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4. Derived service
Companies are typically classified within service sector whose core product is a
service.
Air India-transportation
Birla sunlife-Insurance & financial services
Fortis- healthcare
Columbia Asia health care
SERVICES AS PRODUCTS:
Services as products represent a wide range of intangible product offerings that
customers pay for in the market place. Service products are sold by service companies
& non-service companies such as manufacturing & technological companies .eg: IBM
&HP offer IT consulting services to the marketplace competing with firms such as
EDS, ACCENTURE, which are traditional pure service firms.
CUSTOMER SERVICE:
It is also a critical aspect of what we mean by service. It is the service provided in
support of a companys core products. Cos typically do not charge for customer
service provided. Many companies operate customer service call centers, often staffed
around the clock. Quality customer service is essential to build customer
relationships. It should not be confused with services provided for sale by the
company.
DERIVED SERVICE: The value derived from physical goods is really the service
provided by the good, not the good itself.eg: Computers provide information.
Unfortunately, customers are not always happy with the quality and value of the
services they receive. People complain about late deliveries, rude or incompetent
personnel, inconvenient service hours, poor performance, needlessly complicated
procedures and a host of other problems. They grumble about the difficulty of finding
sales assistants to help them in shops, express frustration about mistakes on their
credit card bills or bank statements, shake their heads over the complexity of new
self-service equipment, mutter about poor value and sigh as they are forced to wait for
service or stand in queues almost everywhere they go.
Suppliers of services often seem to have a very different set of concerns. Many
complain
about how difficult it is to make a profit, how hard it is to find skilled and motivated
employees, or how difficult to please customers have become. Some firms seem to
believe that the surest route to financial success lies in cutting costs and eliminating
unnecessary frills. A few even give the impression that they could run a much more
efficient operation if it werent for all the stupid customers who keep making
unreasonable demands and messing things up!
Forces for change in service management
Technological innovations.
Services
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Stored
consumption
Effect
Per capita income
Service effected
Pest control, personal security, Interior design.
Leisure time
prospects
Health clubs, Spas, Old age homes , gyms, yoga,
Working Couples
Working wives
meditation
Day care centers, home delivery, packed food
Product complexity
Variety available
Life complexity
Lack of time
Need of conservation
IT
apartments
PCO, pager, e- commerce , Internet service
Intangibility
It refers to the lack of tangible assets which can be seen, touched, smelled, heard or
tasted prior to purchase. Services vary in the degree to which they are intangible.
Such as a college education, air travel, & sporting events are highly intangible, which
cannot be smelled or tasted prior to the purchase.
Marketing implications of intangibility feature of services:
II)
Pricing is difficult
Heterogeneity
A distinguishing characteristic of services that reflects the variation in consistency
from one service transaction to the next is called as heterogeneity.
Marketing implications of heterogeneity feature of services:
There is no sure knowledge that the service delivered matches what was planned
and promoted
III)
IV)
Perishability
A distinguished characteristic of services in that they cannot be saved, their unused
capacity, cannot be reserved & they cannot be inventoried.
Marketing implications of perishability feature of services:
The Services Sector contributes the most to the Indian GDP. The Sector of
Services in India has the biggest share in the country's GDP, it accounts for more
than 50% contribution
The various sectors under the Services Sector in India are construction, trade,
hotels, transport, restaurant, communication and storage, social and personal
services, community, insurance, financing, business services, and real estate.
Specific demand for services marketing concepts has come from deregulated
industries and professional services
coroners (who provide the service of identifying cadavers and determining time
and cause of death)
funeral homes (who prepare corpses for public display, cremation or burial)
dispute resolution and prevention services
arbitration
courts of law (who perform the service of dispute resolution backed by the power
of the state) diplomacy
lawyers (who perform the services of advocacy and decision making in many
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military (performs the service of protecting states in disputes with other states)
banks and building societies (offering lending services and safekeeping of money
and valuables)
real estate
stock brokerages
tax preparation
foodservice industry
personal grooming
hairdressing
manicurist / pedicurist
body hair removal
dental hygienist
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hospitality industry
information services
data processing
database services
Interpreting
Translation
risk management
insurance
security
social services
social work
transport
Public utility
electric power
natural gas
telecommunications
waste management
water industry
and are of a high quality, service personnel have to rehearse and practice the service
script several times before delivering the actual service. They have to focus not only
on what they deliver to customers, but also how they do so. For instance, restaurant
and repair personnel have to learn and perform the service courteously with the
customers; otherwise customers would be offended and dissatisfied with the service.
Service personnel must learn to deliver the service with empathy and care to the
customers.
Services are perishable in nature. So services have to be tangiblised in the form of
video demonstrations, tape records, testimonials, etc. so that customers can feel the
quality of the service even when the actual service is not being delivered. As services
perish once it is delivered, any mistake in the service provision would call for redoing
that part of the service, which is called service recovery. Service recovery can lead to
unnecessary expenditure for the service provider. So service providers have to learn
and practice delivering the service right first time and each time. In short, they have to
ensure
that
the
services
they
provide
are
reliable
in
nature.
Services are variable in nature as these are intangible and simultaneous in nature.
Hence, the same service delivered by different people varies and the service provided
by the same person at different times varies from time to time. Hence, service
personnel have to learn the service script well and deliver the service strictly as per
the service script in order to minimise the variability of the service and increase its
reliability, dependability, credibility, consistency and accuracy. Customers perceive
the
restaurant
service
as
reliable
when they provide the same quality and level of service each and every time the
customer purchases the service from the restaurant.
Tangibility spectrum
Services tend to be more intangible than manufactured products, and manufactured
products tend to be more tangible than services. For example, the fast-food industry,
while classified as a service, also has many tangible components such as the food, the
packaging, and so on. A useful way to distinguish a service from a product is to place
them on a scale from tangible-dominant to intangible-dominant when more than half the
value comes from service element.
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across the locations. The companies can now operate their bank accounts through corporate
banking terminals in their own offices which are linked to the bank computers. Companies
can thus carry out transactions like transferring funds, managing its cash flow, opening letters
of credit, etc. without any paper work. Smart Cards The Processor type smart cards with inbuilt integrated circuits (ICs) or micro-chips offer a wide range of transactional opportunities
even from remote areas. The smart cards are extensively being used for employee clocking
in, withdrawing cash from ATM, using pay-phones, payment of various bills, etc.
Impact of technology on Insurance industry
E-Insurance Today various insurance companies are providing facilities to their clients. They
can check the balance premium, maturity date, dues and outstanding of their policy. They are
provided various new information regarding new policy. The customer can pay the premium
amount of their policy from the e- insurance option. E-CRM Insurance industry is a data-rich
industry, and thus, there is a need to use the data for trend analysis and personalization. It is
very difficult to interact with each and every person to whom the insurer wants, and in the
insurance sector the customer relationship management is base. Thus with the help of e-crm
insurer are taking knowledge about their customer and providing information directly to
them. It also reduces the cost of marketing which increases the profit of business.
Role of information technology in Services Marketing
Information Technology (IT) revolution takes places everywhere. Organizations
implementing IT are able to provide better services and thereby able to improve their
businesses manifold. In earlier days IT has enormously been used in manufacturing sector
regarding product designing and development, product modification etc. Now-a-days the
importance of IT has been strongly felt and applied in the services sector.
Application of IT in Hospitals
The hospital management is taking place with the application of IT. Starting from the
reception by recording a patient's name, the IT has been used everywhere in an hospital. A
patient's record comprising his name, age, sex, disease found, blood group, height,
weight, blood pressure level, etc. has been maintained as database in a computer in the
hospital. So whenever the patient arrives his previous record can be verified. Similarly
when the surgeries take place, the hospitals use computers and specialized software for
judgement of diseases/problems and for curing the diseases. For billing purposes also the
computers have been used widely in hospitals.
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furniture and employees has got decreased because of the application of IT.
Application of IT in Advertising Agencies
'Creativity' is the slogan chanted in Ad Agencies. Creativity involves doing things
differently. Things can be done differently with the help of IT. The Ad Agencies use lot of
software for creating advertisements. Lot of animations and graphics can be done using
IT tools.
Application of IT in Marketing Research Agencies
Marketing Research (MR) agencies involve in lot of research activities starting from
research survey on product development till distribution and measurement of customer
response. Gone are the days of manual analysis of data. The MR agencies use
sophisticated statistical software packages for data analysis and interpretation. Some of
the statistical software packages are created by their own for customized problems.
Hence, application of IT tools take place in full swing at MR agencies.
Application of IT in Indian Railways
The Indian Railways has the proud of being the 'largest employer'. The application of IT
has provided various benefits for the Indian Railways and its passengers. With the issue
of computerized railway tickets, the errors have been minimized. A passenger can book
the train ticket from any part of the country. A passenger can also book the train ticket at
his convenient place, as the online reservation system has been introduced.
Application of IT in other services sector
Now-a-days the reservation for film shows take place through online ticket booking. The
cinema theatres in order to avoid queues and unnecessary rush follow the system of
online ticket booking so that through internet anyone can book tickets at their convenient
places. In order to reduce the queue, computerization takes place in petrol bunks also.
Computerization ensures speedier billing and reduces the queue in petrol bunks. In
Regional Transport Offices, computerization ensures prompt and quick delivery of
service to the peoples. The leading libraries are also computerized these days. Application
of IT tools provides various benefits for the libraries and readers. The books available in
the libraries and those on circulation can easily be found. The issue and return date can
easily be identified and other information related to the library can also easily be sought.
IT also paves way for online shopping. Websites like Amazon.com: Online Shopping for
Electronics, Apparel, Computers, Books, DVDs & more, fabmart.com etc. provide online
shopping facilities. Online hundi system has been introduced by some of the leading
temples in India. With the help of online hundi system, those interested in donating
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amount to these temples can remit their amount with the help of credit card numbers
through internet.
Challenges and issues in services marketing
Challenges are integral part of any business environment. It gets more complex with
services because of its nature and the participants in it. Therefore, the features of services
are its challenges itself. To begin with, let us look at the traditional challenges or the
challenges that are imbibed in the nature of services itself.
1. Intangibility: The service is not physical in nature, thus service marketers have no
physical evidence to support their claim of the services. Example: A Portfolio manager
has only empirical data to prove his words of service levels and not anything in substance.
2. Inconsistency: Services delivered generally vary in quality based on different
situations so they are not always consistent. Example, A pizza delivery boy may deliver
pizza at your home in 20 minutes and also sometimes on 30th minute.
3. Inseparability: Services and customers cannot be separated. Thus service marketer has
to transact or be present at the time of service delivery because it is produced and
consumed at the same time. Thus service marketers face a big challenge to deliver on
time due to this feature.
4. Perishibility: Services perish with the delivery. Thus service marketers do not have
evidence of the service provided. They rely on feedback from customer which may vary
due to customers mood. Further there are various other traditional challenges of service
marketing such as ownership issue, as there is no ownership transfer in ownership.
Modern challenges for service marketers are the concepts that play an important role in
service delivery by a service marketer.
1. Gaps Model: Gaps model discusses the gap between customers expectation of
services and service marketers perception of the customer. This results in incorrect
designing and standards of service product. Further, this results in inappropriate service
delivery and finally communication gap due to incorrect service product design and
delivery. This makes service marketer overvalue or undervalue customer expectations.
2. Setting standards due to customization: It is very difficult for a service marketer to
define standards due to customization of the service product. For example, we have ISO
standards in products and Egmark for products that define standardization. However, for
services, the service delivery varies from place to place, from person to person. The topic
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focuses on challenges due to changing business environment. Thus let us now look at the
emerging challenges of the service marketing and how the modern service marketer
handles these challenges. 1. 4th Dimensional approach to management: Service marketers
need to be proactive and focused on all aspects of customer perception, whether internal
or external. Fourth dimensional approach is the suppliers, distributors, customers,
employees all are to be cared and focused with responsiveness. 2. Managing Social
media: Social media influence is very contagious. For the matter of fact: 78% of people
trust recommendations of other consumers- AC Nielson; Trust in advertisement report,
2009. Thus making it challenging for service marketers to influence customer behaviour
by facts and advertisement as people have a platform now to communicate and discuss
brands and products.
3. Prosumer Concept: Consumer is not just consumer now, with social media and mass
media development, service marketer cannot ignore the customer. Customer now
participates in production of goods. Example; customer feedback forums over social
media, complaints all are tracked and focused by service marketers to understand
customers and their requirements.
4. Mass marketing becomes Niche marketing: As markets are getting saturated,
selection of right mode of marketing is extremely important due to focus on R.O.I in
advertisements. Example: Dell Generated $6.5 million sales from twitters in 2010.
5. Managing interactive markets: Markets are interactions now, not merely transactions.
Thus service marketer has to focus on reputation management, complaint resolutions etc
to make sure service disruptions are not exaggerated in media and to other consumers.
This service marketer needs to be proactive in handling reputation and complaints. We
can see development of programmes related to reputation management. Example: Om
Logix, a marketing consultancy company has programmes such as Online Reputation
Management to meet these challenges of organisations. Thus we discussed about few of
the emerging issues that service marketer face in the challenging business environment.
Service marketer should keep few aspects in mind in this challenging business
environment to be successful. A few of them are briefly discussed here.
1. Learn more about consumers: Its time that service marketer knows their customer even
better. Run Customer relationship programmes (CRM), gather customer feedback,
knowledge, tastes, after sales service etc.
2. Be clear and authentic: False claims and big brand ambassador do not earn huge bucks
anymore. Its interactive market due to development in communication networks.
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Example: Airtel rebranding failed even after 200 cr. of advertisement budget, where as
their HFZ (Har Ek Friend Zaruri) campaign of Airtel at a cost of 35 cr. made gave higher
viewer penetration and R.O.I as compared.
3. Create audience driven engagement programmes: This will promote healthy
interactions among customers and also customers feel engaged with the brands. This
creates loyalty. Example: In March 2010, when HBO planned Bond month focusing on
Bond movies for the month of march, It attracted popularity by having Dress the Bond
girl concept online, which engaged people visiting HBO website with average user
engagement of 15 minutes.
4. Make social media work for organization: Understand the potential of social media and
leverage it sophistically to make it work positively for the business.
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