Masters of Business Administration- MBA Semester 4 MK0015– Services Marketing and Customer Relationship Management Each question carries

10 marks 1. Explain the types of new service developments and its stages Answer:-Types of New Service Development and its stages Before discussing about the types of services, let us first learn the meaning of new service development. Products that are not developed within a framework are less likely to succeed when compared to those developed and implemented within a structured planning framework. The new service development system must have four basic characteristics because of the intangible nature of service. The four basic characteristics are: I. Service must not be subjective, it should be objective. II. It should be well defined not vague or ambiguous. III. It must be based on facts rather than opinions. IV. It should be a step wise procedure rather than a philosophical one. Figure 1.1 depicts the stages of new service development

The different development stages involved in front end planning, which include: 1. Business strategy development or review: The new service developed should align itself with the strategic vision and mission of the organisation. The growth efforts of the organisation must also be considered while developing the new service. 2. New service strategy development: A product portfolio strategy and defined organisational structure for a new product or service development is critical for the success of an organisation. The goals, vision, capabilities, and growth plans of the organisation need to be considered while developing new types of services. 3. Idea generation: Generation of new ideas is the next step in the process. The new service strategy screen screens the idea developed at this phase. Brainstorming, ideas from employees and customers, lead user research, learning about competitors are the methods used for idea generation. 4. Service concept development and evaluation: The development phase begins once the idea is regarded to fit both the business and new service strategies. For a tangible product, forming the product description and drawings and presenting it to customers would be the next step. 5. Business analysis: Estimating the economic feasibility and potential profit implications form a part of the next step after development. Demand analysis, revenue projections, cost analyses and operational feasibility are assessed at this stage.

· Excess capacity: Optimum capacity is way above demand. Service firms face the problem that they cannot store their inventories during a slow moving period for a higher demand period later. airline seats that are not sold on a particular day cannot be resold on another day. equipment and facilities are underutilised. customers may feel disappointed thinking that they have chosen an inferior service provider.Q.2 Explain the concept of lack of inventory capability in managing supply and demand in service Answer:. For example. Fluctuating demands and lack of inventory capability combined together result in a number of potential outcomes as shown in figure 1. In this scenario. employees are not overworked. the number of rooms in a hotel remains constant but the demand fluctuates. · Demand and supply are balanced at the level of optimum capacity: Staff and facilities are kept occupied at an optimal level. The challenges faced in managing supply and demand may not be the same for all companies. hotel services cannot be moved to another location during low demand periods. due to crowding. Here. The demand fluctuates and hence it is represented by the sloping line. · Excess demand: Maximum capacity is exceeded by the level of demand.2: Variations in Demand Relative to Capacity The straight horizontal lines in the figure represent service capacity and the sloping lines indicate customer demand for service. since the productive resources such as labour. The optimal capacity is represented in between the second and third horizontal line. facilities are maintained and the customers receive prompt quality service. The quality of service may not match what was promised even though the customer is served. overuse. there is lack in inventory capability. The uppermost horizontal line indicates maximum capacity. The extent of demand fluctuations over time and extent to which supply is constrained are the . Capacity is generally fixed in many services and hence. designated by a flat horizontal line. Services are produced and consumed simultaneously and hence. For example.2 Figure 1. It results in low productivity and profits. For example. Cases where the service quality depends on the presence of other customers. Optimal capacity is the ideal use of capacity from the company and customers perspective. and pushing staff beyond their abilities to deliver consistent quality. · Demand exceeds optimum capacity: The quality of service will suffer. The other problems associated with services are that they can not be transported from one place to another nor can they be transferred from one person to another.Lack of inventory capability in services is the underlying fundamental issue in the management of supply and demand. The useful capacity of that seat has perished. business may be lost since some customers are driven away. Perishability of services is the cause of lack of inventory capability. This happens because the employees are overworked and the facilities are also overtaxed.

sales promotion. advertising. The figure 1. and discipline. It also includes internet marketing. Q 3. Integrated Marketing Communications (IMC) is an approach. in which all the processes are interdependent on each other for proper functioning and achieving the goal setup for them. Customer lifetime value and the regression analysis are the important elements in the IMC approach. Price. and personal selling activities.driven approach to identify the areas of the customer interest and develop a strategy with the right channels (combination of different advertisement media) to create a stronger brandconsumer relationship. A comprehensive integrated marketing communication planning is needed to accomplish this task.Integrated marketing process model is a concept under which a company integrates and coordinates its many communications channels to deliver a clear. in order to gain an edge over competitor. database marketing. Examples of firms with narrower fluctuation are insurance.two main reasons that govern the seriousness of the problem. functions. planning. and sales. It is a closed process cycle. . when to use. Marketing mix is a part of the marketing plan and promotion is a part of the marketing mix. Integrated marketing communication for services is considered to be the combination of market communication. and public relations. IMC uses a data. Figure 1. and marketing communication tools within a company into a flawless process that can maximise the impact on the user. It is developed to make the maximum market impact. while maintaining the low cost for the company. IMC is the integration of all these different promotional tools along with other components of marketing mix. consistent. and how to use the different media resources to mark the maximum impact on the consumer and their choice.3 shows how different processes of the business system interact with each other to develop sales. Promotional activities include advertising by using different media (for example print media and electronic media). The main aim of the organisation is to maintain communication between the customer and the organisation.3 Brief discussions of the main processes are as follows: • Cross functional monitoring: All parts of the organisation should be monitored for the performance while delivering quality service and should be evaluated for maintaining the brand relationship. It is also considered to be a part of the marketing communication planning. sponsorship marketing. and laundry services. and compelling message about the organisation and its services[2]. banking. and Place) which constitute different styles of marketing. places. What is the integrated marketing process model? Explain in brief. and brand equity. This approach involves knowing what to use. The starting point of the IMC is the marketing mix (Product. direct marketing. Answer:. Promotion. which coordinates and integrates all sources. profit.

9. which meet the requirement of customers. recreation and entertainment services. Public administration and defence. Business services including accounting. architectural. Like the Annual Survey of Industries (ASI) that is devoted to collection of data from manufacturing and few other categories of units included in the lists maintained by the Chief Inspectors of Factories. • Database and information technology: This enables the organisation to take the decision faster by conducting research and implementing new technologies. The American Marketing Association defines services as activities. software development. the database in this Sector is highly disorganised. Although the Services Sector has a very pivotal role in the country’s economic development. medical and health. Hotels and restaurants 3. A major limitation of the existing statistical system in this respect is the absence of a well-organised mechanism for maintaining a regular and proper database for this Sector. advertisement and other business services 8.The definition of service sector in the Indian context is provided by section 2 (r) of the Monopolies and Restrictive Trade Practices Act. business and management consultancy. It is a method for evaluating strategic planning and can be built into the strategic planning model of the organisation. Transport including tourist assistance activities as well as activities of travel agencies and tour operators 4. 1969. 10. chit fund. insurance. • Brand relationship: Building the brand relationship with the customer requires a continuous interaction between the organisation and the customer. Real estate and ownership of dwellings 7. Trade 2. engineering and other technical consultancy. Storage and communication 5. entertainment. Under the said statute a “service means service which is made available to potential users and includes the provision of facilities in connection with banking. which are offered for sale and are provided with the sale of goods. which are present in service but are not found in case of products. weakness. religious and other community services. Activities comprising the service sector in India 1. processing. Other services including education. financing. transport. It will help in building up the brand equity and maintaining a healthy customer relationship. amusement or the purveying of news or other information.• SWOT analysis: SWOT stands for strengths. there were attempts to differentiate physical products from services by defining characteristics. opportunity and threats. board or loading or both. Q 4. data processing services. benefits or satisfactions. This definition is considered to be too broad as products also offer benefits and satisfaction to customers. Answer:. So. supply of electrical or other energy. • Brand messages: It involves the strategic consistency of brand positioning using big creative ideas and mass media for spreading those messages to the masses. Personal services and activities of extra-territorial organisations and bodies. Banking and insurance 6. real estate. Define service sector in India and classify the major service sectors. there is no such scheme in the Services Sector . legal services.

a sound official statistical system should endeavour to address all these methodological issues for properly estimating the size and contribution of the Services Sector marked by a rapid change in its composition Q 5. and so on. from which you can select by pressing respective key on your handset. Further.for annual collection of data from the units either having a large number of workers or contributing significantly in terms of annual turnover. new tariffs. which involve: · A communications perspective: this is the delivery of information. · A service perspective: this involves enabling cost cutting at the same time as increasing the speed and quality of service delivery. This system provides you with number of options such as call charges. The problem of data collection from this Sector through the Follow-up Enterprise Surveys of Economic Census is compounded by the fact that the Sector is dominated by a large number of unorganised units. Suppose you want to sell your motor cycle. an automated voice response system responds to your call. The main difficulty in this regard is the non-availability of an up-to-date frame of such units. Thus. the website also allows . This technology has revolutionised the way in which the money transaction takes place in our day to day activities. Let us discuss these perspectives. which uses the technological advancements for their marketing purpose. Let’s discuss the new approaches of service marketing. almost all the major banks today issue credit and debit cards to its customers. It always makes an impact on the strategy making process. when you call a mobile service provider for queries. the composition of units in the domain undergoes changes at a rapid pace because new units or newer service areas come into existence and others disappear with alarming frequency. e-Commerce Kalakota and Whinston (1997)[3] refer to a range of different perspectives for e-commerce that highlight the type of communications involved. ordering and delivery of magazines or newspapers. For example e-bay. e-Commerce and e-marketing are the new concepts that make use of the information technology for the marketing of the services. You can upload the details of your bike in this website. For example. · An on-line perspective: this involves buying and selling of products/services and information on-line. Similarly. The person interested to purchase your bike can quote a price. Zwass (1998) uses a broad definition of e-commerce. products/services or payment is done by electronic means. This is a website where you can buy and sell any product of your choice. the amount of money used for the transactions will be automatically deducted from our bank account. When we make transactions using these cards. Mention the technical options in the service marketing. For example. · A business process perspective: this involves the application of technology towards the automation of business transactions and workflows. Let’s discuss them in brief. For example. Use of technology has always been a part of the strategy of every organisation. Even the door to door services provided by restaurants come under this perspective. Answer:Technical options in the service marketing.

a customer can get special calling rates or can get special discounts while paying his monthly telephone bills. Moving from one service provider to another service provider generally involves more investment of money and time.  Benefits for customers Customer can get the following benefits from relationship marketing: • Confidence benefit: The customers are confident about the quality of service and the service provider itself. CRM can benefit both the company and the customers. This gives you an opportunity to sell the bike to the person who has quoted the highest price. especially internet. • Internet characteristics as it are mostly based on internet to realise business activities. These services can help the companies to maintain their relationship with the customer and enhance them. preferential treatments. long term customer of a telecom company gets more attention and help from the staff of the company. The customers get the benefit of the desired quality of services.  Benefits for company . For example. customer can get a social support benefit.many personnel to quote a price for the same product. However eBay charges the customers for providing such services. The information stored in CRM helps the company to get more information about the customers. The company knows what the customer expects and the customer knows what kind of service they can expect from the service provider. special offers and special services. contribution of business information. For example. and conducting business communication by means of telecommunications networks. · • Social benefit: With the long term relationship with a company or firm. namely: • Business environment as it is a business model. Over the time. The local staff might be more familiar with the customer. Let us now discuss the benefits CRM provides to customer and the company. • Special treatment benefit: With the long term relationship. Q 6. On the other hand. customer can get the benefit of special treatment like benefit of doubt. customer feels more familiar in the environment of the company. e-Business in a broader term refers to both buy side and sell-side e-commerce and the internal use of network technologies through a local and modernised business processes. Kalakota and Whinston refer to e-commerce as a way of maintaining business associations. customer develops a feeling of familiarity with the company and the service being provided. • Digital characteristics because information in the e-commerce is transmitted in digital form. special discounts. e-Commerce should emphasize on three points. What are the key benefits of CRM? What are the main difficulties involved in CRM? Answer:Benefits of CRM CRM is implemented by the company to provide more velocity to their effort in maintaining lifetime customer and customer loyalty. This is one of the benefit that the customers enjoy when they are involved in a long term relationship with the company.

there is a need for the proper selection of the requirements. There is always a need for large number of resources in the CRM. the policies need to be clearly defined. it also has some difficulties involved with its implementation. reduction in administrative cost. Lacking resources: CRM development and implementation is a resource hungry process. The complexity of the CRM often misleads the developmental and implementation process into different direction. It is easy to train new staff by allowing them to deal with the loyal customers as the behaviour of the customer is known. service provider keeps getting more of the business from the satisfied customers. It also has to store the information of the customers and has to analyse the stored information. 6. . The requirements must be clearly defined and implemented. Like in any management approach. The CRM is generally built around these needs provided by the company. Sometimes it may lack the resources while in the development or implementation phase. Not customer centric: The most important aspect in the CRM is that it has to be customer centric. it will lack the ability to capture all the aspects of the customer and may miss out in collecting some important information from the customer that might be crucial for analysis and framing out the policy. 5. Insufficient focus on main objectives: The development of a good CRM requires effective implementation of the company policies. increase in the expense by customer. • Customer behaviour benefit: The best benefit that a service provider company can get from the satisfied and long term customer is the free mouth-to-mouth publicity. • Human resource management benefit: Loyal customers can help in making the job of the staff much easier with the previous experience with the company. even while it is in the operational stage also. CRM checks for the following: The main problems involved in the CRM are as follows: 1. Let us now discuss about these difficulties in this section. • Difficulties Involved in CRM In the previous section. The implementation of the CRM should focus more on the primary objectives than on the secondary objectives. 4. Although CRM provides many benefits. good margin in profit without reduction in price of the services. 3. Working is easy with the long term customers and also staffs like to work for the company which has a stable customer base. The second benefit that the company can get from the loyal customer is that they try to help the company to provide quality services and also help the company to perform better. As the satisfaction of the customer increases with the service provider. Wrong need selection: While developing the CRM system. developing customer relationship. Investment is required in training man power. Excessive cost: The implementation and development of CRM requires huge investment of resources. CRM also has some difficulties involved in its planning and implementation. It interrelates with almost all the departments of the company. it will affect the effective performance of the CRM system. 2. we have discussed the benefits of CRM. It also requires time investment. If the CRM tends to be more company defined. If wrong selections are provided. and in creating effective policies. far away from the framed policies. Complex system: CRM is a complex system.Companies can get the following benefits from relationship marketing: Economic benefit: The overall returns come from reduced marketing cost.

Slow returns: The returns from the CRM are generally slow. effective and efficient implementation of those policies. Also. . The return also depends upon the effective use of the CRM and effective policies being developed on its basis. There is a huge investment cost of the CRM and CRM will take time to return this cost back to the company.7.

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