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SERVICESAND RELATIONSHIP MARKETING (SRM) KEYUR DVASAVA..

Module 1. Basics of ServicesMarketing

1.WHATARE SERVICES?

The term services cover a heterogeneous range of intangible products and activities

that are difficult to encapsulate within a simple definition.

Services are also often difficult to separate from goods with which they may be

associated in varying degrees.

"There is a group of industries, generally classified as service industries, that

produce outputs that have many of the characteristics of goods, i.e., those

concerned with the provision, storage, communication and dissemination of

information, advice and entertainment in the broadest sense of those terms--the

production of general or specialized information, news, consultancy reports,

computer programs, movies, music, etc. The outputs of these industries, over which

ownership rights may be established, are often stored on physical objects--paper,tapes, disks, etc.--that can be traded like ordinary goods. Whether characterized as

goods or services, these products possess the essential characteristic that they can

be produced by one unit and supplied to another, thus making possible division of

labour and the emergence of markets."

Examples of service activities are wholesale, retail, certain kinds ofrepair, hotel, catering, transport, postal, telecommunication, financial, insurance,

real estate, property rental, computer-related, research, professional, marketing

and other business support, government, education, health, social, sanitation,

community, audiovisual, recreational, cultural, personal, and domestic services.

Why Study Services?Good customer service is all about bringing customers back.

And about sending them away happy - happy enough to pass positive feedback

about your business along to others, who may then try the product or service you

offer for themselves and in their turn become repeat customers.

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By maintaining good customer service, you will be keeping customers - which in the

long run is quicker, easier and cheaper then finding new ones!

Good customer service is much cheaper and far more effective

A satisfied customer that has purchased a product from you, or used your service

will tell friends and colleagues about their experience. Generally, happy customers

will recommend your business to others.

Good customer service is important as its easier and cheaper to keep existing

customers happy than to keep finding new ones.

every member of staff needs to take ownership of customer care and be proactive

when dealing with customers so that problems do not arise.

Marketing brings a customer in, customer service keeps them coming back.

Good customer service can be the difference between being able to compete andsurvive and failing.

customer service that builds customer loyalty, gives positive word-of-mouth

advertising, and increases sales in short, the good, better or even superior

customer service that consumers want.

Providing excellent customer service is one way a small business can distinguish

itself from the competition.

The essence of good customer service is forming a relationship with customers a

relationship that that individual customer feels that he would like to pursue.

Flexibility

Reliability

2. ROLEOFSERVICESINTHEECONOMY

Role of Services in an Economy

What is a service?

n An idea?

n A circumstance?

n A convenience?

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n A physical thing?

Goods vs. Services

n Good: tangible physical object; created and transfered; existence over time

n Service: intangible and perishable; created and used simultaneously; only theeffect has an existence over time

Book, restaurant, TV

Challenge to managers

n Identify appropriate techniques developed in manufacturing that are

applicable to service operations

n Initiate the innovative use of information systems

n Recognise the consumer as a productive resource

Service Definition

A Service is a Time-perishable, Intangible Experience Performed for a Customer

Acting in the Role of a Coproducer.

-- James Fitzsimmons

Definition of Service Firms

Service Enterprises are Organizations that Facilitate the Production and

Distribution of Goods, Support Other Firms in Meeting Their Goals, andAdd Value to

Our Personal Lives.

-- James Fitzsimmons

Taxonomy of services

n Domestic services

n Trade and Commerce

n Services that refine and extend human capacities

Role of Services in an Economy

GOVERNMENT SERVICES

Military

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Education

Judicial

Police and fire protection

BUSINESS SERVICES

Consulting

Auditing

Advertising

Waste disposal

MANUFACTURING

Services inside company:

Finance

Accounting

Legal

R&D and design

DISTRIBUTION SERVICES

Wholesaling

Retailing

Repairing

PERSONAL SERVICES

Healthcare

Restaurants

Hotels

CONSUMER

(Self-service)

INFRASTRUCTURE SERVICE

Communications

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Transportation

Utilities

Banking

FINANCIAL SERVICES

Financing

Leasing

Insurance

Stages of Economic Development

Features

==============================================================

==================================

Pre- Use of Standard

Dominant human Unit of of living

Society Game activity labor social life measure Structure

Technology

==============================================================

===================================

Pre- Against Agriculture Raw Extended Sub- RoutineSimple hand

Industrial Nature Mining muscle household sistence Traditional

tools

Power

Authoritative

==============================================================

=====================================

Industrial Against Goods Machine Individual Quantity Bureaucratic

Machines

fabricated production tending of goods

Hierarchical

nature

==============================================================

=====================================

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Post- Among Services Artistic Community Quality of Inter-

Information

Industrial Persons Creative life in terms

dependent

Intellectual of health, Global

Education,

Recreation

The New Experience Economy

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The Four Realms of an ExperienceThe Four Realms of an ExperienceThe Four

Realms of an Experience

Experience Design Principles

n Theme the Experience (Big Chefs)

n Harmonize Impressions with Positive Cues

n Eliminate Negative Cues

(Cinemark talking trash containers)

n Mix in Memorabilia (Hard Rock T-shirts)

n Engage all Five Senses (Mist in Rainforest)

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Source of Service Sector Growth

n Information Technology (e.g. Internet)

n InnovationPush theory (e.g. Post-it)

Pull theory

Services derived from products

Exploiting information (e.g. Auto part sales)

Difficulty of testing service prototypes

n Changing Demographics

Aging of the population

Two-income families

Urbanisation

Role of the Service Manager

n Entrepreneurial Innovation

n Capitalizing on Social Trends

n Management Challenges

Economies of Scale (MRI scanner)

Economies of Scope(Convenience store)Complexity (Yield Management)

Boundary Crossing (Bank vs Brokerage)

International Competitiveness( Cultural Diversity)

Services and Technology -

3.TECHNOLOGYINSERVICEENCOUNTER

Service encounters were viewed as person-to-person interactions. Now, in many contexts, technology

is replacing human providers and either giving customers an option of, or requiring, the use of self-service technologies. Technology is also being deployed to enhance the performance of the front line

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employee in interacting with the customer. In still other cases, technology is allowing introduction ofentirely new service innovations. Across all these situations, the infusion of technology is

dramatically altering the very essence of service encounters formerly anchored in a low tech, hightouch paradigm.

The objective of this research is to explore the changing nature of service encounters emanating from

the infusion of technology, with an emphasis on how service encounters can be improved throughtechnology. We examine the influence of technology on the ability of firms to effectively:

(1) customize service offerings;

(2) recover from service failure; and,(3) delight customers.

The role of technology infusion is examined as an enabler of both employees and customers in

creating satisfying service encounters across all three of these categories. Examples are featured andmanagerial and research implications highlighted.

IMPLEMENTING SUCCESSFUL SELF-SERVICE TECHNOLOGIES

As companies race to introduce technology that enables customers to get service on their own,

managers often find that it is more difficult than it looks to implement and manage effective self-

service technologies (SSTs). In this research, we present findings from qualitative interviews andsurvey research investigating SSTs from the customers point of view. Based on this research and our

work with companies, we present and develop insights around important lessons listed below toguide managers in developing successful SSTs.

Lesson 1: Be very clear on the strategic purpose of the SST.

Lesson 2: Maintain a Customer Focus.

Lesson 3: Actively promote the use of SSTs.Lesson 4: Prevent and Manage Failures.Lesson 5: Offer Choices.

Lesson 6: Be prepared for constant updating and continuous improvement.

Descriptions of technologically based service encounters were collected from over 800 customers.

Results indicate that the determinants of satisfaction or dissatisfaction with SSTs are quite different

from factors that determine satisfaction or dissatisfaction in interpersonal encounters. Satisfactoryencounters result primarily from the customers delight at being able to solve an immediate need,

fascination with being able to conduct transactions electronically, or being able to do something moreeasily and conveniently. On the other hand, all dissatisfactory encounters resulted from some type of

service failure, either with the technology itself, the design of the technology, the resulting serviceprocess, or occasionally from the customers own mistake.

As expected, satisfactory encounters lead to significantly greater occurrence of

positive word of mouth and repeat purchases, and less complaining than

dissatisfactory encounters. It was also determined that customers found certain

types of failures (design of the technology or service process) to be more

unforgivable than other more temporary failures such as an out of order SST.

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This research examines the issue of employee behaviors and motivation with regard torecommending a new SST to end customers. Over 300 sales and service employees in dealerships of

a major manufacturer were surveyed to assess their motivation for recommending a new consumerSST that allows online scheduling of service appointments and tracking of service status by end

customers. Conclusions from the study suggest that:

Employees who have more positive beliefs & feelings about the new SST will be more likelyto recommend it.

Employees are more motivated when they feel they are competent to recommend thetechnology and when they feel free to decide to recommend it.

Employee competence and freedom of choice, and thereby motivation and ultimaterecommending behaviors, are increased through:

o Creating a sense of the importance of the strategic SST initiative and buy-in

throughout the organization.

o Increasing management and co-worker support of the SST initiative.

o Having managers clearly expect, or even require, that employees recommend the SST

to customers.o Training and re-training all managers and employees to use the SST themselves.

o Promoting and advertising the SST internally to employees as well as externally to

customers.

An overall conclusion from the study is the need for organizations to implement

an internal marketing and employee roll out plan for new SSTs in addition to the

more common customer advertising and customer roll out plans.

OR

A service encounter may be described as the direct or indirect interaction between

a service provider (i.e., a firm) and its customer.

The availability and use of appropriate technologies govern the success of a service

encounter. An examination of the role of OT is therefore essential to the

comprehensive understanding of the service encounter. Recent efforts (e.g., Mills

and Moberg, 1990; Quinn and Paquette, 1990) have provided a first attempt at

understanding the role of OT in service encounters. Findings suggest that the

customer is often not just a passive recipient of the service, but an active

participant in the service production process. In fact, in most service encounters

(from a simple tax return preparation to something as complex as psychoanalytic

therapy), the active participation of the customer is not just helpful, but rather an

essential necessity. In general, as customer involvement increases, so does the

complexity of a given service encounter.

The firm's inability to adequately control the extent of customer participation has

prompted researchers to treat the customer as an uncertainty faced by a firm.

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Contemporary investigations have accepted the existence of this uncertainty and

have focused on how firms can best manage and control the encounter

Others have suggested the use of appropriate governance structures that match

the nature of the service (e.g., Jones, 1990). A common thread in these arguments

is the need for the firm to focus on the difficult task of managing the customer. Theactive role that the customer plays in service encounters makes this task even more

critical for the firm. Therefore, any attempt at understanding OT in service

encounters must account for the active and often unpredictable involvement of the

customer during the encounter.

The article hopes to make several academic and managerial contributions. First, it

extends the research on the co-alignment of customer and firm in service

encounters. Next, it provides a framework for investigating technologies as they

enter the service encounter. This is particularly relevant since the customer is a

provider of technological inputs. Third, to understand the role of OT in service

encounters researchers need to define the broad constructs at a lower level ofabstraction than the words denoting the construct

The article is organized in three sections. The first section of the article sets the

stage for framework development by describing the two primary constructs (i.e.,

service encounters, and OT). Next, the conceptual framework for viewing OT in

service encounters is developed. The conclusions section of the article includes a

discussion on the implications and usefulness of the proposed model.

PRIMARY CONSTRUCTS

Two streams of research have directly influenced the theory development process proposed inthis article --research on service encounters and that on OT. These two areas offer rich sources of

information for the necessary rationale and support of the framework developed in this paper.This section contains a brief discussion of the relevant research on service encounters and OT.

The Service Encounter

There is increasing agreement among researchers on the basic form and definition of a service.

This consensus has stemmed from an agreement on the unique and distinctive characteristics of aservice (e.g., Gronroos, 1983; Lovelock, 1981; Norman, 1984; Uhl and Upah, 1983; Zeithaml et

al., 1985). The unique characteristics of a service dictate the structure and the conduct of the

service encounter. A review of commonly accepted definitions suggests two uniquecharacteristics of service encounters. First, both the customer and the firm have key roles to play

in the service encounter. Scholars in management and marketing (e.g., Bowen, 1990;Jones, 1990;

Gronroos, 1990) have noted that service encounters call for a high level of coordination between

the customer and the firm. The interaction between the customer and the firm results in thesharing and/or use of resources held by the firm and by the customer. Since technology is a

resource that the customer can contribute to the service encounter, researchers must study, (1) the

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complimentary roles of the firm and the customer as contributors of technology in a service

encounter, and (2) the process of assembling appropriate technological resources.

The second characteristic noted in the literature is the dynamic interaction between the two keyparticipants (the customer and the firm) in a service encounter. Researchers have consistently

noted that the customer is not a passive participant in the resource transformation process.Bowen (1986) suggests that the customer should be considered an active participant in the

resource transformation process. Mills, Chase and Margulies (1983) have suggested that thecustomer's willingness to participate in the transaction depends on the expected value of that

outcome. Similar sentiments are expressed by Czepiel (1990), and Larsson and Bowen (1989).

Thus, understanding the role of both the customer and the firm in combining technologies duringthe transformation process is the second issue that must be explored when developing a

framework for OT in service encounters.

OR

The value of technology in service encounters

To gain competitive advantage in the market, several retail banks have recently started to deploybiometric technologies in their service encounters. Biometrics is an emerging technology that

authenticates individuals using their unique physical characteristics. While the application of

biometrics is expected to increase security of a certain physical or logical area, this newtechnology seems to engender various consumer concerns.

This study aimed to understand consumers' value perception of using biometric technology, in

particular fingerprint recognition technology at ATMs. Following the utilitarian approach to

define consumers' value, perceived benefit and perceived risk were measured as a "get"component and a "give" component, respectively. The levels of trust in a bank and personal

innovativeness were also measured as constructs that may influence individuals' value judgment

of using the new technology.

The perceived benefit and the perceived risk were hypothesized as multi-dimensional constructsand measured by formative indicators. Specific dimensions of those two molar constructs were

determined based on informal personal interviews as well as reviews of extant literature. To

validate the research model of this study, an empirical study was conducted with an Internetsurvey. Customers' e-mail addresses were randomly selected from the database of the bank that

deployed fingerprint recognition technology for its ATMs.

Understanding what attracts or inhibits consumers from using such a new

technology-embedded service would enable businesses to evaluate the

technology from their customers' perspectives and develop effective

marketing strategies. This study concludes with discussion on the use of

formative and reflective indicators, limitation, and direction for future

research.

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4.AUTOMATIONINSERVICES

Automation Service is the World's largest remanufacturer

of process controls. Our major brands include:

Rosemount, Fisher, Foxboro, Honeywell and Moore

products

Automation Service is a leading remanufacturer of electronic transmitters, diaphragm seals and

capillary systems, pneumatic transmitters, electronic controllers, recorders, indicators andauxiliary stations, butterfly valves, rotary valves, sliding stem valves, pneumatic controllers,

recorders, indicators and auxiliary stations, valve positioners, transducers, and magnetic flow

systems. Primary industries served include pulp & paper, petro-chemical, chemical, petroleum,utility and water & wastewater industries. Automation Service also offers the most extensive

process controls recycling program in the world.

Automation Service remanufactures or reconditions equipment originally manufactured by

Fisher Controls and Rosemount and is not a representative, distributor, agent, affiliate, or factoryauthorized repair center for Fisher Controls and Rosemount. Specifications and certification

marks applied by the orignial manufacturer may no longer apply.

http://www.automationservice.com/LinkClick.aspx?link=75&tabid=36http://67.199.57.202/Products/FisherControls/tabid/76/Default.aspxhttp://67.199.57.202/Products/Foxboro/tabid/77/Default.aspxhttp://67.199.57.202/Products/Honeywell/tabid/79/Default.aspxhttp://67.199.57.202/Products/Honeywell/tabid/79/Default.aspxhttp://67.199.57.202/Products/MooreProducts/tabid/78/Default.aspxhttp://www.automationservice.com/LinkClick.aspx?link=75&tabid=36http://67.199.57.202/Products/FisherControls/tabid/76/Default.aspxhttp://67.199.57.202/Products/Foxboro/tabid/77/Default.aspxhttp://67.199.57.202/Products/Honeywell/tabid/79/Default.aspxhttp://67.199.57.202/Products/MooreProducts/tabid/78/Default.aspx

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automation in services

Internet services

Internet Services is the embedded HTTP server application that is available on a

network enabled Document Centre (DC 220/230/332/340). Internet Services

enables you to access printing, faxing and scanning features of the Document

Centre, as well as view device status, perform queue management and perform

device management, over the internet.

Using a browser application, such as Netscape Navigator or Microsoft Internet

Explorer, you can access any Document Centre on a network using the TCP/IP

protocol. By entering the Document Centres IP address as the URL in the

browser, you have access to the Document Centre 220/230/332/340 for scanning,

printing, faxing, performing device management and many other functions you

would normally have to execute at the Document Centre control panel.

FEATURES

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Internet Services gives users access to the Document Centre 220/230/332/340

printing, faxing and scanning control panel features over the internet.

Additionally, many system administration tasks can be performed without the use

of native network utilities, allowing faster and easier set up of the Document

Centre 220/230/332/340.

The features that are described in this section correspond to the tabs that areavailable within the Internet Services interface.

The following features are available with Internet Services:

Services

Queue

Status

Properties

Maintenance

Assistance

SERVICES FEATURES

There are three primary areas within Services that are available for general users

encompassing Job Submission and Stored Templates selections:

Scanningoffers the functionality of scanning a paper document into electronic

format. Scan options, such as scanning to a specified repository or

manipulating templates, allow customisation of scan jobs. Scanning with

Internet Services is a component of other scanning capabilities provided with

the Document Centre 220/230/332/340 ST.

Printingoffers the high-speed, high-quality, laser printer functionality of the

Document Centre 220/230/332/340. Print ready files can be submitted for

printing from the Internet Services user interface. Print options, such asnumber of copies, collation and paper specifications, allow flexible choices for

print jobs.

Faxingoptionally offers the functionality of a fax machine. If faxing is

configured and available on the Document Centre, files can be submitted for

faxing from a workstation. Fax options, such as delayed fax and recipient

phone number list, provide preferences for fax jobs.

PROPERTIES FEATURES

Many system options can be set using Internet Services. The Properties feature

includes options for system administrators:

Modify the system default template that defines how to file, fax, or distribute a

scanned document.

Select a Template Pool for scanning use.

Modify PCL (font information, form length) or PostScript (error sheet)

emulation settings.

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Modify connectivity settings that are used by the Document Centre 220/230/

332/340.

Select public and private repositories for scanning.

Define job defaults for print, fax, or scan jobs that do not requirecustomisation.

Define attributes, such as filing policy and confirmation sheet, for stored

templates.

Obtain device information, such as device profile, fault history, support

contacts and billing meters.

SETTING UP INTERNET SERVICES

GENERAL SETUP

General setup consists of configuring your Document Centre with TCP/IP,

configuring your browser to use Internet Services and then accessing a Document

Centre over the internet.

STEP 1. CONFIGURE THE DOCUMENT CENTRE

NOTE: For complete information on the installation and setup of Internet

Services and Scanning Services with the DC 220/230/332/340 ST, see theXerox

Document Centre 220/230/332/340 ST or 230 LP System Administration Guide.

To setup a Document Centre for internet access:

1. Configure an IP address for the Document Centre on your network.

2. Setup the embedded HTTP server.

STEP 2. SETTING UP THE INTERNET BROWSER

Internet Services can be used on any system that has an internet browser.

Microsoft Internet Explorer 4.x or later, or Netscape Navigator 3.x or later arerecommended. Other browsers may work but could produce unexpected results.

Internet Browser Configuration

If any problems are encountered using Internet Services, check the following

internet browser settings have been correctly configured.

1. The internet browser should be configured to run Java programs.

2. The internet browser should also be configured with caching disabled.

The procedures to configure these settings vary on different browsers - see the

internet browser on-line help or documentation for assistance.

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STEP 3. ACCESS INTERNET SERVICES

To access the Document Centre using Internet Services:

Type the Document Centres IP address in your browsers URL location field.

TIP: Once you have accessed the embedded HTTP server, you can designate it as

a bookmark in your browser, then directly access it simply by clicking this bookmark.

Scanning with Internet Services provides the following options:

printing your electronic document using Print Service options faxing your electronic document using Fax Service options

specifying a scanning template

scan to public or private repository

On the Services, Job Submission page, printing with Internet Services provides

the following output options:

number of copies to print collation

duplexing (2-sided)

stapling (if Document Centre has a Finisher configured)

input paper tray

output destination

paper size, type, color

file format

The table below lists the common buttons that are available on many of the pages

and frames. Some of them match the look of the actual button on the Document

Centre control panel.

Button ActionInternet Services ButtonsApply (new settings, settings)Apply changes.

Cancel Exit the page without updating.

Device IndexAccess Internet Services index for the Document Centre.

Help Access Internet Services help system.

Print/Fax SubmissionSubmits a job for printing or faxing.

Refresh (status, now, latest values, jobs) Update the page with the new information.

Restore SettingsReturn the settings to their last saved values.

Restore Default ValuesReturn the settings to their default values.

Browse Access network or local directory paths. Note that the Browse buttons do notappear if you are using Internet Explorer version 3.0 or less.

Device HomeAccess the Document Centre home page.

QueueRefresh job listing.

WHAT YOU CAN DO WITH INTERNET SERVICES

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This section discusses the different tasks that users and system administrators can

perform using Internet Services.

SUBMITTING A JOB

Print-ready (PCL, PostScript, or ASCII) files can be submitted for printing or

faxing directly from Internet Services to the Document Centre.

NOTE: Existing preformatted jobs do not take priority over options that are seton the Job Submission page.

To submit files for processing to the Document Centre:

1. Access the Document Centre embedded HTTP server.

2. ClickServices.

3. Click the Job Submission radio button to display the Job Attributes. Perform

the following if these options are not already set according to your jobrequirements:

Type in the number of copies needed.

Select other options, such as finishing options, for your job from the dropdown lists.

4. Type the path and file name or clickBrowse (if available) to locate the file to process.

5. When finished with your selections, click the submission button to process your job.

NOTE: It is recommended that print files should not be larger than 6 MB.

ORBasic network types

System area network (SAN)

same room (meters)

300 MB/s Cray T3E

Local area network (LAN)

same bldg or campus (kilometers)

10 Mb/sEthernet

100 Mb/s Fast Ethernet

100 Mb/s FDDI

150 Mb/s OC-3 ATM

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622 Mb/s OC-12 ATM

Metropolitan area network (MAN)

same city (10s of kilometers)

800 Mb/s Gigabit Nectar

Wide area network (WAN)

nationwide or worldwide (1000s of kilometers)

telephone system

1.544 Mb/s T1 carrier

44.736 Mb/s T3 carrier

Global Internet

The internetworking idea (Kahn, 1972)

Build a single network (an interconnected set of networks, or

internetwork, or internet) out of a large collection of separate

networks.

Each network must stand on its own, with no internal changes

allowed to connect to the internet.

Communications should be on a best-effort basis.

black boxes (later called routers) should be used to connect

the networks.

No global control at the operations level.

Internetworking challenges

Challenges:

heterogeneity

lots of different kinds of networks (Ethernet, FDDI, ATM,

wireless, point-to-point)

how to unify this hodgepodge?

scale

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how to provide uniques names for potentially billions of

nodes? (naming)

how to find all these nodes? (forwarding and routing)

Note: internetrefers to a general idea, Internetrefers to a

particular implementation of that idea (The global IP Internet).

Internetworking with repeaters: Pros and cons

Pros

Transparency

LANS can be connected without any awareness from the

hosts.

Useful for serving multiple machines in an office from one

ethernet outlet.

Cons

Not scalable

ethernet standard allows only 4 repeaters.

more than 4 would introduce delays that would break

contention detection.

No heterogeneity

Networks connected with repeaters must have identical

electrical properties.

Internetworking with bridges: Pros and cons

Pros

Transparency

LANS can be connected without any awareness from the

hosts

popular solution for campus-size networks

Cons

Transparency can be misleading

looks like a single Ethernet segment, but really isnt

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packets can be dropped, latencies vary

Homogeneity

can only support networks with identical frame headers

(e.g., Ethernet/FDDI)

however, can connect different speed Ethernets

Scalability

tens of networks only

bridges forward all broadcast frames

increased latency

Internetworking with routers

Def: An internetwork(internet for short) is an arbitrary

collection ofphysical networks interconnected by routers to

provide some sort of host-to-host packet delivery service.

Building an internet

We start with two separate, unconnected computer networks

(subnets),

which are at different locations, and possibly built by different

vendors.

Next we physically connect one of the computers, called a

router

to each of the networks.

Finally, we run a software implementation of the Internet

Protocol (IP)

on each host and router. IP provides a global name space for

the hosts, routing messages between network1 and network 2

if necessary.

At this point we have an internet consisting of 6 computers

built from

2 original networks. Each computer on our internet can

communicate

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with any other computer. IP provides the illusion that there is

just

one network.

IP: Internetworking with routers

IP is the most successful protocol ever developed

Keys to success:

simple enough to implement on top of any physical network

e.g., two tin cans and a string.

rich enough to serve as the base for implementations of more

complicated protocols and applications.

The IP designers never dreamed of something like theWeb.

rough consensus and working code

resulted in solid implementable specs.

Basic Internet componentsAn Internet backbone is a collection of routers (nationwide or

worldwide) connected by high-speed point-to-point networks.

A Network Access Point (NAP) is a router that connects

multiple backbones (sometimes referred to aspeers).

Regional networks are smaller backbones that cover smaller

geographical areas (e.g., cities or states)

Apoint of presence (POP) is a machine that is connected to the

Internet.

Internet Service Providers (ISPs) provide dial-up or direct

access to POPs.

The Internet circa 1993

In 1993, the Internet consisted of one backbone (NSFNET) that

connected 13 sites via 45 Mbs T3 links.

Merit (Univ of Mich), NCSA (Illinois), Cornell Theory Center,

Pittsburgh Supercomputing Center, San Diego Supercomputing

Center, John von Neumann Center (Princeton), BARRNet (Palo

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Alto), MidNet (Lincoln, NE), WestNet (Salt Lake City),

NorthwestNet (Seattle), SESQUINET (Rice), SURANET (Georgia

Tech).

Connecting to the Internet involved connecting one of your

routers to a router at a backbone site, or to a regional networkthat was already connected to the backbone.

5. DISTINCTIONSBETWEEN SERVICESAND GOODSOne of the most basic ideas in economics is goods and services. More than

anything else, money is spent on goods and services. It helps to know the difference

between two.

A good is something that you can use or consume, like food or CDs or books or a car or clothes.

You buy a good with the idea that you will use it, either just once or over and over again.

A service is something that someone does for you, like give you a haircut or fix you dinner oreven teach you social studies. You don't really get something solid, like a book or a CD, but you

do get something that you need.

The basic difference is that a good is something you can hold in your hand (unless it's somethingbig, like a car or a house).

Now, a service can also contain a good. Someone who fixes you dinner gives you food, which

was bought. In this example, the food is the good and the person's fixing it for you is the service.

In the same way, your teacher gives you a service by teaching you social studies. He or she also

gives you a good by giving you a textbook.

Your teacher teaching you social studies is a good example of a service that you personally don't

pay for. (Your family might pay for it, but you don't.)

And not all services are economic, either. A service can be as simple as reading a book to

someone. This kind of activity doesn't cost anything, but it is something that one person did foranother.

A good doesn't have to cost anything, either. If you give your friend a book or a CD, then you

given that friend a good, since we have already defined books and CDs as goods. Your friend

didn't give you any money for the good. But you didn't really do something for your friend,either; you just gave your friend something he or she could hold or touch.

Remember, the one thing that sets goods and services apart is the ability to touch them. You can

touch a good, but you can't touch a service. You can touch the result of a service but not the

service itself.

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OR

1. Goods are tangible, and transferable while the services are intangible and

non transferable.

2. Goods are separable, and non - perishable while services are inseparable.3. Goods are homogeneous while services are heterogeneous

A good is a tangible object used either once or repeatedly. A service is intangible.

The tangibility differentiator indicates the ability to touch, smell, taste and see

which is absent in services. This can be a deterrent to the service receiver to gauge

the quality and dependant on the service company reputation. In the case of goods

the ownership of the product is transferable from sellers to buyers, whereas in

services there is no ownership involved.

On the quality front, with goods it is homogeneous, once produced the quality is

uniform across all line of products. They can be separated from the seller/ provider

and not dependant on the source for its delivery to the purchaser. With regard to

service it is inseparable from the service provider and heterogeneous, where each

time the service is offered it may vary in quality, output, and delivery. It cannot be

controlled and is dependant on the human effort in achieving that quality hence is

variable from producer, customer and daily basis.

Another key distinction is perishability of services and the non perishability of

goods. Goods will have a long storage life and are mostly non perishable. Whereas

services are delivered at that moment and do not have a long life or cannot bestored for repeat use. They do not bear the advantage of shelf life as in the case of

goods like empty seats in airlines. With the production and consumption taking

place simultaneously in services, it differs from goods on simultaneity and the

provisions for quality control in the process.

6.SERVICES MARKETING MIX

Service marketing mix means

Seven P's: 4 P's of a tangiblegood (price, presentation, place, and Promotion) plus 3

P's of an intangibleserviceparticipants, physical evidence, and process (of service

assembly).

The service marketing mix comprises off the 7ps. These include:

Product

Price

http://www.businessdictionary.com/definition/seven-P-s.htmlhttp://www.businessdictionary.com/definition/tangible.htmlhttp://www.businessdictionary.com/definition/good.htmlhttp://www.businessdictionary.com/definition/labor-rate-price-variance.htmlhttp://www.businessdictionary.com/definition/presentation.htmlhttp://www.businessdictionary.com/definition/promotion.htmlhttp://www.businessdictionary.com/definition/intangible.htmlhttp://www.businessdictionary.com/definition/final-good-service.htmlhttp://www.businessdictionary.com/definition/participant.htmlhttp://www.businessdictionary.com/definition/evidence.htmlhttp://www.businessdictionary.com/definition/process.htmlhttp://www.businessdictionary.com/definition/assembly.htmlhttp://www.businessdictionary.com/definition/seven-P-s.htmlhttp://www.businessdictionary.com/definition/tangible.htmlhttp://www.businessdictionary.com/definition/good.htmlhttp://www.businessdictionary.com/definition/labor-rate-price-variance.htmlhttp://www.businessdictionary.com/definition/presentation.htmlhttp://www.businessdictionary.com/definition/promotion.htmlhttp://www.businessdictionary.com/definition/intangible.htmlhttp://www.businessdictionary.com/definition/final-good-service.htmlhttp://www.businessdictionary.com/definition/participant.htmlhttp://www.businessdictionary.com/definition/evidence.htmlhttp://www.businessdictionary.com/definition/process.htmlhttp://www.businessdictionary.com/definition/assembly.html

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Place

Promotion

People

Process

Physical evidence.

7 Ps of Services Marketing

Marketing services is different from marketing goods, and the marketing tools and practices

developed for goods marketing are often not directly transferable to the marketing of services.There are several major differences, including:

The buyer purchases are intangible

The service may be based on the reputation of a single person

It's more difficult to compare the quality of similar services

The buyer cannot return the service

4 P's product promoation placement and price The differences have resulted in a divergence in the education of services marketing

versus regular marketing. Apart from the traditional "4 P's," Product, Price, Place,

Promotion, there are three additional "P's" consisting of People, Physical

evidence, and Process.

Product refers to the creation of a service concept that will offer value to target

customers and satisfy their needs better than competing alternatives. This consists of a

core product that responds to the customer primary need and an array of supplementaryservice elements that are mutually reinforcing value-added enhancements that help

customers to use the core product more effectively.

Place and time may involve physical or electronic channels such as banks now offercustomers a choice of distribution channels including visiting a branch, using a network

of ATMS, doing business by phone or conducting them over the Internet.

Price and other user outlays are crucial as well. To determine if a particular service is

worth it, customers go beyond monetary considerations and assess the outlays of theirtime and effort. Thus, service marketers must set prices that target customers are willing

and able to pay and minimize other burdensome outlays that are incurred. These may

include additional monetary expense in traveling, time expenditures, unwanted mentaland physical effort and exposure to negative sensory experiences.

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Promotion in services marketing is also educational in nature, especially for new

customers. Suppliers need to teach these customers about the benefits of the service,where and when to obtain it, and how to participate in service processes to get the best

results. This can be delivered via individuals such as salespeople, at websites, on displayscreens in self-service equipment and through a variety of advertising media.

The process of delivering the service is very often as important as the function of theservice. Operational inputs and outputs can vary widely due to the lack of inventory and

real time interaction involved. Nonetheless, variability can be reduced through careful

design of the customer service process, adopting standardized procedures, implementingrigorous management of service quality, high standards of training, and automation.

Furthermore, customers are often involved in co-production as partial employees through

self-service, telecommunications and the Internet.

Physical environment includes the appearance of buildings, landscaping, vehicles,

interior furnishing, equipment, uniforms, signs, printed materials and other visible cues

that provide evidence of service quality, facility service delivery and guide customers

through the service process. This can also be referred to as the servicescape which canhave a profound impact on customer satisfaction and service productivity.

People refer to the human capital of the firm, i.e. the employees. These individuals

should possess the required technical skills, good interpersonal skills and positive

attitudes that can become a key competitive advantage for the firm.

CHARACTERISTICSOFA SERVICE

What exactly are the characteristics of a service? How are services different from a

product? In fact many organisations do have service elements to the product they sell, forexample McDonalds sell physical products i.e. burgers but consumers are also

concerned about the quality and speed of service, are staff cheerful and welcoming anddo they serve with a smile on their face?

There are five characteristics to a service which will be discussed below.

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1. Lack of ownership. You cannot own and store a service like you can a product. Services are used or hired for

a period of time. For example when buying a ticket to the USA the service lasts maybe 9

hours each way , but consumers want and expect excellent service for that time. Because

you can measure the duration of the service consumers become more demanding of it.

2. Intangibility You cannot hold or touch a service unlike a product. In saying that although services are

intangible the experience consumers obtain from the service has an impact on how they

will perceive it. What do consumers perceive from customer service? the location, and

the inner presentation of where they are purchasing the service?.

3. Inseparability Services cannot be separated from the service providers. A product when produced can

be taken away from the producer. However a service is produced at or near the point ofpurchase. Take visiting a restaurant, you order your meal, the waiting and delivery of the

meal, the service provided by the waiter/ress is all apart of the service production process

and is inseparable, the staff in a restaurant are as apart of the process as well as thequality of food provided.

4. Perishibility Services last a specific time and cannot be stored like a product for later use. If travelling

by train, coach or air the service will only last the duration of the journey. The service is

developed and used almost simultaneously. Again because of this time constraint

consumers demand more.

5. Heterogeneity It is very difficult to make each service experience identical. If travelling by plane the

service quality may differ from the first time you travelled by that airline to the second,because the airhostess is more or less experienced.

A concert performed by a group on two nights may differ in slight ways because it is very

difficult to standardise every dance move. Generally systems and procedures are put intoplace to make sure the service provided is consistent all the time, training in service

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organisations is essential for this, however in saying this there will always be subtle

differences.

Services marketing is a form of marketing which focuses on selling services.

Services can be tricky to sell and the marketing approach for them is much different

than the approach for products. Some companies offer both products and services

and must use a mixture of styles; for example, a store which sells computers also

tends to offer services such as helping people select computers and providing

computer repair. Such a store must market both its products and the supporting

services it offers to appeal to customers.

6.CUSTOMER BEHAVIOURIN SERVICE ENCOUNTER:

Four Categories of Services

1. DirectCaring for or providing for others face-to-face whoare different in age/experience.

Examples

Tutoring children

Reading to the elderly Serving as a mentor or buddy

Working with animals/shelters

IndirectDoing something tocare for thecommunity, agroup ortheenvironment as awhole; often donewith a partner orgroup.

Examples

River/roadside clean up

Donation programs for the homeless or poor

Stocking a food pantry

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3.Advocacy Creating awareness or promoting action on an issueof public interest.

Examples

Letter writing campaign

Sponsoring a public meeting on an issue

Public speaking

Performing a play on an issue

4. ResearchFinding, gathering, and reporting on information inthe public interest.

Examples

Conducting surveys on issues related to public

safety, school, the environment, etc.

Testing water or soil samples for pollution

Differences among Services Affect Customer Behavior

Consumers are rarely involved in the manufacture of goods butoften participate in

service creation and delivery

Challenge for service marketers is to understand how customersinteract with

service operations

Based on differences in nature of service act (tangible/intangible)and who or what

is direct recipient of service(people/possessions), there are four categories of

services:

People processing

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Possession processing

Mental stimulus processing

Information processing

Who or What Is the Direct Recipient of the Service?

Nature of the Service Act People Possessions

Tangible Actions People processing

(services directed at peoples bodies): People

processing

(services

Is the Direct Recipient of the Service?

Who or What Is the Direct Recipient of the Service?

Nature of the Service Act People

Possessions

.

Tangible Actions People processingPossession processing

.

(services directed at(services directed at

peoples bodies):physical possessions):

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Barbers

Refueling

Health careDisposal/recycle

..................... Intangible ActionsMental stimulus Information processing

processing

(services directed at(services directed at

peoples minds):intangible assets):

EducationAccounting

Advertising/PRBanking

..

People Processing

Customers must:

Physically enter the service factory

Co-operate actively with the service operation

Managers should think about process and output from customers perspective

To identify benefits created and non-financial costs:

Time, mental, physical effort

Possession Processing

Customers are less physically involved compared to people processing services

Involvement is limited

Production and consumption are separable

Mental Stimulus Processing

Ethical standards required when customers who depend on such services canpotentially be manipulated by suppliers

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Physical presence of recipients not required

Core content of services is information-based

Can be inventoried

Information Processing

Information is the most intangible form of service output

But may be transformed into enduring forms of service output

Line between information processing and mental stimulus processing may beblurred.

Customer Decision Making

Three-Stage Model of Service Consumption

The Purchase Process for Services

1.Prepurchase Stage

2.Service Encounter Stage

3.Post-Encounter Stage

Pre-purchase Stage

Customers seek solutions to aroused needs

Evaluating a service may be difficult

Uncertainty about outcomes increases perceived risk

What risk reduction strategies can service suppliers develop?

Understanding customers service expectations

Components of customer expectations

Making a service purchase decision

Customers Seek Solutions to Aroused Needs

People buy goods and services to meet specific needs/wants

External sources may stimulate the awareness of a need

Companies may seek opportunities by monitoring consumer attitudes and behavior

Evaluating a Service May Be Difficult

Search attributes help customers evaluate a product before purchase

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Style, color, texture, taste, sound

Experience attributes cannot be evaluated before purchasemust experienceproduct to know it

Vacations, sporting events, medical procedures

Credence attributes are product characteristics that customers find impossible toevaluate confidently even after purchase and consumption

Quality of repair and maintenance work

Perceived Risks in Purchasing and Using Services

Functionalunsatisfactory performance outcomes

Financialmonetary loss, unexpected extra costs

Temporalwasted time, delays leading to problems

Physicalpersonal injury, damage to possessions

Psychologicalfears and negative emotions

Socialhow others may think and react

Sensoryunwanted impact on any of five senses

How Might Consumers Handle Perceived Risk?

Seeking information from respected personal sources

Relying on a firm that has a good reputation

Looking for guarantees and warranties

Visiting service facilities or trying aspects of service before purchasing

Asking knowledgeable employees about competing services

Examining tangible cues or other physical evidence

Using the Internet to compare service offerings and search for independent reviewsand ratings

Strategic Responses to Managing Customer Perceptions of Risk

Offer performance warranties, guarantees to protect against fears of monetary loss

For products where customers worry about performance, sensory risks:

Offer previews, free trials (provides experience)

Advertising (helps to visualize)

For products where customers perceive physical or psychological risks:

Institute visible safety procedures

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Deliver automated messages about anticipated problems

Websites offering FAQs and more detailed background

Train staff members to be respectful and empathetic

Understanding Customers Service Expectations

Customers evaluate service quality by comparing what they expect against whatthey perceive

Situational and personal factors also considered

Expectations of good service vary from one business to another, and amongdifferently positioned service providers in the same industry

Expectations change over time

Example: Service Perspectives 2.1

Parents wish to participate in decisions relating to their childrens medical treatment

for heart problems

Media coverage, education, the Internet has made this possible

Components of Customer Expectations

Desired Service Level:

Wished-for level of service quality that customer believes can and should be delivered

Adequate Service Level:

Minimum acceptable level of service

Predicted Service Level:

Service level that customer believes firm will actually deliver

Zone of Tolerance:

Range within which customers are willing to accept variations in service delivery

Factors Influencing Customer Expectations of Service

Personal Needs Desired Service

Beliefs about what is possible Desired Service

Perceived Service alterationsAdequate Service

Situational FactorsAdequate Service

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Service Encounter Stage

Service encounters range from high- to low-contact

Understanding the servuction system

Service marketing systems: high-contact and low-contact

Role and script theories

Theater as a metaphor for service delivery: An integrative perspective

Implications for customer participation in service creation and delivery

Distinctions between High-Contact and Low-Contact Services

High-Contact Services

Customers visit service facility and remain throughout service delivery

Active contact between customers and service personnel

Includes most people-processing services

Low-Contact Services

Little or no physical contact with service personnel

Contact usually at arms length through electronic or physical distribution channels

New technologies (e.g. the Web) help reduce contact level

Medium-Contact Services Lie in between These Two

The Servuction System: Service Production and Delivery

Service Operations (front stage and backstage)

Where inputs are processed and service elements created

Includes facilities, equipment, and personnel

Service Delivery (front stage)

Where final assembly of service elements takes place and service is delivered tocustomers

Includes customer interactions with operations and other customers

Service Marketing (front stage)

Includes service delivery (as above) and all other contacts between service firm andcustomers

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Service Marketing System for a High-Contact Service

SERVICE MARKETING SYSTEM

Service Delivery

System Other Contact Points

Service Operations System Other CustomersAdvertising

Sales Calls

Interior & Exterior

Market Research Surveys

Technical Facilities The Customer

=====Billing/Statements

Core EquipmentMisc. Mail, Phone Calls

E-mails, Faxes, etc.

Service People

Website

Random Exposure to

Facilities/Vehicles

Back Stage Front StageChance Encounters with

( Invisible ) ( Visible ) Other Customers

Service Personnel

Word of Mouth

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Theater as a Metaphor for Service Delivery

All the worlds a stage and all the men and women merely players. They have their exits

and their entrances and each man in his time plays many parts

Theatrical Metaphor: Service dramas unfold on a stagesettings may change as

performance unfolds

Many service dramas are tightly scripted, others improvised

Front-stage personnel are like members of a cast

Like actors, employees have roles, may wear special costumes, speak required

lines, behave in specific ways

Support comes from a backstage production team

Customers are the audiencedepending on type of performance, may be passive or

active participants

An Integrative Perspective

Implications for customer participation in service creation and delivery

Greater need for information/training to help customers to perform well, get

desired results

Customers should be given a realistic service preview in advance of servicedelivery, so they have a clear picture of their expected role

Post-Encounter Stage

Evaluation of service performance

Future intentions

Customer Satisfaction Is Central to the Marketing Concept

Satisfaction defined as attitude-like judgment following a service purchase or series

of service interactions

Customers have expectations prior to consumption, observe service performance,

compare it to expectations

Satisfaction judgments are based on this comparison

Positive disconfirmation if better than expected

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Confirmation if same as expected

Negative disconfirmation if worse than expected

Satisfaction reflects perceived service quality, price/quality tradeoffs, personal and

situational factors

Research shows links between customer satisfaction and a firms financial

performance

Customer Delight: Going Beyond Satisfaction

Research shows that delight is a function of three components:

Unexpectedly high levels of performance

Arousal (e.g., surprise, excitement)

Positive affect (e.g., pleasure, joy, or happiness)

Is it possible for customers to be delighted by very mundane services?

Strategic links exist between customer satisfaction and corporate performance.

Getting feedback during service delivery help to boost customer loyalty

Progressive Insurance seeks to delight customers through exceptional customer

service (Best Practice in Action 2.1)

SUMMARYOF CHAPTER: CUSTOMER BEHAVIORIN SERVICE ENCOUNTERS

Four broad categories of services

People processing, possession processing, mental stimulus processing,

information processing

Based on differences in nature of service act (tangible or intangible), and

who or what is direct recipient of service (people or possessions)

Each poses distinctive service management challenges

Three-Stage Model of service consumption helps us to understand and better

manage customer behavior

Prepurchase stage

Customers seek solutions to aroused needs

Evaluation alternatives are more difficult when a service involves experience

and credence attributes

Customers face a variety of perceived risks in selecting, purchasing and

using services

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Steps taken to reduce customers risk perceptions, include: (1) guarantees

and warranties, (2) previews of service and visits to service facilities, (3)

employee training, (4) instituting visible safety procedures, (5) easy access

to information, and (6) advance notice of problems or delays

Customer expectations of service range from desired to adequate with a

zone of tolerance in between; if actual service is perceived as less thanadequate, customers will be dissatisfied

Service encounter stage

Service encounters range from high contact to low contact

Servuction system differs by level of contact:

High-contact services: Most parts of operations, service delivery, and

marketing systems are exposed to customers

Low-contact services: Some parts of systems are invisible to

customers

Role and script theories help us understand and manage customer behavior

during encounters

Theatrical view of service delivery offers insights for design, stage-managing

performances, and relationships with customer audience

Post-encounter stage

In evaluating service performance, customers can have expectations

positively disconfirmed, confirmed, or negatively disconfirmed

Unexpectedly high levels of performance, arousal and positive affect are

likely to lead to delight

CUSTOMER EXPECTATIONSAND PERCEPTIONSOF SERVICES- ZONEOF TOLERANCE

How Might Consumers Handle Perceived Risk?

Seeking information from respected personal sources

Relying on a firm that has a good reputation

Looking for guarantees and warranties

Visiting service facilities or trying aspects of service before purchasing

Asking knowledgeable employees about competing services

Examining tangible cues or other physical evidence

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Using the Internet to compare service offerings and search for independent reviews

and ratings

Strategic Responses to Managing Customer Perceptions of Risk

Offer performance warranties, guarantees to protect against fears of monetary loss

For products where customers worry about performance, sensory risks:

Offer previews, free trials (provides experience)

Advertising (helps to visualize)

For products where customers perceive physical or psychological risks:

Institute visible safety procedures

Deliver automated messages about anticipated problems

Websites offering FAQs and more detailed background

Train staff members to be respectful and empathetic

Understanding Customers Service Expectations

Customers evaluate service quality by comparing what they expect against what

they perceive

Situational and personal factors also considered

Expectations of good service vary from one business to another, and among

differently positioned service providers in the same industry

Expectations change over time

Example: Service Perspectives 2.1

Parents wish to participate in decisions relating to their childrens medical

treatment for heart problems

Media coverage, education, the Internet has made this possible

Factors Influencing Customer Expectations of Service

Personal Needs Desired Service

Beliefs about what is possible Desired Service

Perceived Service alterationsAdequate Service

Situational FactorsAdequate Service

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Components of Customer Expectations

Desired Service Level:

Wished-for level of service quality that customer believes can and should be

delivered

Adequate Service Level:

Minimum acceptable level of service

Predicted Service Level:

Service level that customer believes firm will actually deliver

Zone of Tolerance:

Range within which customers are willing to accept variations in service

delivery

MODULE 2. SERVICES MARKETING MIX:

service marketing mix means

Seven P's: 4 P's of a tangiblegood (price, presentation, place, and Promotion) plus 3

P's of an intangibleserviceparticipants, physical evidence, and process (of service

assembly).

The service marketing mix comprises off the 7ps. These include: Product

Price

Place

Promotion

People

Process

Physical evidence.

7 Ps of Services Marketing

Marketing services is different from marketing goods, and the marketing tools and practicesdeveloped for goods marketing are often not directly transferable to the marketing of services.

There are several major differences, including:

The buyer purchases are intangible

The service may be based on the reputation of a single person

It's more difficult to compare the quality of similar services

The buyer cannot return the service

http://www.businessdictionary.com/definition/seven-P-s.htmlhttp://www.businessdictionary.com/definition/tangible.htmlhttp://www.businessdictionary.com/definition/good.htmlhttp://www.businessdictionary.com/definition/labor-rate-price-variance.htmlhttp://www.businessdictionary.com/definition/presentation.htmlhttp://www.businessdictionary.com/definition/promotion.htmlhttp://www.businessdictionary.com/definition/intangible.htmlhttp://www.businessdictionary.com/definition/final-good-service.htmlhttp://www.businessdictionary.com/definition/participant.htmlhttp://www.businessdictionary.com/definition/evidence.htmlhttp://www.businessdictionary.com/definition/process.htmlhttp://www.businessdictionary.com/definition/assembly.htmlhttp://www.businessdictionary.com/definition/seven-P-s.htmlhttp://www.businessdictionary.com/definition/tangible.htmlhttp://www.businessdictionary.com/definition/good.htmlhttp://www.businessdictionary.com/definition/labor-rate-price-variance.htmlhttp://www.businessdictionary.com/definition/presentation.htmlhttp://www.businessdictionary.com/definition/promotion.htmlhttp://www.businessdictionary.com/definition/intangible.htmlhttp://www.businessdictionary.com/definition/final-good-service.htmlhttp://www.businessdictionary.com/definition/participant.htmlhttp://www.businessdictionary.com/definition/evidence.htmlhttp://www.businessdictionary.com/definition/process.htmlhttp://www.businessdictionary.com/definition/assembly.html

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4 P's product promoation placement and price

The differences have resulted in a divergence in the education of services marketing

versus regular marketing. Apart from the traditional "4 P's," Product, Price, Place,

Promotion, there are three additional "P's" consisting of People, Physical

evidence, and Process.

Product refers to the creation of a service concept that will offer value to target

customers and satisfy their needs better than competing alternatives. This consists of a

core product that responds to the customer primary need and an array of supplementaryservice elements that are mutually reinforcing value-added enhancements that help

customers to use the core product more effectively.

Place and time may involve physical or electronic channels such as banks now offer

customers a choice of distribution channels including visiting a branch, using a networkof ATMS, doing business by phone or conducting them over the Internet.

Price and other user outlays are crucial as well. To determine if a particular service is

worth it, customers go beyond monetary considerations and assess the outlays of theirtime and effort. Thus, service marketers must set prices that target customers are willing

and able to pay and minimize other burdensome outlays that are incurred. These may

include additional monetary expense in traveling, time expenditures, unwanted mentaland physical effort and exposure to negative sensory experiences.

Promotion in services marketing is also educational in nature, especially for new

customers. Suppliers need to teach these customers about the benefits of the service,

where and when to obtain it, and how to participate in service processes to get the bestresults. This can be delivered via individuals such as salespeople, at websites, on display

screens in self-service equipment and through a variety of advertising media.

The process of delivering the service is very often as important as the function of theservice. Operational inputs and outputs can vary widely due to the lack of inventory and

real time interaction involved. Nonetheless, variability can be reduced through careful

design of the customer service process, adopting standardized procedures, implementing

rigorous management of service quality, high standards of training, and automation.

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Furthermore, customers are often involved in co-production as partial employees through

self-service, telecommunications and the Internet.

Physical environment includes the appearance of buildings, landscaping, vehicles,interior furnishing, equipment, uniforms, signs, printed materials and other visible cues

that provide evidence of service quality, facility service delivery and guide customers

through the service process. This can also be referred to as the servicescape which canhave a profound impact on customer satisfaction and service productivity.

People refer to the human capital of the firm, i.e. the employees. These individuals

should possess the required technical skills, good interpersonal skills and positiveattitudes that can become a key competitive advantage for the firm.

Characteristics of a Service

What exactly are the characteristics of a service? How are services different from a

product? In fact many organisations do have service elements to the product they sell, forexample McDonalds sell physical products i.e. burgers but consumers are also

concerned about the quality and speed of service, are staff cheerful and welcoming and

do they serve with a smile on their face?

There are five characteristics to a service which will be discussed below.

1. Lack of ownership.

You cannot own and store a service like you can a product. Services are used or hired for

a period of time. For example when buying a ticket to the USA the service lasts maybe 9hours each way , but consumers want and expect excellent service for that time. Because

you can measure the duration of the service consumers become more demanding of it.

2. Intangibility

You cannot hold or touch a service unlike a product. In saying that although services areintangible the experience consumers obtain from the service has an impact on how they

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will perceive it. What do consumers perceive from customer service? the location, and

the inner presentation of where they are purchasing the service?.

3. Inseparability

Services cannot be separated from the service providers. A product when produced can

be taken away from the producer. However a service is produced at or near the point of

purchase. Take visiting a restaurant, you order your meal, the waiting and delivery of the

meal, the service provided by the waiter/ress is all apart of the service production processand is inseparable, the staff in a restaurant are as apart of the process as well as the

quality of food provided.

4. Perishibility

Services last a specific time and cannot be stored like a product for later use. If travelling

by train, coach or air the service will only last the duration of the journey. The service is

developed and used almost simultaneously. Again because of this time constraint

consumers demand more.

5. Heterogeneity

It is very difficult to make each service experience identical. If travelling by plane theservice quality may differ from the first time you travelled by that airline to the second,because the airhostess is more or less experienced.

A concert performed by a group on two nights may differ in slight ways because it is very

difficult to standardise every dance move. Generally systems and procedures are put into

place to make sure the service provided is consistent all the time, training in serviceorganisations is essential for this, however in saying this there will always be subtle

differences.

Services marketing is a form of marketing which focuses on selling services.Services can be tricky to sell and the marketing approach for them is much different

than the approach for products. Some companies offer both products and services

and must use a mixture of styles; for example, a store which sells computers also

tends to offer services such as helping people select computers and providing

computer repair. Such a store must market both its products and the supporting

services it offers to appeal to customers.

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Product Core and Supplementary Elements

A service product consists of two components, the core productand supplementary services. The core product is based on thecore set of benefits and solutions delivered to customers.Supplementary services are those elements that facilitate andenhance the use of the core product.Designing a service concept is a complicated task that requires anunderstanding of how the core and supplementary servicesshould be combined, sequenced, delivered, and scheduled tocreate benefits that meet the needs of the target marketsegments.

Different types of core products often share similar

supplementary elements. The Flower of Service conceptcategorizes supplementary services into eight groups (eachrepresented as a petal surroundingthe core).

The eight groups can be categorized as

(1) facilitating and

(2) enhancing supplementary services.

Facilitating supplementary services are needed for servicedelivery or help in the use of the core product. They are:

o Informationo Order-takingo Billing, ando Payment.

Enhancing supplementary services add extra value for thecustomer and include:

o Consultationo Hospitality

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o Safekeepingo Dealing with exceptions.

The use of a flower helps us to understand that all the

supplementary elements must be performed well. A weakness inone element will spoil theoverall impression.

OR

Core Product

Central component that supplies the principal, problem-solvingBenefits customers seek

Supplementary Services

Augment the core product, facilitating its use and enhancing itsValue and appeal

The Service Offering

In this chapter, we address the question, what should be the core andsupplementary elements of our service product? The core addresses the customersneed for a basic benefit such as transportation to a desired location, resolution of

a specific health problem, or repair of malfunctioning equipment. As an industry matures and competition increases, theres a risk that prospectivecustomers may view competing core products as commodities that areindistinguishable from each other.

The Augmented Product

Marketers use the term augmented product to describe the combination of acore product with a bundle of value-adding supplementary elements. Molecularmodel that can be applied to either goods or service. The model uses a chemicalanalogy to help marketers visualize and manage what she termed a total marketentity.

At the center benefit that addresses the basic customer need, with links to a seriesof other service characteristics. Surrounding the molecules is a series of bandsrepresenting price, distribution, and market positioning (communication messages).

The molecule model helps identify the tangible and intangible elements involvedin service delivery.

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Identifying and Classifying Supplementary Services

The more we examine different types of core services, the more we find thatmost of them have many supplementary series in common. There are dozens ofdifferent supplementary services, but almost all of them can be classified into oneof the following eight clusters.

We have listed them as either facilitating supplementary services, which aid inthe use of the core product or are required for service delivery.

o Informationo Order takingo Billingo Payment

Enhancing supplementary services, which add extra value for customers.

o Consultation

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o Hospitalityo Safekeepingo Exceptions

These eight clusters are displayed as petals surrounding the center of a flower,which we call the Flower of Service.

o A visual framework for understanding the supplementary service elements thatsurround and add value to the product core.

Information

To obtain full value from any service experience, customers need relevantinformation. New customers and prospects are especially information hungry.Customers needs may include directions to the physical location where the productis sold (or details of how to order it by telephone or Website), service hours, prices,and usage instructions. Some information is required by law like notifications ofchanges, reminders, warnings, and conditions of sale and use. Customers may want

documentation of what has already taken place, such as confirmation ofreservations, receipts and tickets, and monthly summaries of account activity.

Companies should make sure the information they provide is both timely andaccurate; if its not, customers may be annoyed or inconvenienced.

Order Taking

Once customers are ready to buy, companies must have effective supplementaryservice processes in place to handle applications, orders, and reservations. Theprocess of order taking should be polite, fast, and accurate so that customers do not

waste time and endure unnecessary mental or physical effort.

Certain companies need to receive information about the potential clients, withthat information they can decide to either provide services or not. I.G. would beuniversities, banks, insurance companies, and utilities, and other.

Ticketless systems, based upon telephone or online reservations, provideenormous cost savings for airlines. Eliminates the need to compensate agents.

Billing

Billing is common to almost all services (unless it is free). Inaccurate, illegible, orincomplete bills risk disappointing customers who may, up to that point, have beenquite satisfied with their experience. Such failures add insult to injury if thecustomer is already dissatisfied.

Customers usually expect bills to be clear and informative, and itemized in a waythat makes it clear how the total was computed.

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Marketing Research can help companies design user-friendly bills by identifyingwhat information customers want and how they would like it to be organized.

Busy customers hate to be kept waiting for a bill. Some service providers offerexpress checkout options, taking customers credit card details in advance anddocumenting changes later by mail.

Payment

A bill requires the customer to take action on payment. Bank statements are anexception, since they detail charges that have already been deducted from thecustomers account. Ease and convenience is what customers expect.

A variety of options exists to facilitate customer bill paying. Self-service paymentsystems. For instance, require customers to insert coins, banknotes, tokens, orcards in machines. Equipment breakdown destroy the whole purpose of having sucha system.

To ensure that people actually pay what they owe, some services employ controlsystems, such as ticket collection before entering a movie theater or boarding atrain. Those collecting those tickets must be trained to be polite and professional, sothat the customer does not feel harassed.

Consultation

Consultation is an enhancing service that involves a dialog to identify customerrequirements and develop a personalized solution.

Counseling represents a more subtle approach to consultation. It involves

helping customers better understand their situations so that they can come up withtheir own solutions and action programs.

Hospitality

Hospitality-related services should ideally reflect pleasure at meeting newcustomers and greeting old ones when they return. Courtesy and consideration forcustomers needs apply to both face-to-face encounters and telephone.

The quality of a firms hospitality services can increase or decrease satisfactionwith the core product.

Some air transportation companies differentiate themselves from theircompetitors with better meals and more attractive cabin crew.

Safekeeping

While visiting a service site, customers often want assistance with their personalpossessions.

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Additional safekeeping services are directed at physical products that customersbuy or rent.

Exceptions

Exceptions involve supplementary services that fall outside the routine of normalservice delivery. Astute businesses anticipate exceptions and develop contingencyplans and guidelines in advance.

1. Special requests. There are many circumstances when a customer may requestservice that requires a departure from normal operating procedures.

2. Problem Solving. Situations arise when normal service delivery fails to runsmoothly as a result of accidents, delays, equipment failures, or customerexperiencing difficulty in using the product.

3. Handling of complaints/suggestions/compliments. This activity requires well-

defined procedures. It should be easy for customers to express dissatisfaction, offersuggestions for improvement, or pass on compliments, and service providers shouldbe able to make an appropriate response quickly.

4. Restitution. Many customers expect to be compensated for serious performance

failures.

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FACILITATING SUPPLEMENTARY SERVICES

Information

Direction to service site Schedules/service hours Prices Reminders Warnings Conditions of sale/service Notification of changes Documentation

Confirmations of reservations Summaries of account activities Receipts and tickets

Order-Taking

Applications

Memberships in clubs/programs Subscription services (e.g., utilities) Prerequisite based services (e.g., financial credit, college enrolment)

Order Entry

On-site order fulfillment Mail/telephone/e-mail/web order

Reservations and Check-in

Seats/tables/rooms Vehicles or equipment rental Professional appointments

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Billing

Periodic statements of account activity Invoices for individual transactions Verbal statements of amount due Self-billing (computed by customer)

Machine display of amount due

Payment

Self-Service

Insert card, cash or token into machine Electronic funds transfer Mail a check Enter credit card number online

Direct to Payee or Intermediary

Cash handling or change giving

Check handling Credit/charge/debit card handling Coupon redemption

Automatic Deduction from Financial Deposits