services management 03

8/6/2019 Services Management 03

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Services Management


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Service

A service is an act or performance offered by one party to the other.

Although the process may be tied to a physical product, the performance

is transitory, often intangible in nature and does not result in the

ownership ofany ofthe factors ofproduction.

A service is an economic activity that creates value and provides benefitsfor customers at specific times and places by bringing about a desired

change in, or on behalf of, the recipient ofthe service.


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What is Service Quality

Actual performance by the firm

Customer satisfaction= ------------------------------------------

Customers expectations


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The Customers view of service quality

Customer perceptions of the firm and its offer are shaped by:

a) Word ofmouth publicity-like recommendations from friends, relatives,

neighbors and peer group at work place

b) Personal experience on the part ofthe customer

c) Personal needs ofindividual customers

d) External communications like the publicity ofthe firm in the media and

its advertisements and other corporate communications


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a) The quality ofservice or customer satisfaction=service quality delivered

- service expected

b) The value ofa service to a customer= Service quality(both the results

realized and process by which they are achieved)+

price and other customer costs ofacquiring the service

c) Potential profit leverage in providing the service=value to the

customer-cost to the service provider

d) The profitability ofa service to its provider=marginvrepeat

usagezinvestment


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Service encounters or moments oftruth are a dynamic force

with a potential tofuel self-reinforcing relationships.

-To create this self-reinforcing process, one has to understand the two

important players in corporate profitability-the customer and the firm

itself.

Development ofcustomer-oriented policies like guarantees, warranties,

replacements, refund and exchange policies.


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How is Service Quality Measured?

SERVQUAL=(Perception ofan ideal company as measured by the rating

given by the customer on the ten point scale for each variable - (

Expectation or actual service provided by the rating given by the ten point

scale for each variable or for the firm as a whole).


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Planning for Service

Strategic Options

a) Locating service points near the customer

b) Making delivery points user friendly

c) Reducing time gap between service sought and delivered

d) Product design

e) Unconditional guarantee

f) Role clarity and empowering people

g) Customer service and satisfaction is a result ofteam-work

h) Performance measurement and reward systems i) Research

k) Training ofpeople


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Differences between Goods and Services

Goods are tangible and services are Intangible. Services thus cannot be

inventoried or patented or readily displayed. Intangible elements

dominate value creation.

Customers do not obtain the ownership of services. Customers may be

involved in the production process. Goods are normally standardized whereas services are heterogeneous.

Since services are provided by human beings no two services will be

precisely alike. The heterogeneity connected with services is largely the

result of human interaction between the service provider and the

custo

mer. It beco

mes a bit diff

icult to

quantitatively evaluate service. In case ofgoods, the production is separate from consumption whereas in

services the production and consumption is simultaneous. Customers also

participate and affect the transaction.


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Goods are non perishable whereas services are perishable. Mass

production ofservice is very difficult and services cannot be returned or

resold.

Time factor assumes great significance and importance for service.

With regards to goods and services, the distribution channel may assumedifferent forms


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Market positioning

The importance for service firms to adopt focused strategies in their

choice ofmarkets and products

What is the distinction between important and determinant attributes in

consumer choice decisions?

What are the key concepts underlying competitive positioning strategy inservices?

When is it appropriate to reposition an existing service offering?

How can positioning maps help service marketers to better understand

and respond to competitive dynamics?


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Service delivery system

Identifying the primary channels through which services are delivered to

end customers: a) Direct delivery ofservice and b) Delivery ofservice

through intermediaries

Direct or company owned channels

Franchising: Advantages: a) A leveraged business format for greater

expansion and revenues. b) Consistency in outlets. C) Knowledge oflocal

markets d)Shared financial risk and more working capital. Disadvantages:

Difficulty in maintaining and motivating franchisees b) High dispute

between franchisees and franchisers c) customer relationships controlledby franchisee rather than franchiser

Agents and brokers


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Electronic channels: benefits: a) Consistent delivery for standardized

services b) Low cost c) Customer convenience d) wide distribution

e)customer choice and ability to customize f) Quick customer feedback.

Challenges and disadvantages: a) Price competition b) Inability to

custo

mize with highly standardized services c)Lack

ofc

onsistency due t

ocustomer involvement d) changes in customer behavior e)competition

from widening geographies


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New Service Development

When there is a new service development, it has to have the followingfour basic characteristics: a) Must be objective and not subjective b)Mustbe precise and not vague c)Must be fact driven and not opinion drivend)Must be methodological and not philosophical.

Types ofnew services:

Major or radical innovations ( television or computer)

Start up businesses consists ofnew services for a market that is alreadyserved by existing products that meet the same generic needs ( on linebanking for financial transactions)

New services for the currently served market represent attempts toofferexisting customers ofthe organization a service not previously availablefrom the company ( An airline offering fax or internet service duringflights)


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Service line extensions represent augmentations ofthe existing service

line ( An airline offering new routes)

Service improvements represent perhaps the most common type of

service innovation. ( A hotel room having a WIFI zone)

Style changes represent the most modest service innovations althoughthey are highly visible and can have significant effects on customer

perceptions ( revising the logoofa brand, changing the color scheme ofa

retail chain etc)


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Stages in new service development

Business strategy development or review

New service strategy development

Idea generation( screen the ideas against new service strategy)

Concept development and evaluation ( test concept with customers and

employees)

Business analysis ( test for profitability and feasibility)

Service development and testing ( conduct service prototype and test)

market testing ( test the service and other marketing mix elements)

Commercialization

Post introduction evaluation


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services management 03

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