November

INDIAN RAILWAYS ASSIGNMENT- 8

SERVICES MARKETING 2009

Submitted to- Submitted by-

Prof. M. Balaji Angana Deb(08 BSHYD0092)

IBS Hyderabad Karishma Kataria(08BSHYD0340)
Services marketing Mohit Sood (08BSHYD0443)
Mugdha Thareja(08BSHYD450)
 INDIAN RAILWAYS ASSIGNMENT- SERVICES MARKETING
November 8, 2009

Q1. Identify the characteristics of the services provided by Indian railways?

Answer-With respect to the article entitled “Classifying services to gain strategic marketing
insights” by Christopher H. Lovelock we have already seen that services can be classified with
respect to different parameters.

Here we are trying to apply similar concepts in trying to categorize the services that the Indian
railways provide in accordance with the parameters suggested by the above mentioned article.
From the case “Indian railways at cross-roads” we have identified that the main services that the
railways offered were those related to passenger and freight transportation. In the following table
we try to see how these services can be classified with respect to the parameters that are
suggested for classifying services.

Service characteristics Passenger transportation Freight Transportation

Nature of the service act
Who or what is the service
directed at
Nature of service delivery
Type of relationship between
the service organization and
its customers
Extent to which the customer
contact personnel exercise
judgment in meeting customer
needs
Extent to which the service
characteristics are customized
Extent to which supply is
constrained
Extent of demand fluctuations
over time
Nature of interaction between
customer and service
organization
Availability of service outlets
Tangible (directed at the body)
People
Discrete(transaction based)
No formal relationship
Low(process is standardized)
Low(Process is standardized)
Peak demand regularly
exceeds capacity (Waiting list
and RAC tickets).
Wide(season and off season)
Customer goes to service
organization
Multiple (many stations)
Tangible(directed at the body)
Things
Discrete(transaction based)
No formal relationship
Low(process is standardized)
Low(Process is standardized)
Peak demand regularly
exceeds capacity(not possible
to add bogies immediately to
meet excess demand.)
Low/Wide*
Customer goes to service
organization
Multiple(many stations)

* This is highly subjective depending upon the type of good that you are considering. The
fluctuations will be wide if you consider seasonal goods like oranges but for products like coal or
wheat the demand fluctuations will be low.

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Q2. . Enumerate the suggestions or recommendations provided in the case (for the better of
IR). Categorize or classify them.

Answer- In the case entitled “Indian railways at cross roads” we have looked into the different
issues that are plaguing the railways making its operations difficult and unprofitable. The same
case also discusses recommendations given by analysts as to how the efficiency of organization
can be improved. The following is an attempt to enumerate the different recommendations put
forward and how they can be categorized based on the services that the railways provide.

Let us first take look at the suggestions or recommendations for improvement.

1. Privatization-

Privatization, either partial or complete, would help the IR do away with the obligations of
being a Government organization.
Adapt better to the market conditions.
It would also increase accountability and transparency.
The privatization could be brought in a phased manner starting with auxiliary services like
catering and maintenance of stations. This would help in increasing the quality of services.

2. Simplifying operations-

It was also suggested that the IR be broken up into different departments and units like track
maintenance, operations, bookings.
These units would be managed by private assistance.
It was also suggested that the operations could be improved by separating the railway
services (building, maintenance of tracks) from the train services (operations of the trains).
Adopting the “hub and spoke” model, especially for long distance trains can further simplify
operations and reduce the costs as well.

3. Infusing new blood-

Choosing a Chairman from the private sector to infuse entrepreneurship and reducing the
complacency.
Change in the administrative systems and reconstitution of the railway board to include
people with greater entrepreneurial ability.

4. Revamping the pricing strategy-

Rationalization of the fares by reducing the number of people who should be allowed to
travel on discounted fares and restricting them only to the needy.

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Reducing fare subsidies will also help IR cut losses and by rationalizing the tariff structure
railways will be able to achieve dual objectives of social benefits and profitability.
Stopping the subsidization of fares with freight traffic.

5. Coming up with “last mile” solutions-

IR could look to improve its freight services by tying up with some trucking companies to
solve the problem of the last mile.
This would also significantly reduce the competition between road transport and IR
considerably.

6. Measures for improving safety and security-

Increase the accountability of the railway officials for safety and performance.
Improve signaling and communication systems to enhance safety and for lowering of
accident rates.

7. Others-

Increasing commercial activities in stations by leasing out the areas to vendors where the
customers can shop as in airports and avail recreational facilities.

Now we will take a look at how these suggestions can be categorized depending on the services
that the IR offers, that is passenger and freight transportation. The recommendations have been
categorized based on whether the suggestion is applicable to passenger or freight transportation.

Recommendations Passenger transportation Freight Transportation

Privatization Applicable Applicable
Departmentalization of various Applicable Applicable
functions
Adopting hub and spoke model Applicable Applicable
Appointing people with Applicable Applicable
entrepreneurial abilities from
the private sector
Giving less number of subsidy Applicable Not Applicable
in train fares
Stopping the subsidization of Applicable Applicable
fares with freight traffic
Coming up with last mile Not Applicable Applicable
solutions

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 INDIAN RAILWAYS ASSIGNMENT- SERVICES MARKETING
November 8, 2009

Recommendations Passenger transportation Freight Transportation

Measures for improving safety Applicable Applicable
and security
Increasing the accountability Applicable Applicable
of the railway officials
Leasing out station space Applicable Applicable

Q3. Take each of the suggestions and discuss how they are related to the characteristics of
the services provided by IR.

Answer- After taking a look at the different strategies that have been recommended by analysts
that will help the IR turn around, in this section we will try to relate the service characteristics
that we have mentioned in question number one to the recommendations that have been given.

1 & 2. Privatization and simplifying operations –

Here the three parties involved in the transaction are-

1. Government i.e. IR
2. The contacting agency
3. The customer
The nature of service act will be tangible as it will still be directed towards the body of the
passenger and the goods. But the intangible element can come in the sense that due to
privatization; the servicescape can become better in the form of well maintained stations and
train coaches that can act as surrogate service features designed to make the experience of
travelling and transportation better.
The service will still be directed at the passengers and the goods.
Type of relationship between the customers and the service organization will remain discrete.
The nature of service delivery will have no formal relationship between the service provider
and the customer but for the IR and the service provider the relationship will be formal in
nature.
The extent to which the customer contact personnel can exercise judgment to fulfill
individual needs or the degree to which the service characteristics are customized according
to individual customer needs will be governed by the terms of the contract that the railway
signs with the agencies. It will depend on how much the IR would be willing to standardize
the processes and how much freedom would be given to the agencies.
Balancing demand and supply will become better by simplifying operations where different
units will be responsible for different functions. Thus creating a reservation and bookings

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division will enable railway officials adapt to changing market conditions better and manage
the systems better.
Nature of interaction and the availability of services will remain the same as the customer
will still come to the service organization and the service will still be available at multiple
locations.

3. Infusing new blood-

Changing administration might have a positive impact that for how long and to what extent
cannot to be quantified. Here is how it will affect the different service characteristics-

The service provided will still be tangible in nature with intangible elements creeping in as
already mentioned in case of privatization.
Customers and service providers will share an informal relationship.
Discrete transactions will still be prevalent.
At times the peak demand will exceed the capacity but the ways in dealing with excess
demand and creating demand during lean periods will change as the strategies applied may
change.
But still the services being provided will be low on customization, until and unless some
radical changes are allowed and the extent to which service personnel will exercise their
judgment will again depend on the degree of freedom they will be vested with.
The method of service delivery will still remain the same owing to the compulsion of the
customer in having to come to the station to avail the service and due to the presence of
multiple outlets in terms of the number of stations being the same.

4. Revamping the pricing strategy-

The nature of the service act will not be affected by the change in pricing strategy; it will still
be tangible as it is directed towards the body of the customer and the freight rather than the
mind.
Who or what the service is directed at will also not change in the sense that the two major
services offered, that is passenger and freight transportation will remain the same.
Type of relationship between the customer and the service provider may change depending
on the pricing strategy because if the IR starts certain loyalty programs like the airlines do if
they start different membership facilities for those people who will be eligible for discounted
fares.
The extent to which the customer contact personnel can exercise judgment to fulfill
individual needs or the degree to which the service characteristics are customized according
to individual customer needs can be, to some extent, be dependent on the pricing strategy

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only if he railway decides to include a first class or a premier class like the business class in
airlines. Thus the premium that the customer will pay should get him personalized attention
and tailored services.
The constraint in demand will be affected by the pricing strategy because if the IR decides to
increase the number or subsidies and discounts and decreases the base fares, then more
people will choose to travel by railways increasing the demand. On the other hand if you
decide to increase the base fares then it will become an indirect competition to the low cost
carriers. Also if the railways decide to start a premier class along with the second class, third
class and A.C class that they already have then the number of seats in the general classes will
be decreased raising the constraint in the demand for average travelers. From the point of
view of freight transportation, the prices should be compatible to that of roadways otherwise
creating demand would be difficult.
Extent of demand fluctuations over time can be controlled by inventorying demand with
prior reservations and charging differentially as is done by the airways. Also de-marketing by
raising the prices of tickets/ charges for freight can help the railways deal with excess time.
Similarly by adjusting prices in times of low demand can stimulate demand in off seasons.
The interaction of the service organization with that of the customer and the number of
service outlets will not be affected by the pricing.

5. Coming up with “last mile solutions”-

The nature of services, tangibility will remain the same as will be the nature of service
delivery. The nature of service delivery can change between the IR and the trucking
companies with whom they will be tying up for providing the last mile solutions, which can
take the form of a continuing relationship.
The type of relationship will still remain discrete between the IR and the customer as
transactions will be charged after each one has been completed until and unless any company
signs up with the railways through a special MoU.
The degree to which the contact personnel can exercise judgment in customizing the offering
and the degree to which the service characteristics can be customized will depend to some
extent on the trucking companies that are providing the services along with the IR. The IR
may not be in a position to change their standardized process of delivering freight but the
trucking companies may be able to do so or may allow the managers to take decisions
depending on the kind of client they are dealing with. E.g. - Providing temperature controlled
trucks for perishable goods.
The demand constraint and fluctuations will have a bearing on this particular service offering
if the IR decides to charge the trucking companies on per transactions basis. But if it is an
ongoing agreement then the IR will end up overspending in times of low demand. From the
customers point of view the customers can wait for availing the enhanced services provided
by the IR only up to a point till which this does not result in losses for them. In cases where

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speed of delivery, spoilage, time of delivery is a prerequisite, in cases as such, inventorying

demand will not be possible.
The nature of interaction will not change in some cases because the customer still has to
come to the stations to send the goods (until and unless the IR also starts offering pick-up
services) but when it is about collecting the goods or the delivery of the goods then the
service organization will go to the customer.
Availability of service outlets will again depend on the degree to which the IR is able to
spread this service. If it is only available at a particular station or a junction in a zone then it
will be a single outlet.

6. Measures for improving safety and security-

The nature of service act is both tangible and intangible at the same time as the service of
providing safety and security to the customers is directed both to the mind as well as the
body of the customers when we consider passenger transportation. For freight it is also the
same as guarantying the safety of the products is a service towards the sender’s mind while
keeping the product from spoilage and pilferage is a service directed towards the body of the
goods.
The nature of service delivery is continuous, this means that the customer does not pay for it
every time he boards the train or sends something via train. It is an implicit and thus is
expected always.
There exists no formal relationship between the customer and the service organization when
we talk of providing safety and security to the passengers and the goods.
The extent to which the customer contact personnel can exercise judgment to fulfill
individual needs or the degree to which the service characteristics are customized according
to individual customer needs is also not very high as the passengers and the railway
authorities and officials can only issue general safety instructions and take steps for safety
that will be applicable to all the travelers and the freight that they are carrying. It may only be
applicable in special cases when the train is carrying something valuable or some V.I.P in
which case the security can be beefed up as required.
The provision of safety and security depends on number of factors like the availability of
Railway police force, the condition of tracks, bridges, the switching of lines, the drivers, the
presence of firefighting equipment in trains as well as the awareness of the passengers who
are travelling. Thus looking at all the requirements and the sheer number of people that travel
by train regularly the services that the IR provides is always less compared to what it should
be providing. Meeting the fluctuating demands in security, especially during times of
festivals and holidays in certain areas of the country during disasters and emergencies/
accidents also affect the services in the sense that the demand cannot be inventoried and it is
also not always possible to meet the demand instantaneously. Deploying rescue missions/
forces takes time.

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The method of service delivery is that where the service organization comes to the customer
to protect their lives and goods/ valuables.
The availability of service outlet is again multiple because the IR provide these services in all
the stations and trains.

7. Increasing commercial activities in stations-

The nature of services can be both tangible as well as intangible in nature as the commercial
activities can be directed both at the minds of the consumers as well as their bodies, as for
example shopping arcades are services directed at the minds of the consumers mainly while
if stations have spas as some airports have or pay and use showers and toilets and resting
cubicles, then they will be directed to the body of the consumer. For freight, the services can
be tangible, like packaging, labeling and weighing services.
The nature of service delivery will be continuous if the agreement is based on lease or rent.
But if they sell it off then it will be discrete in nature.
There should be a formal relationship between the IR and the businesses that will be allowed
to operate in the train stations. This can be based on a rent or a lease.
The extent to which the customer contact personnel can exercise judgment to fulfill
individual needs or the degree to which the service characteristics are customized according
to individual customer needs will depend on the contents of the contract that the IR chooses
to draw up for the purpose.
Demand constraints and the ability to meet the demand when it arises will depend on the
shops in the stations. The focus in providing the service as and when it is wanted is no longer
the prerogative of the IR except in the case of may be during times of festivals when there
will be an excess demand from shopkeepers to set up shops in busy stations, a problem that
can be dealt with by opening advance bookings for space.
Nature of interaction between the service organization and the customer is that the customer
will have to come to the service organization and the availability of service outlets will
depend on how many stations that the IR chooses to commercialize.
Conclusion- In this report we have managed to collate the learning from the” Indian Railways at
cross roads case study and the article on “Classifying services to gain strategic marketing
insights” by Christopher H. Lovelock. We have first tried to see what how are the services
characteristics suggested by the article applicable in the context of the services offered by the
Indian railways. This was followed by the categorization of the suggestions given by analysts for
the improvement of the operations of the Indian railways and what are the services to which the
recommendations applied to. We ended our report analyzing how each service characteristic
would have a bearing on the recommendations that have been given. In the course of this
assignment we came to realize that all the service characteristics may not be applicable to all the
services and that there is always room for subjectivity and until and unless you are aware of the
nuances of the service blueprint it gets difficult to analyze the service characteristics.

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