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CHAPTER 1:

INTEGRATED SERVICE MANAGEMENT

8 P MODEL : COXSWAIN MODEL

8 P MODEL : COXSWAIN MODEL


PROCESS PRODUCT PRODUCTIVITY & QUALITY

PLACE & TIME

PROMOTION & EDUCATION

PEOPLE

PRICE & OTHER COSTS

PHYSICAL EVIDENCE

A. PRODUCT
The term product is defined as a bundle of attributes capable of exchange or use, usually a mix of tangible and intangible forms. It may be an idea, a physical entity, or a service, or any combination of these.

PRODUCT: Conceptualization of the service concept


Customer Benefit Concept Service Concept Service Offer and Service Package Service Delivery System

SERVICE CONCEPT: LEVELS OF SERVICES

LEVEL CONTENTS 1 2 Basic Basic+ minimum conditions

EXAMPLE Food

Kitchen, serving space, menu availability In addition to expected Sparkling floors, Smiling employees, ambience Exceed expectations Welcome flowers, Welcome Drink Beyond the usual

CORE AND PRODUCT SURROUND


BASIC FEATURES

PRODUCT SURROUND
CORE PRODUCT

ADDED VALUES

Consists

Impact

Cost

Core product

Basic features

30%

70%

Product surround

Added values

70%

30%

SERVICE PACKAGE: SERVICE FLOWER


Locker facility Card room CORE: Food and shelter

Swimming

Shopping

Transport

Casino

Medical services

Lounge

Supplementary services

TYPES OF NEW SERVICES


TYPE Major Innovation Start up business New service for currently served market Service Line Extensions EXAMPLES First broadcast TV. Service ATM, Vending Machines Library starts a restaurant

New Courses, New Sectors, New dish on menu

Service Improvements
Style Changes

Extended Banking hours


New design on bank cheques

NEW SERVICE DEVELOPMENT PROCESS


1. 2. 3. 4. 5. 6. 7. 8. Exploration & Idea Generation Screening Concept testing Business analysis Service development Test marketing Commercialization Evaluation

PRODUCT LIFE CYCLE

SERVICE PRODUCT DECISIONS


EXISTING PRODUCTS NEW PRODUCTS

EXISTING MARKETS

Market penetration

Product development

NEW MARKETS

Market Development

Diversification

IGOR ANSOFF`S PRODUCT GROWTH MATRIX

B. PRICE
Only element of the marketing mix which generates revenue. All others generate cost

Importance of income groups, Competition and Government Regulations


Perceptions of quality

PRICING OBJECTIVES
Survival Profit maximization Sales Maximization Prestige Return on Investment Stimulating patronage

FACTORS AFFECTING PRICING DECISIONS

Internal Factors

External Factors

Organizational factors

Competition

Marketing Mix elements

Demand

Positioning

Regulatory Factors

Service Cost

INFLUENCE OF PRICING ON SERVICE SECTOR/ SPECIAL ISSUES OF PRICING IN SERVICE SECTOR


Perishibility Price elasticity/sensitivity Volatility of the market Short run vs. long run profits High fixed costs Variability Government regulations Seasonality of demand Price vs. quality High cash flows

METHODS OF PRICING
1) 2) COST BASED: Basic Cost/ Cost Plus Contribution Working Back/ Expected Return/ Rate Of Return

MARKET ORIENTED/ DEMAND BASED: Skimming Penetration Price Discrimination (Customer, Product, Location, Time, Quantity) Pricing to meet customer expectations Discounts and Sales

3)

COMPETITION BASED: Destroyer Pricing Going Rate Pricing/ price matching Price bidding/ close bid pricing

4) VALUE STRATEGIES: A. Satisfaction Based: Service Guarantee Benefit Driven Pricing Flat Rate Pricing Convenience Pricing

B. Relationship Based: Long term contracts Price Bundling


C. Efficiency Pricing

C. PLACE
a) Time: doctor 4-7 pm pharmacy 24 hours b) Method: Physical Electronic c) Speed and convenience: channel of distribution must be short since services are intangible and inseparable

PLACE OF INTERACTION/ OPTIONS FOR SERVICE DELIVERY


Service provider customer

Service provider

customer

Service provider

customer

S E R V

CHANNEL DECISIONS
DIRECT C U S FRANCHISEES T

I
C E

P
R O V

O
ELECTRONIC CHANNELS M E

I
D E R

R
AGENTS AND BROKERS

CHANNEL DECISIONS
should Ensure easy accessibility and convenience Add value to the consumer Not eat away into the service provider;s margin Cover all target markets Be reliable

FACTORS INFLUENCING CHOICE OF LOCATION


Nature of service Nature of interaction Nature of consumers demand Competitive positioning Natural geographical location Technological advancements Dependence on other services Infrastructure facilities Target market decisions

LOOK OF PREMISES
Nature of service organization Future Needs Aesthetic factors Social environment

MARKET COVERAGE STRATEGIES


1. Intensive Distribution 2. Selective Distribution 3. Exclusive Distribution

D. PROMOTION/ COMMUNICATION
Promotion is used in hope of influencing the recipients feelings, beliefs or behavior, through any form of communication. ICICI sindhoor campaign Taj- Stays with you Campaign

KEY STEPS IN THE PROMOTION/ COMMUNICATION PROGRAMME


Identification of target audience Determine promotion objectives Development of message

Selection of communication/promotion mix

GUIDELINES FOR SERVICE COMMUNICATION

Provide tangible clues Make the service understood Communication continuity Promising what is possible Capitalizing on word of mouth Direct communication to employees

ORIGINATING SOURCES OF MESSAGE RECEIVED BY THE TARGET AUDIENCE


Messages originating within the organization
Front-line staff Service outlets

Advertising Sales promotions Direct marketing Personal selling Public relations

A U D I E N C E

Word of mouth

Messages originating outside the organization

Media editorial

PROMOTION MIX ELEMENTS


1. 2. 3. 4. 5. 6. 7. 8. 9. Advertising Personal selling Cross selling Sales promotion Public relations Word of mouth Direct mail Tele-marketing E-marketing

PROCESS OF COMMUNICATION
ENCODES SENDER MESSAGE SELECTIVE EXPOSURE CHANNEL RECEIVER DECODES

FEEDBACK PRE TESTS AND POST TESTS

E. PEOPLE
Who provide the service Who receive the service

SERVICE PROVIDER

SERVICE RECEIVER/ CUSTOMER

PEOPLE
EXTERNAL INTERNAL

Other customers

Employees

Students of other divisions

Teachers

DIFFERING ROLES OF PEOPLE


Involved with conventional marketing mix Frequency or periodic consumer contact Not directly involved with marketing mix

Contactors

Modifiers

Infrequent or no consumer contact

Influencers

Insolateds

STRATEGIES FOR QUALITY SERVICE DELIVERY


Hire right people Develop people to deliver service quality Provide needed support system Retain best people

ROLE OF EMPLOYEES IN SERVICES


High contact Low contact services Professional Non- Professional Services

Primary Role Facilitating Role Ancillary Role

INTERDEPENDANCE CYCLE/ THE SERVICE MANAGEMENT TRINITY

Operations Management Customers

Marketing Management

Human Resources Management

KEY CONCEPTS
Recruitment Training and development Motivation Retaining Boundary spanning Emotional labour & Surface Acting Empowerment

VIMP CONCEPT : EMPOWEREMENT


Removing the barriers that prevent workers from exercising judgment and creativity 1. Suggestion involvement: Big Mac, Fedex pay for suggestion schemes 2. Job involvement 3. High involvement

PARTIAL EMPLOYEES
Some service providers treat customers as partial employees so as to improve the service quality and productivity.

Customer is both employee and customer


Example: student council

F. PHYSICAL EVIDENCE
Physical evidence is the environment in which the service is delivered and where customers and firms interact. Any tangible commodities that facilitate performance or communicate the service are also physical evidence. ELEMENTS OF PHYSICAL EVIDENCE Physical facilities Physical environment

PHYSICAL FACILITIES

ESSENTIAL

EVIDENCE

PERIPHERAL EVIDENCE

Equipments in gym

Brochure/ magazine

PHYSICAL ENVIRONMENT

AMBIENT FACTORS

SIGNS, SYMBOLS, ARTEFACTS

SOCIAL FACTORS

Smell in hospital

Operation theatre signs Emergency sign Bell to call nurse

Other patients

ROLE OF PHYSICAL EVIDENCE/ INFLUENCE ON BUYER BEHAVIOUR


Shaping first impressions Managing trust Facilitating quality of service Changing the image Providing sensory stimuli Socializing employees

GUIDELINE FOR DEVELOPING A PHYSICAL EVIDENCE STRATEGY


Identify the strategic requirement of physical evidence (PE) Decide the kind of PE needed Clarify roles of employees and customers in the servicescape Identify and assess PR opportunities Update and modernize evidence Work cross-functionally

G. PROCESS: VVVVIMP
It is the way of undertaking transactions, supplying information and providing services in a way that is acceptable to the consumers and effective to the organizations. Since service is inseparable, it is the process through which consumers get into interaction with the service provider

DESIGNING SERVICE PROCESS


The following factors are to be considered in the service process design: The service itself Customer participation Degree of customer contact Degree of divergence Location of service delivery Complexity of service

Every service will have:


1. Complexity: steps involved 2. Divergence: variability in each step.

complexity standard high customized Low

divergence example low Airlines

high

restaurants

STAGES OF SERVICES
Pre-transaction Stage Observing Enquiring

Transaction Stage Meeting with agents Customization of service package Purchasing

Post-transaction Stage After sales service (e.g. Information, Extra advice, Additional services).

VIMP CONCEPTS
1. CRITICAL MOMENTS/ CRITICAL INCIDENTS/ MOMENTS OF TRUTH

2. SERVICE ENCOUNTERS
3. CRITICAL INCIDENT TECHNIQUE 4. BLUE PRINTING 5. ROLE AND SCRIPT THEORIES 6. SERVICE MAPPING

7. CUSTOMER CONTACT WITH SERVICES


8. CUSTOMERS AS COPRODUCERS

1. CRITICAL MOMENT/ INCIDENTS/ MOT


All those moments when you come in contact with the service provider which leaves either a satisfying or a dissatisfying experience for either or both of them Venn Diagram - Carlzon (chief executive) Scandinavian Airlines coined the term MOT 2. SERVICE ENCOUNTER Entire length/ duration/ period during which customers interact directly with the service Service encounters must meet the customers expectation. Venn Diagram

1. Could be:
Single encounter: restaurant Series/ multiple encounters: doctor/ consulting Different places/locations: airlines- baggage, check in, etc Different employees: restaurant 2. Could be: Shorter period encounter Longer period encounter

3. CRITICAL INCIDENT TECHNIQUE :( CIT ) Method to collect and categorize moments of truth and critical moments

Cit helps to find

Customer satisfaction

Customer dissatisfaction

CHANGES

4. BLUE PRINTING
Process/ design needed to make sure that the critical moments are encountered correctly

A blue print is a visual portrayal of a service plan. This is a technique used when planning a new or a revised process and prescribes how to function
Allows the service marketer to evaluate which tasks are more important/ critical and which are prone to failure. BP helps turn complaints into repeat business

Stages in blue printing 1. 2. 3. 4. Represent the service product in molecular structural formula Breaking down the process into logical steps Recognizing the variability in the process Identify the backstage elements in the process

Q) WHAT IS BLUE PRINTING. EXPLAIN WITH AN EXAMPLE: 10 MKS. VVVVVIMP

EXAMPLE : AN OVERNIGHT STAY IN A HOTEL

5. ROLE AND SCRIPT THEORIES


Role: A set of behavior patterns learned through experience and communication Role congruence: In service encounters, employees and customers must act out defined roles for good outcomes Script: Predetermined stereotyped sequence of actions that defines a well known situation. A script will have a set of activities that has conventional roles, props, even sequences, standard entering conditions and standard outcomes

Script tells a customer


Other peoples actions

His role

Sequence of events

INTERACTION BETWEEN ALL 3

CUSTOMER SATISFACTION WILL ALWAYS DEPEND ON WHETHER HE HAS RECEIVED SERVICES AS PER THE SCRIPT

6. SERVICE MAPPING
Service mapping is a technique which is used to
portray an existing service situation and provides a useful tool to access and identify service evidence opportunities. Service maps tell us: How to deliver a service Role of employee Interaction with customers SM gives a visual picture of the entire organization

LAYERS AND FEATURES OF SERVICE MAPS: IMP


PROCESS

customer Front line


Service Structure

Front Stage

Line of Interaction Line of visibility

employees
Back stage

Support staff
Management

Line of internal interaction Line of Impletation

Services

EG: educational institution- COLLEGE

Teaching
Students Teachers, Professors, Service Structure Peons Staff Front Stage Line of (classrooms) Interaction Line of visibility

Office and Admin Staff

Admissions & H. R. C. office

Line of internal interaction Line of Impletation

HSNC, Principal, Principals Vice Principal Office

7. LEVELS OF CUSTOMER CONTACT WITH SERVICES


High contact: customers visit the service facility / provider in person. Teacher. Medium contact: customer contact is limited. Travel agency. Low contact: very little. Call center. The 3 levels are based on: The extent of interaction with the service personnel The extent of interaction with the Physical elements The extent of interaction with both

Types of Customer Contact: Constant physical contact (barbers)

Constant communication contact (call center)

Sporadic physical contact (medical services)


Sporadic communication contact (financial services

8. CUSTOMERS AS COPRODUCERS (3 LEVELS OF CUSTOMER PARTICIPATION)


LOW- service is provided regardless of any individual purchase. Theatre. Online buying. Flight.

MODERATE- Inputs required for service creation. Restaurant. HIGH- Co-production. Service is created from the customers purchase & active participation. Counseling/ learning.

CHAPTER 2:
SEGMENTATION, TARGETING & POSITIONING IN SERVICES

BASIS FOR SEGMENTATION


1) Geographic 2) Demographic Age Sex Size and structure of family Income Educational level

3) Psychographic Lifestyle Personality

4)

Behavioristic Benefit Purchase occasion User status Usage rate Loyalty Buyer readiness and marketing factors

STEPS IN SERVICES MARKETING SEGMENTATION


Definition of market

Identify alternative bases for segmentation

Select best base(s) for segmentation

Process of Market Segmentation

Identify and select market segments

Develop positioning for target segments

Positioning

Develop marketing mix for each target segment

Marketing Mix Development

TARGETING STRATEGIES
1. Undifferentiated Marketing (Mass Marketing) 2. Differentiated Marketing (Multiple Segmentation) 3. Concentrated Marketing (Single segment)

POSITIONING
Please do the following from the Text Book:
Definition Importance Objectives Elements Procedure Positioning of service quality

POSITIONING OF SERVICES- IMAGE


Image : picture of organization as perceived by the target group Current image: way it is actually seen Mirror image: way it thinks it is seen Wish image: way it would like to be seen THE IDEAL SITUATION Wish= Current If no then various positioning strategies are used

POSITIONING APPROACHES/STRATEGIES
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Attributes/features/customer benefits Price/value Use or application Users or classes of users Product class Against competition Endorsement Quality dimensions: RATER Service Evidence People Physical Evidence Process

POSITIONING MAP
ATTRIBUTE 1
SERVICE A SERVICE E

SERVICE B

ATTRIBUTE
2

SERVICE C SERVICE D

CHAPTER 3:
MANAGING DEMAND AND SUPPLY OF SERVICES

DEMAND PATTERNS
Stable, Constant Increasing: Accelerating Decreasing: Decelerating Stable, Cyclical Increasing: Saturating Decreasing: Vanishing Life Cycle

STRATEGIES FOR MANAGING CAPACITY TO MATCH DEMAND


DEMAND HIGHER THAN CAPACITY Stretching time, labour, facilities, Equipments Cross train Overtime Rent or share facilities Part time employees Subcontract or Outsource

DEMAND LOWER THAN CAPACITY Performance maintenance/ renovations Schedule vacations Employee training Lay-off employees

STRATEGIES FOR MANAGING DEMAND TO MATCH CAPACITY


Partitioning demand Vary service offering Complementary services Promoting off- peak demand Pricing incentives Communicate with customers Modify timing and location of service Advertising and sales promotion

STRATEGIES WHEN DEMAND AND CAPACITY CANNOT BE MATCHED


Reservations and appointments Waiting lines Queuing situations Triage- Sorting Delaying Service Delivery

YIELD MANAGEMENT & POSITIONING


Please study these 2 topics from the text book.

CHAPTER 4:
MARKETING STRATEGIES FOR SERVICES

SCA: SUSTAINABLE COMPETITIVE ADVANTAGE


Features of SCA Customer must value the concept Non substitutable Firm must have the capabilities Sustainable

SOURCES OF COMPETITIVE ADVANTAGE FOR FIRMS


Operational position Scale effect Cost and demand synergy Brand/ firm equity Customer relationships Spatial preemption Service package Information technology

PROACTIVE SERVICE MODEL

MARKET PLANNING PROCESS


1. Analysis of marketing opportunities 2. Marketing research and selection of target markets 3. Designing marketing strategies 4. Designing and implementing detailed marketing plan 5. Effective monitoring and control

TYPES OF MARKETING/ SERVICE MARKETING TRIANGLE