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CASE STUDIES: SERVICE SECTOR MANAGEMENT

CASE 1
On checking into a 5 star hotel in Bangalore recently Anand was impressed with the
courtesy extended to the visitor in the front office – polite, friendly and efficient. The
check in card was already ready just waiting to be signed. He walked up to the room and
his bag arrived at the same time. A few minutes later, the bearer came with a welcome
drink which was on the house. It was certainly an excellent start.

Later, he discovered that there was no table lamp in the room this made it difficult to
read. The press button for the shower didn’t work so one had to bend down and keep it
pressed right through the shower. The wash basin became easily clogged and virtually
unusable. A complaint was made to the house keeping department and they said that they
would certainly attend to it, nothing happened for the whole day.

The next day a complaint was given to the reception desk, they said they will surely look
into it. In the evening it was discovered that only the basin had been attended to but the
floor was littered with some screws and nails lying in a pool of dirty water. Another
complaint was lodged the following morning at the reception desk, again unattended in
the evening. But the unkindness cut-off, all was inflicted the following morning at the
reception desk when the girl at the reception desk (who was a new recruit perhaps
wrongly selected and inadequately trained) crowed in her most presently sarcastic
manner “good morning Mr. Anand any further complaints today? I am all ears.”

At that moment the hotel lost a customer as the back room services of the hotel was poor
and she compounded the problem with poor front office service. She had forgotten or
perhaps never been taught that in a marketing of a service the focus is just not on
delivering goods but satisfying reasonable expectations of paying customers.

Questions:

1. Highlight the M.O.T.s.

2. Highlight the negative critical incidents.
3. What were the peripheral services missing in the hotel? Justify.
4. In which areas do you think the back-end personnel and front-end personnel should
be trained?
5. Enumerate 5 innovations in the hotel industry.

SOURCE: BMS NOVEMBER, 2002

CASE 2:

The Indian Bank Corporation is one of the oldest banks to operate all over India. The
bank is a private bank belonging to a trust. With the multinational banks coming into the
market the IBC were concerned about the retaining their clients. The IBC offered all the

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products which the MNC banks were offering yet they felt that they were lacking behind
in retaining their customers and also in attracting new ones. The managing director of the
IBC called for a meeting with the national manager and all four regional managers to
discuss the problem.

Questions:

1. As the regional manager what will be your suggestion for IBC in terms of a.) Physical
evidence b.) Promotion c.) Productivity & Quality
2. How would you explain intangibility, heterogeneity, perishability, simultaneity in
regards to the banking services?
3. What is the solution for attracting new customers? Guarantees? Comment.

Source: H.R College prelims 03

CASE 3:

Failure of Iridium

Motorola, the US based mobile communications giant launched the Iridium project and
floated a separate company called Iridium Satellite Network. The aim was to offer global
roaming facility to subscribers with a single number across international destinations. The
target customers were the international travelers and large corporate houses, which
operate across international borders. The idea was to get over the problems of
incompatibilities of network and offer single number roaming across different cellular
protocols. The process involved positioning of satellites in orbit that will receive the
signals from earth and connect to the hand set. Kyocera, a Japanese manufacturer was to
manufacture the handsets.
A few years later, the whole project had failed miserably and the company had posted
staggering losses. There are several reasons for failure, such as
• High cost of handset, $ 3000 per set, which made it beyond the reach of most people.
• High service cost, $ 5.50 to $ 6.50 per minute
• Insufficient availability of handsets due to production problems at Kyocera, the
Japanese manufacturer of handsets.
• Rapid changes in technology which made the interconnectivity between various
cellular protocols much easier to achieve at a much lesser cost.
• Shorter life of Iridium satellites, 5 to 6 years which does not justify the high cost.

Questions:

1. What factors hinder the successful development of new services?

2. Give a brief analysis of the case.

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CASE 4:

Hotel Holiday Inn changes its image

The world’s largest innkeeper, Holiday Inn has been revising its strategy to share in the
growth of luxury hotel in the market. The luxury market has shown tremendous growth
from both business traveler and the affluent vacationer as disposable incomes have risen
in many parts of the world.

Holiday Inns recently entered the hotel casino market by purchasing Harrah’s Nevada
property and has launched the development of two new luxury hotel chains, the Crown
Plaza and the Embassy Suite. These new hotels are designed to compete directly with
Hyatt, Sheraton and Hilton Hotels in major cities. Located in the heart of business
district, they provide excellent services for the main customer, the business executive.
Most of the hotel chains in the middle-class market have begun to reach the saturation
level all across the country and are now seeking new target market to maintain their
planned growth. In an effort to capture a portion of the expanding luxury market niche.
Some of the larger chains, such as Ramada Inns are attempting to upgrade their
metropolitan properties into first-class hotels for the profit margins. This will result in a
very comparative situation in which only the best will survive.

Holiday Inns will be making a large transition from their current middle-class image to
that of the luxury hotel operators, but they are counting on the strength of their well-
known name and their proven marketing ability to attain success. Some of their
competitors are convinced that using their well-known name may not help them as much
as they would like. Consumers, aware of the standardized rooms and service of the
Holiday Inn, will transfer this image to the new luxury units. Another major problem that
must be overcome is the development of enough qualified management and staff to
supply all of these units. One of Holiday Inns’ major strengths has been their
management training program, but it has been aimed at serving the middle-class
customer. It appears that the new chains must be differentiated from the Holiday Inns
name, especially in cities where their markets will overlap. These new upscale hotels
must establish their own brand image and loyalty quickly, and this will require an
extensive as well as expensive promotion.

Questions:

1. What promotion strategy should be used in introducing these luxurious

accommodations?
2. Has Holiday Inns defined its target market correctly?
3. Importance of people in the Hotel industry.
4. What would be the external marketing strategy of Holiday Inn?

Source: Jai Hind Prelims 02

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CASE 5:

First it was Apollo Health Street. Now it is apollohealth@satyamonline.com. Apollo

hospital wants to launch a comprehensive health and medical web service, which will
provide a wide range of relevant and useful medical content and service. The user not
only will get to access static information on health and fitness but also key advice and
suggestions including a comprehensive health check-up and so on.

Help Apollo Hospitals on the same.

CASE 6:

Growth checks In

The Indian travel and tourism industry has done significantly well few months with key
parameters like tourist arrivals, foreign exchange earnings, and financial results of hotel
and tour companies recording positive performance. Additionally, the government
announced withdrawal of expenditure tax, extension of benefits to financial institutions
that advance long-term capital to hotels in 3 star and higher categories and the
continuance of exemption of service tax. Post September 11, there couldn’t have been
anything better.

The tourism industry is a cyclical industry with key seasons being from October to
February and then April to June. This year has seen a positive performance by the
industry with several hotel companies posting positive results after going through many
poor quarters. Tourist arrivals increased be 22% to 2.78 million in January this year
compared to the corresponding period last year although the annual year’s figure’s have
shown a 7% drop to 2.35 million.

Questions:

1. What are the main barriers in the hospitality industry?

2. What were the effects of WTC attacks and Iraq wars on tourism in India?

CASE 7:

An annoyed and irritated customer walked into a watch repair shop with a wristwatch that
was repaired and had the battery changed a few days ago, but now was in the same
condition as it was before the repair. The person behind the counter acknowledged that he
had changed the battery but he would look into the problem. This gesture immediately
eased the tension of the customer. However he still had doubts about the quality of the

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battery. Understanding from the body language of the customer, the person behind the
counter showed that the cell was active with 1.6 V of current. And confirmed that there
still was a warranty period of 1 year for the battery.

He then walked in to get the watch cleaned. As the customer waited for the job to be
done, she noticed other customers walk into the shop. Most of them were greeted by
name. This further changed the attitude of the customer, whose aggressiveness had all
disappeared. The man returned the watch to the customer and assured that everything was
fine. He even refused to accept anything for the repair as the customer had already paid
before. By refusing to accept a little money, he had gained a lot of goodwill. At the end
he had a relieved and joyous customer who would evangelize his shop to all friends and
family.

Questions:

1. Explain the importance of Goodwill with respect to services. Is goodwill more

important in services as compared to goods?
2. Do you think the service provided by the wristwatch repairer was of superior quality?
Justify.
3. What treatment does an unhappy customer expect? Was the same provided by the
repair shop?
4. What is a warranty? Differentiate between guarantees and warranties.

CASE 8:

A passenger with a confirmed ticket on an early morning flight from Ahemdabad to

Mumbai could reach Ahemdabad by only 3:30 pm. because the train by which he was
traveling to Ahemdabad got marooned, due to floods at night. He reached Ahemdabad,
traveling by special buses arranged by the railways. When he went to the airline
reservation office in town, the assistant wanted to know whether he had any certificate
from the railways confirming all this. He did not. He was then told, as per rules, he had to
be treated as a "No show" and he could get no refund on the earlier ticket. He could buy
a fresh ticket for either of the evening flights, both of which were late, and were fully
booked. He could take his chances at the airport. He agreed. The assistant then endorsed
the morning ticket for either of the evening flights (without any extra charges) and told
him to go to the airport immediately and enter his name among the wait-list passengers.
When he reached the airport in about 30 minutes, he found that his name was already
among the wait listed passengers. Apparently the assistant in the office had called up and
entered his name in the list.

Questions:

1. Explain the significance of Service Marketing Triangle

2. Explain the term "Customer delight" with reference to the case.

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3. Bring out the importance of "Responsiveness" of the service provider

Source: MAY (KT) 2006

CASE 9:

RAILWAYS COME BACK ON TRACK

Computerized Reservation System will be decentralized:
The passenger amenity in Southern Railways is being upgraded to international
standards. 60 stations of the Indian Railways are selected for this up gradation exercise.
In an attempt to provide train commuters with better facilities, the authorities have graded
these selected railway stations from A to F, depending on the category of the city and
passenger traffic handled.
Firstly persons booking tickets will have to stand in different ques for the Southern,
central, western, eastern, northern, south eastern and north eastern trains. A passenger can
purchase any number of tickets to any station from one counter. It is called “the global
reservation system.”
Extending its computerization efforts, complaints and suggestions from the commuters
and other users of the railway station will be recorded and dispensed with immediately.
This system is followed in all the 11000 trains of the Indian Railways and can be used by
the 1 billion commuters presently. The railways now have an exclusive communication
network called “railnet” which connects the 62 railway divisions distributed across the
country. The other step improving the existing passenger amenities is to upgrade the
“National train enquiry system”, the “interactive voice responsive system” that gives
details about reservation status and information on timings of trains.
The 44 types of concessions available for the marginalized sections of the society are
made available on the computer. A person who fills his age as 65 automatically gets a
30% concession on his ticket fare. Boards are placed at various locations in the railway
stations announcing the luggage charges to be given to porters.
Another new facility being offered is the circular journey ticket for those interested in
exclusive train journeys. The further distance they travel, the lesser the ticket costs. An
added benefit is the 8 breaks offered during this special journey. The railways plan to
make the computer reservation system decentralized, like post offices in each locality.

Questions:
1. What are the different strategies that can be used to manage demand and capacity,
when both cannot be matched as in the above case?
2. Explain the different strategies for managing capacity to match demand.

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CASE 10:

Air passengers stand to gain in the ongoing fare cuts warfare by domestic airlines:
Flight travelers in India have never had it so good. Thanks to liberalization regime in the
skies. It all started with Sahara Airlines slashing the fare on a particular sector, which
initiated the price war in the domestic airlines industry. Soon other airlines were forced to
join as Jet Airways cut its ticket price followed by Indian Airlines and even Air India.
That’s not all, a host of value additions like holiday package, free stay in five star hotels,
a unique 16-page booklet brought out by Sahara giving discount on various things you
buy, Indian Airlines’ “seven return tickets – get you return international ticket free” and
“10 return tickets – get your two return tickets free schemes” besides “holiday in Goa”
have all come as bonanza to the travelers.
Generally, airlines face lean season and their load capacity falls from May to September.
After earning profits in the first quarter, the airlines face loss in the second quarter but get
on to the recovery mode in the last two quarters. But in the year 1999, most of the airlines
have been badly hit because of low passenger traffic inflow. This is partly because of
recession and low tourist traffic into the country. While the airlines like Indian Airlines
were expecting about five percent improvement in load capacity, what was happening
was the opposite. First to realize the falling market, the Sahara Airlines triggered the fare
war as others followed it. No one exactly earned more, but there was a sort of break-even.
All these go to show that the Indian air passengers never had the flying experience more
exiting. “The dynamic fare regime will ensure that there will be no more fixed fare
structures. It will be based on demand and supply.”

Questions:

1. “The dynamic fare regime will ensure that there will be no more fixed fare
structures. It will be based on demand and supply.” Do you agree? Give Reasons.
2. What strategy will you use to match the demand and supply?

CASE 11:

The passengers were through with their final security check and were boarding the
aircraft. The lotus airline personnel were awaiting the arrival of a V.I.P. to clear takeoff.
Finally the V.I.P arrived half an hour late and went directly for security check. During the
security check the security personnel acme across weapons with live cartilages. The V.I.P
was requested not to carry the weapon on the flight. However the V.I.P. refused to part
with the weapon for personal security. When he was asked for the license, he said he was
not carrying it. The security personnel refused to give permission to the V.I.P. to board the
aircraft. This led to a heated argument and in a rage the V.I.P. threw one of the security
staff across the floor. This further delayed the flight. The passengers were very restless
since they were in the aircraft for the last one and a half hours. To top it up, they were not
allowed to leave the aircraft for security purpose.

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Questions:
1. In this case where the service are gaps existing and how would you close the
gaps?
2. Elaborate the importance of people in the airline industry.
3. As a service provider how would you manage this kind of service encounter?
What is a service encounter?
4. What would you do when prevention fails and damage is done?
5. Design a Complaint handling process.

Source: BMS November, 2003

CASE 12:

Mr. and Mrs. Karan Gupta decided to celebrate their 15 th wedding anniversary at Candies
restaurant and bar; the restaurant had a multi-cuisine menu and a dance floor. Mr. Karan
booked a table for 14 people with Mr. Kumar. Three days before the party Mr. Karan
increased the booking to 20 people. Mr. Kumar sounded very busy on the telephone but
still confirmed the change. Mr. and Mrs. Gupta along with their friends arrived to the
restaurant in 5 cars. With slight difficulty they found parking space in different locations.
Mr. Karan found that the table was booked for only 14 people. Mr. Karan reminded Mr.
Kumar that the change had been made 3 days ago. But to Mr. Karan`s amazement and
embarrassment Mr. Kumar denied it saying, “you must have been mistaken”. Mr. Karan
tried to make him admit his mistake but Mr. Kumar was too rigid and continued to deny
the change of booking. The restaurant was full. Mr. Karan requested Mr. Kumar to
resolve the matter since his guests were standing since 10 minutes. Mr. Kumar expressed
his helplessness and said that there was nothing he could do at that moment. Finally after
a long wait they were accommodated.

During dinner the conversation mostly centered on the service provided by the restaurant.
Karan gave the bill but did not leave and tip. Before leaving Mr. Karan met Mr. Kumar
and told him he would never visit the restaurant again. Mr. Kumar admitted that he may
have been nasty but he thought that Mr. Karan was being unreasonable as it was his
busiest evening and that he should make allowances. Mr. Karan never visited the
restaurant again and so the others. They narrated this incident to many people.

Analyze the case.

Source: BMS H.R. College Prelim, 2006

CASE 13:

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Krishnan was delighted to get a phone call one evening from the finance company saying
that the new car that had been launched only a month back, was ready for delivery. The
appointment was fixed for net morning at 10 am. Krishnan and his family reached the
showroom promptly at 10 am hoping to collect the vehicle before his inauspicious
“Rahukalam” began at 12 pm. When he entered the showroom nobody not even the
receptionist, asked him who he was and what he wanted. After standing around for some
time he asked a gentleman who was walking past whether he would be attended to. He
was told to wait. An empty chair was pointed out to him. The rest of the family had to
stand. After a few minutes a young lady came with a file and all small smiles, asked
whether he had brought the balance money. “What balance?” asked Krishnan. “I was told
that all payments had been made and I can take the car this morning”. The lady went ‘to
check’. As Krishnan was waiting another well dressed person all smiles again came and
asked whether he would like to select the accessories from the list (2 full pages). “Let me
get the car first” shouted Krishnan. The original lady returned all smiles again confirming
that new payments were due and handed him the papers. One was an insurance receipt.
Krishnan wanted to know what insurance cover had been taken. “Insurance Cover” she
said. “Yes, but what kind of cover?” Krishnan wanted to know. She went back to check,
returned called up the insurance and confirmed that it was a comprehensive cover.
Krishnan was then required to go to the workshop, where after more delay and paperwork
he got the car at 12.30 pm.

Questions:
1. Identify the service gaps in this case and how would you rectify the same?
2. Explain the ‘core’ and ‘supplementary’ products in the context of above case.
3. How do you find the ‘people’ factor in the above case? What skills, according to you,
are lacking in them?
4. As a showroom manager what service recovery measures would you take?

Source: BMS, November 2004

CASE 14:

The three morning flights scheduled to leave from Mumbai to Delhi at 6.30, 8.00, 8.45
am. were delayed due to the fog in Delhi. The first two were scheduled for 9.15 in the
hope that by then the weather would improve. At 8.30 the passengers were asked to
proceed for security check and await departure call. An announcement at 8.50 am
requested passengers on the on the second fight to board the aircraft. Those who were
booked on the first flight, waiting on the first floor heard this announcement. Anticipating
similar announcement for them, they moved gradually to the gate. The movement of the
staff through the aerobridge and to the telephones gave the impression that something
was wrong. But the gate did not open. At about 9.15 one of the staff was asked the
reasons for the delay. He replied rudely that they would be boarding within five minutes.
The passengers were getting restive. When the same answer was given by another
assistant, the passengers got infuriated. They also felt that the staff was not doing their

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duty and that the delay was avoidable. Within another five minutes they were asked to
board the aircraft. When all were seated, the pilot announced that the weather was still
bad, and the next report was expected after 30 minutes and the breakfast will be served
on board. From the airhostess, the passengers came to know the passengers of the second
fight were also boarding only then this incident could have been communicated
periodically. The announcement about boarding the second flight was misleading. The
traffic assistants themselves didn’t know the real situation when they have said five
minutes. This situation further aggravated by further delay due to late arrival of a
politician who was traveling to Delhi. The parting greetings were given to the passengers
“Hope you enjoyed the flight” just before landing to Delhi. As if this was not enough, the
passengers had to wait for one more hour for luggage clearance.

Questions:
1. Which were the critical interactions and which were not?
2. Did all the airline staff and the passengers exhibit technical and interactive skills?
Explain.
3. What were the reasons for the delay at both airports?
4. What steps could have been taken to rectify the situation as a service recovery
strategy?
5. What kind of image did the parting remarks convey to the passenger? If you were the
passenger, how would you perceive the quality services rendered by the airline?

Source: BMS November 2001

CASE 15:

Mr. and Mrs. Mahesh Gupta decided to celebrate their daughter’s first birthday at Purple
Orchid Restaurant. The restaurant had a multi-cuisine menu and a dance floor. Mr.
Mahesh booked a table for 14 adults and 12 children with Mr. Seth. Three days before the
party Mr. Mahesh increased the booking by another 8 people. Mr. Seth sounded very
busy on the telephone but still confirmed the change. Mr. and Mrs. Mahesh Gupta along
with their friends arrived to the restaurant in five cars. With slight difficulty they found
parking space in different locations.

Mr. Mahesh found that the table was booked only for 26 people. Mr. Mahesh reminded
Mr. Seth that the change was done 3 days back. But to Mr. Mahesh’s great amazement
and embarrassment Mr. Seth denied it, saying “you must have been mistaken”. Mr.
Mahesh tried to make him admit his mistake but Mr. Seth was too rigid and continued
deny the change of booking. The restaurant was full. Mr. Mahesh requested Mr. Seth to
resolve the matter since the guests were standing for 10 minutes. Mr. Seth expressed his
helplessness and said there was nothing he could do at that moment. Finally after a long
wait they were accommodated.

Mr. Deshmukh, the GM was informed about the incidence. He immediately came to Mr.
Mahesh Gupta with a complementary birthday cake and a teddy bear gift for Mr. Gupta’s

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daughter; he also apologized for the service given by Mr. Seth. After the party was over,
while paying the bills, Mr. Mahesh was given 20% discount on the total bill and also 20%
discount coupons were given to his guests for their future use.

Questions:
1. What are the failure points in the service delivery?
2. What problems and issues of service providers lead to situations as above?
3. Was Mr. Deshmukh effective in service recovery?
4. How would you react to Mr. Seth’s action and Mr. Deshmukh’s offer?

Source: MAY (KT), 2004

CASE 16:

Kool Travels Pvt. Ltd., a holiday company has been arranging regular holiday tours to
Rajasthan. Kool Travels had regular arrangements with Maharaja Hotels for
accommodation of their tourists in Jaipur. In December, 2005 Mr. Tejas and his family
booked a Rajasthan Tour Package with Kool Travels and checked into Maharaja Hotel in
the room allocated to him and his family. However, Mr. Tejas did not like the room and
decided to register a complaint about the room. In the meantime, his wife Pooja turned on
the television and was greeted by a screen with Maharaja Hotel Customer Survey. Using
the remote control, Mr. Tejas punched in his evaluation. To his surprise, within 2 minutes
of him punching the complaint, the hotel manager called him to say that because of
holiday season the hotel was completely booked. The room could not be exchanged, but
the guest could expect a hospitality gift from the hotel for his inconvenience.

The next day a garden facing room was available and the hotel manager offered the same
to Mr. Tejas if he wished to shift. Mr. Tejas declined and told the manager that he and his
family were quite comfortable in the present room.

Questions:
1. Give your opinion about the expected level of service in the case
2. Analyze the service recovery in the case.
3. What would be the effect of this incident on The Kool Travels?
4. Why do you feel Mr. Tejas declined to change the room?

Source: BMS November, 2006

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