]

When I am a CUSTOMER I want

To be taken seriously. Competent & Efficient Service Anticipation of My Needs & Explanations in My Terms Basic Courtesies To be informed of the options Not to be passed around (E.g. Banks & Govt. offices) Dedicated Attention Knowledgeable help & Friendliness To be kept Informed Honesty & Fairness in dealing Respect & Empathy Professional Service & Conduct Follow- through & Feedback

When I am an ORGANISATION I want Customers to Give BACK

Acceptance towards Products & Services Larger Wallet Share & Brand Recall and preference towards offerings Loyalty and Positive Word-of Mouth Regular Feedback to serve better Referrals to grow bigger at reasonable cost Co-operation at times of Crisis and Opportunity for Service Recovery .

Changing Service Scenario-Global Scenario

Contribution of Services in GDP (YEAR 2001) Contribution of Services in GDP (YEAR 2010)

50% 69%

USA
77% 74% UK FRANCE GERMANY JAPAN 76% INDIA 70%

56%

USA
78% 78% UK FRANCE GERMANY JAPAN INDIA

69%

74% 78%

Source: Economic Survey 2011-12, Ministry of Finance

Changing Service Scenario- Indian Economy

Contribution of Various Sectors in GDP (Year 195051) Contribution of Various Sectors in GDP (Year 201112)
13.90% 12%

Agriculture
33%

29.80%
56.30%

Agriculture Services Industry

Services
55%

Industry

Source: Economic Survey 2011-12, Ministry of Finance

Share of Different Services Sub-Sector

Figure for 2010-11
Trade, Hotels & Restaurants
8% 17%

Financing, Insurance,Business Services & Real Estate Community, Social & Personal Services

14%

16%

Construction

Source: Economic Survey 2011-12, Ministry of Finance

State wise Comparison of Services

(Share of services in Gross State Domestic Product)_
Series 1
Others (TN,Bengal , Bihar, Maharastra) Himachal Pradesh Chhattisgarh Delhi Chandigarh 40% 40% 35% 82% 86%

Series 1

0%

20%

40%

60%

80%

100%
8

Source: Economic Survey 2011-12, Ministry of Finance

Baby sitting or Day Care Services Investment Advisory & Financial Services Event Management Services Transportation/ Logistics/ Maintenance Services Retailing & Online Shopping Consultancy & Market Research Leisure & Life style Management Services. R& D Services.

Need for Services Why??????

Services today are not just complimentary to products but a newer method of tackling competition & Survival-Growth Plan To reduce complexity of products To manage Life style changes in order to cope with changing social roles Increasing Affluence ( Change in disposable income as a result of double- income households) and improved quality of Life Change in pattern of thinking SPEND rather than SAVE Preference for Leisure . Rise of Life Expectancy requiring more advanced and alternative medical/ Nursing Care. Greater concern about Ecology & Resource scarcity. Source of Foreign Direct Investment (FDI) in economy
10

Factors Stimulating Transformation of Economy ---- Service Economy

(Reasons for Growth of Service Sector)
Government Policies

Changes in Regulation Privatization New Rules to Protect Customers, Employees & Ecology New Agreements on Trade in Services Rising Consumer Awareness & Expectations, Competition More Affluence More people Short of Time Increased Desire for Buying Experiences Vs. Things More Working Women & Mobility of Labour Rising Ownership of Technologically Advanced devices & applications Manufacturers Add Value through Services & Sell Services Emphasis on Quality Movement, Productivity, Cost-Saving& Innovative practices ,Internet, Use of Advanced communication Medium & Media Focus on Alliances & Transnational Operations to drive profitability & growth.

Social Changes

Business Trends

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WHAT IS A SERVICE?
As per Philip Kotler Service is an act or performance offered by one party to another, that is essentially INTANGIBLE & does not result in ownership of anything. Its production may or may not be tied to a physical product. As per Adrian Payne An Economic activity that creates value & provides benefits for customers at specific TIME & PLACE by bringing about a desired change in, or on behalf of, the recipient of the service ( Either with the customers or with the property belonging to customers)
12

Features of Services & Its Market Implications

1. INTANGIBILITY
Product is physical.--- Can be felt , seen , smelt, tested. Service is not tangible till it is experienced or consumed. Different people have different expectations with regard to the same service.

IMPLICATIONS
Services cannot be inventoried Services cannot be patented Services cannot be readily displayed or communicated. Consumers perceives it as a High Risk proposition Uses Price as a basis for assessing Quality

So, Organization Needs to Stress on 1. Tangible Clues 2. WOM 3. Focus on Service Quality 13

2. HETEROGENEITY
No two service providers are same and even the service personnel within the same organization makes a complete difference. The same service can not be even same to different customers.

IMPLICATIONS
Service delivery and customer satisfaction depend on employee actions Service quality depends on many uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and promoted

So, Organization should focus on : 1. Careful Employee Selection, Recruitment, Orientation & Training. 2. Communicating Standards and conforming to its adherence. 3. Focus on Quality control. 14

3. PERISHABILITY As services can not be stored , if unavailed , they are treated as Lost.

IMPLICATIONS Services can not be Stored for Future. Problems with Demand Fluctuations

So, organization should: 1. Better match between Supply & Demand by way of discounts, promotional schemes etc. Example: Airlines & Movies Weekend Specials, Early- bird discounts, Off-Season specials, Group, Senior Citizen rates or Family Rates. Even Banks today have arranged for privilege banking hours to map and manage peak hour demands and ensure smooth flow of operations
15

4.INSEPARABILITY
SEQUENCE OF PRODUCTION & CONSUMPTION PHYSICAL GOODS SEQUENCE OF PRODUCTION & CONSUMPTION SERVICES

Production Storage Sale Consumption

Sale
Produced & Consumed at Same time

As a result of this feature it leads to customers being CoProducers of the service & often have to travel to the point of service production. Here the Management has to emphasis on 16 improving service delivery systems and Process.

5. LACK OF OWNERSHIP

Whenever a customer pays for a service or utility, he/ she has access to the action or experience , but its only for a stipulated time frame and does not own the activity or facility.

IMPLICATIONS: Stress on advantages of Non-ownership & easier payment systems

17

6. SIMULTANEITY
Unlike products, services are produced and consumed simultaneously. They cant be stocked. As the customer requires service (point of sale), services are produced and consumed at the same time. IMPLICATIONS: Due to simultaneity as one of the characteristics, In case if services, it is necessary that buyer and seller should be at the same place unlike products. The production process of services is called Servuction Process

18

The 4 Components of a Service

Service Product

Physical Product
Service Environment Service Delivery

19

Services As a System
The components of Service as a System includes:
1. Service Operations System ( Back & Front End activity) 2. Service Delivery System (Back & Front End activity + Interaction to customer)

3. Service Marketing System (Includes all elements which contribute to customers overall view of organization)

20

SERVICES AS SYSTEM DIAGRAM.doc

21

Types of Goods & Services

GOODS

SERVICES

Durable Goods

NonDurable Goods

Rental Good Services

Own Good Services

NonGoods Services

22

Product V/S Services- Differences

No PRODUCT 1 2 3 4 5 6 7 8 SERVICES

Product is a Physical object/ good Product is homogenous Product can be inventoried Can be readily displayed on Shelf

Service is an Action Heterogeneous in nature Services can not be inventoried Cannot be readily be displayed on Shelf

Production and consumption takes Service is produced and consumed at place at different time same time Customer participation does not always affect transaction Product can be returned or resold Mass production is easy Customer participation affects transaction Services once rendered cannot be returned or resold. Mass production is difficult
23

No

PRODUCT

SERVICES

Sure knowledge that product delivered is same as planned and promoted.

No surety that service delivered is same as planned and promoted Employees providing services are a matter of concern for customer. Transfer of Ownership does not take place Difficult for consumers to assess Quality

10 Employees involved in producing product is not a matter of concern for customers 11 Transfer of Ownership takes place 12 Easy for customers to assess the Quality of Product & Services

24

Classification of Services
1. Based on degree of Customer Involvement

People processing : Institutes or education center

Possession processing: Bike service center etc.

Mental stimulus processing: Advertising agency, consultancy Information Processing: Data processing, Lawyers/legal consultants etc.

25

2. Classification Based on Service Tangibility

Highly tangible: Bicycle on rent Service linked to tangible products: Free after sales services of Bikes Tangible goods linked to services: Facilities in Rajdhani Express (Train) Highly intangible: Hair saloon

26

Goods Services Continuum

Pure Goods

Service Related

Goods Related

Pure Services

27

Services Tangibility Spectrum

28

3. Classification Based on Service Skills and Expertise Required

Professional services: Doctors, lawyers Non-professional services: Baby sitting, housekeeping etc.

4. Classification Based on Business Orientation of Service Provider

Not-for-profit organization Commercial organizations

5. Classification Based on Type of End User

Customer services Industrial services
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The Services Marketing Triangle

Company (Management)
Internal Internal Marketing
Enabling the promise

External Marketing
Setting the promise

arketingz

Employees

Interactive Marketing
delivering the promise

Customers

Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler

Development Frameworks for Analyzing Services

Type of service Nature of relationship shared by the customer with service organization Service delivery Type of demand and supply of services Extent to which service provider need to customize services

31

Myths About Services

Examples

Services is a necessary evil for manufacturing firms Service sector is labor-intensive and less productive Service firms earn less revenue when compared to other two sectors Growth in service economy is linked to growth of the public sector services Marketing a service is not different from marketing a product Growth in service sector eliminates jobs from the manufacturing

GE, Motorola

Wal-Mart ICICI Prudential, HDFC, TATA-AIG

32

Limitations in Growth of Services

External Forces:
Customers can perform services themselves (Eg: People can cook instead of going to eatery) Manufactured goods will be produced which replace service roles (Eg: Tools replace the service of skilled labour, like easy care fabrics replace cleaning & laundry services) Manufactured goods will be produced which require less service attention (Eg: Cars with longer service intervals, equipments with throwaway replaceable parts)

33

 Internal Forces:
Shortage of people with specialized skills Lack of resources and small size of firm Limited competition in some service sub-sectors (Eg: Rail transport)

34

Extended Marketing Mix

Extended Marketing Mix.JPG

35

Dimensions Of SEC Qualities

Search Qualities
Tangibility Credibility

Experience Qualities
Access Courtesy

Credence Qualities
Competence Security

Reliability & Responsiveness Understanding the Customer Communications

Consumer Decision Making Process

Need Perception
Environmental Factors External sources

Culture Subculture Social class Reference groups Family

Search for Information

Personal sources Commercial sources Public sources

Evaluation of alternatives Marketer Activities

Internal sources

Purchase decision

Post-purchase evaluation

37

Implications for Service Providers

Customers rely on information obtained from personal sources. Customers need assistance of service provider to assess the value of service Co-production Time Intangibility Quality and customization

38

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