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SERVICE SECTOR MANAGEMENT

WHAT IS SERVICES Services include all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced and provides added value in forms (such as convenience, timeliness, comfort or health). That is essentially intangible concerns of its first purchaser. DIFFERENCES BETWEEN SERVICES AND CUSTOMER SERVICES A company like !" offers repair and maintenance service of e#uipment, consultancy, training services etc. These services may include a tangible product like a report or train manual. $ustomer Services , however is the service provided in support of a company%s core product & ike answering #uestion , taking orders ,dealing with billing issue , handling complaints etc Typically there is no charge for customer service is essential for building customer relationship . $ustomer services are hence different from services provided for sale by a company. 'ederal ()press market and delivers services. t also provides a high level of customer services. ts services are overnight package delivery, and logistics services. ts customer services include well trained staff who can answer all #uestion on telephone, on line tracking of parcels etc. CONCEPT OF SERVICE MARKETING The perception of service marketing focuses on selling the services in the best interest of users*customers. "arketing a service is meant marketing something intangible. t is marketing a promise. t is more selling yourself. n the marketing of services, we go through a number of problems directly or indirectly influencing the business inde). The problems like market segmentation, marketing information system, behavioural management are studied minutely which simplify the task of formulating a sound mi) for marketing, such as +roduct mi), +romotion mi), +rice mi) and the +lace mi). t is important to mention that we find People an important mi) of marketing services. f we market the services in a right direction, the available opportunities can be capitali,ed on optimally and also it contributes substantially to the process of development. n view of the above, we observe the following key points regarding the concept or perception of services marketing. t is a managerial process of managing the services. . t is an organi,ed effort for providing a sound foundation for the development of an organi,ation. . t is a social process helping an organi,ation to understand the emerging social problem and to take part in the social transformation process to /ustify its e)istence in the society. SERVICE MANAGEMENT Service "anagement is 1) To understand the utility the customers rceicve by consuming or using the service offering of the organi,ation

0) To understand how the organi,ation (personnel, technology, physical resources, systems and customers)will b able to produce and deliver this utility 1) To understand how the organi,ation should be developed and managed so that the intended #uality can be achieved 2) To make the organi,ation function so that this #uality can be delivered on a continuous basis GOODS SERVICE CONTINUUM As per Theodore 3evit 4There is no such things as service industries. There are some service industries whose service component are greater (or less) than those of other industries5. (verybody is in service. The point that 3eavitt was trying to put across is that with almost every tangible physical product an intangible servicecomponent is associated. Therefore every body is in service.6e has further put that goods can be put into two categories

Philip kotler suggests 4 c tegories 1) +ure tangible (salt) 0) "a/or tangible with minor intangibles (soap) 1) "inor tangible with ma/or intangibles (consultancy) 2) +ure service (teaching)

The above diagram shows the Service & goods continuum & some goods being tangible dominant others being service dominant. The fast food outlets has almost 78*78 of tangible and intangible parts i.e. in this case both tangible factors such (food) and intangible such as (services) is important. That is the reason it come in the middle. n case of other products like salt there services won%t play any important role so it is more towards tangible and in case of teaching profession it is purely service dominated. 9e never known about service with out e)periencing and in this manner various goods fall in place according to its category i.e. less service oriented or more service oriented.

:: American "arketing association has defined services as 4activities, benefits or satisfactions, which are offered for sale or provided in connection with sale o goods5. This definition took a limited view of services as it proposed that services are offered only in connection with sale of goods. :: ;obert <udd defined services as 4 a market transaction by an enterprise or entrepreneur, where the ob/ect of market transaction is other than the transfer of ownership of a tangible commodity5 This recognised three broad areas of services The right to possess and use a product (rented goods service) The customs creation, repair, or improvement of a product (owned goods service) =o product elements but rather e)perience or what might be termed as e)periential possession (nongoods service) :: !lois defines services, as 4a service is an activity offered for sale which yields benefits and satisfactions without leading to physical change in the form of a good5 :: >otler and !loom defines services as 4an activity or benefit that one party can offer to another that is essentially intangible and dos not result in the ownership of any thing. ts production may not my not be tied up to a physical product5. :: ?ummesson says, 4 Services is something which can be bought and sold but which you cannot drop on your foot5. :: According ?ronross 4a service is an activity or series of activities of more or less intangible in nature that normally, not necessarily, take place in interactions between the customer and the service employees and*or physical resources or goods and*or system of the service provider, hich are provided as solution to customer problems.5 'rom this it follows that Services are by and large activities, or a series of activities rather than things As a result they are intangible They take place in interaction between the customer and service provider & which means that services are produced and consumed simultaneously $ustomer has a role to play in the production process as services are provided in response to the problems of customers as a solution. !"# Ch r cteristics o$ Ser%ices &' its M rketi&g I(plic tio&s The main $haracteristics of Services are ntangibility nseparability 6eterogeneity +erishability I&t &gi)ilit* Services are actions and hence they are intangible. @ue to this it is not possible to stock services and hence fluctuations in demand becomes difficult to manage. 6otels have same number of rooms all through the year but the customers re#uiring the room are always varying with some months seeing very few customers while other months seeing a rush of customers. 'urther services cannot be patented and any new concept can be easily copied by competitors. These cannot be readily displayed or easily

communicated, and hence it will be difficult for the consumers to assess the #uality. This also creates a problem for what to include in advertisements and promotional materials. 'urther the actual cost of 4unit service5 is difficult to determine and hence pricing becomes difficult. I&sep r )ilit* Services are generally created or supplied simultaneously. They are inseparable. 'or e.g., the entertainment industry, health e)perts and other professionals create and offer their service at the same given time. Services and their providers are associated closely and thus+ not separable. @onald $owell states Goods are produced, sold and then consumed whereas the services are sold and then produced and then consumed. A service is produced when it is consumed eg. a dinning e)perience. Thus the customers are present when the service is produced thus other customer play an important role in satisfaction. The service producer also plays an important role in #uality. Thus mass production is impossible, it is not possible to get economy of scale by centralisation, operations has to be decentralised to deliver to the consumer directly at convenient locations. A 4problem customer5 can result in disruption of service production process creating a dissatisfaction forhimself, other customers and also to the service producer. Heterogeneity As services are produced by humans, hence no two services can be identical. 'urther no two customers are precisely alike and hence their e)periences of the same service are different. (ven the same customer can be with different frame of mind at different times & which results in differing satisfactions from the same service at different times. (g. A ta) consultant may provide different a service e)perience to two different customers on the same day depending upon their needs and on whether the consultant is meeting the customer when he is fresh in the morning or tired at the end of the day. !ecause of this ensuring a consistent #uality becomes a challenging /ob. The #uality depends upon a number of factors like the customer, service provides, other customers (their presence or even absence) etc., hence the service provider cannot know if the service is delivered in a manner which has been originally planned and promoted. Sometimes services are provided by a third party further increasing the heterogeneity. Perish )ilit* Services cannot be stored, saved, resold or returned. A bad haircut cannot be returned or resold to another customer. 6ence demand forecasting and creative planning to meet the demand is a problem. 'urther one has to be right the first time or if things go wrong one should have strong recovery strategies to retain the customer goodwill. @ue to these characteristics of services the marketeers face a ma/or challenge in marketing of Services.

REASONS FOR THE GROWTH OF SERVICE INDUSTR

t is obvious that the growth in the services sector has been substantive. The reasons for this growth are #uite a few, some of which are summari,ed as follows. .Affluence- C The increase in per capita income from ;upees 01D.D in 1E78 to ;upees 11,E12.7 in 1EED is an indicator of he increase in general affluence has given rise to service like pestCcontrol, personal security, interior designer, etc. .3eisure time- C +eople do get some time to travel and holiday and therefore there is a need for travel agencies, resorts, hotels, and entertainment. There are other%s who would like to utili,e this time to improve their career prospects and therefore there is a need for adult education*distance learning*part time courses. .3ife e)pectancy- C The health programmed have significantly contributed to an increase in life e)pectancy given rise to services like old age homes, nursing homes, health care, etc. .9orking wives- C As more and more women have started working, the need for day care for children has increased, and so is the care with packed food and home delivery. .+roduct comple)ity- C A large no. of products are now being purchased in households which can be serviced only by speciali,ed persons like water purifies, micro wave ovens, home computers, etc. giving rise to the need for services like after sales service agents for durables, maintenance service providers, etc. .3ife comple)ity- C As the daily routine gets busier, individuals find it difficult to manage things on their own. Their leads to an obvious need for ta) consultants, legal advisors, property advisers, etc. .;esource scarcity and ecology- C As the natural resources are depleting and need for conservation is increasing, we have seen the coming up of service providers like pollution control agencies, car, pools, water management, etc. .=ew products- C the development in information technology has given rise to services like +$Fs, +ager service providers, 9eb Shoppe, etc W,R20

C,NTRI-.TI,N ,/ SERVICE IN0.STR1 T, IN0IAN EC,N,M1 AN0 EC,N,M1

W,R20 SCENARI, .as economy shifts from developing to developed stage, they will show more and more shift toward services .today, the fastest growing segments of the GS economy is services .in 1E2D 72H of the ?@+ of GS was generated by services which is D8H now .employment in this sector which was 77H in 1E78 is now D1H .the GS balance of trade in goods has remained in the red for many years, but there has been a trade surplus in services .today service sector dominates the economics of many developed nations. As countries develop the role of agriculture in the economy declines and that of

services increase.(china has 78H ?@+ from service, 17H from industry, and 17Hfrom agriculture) .during recession it has been seen that service output declines less than industrial output & the service employment is less sensitive to business cycle fluctuation .globalisation as strategy for service firm is becoming more important

IN0IAN SCENARI, .The service sector now accounts for more than half of ndiaIs ?@+- 71.1A per cent in 1EEDCEE. This sector has gained at the e)pense of both the agricultural and industrial sectors through the 1EE8s. The rise in the service sectorIs share in ?@+ marks a structural shift in the ndian economy and takes it closer to the fundamentals of a developed economy (in the developed economies, the industrial and service sectors contribute a ma/or share in ?@+ while agriculture accounts for a relatively lower share). .The service sectorIs share has grown from 21.AE per cent in 1EE8CE1 to 71.1A per cent in 1EEDCEE. n contrast, the industrial sectorIs share in ?@+ has declined from 07.1D per cent to 00.81 per cent in 1EE8CE1 and 1EEDCEE respectively. The agricultural sectorIs share has fallen from 18.E1 per cent to 0A.D1 per cent in the respective years. .Some economists caution that if the service sector bypasses the industrial sector, economic growth can be distorted. They say that service sector growth must be supported by proportionate growth of the industrial sector, otherwise the service sector grown will not be sustainable. t is true that, in ndia, the service sectorIs contribution in ?@+ has sharply risen and that of industry has fallen (as shown above). !ut, it is e#ually true that the industrial sector too has grown, and grown #uite impressively through the 1EE8s (e)cept in 1EEDCEE). Three times between 1EE1CE2 and 1EEDCEE, industry surpassed the growth rate of ?@+. Thus, the service sector has grown at a higher rate than industry which too has grown more or less in tandem. The rise of the service sector therefore does not distort the economy. .the share of agriculture sector to ?@+ has come down from 78H in 1EA8 to 02H .service sector contribution to ?@+ is around 72H with an annual growth of DH .employment in this sector is around 78H .the response to liberation has been more in service sector, partly because lower fi)ed investment re#uirements, e)ample-C today%s concept of banking .technological advances have made it possible for ndia to compete on global basis in areas like SF'T9A;(, T, 6(A3T6, (@G$AT F=, etc., .in addition lower wage structure has helped to develop $A33 $(=T;(%s, "(@ $A3 T;A=S$; +T F=, etc., .from 1EEA !S( has given a prominent place to service industry in it%s 18 share inde)

.since no ta) is imposed on agriculture sector, most of the ta) came from manufacturing sector. now services are being ta)ed .service ta) collection is to the tune of 7888 crore. D1H of this is contributed by service sectors. 71H C Telecom, others are nsurance, A@ agencies, $ourier and stock brokers. .many e)port benefits like (+$? is now e)tended to the service sector. .in last 07 years the increase in employment in the organi,ed sector is 7BH while if only service sector is considered it is B8H(other than service sector it 21H) . ndia%s service e)ports in1EEB were E.1 billion J against its merchandi,ed e)ports of J10.0 billion. t is e)pected that service e)ports could a third of merchandi,e e)ports now this will be well above the global average of K. t implies that ndia which has failed to catch the bus in the e)ports of manufactures is among the early leaders of the developing world in the race for service e)ports. .9ithin the services sector, the share of trade, hotels and restaurants increased from 10.70 per cent in 1EE8CE1 to 17.AD per cent in 1EEDCEE. The share of transport, storage and communications has grown from 7.0A per cent to B.A1 per cent in the years under reference. The share of construction has remained nearly the same during the period while that of financing, insurance, real estate and business services has risen from 18.00 per cent to 11.22 per cent. .The fact that the service sector now accounts for more than half the ?@+ probably marks a watershed in the evolution of the ndian economy.

.N0ERSTAN0ING THE C,NS.MER ! 3N,W2E0GE ,/ THE -.1ER n buying decisions many times other people also influence the decision. n services these roles are played by many persons. n purchase of any service si) distinct roles are played . nitiator - The person who has a specific need and proposes to buy a service . nfluencer - The person or group of persons whom the decision maker refers to or who advice the decision maker.

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.?ate >eeper - The person or organi,ation or promotional material, which act as filter on the range of services which enter the decision choice .@ecider - The person who makes the buying decision .!uyer - The person makes the actual purchaser .Gser - The actual user. 'or e)ample if a sales e)ecutive wants to do a market tour LL. Hi! "o!! #$y "e t%e initi$tor The travel agency may act as a ?atekeeper The finance department may be the influencer The administrative department the buyer The e)ecutive the user. n this case the user may have no role in the buying process. 6ence while targeting a customer the service provider may have to influence other persons. C,NS.MER 0ECISI,N MA3ING" The consumer%s decision to purchase or re/ect a product or service is the moment of final truth for the marketer. t signifies the marketing strategy has been wise, insightful and effective, whether it was poorly planned and missed the mark. "arketer are, therefore, interested in the consumer decisionCmaking process by which a consumer selects an alternative amongst the lot available. The decision not to buy is also an alternative. A simple consumer decisionCmaking model, ties together the psychological, social and cultural concepts into an easily understood framework. The decision model has three distinct sets of variables1. nput Mariables, 0. +rocess Mariables, 4" Futput Mariables. I&put V ri )les56 nput variables are those variables which affect the decision making process and include commercial marketing efforts as well as nonCcommercial influences from the consumer%s socioCcultural environment. .0ecisio& V ri )les56 The decision process variables are influenced by consumer%s own psychological fields, which affect their recognition of a need, their preCpurchase search for information and their evaluation of alternatives. .,utput V ri )les56 The output phase of the model includes the actual purchase (either trial or repeat purchase) and post purchase evaluation. !oth preCpurchase and postCpurchase evaluation feed back in the form of e)perience into the consumer%s psychological field and serves to influence future decision processing. (Fn a holiday a customer may change hotels in between his stay).

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/ ctors I&$lue&ci&g The -u*i&g -eh %iour Situational 'actors - Time, Store%s atmosphere, "arketing Stimuli (the occasion) +ersonal 'actors - +ersonality, life style, Fther demographic factors like age, gender, occupation etc. Social 'actors - $ulture, reference group, family +sychological 'actors - +erception, attitude, motivation

TEN S.CH 7.A2ITIES WHICH IN/2.ENCE THE C,NS.MER8S EVA2.ATI,N ,/ SERVICES 97u lit* 0i(e&sio&s o$ Ser%ices: .Co&siste&c*& ' it involves consistency and reliability of performances and dependability. t means that the firm performs the service right the first time. t also means that the firm honours its promises especially in terms of accuracy in billing, record keeping and performing the service at the designated time. .Co&cer&56it is the willingness or responsiveness of employees to provide the service. t involves timeliness of service or giving prompt service, calling the customer back #uickly or mailing the transaction slip immediately. .Co(pete&ce5 6 it means having the re#uired skills and knowledge to perform the service. t involves knowledge and skill of the contact personnel, knowledge and skill of operating support personnel and research capability of the organi,ation. (.g. securities brokerage firm. .Co&t ct56 it involves approachability, access and ease of contact. t means that the service is easily accessible by telephoneN waiting time to receive the services is not e)tensive, convenient hours of operation and convenient location of service facility. .Courtes*-C it involves politeness, report, consideration and friendliness of contact personnel. t includes consideration for the consumer%s property. $lean and neat appearance of public contact personnel. (.g. no muddy shoes on the carpet, proper telephone operators etc. .Co((u&ic tio&56 it means keeping consumers informed in a language that they can understand and listen to them. t may mean that the company has to ad/ust its language for different consumers & increasing the level of sophistication with a well educated consumer and speaking simply and plainly with a novice. t involves e)plaining the service itself and how much the service will cost e)plaining the tradeCoff between service and cost and assuring the customer that a problem will be handled. .Cre'i)ilit*5 6 it involves trustworthiness, believability, honesty. t involves having the customer%s best interest at heart thus contributing to credibility, company name and reputation, personal characteristics of the contact personnel and degree of hard sell involved in interaction with the customer. .Co&$i'e&ti lit*5 6 the security and the freedom from risk or doubt, involving physical safety, financial security or confidentiality.

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.Custo(er k&o;le'ge5 6 it involves making the effort to understand the customer%s needs, i.e. learning the customer%s specific re#uirements, providing individuali,ed attention and recogni,ing the regular customer. .T &gi)les5 6 it includes physical evidence of the service, physical facilities, and appearance of personnel tools or e#uipments used to provide the service, physical representations of the service such as a plastic credit card or a bank statement and other customers in the service facility. THE SERVICE ENC,.NTERS 9M,MENT ,/ TR.TH": M,MENTS ,/ TR.TH 'rom the customer%s point of view, the most vivid impression of service occurs in the ser%ice e&cou&ter or 4Mo(e&t ,$ Truth,5 when the customer interacts with the service firm. This is the foundation to 4Satisfaction of Service Ouality5 & it is where the promises are kept or broken. This concept was put forth by ;ichard =orman, taking the metaphor from !ull 'ighting. "ost services are results of social acts, which take place in direct contact between the customer and the service provider. At this stage the $ustomer realises the perceived service #uality. ENC,.NTER CASCA0E (very "oment of Truth is mportant & according to Scandinavian Airlines, each one of their 18 million customers come in contact with 7 employees. Thus the airlines say there 78 million moments of truth & each one is managed well and 4They prove they are the !(ST5. 6owever some encounters are more critical. The encounter cascade refers to a series of encounters right from the time a customer comes to take the service. The encounter cascade can be important as any encounter can be critical, as it determines customer satisfaction and loyalty. f it%s the first interaction of the customer then the initial interaction will be the first impression. So, these interactions have to be given importance, as they are critical and influences customer%s perception of the organi,ation. E< (pleA customer calling for the repair service may switch to some other company if he is put on hold for a long time or even treated rudely. (ven if the technical #uality of that firm is superior, the firm may not get a chance to prove themselves in front of the customer. 9hen the customer has had many interactions with firm, each encounter will be important as it will create a combined image of that firm. "any positive e)periences will give an image of 6igh Ouality and many negative e)periences will represent a bad image. $ombination of positive and negative interactions will leave the customer confused about the Ouality. t is suggested that not all encounters are e#ually important in building longCterm relations. 'or every organi,ation, certain encounters can act as a key to customer satisfaction" /or e< (ple5 for "A;; FT hotels, it is the early encounters that are important. n a hospital conte)t, a study of patients revealed that encounters with the nursing staff were more important in predicting the customer satisfaction. As it is rightly

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said 4one bad apple can ruin the whole basket of apples.5 The same applies in this tooN one negative encounter can drive the customer away, no matter how many encounters had taken place in the past. So a firm has to give a lot of importance to such encounters. 4A customer who has been using a bank for nearly 17 years is #uite happy with the service. 6e has a huge deposit and many accounts. Fne fine morning, when he comes out of the bank the watch man asks ;s. 18 for parking charges of his car. 6e goes inside the bank and informs the clerk at the counter, who directs him to the officer. The officer directs him to the "anager, who says he is helpless as this is a new policy of the bank. The customer who was so happy with the bank services decides to close all his accounts & 4Some encounters can be very $ritical5.

Among the service encounters a hotel customer e)periences are checking in, being taken to the room by a bell person, eating a restaurant meal etc as shown in the figure. t is in these encounters that the customer receives an overall view of the organi,ations service #uality and encounter contributes to customer satisfaction and willingness to do business with the organi,ation again. As for the company, each encounter represents an opportunity to prove its potential as a #uality service provider and to increase customer loyalty. Some services have few service encounters and others have many. "istakes or problems that occur in the early levels of the service cascade can e critical because failure at one point results in greater risk of dissatisfaction in the long run. "A;; FT 6otels learned this through their e)tensive customer survey to determine what service element contributes to customer loyalty. They found that 2 out of 7 factors came into play in the first 18 minutes of the guest%s stay. T1PES ,/ ENC,.NTERS

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A service encounter occurs every time a customer interacts with the service organi,ation. There are three general types of encounters C remote encounters, phone encounters, and face to face encounters. A customer may e)perience any of these types of encounters, or a combination of all three in his or her relations with a service firm.

Re(ote E&cou&ter56 (ncounter can occur without any direct human contact is called as ;emote (ncounters. Such as, when a customer interacts with a bank through the AT" system, or with Ticketron through an automated ticketing machine, or with a mailCorder service through automated dialCin ordering. ;emote encounters also occur when the firm sends its billing statements or communicates others types of information to customers by mail. Although there is no direct human contact in these remote encounters, each represents an opportunity for a firm to reinforce or establish perceptions in the customer. n remote encounter the tangible evidence of the service and the #uality of the technical process and system become the primary bases for /udging #uality. E=AMP2E56 Services are being delivered through technology, particularly with the advent of nternet applications. ;etail purchases, airline ticketing, repair and maintenance troubleshooting, and package and shipment tracking are /ust a few e)amples of services available via the nternet. All of these types of service encounters can be considered remote encounters. Pho&e E&cou&ters56 n many organi,ations, the most fre#uent type of encounter between a customer and the firm occurs over the telephone is called as phone encounter. Almost all firms (whether goods manufacturers or service businesses) rely on phone encounters in the form of customerCservice, general in#uiry, or orderCtaking functions. The /udgment of #uality in phone encounters is different from remote encounters because there is greater potential variability in the interaction. Tone of voice, employee knowledge, and effectiveness*efficiency inhandling customer issues become important criteria for /udging #uality in these encounters. / ce6to >/ ce E&cou&ters56 A third type of encounter is the one that occurs between an employee and a customer in direct contact is called as 'aceCtoC'ace (ncounter. n a hotel, face & to & face encounters occurs between customers and maintenance personnel, receptionist, bellboy, food and beverage servers and others. @etermining and understanding service e#uality issues in face & to &face conte)t is the most comple) of all. !oth verbal and nonCverbal behaviours are important determinants of #uality, as are tangible cues such as employee dress and other symbols of service (e#uipments, informational brochures,

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physical settings). n face & to & face encounters the customer also play an important role in creating #uality service for herself through her own behaviour during the interaction. At @isney theme parks, faceCtoCface encounters occur between customer and ticketCtakers, maintenance personnel, actors in @isney character costumes, ride personnel, food and beverage servers, and others. 'or a company such as, !", in a businessCtoCbusiness setting direct encounters occur between the business customers and salespeople, delivery personnel, maintenance representatives, and professional consultants. Ff all determining and understanding service #uality issues in faceCtoCface conte)t is the most comple). !oth verbal and nonCverbal behaviours are important determinants of #uality, as are tangible cues such as employee dress and other symbols of service (e.g., e#uipment, informational brochures, and physical settings). n face toC face encounters the customer also plays a role in creating #uality service for herself through her own behaviour during the interaction. SERVICE /AI2.RES AN0 REC,VER1 SERVICE /AI2.RES (ven with the !est organi,ations failures can /ust happen & they may be due to the service not available when promised, it may be delivered late or too slowly (some times too fast PP), the outcome may be incorrect or poorly e)ecuted, or employees may be rude or uncaring. All these types of failures bring about negative e)periences. f left unfi)ed they can result in customers leaving, telling others about the negative e)periences or even challenging through consumer courts. ;esearch has shown that resolving the problems effectively has a strong impact on the customer satisfaction, loyalty, and bottomCline performance. $ustomers who e)perience service failures, but are ultimately satisfied based on recovery efforts by the firm, will be more loyal. THE REC,VER1 PARA0,=" t is suggested that customers who are dissatisfied, but e)perience a high level of e)cellent service recovery, may be more satisfied and more likely to repurchase than are those who are satisfied at the first place. /or e< (ple-C A hotel customer who arrives Q finds there is no room available. n an effort to recover, the frontCdesk person immediately upgrades this guest to a better room at the same price. The customer is so thrilled with this compensation that he is e)tremely satisfied with this e)perience, is even more impressed with the hotel than he was never before, and vows to be loyal into future. The logical, but not very rational, conclusion is that companies should plan to disappoint customers so they can recover Qgain even greater loyalty from them as a result. This idea is known to be as Reco%er* P r 'o<" The recovery parado) is more comple) than it seem. 'irst of all it is e)pensive to fi) mistakes and would appear ridiculous to encourage service failureCas reliability is the most important aspect of service #uality. According to a research it is observed that a customer weight their recent e)periences heavily in their decision to buy again. f the e)perience is negative, overall feelings about the company will decrease and repurchase

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intentions will also reduce. f the recovery effort is absolutely superlative then the negative impression can be overcome. Then there is a recent study which shows no support to recovery parado). t shows the overall satisfaction was consistently lower for those customers who had e)perienced a service failure than for those who had e)perienced no failure, no matter what the recovery effort is. The e)planation for why no recovery parado) is suggested by the magnitude of the service failure in this study it isCa three hour airplane flight delay. This type of failure may be too much to be overcome by any recovery effort. $onsidering mi)ed opinions on if recovery parado) e)ists it is safe to say 4doing it right the first time5 is the best and safest strategy. 9hen a failure does occur then every effort at superior recovery should be made. n cases where the failure can be fully overcome the failure is less critical, or the recovery effort is clearly superlative, it may be possible to observe evidence of the recovery parado). H,W C.ST,MERS RESP,N0 T, SERVICE /A2I.RE f customers initiate action following service failure, the action can be various types. A dissatisfied customer can choose complaint on the spot to the service provider, giving the company the opportunity to respond immediately. Thos is often the bestCcase scenario for the company it has the second chance right at that movement to satisfy the customer, keep his or her business in the future, and potentially avoids any negative word of mouth. Some customer chooses not to complaint directly to the provider but rather spread negative word of the mouth about the company to friend, relatives, and coworkers. This negative word of mouth can be e)tremely detrimental because it can reinforce the customer%s feeling of negativism and spread that negative impression to other as well. 'urther, the company has no chance to recover unless the negative word of mouth is accompanied by a complaint directly to the company. 9hen there is a failure, customer can respond in a variety of ways as illustrated in the figure. t is assumed that following are the failure, dissatisfaction at some levels will occur for the customer. n fact, research suggest that variety of negative emotion can occur following service failure, including such feeling as anger, discontent, disappointment, selfC pity and an)iety. "any customers are very passive about their dissatisfaction, simply saying or doing nothing, take action or not, at some point the customer will decide weather to stay with that provider or switch to a competitor.

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9hen the company fails to stand for its promises made to the customer on the basis they build e)pectation, it%s to be said that there is service failure. 9hen the service failure occurs, there can be again severe ramification. $ustomer is considered to be the bread and butter, hence retaining them is the biggest challenge, and however service failure acts as an obstacle to it. n such failures, 1) 0) 1) 2) The customer wants what they were promised. $ustomer wants personal attention $ustomer wants a decent apology $ustomers want that they should not be made to feel that they are the cause of the problem. (Though in many cases they are responsible for nuisance)

There are again five steps involved in order to deal with service failure. They are mentioned as below 1st step- Acknowledgement and apology for the fact. 0nd step- 3istening to the customers. 1rd step- Avoid defending the company and offer a rational e)planation. 2th step- Fffer some e)tra benefits 7th step- 6ave a proper follow up and make sure no mistakes this time, so that he can easily forget about the service failure and is retained. A customer e)pects 1 shorts of fairness in case of service recovery. They are mentioned as below. !" I&ter ctio& $ ir&ess- C when there is service failure, first the company is supposed to acknowledge the customer. @ue to this the customer might turn erate,

1D

but he still e)pects fairness and courtesy in the language and tone used by the addresser ?" Proce'ure $ ir&ess5 C to know in detail about the incidence of service failure or to avail the compensation. There should be simplicity in procedure, which is involved. Service failure and comple)ity in procedure both together might result in a disaster as far as customer is concern. 4" ,utco(e $ ir&ess- C now when the company reali,es that there is service failure they should end up compensating, arranging for some alternative mode of transporting or complies with the customer condition. The outcome should be taken by considering the customer, his needs and the company%s policy. ACTION P(AN TO SO(VE THE PROB(EM & 6andling complaints is a big challenge for every company today. !efore understanding how to handle, let us see what are the factors, which can result in customer%s complaints. There are ten steps involved in handling such airline flights delayed departure complaints effectively. They are mentioned below. 1) The frontline employee handling complaints should stay calm under any circumstances. 0) 3et the customer get the story off their chestC do not interrupt, this will only cause irritation. n this case listening skills comes into picture. 1) Avoid admitting any liability at this stage. The officer /ust need to show concern like, 4 %m sorry for the inconvenience, let me see what can do5. ?ive attention to the customer, make him feel important. 2) ?et facts by using #uestion and try to find out the real and whole story behind it. 7) After listening and collecting data, /ust identify appropriate action considering company%s policy and customer%s e)pectation. A) Take action if you have authority or involve manager or concerned person. B) f corrective action cannot be taken immediately, tell the customer. t%s better to give bad news rather giving false news. D) ;ecord the action to be taken and inform anyone else in the organi,ation involved. E) 3ook into the matter, provide a proper followCup. This ten approaches if followed effectively, complaints can be handled properly and possibly a customer can be retained. (Solution is only for the taken e)ample. i.e. delayed departures of flights). OTHER SO(UTIONS $ontrol costs, reduce waste Set productive capacity to match average demand Automate labor tasks Gpgrade e#uipment and systems

1E

Train employees 3everage lessCskilled employees through e)pert systems $hange timing of customer demand @evelop customer trust Gnderstand customers% habits and e)pectations +retest new procedures and e#uipment +ublici,e the benefits Teach customers to use innovations and promote trial "onitor performance, continue to seek improvements

EIGHT C,MP,NENTS ,/ INTEGRATE0 SERVICE MANAGEMENT The M rketi&g Mi< 9THE @ P8s ,/ SERVICES MAR3ETING: n order for your business to sell its products and services as successfully as possible, you need to look at what products you are selling in detail to ensure they will be attractive and neededN the price to ensure it is not too cheap or too e)pensiveN where you are best distributing your productN and finally, how you can create interest and awareness for your products. All these elements need to be targeted at the right people at the right time. n order for your business to tackle this correctly, you need to get the right type of mi) (marketing mi)), the mi) should include four main elements- +roduct, +rice, +lace and +romotion, by e)amining each and carefully and adapting them to your customerIs needs, you will continue to produce and needed products and services !: Pro'uct ele(e&t5 "anagers must select the feature of both the core product (either a good or service) and the bundle of supplementary service elements surrounding it, with reference to the benefit desired by customers and how well competing products perform. n short, they must be attentive to all aspects of the service performance that have the potential to create value for customers ?: Price &' other user costs5 6 This components addresses management of the e)penditures and other outlays incurred by customers in obtaining benefits from the service product. t is not only related to traditional pricing tasks of establishing selling price to customers, setting trade margins and getting credit terms but also, how to minimi,e other burdens of customers while purchasing such as time, mental and physical efforts and unpleasant sensory e)periences such as noises and smells. 4: Pl ce + c*)ersp ce &' Ti(e56 @elivering product elements to customers involves decisions on the place and time of delivery as well as on the methods and channels employed. @elivery may involve physical or electronics distribution channels or both),depending on the nature of the service being provided. 4: Pro(otio& &' e'uc tio&56 =o marketing program can succeed without effective communications. This component plays three vital roles- C a)+roviding needed information and advice (awareness). b)+ersuading target customers of the merits of a specific product. ($oncentrating on a particular segment of the market). c)(ncouraging to take action at a specific time (purchase). $ommunication is educational in nature for new customers.

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$ommunication can be delivered by individuals such as sales people and trainers, media such as TV+ r 'io+ &e;sp per+ ( g Ai&es+ postures+ ;e)sites etc. This promotion is usually used as incentives to catch customer%s attention and to motivate them to act. The above four are the traditional marketing mi). The (RT(=@(@ marketing mi) for services marketing isas follows @: People5 6 "any services depend on the direct, personal interaction between customers and a firm%s employees (such as getting a haircut or eating at a restaurant). This interaction strongly influences the customer perception of service #uality. So, successful service firm devote significant effort to recruitment, training and motivating their personnel. B) Ph*sic l e%i'e&ce56 The appearance of buildings, landscaping, vehicle, interior furnishing, e#uipment, staff members, signs, printed materials, and other visible cues all provide tangible evidence of the firms service #uality. The service firms need to manage physical evidence carefully because it can have a profound impact on customers% impression as the service itself is intangible. A tangible element such as insurance and advertising is often employed to create meaningful symbols. (.g.- C umbrella may symboli,e protection and a fortress, security. C: Process5 6 t is the method and se#uence of actions in which service operating system works. - 'l* 'esig&e' process- C annoys customers which leads to likelihood of service 'ailures. #: Pro'ucti%it* &' Du lit*5 6 Pro'ucti%it* relates to how inputs are transformed into outputs that are valued by customers. mproving productivity keeps costs under control 7u lit* refers to the degree to which a service satisfies customers by meeting their needs, wants and e)pectations. Service #uality helps in product differentiation and building customer loyalty. nvest in #uality profitably i.e. by considering incremental cost and incremental revenue. Thus, these are the Dps of service management, which are the essence of it. The integration of each p%s is necessary for the successful service management $ollectively these are the tools organi,ations uses to develop offerings to satisfy their target market(s) ... the only tools at their disposal. ;emember- f your marketing mi) doesnIt meet their needs they will not be satisfied C and if they arenIt satisfied you are unlikely to meet your ob/ectives. The marketing mi) should be viewed as an integrated and coor'i& te' package of benefits that reflect the characteristics of customers and various targeted publics and satisfy their needs, wants, and e)pectations. =ote that the elements of the marketing mi) should be integrated because each element of the mi) usually has some impact, direct or indirect, on the other three. 'or e)ample, if you improve the product or service you probably have to change the price because it costs more to produce. Although you may not have to change where the product is delivered to the customer, you will almost certainly have to change the promotion or communication with the customer because you need to tell the customer about the changes you have made in the product and how the changes will make it more desirable and satisfying. Fne problem in many organi,ations is that different divisions may be responsible for different elements of the marketing mi). This happens even in wellCmanaged organi,ations. The result is that the offering is confusing to the

01

target market. 3ack of communication among divisions makes this problem worse. And if they donIt share the same view of organi,ational ob/ectives, the problem is worse still. PR,0.CT MI= I&tro'uctio& S+roduct% includes name, design, features, #uality, operational case, packaging, warranties, appearance, range and si,e. t also includes preCsale and postCsale services like training, repairs, maintenance and replacements. According to +hilip >otler 4a product is anything that can be offered to market for attention, ac#uisition use or consumption that satisfy a want or need. t includes physical ob/ects (TM), service (banking), person (political person), place (holiday resort), organi,ation (red cross) and idea (aid awareness).5 $onventionally, a product is an ob/ect, which is delivered and consumed. 6owever, in services there is no or very little tangible elements. 6ence, what is offered for sale is benefits. Service is a bundle of benefits and has relevance for a specific target market. 6ence, the package of benefits should have a customer%s perspective. 2e%els o$ pro'uct5 >otler has identified 7 levels of a product 1) $ore product 0) !asic product 1) ()pected product 2) Augmented product 7) +otential product >otler suggested that a product should be viewed in three levels. 1. 3evel 1- $ore +roduct. 9hat is the core benefit your product offersP This is the fundamental benefit or service that the customer is buying. 'or eg. A customer going to a 6otel is buying rest, sleep etc. 0. 3evel 0 !asic +roduct- !asic functional attributes. All 6otels provide rest and sleep. The aim is to ensure that your potential customers purchase your one service. Thus the functional attributes like ;oom, !ed, !ath are important. 1. 3evel 1 - ()pected product - Set of attributes that the buyer e)pects ($lean room, large towels, #uietness) 2. 3evel 2- Augmented product- 9hat additional nonCtangible benefits can you offerP This meets the customer%s desires beyond his e)pectations & (+rompt room service, music, aroma etc) 7. 3evel 7 - +otential product - The possible evolutions that can be made to make the product a distinguishedoffer (all suite room) I& - &k these c & )e $ore +roduct (Safety of deposits, nterest, (asy loans !asic product - Savings deposit, '@, ;ecurring deposit ()pected product - $orrect transaction records, timely service, convenient timing Augmented product - $ongenial waiting room, 9ater cooler +otential product - ?reetings for =ew Tear, 02 hour banking

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The +A$>A?( $F=$(+T of Service product & suggests that what you offer to the market si a bundle of different services & tangible and intangible. There is a core service and around it are built the au)iliary or facilitator service. 9ithout this the service would collapse (a bell boy in a 6otel). Tet another service is the supporting service & it is used to increase the product value (a car rental in a hotel). The basic product is not e#uivalent to the service product which the customer perceives, which is in fact based on customer%s e)perience and evaluation. Therefore there is a need for an augmented product & like Accessibility (number and skills of personnel, convenient timing, location, infrastructure etc.,) nteraction with service organi,ation (!etween employees and customer, with physical and technical resources, with other customers) $onsumer participation.(how well the customer is aware about the process of service delivery, his willingness to share information and use service e#uipments) The package should also include the management of service image through encouraged word of mouth and market communication. Pro'uct 0ecisio&s 9hen placing a product within a market many factors and decisions have to be taken into consideration. These include $onsumer benefits & assess what benefits the consumer looks for Service concept & To translate it to suitable service offer @evelop augmented offer -RAN0ING5 Fne of the most important decisions a marketing manager can make is about branding. The value of brands in oday%s environment is phenomenal. !rands have the power of instant salesN they convey a message of confidence, #uality and reliability to their target market. !rands have to be managed well, as some brands can be cash cows for organi,ations. n many organi,ations they are represented by brand managers, who have huge resources to ensure their success within the market. A brand is a tool, which is used by an organi,ation to differentiate itself from competitors. Ask yourself what is the value of a pair of =ike trainers without the brand or the logoP 6ow does your perception changeP ncreasingly brand managers are becoming annoyed by Scopycat% strategies being employed by supermarket food retail stores particular within the G>. $ocaC$ola threatened legal action against G> retailer Simsbury after introducing their $lassic $ola, which displayed similar designs and fonts on their cans. nternet branding is now becoming an essential part of the branding strategy game. ?eneric names like !ank.com and !usiness.com have been sold for Um%s. (;ecently within the G> banking industry we have seen the introduction of nternet banks such as c hoot"co( and ( r)les"co( the task by brand managers is to insure that consumers understand that these brands are banksV -r &'i&g o$ Ser%ices &' its I(port &ce +hilip >otlar defines a brand as 4a name, a term, a symbol, or a designed or a combination of them which is intended to identify the goods and services of one seller or a group of sellers and to differentiate them from those of competitors5.

01

!rand decision is important for tangible goods. !ut in the case of service offering branding is still in its infancy, there importance is e)pected to rise due to the following reason. 1. Service market is getting more competitive and there is as increasing proliferation of brands in the service sector. 0. t is five times cheaper to retain customer than to attract new ones. 1. As a new service development assumes greater importance, the risk of product launch is reducing in the conte)t of umbrella branding. 2. As service itself does not offer uni#ue tangible benefits, brand development tangibilises the service. $ustomer gives more significance to the service provider than the individual service products that the provideroffers. Therefore, this leads to branding the service providers cooperate image. !anks especially have recogni,ed the importance of corporate image and identity and have used slogans, logos and other means to brand themselves. Fnes the corporate brand is developed it is found that service firms move with relative easy to other service product categories. +rimarily companies resorts to corporate brand building with a goal of ma)imi,ing market capitali,ation and creating shareholders wealth. n case of service firms corporate branding reflects the service itself. Airlines, fastCfood restaurants, banks, professional firm are usually differentiated on the basis of their corporate name and reputation rather than the specific service they offer. The service organi,ation brand name is reinforce by courteous employees, professional looking uniform, advertising etc. 6owever no matter how good the corporate brands may be the #uality of service determines the success of the image. There are instance where the service itself is branded. ()ample Suvidha Account of $itibank, the various schemes of 3 $ like <eevan >ishore, <eevan "itra etc. A'% &t ges o$ )r &'i&g ser%ices 1. To tangibilise the intangible. 0. To support the positioning strategy. 1. Fffers a powerful tool for relationship building. 2. To create an image of #uality and consistency. 7. To reduce price comparison. A. >eeps current customers satisfied by developing and sustaining a uni#ue service advantage. B. (ncourages repeat usage using sales promotions. PRICE MI= I&tro'uctio&5 This element of the marketing mi) is related to the decision influencing the fee structure, rate of interest, commission charged and paid by the service generating organi,ations. t is considered to be the most critical component of the marketing mi). !oth from economic and social standpoint, the management of pricing is important but at the same time more critical and challenging. 9e find pricing decisions important because the pricing decisions are to influence the maintenance, development and e)pansion plans of an organi,ation.

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Gui'eli&es $or ser%ice prici&g5 1) +ricing strategy should enable handling demand fluctuations successfully. As services cannot be inventoried, pricing should encourage customers to use the service during period of low demand. 0) As services need to have some tangible element attached to it, service pricing should be based on costs so as to take into account the tangible clues. 1) Service price as an indicator of #uality- Services not having specific brand names to indicate #uality, customers use price as an indicator of #uality. This in particular in some cases, where the price variation is too much with in a particular class of service (e.g. Tour operators). Also, where the risk associated with the service is high (e.g. 6eart surgery). +rice is taken as an indicator of #uality. Thus pricing too low can give wrong signals and pricing too high can set e)pectations that the firm may find it difficult to match in service delivery. !ecause goods are dominated by search #ualities. +rice is normally not used to /udge #uality. 2) +ricing strategy should copeCup with the degree of competition operation with in certain geographic and time ,one. (.g. !us operators will have to consider prices of train. t also includes the stage ofstrategic low pricing to attract first time customers. Appro ches to prici&g ser%ices5 The 1 approaches to pricing services are1) $ostCbased pricing 0) $ompetitionCbased pricing. 1) @emand&based pricing. !: Cost6) se' prici&g5 n costCbased pricing, a company determines e)penses from raw materials and labor, adds amounts or percentages for overhead and profit, and thereby arrives at the price. This method is widely used by industries such as utilities, contracting, wholesaling and advertising. The basic formula for costCbased pricing is +rice W @irect costs X Fverhead costs X +rofit margin @irect costs involve materials and labor that are associated with the service, overhead costs are a share of fi)ed costs, and the profit margin is a percentage of full costs (direct X overhead) Pro)le(s i& cost6) se' prici&g ser%ices5 a) t is difficult to define the units in which a service is purchased. Thus the concept of price or unit is vague. Thus many services are sold in terms of input units rather than units of measured output. (.g. consultant, teacher etc. b) 9here a firm provides multiple services. The costs being a ma/or component of employee time are difficult to allocate. c) Service cost may not represent true value. 'or e.g. a darner charging same price for a e)pensive suit and an ordinary pant. ?: Co(petitio&6) se' prici&g5 This approach focuses on the prices charged by other firms in the same industry or market. $ompetitionCbased pricing does not always imply charging the identical rate others charge but rather using others prices as an anchor for the firm%s price. This

07

approach is used predominantly in two situations- (a) 9hen services are standard across providers, such as in the dry cleaning industry. (b) n oligopolies where there are a few large service providers, such as in the airline. Pro)le(s i& co(petitio&6) se' prici&g5 (a) Small firms may charge too little and not make margins high enough to remain in business. (b) 6eterogeneity of services across and within providers makes this approach complicated. (.g. !anks charge different rates of commission for drafts and other services. 4: 0e( &'6) se' prici&g5 The first two approaches of pricing are based on the company and its competitors rather than on customers. =either approach takes into consideration that customers may lack reference price, may be sensitive to nonmonetary prices and may /udge #uality on the basis of price. All of these factors can and should be accounted for in a company%s pricing decisions. The third ma/or approach to pricing, demandCbased pricing, involves setting prices consistent with customer perceptions of value- prices are based on what customers will pay for the services provided. Pro)le(s i& 'e( &'6) se' prici&g5 (a) There is an element of nonCmonetary costs and benefits which must be considered while calculating perceived value. (.g. services re#uiring time, inconvenience, psychological and search costs should be riced lower. t is difficult to convert this nonC monetary cost into monetary cost. (b) nformation on service may be less available to customer, making it difficult to assess the price. THE P2ACE MI=" INTR,0.CTI,N Another important element of the marketing mi) is place mi), which focuses our attention on the offering of services by the providers to the ultimate users and the place of location for the service generating organi,ations. n some of the cases we find that providers have no option but to locate the units*branches as per the instructions of the ape) body. Some of the essential features are taken into consideration such as easy and convenient accessibility, safety or protection availability of the infrastructural facilities, attractive and healthy surroundings or so. @ue to the intangibility, services cannot be stored, transported and inventoried. 6ence the traditional channels of product marketing like wholesalers cannot be used. (evn retailing cannot be an independent activity. Similarly because of inseparability they have t be produced and sold simultaneously. @ue to this tehe channels of distribution are made very short. At the most there can be one agent like in the case of insurance, travel agency, courier eye. The better thing is direct selling. Agents when employed can have two types of functions & either they market the services lke travel agents, insurance agents etc, who market the tangible part of the service offering F; there can be agents who are trained to provide the service 3ike a Shahna, 6ussain !eauty parlour. 'urther as there is no actual transfer of ownership, the creation of time and place utility is very important. 6ence proper location to cover ma)imum cu)tomers becomes important. !anks often have e)tension counters or use money collectors.

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C p cit* Pl &&i&g" t is not sufficient that we are interested only in managing our present. t is much more significant that we keep our eyes open, minds active to know about the future and continue to enrich our potentials to manage the future. The organi,ations not managing the future fail in managing the demand and supply position, make it difficult to optimi,e the development of marketing resources to cope with the changing re#uirements, make possible a contraction in their resistance power and both on #uantitative and #ualitative fronts, we find them moving backward. !y capacity planning, our emphasis is on the management of strength. $apacity planning is known as planning the capacity in the face of future. This throws light on both the aspectsCfirst, the organi,ations are supposed to know the demand position so that the potentials are enriched to increase the #uantity or capacity of generating the services and second, the organi,ations are also re#uired to know about the likes and dislikes, preferences, e)pectations, attitudes which make an advocacy in favor of technologies to fulfill their e)pectations and this is not possible unless we think in favor capacity planning. The strategic plan would make the ways for the mobili,ation of financial resources to cater to their increasing re#uirements. 9e can%t deny the fact that if an organi,ation succeeds in maintaining the process of profit generation, the financial health of that organi,ation becomes so sound that the task of satisfying the employees and investors is simplified considerably. f an organi,ation is strong, the task of facing the challenges and threats in the markets is simplified considerably. t is against this background that strategic planning assumes a place of outstanding significance. 9hen we talk about capacity planning, our prime focus is on strategic planning since the process of enriching strength can%t be made possible within a couple of days. C p cit* Sche'uli&g" 6ow much of what (service) will be needed to achieve its preCdetermined goals is an important consideration that makes an advocacy in favor of capacity planning and scheduling. There are a number of critical variables re#uiring due consideration in the process such as, goals of the service firm, availability of capital and the #uality of human resources, market segments served and the level of service #uality aimed at. A detailed scheduling of man, materials, money and machines (four "%s) is essential for each element of the service mi). PR,M,TI,N MI= INTR,0.CTI,N5 The promotion mi) is found instrumental in informing, sensing and persuading the prospects or customers. The marketers bear the responsibility of using the different components of promotion in such a way that the measures adopted for promoting the goods or services are found productive. The promotion communicates to customer%s information on the other elements of marketing mi), such as product, pricing and place. The advantage of product itself, details on the place through which it is sold and details on the pricing are transmitted through promotion. C,MP,NENTS ,/ THE PR,M,TI,N MI=5 !: A'%ertisi&g5

0B

Advertising is paid form of persuasive promotion since it plays an effective role in informing and sensing the customers. The creativity is found to be an essential aspect of advertising, which increases the importance of professional e)cellence in making the advertising processes productive. ?: Pu)licit*Epu)lic rel tio&s5 All the organi,ations need to develop and strengthen the public relation activities to promote their business. This component of promotion is found effective though the organi,ation don%t make any payment for publicity. The most important thing in the conte)t of public relations is the instrumentality of e)ecutives in pro/ecting a positive image of the services offered. They should have the potentials to throw a positive imprint on the prospects. t is also significant that they know the art of developing rapport with the media people. 4: Perso& l selli&g5 The personal selling is found instrumental in promoting the business of service generating organi,ations. +ersonal selling is a process of informing the customers besides persuading them to purchase products being influenced by personal communication. t is /ust a process of communication in which an individual e)ercises his or her personal potentials, tact, skill and ability to influence the impulse of prospects and to transform them into customers. +ersonal selling is basically a method of communication. t involves not only individual but the social behavior tooN each of the person in faceCtoCface contact, salesman and prospect influence the other. Thus we find personal selling a personal communication, sellerCbuyer interaction, interCpersonal communication and more so direct selling. The following facts are observed regarding the personal sellinga) t is a direct personal relation between the buyer and seller. b) t is an oral presentation in conservation. c) t is twoCway communication. d) t is personal and social behavior. e) t is an e)ercise for selling the goods and services. f) t is found more effective in the service generating organi,ations. g) t is based on the professional e)cellence of an individual. h) t is an important element of the promotion mi). 4: S les pro(otio&5 "arketing activities other than personal selling, advertising and publicity that stimulate customers and dealers effectively, such as display shows, e)hibitions, demonstrations and various nonCrecurrent selling efforts not in the ordinary routine are the sales promotion measures. Sales promotional activities are devices aimed at reaching the consumer at home or in his business establishment. The tools are generally in the form of samples, contest, demonstrations and coupons. Sales promotion directed at consumers may be done with a view to increase the products rate of use among e)isting customers or to attract new customers to the company%s product. Tools of sales promotiona) ?ift b) $ontest c) @iscount and commission

0D

d) (ntertainment e) Travel and tours f) Additional allowance g) 'airs and shows These are some of the tools of sales promotion offered to both, the providers as well as the users. The motivesare increasing the selling activities, touching the target, e)celling the competition, increasing the market share, clearing the old products to be declared absolute in the near future. @: Wor'6o$6(outh pro(otio&5 "uch communication about the performance of the service generating organi,ations actually takes place by wordCofCmouth information, which is also as wordCofCmouth promotion. The wordCofCmouth recommendations the hidden sales force make the process of communication effective. The growing sensitivity of the words and e)periences of hidden sales force simplify the task of promoting the business. The advertisements, sales promotion measures, the personal selling may of course be effective but the wordCof mouth recommendations are found acceptable in all the conditions by almost all the prospects. B: Tele( rketi&g5 Telemarketing is found instrumental in promoting the business. The telemarketing helps in activating the process of advertisement in addition to its instrumentality in increasing the sale. The service generating organi,ations in general and the banking, insurance, transport, hotel, tourism organi,ations in particular have been found using telemarketing with the twoCfold ob/ectives of selling and advertising. The instrumentality of telephones and televisions are found effective in the process of promoting the business. The instrumentality of telemarketing in persuading the users is substantially influenced by the #uality of personnel supposed to discharge the responsibility. The telemarketing minimi,es the dependence of service generating organi,ations on the sales people since /ust a counter or a center listed in the call numbers serves multiCdimensional purposes. PR,M,TI,N ,-FECTIVES 1) @evelop personal relation with client 0) "ake a strong impression of competency, honesty and sincerity 1) Should be able to use indirect selling techni#ues (create a derived demand & mobile companies give free sim card) 2) "anage to maintain a fine image by positive word of mouth 7) +acking and customi,ation of service offering TARGET A.0IENCE 1) !uyer (or user*influencer*gatekeeper) 0) (mployees (discussed in detail under people) P2ANNING THE PR,M,TI,N MI= 1) Advertisement should have positive effects on contact personnel 0) t should be able to capitalise on word of mouth 1) t should provide tangible clues to the customers 2) t should make the service offering easily understandable

0E

7) t should promise only what is possible to deliver A) t should contribute to the continuity C,NS.MER PR,M,TI,N IN SERVICE MAR3ETING 1) Sampling is less fre#uently used compared to ?oods (Sampling gives consumer a free trial & though now becoming popular) 0) ?ift premiums are fre#uently used to give an element of tangibility 1) +rice*#uantity promotions can be used to get long term commitments from consumer (fre#uent flyer programme or group booking in 6otels) 2) Gse of coupons are less fre#uent (coupon with straight price cut F; discount or fees waiver for one or more purchases with original purchase F; @iscounts on augmented products & like a free wa) polish with car wash) 7) 'uture discounts are less fre#uent A) +ri,e promotions are fre#uently used (pri,e for mobile bank use etc) G.I0E2INES /,R SE22ING SERVICES 1) t is personal relationship rather than the service itself that results in satisfaction 0) !uyer%s confidence in the seller%s ability to deliver the results is important & hence make a strong impression of competency, sincerity, and honesty. 1) As what is sold is intangible & indirect selling techni#ues have to be adopted (6otels selling tour programmes) 2) As word of mouth is important & building up a favourable is image is essential. 7) A service provider sells 4services5 and not /ust a single service & hence ability to customise the service offering is important (<ain food in AirClines 6otels etc) A) +ublic relations becomes important & particularly in industries where advertisement cannot be used as a promotional tool like 6ospital industry. PE,P2E MI= INTR,0.CTI,N The employees of an organi,ation represent the organi,ation in the eyes of the customers. f they are not give proper training in representing the organi,ation and its goals the service efforts will fail. 6ence the most important marketing strategy is to market the service first to the organi,ation%s employees. There are two types of contact personnel & 6 ?6 $F=TA$T +(;SF==(3 and 3F9 $F=TA$T +(;SF==(3 (eg .in a hospital a nurse is a high contact personnel and ward boy may be a low contact personnel) n addition there can be a =F= $F=TA$T +(;SF==(3

SERVICE TRIANG2E

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9hen company makes efforts to do e)ternal marketing, it should have strategies of nternal marketing. ()ternal marketing is nothing but promises made,which needs to be fulfilled & this needs internal marketing enabling the comapany to keep up the promises made. Gnless the employees are able and willing to deliver, the servicepromises will fail. This will result in proper interaction of thecustomers with the service providers which helps the organi,ation to keep the promises ( nteractive marketing) EMP2,1EE SATIS/ACTI,N+ C.ST,MER SATIS/ACTI,N+ AN0 PR,/ITS There is concrete evidence that satisfied employees make more satisfied customers (and satisfied customers can, in turn, reinforce employees% sense of satisfaction in their /obs). Some have even gone so far as to suggest that unless service employees are happy in their /obs, customer satisfaction will be difficult to achieve. The underlying logic connecting employee satisfaction and loyalty to customer satisfaction and loyalty and ultimately profits is illustrated by the service profit chain shown in the figure. The service profit chain suggest that there are critical linkages among internal service #ualityN employee satisfactionN productivityN the value of services provided to the customersN and ultimately customer satisfactionN retention and profits. Service profit chain researchers are careful to point out that the model does not cause customer satisfactionN rather the two are interrelated and feed ff each other. The model does imply that companies that e)hibit high levels of success on the elements of the model will be more successful and profitable than those who do not.

11

H.MAN RES,.RCE STRATEGIES5 6uman resources decisions and strategies primary goal is to motivate and enable employees to deliver customerCoriented promises successfully. The strategies presented here are organi,ed around four basic themes. To build a customerCoriented, serviceCminded workforce, an organi,ation must1) 6ire the right people 0) @evelop people to deliver service #uality 1) +rovide the needed support systems 2) ;etain the best people !: Hire the right people5 Fne of the best ways to close gap 1 is to start with the right service delivery people from the beginning. This implies that considerable attention should be focused on hiring and recruiting service personnel. : Co(pete $or the )est people5 To get the best people, an organi,ation needs to identify them and compete with other organi,ations to hire them. The firm act as marketers in their pursuit of the best employees, /ust as they use their marketing e)pertise to compete for customers. Thinking of recruiting as a marketing activity results in addressing issues of market (employee) segmentation, product (/ob) design, and promotion of /ob availability in ways that attract potential longCterm employees. ): Hire $or ser%ice co(pete&cies &' ser%ice i&cli& tio&5 Fnce potential have been identified, organi,ations need to be conscientious in interviewing and screening to truly identify the best people from the pool of candidates. t has been suggested that service employees need two complementary capacities- they need both service competencies and service inclination. Service competencies are the skills and knowledge necessary to do the /ob. Achieving particular degrees and certifications validates competencies, such as attaining a doctor of law degree and passing the relevant state bar e)aminations for lawyers. Service competencies may not be degree related, but may instead relate to basic intelligence or physical re#uirements. c: -e the pre$erre' e(plo*er5 Fne way to attract the best people is to be known as the preferred employer in a particular industry or in a particular location. Fther strategies that support a goal of being the preferred employer include providing e)tensive training, career and advancement opportunities, e)cellent internal support and attractive incentives and offering #uality goods and services that employees a proud to be associated with. ?: 0e%elop people to 'eli%er ser%ice Du lit*5 To grow and maintain a workforce that is customer oriented and focused on delivering #uality, an organi,ation must develop its employees to deliver service #uality. That is, once it has hired the right employees, the organi,ation must train and work with these individuals to ensure service performance. :Tr i& $or tech&ic l &' i&ter cti%e skills5 To provide #uality service, employees need ongoing training in the necessary technical skills and knowledge and in process or interactive skills. ()amples of technical skills and knowledge are working with accountingsystems in hotels, cash machine

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procedures in a retail store, underwriting procedures in an insurance company, and any operational rules the company has for running its business. "ost service organi,ations are #uite conscious of and relatively effective at training employees in technical skills. $ompanies are increasing their use of information technology to train employees in the technical skills and knowledge needed on the /ob. Service employees also need training in interactive skills that allow them to provide courteous, caring, responsive, and empathetic service. ): E(po;er e(plo*ees5 (mpowerment means giving employees the desire, skills, tools, and authority to serve the customer. 9hile the key to empowerment is giving employees authority to make decisions on the customer%s behalf, authority alone is not enough. (mployees need the knowledge and tools to be able to make these decisions and theyneed incentives that encourage them to make the right decisions. Frgani,ations are well suited to empowerment strategies to ones in which (1) the business strategy is one of differentiation and customi,ation, 0) customers are longCterm relationship customers, (1) technology is nonroutine or comple), (2) the business environment is unpredictable, and (7) managers and employees have high growth and social needs and strong interpersonal skills. c: Pro(ote te (;ork5 The nature of many service /obs suggests that customer satisfaction will be enhanced when employees work as teams. !ecause service /obs are fre#uently frustrating, demanding and challenging, a teamwork environment will help to alleviate some of the stresses and strains. (mployees who supported and that they have a team backing them up will be better able to maintain enthusiasm and provide #uality service. !y promoting teamwork an organi,ation can enhance the employee%s abilities to deliver e)cellent service while the camaraderie and support enhance their inclination to be e)cellent service providers. 4: Pro%i'e &ee' support s*ste(s5 To be efficient and effective in their /obs, service workers re#uire internal support systems that are aligned with their need to be customer focused. 9ithout customerC focused internal support and customerCoriented systems, it is nearly impossible for employees to deliver #uality service no matter how much they want to. n e)amining customer service outcomes researchers found that internal support from supervisors, teammates, and other departments as well as evaluations of technology used on the /ob were all strongly related to employee satisfaction and ability to serve customers. : Me sure i&ter& l ser%ice Du lit*5 Fne way to encourage supportive internal service relationships is to measure and reward internal service. !y first acknowledging that everyone in the organi,ation has a customer and then measuring customer perceptions of internal service #uality, an organi,ation can begin to develop an internal #uality culture. nternal customer service audits and internal service guarantees are two strategies used to implement a culture of internal service #uality. Through the audit, internal organi,ations identify their customers, determine their needs, measure how well they are doing, and make improvements. ): Pro%i'e supporti%e tech&olog* &' eDuip(e&t5

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9hen employees don%t have the right e#uipment, or their e#uipment fails, they can be easily frustrated in their desire to deliver #uality service. To do their /obs effectively and efficiently, service employees need the right e#uipment and technology. having the right technology and e#uipment can e)tend into strategies regarding workplace and workstation design. c: 0e%elop ser%ice6orie&te' i&ter& l processes5 To best support service personnel in their delivery of #uality service on the front line, an organi,ation%s internal processes should be designed with customer value and customer satisfaction in mind. n other words, internal procedures must support #uality service performance. n many companies internal processes are driven by bureaucratic rules, tradition, cost efficiencies, or the needs of internal employees. +roviding service and customer oriented internal processes can therefore imply a need for total redesign of systems. This kind of wholesale redesign of systems and processes has become known as 4process reengineering.5 4: Ret i& the )est people5 An organi,ation that hires the right people, trains and develops them to deliver service #uality, and provides the needed support must also work to retain the best ones. (mployee turnover, especially when the best service employees are the ones leaving, can be very detrimental to customer satisfaction, employee morale, and overall service #uality. Some firms spend lot of time attracting employees but then tend to take them for granted, causing these good employees to search for /ob alternatives. : I&clu'e e(plo*ees i& the co(p &* %isio&5 'or employees to remain motivated and interested in sticking with the organi,ation and supporting its goals, they need to share an understanding of the organi,ation%s vision. +eople who deliver service day in and day out need to understand how their work fits into the big picture of the organi,ation and its goals. ): Tre t e(plo*ees s custo(ers5 f employees feel valued and their needs are taken care of, they are more likely to stay with the organi,ation. "any companies have adopted the idea that employees are also customers of the organi,ation, and thus basic marketing strategies can be directed at them. The products that the organi,ation has to offer its employees are a /ob and #uality of work life. To determine whether the /ob and work life needs of employees are being met, organi,ations conduct periodic internal marketing research to assess employee satisfaction and needs. c: Me sure &' re; r' stro&g ser%ice per$or(ers5 f a company wants the strongest service performers to stay with the organi,ation, it must reward and promote them. Fften the reward systems in organi,ations are not set up to reward service e)cellence. ;eward systems may value productivity, sales or some other dimension that can potentially work against good service. ;eward systems need to be linked to the organi,ation%s vision and to outcomes that are truly important. B"B"@ IMP,RTANCE ,/ EMP,WERING PE,P2E IN SERVICES An organi,ation that emphasi,es customer service needs people at the frontline to do the service, to use discretions be concerned about the customer, to take initiative to provide satisfaction through e)ceptional service. The person at the front must fell empowered to do in the circumstances. (mpowering cannot be done through a formal

12

delegation of authority. A person with authority may not e)ercise that authority, if he does not feel empowered. E< (ple A peon who takes responsibility to direct the fireman in a burning office to areas housing the most important documents is acting without formal authority. 6e feels empowered to do so, meaning that feels a sense of dedication to the organi,ation, that he feels it is his duty to save the organi,ation as much as possible , that he is doing the right thing . 'ollowing are the importance of empowering the people in services-C 1) An empowered employee focuses on results. 6e is not inhabitant by formalities of position , authorityor function . 0) 6e does not consider himself bound by rules and procedure. 1) 6e believes that the organi,ation e)pects him to be aware of the ends to be achieved and to act in furtherance thereof. 6e 4sees5 constraints but not does not feel prevented thereby , from what is to be done , instead he tries to overcome the constraints. 2) 6e believes that the organi,ation will not find fault with him for having one something new and nusual. Fn the contrary, he believes that the organisation will applaud him for having done something that had to be done. 7) 6e believes that he is e)pected to take the initiative and ensure that the customer needs are met and thereby maintain and enhance the reputation of the organi,ation. A) 6e feels that he is dedicating to satisfy the customer to upgrade organi,ation reputation B) An empowered employee may be willing to challenge company policies at meetings with sensors. PH1SICA2 EVI0ENCE MI= THE EVI0ENCE ,/ SERVICE As services are intangible, the customers are searching for evidence of service in every interaction they have with an organi,ation. The figure depicts the three ma/or categories of evidence as e)perienced by the customer- people, process, and physical evidence. These categories together represent the service and provide the evidence that tangibili,es the offering. The new mi) elements essentially are evidence of service in each moment of truth.

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All of these evidence elements, or a subset of them are present in every service encounter a customer has with a service firm and are critically important in managing service encounter #uality and creating customer satisfaction. 9hen a guest enters the hotel for a stay the first encounter of the guest is the door attendant and fre#uently with receptionists at the reception. The #uality of that encounter will be /udged by how the registration process works (6ow long is to waitP s the registration system computeri,ed and accurateP) The actions and attitudes of the people ( s the receptionist courteous, helpful, knowledgeableP @oes she handle the en#uiries fairly and efficientlyP) and the physical evidence of the service (is the awaiting area clean and comfortable). The three types of evidence may be differentially important depending on the type of service encounter (remote, phone, face & to & face). All these types will operate in face & toC face service encounters as in the one /ust described. PH1SICA2 EVI0ENCE t is the environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of service. t includes all tangible representations of the serviceCsuch as brouchers, letter head, e#uipment etc. in somecases the physical facilities where service is offered is important e.g., in a hotel the parking lot, surroundings are important. n other services such as telecommunication the physical facilities may be irrelevant. n this case other tangibles like billing statements become important. +hysical evidence includes

1A

(A) +hysical facilities (essentials and peripherals) (!) +hysical setting (appearance of premises) ($) Social setting (appearance of staff) The decision on the physical evidence will differ in terms of customerCemployee interaction. At one end is selfCservice of customer without any interaction with employee (AT") where physical facilities must be to attract customer and user friendly. At other end employee performs without any interaction (mail order business) here physical evidence is designed to promote operational efficiency. !etween the two e)tremes is a situation where both customer and employee interact. n this case physical evidence must be planned to facilitate the activities of both. ((.g., !anks, Airlines). $ertain service environments are simple re#uiring very little space or e#uipment (AT", Mending machine). They are called lean environment. Fthers like hospitals, hotels are elaborate environment where proper planning is needed. (a) +hysical facilities- The potential customers form impression about the service organi,ation on the basis of physical evidence like building, furniture etc., Esse&ti l E%i'e&ce5 They are dominant features like building area, parking space, signboards. Peripher l E%i'e&ce5 They are less dominant like admission card, medical reports, etc. (b) $onsist of service environment .Ambient factors (light, colour, temperature) .Space (spatial layout and functionalityC i.e., ability of e#uipment and furniture to accomplish interactions) .@ecor and artefacts (c) Social setting- (mployee uniform, appearance etc. of service scape can influence customer e)pectation,satisfaction and other behavior. n shopping mall soft music is played*crossroads had hired separate parking space. !itner identifies +hysical 'acilities and (nvironment as SERVICE SCAPES 6owever too much decor may make customers feel that they are paying for the e)pensive dYcor. (mployees however feel that an investment in environments is an indication of management%s concern for their /ob satisfaction. 6ence the challenge is to strike a balance. MANAGING SERVICE 7.A2IT1 To compete successfully a firm must define how the customers perceive the service #uality and in what way the service #uality is influenced. The #uality can be of seen from two angles (1) Technical #uality (9hat is delivered) (0) 'unctional #uality (6ow it is delivered). 9hen a customer comes to the service provider he comes with some e)pected #uality. 9hen he takes the service he e)periences a service #uality & this is his perceived #uality. PERCEIVE0 SERVICE 7.A2IT1 $ustomer service is about perception. +erceptions are /udgment of the consumers about the actual service performance or delivery by a company. Since service are intangible, customers search for the evidence of #uality in every interaction they have

1B

with a service firm. The evidence of service that are e)perience by the customer are people, process and physical evidence. +eople & contact employees, other customers or the customer himself. @imensions & reliability, assurance, empathy and responsiveness. +rocess & operational flow of activities. @imensions & reliability and promptness of service. +hysical evidence & tangible aspect of service. Apart from these the corporate image of the service provider as well as the service can also influence the perceived #uality. 9hile comparing the e)pected and perceived service #uality the following may be the outcome. !:" Percei%e Du lit* G e<pecte' Du lit*" Result H 'elighte' custo(er" ?:" Percei%e Du lit* H e<pecte' Du lit*" Result H s tis$ie' custo(er" 4:" Percei%e Du lit* I e<pecte' Du lit*" 0iss tis$ie' custo(er" A very important factor in important service #uality is to always keep promises and not guarantee which the firm cannot deliver

J,NE ,/ T,2ERANCE The services provided are varying between organi,ations, between employees and even with in employees at different times. The e)tent to which the customers recogni,e and are willing to accept this variation is called as ,one of tolerance. f the service levels fall below this level, customers will be frustrated.

1D

.@ifferent customers possess different ,ones of tolerance .Zones of tolerance vary for different dimensions fo service .Zones of tolerance vary for first time and recovery service

7.A2IT1 GAPS To manage the perceived #uality of a service one has to match the e)pected service and perceived service to each other so that consumer satisfaction is achieved. To keep the gap between e)pected service minimal, two things are critical- C .The promises about how the service will perform given by traditional marketing activities and communicated by wordCofCmouth, must not be unrealistic when compared to service received by the customer. ."anagers have to understand how the technical and functional #uality of a service is influenced and how the customers perceive these #uality dimensions. n order to develop greater understanding of the nature of service #uality and how it is achieved in an organi,ation, SA ?ap "odel Ff Service Ouality% was developed. The model clearly indicated that the consumer%s #uality perceptions are influenced by a series of five distinct gaps occurring in the organi,ations, which are as follows- C G p! 9M rketi&g I&$or( tio& G p: 5 @ifference between consumer e)pectations and management perceptions of consumer e)pectations arising due to inade#uate or inaccurate management understanding of customers% service e)pectations G p? 9St &' r' g ps: 5 @ifference between management perceptions of consumer e)pectations and service #uality specifications arising due to "anagement%s failure to develop performance specifications reflecting customer%s e)pectations. G p4 9Ser%ice Per$or( &ce G p: 5 @ifference between service #uality specifications and the service actually delivered. G p4 9Co((u&ic tio& G p: 5 @ifference between service delivery and what is communicated about the service to consumers resulting in discrepancy between communications to customers describing the service and the service actually delivered. G p@5 @ifference between the perceived service and e)pected service. This gap depends on the si,e and direction of the first four gaps associated with the delivery of service #uality. These ?aps develop due to the following reasons GAP ! 5 .3ack of ade#uate market research .3ack of upward communication between front line staff and "anagement .3ack of interaction with the customers .3ack of segmentation to identify specific needs of the customers GAP ? 5 .3 ack of commitment from "anagement (they may perceive that customer e)pectations are unreasonable) .3ack of ?oal setting .3ack of resources

1E

GAP

45 . neffective recruitment .;ole ambiguity .3ack of training*incentives to perform to the staff .3ack of training to customer on use of service and their roles .3ack of preCtesting when new procedures are introduced .3ack of understanding of customer habits & how they prefer to consume a service (a customer may prefer a slow delivery of food in an e)clusive restaurant compared to an Gdipi restaurant) GAP 4 5 .()aggerated promises . neffective communication .3ack of 6ori,ontal communications with in the organi,ation GAP @ .Too much of ?aps (1 to 2) To close the gaps the following things should be implemented- C !" @evelop customer trust through longCterm strategy rather than a snipCshot superficial programme. ?" Gnderstand customers% habits on how they prefer to consume a service. eg., a customer wouldprefer e)tended hours for a meal in a e)clusive restaurant. 4" +reCtest new procedures and e#uipments before introducing them. The failure of a productivity improvement programme is more damaging than otherwise, e.g., when ndian Airlines introduced computeri,ed reservation system to improve its service, it found that at most places the system remained down most of the time. t created more confusion, both among customers and employees, and proved to be countered productive. 4" Gnderstand the determinants of consumer behaviour in terms of their choiceN by force or by any other e)ternal forces, e.g., shopping behaviour is not even throughout the month. t changes between the first weeks to the fourth week of the monthN it changes between weekdays and weekends. @" Teach consumers how to use service innovations[most people don%t know how to go about treatment in government hospitals[there is a need to make people aware of how to go about from registration to appointment to check[up and treatment, in the same way as traffic routes at ndia ?ate or $onnaught +lace are notified through press and television before introducing them. B" +romote the benefits and stimulate trial. The success in innovation lies in encouraging trial by making the benefit obvious. C" "onitor and evaluate performance. Fne can learn from e)perience[good or bad. As one goes along introducing changes, corrective measures should also be taken simultaneously. These measures should be restricted to redesign of facilities and procedures or e)tending to educating, communicating and promoting the efforts.

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THE @ 0IMENSI,NS ,/ SERVICE 7.A2IT1 ARE AS /,22,WS ,& Which Custo(ers Fu'ge The Ser%ice 7u lit* . Reli )ilit*5 means the ability to perform the promised service dependably and accurately. n other words reliability means that the company delivers on its promises & promises about delivery, service provisions, problem resolution, and pricing. 'or e)ample, 'ed(), this company effectively communicates and delivers on the reliability dimension. . Respo&si%e&ess5 is the willingness to help customers and provide prompt service. This dimension emphasi,es on attentiveness and promptness in dealing with customer%s re#uest, #uestions, complaints and problems. ;esponsiveness also captures the notion of fle)ibility and ability to customi,e the service to the customers needs. . Assur &ce5 is defined as employee%s knowledge and courtesy and the ability of the firm and its employees to inspire trust and confidence. This dimension is likely to be particularly important for service for services that the customer perceives as involving high risk and * or about which they feel uncertain about their ability to evaluate outcomes. 'or e)amples, banking, insurance, brokerage, etc. . E(p th*5 is defined as carrying individuali,ed attention the firm provides its customers. The essence of empathy is conveying through personali,ed or customi,ed service, the customers are uni#ue and special. $ustomers want to feel understood by and important to that provide service to them. 'or e)ample, personnel at small firm know customers by name and build relationships that reflect their personal knowledge of customer%s re#uirements and preferences. 9hen such a small firm competes with large firms, the ability to be empathetic may give the small firm a clear advantage.

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. T &gi)le5 tangibles are defined as the appearance of physical facilities, e#uipment%s, personnel and communication materials. All of these provide physical representations or images of the service that customers particularly new customers, will use to evaluate #uality. Although tangibles are used by Service $ompany%s to enhance their image, provide continuity, and signal #uality to consumers, most company combine tangibles with another dimension to create a service #uality strategy for the firm. E< (ples o$ ho; custo(ers Ku'ge the @ 'i(e&sio&s o$ ser%ice Du lit* . C r rep ir 9co&su(ers:5 !" ;eliability- problem fi)ed the 1st time and ready when promised. ?" ;esponsiveness- accessible, no waiting, respond to re#uest. 4" Assurance- knowledgeable mechanics. 4" (mpathy- acknowledges customers by name, remembers previous problem and preferences. @" Tangibles- repair facility, waiting areas, uniform, and e#uipment%s. . Airli&es 9co&su(ers:5 !" ;eliability- flights to promise destination, depart and arrives on time. ?" ;esponsiveness- prompt and speedy system of ticketing, in flight baggage handling. 4" Assurance- trusted name, good safety records Q competent employees. 4" (mpathy- understanding of special individual needs, anticipates consumer needs. @" Tangibles- aircraft, ticketing counters, uniforms, and baggage areas. . Me'ic l c re 9co&su(er:5 !" ;eliability- appointments are kept on schedule diagnoses prove accurate. ?" ;esponsiveness- accessible, no waiting, willingness to listen. 4" Assurance- knowledge, skills, credentials, and reputation. 4" (mpathy- acknowledges patients as a person, remembers previous problems, good listening, and patients. @" Tangibles- waiting room, e)am rooms, and e#uipment, written materials. . Architecture 9)usi&ess:5 1. ;eliability- delivers plans when promised and within budget. 0. ;esponsiveness- returns, phone calls, adapt to change. 1. Assurance- credential, reputation, and name of the community, knowledge and skills. 2. (mpathy- understanding clients industry acknowledges and adapts to specific clients needs, gets to know the client. 7. Tangibles- office areas, report, plan themselves, billing statement, dress of the employees. . I&$or( tio& processi&g 9i&ter& l:5 !" ;eliability- provides needed information whenever re#uested. ?" ;esponsiveness- prompt response to re#uest not 4bureaucratic% deals with problems promptly. 4" Assurance- knowledgeable staff, well trained, credentials. 4" (mpathy- knows internal customers as individuals and departmental needs. @" Tangibles- internal reports, office areas, and dress of employees. . I&ter& l )roker ge 9co&su(er &' )usi&ess:5 !" ;eliability- provides correct information and e)ecutes customer%s re#uests accurately. ?" ;esponsiveness- #uick website with easy access and no down time.

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4" Assurance- credible information sources on the site, brand recognition credential apparent on site. 4" (mpathy- ability to respond with human interaction as needed. @" Tangibles- appearance of the website and collateral.

-ENCHMAR3ING ,/ SERVICES !enchmarking means measuring the performance of a business against that of the competitors in order to establish S)est pr ctice8. !enchmarking is a part of process of continuous improvement. !enchmarking can be applied at three levels1. nternal !enchmarking. 0. $ompetitive !enchmarking. 1. 'unctional or ?eneric !enchmarking. I&ter& l -e&ch( rki&g5 nternal !enchmarking is normally carried by large organi,ation by way of comparison between operation units. 'or e.g.. Super market chain might benchmark operations across stores, financial across branches, different colleges under the same authority. !ut important thing is how performance is measured Qthis is clear link to the strategy of organi,ation. Co(petiti%e -e&ch( rki&g5 At a second level competitive !enchmarking can be used. This is probably the most fre#uently use where comparisons are made with directly competitive organi,ation. $ustomer participation is necessary because of which it will be easy to achieve in some service environments. 'or e.g- As a hotel owner, it is possible to Ssample% the service to competitor simply by Sposing% the guest. Fften however, this is done in informal manner. A comparative impression gained of the service without e)amining the different facets in a structured way Q attempting to measure them. /u&ctio& l or Ge&eric -e&ch( rki&g5 The third approach is 'unctional or ?eneric !enchmarking, which compares specific functions such as distribution and after sale service. The advantage here is that information is sometime easier to obtain than when comparison are being made with competitors. $are has to be taken in selecting the dimension Q sales to be used for performance measuring and ensuring that due account is taken of all relevant factors.