service sector management prepared by: suresh shah · subject: service sector management. unit - i...

Compiled by Suresh Shah J. M. Patel College of Commerce. T.Y.BMS Semester V Subject: Service Sector Management. UNIT - I and UNIT - II

For Internal Use Only. No extra charges or remuneration paid or taken

SERVICE SECTOR MANAGEMENT

prepared by: suresh shah

UNIT I

1. Introduction to Services Marketing

2. Services Marketing Environment

3. Consumer Behavior

Introduction To Services Marketing

Introduction

Meaning and Definition

Characteristics of Services

Implications of Characteristics

Classification of Services

Reasons for the growth of services in India

Marketing of Products V/s Services

The Good Services Continuum

Significance of Service Marketing

Service Economy

Marketing Challenges of Services

Services Marketing Triangle

Opportunities in Journalism Sector

What is Service Sector?

SS is also called tertiary sector

It is the third of the 3 economic sectors

Primary Sector

Extracts natural material and provides raw materials to Secondary Sector

Covers areas like farming, mining and fishing



Secondary Sector

Processes raw materials or semi-finished goods into more valuable products

It covers manufacturing and marketing things

Tertiary Sector

Is the provision of services

Activities in the service sector include retail, banks, hotels, real estate,

education, health, social work, computer services, recreation, media,

communications, electricity, gas and water supply

SS accounts for 57% of the Indian GDP in 2006 -2007

Computer software businesses in India are increasing at a rate of 35% per year

SS need to keep ahead of other businesses

By understanding what it is their customers want

Be in a position to give it to them quickly and at low cost.

Growth of Banking Industry

By using Information and communication technology

Reduction of manual work by automating processes helped in reduction of cost

ATM machines; 24x7 services; 7 days a week banking business

India is moving from developing to developed economy

Growth of employment in service Industry


Intangibility

Services cannot be touched, viewed, gripped, handled, looked at, smelled, tasted or

heard

E.g. Cosmetic Surgery, Taj Hotel Services; Teacher teaching.

Perishability

One of the crucial factors / problems faced by marketers



In other words services have Zero Inventory! Once sold, they stand sold and cannot be

returned.

Hence several times in the services industry the saying “First impression is the last

impression” actually stands true.

Services such as a doctors treatment, a hair dressers haircut, a movie or airline ticket etc

cannot be saved for later use.

They can be used only once else they perish. That’s perishability in services marketing.

Inseparability

Services cannot be separated from the service providers

Production, delivery and consumption of a service takes simultaneously

E.g. Salon, No two person are with the same haircut but they will be treated with the

same respect.

For example in case of a doctor when they provide their services to the patients but at

the same time patient should also take part in all the process. Same like that patient

should be there at the time of the surgery as who is going to be injected. In brief the

doctor can only provide its services if there is any patient.

Variability

Variability can also means lack of consistency.

Services are highly variable.

It is impossible to have the same service from the same seller the second time.

Quality of service cannot be standardized

Variability Services are highly variable because the quality of service depends on who

provides and where and when they are provided.

For example, when there is less number of customers, services are more specific and

polite.

If there is large number of customers, service provider tend to be busy and might lose

some service to the customers.

For example, if one day you eat in a restaurant, the food and service was very good but

the next day, it becomes bad.




Ownership

In product the product is produced first and than it is sold.

However in services, the product is bought first and than produced and consumed. In

this case the ownership is not transferred.

E.g. You go to an electronics shop and buy a Sony Walkman. The product now belongs to

you. However, you next go to the restaurant and order a dish. Does the food in the

restaurant belong to you? No. In the case of the electronics shop too, the product –

Walkman might belong to you, but the ownership of the service has not been

transferred. In an IT company, you might get an order for an IT software but do you own

the software? Not until it becomes a independent product for the IT company.

In short, ownership is transferred in case of products but not in case of services.

Simultaneity

Fundamental characteristic of services that they are produced and consumed at the

same time at the point of sale.

Either users are brought to the services or providers go to the users

Services have limited geographical areas.

E.g. Teacher has to go to the student or the student has to come to the teacher for to

learn

Quality Measurement

Service sector requires another tool for measurement

We can measure it in terms of service level

It is very difficult to rate or quantify total purchase

E.g. We can quantify the food served in a hotel but the way waiter serves the customer

or the behavior of the staff cannot be ignored while rating the total purchase

Nature of Demand

Services are fluctuating in nature.

During peak tourist season there is abnormal increase in the demand of services

E.g. Tourist goes to hill station during summer season wherein public transport utilities

are used substantially



17/06/2015

1. Implications of Characteristics

2. Classification of Services

3. Reasons for the growth of services in India

4. Marketing of Products V/s Services

5. The Good Services Continuum



CLASSIFICATION OF SERVICES HELPS IN DEVELOPING MARKET MIX

Services are classified on the basis of activity performed

Classification of services offers benefits like

Better understanding a particular service under consideration

Highlighting the similarities and differences between the services being classified and

other services

Assisting in the development of marketing strategies and tactics

Philip Kotler identifies 4 types of activities of recognize goods and services

Pure Products – Which have no service factor e.g. soap or salt

Products associated with services - e.g. Computers

Pure Service - e.g. Play home

A main service associated with minor services – e.g. Train journey with 1st Class A.C.

service

FACTORS FACILITATING CLASSIFICATION OF SERVICES

TYPE OF SERVICES

Marketable

Non Marketable

Producer



Consumer

MAGNITUDE OF SERVICE

e.g. Consultancy and teaching service

DEGREE OF CONSUMER PARTICIPATION

E.g. personal care services like Beauty parlors or Dental Care

SERVICE BASED ON THE TYPE OF SUPPLY

Casual Supply – E.g. Services of musicians / dancers

Continuous Supply – E.g. Communication services

MACHINE ORIENTED AND PERSON ORIENTED

Machine oriented - Computer services; Xerox services

People Oriented - Teaching services, Legal Services

FACTORS STIMULATING GROWTH IN SERVICE SECTOR

Demographic Changes

Life expectancy has risen which in turn producing an expanding retired population

This sector has created new demand for travel and leisure, healthcare, nursing and life

insurance

Need for infrastructural support services have increased due to the development of new

towns and Regions

Social Changes

The number of women in the workforce has increased

Led to traditional domestic functions being performed outside the home

Rise in the nos. of double income households have created demand for

Consumer Services

Retailing

Real Estate

Personal financial services



Standard of life has improved

Smaller families with double income spend more on entertainment, travel and

hospitality services

FACTORS STIMULATING GROWTH IN SERVICE SECTOR

Economic Changes

Demand for communication, travel and information services has increased due to

globalization

Increased specialization within the economy has led to reliance on specialist service

providers

Political and Legal Changes

Size of government has grown creating a huge infrastructure of service department

With the growth of international trade demand for legal and other professional services

have increased, cutting across national boundaries

REASONS FOR THE GROWTH OF SERVICES IN INDIA

Economic Affluence

Changing role of women

Cultural Changes

IT Revolution

Development of Markets

Market Orientation

Health Care Consciousness

Economic Liberalization

Rampant Migration

Export Potential

Service Tax


Economic Affluence



Size of the middle income consumer is rising fast

Percentage of the very poor household is declining

The rural households in the upper income category is growing at a faster pace

Changing role of women

Women are now allowed to work

They are employed in all sectors / services

Percentage of working women are growing rapidly

Changing role of women has created market for number of goods and services

Demand of woman are forcing service organisation to be more innovative in their

approach

More traditional services performed by women earlier are being performed outside the

home

Cultural Changes

Change is the underlying philosophy of culture

Place of change in the Indian culture is not uniform

Emergence of nuclear family system in place of the traditional joint family system

Created a demand for host of services like education, health care, entertainment and so

on


IT Revolution

IT has become key service businesses of the country

India has the largest software skilled population in the world

Domestic and international market has grown substantially

Many State Government has made IT as their most prioritized segment

States like AP, Karnataka, MP, Maharashtra and Delhi have achieved substantial

progress in Information Technology

Development of Markets



Wholesaler and Retailer population has grown in the last few decades

Urban India has become a cluster of wholesaling and retailing business

Retailing has spread to the nooks and corners of the streets

Rural areas retail business is significantly present

Market Orientation

Manufacturing organisation has shifted the philosophy from Production orientation to

Market orientation

Market is a service function that has been added in the organisation

Pressures in the market has forced the manufacturers to have marketing research,

accounting, auditing, financial management, human resource management and

marketing research divisions – all of which are service function


Health Care Consciousness

In India Health Care market has grown substantially

The increased life expectancy is the result of the consciousness of people regarding the

health issues

Growth of fitness clubs, diagnostic centres, medical counselling, are the reflections of

the growing demands for health care services

Government and social organisation have taken up the mass campaigns to create

awareness

Economic Liberalization

With the divestment and privatization policies the state owned monopolies in many

services areas came to an end

Multinationals were permitted to enter the Indian market

Liberal lending policies and lower interest rates motivated people to become self

employed

Different sectors like Banking, Insurance, Power projects, Telecommunication,

hospitality and others witnessed intense competition due to entry of multinational

Rampant Migration



Rampant migration from rural to semi urban and urban areas

Migration to urban areas for jobs and livelihood has resulted in the expansion of cities

and township

Due to which real estates, rentals, transportation and infrastructure services are rapidly

expanding


Export Potential

India is considered as potential source for services

There are nos of services that India offers to various part of the world like

Banking, Insurance, transportation, communication, data services, accounting

services, construction labor software services and tourism

Tourism and software services are the major foreign exchange earners of the country

Growth rate of these services are high in comparison to other sectors

Service Tax

Growth of the service sector attracted the attention of the government as a tax

generating source

Over the years the nos of services brought under service tax has increased

Service tax is levied on

Hotels and restaurants

Transport

Storage and Communication

Financial Services

Real estates

Business Services

Social and Personal services

DIFFERENCES BETWEEN GOODS MARKETING AND SERVICE MARKETING

DIFFERENCES BETWEEN GOODS MARKETING AND SERVICE MARKETING



TODAY’S SESSION


Significance of Service Marketing

Service Economy

Marketing Challenges of Services

Services Marketing Triangle



The goods and services continuum enables marketers to see the relative goods/services

composition of total products.

A product’s position on the continuum, in turn, enables marketers to spot opportunities.

At the Pure Goods end of the continuum, goods that have no related services are positioned.

At the Pure Services end are services that are not associated with physical products.

Products that are a Combination of goods and services fall between the two ends.

For example,

goods such as furnaces, which require accompanying services such as delivery and

installation, are situated toward the pure goods end.

Products that involve the sale of both goods and services, such as auto repair, are near

the center.

And products that are primarily services but rely on physical equipment, such as taxis,

are located toward the pure services end.


Observation Of Continuum Model

Offerings of a firm range from pure goods to pure services

Those that are goods are tangible and easy to evaluate by customer

Those that are services are intangible and not easy to evaluate by customer



Mostly goods show search qualities

Customer know exactly what they want and look for those features in the offer

there are many offers that are a combination of goods and services

Taking a vacation

It is intangible yet there are tangible components like hotel rooms, cuisine,

souvenir etc

Customer looks for these kind of experience

SERVICE ECONOMY

A service economy refers to a financial concept that says that service is becoming more and

more important in product offerings.

While most manufacturing companies continue to sell tangible products, the intangible service

that is being integrated into the product is becoming a market differentiator.

The concept that products and services are interconnected, and that service represents an

increasingly important part of a product, is called servitization of products.

The merging of products and service is said to occur on a service-product continuum.

The information revolution is a key driver of the service economy, or service system.

SERVICE ECONOMY

Manufacturers of computer hardware and software, as well as software application developers,

now consider service to be an integral part of their product offering.

These companies commonly promote their "solutions," which consist of both products and

services that cannot be separated.

Services marketing consists of marketing relationships and value.

This type of marketing may be based more on reputation or relationship rather than on product

features.

It can be difficult to compare the offerings of two or more suppliers, and service offerings

typically cannot be returned.

SERVICE ECONOMY

The shift toward a service economy has brought other changes in the macroeconomic

environment.



The present accounting methods used by both public and private-sector organizations

were developed prior to the servitization of products and

so are more suited to a product-based economy.

Accounting reform measures have been proposed to more accurately reflect the current

reality of a service economy.

One of these reforms is full cost accounting,

which refers to a method that takes into account

not only the economic costs of a given proposal,

but also the social, environmental, and other intangible costs.

Full cost accounting is sometimes referred to as total cost accounting.

Monetary reform, which would change the way money is utilized in the economy, may

be a future byproduct of a service economy.

SERVICE ECONOMY

The service economy is impacting workers as well,

Companies shift from regular, long-term employment to precarity, or work that is intermittent

or insecure.

Workers may be hired

on a contract or

freelance basis, and

may work from home or telecommute.

They work, and are paid, only when needed by the company.

The benefit to the company is that

labor costs are more closely related to output.

Workers, however, have reduced job security and negotiating power.

ROLE OF SERVICES IN MODERN ECONOMY

i) Wider Utility

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Services are widely used by people in all aspects of life

From education to entertainment

Finance to fast food

Travel to telephone

Advertisement to amusement park

Market research to maintain services and

Retailing to recreation

Services are used by corporate and household sectors

Increased emphasis on services started in 20th century especially after the end of world war 2

ii) Shift in the Economy

Role of service sector has been increasing at a faster pace

Economies are shifting from developing to developed stage they will show more and more shift

towards services

Fastest growing segment of the US economy is service

Economies of other developed countries are also dominated by services


iii) Liberalization, privatization and Globalization

Privatization and Globalization has led to increased contribution of services

Globalization ha led to increased in the FDI in various sector thus contributing to the development of the

economy

Response to liberalization has probably been more in service sector

iv)Reducing share of Agriculture Sector

Share of agriculture sector which constituted 50% of GDP in service sector in 1960 has come down to

24% in the present

Substantial increase in manufacturing sector but majorly in service sector



Current contribution by service sector to India’s GDP = 57%


v) Increase in National Income

IMF report on service sector in India has consistently outperformed

Service sector dominates Indian Economy

Contributing 57% to GDP of India

It is the fastest growing sector with an annual growth rate of 8% per year

Majority of middle class families want their children to work in service sector

With best jobs, best income and best talents the service sector is the show case of Indian economy

vi) Compete on a Global Level

Technological advances have made it possible for India to compete at a global level in areas

Software development &

Information system

Reduced restrictions on the private sector involvement has helped growth of the sector

The annual growth rates of the service sector have outperformed the overall GDP growth rates


vii) Dominant place in the revived 30 share index

Importance of service sector in India has been acknowledged by the stock market

BSE has given the service sector dominant place in the revised 30 share index.

Service sector contributes less than 1% of the gross tax structure

No taxes are imposed on agriculture, most of the tax revenues are generated from manufacturing sector

which are on the higher side

With economic reforms, the tax structure in the manufacturing sector is being rationalized

Service sector is being increasingly included in the tax net

Viii) Service tax is an important tool of revenue collection

Turning out to be an important tool of revenue collection for Central Government



83% of the total revenue is contributed by 5 sectors

Telecom industries (51%)

Insurance

Advertising

Courier services

Stock Brokers


ix) Generation And Expansion Of Job Opportunities

Service sector creates and expands job opportunities

In USA, 85% of the jobs created come from service sector

Every $ consumer spends in US, about half of it goes for services

This confirms the growing global influence of this sector

Majority of new employment in the organized sector has come from the service sector

x) Optimum utilization of untapped resources

SS provides opportunity to make optimum utilisation of untapped resources

By marketing unutilised / under utilised resources are properly utilised

Personal care services, tourism, entertainment, hotel etc. if not utilised are a national waste

MARKETING CHALLENGES OF SERVICES

Clients can’t see or touch services before they purchase them:

This makes services difficult to conceptualize and evaluate

from the client perspective, creating increased uncertainty and perception of risk.

From the firm’s perspective, service intangibility can make services difficult to promote, control quality,

and set price.

Services are often produced and consumed simultaneously:

This creates special challenges in service quality management

that product companies do not even consider.



Products are tested before they go out the door.

If a product has quality problems while in production the company can fix them and customers are none

the wiser.

Service production happens with the customer present, creating a very different and challenging

dynamic.

Trust is necessary:

Some level of trust in the service organization and its people must be established before clients will

engage services.

This is as important, sometimes more important, than the service offerings and their value proposition.


Competition is often not who you think:

Competition for product companies are other product companies.

Competition for service companies are often the clients themselves:

Sometimes you find yourself in a competitive shootout

Often the client is asking ‘should we engage this service; at all’ and ‘if so, should we just do it in-house’.

Brand extends beyond marketing:

Brand in service businesses is about who you are as much as what you say about yourself.

Internal brand management and communications can be equally as vital to marketing success as are

external communication.

Proactive lead generation is difficult:

Many service companies have tried, and failed, at using lead generation tactics that work wonders for

product companies.

Implemented correctly, traditional product techniques, such as direct marketing and selling, can work

for services,

But the special dynamics of how clients buy services must be carefully woven into your strategy.


Service deliverers often do the selling :

Many product companies have dedicated sales forces.



For services, the selling is often split between sales, marketing, professional, and management staff.

Marketing and sales lose momentum:

Most product companies have dedicated marketers and sellers.

They market and sell continuously, regardless of the revenue levels they generate.

In many services companies the marketers and sellers also must manage and deliver.

This can often lead to the Services Revenue Rollercoaster-wide swings between revenue and work

overflow, and revenue and work drought.

Passion is necessary yet elusive:

The more passion, spirit, hustle, and desire your staff brings to the organization every day, the more

revenue and success you will have.

The correlation between staff passion and financial success is direct and measurable

Service Marketing Triangle

Service marketing triangle–a dynamic model

There are three interlinked groups that work together to develop, promote, and deliver services.

These key players are labeled on the points of the triangle – Company, Customer, Providers.

there are three types of marketing that must be successfully carried out for a service to succeed –

external marketing, internal marketing, and interactive marketing.

All these activities revolve around making and keeping promises to customers.

For services, all three types of marketing activities are essential for building and maintaining

relationships with customers. Those are described below:


According to Philip Kotler, service marketing requires both

External marketing and internal

As well as interactive marketing

The three types of marketing in service industries are shown in the following figure.

The Right side of the triangle shows

http://www.assignmentpoint.com/business/marketing-business/definition-of-marketing.html



the external marketing (setting promises).

It is the normal activity of the firm to develop price, promote and distribute the

service offering to the customers.

Any thing that is communicated to the customer before service delivery is seen

as a part of external marketing.

The Left side of the triangle shows

the internal marketing (enabling the promise).

The internal marketing activities of the firm are to train and motivate its

employees

To work as a team in order to deliver the service.

It emphasis on the critical role that enables the employees to keep the promises

made to the customer.

The Bottom part of the triangle describes

the employee’s skill in handling customer contact.

It is the real time marketing of “moments of truth”

the employees directly interact with the customer in order to fulfill the promise.


All the three sides mentioned in the triangle are critical to successful services marketing.

The service triangle also has a number of fundamental strategic implications:

The key factor is customer focus and, not functions. Customer satisfaction should be the

function of the entire organisation.

The internal environment is reflected in the external culture. It is directly linked to how

the staff serves the customer.

One who delivers the service must not only have the skill and knowledge but also the

authority to serve the customer to his satisfaction.

The organizational values, in relation to the service culture need to be simple, clear and

shared by all

During interaction the customers infer the quality. Therefore, it becomes necessary to

develop good delivery associated activities.




Internal marketing refers

To the way a company communicates with employees.

It includes sharing of important news by company leaders and effective support of employees as they do

their jobs

External marketing includes

All promotional efforts aimed at customers to promote the benefits of the company and its products

and services.

Interactive marketing includes

Direct exchanges between employees and customers

Whom they share product or service information with to induce purchases.

At the center of the triad is technology, such as phones, computers and mobile devices, which are used

in implementing these marketing elements.


Career in journalism is fiercely competitive.

If you have not yet undertaken any activity related to journalism, the first thing you need to do is find

something relevant to get involved in.

If you are still at university there are likely to be many opportunities open to you via student

newspapers, magazines, radio and even internal television circuits.

If you have already graduated, you will need to work that much harder to get some useful experience.

Every year, graduates with the right qualities and experience do compete successfully for entry on to

courses and jobs in journalism - be it in print (newspapers and magazines) or broadcasting (radio or

television).

The Internet is rapidly taking its place as a third branch of the media.

There are also other related jobs - industrial firms and major charities often produce regular publications

and employ journalists to work on them.

Later possibilities occur in press agencies, public relations and media liaison, and many journalists work

on a freelance basis.


http://www.grb.uk.com/



Journalism influences the way we perceive and think about social and political issues.

It is important to remember that although journalism may seem to offer a glamorous career the reality

is quite the opposite.

The work can involve irregular and often anti-social hours and some positions may include a high

element of risk (i.e. foreign correspondents reporting in an area of conflict or an investigative journalist

working undercover).

Many journalists are concerned with hard news,

for example politics, economics, war, terrorism, crime and disasters, or

with various aspects of current affairs such as technology and science, business, culture, race, religion,

education and sport.

The stories to be presented can be divided into spot news, comprising occurrences

such as crime, accidents and natural disasters, and

anticipated or diary events such as budgets, conference and anniversaries.


The broad aim of journalism is to 'inform, educate and entertain', though the mixture of objectives may

vary considerably.

Journalists' tasks range from

the presentation of hard news,

through the preparation of features giving the background to the news,

to the preparation of features which are simply meant to entertain.

In the course of a career, and in indeed in the course of one job, journalists may do all these things.

Journalism exists in several forms and can be divided into

written and

non written forms of communication.

Predominantly employers are within the newspaper and magazine industries

The growth of the Internet as a viable communication medium has allowed companies to expand their

interests online.




Rapid technological change and the impact of globalisation has affected journalism.

In many way's a journalists job has become research can now be carried out at the click of button.

An predominant change within journalism is the

Recent rise of multimedia groups that own both print and broadcasting interests, and the consequent

closer relationship between them

Within journalism there are a multitude of specialisms - sports, finance, medical, science and fashion

etc.

The industry is characterized by a move away from specialisms towards multi-skilling, and there are

more opportunities for personnel to move between media.

there is an increasing tendency in journalism courses to teach so called bi-media skills which relate to

both branches of work.

Increasingly, journalists are also writing for online publications

knowledge and expertise for the web will become more and more important.

Therefore individuals will be expected to quite flexible about their career paths


It is now possible to download digital photographs of newsworthy events onto computers and send via

email to appear in newspapers and on television screens all over the world.

Journalists work in newspapers, magazines, in broadcasting and online.

Aside from gathering and reporting information, journalists can also get involved in the design, layout

and editing of features.

Editors and sub-editors are responsible for what actually gets printed

making sure that the content is accurate

there are no errors and

that the articles comply with the style that the readers are normally accustomed to.

Journalists can also find themselves writing captions and headlines

and in some cases conducting picture research.

NEXT SESSION

SERVICES MARKETING ENVIRONMENT



1. 7P’S of Marketing

2. Positioning – Market Segmentation

3. Balancing of Demand and Capacity

4. Branding of Services - Problems and Solutions

7P’S OF MARKETING

Services are very different from products.

Services can range from financial services provided by

The banks,

Technology services provided by the IT company,

Food and ambiance as a service provided by restaurants or

Even a blog where an author provides a service (information presentation, interesting reading etc) to his

audience.

Services marketing are dominated by the 7 Ps of marketing namely

Product,

Price,

Place,

Promotion,

People,

Process and

Physical evidence.

The 7 P framework is one of the most popular framework for deciding a marketing strategy, right from

strategy formulation to actual implementatio

7P’S OF MARKETING

Product

is your core offering.

This is “the thing” that will fulfill the needs of your customer.



If your product is faulty, every thing else fails.

The attributes of the product,

vis-a-vis the attributes offered by competing products and substitutes,

are important in estimating the competitive scenario for the marketing strategy formulation.

Price

has a lot of impact on the service buyer’s satisfaction level.

Often, paying a higher price makes a customer more satisfied.

Price is often considered a proxy for quality and vice-versa.

What is important to note that services being all the more intangible, the price becomes an important

factor for the actual service consumption to happen, after service awareness and service

acknowledgement.

7P’S OF MARKETING

Place

Often offers a different side of value (utility) to the customer.

Who would want to travel 10 miles to have a regular dinner, even if that is priced very competitively and

has a super quality?

Services are often chosen for their place utility.

Closer to the customer means higher probability of purchase.

Place utility is important to evaluate, for strategizing on the other 6 Ps.

Promotion

plays a role in the perception the possible target audience may have about your service.

There has to be a fit between the promotion and the positioning.

Promotion leads to service (brand) recognition and further establishes a proxy to evaluate quality of

services based by potential customers.

Many different promotional tools are often used like internet advertisement, special events,

endorsements which happen out of the store or in-store merchandising like branded boxes from Custom

Boxes Now, plastic dump bins and digital signage

7P’S OF MARKETING



People

Are crucial in service delivery.

The best food may not seem equally palatable if the waitress is in a sour mood.

A smile always helps.

Intensive training for your human resources on how to handle customers and how to deal with

contingencies, is crucial for your success.

Processes

are important to deliver a quality service.

Services being intangible, processes become all the more crucial to ensure standards are met with.

Process mapping ensures that your service is perceived as being dependable by your target segment.

Physical evidence

affects the customer’s satisfaction.

Often, services being intangible, customers depend on other cues to judge the offering.

This is where physical evidence plays a part.

Would you like eating at a joint where the table is greasy or the waitresses and cooks look untidy and

wear a stained apron?

Surely you would evaluate the quality of your experience through proxies such as these.

Life cycle of a product


Introduction

The service is new as it is just launched

Usage rate will be low

Production cost is high

Sales being smaller the revenue is low

Until the growth stage the service provider mostly operate from one location

Growth



Rapid increase in the sales at this stage

Sales increases at an increasing rate

Customer see the benefits in using the services

Promotion is focused to attract new users and retain repeat customers

Firm may improve service quality and add some more new features to attract customers


Maturity

Product / Service enters the stage of maturity

Rate of growth slows down

Sales are increasing but at a decreasing rate

Sales touch their peak

Saturates at that level for a longer period of time

There is intense competition at this stage

In order to keep its market stage may modify and improve service quality

Decline

The usage of the service rate diminishes

Due to the technological development and changing consumer tastes

The service provider uses different strategies at this stage

Second p - price

Price is the marketing mix variable which brings revenue; all other are cost drivers.

Price attributes are:

Flexibility

Price Level

Differentiation



Discounts

Allowances

Price is what customers are willing to pay for the services

How much the customer wants to pay depends on the value of the services he perceives.

Payment can be in many forms

Money

Barter

Services

4 important bases for price determination

What is cost to produce a service or cost oriented method of pricing.

It includes all direct / indirect cost.

Skills of the marketing lies in correctly identifying cost

Amount that consumers are willing to pay

Depend on the identification of customer typology (initiators, adopters, middle majorities, laggards

etc.).

Competition oriented method of pricing

Price that the competitors are charging.

Constraints on pricing that are imposed by government and / or regulatory bodies.

Methods of pricing

Cost Oriented Method

Simple to use and understand

Marketers add all the direct and indirect cost that occur in the course of the delivery of the service and

Includes his intended profit to arrive at the price of the offer

E.g. Tour operator will add

Direct Cost: Transportation fare, food, accommodation, sight seeing; local transportation; cost of guides

etc.



Indirect Cost: salary of permanent employees who continuously manage the tour programme

Demand Oriented Method

The offer priced after analysing the degree of demand amongst the customers

Marketers required to accurately read the pulse of the customers and know the market trend

There is an opportunity to ride the demand wave and appropriately price the offer

E.g. A retail store brings in fresh stock of merchandise

at the beginning of the season , it can set a high price

As the season progress the store can keep lowering the price

Methods of pricing

Competition Oriented Pricing

Pitches his offer at a price resembling the competition

Service being intangible, it is very difficult to communicate to the market about the character of the

offer and the positioning becomes a challenge

Price is very communicative

E.g. Menu card of the restaurant can speak a lot about the positioning – less by the menu items and

more by the price mentioned alongside.

Hospitals are judged for their quality by the price of its services

Service provider entering into the market

for the first time and

wanting to be perceived the way the market does to other players

could attach a similar price to get the same image as the competitor

Government or Regulatory Pricing Mechanism

Pricing of many services are governed by the regulatory mechanisms like

Municipal hospitals

Basic and higher education

Power tariffs



The service marketer can make profit by cutting down on costs and improving efficiency

Differential pricing mechanism

The same service can be offered to multiple customer types simultaneously with differential pricing

mechanism. Why resort to this method?

The offer cannot be broken up to reduce value benefit or cost: It has to be sold in totality.

Irregular or seasonal demand for the service

Additional distribution and logistic costs over the geographical so read

The offer can be so important and basic that all types of customers be they rich or poor might require

them.

E.g.

Indian railways offer concessions to students and defense personnel

Movie theatre offer matinee shows at a lower rate than other shows.

Central government announced free ship for girl students

Hospitals offering the same service to the patients with differential pricing mechanism

THIRD P - PROMOTION

Promotions refer to the entire set of activities, which communicate the product, brand or service to the

user.

Definition: Promotions refer to the entire set of activities, which communicate the product, brand or

service to the user. The idea is to make people aware, attract and induce to buy the product, in

preference over others.

Description:

There are several types of promotions.

Promotions include

Advertising,

Press releases,

Consumer promotions (schemes, discounts, contests), while



Below the line include

Ttrade discounts,

Freebies,

Incentive trips,

Awards and so on.

Sales promotion is a part of the overall promotion effort.

Promotion is the communication tool of the service to target the customers

THIRD P - PROMOTION

THIRD P - PROMOTION

Tools used in service promotion

Advertising

Public Relations

Sales Promotion

Personal Selling

Direct mail

Word of Mouth

Sponsorship

THIRD P – PROMOTION tools

Advertising

It is a paid form of communication Payment is made to the media

The latter acts as a vehicle to carry the message

The service marketer has total control

on the content of the message

as well as on the exposure, which is the number of times the message can be broadcast

The effectiveness of the media vehicle



Its reach and frequency

can make or break the effectiveness of the message

Different media types are


Public Relation

Different Strategies of PR

Maintenance of PR

Handles routine public relation stuff like

mailing greeting cards

Compiling Newsletters and house magazines

Holding routine conferences

Offensive PR

Used when reacting to adversaries remarks like

during hostile takeovers or

aggressive government interventions

Defensive PR

Being apologetic

Trying to explain glitches in operations


Sales Promotion

Trade Promotion

Intended for service intermediaries like

Retailers

Dealers



Agents

Incentives like commissions, Special schemes etc are given to the middlemen to motivate them to push

their offer

Consumer Promotion

Meant for consumers

Takes the form of short lived schemes

Price off

Freebies

Co- promotion (Airtel – MTV cards and special discounts)

Meant to attract the customers and have a pull effect


PERSONAL SELLING

Facilitates fact-to-face communication between the consumers and the marketer

Direct Mail

Popular method of reaching the customers potential or present

Cost effective and wider reach

Database management acquisition and their updating is the key to direct mail

Popular newsmagazine have been selling their subscription database to multinational banks that use

them to send mailers to their offers

For the banks it is a hugely cost effective way to acquire customers

Word of Mouth

Greater importance is given to referral and word of mouth communication

When people are the deliverers of services, personal recommendation is often preferred source of

information

Sponsorship

Sponsorship are seen in such examples as Hutch mobile sponsoring India vs. Pakistan cricket matches,

Insurance companies sponsoring weather forecast.



FOURTH P – DISTRIBUTION (PLACE)

Distribution is the process of making

A product or service available for use or consumption by a consumer or business user,

Using direct means, or using indirect means with intermediaries.

-----------------------------------------------------------------------------------------------------

It’s the method you use to get your product or service through various distribution channels to the

ultimate purchaser or end-user –

In other words, how and where the consumer buys your product or service.

It is a vitally important activity that focuses on how to reach your target market and the:

location of your business

location of your target market

how to reach your target market

warehousing of your stock

transportation of your stock



In case of services

they are inseparable from the service provider and

can neither be stored nor transported

not their ownership or title is passed along the channel line.

The placing of services should not be treated in the same lines as that of tangible product

There are certain services where the service provider has to be present personally in order to deliver the

services according to their specifications

There are certain services which do not require the presence of service provider E.g. ATM machine, Tea

Vending machine.

The provider of intangible services need to have more direct contact in delivering the services to the

customer E.g. Educational Services



In services, distribution means provision of personal services and information to the customer which

adds value to the service


Locating your business

The location of your services depends on a number of factors as outlined below:

Who are the target customers?

The degree of interaction required between the provider and the customer in service delivery?

Whether the service is technology based or people based?

What is the nature of competitors operation?

Can any new technology or system be used in order to improve the existing location decision?

Factors influencing choice of location

Nature of Service

Services are perishable and inseparable from the service provider

Degree of inseparability varies from firm to firm

The degree of inseparability is greater if the skill and expertise of the service provider are required

In such a case there is less flexibility and more cost is involved in setting the location

Nature of interaction

Nature of interaction differs from services to services.

The question here is where the service is to be delivered? Whether at the place of service provider or at

the place of customer.

E.g. Restaurant and banks, the location must be convenient to the customer as the customer has to go

to the service provider.

In case of cleaning services and repairs

the service provider has to go to the customer,

the location will be a cost effective location and



Service must be made available within a reasonable time.


Customer Needs and Wants

Customer needs and wants differ

There are customer who rate convenience as a major criterion for a service

while some others may want some special feature of the service and are willing to go the location to get

their needs satisfied

Natural Geographical Location

There are certain services that do not have a choice of location

In case of holiday resorts in the hill stations or on beach are dependent on geographical locations rather

than the convenience factor of both the customer and the firm

The location are predetermined and therefore the service provider must try and manage other elements

of the marketing n order to attract the customer

Competitive Position

An artificial barrier to entry can be created by acquiring and holding prime location before the market

has developed

Multiple locations can serve as barrier to competition by building a firm’s competitive position and by

establishing market awareness


Technological Advancement

Automation has resulted to great reduction in the choice of location decisions

In case of banking services with the introduction of ATM’s it is possible to separate the service provider

from the customer

Corporate clients can electronically connect with the help of modem

In many service industry locational decisions still depends in the customer’s needs

Dependency on Other Services

There are certain services like medical services e.g. X-ray; diagnostic laboratories, pharmacy etc that are

dependent on each other



They are required in cluster of associated services and products.

Infrastructure Facilities

There are certain services, which require rapid communication facilities with the other companies E.g.

Financial Services

They are to be located in large and highly developed cities with excellent communications

Target Market Decisions

Market should be closer to the largest customer taking into consideration the infrastructure facilities

available to access to the locations

Channels in service industry

Distribution channel for services are usually short, and are either direct or use an agent. Since stocks are

not held, the role of wholesalers, retailers or industrial distributors does not apply.

Popularly used channels of distribution (intermediaries) of services are

1. Agents and Brokers

2. Electronic media

3. Franchising

Benefits and challenges for franchisers of service

Benefits and challenges for agents and brokers of service

Benefits and challenges of electronic distribution

Fifth P - people

People play an important role in the provision of services

Customers are the judges to evaluate the performance of medical personnel

It is through the interaction with the staff, that the customer forms an opinion of the organisation.

Service marketers should develop a high level of interpersonal skills and customer oriented attitude in

the employees

Types of Service Personnel

Customer Contact Employees

Support Personnel or Non Contact Employees



Type of service Personnel

Customer contact employees

They are frontline staff

They are in direct contact with the customers n the process of service delivery

They represent the organisation and can directly influence the customer satisfaction

HIGH CONTACT PERSONNEL:

They are required when physical presence and interaction of the customer with the employees is for a

longer time e.g. Hospitals, educational institutions, restaurants etc

LOW CONTACT PERSONNEL:

The physical presence and interaction with the customers is for a lesser time e.g. retailing, post offices

etc.

SKILLED AND PROFESSIONAL

E.g. Doctors, Lawyers, Chartered Accountants, engineers etc.

NON PROFESSIONALS

Courier delivery boys, waiters, helpers etc

Types of service personnel

B) Support Personnel or Non Contact Employees

Those employees who contribute to the service industry but do not come in contact with the customers

are called non – contact employees

E.g. Administrative staff, chefs in the hotels etc.

They are support personnel, possesses high technical skill and are highly competent in their work

Without customer focused support personnel, it is not possible for the contact personnel to deliver

quality service.

Service quality and employee behavior

5 dimensions of service quality

Reliability

Delivering the service as promised is often totally within the control of frontline employees



In case of automated services such as ATM, Vending machines, support personnel are critical to make

sure all systems are working properly

Responsiveness

Frontline employees directly influence customer perception

By their willingness to help and their promptness in serving customers

Assurance

Service quality is highly dependent on the employee’s ability to communicate the credibility and to

inspire trust and confidence.

Empathy

Empathy implies that employees will pay attention, listen, adapt and be flexible in delivering what

individual customers need

Tangibility

Employee appearance and dress are important aspects of tangible dimensions of quality alongwith other

factors like service decor

Marketing mix

Marketing mix for

Tourism Industry

Hospital services

Hotel services

Hotel industry

Nikita Bhelekar

Meenal Solanki

Jyoti Khalate

Tirupathi Vannela

Sandeep Yadav

Ankush Bharekar

MARKETING MIX FOR HOTEL SERVICES



PRODUCT

The success of any hotel depends upon the quality of services it offers.

Change in Expectations

Factors that affects i.e. Veg & Non-Veg.

Product helps to create good Relationship between Customer and Hotel.

Example: Cuisine, Beverages, Politeness of Waiter, Receptionist, Room Services, Etc………

PRODUCT MIX

PRODUCT MIX CORE SERVICES

Reception Welcome, Enquiry Etc.

Boarding Restaurant, Catering,

Café

Lodging Bed, Rooms, water, Light,

Ventilation Etc

Entertainment TV, Music, Dance, Etc

Personal Care Gym, jogging, beauty Parlour

Transport Car Rental, Telephone,

News Paper, Etc..

PRICE

Balance between Price and Value

Economic conditions i.e. Fluctuating rates of Vegetables, Fruits.

Example: Onion Prices, etc..

Different prices on different occasions Like

Happy Hours, Seasonal Offers.

Intensity of the Competitive affects Pricing strategy.

KFC & McDonalds.

promotion



Try something innovative and Creative.

Like Natural Scenery Photographs.

Reception Desk i.e. Enthusiastic Receptionist.

Qualities of Receptionist:

Impressive Personality

Ambitious

Empathy

Respectful to guest and many more convincing qualities

people

People includes, Chefs, waiters, bell boy, doorman, house-keeping staff, etc…

These people should be Co-operative.

First Impression- influence the attitude of the guest

Last Impression- lingers in the guest mind.(Raises frequency of visits).

Convert Potential users into Actual users.

place

Location should attract Tourist and it should be near Tourist place like

Matheran, Goa, Ajanta Caves, Religious Places like Shirdi, Tirupathi.

Good relation between travel agent and hotels.

Place should be Clean, easy to reach, Reliable.

Encourage Tourism

service sector management prepared by: suresh shah · subject: service sector management. unit - i...

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