slides on services marketing shown to pgdm-im may 2014
DESCRIPTION
B2B Services Case taken for Information Management students of PGDM at S P Jain Institute of Management at Mumbai campusTRANSCRIPT
PGDM Year 2 – IM
(May 2014)
On Service Marketing
Prof S K Palekar
Session 1 : Marketing Concepts Relevant to IM
Session 2 : Case study : Marketing of B2B services
Session 1 Agenda
Introduction to services sector
Marketing Mix for services
Marketing Process
How marketing varies between products / services
Sectors within services
Marketing of professional services
WHY SHOULD YOU STUDY SERVICES ? Growth in various sectors Rs ‘000 Crores Indian GDP
Inspectable Experience Faith
In reality there is no pure product or pure service
3 ways of competing
My product best ( R&D / Tech Lead )
My price lowest ( Scale / Material Lead )
I am close to customer ( People / Service)
This is a service intensive paradigm
Services are almost always a part of what you sell
Product
Price
Place
Promotion
People
Process
Proof
Marketing Mix
What % of your costs are for services?
Where is the Value in Services?
Intangible : Low search attributes
Person dependent : Variable
Reputation / Reference dependent : Reference dependent
Co-created with customer’s presence / input
Cannot be pre-made : Peak and Lean times
Embedded in MOT / Encounters
Handling of complaints
Standardization and efficiency of machines
Customization and warmth of people
Think : Managerial implications of these service characteristics
Which are different from those of products
Designed and produced to the need of the customer – on the fly
Frequently designed / produced at the same time.
Service quality depends a lot on customer-fronting employees
Customer present throughout design, production, delivery.
Many times other customers are also watching this.
Management cannot inspect all customer transactions
In service, machines assist service givers
Service giver visits customer or customer comes to service
Distribution and storage not possible.
Service has locations and catchment areas.
Look of the people and facilities is important in service.
Service Providers Exhibit a Wide Range
Each type / context needs a different type of person
RARE EXPERTISE / JUDGEMENT / SKILL
Expertise / Experience Lawyer
Perform Singer, Dancer, Teacher, Priest
Judgment / Decision Doctor
MEDIUM EXPERTISE / JUDGEMENT / SKILL
Empathy Sales Executives
Conversation / Sociability Customer Relation Executives
Awareness and Feedback Barber, Tailor
LOW EXPERTISE / JUDGEMENT / SKILL
Physique Laborer, Guard
In most service businesses the service providers are the main value creators for the customers.
Therefore, in many service businesses, managing people is mainly an operations responsibility and
not the HR responsibility. Each business needs its own “People Strategies” of locating, sourcing,
recruiting, inducting, deploying, training and motivating the people. People strategies are more
important than marketing strategies for service firms. [email protected]
Understanding High/Low-Contact services – 1
Location ( Where to locate ) High contact : Convenient to customer
Low contact : Near labor or Transportation source
Service Scape ( How to layout and do interiors) High contact : set up like a customer reception / contact / service
area. Presentable, inviting, facilitate interaction with staff, and
waiting and serviceb.
Low contact : set up like a job work shop : for efficiency
Quality Control High Contact : customized benchmarks – customer present and
actively influences – can see all Ps - defects and all
Low Contact : since there is no customer during production, it is
possible to run using standard benchmarks and rework is possible
to correct the defects
Understanding High/Low-Contact services – 2
How the operations are organized ? High Contact : Pace is set by the location and time of customer
requests for service. Customer is present, sees process,
intervenes, directs but also likes to see the process. A key issue is
how to handle demand peaks and how to shape the demand
Low Contact : Customer is absent and is concerned with
completion date and final result. He does not see the people and
the process. Hence grouping (batching) and scheduling is possible.
Pace can be set internally and can be the “average demand”.
Front Line Worker Skills High Contact : Capable of interacting with customers, capable of
using judgment , capable of using his talent
Low Contact : Only Technical skills are needed
Understanding High/Low-Contact services – 3
Service Process High contact : Mostly front-room activities. The service may
change during delivery in response to customer.
Low contact : Mostly backroom activities planned and executed
with minimal interference from customer
Service Package High contact : Varies with customer : many choices and outcomes
Low contact : Fixed, less extensive
Discover Diagnose Design Deliver
Customer
Service Employees
Management
Management cannot create “Moments of Truth” for the customers.
But the management can create context, culture and employees.
“Service Value” is co-created between Customer & Service Employees
High Contact Service Encounters
S E R V I C E S C A P E
MOOD
INTERACTION
PERSON
TRAINING / EXPECTATIONS
RESOURCES
MOOD
SCRIPT / INTERACTION
M O M E N T O F T R U T H
PERSON
NEED
EXPECTATION
encounter
Cannot avoid complaints in service business
[email protected] +9821046013
Quality in High-Contact Services
Each “Service Encounter”
( Also called “Touch Point” or “Contact”)
Is a Moment of Truth (MOT)
It leaves a customer satisfied or dissatisfied.
SCANDANIVIAN AIRLINES EXAMPLE
Management Deals with Customers
Through The Employees
Management
Buyers Employees
Much value is co-created as MOT ( Moments of Truth) at
the front line. Customers evaluate the service based on
many intangibles like responsiveness, competence,
courtesy, communication, appearance.
Managing employees so
that they manage
customers better.
Recruit, induct, train,
motivate, supervise,
compensate, control
Management needs to
have a “line of sight” to
what is happening at
service locations and also
needs to have a customer
satisfaction measuring
process in place to know
if service is getting
delivered.
What do customers expect in MOT ?
Note : This slide is only for “Pure Service” but in reality there are only a
few “Pure Services”.
5 dimensions of service quality Reliability : Dependably and consistently delivering value
Responsiveness : Not creating dissatisfaction due to waiting
Assurance : credentials, experience, reputation
Empathy : listening well and putting yourself in customer shoes
Tangibility : service scape
Customer Feedback and Word of Mouth
You hear from only 4% of “dissatisfied customers” :
96% do not bother to complain but 25% of them
have “serious problems”
Interestingly the 4% are likely to stay if targeted by
“customer recovery” process but 96% may go
away. 96% will stay if the issue was resolved
quickly and 60% will stay of the issue was resolved
A dissatisfied customer will tell 10-20 other people
A resolved customer will tell 5 people
A satisfied customer will not go and tell someone
High Contact Service value creation
Customers are homogenized
through filtration, access, fencing, selection
Service providers are selected
Through filtration, access, fencing, selection
To match with the expectations of the customers
Service providers are prepared to handle the job
Customer expectations / scripts are communicated
Service delivery process is taught
Servicescape is appropriate : Facilities and
processes
Keep in mind technical logic, customer logic and employee
logic
Mechanism to handle complaints and counsel
Equipment –Intensive Services
Costs
Main investment and cost is in the machines
People Selection Criteria
Good technical qualification / knowledge
Trained to follow routine / standard operating process
Dealing with the Customer : Transactional
Classification
automated services – vending machines, automated car washes
monitored by unskilled labor – dry cleaning, door keepers, cleaning
operated by skilled labor – excavators, airline pilots,
People-intensive Services
Costs : mainly in selection, training, motivation &
retention of people
People Selection Criteria
Good social skills of dealing with customers individually
and to have a good EQ . – In professional service you need judgment and experience.
– In performing arts you need flair, temperament
Trained to follow – Consultative, diagnostic, solution providing, counseling
Customer orientation at the front end
– routine / standard operating process at the back end
Classification
Low contact service : security guards, janitorial service
Medium contact : repair technicians, electricians
Professional services : law, medicine, consulting.
High Contact Service - 1
The value is created mainly through employees dealing direct with the customers
Customer not well-anticipated in advance
Needs satisfied in real time when customer waits
Using “discover, diagnose, design, deliver” process
Main expectation of the customer is Customization
Service with a smile – a human touch”
High Contact Service - 2
Machines are secondary : interaction is primary.
High variations in productivity and satisfaction.
Investment in
right (convenient to customers location,)
Right interiors and facilities : meet / greet
Right “qualified”, “trained” and “sensitized” service
providers