, a restaurant, a hair salon, several stores, and even a
health club. Some companies even includes an on- sites childrens day care facility to make
life easier for busy working parents.

E-commerce

Selling goods and services through the internet is a major growth trend. Personnel computers
and the internet are changing the way people shop. From perusing catalogs and shopping by
mail or telephone, many people are moving to shop in cyberspace for a wide array of both
goods and services.
b. When should service be delivered?
Some services have long operated 24 hours a day, every day of the year. Examples include
those services that respond to emergencies, such as fire, police, and ambulance, or make
repairs to vital equipment. Hospital and the first- class hotels provide 24 hour care or room
service as a matter of course. Similarly, passengers aircraft operate around the clock, and
telephone companies always have operators available on a 24 hour basis. By contrast most
retail and professionals services in industrialized countries used to follow a traditional and
rather restricted schedule that limited service availability to about forty to fifty hours a week.
In large measure this routine reflected social norms as to what were appropriate hours fo
people to work and for enterprises to sell things. Today the situation is changing fast. For
some highly responsive service operations, the standard has become 24\7service -24 hours a
day, seven days a week, around the world.

Chapter 8
Designing the communication mix for services
Concept

Steps of marketing communication

Source of information

Encoding

Channels of information

Decoding

Receiver

Feedback

Noise

Importance of marketing communication

Marketing communication mix

Advertising

Personnel selling

Sales promotion

publicity

Reason for service communication problem

Inadequate management of service promises

In services, the sales (marketing) departments make promises what other employees in the
organization will fulfill. Because what employees do cannot be standardized, greater
coordination among departments and management of promises are required. A discrepancy

between service delivery and promises occur when companies fail to manage the service
promises- the promise made by salespeople, advertising and service personnels. One of the
primary reasons for discrepancy is that the company lacks the information and integration
needs to make fulfill able promises. The traditional functional structure in many companies
obscures(to hide from view) the end- to- end processes that allow the company to project
when work will be accomplished or whether the service to be delivered will match what is
promised.

Inadequate management of customer expectations

In the service marketing the marketer must satisfy the customer by managing the expectation
of customer satisfying customer is meeting expectation of customer. If the expectations are
not meet the marketer must change the expectations of customer. Appropriate and adequate
communication about services is the responsibility of both marketing and operations.
Marketing must adequately (if compellingly) reflect what happens in actual service
encounters: operations deliver what is promised in communication. For examples, when
management consulting firms introduces new offerings such as return-on-quality analysis, he
marketing ad sales departments must make offering appealing enough to be viewed as
superior to competing services. In a expectations above the level at which its consultants can
consistently perform. If advertising, personal selling, or any other external communication
sets up unrealistic expectations, actual encounters will disappoint customers.

Inadequate customer education

If the customers are unclear about how the service will be provided, what their role in
delivery involves, and how to evaluate service they have never used before, they will
disappointment and often hold the service company, not themselves, responsible.
Inexperienced customers, by definition, may not understand how to use services correctly.
For services high in credence properties- export services that are difficult for customers to
evaluate even after they have received the services-many customers do not know the criteria
by which they should judge the service.

Inadequate internal marketing communication

Another major difficulty associated with providing service that matches promises is that
multiple functions in the organization, such as marketing and operations, must be coordinated
to achieve the goal of service provision. Because service advertising and personal selling
promise what people do, frequent and effective communication across functions- horizontal
communication is critical. If internal communication is poor perceived service quality is at
risk. If company advertising and other promises are developed without input from operations,
contact personnel may be able to deliver service that matches the image portrayed in
marketing efforts. Not all service organization advertises, but al need co-ordination or

integration across departments or functions to be able to deliver quality service. All need
internal communication between the sales force and service providers. Horizontal
communication also must occur between the human resource and marketing departments. To
deliver excellent deliver service, firms must be certain to inform and motivate employees to
deliver what their customers expect. If those who understand customer expectations
(marketing and sales personnel) do not communicate this information to contact employees,
their lacks of knowledge will affect the quality of service that employees delivers
Chapter-9
People in service
Concept of service employees
Employees are life blood of organization. In the good manufacture organization, the personnel
perform their duties in the factories, away from customers. Most common definition of quality of
services is employee contact skills such as courtesy, attitude, or helpfulness. In the service
business, the personnel are carries of total organizational realities. Through the interaction with
them, the customer forms an opinion about the organization. Service firms develop technical
competencies of the personnel and invest a lot of money in facilities that are essential o produce
a services. In the spite of such efforts, these firms fail to provide a satisfactoriness customer
service because of their inability to manage customer personnel encounter. It is because of this
reason that uncaring salesman, rude bank employees, discourteous service people in restaurant,
unwelcoming receptionists, indifference beautician and hairdressers are found in service
organizations. So, we can say that service employees in two ways i.e. professional service
employees and customer service employees. The professional service employees refers to
lawyers, doctors, consultants, etc. these people posses high qualification, have high level of
perceived status. On the other hand, customer service employees are found in grocery, clothing
and other retail stores.
Importance of service employees
Service employee plays an important role to provide customer satisfaction and in building
customer relationship. Service employees represents the organization and can directly influence
customer satisfaction, they perform the role of marketers. Service employees are not duty or an
break, if they make a rode remarks about or to customers, customers perceptions of the
organization will suffer. So they are very important.

Service employees are the links between service provider and the customer.

The employees promise enables the service provider to make the marketing promise to the
customer. More importantly, the employees deliver this service promises to the customers.

Thus they are crucial element around which the entire performance of the service provider
revolves.

People are the visible fact of the service provider. They are the only one who are seen and
heard by the service recipient. For examples, the receptionist at the tax office receives the
returns at the counters. You are not allowed to go in any further or meet with the taxation
officers.

Difficulties faced by service employees

Role ambiguity

For example: if a boy had an accident and he is bought to the hospital. And emergency cases are
bought to the emergency rooms. The emergency room staffs can see that the patient/the boy is
under distress and need immediate attention. Yet, they feel that they cannot give the treatment
without completion of admission formalities. This type of ambiguity is source of conscientious
employees. It is a situation in which employees are unclear and delama about their action at such
situation.

Role conflicts

The employees are also human being with their own personalities, self esteem and ego,
aspiration, etc. when the job demands that they ignore or suppress some of their individual traits
for the sake of the customer, it can lead to role conflict.
In hotel receptionist should dearly welcome the customers, if a waiter is busy then some times
they will have to service the customer, this task may bring the receptionist to feel it is below their
dignity to carry it out. When a manager insists on it, where is usually a dispute between her and
the manager, which inevitably leads to arguments.

Organizational conflict

There are rules of an organization that need to be overlooks from time to time to secure customer
satisfaction. Thin rules and the common sense action may be at variance or conflict with each
other.
For example the hotel may demand full payment of room rental for another day if the room is
kept beyond 12 noon of the following day. Yet the customer may request extension of rental
period till evening 5 o clock without additional payment. The receptionist knows that there is no
great demand for the rooms during this period. Usually, business visitors check in either early in

morning or late in the evening after the office hours. In order to please the customers, if the
receptionist grants the leeway, the management may penalize the employee for loss of revenue

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