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SERVICE MANAGEMENT
Service Management is :
1) To understand the utility the customers rceicve by consuming or using the
service offering of the organization
2) To understand how the organization (personnel, technology, physical
resources, systems and
customers)will b able to produce and deliver this utility
3) To understand how the organization should be developed and managed so
that the intended quality can be achieved
4) To make the organization function so that this quality can be delivered on
a continuous basis
The above diagram shows the Service – goods continuum – some goods
being tangible dominant others being service dominant. The fast food outlets
has almost 50/50 of tangible and intangible parts i.e. in this case both
tangible factors such (food) and intangible such as (services) is important.
That is the reason it come in the middle.
In case of other products like salt there services won’t play any important
role so it is more towards tangible and in case of teaching profession it is
purely service dominated. We never known about service with out
experiencing and in this manner various goods fall in place according to its
category i.e. less service oriented or more service oriented.
Intangibility
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Services are actions and hence they are intangible. Due to this it is not
possible to stock services and hence fluctuations in demand becomes
difficult to manage. Hotels have same number of rooms all through the year
but the customers requiring the room are always varying with some months
seeing very few customers while other months seeing a rush of customers.
Further services cannot be patented and any new concept can be easily
copied by competitors. These cannot be readily displayed or easily
communicated, and hence it will be difficult for the consumers to assess the
quality. This also creates a problem for what to include in advertisements
and promotional materials. Further the actual cost of “unit service” is difficult
to determine and hence pricing becomes difficult.
Inseparability
Services are generally created or supplied simultaneously. They are
inseparable. For e.g., the entertainment industry, health experts and other
professionals create and offer their service at the same given time. Services
and their providers are associated closely and thus, not separable. Donald
Cowell states ‘Goods are produced, sold and then consumed whereas the
services are sold and then produced and then consumed.’ A service is
produced when it is consumed eg. a dinning experience. Thus the customers
are present when the service is produced thus other customer play an
important role in satisfaction. The service producer also plays an important
role in quality. Thus mass production is impossible, it is not possible to get
economy of scale by centralisation, operations has to be decentralised to
deliver to the consumer directly at convenient locations. A “problem
customer” can result in disruption of service production process creating a
dissatisfaction forhimself, other customers and also to the service producer.
Heterogeneity
As services are produced by humans, hence no two services can be identical.
Further no two customers are precisely alike and hence their experiences of
the same service are different. Even the same customer can be with
different frame of mind at different times – which results in differing
satisfactions from the same service at different times.
Eg. A tax consultant may provide different a service experience to two
different customers on the same day depending upon their needs and on
whether the consultant is meeting the customer when he is fresh in the
morning or tired at the end of the day. Because of this ensuring a consistent
quality becomes a challenging job. The quality depends upon a number of
factors like the customer, service provides, other customers (their presence
or even absence) etc., hence the service provider cannot know if the service
is delivered in a manner which has been originally planned and promoted.
Sometimes services are provided by a third party further increasing the
heterogeneity.
Perishability
Services cannot be stored, saved, resold or returned. A bad haircut cannot
be returned or resold to another customer. Hence demand forecasting and
creative planning to meet the demand is a problem. Further one has to be
right the first time or if things go wrong one should have strong recovery
strategies to retain the customer goodwill. Due to these characteristics of
services the marketeers face a major challenge in marketing of Services.
WORLD SCENARIO
• as economy shifts from developing to developed stage, they will
show more and more shift toward services
• today, the fastest growing segments of the US economy is services
• in 1948 54% of the GDP of US was generated by services which is
80% now
• employment in this sector which was 55% in 1950 is now 83%
• the US balance of trade in goods has remained in the red for many
years, but there has been a trade surplus in services
• today service sector dominates the economics of many developed
nations. As countries develop the role of agriculture in the economy
declines and that of services increase.(china has 50% GDP from
service, 35% from industry, and 15%from agriculture)
• during recession it has been seen that service output declines less
than industrial output – the service employment is less sensitive to
business cycle fluctuation
• globalisation as strategy for service firm is becoming more important
INDIAN SCENARIO
• The service sector now accounts for more than half of India's GDP:
51.16 per cent in 1998-99. This sector has gained at the expense of
both the agricultural and industrial sectors through the 1990s. The rise
in the service sector's share in GDP marks a structural shift in the
Indian economy and takes it closer to the fundamentals of a developed
economy (in the developed economies, the industrial and service
sectors contribute a major share in GDP while agriculture accounts for
a relatively lower share).
• The service sector's share has grown from 43.69 per cent in 1990-91
to 51.16 per cent in 1998-99. In contrast, the industrial sector's share
in GDP has declined from 25.38 per cent to 22.01 per cent in 1990-91
and 1998-99 respectively. The agricultural sector's share has fallen
from 30.93 per cent to 26.83 per cent in the respective years.
• Some economists caution that if the service sector bypasses the
industrial sector, economic growth can be distorted. They say that
service sector growth must be supported by proportionate growth of
the industrial sector, otherwise the service sector grown will not be
sustainable. It is true that, in India, the service sector's contribution in
GDP has sharply risen and that of industry has fallen (as shown above).
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But, it is equally true that the industrial sector too has grown, and
grown quite impressively through the 1990s (except in 1998-99). Three
times between 1993-94 and 1998-99, industry surpassed the growth
rate of GDP. Thus, the service sector has grown at a higher rate than
industry which too has grown more or less in tandem. The rise of the
service sector therefore does not distort the economy.
• the share of agriculture sector to GDP has come down from 50% in
1960 to 24%
• service sector contribution to GDP is around 54% with an annual
growth of 8%
• employment in this sector is around 50%
• the response to liberation has been more in service sector, partly
because lower fixed investment requirements, example:- today’s
concept of banking
• technological advances have made it possible for India to compete
on global basis in areas like
• SOFTWARE, IT, HEALTH, EDUCATION, etc.,
• in addition lower wage structure has helped to develop CALL
CENTRE’s, MEDICAL
• TRANSCRIPTION, etc.,
• from 1996 BSE has given a prominent place to service industry in it’s
30 share index
• since no tax is imposed on agriculture sector, most of the tax came
from manufacturing sector. now services are being taxed
• service tax collection is to the tune of 5000 crore. 83% of this is
contributed by service sectors. 51% - Telecom, others are Insurance,
AD agencies, Courier and stock brokers.
• many export benefits like EPCG is now extended to the service
sector.
• in last 25 years the increase in employment in the organized sector
is 57% while if only service sector is considered it is 70%(other than
service sector it 41%)
• India’s service exports in1997 were 9.3 billion $ against its
merchandized exports of $32.2 billion. It is expected that service
exports could a third of merchandize exports now this will be well
above the global average of ¼. It implies that India which has failed to
catch the bus in the exports of manufactures is among the early
leaders of the developing world in the race for service exports.
• Within the services sector, the share of trade, hotels and restaurants
increased from 12.52 per cent in 1990-91 to 15.68 per cent in 1998-99.
The share of transport, storage and communications has grown from
5.26 per cent to 7.61 per cent in the years under reference. The share
of construction has remained nearly the same during the period while
that of financing, insurance, real estate and business services has risen
from 10.22 per cent to 11.44 per cent.
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• The fact that the service sector now accounts for more than half the
GDP probably marks a watershed in the evolution of the Indian
economy.
• Initiator : The person who has a specific need and proposes to buy a
service
• Influencer : The person or group of persons whom the decision maker
refers to or who advice the decision maker.
• Gate Keeper : The person or organization or promotional material,
which act as filter on the range of services which enter the decision
choice
• Decider : The person who makes the buying decision
• Buyer : The person makes the actual purchaser
• User : The actual user.
For example if a sales executive wants to do a market tour …….
1. Input Variables,
2. Process Variables,
3. Output Variables.
Input Variables:-
Input variables are those variables which affect the decision making process
and include commercial marketing efforts as well as non-commercial
influences from the consumer’s socio-cultural environment.
Decision Variables:-
The decision process variables are influenced by consumer’s own
psychological fields, which affect their recognition of a need, their pre-
purchase search for information and their evaluation of alternatives.
Output Variables:-
The output phase of the model includes the actual purchase (either trial or
repeat purchase) and post purchase evaluation. Both pre-purchase and post-
purchase evaluation feed back in the form of experience into the consumer’s
psychological field and serves to influence future decision processing. (On a
holiday a customer may change hotels in between his stay).
MOMENTS OF TRUTH
From the customer’s point of view, the most vivid impression of service
occurs in the service encounter or “Moment Of Truth,” when the
customer interacts with the service firm. This is the foundation to
“Satisfaction of Service Quality” – it is where the promises are kept or
broken. This concept was put forth by Richard Norman, taking the metaphor
from Bull Fighting. Most services are results of social acts, which take place
in direct contact between the customer and the service provider. At this
stage the Customer realises the perceived service quality.
ENCOUNTER CASCADE
Every Moment of Truth is Important – according to Scandinavian Airlines,
each one of their 10 million customers come in contact with 5 employees.
Thus the airlines say there 50 million moments of truth – each one is
managed well and “They prove they are the BEST”.
However some encounters are more critical. The encounter cascade refers to
a series of encounters right from the time a customer comes to take the
service. The encounter cascade can be important as any encounter can be
critical, as it determines customer satisfaction and loyalty. If it’s the first
interaction of the customer then the initial interaction will be the first
impression. So, these interactions have to be given importance, as they are
critical and influences customer’s perception of the organization.
Example:
A customer calling for the repair service may switch to some other company
if he is put on hold for a long time or even treated rudely. Even if the
technical quality of that firm is superior, the firm may not get a chance to
prove themselves in front of the customer. When the customer has had
many interactions with firm, each encounter will be important as it will
create a combined image of that firm. Many positive experiences will give an
image of High Quality and many negative experiences will represent a bad
image. Combination of positive and negative interactions will leave the
customer confused about the Quality.
It is suggested that not all encounters are equally important in building long-
term relations. For every organization, certain encounters can act as a key to
customer satisfaction. For example: for MARRIOT hotels, it is the early
encounters that are important. In a hospital context, a study of patients
revealed that encounters with the nursing staff were more important in
predicting the customer satisfaction. As it is rightly said “one bad apple can
ruin the whole basket of apples.” The same applies in this too; one negative
encounter can drive the customer away, no matter how many encounters
had taken place in the past. So a firm has to give a lot of importance to such
encounters. “A customer who has been using a bank for nearly 15 years is
quite happy with the service. He has a huge deposit and many accounts. One
fine morning, when he comes out of the bank the watch man asks Rs. 10 for
parking charges of his car. He goes inside the bank and informs the clerk at
the counter, who directs him to the officer. The officer directs him to the
Manager, who says he is helpless as this is a new policy of the bank. The
customer who was so happy with the bank services decides to close all his
accounts – “Some encounters can be very Critical”.
Among the service encounters a hotel customer experiences are checking in,
being taken to the room by a bell person, eating a restaurant meal etc as
shown in the figure. It is in these encounters that the customer receives an
overall view of the organizations service quality and encounter contributes to
customer satisfaction and willingness to do business with the organization
again. As for the company, each encounter represents an opportunity to
prove its potential as a quality service provider and to increase customer
loyalty.
Some services have few service encounters and others have many. Mistakes
or problems that occur in the early levels of the service cascade can e critical
because failure at one point results in greater risk of dissatisfaction in the
long run. MARRIOT Hotels learned this through their extensive customer
survey to determine what service element contributes to customer loyalty.
They found that 4 out of 5 factors came into play in the first 10 minutes of
the guest’s stay.
TYPES OF ENCOUNTERS
A service encounter occurs every time a customer interacts with the service
organization. There are three general types of encounters - remote
encounters, phone encounters, and face – to – face encounters. A customer
Remote Encounter:-
Encounter can occur without any direct human contact is called as Remote
Encounters. Such as, when a customer interacts with a bank through the
ATM system, or with Ticketron through an automated ticketing machine, or
with a mail-order service through automated dial-in ordering. Remote
encounters also occur when the firm sends its billing statements or
communicates others types of information to customers by mail. Although
there is no direct human contact in these remote encounters, each
represents an opportunity for a firm to reinforce or establish perceptions in
the customer. In remote encounter the tangible evidence of the service and
the quality of the technical process and system become the primary bases
for judging quality.
EXAMPLE:-
Services are being delivered through technology, particularly with the advent
of Internet applications. Retail purchases, airline ticketing, repair and
maintenance troubleshooting, and package and shipment tracking are just a
few examples of services available via the Internet. All of these types of
service encounters can be considered remote encounters.
Phone Encounters:-
In many organizations, the most frequent type of encounter between a
customer and the firm occurs over the telephone is called as phone
encounter. Almost all firms (whether goods manufacturers or service
businesses) rely on phone encounters in the form of customer-service,
general inquiry, or order-taking functions. The judgment of quality in phone
encounters is different from remote encounters because there is greater
potential variability in the interaction. Tone of voice, employee knowledge,
and effectiveness/efficiency inhandling customer issues become important
criteria for judging quality in these encounters.
Face-to –Face Encounters:-
A third type of encounter is the one that occurs between an employee and a
customer in direct contact is called as Face-to-Face Encounter. In a hotel,
face – to – face encounters occurs between customers and maintenance
personnel, receptionist, bellboy, food and beverage servers and others.
Determining and understanding service equality issues in face – to –face
context is the most complex of all. Both verbal and non-verbal behaviours
are important determinants of quality, as are tangible cues such as
employee dress and other symbols of service (equipments, informational
brochures, physical settings). In face – to – face encounters the customer
also play an important role in creating quality service for herself through her
own behaviour during the interaction. At Disney theme parks, face-to-face
encounters occur between customer and ticket-takers, maintenance
personnel, actors in Disney character costumes, ride personnel, food and
beverage servers, and others. For a company such as, IBM, in a business-to-
business setting direct encounters occur between the business customers
and salespeople, delivery personnel, maintenance representatives, and
professional consultants. Of
all determining and understanding service quality issues in face-to-face
context is the most complex. Both verbal and non-verbal behaviours are
important determinants of quality, as are tangible cues such as employee
dress and other symbols of service (e.g., equipment, informational
brochures, and physical settings). In face to- face encounters the customer
also plays a role in creating quality service for herself through her own
behaviour during the interaction.
saying or doing nothing, take action or not, at some point the customer will
decide weather to stay with that provider or switch to a competitor.
When the company fails to stand for its promises made to the customer on
the basis they build expectation, it’s to be said that there is service failure.
When the service failure occurs, there can be again severe ramification.
Customer is considered to be the bread and butter, hence retaining them is
the biggest challenge, and however service failure acts as an obstacle to it.
In such failures,
1) The customer wants what they were promised.
2) Customer wants personal attention
3) Customer wants a decent apology
4) Customers want that they should not be made to feel that they are
the cause of the problem. (Though in many cases they are
responsible for nuisance)
There are again five steps involved in order to deal with service failure. They
are mentioned as below
1st step: Acknowledgement and apology for the fact.
2nd step: Listening to the customers.
3rd step: Avoid defending the company and offer a rational explanation.
4th step: Offer some extra benefits
5th step: Have a proper follow up and make sure no mistakes this time, so
that he can easily forget about the service failure and is retained.
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There are ten steps involved in handling such airline flights delayed
departure complaints effectively. They are mentioned below.
OTHER SOLUTIONS
• Control costs, reduce waste
• Set productive capacity to match average demand
• Automate labor tasks
• Upgrade equipment and systems
• Train employees
• Leverage less-skilled employees through expert systems
• Change timing of customer demand
• Develop customer trust
• Understand customers’ habits and expectations
• Pretest new procedures and equipment
• Publicize the benefits
• Teach customers to use innovations and promote trial
• Monitor performance, continue to seek improvements
while purchasing such as time, mental and physical efforts and unpleasant
sensory experiences such as noises and smells.
3) Place , cyberspace and Time:- Delivering product elements to
customers involves decisions on the place and time of delivery as well as on
the methods and channels employed. Delivery may involve physical or
electronics distribution channels or both),depending on the nature of the
service being provided.
4) Promotion and education:- No marketing program can succeed without
effective communications. This component plays three vital roles: -
a)Providing needed information and advice (awareness).
b)Persuading target customers of the merits of a specific product.
(Concentrating on a particular segment of the market).
c)Encouraging to take action at a specific time (purchase).
Communication is educational in nature for new customers.
Communication can be delivered by individuals such as sales people and
trainers, media such as TV, radio, newspaper, magazines, postures,
websites etc.
This promotion is usually used as incentives to catch customer’s attention
and to motivate them to act. The above four are the traditional marketing
mix. The EXTENDED marketing mix for services marketing isas follows :
5) People: - Many services depend on the direct, personal interaction
between customers and a firm’s employees (such as getting a haircut or
eating at a restaurant). This interaction strongly influences the customer
perception of service quality. So, successful service firm devote significant
effort to recruitment, training and motivating their personnel.
6) Physical evidence:- The appearance of buildings, landscaping, vehicle,
interior furnishing, equipment, staff members, signs, printed materials, and
other visible cues all provide tangible evidence of the firms service quality.
The service firms need to manage physical evidence carefully because it can
have a profound impact on customers’ impression as the service itself is
intangible. A tangible element such as insurance and advertising is often
employed to create meaningful symbols.
E.g.: - umbrella may symbolize protection and a fortress, security.
7) Process: - It is the method and sequence of actions in which service
operating system works.
Badly designed process: - annoys customers which leads to likelihood of
service Failures.
8) Productivity and quality: - Productivity relates to how inputs are
transformed into outputs that are valued by customers. Improving
productivity keeps costs under control
Thus, these are the 8ps of service management, which are the essence of it.
The integration of each p’s is necessary for the successful service
management Collectively these are the tools organizations uses to develop
offerings to satisfy their target market(s) ... the only tools at their disposal.
Remember: If your marketing mix doesn't meet their needs they will not be
satisfied - and if they aren't satisfied you are unlikely to meet your
objectives.
The marketing mix should be viewed as an integrated and coordinated
package of benefits that reflect the characteristics of customers and various
targeted publics and satisfy their needs, wants, and expectations. Note that
the elements of the marketing mix should be integrated because each
element of the mix usually has some impact, direct or indirect, on the other
three.
For example, if you improve the product or service you probably have to
change the price because it costs more to produce. Although you may not
have to change where the product is delivered to the customer, you will
almost certainly have to change the promotion or communication with the
customer because you need to tell the customer about the changes you have
made in the product and how the changes will make it more desirable and
satisfying. One problem in many organizations is that different divisions may
be responsible for different elements of the marketing mix. This happens
even in well-managed organizations. The result is that the offering is
confusing to the target market. Lack of communication among divisions
makes this problem worse. And if they don't share the same view of
organizational objectives, the problem is worse still.
PRODUCT MIX
Introduction
‘Product’ includes name, design, features, quality, operational case,
packaging, warranties, appearance, range and size. It also includes pre-sale
and post-sale services like training, repairs, maintenance and replacements.
According to Philip Kotler “a product is anything that can be offered to
market for attention, acquisition use or consumption that satisfy a want or
need. It includes physical objects (TV), service (banking), person (political
person), place (holiday resort), organization (red cross) and idea (aid
awareness).” Conventionally, a product is an object, which is delivered and
consumed. However, in services there is no or very little tangible elements.
Hence, what is offered for sale is benefits. Service is a bundle of benefits and
has relevance for a specific target market. Hence, the package of benefits
should have a customer’s perspective.
Levels of product:
Kotler has identified 5 levels of a product
1) Core product
2) Basic product
3) Expected product
4) Augmented product
5) Potential product
Kotler suggested that a product should be viewed in three levels.
1. Level 1: Core Product. What is the core benefit your product offers?
This is the fundamental benefit or service that the customer is buying.
For eg. A customer going to a Hotel is buying rest, sleep etc.
2. Level 2 Basic Product: Basic functional attributes. All Hotels provide
rest and sleep. The aim is to ensure that your potential customers
purchase your one service. Thus the functional attributes like Room,
Bed, Bath are important.
3. Level 3 : Expected product : Set of attributes that the buyer expects
(Clean room, large towels, quietness)
4. Level 4: Augmented product: What additional non-tangible benefits can
you offer? This meets the customer’s desires beyond his expectations –
(Prompt room service, music, aroma etc)
5. Level 5 : Potential product : The possible evolutions that can be made
to make the product a distinguishedoffer (all suite room)
In a Bank these can be
• Core Product (Safety of deposits, Interest, Easy loans
• Basic product : Savings deposit, FD, Recurring deposit
• Expected product : Correct transaction records, timely service,
convenient timing
• Augmented product : Congenial waiting room, Water cooler
• Potential product : Greetings for New Year, 24 hour banking
The PACKAGE CONCEPT of Service product – suggests that what you offer to
the market si a bundle of different services – tangible and intangible. There
is a core service and around it are built the auxiliary or facilitator service.
Without this the service would collapse (a bell boy in a Hotel). Yet another
service is the supporting service – it is used to increase the product value (a
car rental in a hotel). The basic product is not equivalent to the service
product which the customer perceives, which is in fact based on customer’s
experience and evaluation. Therefore there is a need for an augmented
product – like Accessibility (number and skills of personnel, convenient
timing, location, infrastructure etc.,) Interaction with service organization
(Between employees and customer, with physical and technical resources,
with other customers) Consumer participation.(how well the customer is
aware about the process of service delivery, his willingness to share
information and use service equipments)
The package should also include the management of service image through
encouraged word of mouth and market communication.
Product Decisions
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When placing a product within a market many factors and decisions have to
be taken into consideration.
These include:
• Consumer benefits – assess what benefits the consumer looks for
• Service concept – To translate it to suitable service offer
• Develop augmented offer
BRANDING:
One of the most important decisions a marketing manager can make is
about branding. The value of brands in oday’s environment is phenomenal.
Brands have the power of instant sales; they convey a message of
confidence, quality and reliability to their target market. Brands have to be
managed well, as some brands can be cash cows for organizations. In many
organizations
they are represented by brand managers, who have huge resources to
ensure their success within the market. A brand is a tool, which is used by an
organization to differentiate itself from competitors. Ask yourself what is the
value of a pair of Nike trainers without the brand or the logo? How does your
perception change? Increasingly brand managers are becoming annoyed by
‘copycat’ strategies being employed by supermarket food retail stores
particular within the UK. Coca-Cola threatened legal action against UK
retailer Simsbury after introducing their Classic Cola, which displayed similar
designs and fonts on their cans. Internet branding is now becoming an
essential part of the branding strategy game. Generic names like Bank.com
and Business.com have been sold for £m’s. (Recently within the UK banking
industry we have seen the introduction of Internet banks such as
cahoot.com and marbles.com the task by brand managers is to insure
that consumers understand that these brands are banks!
PRICE MIX
Introduction:
This element of the marketing mix is related to the decision influencing the
fee structure, rate of interest, commission charged and paid by the service
generating organizations. It is considered to be the most critical component
of the marketing mix. Both from economic and social standpoint, the
management of pricing is important but at the same time more critical and
challenging. We find pricing decisions important because the pricing
decisions are to influence the maintenance, development and expansion
plans of an organization.
dry cleaning industry. (b) In oligopolies where there are a few large service
providers, such as in the airline.
Problems in competition-based pricing:
(a) Small firms may charge too little and not make margins high enough to
remain in business.
(b) Heterogeneity of services across and within providers makes this
approach complicated. E.g. Banks charge different rates of commission for
drafts and other services.
3) Demand-based pricing:
The first two approaches of pricing are based on the company and its
competitors rather than on customers. Neither approach takes into
consideration that customers may lack reference price, may be sensitive to
nonmonetary prices and may judge quality on the basis of price. All of these
factors can and should be accounted for in a company’s pricing decisions.
The third major approach to pricing, demand-based pricing, involves setting
prices consistent with customer perceptions of value: prices are based on
what customers will pay for the services provided.
Problems in demand-based pricing:
(a) There is an element of non-monetary costs and benefits which must be
considered while calculating perceived value. E.g. services requiring time,
inconvenience, psychological and search costs should be riced lower. It is
difficult to convert this non-monetary cost into monetary cost. (b)
Information on service may be less available to customer, making it difficult
to assess the price.
Capacity Planning.
It is not sufficient that we are interested only in managing our present. It is
much more significant that we keep our eyes open, minds active to know
about the future and continue to enrich our potentials to manage the future.
The organizations not managing the future fail in managing the demand and
supply position, make it difficult to optimize the development of marketing
resources to cope with the changing requirements, make possible a
contraction in their resistance power and both on quantitative and
qualitative fronts, we find them moving backward. By capacity planning, our
emphasis is on the management of strength. Capacity planning is known as
planning the capacity in the face of future. This throws light on both the
aspects-first, the organizations are supposed to know the demand position so
that the potentials are enriched to increase the quantity or capacity of
generating the services and second, the organizations are also required to
know about the likes and dislikes, preferences, expectations, attitudes which
make an advocacy in favor of technologies to fulfill their expectations and
this is not possible unless we think in favor capacity planning. The strategic
plan would make the ways for the mobilization of financial resources to cater
to their increasing
requirements. We can’t deny the fact that if an organization succeeds in
maintaining the process of profit generation, the financial health of that
organization becomes so sound that the task of satisfying the employees and
investors is simplified considerably. If an organization is strong, the task of
facing the challenges and threats in the markets is simplified considerably. It
is against this background that strategic planning assumes a place of
outstanding significance. When we talk about capacity planning, our prime
focus is on strategic planning since the process of enriching strength can’t
be made possible within a couple of days.
Capacity Scheduling.
How much of what (service) will be needed to achieve its pre-determined
goals is an important consideration that makes an advocacy in favor of
capacity planning and scheduling. There are a number of critical variables
requiring due consideration in the process such as, goals of the service firm,
availability of capital and the quality of human resources, market segments
served and the level of service quality aimed at. A detailed scheduling of
man, materials, money and machines (four M’s) is essential for each element
of the service mix.
PROMOTION MIX
INTRODUCTION:
The promotion mix is found instrumental in informing, sensing and
persuading the prospects or customers. The marketers bear the
responsibility of using the different components of promotion in such a way
that the measures adopted for promoting the goods or services are found
productive. The promotion communicates to customer’s information on the
other elements of marketing mix, such as product, pricing and place. The
advantage of product itself, details on the place through which it is sold and
details on the pricing are transmitted through promotion.
COMPONENTS OF THE PROMOTION MIX:
1) Advertising:
Advertising is paid form of persuasive promotion since it plays an effective
role in informing and
sensing the customers. The creativity is found to be an essential aspect of
advertising, which increases the importance of professional excellence in
making the advertising processes productive.
2) Publicity/public relations:
All the organizations need to develop and strengthen the public relation
activities to promote their business. This component of promotion is found
effective though the organization don’t make any payment for publicity. The
most important thing in the context of public relations is the instrumentality
of executives in projecting a positive image of the services offered. They
should have the potentials to throw a positive imprint on the prospects. It is
also significant that they know the art of developing rapport with the media
people.
3) Personal selling:
The personal selling is found instrumental in promoting the business of
service generating organizations. Personal selling is a process of informing
the customers besides persuading them to purchase products being
influenced by personal communication. It is just a process of communication
in which an individual exercises his or her personal potentials, tact, skill and
ability to influence the impulse of prospects and to transform them into
customers. Personal selling is basically a method of communication. It
involves not only individual but the social behavior too; each of the person in
face-to-face contact, salesman and prospect influence the other. Thus we
find personal selling a personal communication, seller-buyer interaction,
inter-personal communication and more so direct selling. The following facts
are observed regarding the personal selling:
a) It is a direct personal relation between the buyer and seller.
b) It is an oral presentation in conservation.
c) It is two-way communication.
d) It is personal and social behavior.
e) It is an exercise for selling the goods and services.
f) It is found more effective in the service generating organizations.
g) It is based on the professional excellence of an individual.
PROMOTION OBJECTIVES
1) Develop personal relation with client
2) Make a strong impression of competency, honesty and sincerity
3) Should be able to use indirect selling techniques (create a derived
demand – mobile companies give free sim card)
4) Manage to maintain a fine image by positive word of mouth
5) Packing and customization of service offering
TARGET AUDIENCE
1) Buyer (or user/influencer/gatekeeper)
2) Employees (discussed in detail under people)
PEOPLE MIX
INTRODUCTION
The employees of an organization represent the organization in the eyes of
the customers. If they are not give proper training in representing the
organization and its goals the service efforts will fail. Hence the most
important marketing strategy is to market the service first to the
organization’s employees. There are two types of contact personnel – HIGH
CONTACT PERSONNEL and LOW CONTACT PERSONNEL (eg .in a hospital a
nurse is a high contact personnel and ward boy may be a low contact
personnel) In addition there can be a NON CONTACT PERSONNEL
SERVICE TRIANGLE
screening to truly identify the best people from the pool of candidates. It has
been suggested that service employees need two complementary capacities:
they need both service competencies and service inclination. Service
competencies are the skills and knowledge necessary to do the job.
Achieving particular degrees and certifications validates competencies, such
as attaining a doctor of law degree and passing the relevant state bar
examinations for lawyers. Service competencies may not be degree related,
but may instead relate to basic intelligence or physical requirements.
c) Be the preferred employer:
One way to attract the best people is to be known as the preferred employer
in a particular industry or in a particular location. Other strategies that
support a goal of being the preferred employer include providing extensive
training, career and advancement opportunities, excellent internal support
and attractive incentives and offering quality goods and services that
employees a proud to be associated with.
unpredictable, and (5) managers and employees have high growth and social
needs and strong interpersonal skills.
c) Promote teamwork:
The nature of many service jobs suggests that customer satisfaction will be
enhanced when employees work as teams. Because service jobs are
frequently frustrating, demanding and challenging, a teamwork environment
will help to alleviate some of the stresses and strains. Employees who
supported and that they have a team backing them up will be better able to
maintain enthusiasm and provide quality service. By promoting teamwork an
organization can enhance the employee’s abilities to deliver excellent
service while the camaraderie and support enhance their inclination to be
excellent service providers.
3) Provide need support systems:
To be efficient and effective in their jobs, service workers require internal
support systems that are aligned with their need to be customer focused.
Without customer-focused internal support and customer-oriented systems,
it is nearly impossible for employees to deliver quality service no matter how
much they want to. In examining customer service outcomes researchers
found that internal support from supervisors, teammates, and other
departments as well as evaluations of technology used on the job were all
strongly related to employee satisfaction and ability to serve customers.
a) Measure internal service quality:
One way to encourage supportive internal service relationships is to measure
and reward internal service. By first acknowledging that everyone in the
organization has a customer and then measuring customer perceptions of
internal service quality, an organization can begin to develop an internal
quality culture. Internal customer service audits and internal service
guarantees are two strategies used to implement a culture of internal service
quality. Through the audit, internal organizations identify their customers,
determine their needs, measure how well they are doing, and make
improvements.
b) Provide supportive technology and equipment:
When employees don’t have the right equipment, or their equipment fails,
they can be easily frustrated in their desire to deliver quality service. To do
their jobs effectively and efficiently, service employees need the right
equipment and technology. having the right technology and equipment can
extend into strategies regarding workplace and workstation design.
c) Develop service-oriented internal processes:
To best support service personnel in their delivery of quality service on the
front line, an organization’s internal processes should be designed with
customer value and customer satisfaction in mind. In other words, internal
procedures must support quality service performance. In many companies
internal processes are driven by bureaucratic rules, tradition, cost
efficiencies, or the needs of internal employees. Providing service and
customer oriented internal processes can therefore imply a need for total
PHYSICAL EVIDENCE
It is the environment in which the service is delivered and where the firm
and customer interact, and any tangible components that facilitate
performance or communication of service.
It includes all tangible representations of the service-such as brouchers,
letter head, equipment etc. in somecases the physical facilities where
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can be of seen from two angles (1) Technical quality (What is delivered) (2)
Functional quality (How it is delivered). When a customer comes to the
service provider he comes with some expected quality. When he takes the
service he experiences a service quality – this is his perceived quality.
ZONE OF TOLERANCE
The services provided are varying between organizations, between
employees and even with in employees at different times. The extent to
which the customers recognize and are willing to accept this variation is
called as zone of tolerance. If the service levels fall below this level,
customers will be frustrated.
• Different customers possess different zones of tolerance
• Zones of tolerance vary for different dimensions fo service
• Zones of tolerance vary for first time and recovery service
QUALITY GAPS
To manage the perceived quality of a service one has to match the expected
service and perceived service to each other so that consumer satisfaction is
achieved. To keep the gap between expected service minimal, two things are
critical: -
• The promises about how the service will perform given by traditional
marketing activities and communicated by word-of-mouth, must not be
unrealistic when compared to service received by the customer.
• Managers have to understand how the technical and functional
quality of a service is influenced and how the customers perceive
these quality dimensions. In order to develop greater understanding of
the nature of service quality and how it is achieved in an organization,
‘A Gap Model Of Service Quality’ was developed. The model clearly
GAP 2 :
• Lack of commitment from Management (they may perceive that
customer expectations are unreasonable)
• Lack of Goal setting
• Lack of resources
GAP 3 :
• Ineffective recruitment
• Role ambiguity
• Lack of training/incentives to perform to the staff
• Lack of training to customer on use of service and their roles
• Lack of pre-testing when new procedures are introduced
• Lack of understanding of customer habits – how they prefer to
consume a service (a customer may prefer a slow delivery of food in an
exclusive restaurant compared to an Udipi restaurant)
GAP 4 :
• Exaggerated promises
• Ineffective communication
• Lack of Horizontal communications with in the organization
GAP 5
Too much of Gaps (1 to 4)
To close the gaps the following things should be implemented: -
1. Develop customer trust through long-term strategy rather than a snip-
shot superficial programme.
2. Understand customers’ habits on how they prefer to consume a service.
eg., a customer wouldprefer extended hours for a meal in a exclusive
restaurant.
3. Pre-test new procedures and equipments before introducing them. The
failure of a productivity improvement programme is more damaging than
otherwise, e.g., when Indian Airlines introduced computerized reservation
system to improve its service, it found that at most places the system
remained down most of the time. It created more confusion, both among
customers and employees, and proved to be countered productive.
4. Understand the determinants of consumer behaviour in terms of their
choice; by force or by any other external forces, e.g., shopping behaviour is
not even throughout the month. It changes between the first weeks to the
fourth week of the month; it changes between weekdays and weekends.
5. Teach consumers how to use service innovations—most people don’t
know how to go about
treatment in government hospitals—there is a need to make people aware of
how to go about from registration to appointment to check—up and
treatment, in the same way as traffic routes at India Gate or Connaught
Place are notified through press and television before introducing them.
6. Promote the benefits and stimulate trial. The success in innovation lies in
encouraging trial by
making the benefit obvious.
7. Monitor and evaluate performance. One can learn from experience—good
or bad. As one goes along introducing changes, corrective measures should
also be taken simultaneously. These measures should be restricted to
redesign of facilities and procedures or extending to educating,
communicating and promoting the efforts.
BENCHMARKING OF SERVICES
Benchmarking means measuring the performance of a business against that
of the competitors in order to establish ‘best practice’. Benchmarking is a
part of process of continuous improvement. Benchmarking can
be applied at three levels:
1. Internal Benchmarking.
2. Competitive Benchmarking.
3. Functional or Generic Benchmarking.
Internal Benchmarking:
Internal Benchmarking is normally carried by large organization by way of
comparison between operation units. For e.g.. Super market chain might
benchmark operations across stores, financial across branches, different
colleges under the same authority. But important thing is how performance
is measured &this is clear link to the strategy of organization.
Competitive Benchmarking:
At a second level competitive Benchmarking can be used. This is probably
the most frequently use where comparisons are made with directly
competitive organization. Customer participation is necessary because of
which it will be easy to achieve in some service environments. For e.g: As a
hotel owner, it is possible to ‘sample’ the service to competitor simply by
‘posing’ the guest. Often however, this is done in informal manner. A
comparative impression gained of the service without examining the
different facets in a structured way & attempting to measure them.
Functional or Generic Benchmarking:
The third approach is Functional or Generic Benchmarking, which compares
specific functions such as distribution and after sale service. The advantage