Assignment on service marketing

Topic: - Marketing model in sectoral areas catering to services

sector and its impact on economy.

Submitted by: - Gouri Shankar (IMBA-5TH SEMESTER.) Reg. no.:- CUJ/1/09/MBA/06. Submitted to: - Mr. Arindam chakrabarty. Submission date: - 21-11-2011.

Service sector and its impact on economy

The service industry forms a backbone of social and economic development of a region. It has emerged as the largest and fastest-growing sectors in the world economy, making higher contributions to the global output and employment. Its growth rate has been higher than that of agriculture and manufacturing sectors. It is a large and most dynamic part of the Indian economy both in terms of employment potential and contribution to national income. It covers a wide range of activities, such as trading, transportation and communication, financial, tourism, education, health, real estate and business services, as well as community, social and personal services. The most important services in the Indian economy has been health and education. The contribution of the services sector to the Indian economy has been manifold: a 55.2 per cent share in gross domestic product (GDP), growing by 10 per cent annually, contributing to about a quarter of total employment, accounting for a high share in foreign direct investment (FDI) inflows and over one-third of total exports, and recording very fast (27.4 per cent) export growth through the first half of 2010-11.

Share of gross domestic product by industry of origin

1.Agriculture and allied 2.Industry 3.Services A.Commodity sector(1+2) B.Services(3). Total

1950-51 55.4 15 29.6 70.4 29.6 100.0

1980-81 38 24 38 62 38 100.0

2008-09 16.9 25.8 57.3 42.7 57.3 100.0

services hold immense potential to accelerate the growth of an economy and promote general well-being of the people. They offer innumerable business opportunities to the investors. They have the capacity to generate substantial employment opportunities in the economy as well as increase its per capita income. Without them, Indian economy would not have acquired a strong and dominating place on the world platform. Thus, service sector is considered to be an integral part of the economy and includes various sub-sectors spread all across the country.

1.Health sector
Health has always been a high priority area in any country. It has been recognised as an important component in the process of economic and social development. It does not simply mean absence of diseases, rather it is a state of complete physical, mental and social wellbeing. Sanitation and hygiene, nutrition as well as safe drinking water are the basic determinants of good health. The indicators like infant mortality and maternal mortality rates, life expectancy and nutrition levels, birth rate and death rate, along with the incidence of communicable and non-communicable diseases reflects the health status in an economy. The existence of proper and well-defined health care facilities are vital not only for having a healthy productive workforce and promoting general welfare, but also for attaining the goal of population stabilisation as well as enhancing the overall quality of life of people. Over the years, India has built up a vast health infrastructure and manpower, with a wide variety of hospitals and dispensaries being set up at different levels and run both by public and private sectors. Classification:The health sector in India has been fragmented between the Centre and the States. Items like public health, hospitals, sanitation, etc. comes under the State list of the Constitution, while the items having wider ramification at the national level like population control and family welfare, medical education, prevention of food adulteration, quality control in manufacture of drugs etc. have been included in the Concurrent list. (AYUSH) is responsible for designing, formulating and implementing policy in order to promote and propagate Indian systems of medicine, both within India and abroad. There are six systems of medicine and health care in the country. These are: - Ayurveda, Unani, Siddha, Yoga, Naturopathy and Homoeopathy. The main objectives of the Department are to:Attain global leadership for country in the field of traditional medicine Upgrade the educational standards in the Indian systems of medicines and Homoeopathy colleges in the country Evolve pharmacopoeial standards for Indian systems of medicine and Homoeopathy drugs Draw up schemes for promotion, cultivation and regeneration of medicinal plants used in these systems Promote good health and expand the outreach of health care Improve the quality of teachers and clinicians; Ensure affordable AYUSH services and drugs which are safe and efficacious Facilitate availability of raw drugs which are authentic and contain essential components Integrate AYUSH in health care delivery system and national programmes

Re-orient and prioritise research in AYUSH.

The policy involves following strategies for achievement of its goals, such as:I. Disease management including early case detection and complete treatment, strengthening of referral services, epidemic preparedness and rapid response II. Integrated vector management (for transmission risk reduction

III. Supportive interventions including behaviour change communication, public-private partnership (PPP) and inter-sectoral convergence, human resource development through capacity building, operational research including studies on drug resistance and insecticide etc. The broad goals of the Mission are:Reduction in Infant Mortality Rate (IMR) and Maternal Mortality Ratio (MMR). Universal access to public health services such as womens health, child health, water, sanitation and hygiene, immunization and nutrition. Prevention and control of communicable and non-communicable diseases, including locally endemic diseases. Access to integrated comprehensive primary health care. Population stabilization, gender and demographic balance. Revitalize local health traditions and mainstream AYUSH. Promotion of healthy life styles. Implementation of existing programmes of the Ministry.

As a result of all such measures, India has achieved impressive demographic transition owing to the decline of crude birth rate, crude death rate, total fertility rate and infant mortality rate. As per the available information, the crude birth rate (CBR) declined from 40.8 births per thousand populations in 1951 to 29.5 in 1991 and further to 23.5 in 2006. Similarly, there has been a sharp decline in crude death rate (CDR) from 25.1 deaths per thousand populations in 1951 to 9.8 in 1991 and further to 7.5 in 2006. The total fertility rate (average number of children likely to be born to a woman between 15-40 years of age) has decreased from 6.0 in 1981 to 2.9 in 2005. The maternal mortality rate has also declined from 437 per one lakh live births in 1992 93 to 301 in 2001-03. The infant mortality rate, which was 110 in 1981, has declined to 57 per 1000 live births in 2006. While, the child mortality rate has decreased from 57.3 in 1972 to 17.3 in 2005.

2. Retail sector
Retailing is defined to include all the business activities relating to selling of goods and services to the final consumers. It is the final link in a product supply chain. In India, retailing is one of the fastest growing industries. It is estimated to be the largest single sector (after agriculture) both in terms of turnover as well as employment. After leading the IT bandwagon, India is poised to grow as a retail hub.

The Indian retail sector is highly fragmented with about 15 million retailers. Out of the large number of total retail outlets in the country, majority of them relate to the food items. Since 1990s, big industrial houses like Rahejas, Piramals, Tatas, etc. have started entering the retail industry. Besides, several Indian and foreign companies have been franchising for establishing exclusive outlets for their brands, both within the country and overseas. For instance, 'Bharati Group' had entered into a joint venture with the world's largest retail chain the 'Wal-Mart'.

As a result, the Indian retail sector has been undergoing a rapid transformation in the past few years. The traditional formats of kirana stores, hawkers, grocers, etc. are being gradually taken over by the modern formats of department stores, discount stores, malls, supermarkets, convenience stores, fast food outlets, specialty stores, warehouse retailers, hypermarkets, etc. For example, Pantaloons started the 'Big Bazaar' discount stores in 2002; Reliance opened its first supermarket named 'Reliance Fresh' outlet in Hyderabad and has since fanned out to several States; Subhiksha outlets have been fast spreading across the nation; etc. Thus, the current face of Indian retail comprising the unorganised small and medium retailers is slowly changing into a more organised form of retailing.

As per the available estimates, of the Rs. 1,330,000 crore retail market, food and grocery retail is the single largest block estimated to be worth Rs. 7,92,000 crore (with 59.5 per cent share), but the share of organised sector in this is miniscule consumer needs, lifestyle and attitude. Further, shopping centre business alone is estimated to become a Rs. 40,000 crore business by 2010-11.

3.Real Estate
Real estate sector covers residential housing, commercial offices, retail outlets, trading spaces such as theatres, hotels and restaurants, industrial buildings such as factories and government buildings. It involves the purchase, sale, and development of land as well as residential and non-residential buildings. The activities of the real estate sector encompass the housing and construction sectors also.

In India, the real estate and construction is a $16 billion (2006) (by revenue) industry. It is a major employment driver, being the second largest employer next only to agriculture. This is because of the chain of backward and forward linkages that the sector has with the other sectors of the economy. But, the Indian real estate market, as compared to the other more developed Asian and Western markets is characterised by smaller size, lower availability of good quality space and higher prices.

Supply of urban land is largely controlled by State-owned development bodies like the Delhi Development Authority (DDA) and Housing Boards leaving very limited developed space free, which is controlled by a few major players in each city.

Foreign Direct Investment (FDI) in real estate is being permitted since January 2002. Previously, only NRIs and PIOs were allowed to invest in the housing and the real estate sectors. Foreign investors other than NRIs were allowed to invest only in development of integrated townships and settlements either through a wholly-owned subsidiary or through a joint venture company along with a local partner.

India fully opened up the sector to FDI in 2005. However, norms issued later made a minimum capitalization of $10 million for wholly-owned subsidiaries and $5 million for joint ventures mandatory. Besides, minimum area requirement were also imposed by the Government. At present, foreign institutional investment (FII) is not permitted in the real estate sector.

India's real estate sector is witnessing an unfrequented high. Enabling regulatory changes, high industrial growth, easier financing options and steady growth in equity markets have resulted in an upturn in the real estate investment activity. This, coupled with the Governments relaxation of FDI policies has made the real estate an attractive investment option.

4.Educational services
Education is the most crucial investment and an essential element in human resource development. It has always been accorded an honoured place in every economy. It implies ability of the people to read, write and understand. It has the fundamental aspects of imparting knowledge, wisdom and culture. It helps in drawing out the latent potentials and talents of an individual. A well-defined educational system holds the key to economic growth, social transformation and modernisation integration of a country. It develops manpower for different segments of the economy and is the substrate on which innovation, research and development flourish. Thus, education helps the country in achieving social, political and economic goals on national and international levels. It also strongly influences improvement in health, hygiene, demographic profile, productivity and quality of life.

Basic classification of educational services:1. Elementary education. 2. Secondary education. 3. Higher education. 4. Technical and Professional education.

Marketing of educational services:Marketing of educational services encompasses a wide range of activities but they are associated with certain features: - High expertise, Qualifications required, Confidentiality and High barriers to entry There are several clear reasons why professional services should embrace marketing:1. To understand clients needs and wants. 2. To develop and operate the most appropriate service offerings. 3. To communicate the offerings to the clients and attract their interest. 4. To become more business oriented in the highly dynamic competitive environment. 5. To create the room for sustainable rapid growth. 6. To enhance service quality.

5.Information Technology and IT Enabled Services

Information technology (IT) is amongst the fastest growing sectors in the country. Its contribution to GDP rose from 1.2 per cent in 1999-2000 to 5.2 per cent in 2006-07 and to an estimated 5.5 per cent in 2007-08. Growth of Indian IT industry has been driven by the IT software and services (IT services) and IT enabled services (ITES). Business Process Outsourcing (ITES-BPO) sector has emerged as a key driver of growth for the Indian software and services industry. It has become the biggest employment generator amongst young college graduates. The total number of IT and ITES-BPO professionals employed in India has grown from 284,000 in 1999-2000 to over 1.63 million in 2006-07. In addition, the industry helps to create millions of job opportunities through direct and induced employment in telecom, power, construction, facility management, IT, transportation, catering and other services.

Indian companies are expanding their service offerings, enabling customers to deepen their offshore engagements and shifting from low-end business processes to higher ones. They are also enhancing their global service delivery capabilities through a combination of greenfield initiatives, cross-border mergers and acquisitions, as well as partnerships and alliances with local players. This has helped them execute end-to-end delivery of new services.

Also, a majority of companies have already aligned their internal processes and practices to international standards such as International Organization for Standardization (ISO); Capability Maturity Model (CMM); and Six Sigma. This has helped establish India as a credible sourcing destination. As of December 2007, over 498 India based centres (both Indian firms as well as MNC owned captives) have acquired quality certifications with 85 companies certified at Software Engineering Institute (SEI), Carnegie Mellon Capability Maturity Model (CMM) Level 5 (higher than any other country in the world).

India is placed among the fastest growing IT markets in the Asia-Pacific region. Global software giants such as Microsoft, Oracle and SAP have established their captive development centres in here. Today, India is a preferred destination for ITES due to its distinct advantages, which lay in its supportive government policies; infrastructural facilities; low manpower cost; growing knowledge pool; specialised technical skills; higher productivity and quality of service; etc. This increasing attractiveness as an investment destination in IT has even led to a reversal of the brain drain i.e. the people of Indian origin who went to pursue careers abroad are now attracted to work in India itself.

6.Banking sector in India

The banking sector is the backbone of any financial system and economy. In the case of underdeveloped/developing country commercial banks play a crucial role through mobilization of resources and their better allocation. The Indian banking system has changed a lot over the last five decades, especially in the last 15 years. Banking trends in India:Public sector banks Number of banks No.of branches (%) Total deposits (%) Private sector bank 28 88.4 78 Foreign bank 29 11.33 17 31 0.26 5

Critical factors for success:1. 2. 3. 4. 5. 6. 7. 8. 9. Ability of the services product. Availability or services distribution. Incidence of affable services. Use of the internet. Promote reliable services. Reward for the customers in the form of interest rates. Management of the customer perceptions about the bank. Trust and confidence in the bank. Ambience.

10. Complaint redressal mechanism and availability of help desks for customer convenience. Characteristics:1. 2. 3. Multiple products. Multiple channel of distribution. Multiple customers groups.

Product strategies:Many of the public sector banks launched an array of products and services,especially on the retail front to match the competition. For example:-Doctor plus and teacher plus products for Doctors and teachers.some of the new product include debit card, credit card, international cards, travel cards, demat account, special deposit schame, and any where banking. Some of the new services include round-the clock phone banking, ATM service, net banking, bill payment service. Some banking product areas with high growth potential have detailed below:1.Housing loans. 2.Vehicle loans. 3. Personal finance services. 4.Money transfers and remittances. 5.Online bill pay. 6. Travel cards. Customer relationship strategies:The various CRM strategies and steps are as follows:1. Appeal to the self interest of the customer,during discussion. 2. Bring conversation to areas of interest,profession,native place,hobbies. 3. Make use of the logic and emotional appeal to motivate the customer. 4. Self-control with difficult customers.

Summary:While banking sector offers phenomenal opportunities for growth, the challenges are equally daunting. How far the banking sector is able to lead the growth of banking industry in future would depends upon the capacity building of the banks to meet challenges and make use of opportunities profitably. However the kind of technology used and the efficiency of operation would provide the much needed competitive edge for success in banking business. Furthermore in all these the interest of the customer is of paramount importance.

7.TOURISM
Tourism has always been a major social phenomenon of any society. It is motivated by the natural urge of every human being for new experience, adventure, education, knowledge and entertainment. In order to understand each other's cultures and values as well as to cater several other social, religious and business interests, it has resulted in development of many tourist and infrastructure facilities. This, along with the progress of proper transportation network globally, especially of airways and waterways, has encouraged people to venture out to the foreign lands. It has facilitated the trade and commerce between the different regions of a country and between the different countries. As a result, over the years, it has acquired the status of a service industry. In India, tourism industry holds special position as it not only have potential to grow at a high rate, but also stimulate other economic sectors through its backward and forward linkages and cross-sectional synergies with sectors like agriculture, horticulture, poultry, handicrafts, transport, construction, etc. That is, it can provide impetus to other industries in the country and generate enough wealth to help pay off the international debt. It is the third largest net earner of foreign exchange for the country. Tourism product:India offers various categories of tourism products, such as adventure tourism; medical tourism (ayurveda and other forms of Indian medications), eco-tourism; rural tourism; cruise tourism; meetings, incentives, conferences, and exhibitions (MICE) tourism; etc. Promoting Tourism Product The Ministry of Tourism acts as the nodal agency for the development and promotion of tourism in the country. It plays a crucial role in formulating national policies and programmes as well as coordinating and supplementing the efforts of the State/Union Territory Governments and private sector in improving the quality of tourism infrastructure. It catalyses private investment, strengthens promotional and marketing efforts and helps in providing trained manpower resources. As regards the domestic market, the Ministry aims to popularise the culture and natural beauty of different regions, pilgrim sites and various new tourism products. The Ministry has a public sector undertaking, namely the 'India Tourism Development Corporation (ITDC)' for carrying out its various functions, along with the following autonomous institutions:1. Indian Institute of Tourism and Travel Management (IITTM) 2. National Institute of Water Sports (NIWS) has merged with IITTM; 3. National Council for Hotel Management and Catering Technology (NCHMCT) and 4. Institutes of Hotel Management (IHM).

The broad objectives of the policy are to:1. Position tourism as a major engine of economic growth; 2. Harness the direct and multiplier effects of tourism for employment generation, economic development and providing impetus to rural tourism; 3. Focus on domestic tourism as a major driver of tourism growth; 4. Position India as a global brand to take advantage of the burgeoning global travel trade and the vast untapped potential of India as a destination; 5. Acknowledge the critical role of private sector with Government working as a proactive facilitator and catalyst; 6.Create and develop integrated tourism circuits based on Indias unique civilization, heritage and culture in partnership with States, private sector and other agencies; and 7.Ensure that the tourists to India gets physically invigorated, mentally rejuvenated, culturally enriched, spiritually elevated and 'feel India from within'. With these objectives, the Ministry of Tourism has been broadly implementing/ implemented the following schemes/programmes:1. Scheme for Product/ Infrastructure Development and Destination and Circuits. 2. Scheme for Integrated Development of Tourist Circuit 3. Scheme of Assistance for Large Revenue Generating (LRG) Projects 4. Scheme of Capacity Building for Service Providers (CBSP) 5. Scheme of Rural Tourism 6. Scheme of Financial Assistance to States for Organization Tourism Related Events 7. Scheme of Central Financial Assistance for Information Technology (IT) Projects 8. Scheme for Support to Public Private Partnership in Infrastructure Development (Viability Gap Funding) 9. Scheme of Market Development Assistance (MDA) 10. Capital Subsidy 11. Time Share Resorts (TSR). Growth of tourism sector:There has been a remarkable growth, in the recent years, in foreign tourist arrivals to India due to the various efforts made by the Ministry, including promoting India through the 'Incredible lndia' campaign in overseas markets. Incredible India is a multi-pronged

promotional campaign launched by the Ministry in order to position the country as a preferred tourist destination for the travellers the world over. As a result of all such efforts, India's share in international tourist arrivals, which was 0.46 per cent in 2004 has increased to 0.49 per cent during 2005; and further to an estimated 0.52 per cent in 2006 and 0.55 per cent in 2007. The foreign tourist arrivals has increased from a level of 3.46 million in 2004 to an estimated 5 million in 2007. Similarly, the foreign exchange earnings from tourism have also shown a phenomenal growth from US$ 6.17 billion (Rs. 27944 crore) in 2004 to an estimated US$ 11.96 billion (Rs. 49413 crore) in 2007. The share of India in world earnings from tourism registered an increase from 0.98 per cent in 2004 to 1.21 per cent in 2006. The number of domestic tourists in India has also grown phenomenally over this period, that is, from 366.23 million in 2004 to an estimated 462 million in 2006.

4 As of Tourism sector:1. 2. 3. 4. Attraction. Accessibility. Accommodation. Amenities.

Managing demand and supply:The supply factors, as the mix of destination, facilities and services is usually called, can be broadly classified into 5 broad categories:1. 2. 3. 4. 5. Attractions. Transport. Accommodation. Support and auxiliary services. Physical and communication infrastructure.

Thus, Indian travel and tourism industry has been on rise and is gaining popularity amongst travellers all over the world. It is an engine of growth for Indian economy and helps to promote sustained development of infrastructure, such as airports, railways and roads, leading to connectivity of various tourist destinations. Besides, improvement and expansion of existing and new tourism products such as cultural and heritage tourism, rural

tourism, adventure tourism, health and healing tourism, etc.; promotion of 'Incredible India' campaigns; as well as active participation of State Governments therein establishes India's competitive advantage in the sector. This has enhanced the foreign exchange earnings of the country as well as improved its trade relations with other nations. All such measures and incentives, undertaken by public and private sectors, are a source of several investment opportunities in the industry.

Marketing model(strategic framework)

Marketing model, as has been treated in the conventional management literature, is associated with the growth of the business. We can define strategy as a match between what a company can do(organizational strength and weaknesses) within a framework of what it might do(environmental opportunities and threats). 1. Resource based view of the firm:-

It combines the internal analysis of phenomenon within companies with external analysis of the industry. The resource can be assessed on the following dimensions:A. B. C. D. Test of durability. Test of appropriability. Test of substitutability. Test of competitive superiority.

In all these tests the focus is on resource base, keeping in the mind the market conditions and competitive factors. 2. McKinseys 7-S framework also prescribes a model:Strategy. Skills. Staff. Shared values. Styles . Systems. Structure. The strategic view of the firm suggests that there should be a source of competitive advantages.This source should be sustainable in the long run.

3. Sustainable competitive advantages:-

The main reason for analysing competitors is to enables the organization to develop competitive advantages against them, especially advantages that can be sustained over time. The real advantages come from advantages that competitors cannot easily imitate. Sources of sustainable competitive advantages are:A. B. C. D. E. F. G. Differentiation. Low costs. Niche marketing. High performance or technology. Superior quality. Superior service. Vertical integration.

 In order to make comprehensive competitive model of marketing trough SCA, we can follow following dimensions:1.What to compete? 2. Whom to compete? 3. Where to compete? 4. How to compete?

 Given by Lynch for competitive advantage in different types of business:-

Services

High
technology

Competititve advantage

Small business

Manufacturing market leader

4.Options for the growth of the service firm:Some of the different options for the growth of national and international expansion of the firm are as follows:A. B. C. D. E. F. G. Joint ventures. Green field ventures. Merger and acquisition. Strategic alliances. Franchising. Licencing. Management contract.

5. PDCA Technique:PDCA was made popular by Dr. W. Edwards Deming, who is considered by many to be the father of modern quality control; however he always referred to it as the "Shewhart cycle". Later in Deming's career, he modified PDCA to "Plan, Do, Study, and Act" (PDSA) because he felt that check emphasized inspection over analysis.

The steps in each successive PDCA cycle are as follows:A. PLAN: - Establish the objectives and processes necessary to deliver results in accordance with the expected output (the target or goals). By establishing output expectations, the completeness and accuracy of the specification is also a part of the targeted improvement. When possible start on a small scale to test possible effects.

B. DO: - Implement the plan, execute the process, and make the product. Collect data for charting and analysis in the following "CHECK" and "ACT" steps.

C. CHECK: - Study the actual results (measured and collected in "DO" above) and compare against the expected results (targets or goals from the "PLAN") to ascertain any differences. Charting data can make this much easier to see trends over several PDCA cycles and in order to convert the collected data into information. Information is what you need for the next step "ACT". D. ACT: - Request corrective actions on significant differences between actual and planned results. Analyse the differences to determine their root causes. Determine where to apply changes that will include improvement of the process or product. When a pass through these four steps does not result in the need to improve, the scope to which PDCA is applied may be refined to plan and improve with more detail in the next iteration of the cycle.

There are various other model for marketing of services can be applied for gaining core competency in that area. Some of them are:1. 2. 3. 4. 5. 6. 7. 8. 9. Review technique. Fish bone diagram. Analysis regarding demand and supply gap. STP analysis. Competitors analysis. TPA (third party administrator) analysis in case of insurance sector. PPP (Public-Private-Partnership) model for Healthcare sector. Market feasibility analysis. Introducing customised package system in case of tourism sector.

Conclusions:-

To conclude, there is no best strategy that can be suggested. The choice of a strategy depends upon the context, types of firms involved, investment, and timeframe in considerations. Strategic management literature has postulated several frameworks to further the understanding of the concept of strategy. A high-tech industry, however, is characterised by lot of changes. Since the beginning of strategic management discipline, the four major corporate strategy that have emerged are Strength, Weakness, Opportunities and Threats (SWOT) in the 1960s, a strategic planning matrix in the 1970s, competitiveness in 1980s, core competencies in 1990s. We can sum up with a definition of strategy which is Growth of the business considering the vision and matching the external environmental dynamics with the internal resource base of the organisation.