[SEMESTER 5

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[SERVICE SECTOR MANAGEMENT]

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 IBM offers repair and maintenance service of equipment, consultancy, training services etc. These services may include a tangible product like a report or train manual. Customer Services , however is the service provided in support of a company’s core product – ike answering question , taking orders ,dealing with billing issue , handling complaints etc Typically there is no charge for customer service is essential for building customer relationship . Customer services are hence different from services provided for sale by a company. Federal Express market and delivers services. It also provides a high level of customer services. Its services are overnight package delivery, and logistics services. Its customer services include well trained staff who can answer all question 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. Marketing a service is meant marketing something intangible. It is marketing a promise. It is more selling yourself. In the marketing of services, we go through a number of problems directly or indirectly influencing the business index. The problems like market segmentation, marketing information system, behavioural management are studied minutely which simplify the task of formulating a sound mix for marketing, such as Product mix, Promotion mix, Price mix and the Place mix. It is important to mention that we find “People” an important mix of marketing services. If we market the services in a right direction, the available opportunities can be capitalized on optimally and also it contributes substantially to the process of development. In view of the above, we observe the following key points regarding the concept or perception of services marketing: It is a managerial process of managing the services. It is an organized effort for providing a sound foundation for the development of an organization.

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It is a social process helping an organization to understand the emerging social problem and to take part in the social transformation process to justify its existence in the society. SERVICE MANAGEMENT Service Management is : 1) To understand the utility the customers rceicve by consuming or using the service offering of the organization 2) To understand how the organization (personnel, technology, physical resources, systems and customers)will b able to produce and deliver this utility 3) To understand how the organization should be developed and managed so that the intended quality can be achieved 4) To make the organization function so that this quality can be delivered on a continuous basis GOODS SERVICE CONTINUUM As per Theodore Levit “There is no such things as service industries. There are some service industries whose service component are greater (or less) than those of other industries”. Everybody is in service. The point that Leavitt was trying to put across is that with almost every tangible physical product an intangible servicecomponent is associated. Therefore every body is in service.He has further put that goods can be put into two categories

Philip kotler suggests 4 categories 1) Pure tangible (salt) 2) Major tangible with minor intangibles (soap) 3) Minor tangible with major intangibles (consultancy) 4) Pure service (teaching)
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The above diagram shows the Service – goods continuum – some goods being tangible dominant others being service dominant. The fast food outlets has almost 50/50 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. In 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. We never known about service with out experiencing and in this manner various goods fall in place according to its category i.e. less service oriented or more service oriented.

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or improvement of a product (owned goods service) No product elements but rather experience or what might be termed as experiential possession (nongoods service) ** Blois defines services. This definition took a limited view of services as it proposed that services are offered only in connection with sale of goods. ** Gummesson says. take place in interactions between the customer and the service employees and/or physical resources or goods and/or system of the service provider. “ Services is something which can be bought and sold but which you cannot drop on your foot”. not necessarily.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] ** American Marketing association has defined services as “activities. ** According Gronross “a service is an activity or series of activities of more or less intangible in nature that normally. hich are provided as solution to customer problems.8 Characteristics of Services and its Marketing Implications The main Characteristics of Services are : Intangibility Inseparability Heterogeneity Perishability Intangibility 5 ONLY FOR MANAGEMENTPARADISE. as “a service is an activity offered for sale which yields benefits and satisfactions without leading to physical change in the form of a good” ** Kotler and Bloom defines services as “an activity or benefit that one party can offer to another that is essentially intangible and dos not result in the ownership of any thing. Its production may not my not be tied up to a physical product”. ** Robert Judd defined services as “ a market transaction by an enterprise or entrepreneur. 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 Customer has a role to play in the production process as services are provided in response to the problems of customers as a solution. which are offered for sale or provided in connection with sale o goods”.” From this it follows that Services are by and large activities. benefits or satisfactions.COM MEMBERS| [Complied By Vishal. repair. 1. where the object of market transaction is other than the transfer of ownership of a tangible commodity” This recognised three broad areas of services The right to possess and use a product (rented goods service) The customs creation. B ] .

Hotels have same number of rooms all through the year but the customers requiring the room are always varying with some months seeing very few customers while other months seeing a rush of customers. it is not possible to get economy of scale by centralisation. Heterogeneity As services are produced by humans. The quality depends upon a number of factors like the customer. The service producer also plays an important role in quality.COM MEMBERS| [Complied By Vishal. other customers and also to the service producer. Donald Cowell states ‘Goods are produced. Due to this it is not possible to stock services and hence fluctuations in demand becomes difficult to manage. sold and then consumed whereas the services are sold and then produced and then consumed. Eg. This also creates a problem for what to include in advertisements and promotional materials. Services and their providers are associated closely and thus. 6 ONLY FOR MANAGEMENTPARADISE. A “problem customer” can result in disruption of service production process creating a dissatisfaction forhimself. health experts and other professionals create and offer their service at the same given time. hence no two services can be identical. Thus the customers are present when the service is produced thus other customer play an important role in satisfaction. Further no two customers are precisely alike and hence their experiences of the same service are different. other customers (their presence or even absence) etc. not separable. They are inseparable. operations has to be decentralised to deliver to the consumer directly at convenient locations. Further services cannot be patented and any new concept can be easily copied by competitors. and hence it will be difficult for the consumers to assess the quality.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] Services are actions and hence they are intangible.. service provides. Thus mass production is impossible. Even 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 dinning experience. hence the service provider cannot know if the service is delivered in a manner which has been originally planned and promoted.. A tax consultant may provide different a service experience 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. Because of this ensuring a consistent quality becomes a challenging job. Further the actual cost of “unit service” is difficult to determine and hence pricing becomes difficult.’ A service is produced when it is consumed eg. For e. These cannot be readily displayed or easily communicated. B ] . Inseparability Services are generally created or supplied simultaneously. Sometimes services are provided by a third party further increasing the heterogeneity. the entertainment industry.

we have seen the coming up of service providers like pollution control agencies. etc. etc. home computers. interior designer. etc.5 in 1998 is an indicator of he increase in general affluence has given rise to service like pest-control. Life complexity: . individuals find it difficult to manage things on their own. etc. Product complexity: . B ] . Affluence: . the need for day care for children has increased. of products are now being purchased in households which can be serviced only by specialized persons like water purifies. The reasons for this growth are quite a few.934. There are other’s who would like to utilize this time to improve their career prospects and therefore there is a need for adult education/distance learning/part time courses. property advisers.COM MEMBERS| [Complied By Vishal. micro wave ovens. hotels. and so is the care with packed food and home delivery.The health programmed have significantly contributed to an increase in life expectancy given rise to services like old age homes.A large no. giving rise to the need for services like after sales service agents for durables. Hence demand forecasting and creative planning to meet the demand is a problem. etc.As the daily routine gets busier. health care. Due to these characteristics of services the marketeers face a major challenge in marketing of Services.People do get some time to travel and holiday and therefore there is a need for travel agencies. resorts. personal security. maintenance service providers. and entertainment. Their leads to an obvious need for tax consultants. Further one has to be right the first time or if things go wrong one should have strong recovery strategies to retain the customer goodwill.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] Perishability Services cannot be stored.The increase in per capita income from Rupees 238. water management. pools.8 in 1950 to Rupees 11. etc. Leisure time: . 7 ONLY FOR MANAGEMENTPARADISE. car. REASONS FOR THE GROWTH OF SERVICE INDUSTRY • • • • • • • • • • It is obvious that the growth in the services sector has been substantive.As the natural resources are depleting and need for conservation is increasing. legal advisors. nursing homes. saved. Working wives: . Life expectancy: .As more and more women have started working. Resource scarcity and ecology: . resold or returned. A bad haircut cannot be returned or resold to another customer. some of which are summarized as follows.

otherwise the service sector grown will not be sustainable. the industrial and service sectors contribute a major share in GDP while agriculture accounts for a relatively lower share).38 per cent to 22.16 per cent in 1998-99. It is true that.83 per cent in the respective years. economic growth can be distorted. • The service sector's share has grown from 43. 35% from industry.01 per cent in 1990-91 and 1998-99 respectively. The rise in the service sector's share in GDP marks a structural shift in the Indian economy and takes it closer to the fundamentals of a developed economy (in the developed economies. This sector has gained at the expense of both the agricultural and industrial sectors through the 1990s. 8 ONLY FOR MANAGEMENTPARADISE.16 per cent in 1998-99. Pager service providers. the service sector's contribution in GDP has sharply risen and that of industry has fallen (as shown above). In contrast.[SEMESTER 5] • [SERVICE SECTOR MANAGEMENT] New products: . B ] . As countries develop the role of agriculture in the economy declines and that of services increase. the industrial sector's share in GDP has declined from 25.the development in information technology has given rise to services like PCOs.(china has 50% GDP from service.69 per cent in 1990-91 to 51. in India. Web Shoppe.COM MEMBERS| [Complied By Vishal. and 15%from 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 INDIAN SCENARIO • The service sector now accounts for more than half of India's GDP: 51. They say that service sector growth must be supported by proportionate growth of the industrial sector. etc CONTRIBUTION OF SERVICE INDUSTRY TO INDIAN ECONOMY AND WORLD ECONOMY WORLD SCENARIO • as economy shifts from developing to developed stage.93 per cent to 26. but there has been a trade surplus in services • today service sector dominates the economics of many developed nations. they will show more and more shift toward services • today. The agricultural sector's share has fallen from 30. the fastest growing segments of the US economy is services • in 1948 54% of the GDP of US was generated by services which is 80% now • employment in this sector which was 55% in 1950 is now 83% • the US balance of trade in goods has remained in the red for many years. • Some economists caution that if the service sector bypasses the industrial sector.

etc. etc. most of the tax came from manufacturing sector.52 per cent in 1990-91 to 15. It is expected that service exports could a third of merchandize exports now this will be well above the global average of ¼. The share of transport.68 per cent in 1998-99. example:.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] • • • • • • • • • • • • • • • But.61 per cent in the years under reference. the service sector has grown at a higher rate than industry which too has grown more or less in tandem. insurance.2 billion.26 per cent to 7. AD agencies. Within the services sector. IT. B ] . others are Insurance.COM MEMBERS| [Complied By Vishal. HEALTH. Three times between 1993-94 and 1998-99. 83% of this is contributed by service sectors. MEDICAL TRANSCRIPTION. the share of agriculture sector to GDP has come down from 50% in 1960 to 24% service sector contribution to GDP is around 54% with an annual growth of 8% employment in this sector is around 50% the response to liberation has been more in service sector.22 per cent to 11. and grown quite impressively through the 1990s (except in 1998-99). partly because lower fixed investment requirements. industry surpassed the growth rate of GDP. in last 25 years the increase in employment in the organized sector is 57% while if only service sector is considered it is 70%(other than service sector it 41%) India’s service exports in1997 were 9. many export benefits like EPCG is now extended to the service sector.Telecom. It implies that India which has failed to catch the bus in the exports of manufactures is among the early leaders of the developing world in the race for service exports. real estate and business services has risen from 10. Courier and stock brokers. EDUCATION. The rise of the service sector therefore does not distort the economy. from 1996 BSE has given a prominent place to service industry in it’s 30 share index since no tax is imposed on agriculture sector. storage and communications has grown from 5.. hotels and restaurants increased from 12. 51% . 9 ONLY FOR MANAGEMENTPARADISE.today’s concept of banking technological advances have made it possible for India to compete on global basis in areas like SOFTWARE.3 billion $ against its merchandized exports of $32.44 per cent. in addition lower wage structure has helped to develop CALL CENTRE’s. Thus.. it is equally true that the industrial sector too has grown. now services are being taxed service tax collection is to the tune of 5000 crore. the share of trade. The share of construction has remained nearly the same during the period while that of financing.

Hence while targeting a customer the service provider may have to influence other persons. • His boss may be the initiator • The travel agency may act as a Gatekeeper • The finance department may be the influencer • The administrative department the buyer • The executive the user. B ] . UNDERSTANDING THE CONSUMER 1 KNOWLEDGE OF THE BUYER In buying decisions many times other people also influence the decision. 10 ONLY FOR MANAGEMENTPARADISE.[SEMESTER 5] • [SERVICE SECTOR MANAGEMENT] The fact that the service sector now accounts for more than half the GDP probably marks a watershed in the evolution of the Indian economy.COM MEMBERS| [Complied By Vishal. In this case the user may have no role in the buying process. which act as filter on the range of services which enter the decision choice • Decider : The person who makes the buying decision • Buyer : The person makes the actual purchaser • User : The actual user. For example if a sales executive wants to do a market tour ……. In purchase of any service six distinct roles are played Initiator : The person who has a specific need and proposes to buy a service • Influencer : The person or group of persons whom the decision maker refers to or who advice the decision maker. • Gate Keeper : The person or organization or promotional material. In services these roles are played by many persons.

(On a holiday a customer may change hotels in between his stay). interested in the consumer decision-making process by which a consumer selects an alternative amongst the lot available. B ] . Marketing Stimuli (the occasion) • Personal Factors : Personality. Marketer are. It signifies the marketing strategy has been wise. Input Variables:Input variables are those variables which affect the decision making process and include commercial marketing efforts as well as non-commercial influences from the consumer’s socio-cultural environment. Process Variables. occupation etc. Both pre-purchase and postpurchase evaluation feed back in the form of experience into the consumer’s psychological field and serves to influence future decision processing. 3. life style. 2. The decision not to buy is also an alternative. social and cultural concepts into an easily understood framework. Other demographic factors like age. whether it was poorly planned and missed the mark. reference group. Input Variables. The consumer’s decision to purchase or reject a product or service is the moment of final truth for the marketer. The decision model has three distinct sets of variables: 1. Output Variables:The output phase of the model includes the actual purchase (either trial or repeat purchase) and post purchase evaluation. • Social Factors : Culture. motivation TEN SUCH QUALITIES EVALUATION OF 11 WHICH INFLUENCE THE CONSUMER’S ONLY FOR MANAGEMENTPARADISE. Output Variables. family • Psychological Factors : Perception. attitude. A simple consumer decision-making model. Decision Variables:The decision process variables are influenced by consumer’s own psychological fields. which affect their recognition of a need. gender.COM MEMBERS| [Complied By Vishal. Store’s atmosphere. ties together the psychological. Factors Influencing The Buying Behaviour • Situational Factors : Time.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] CONSUMER DECISION MAKING. insightful and effective. their prepurchase search for information and their evaluation of alternatives. therefore.

involving physical safety. E. knowledge and skill of operating support personnel and research capability of the organization.it involves making the effort to understand the customer’s needs.it involves trustworthiness. Concern:-it is the willingness or responsiveness of employees to provide the service. B ] . Communication:. report. honesty. It involves having the customer’s best interest at heart thus contributing to credibility. It includes consideration for the consumer’s property. waiting time to receive the services is not extensive.COM MEMBERS| [Complied By Vishal. record keeping and performing the service at the designated time.g.the security and the freedom from risk or doubt. company name and reputation. believability. It may mean that the company has to adjust its language for different consumers – increasing the level of sophistication with a well educated consumer and speaking simply and plainly with a novice. THE SERVICE ENCOUNTERS (“MOMENT OF TRUTH. Confidentiality: .it includes physical evidence of the service.it involves consistency and reliability of performances and dependability. calling the customer back quickly or mailing the transaction slip immediately. providing individualized attention and recognizing the regular customer.”) 12 ONLY FOR MANAGEMENTPARADISE. E. It means that the service is easily accessible by telephone.e. convenient hours of operation and convenient location of service facility. consideration and friendliness of contact personnel. no muddy shoes on the carpet.it involves politeness. financial security or confidentiality. It involves knowledge and skill of the contact personnel. Credibility: . access and ease of contact. Contact:. securities brokerage firm. It involves explaining the service itself and how much the service will cost explaining the trade-off between service and cost and assuring the customer that a problem will be handled.it means having the required skills and knowledge to perform the service.g. Tangibles: . Clean and neat appearance of public contact personnel.it involves approachability. and appearance of personnel tools or equipments used to provide the service. It means that the firm performs the service right the first time. physical facilities. It also means that the firm honours its promises especially in terms of accuracy in billing. i.it means keeping consumers informed in a language that they can understand and listen to them. learning the customer’s specific requirements. personal characteristics of the contact personnel and degree of hard sell involved in interaction with the customer. proper telephone operators etc. Competence: . Courtesy:. It involves timeliness of service or giving prompt service. physical representations of the service such as a plastic credit card or a bank statement and other customers in the service facility. Customer knowledge: .[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] SERVICES (Quality Dimensions of Services) Consistency: .

” when the customer interacts with the service firm. However some encounters are more critical. as they are critical and influences customer’s perception of the organization. Combination of positive and negative interactions will leave the customer confused about the Quality. For example: for MARRIOT hotels. certain encounters can act as a key to customer satisfaction. it is the early encounters that are important. the most vivid impression of service occurs in the service encounter or “Moment Of Truth. For every organization.COM MEMBERS| [Complied By Vishal. He has a huge deposit and many accounts. no matter how many encounters had taken place in the past. The encounter cascade refers to a series of encounters right from the time a customer comes to take the service. At this stage the Customer realises the perceived service quality. One fine morning. each encounter will be important as it will create a combined image of that firm.” The same applies in this too. Example: A 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. when he comes out of the bank the watch man asks Rs. If it’s the first interaction of the customer then the initial interaction will be the first impression. The encounter cascade can be important as any encounter can be critical. Most services are results of social acts.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] MOMENTS OF TRUTH From the customer’s point of view. which take place in direct contact between the customer and the service provider. This is the foundation to “Satisfaction of Service Quality” – it is where the promises are kept or broken. the firm may not get a chance to prove themselves in front of the customer. each one of their 10 million customers come in contact with 5 employees. taking the metaphor from Bull Fighting. Thus the airlines say there 50 million moments of truth – each one is managed well and “They prove they are the BEST”. So a firm has to give a lot of importance to such encounters. When the customer has had many interactions with firm. So. It is suggested that not all encounters are equally important in building longterm relations. B ] . In a hospital context. one negative encounter can drive the customer away. This concept was put forth by Richard Norman. as it determines customer satisfaction and loyalty. 10 for 13 ONLY FOR MANAGEMENTPARADISE. As it is rightly said “one bad apple can ruin the whole basket of apples. “A customer who has been using a bank for nearly 15 years is quite happy with the service. a study of patients revealed that encounters with the nursing staff were more important in predicting the customer satisfaction. Even if the technical quality of that firm is superior. these interactions have to be given importance. ENCOUNTER CASCADE Every Moment of Truth is Important – according to Scandinavian Airlines. Many positive experiences will give an image of High Quality and many negative experiences will represent a bad image.

who says he is helpless as this is a new policy of the bank.COM MEMBERS| [Complied By Vishal. Some services have few service encounters and others have many. and face – to – face encounters. There are three general types of encounters . who directs him to the officer. The officer directs him to the Manager. MARRIOT Hotels learned this through their extensive customer survey to determine what service element contributes to customer loyalty. phone encounters. each encounter represents an opportunity to prove its potential as a quality service provider and to increase customer loyalty. They found that 4 out of 5 factors came into play in the first 10 minutes of the guest’s stay. A customer 14 ONLY FOR MANAGEMENTPARADISE. TYPES OF ENCOUNTERS A service encounter occurs every time a customer interacts with the service organization. Among the service encounters a hotel customer experiences are checking in. Mistakes 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.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] parking charges of his car.remote encounters. It is in these encounters that the customer receives an overall view of the organizations service quality and encounter contributes to customer satisfaction and willingness to do business with the organization again. As for the company. B ] . He goes inside the bank and informs the clerk at the counter. The customer who was so happy with the bank services decides to close all his accounts – “Some encounters can be very Critical”. eating a restaurant meal etc as shown in the figure. being taken to the room by a bell person.

In a hotel. airline ticketing. or a combination of all three in his or her relations with a service firm. Remote encounters also occur when the firm sends its billing statements or communicates others types of information to customers by mail. food and beverage servers and others. employee knowledge. or with Ticketron through an automated ticketing machine. receptionist. each represents an opportunity for a firm to reinforce or establish perceptions in the customer. particularly with the advent of Internet applications. or with a mail-order service through automated dial-in ordering. The judgment of quality in phone encounters is different from remote encounters because there is greater potential variability in the interaction.COM MEMBERS| [Complied By Vishal. repair and maintenance troubleshooting. B ] . Face-to –Face Encounters:A third type of encounter is the one that occurs between an employee and a customer in direct contact is called as Face-to-Face Encounter. face – to – face encounters occurs between customers and maintenance personnel. the most frequent type of encounter between a customer and the firm occurs over the telephone is called as phone encounter. or order-taking functions.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] may experience any of these types of encounters. general inquiry. EXAMPLE:Services are being delivered through technology. bellboy. Although there is no direct human contact in these remote encounters. Retail purchases. Tone of voice. All of these types of service encounters can be considered remote encounters. Such as. Phone Encounters:In many organizations. In remote encounter the tangible evidence of the service and the quality of the technical process and system become the primary bases for judging quality. Determining and understanding service equality issues in face – to –face 15 ONLY FOR MANAGEMENTPARADISE. and effectiveness/efficiency inhandling customer issues become important criteria for judging quality in these encounters. Almost all firms (whether goods manufacturers or service businesses) rely on phone encounters in the form of customer-service. when a customer interacts with a bank through the ATM system. and package and shipment tracking are just a few examples of services available via the Internet. Remote Encounter:Encounter can occur without any direct human contact is called as Remote Encounters.

as are tangible cues such as employee dress and other symbols of service (equipments.face encounters the customer also plays a role in creating quality service for herself through her own behaviour during the interaction. telling others about the negative experiences or even challenging through consumer courts. and others. and bottom-line performance. in a business-tobusiness setting direct encounters occur between the business customers and salespeople. For a company such as. and physical settings).. delivery personnel. and professional consultants. the outcome may be incorrect or poorly executed. Research has shown that resolving the problems effectively has a strong impact on the customer satisfaction.g. It is suggested that customers who are dissatisfied. The customer is so thrilled with this compensation that he is extremely satisfied with this experience. maintenance personnel. face-to-face encounters occur between customer and ticket-takers. may be more satisfied and more likely to repurchase than are those who are satisfied at the first place. In face – to – face encounters the customer also play an important role in creating quality service for herself through her own behaviour during the interaction. Of all determining and understanding service quality issues in face-to-face context is the most complex. For example:A hotel customer who arrives & finds there is no room available. If left unfixed they can result in customers leaving. but not very rational. Customers who experience service failures. maintenance representatives. conclusion is that 16 ONLY FOR MANAGEMENTPARADISE. actors in Disney character costumes. equipment. or employees may be rude or uncaring. SERVICE FAILURES AND RECOVERY • SERVICE FAILURES Even with the Best organizations failures can just happen – they may be due to the service not available when promised. the front-desk person immediately upgrades this guest to a better room at the same price. it may be delivered late or too slowly (some times too fast ??). but experience a high level of excellent service recovery. IBM. as are tangible cues such as employee dress and other symbols of service (e. is even more impressed with the hotel than he was never before. At Disney theme parks. informational brochures. informational brochures. but are ultimately satisfied based on recovery efforts by the firm.COM MEMBERS| [Complied By Vishal. food and beverage servers. ride personnel. THE RECOVERY PARADOX. The logical. physical settings). loyalty.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] context is the most complex of all. Both verbal and non-verbal behaviours are important determinants of quality. will be more loyal. In an effort to recover. and vows to be loyal into future. All these types of failures bring about negative experiences. In face to. Both verbal and non-verbal behaviours are important determinants of quality. B ] .

[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] companies should plan to disappoint customers so they can recover &gain even greater loyalty from them as a result. Considering mixed opinions on if recovery paradox exists it is safe to say “doing it right the first time” is the best and safest strategy. customer can respond in a variety of ways as illustrated in the figure.COM MEMBERS| [Complied By Vishal. Then there is a recent study which shows no support to recovery paradox. giving the company the opportunity to respond immediately. dissatisfaction at some levels will occur for the customer. relatives. and potentially avoids any negative word of mouth. and coworkers. Thos is often the best-case scenario for the company it has the second chance right at that movement to satisfy the customer. In cases where the failure can be fully overcome the failure is less critical. research suggest that variety of negative emotion can occur following service failure. no matter what the recovery effort is. HOW CUSTOMERS RESPOND TO SERVICE FALIURE If customers initiate action following service failure. overall feelings about the company will decrease and repurchase intentions will also reduce. Many customers are very passive about their dissatisfaction.pity and anxiety. The recovery paradox is more complex than it seem. First of all it is expensive to fix mistakes and would appear ridiculous to encourage service failure-as reliability is the most important aspect of service quality. or the recovery effort is clearly superlative. This type of failure may be too much to be overcome by any recovery effort. If the experience is negative. This idea is known to be as Recovery Paradox. Some customer chooses not to complaint directly to the provider but rather spread negative word of the mouth about the company to friend. This negative word of mouth can be extremely detrimental because it can reinforce the customer’s feeling of negativism and spread that negative impression to other as well. If the recovery effort is absolutely superlative then the negative impression can be overcome. the action can be various types. including such feeling as anger. simply 17 ONLY FOR MANAGEMENTPARADISE. When there is a failure. keep his or her business in the future. In fact. It shows the overall satisfaction was consistently lower for those customers who had experienced a service failure than for those who had experienced no failure. According to a research it is observed that a customer weight their recent experiences heavily in their decision to buy again. It is assumed that following are the failure. B ] . A dissatisfied customer can choose complaint on the spot to the service provider. disappointment. discontent. The explanation for why no recovery paradox is suggested by the magnitude of the service failure in this study it is-a three hour airplane flight delay. the company has no chance to recover unless the negative word of mouth is accompanied by a complaint directly to the company. it may be possible to observe evidence of the recovery paradox. self. When a failure does occur then every effort at superior recovery should be made. Further.

They are mentioned as below 1st step: Acknowledgement and apology for the fact. When the company fails to stand for its promises made to the customer on the basis they build expectation. take action or not. Customer wants personal attention Customer wants a decent apology Customers want that they should not be made to feel that they are the cause of the problem. In such failures. and however service failure acts as an obstacle to it. 1) 2) 3) 4) The customer wants what they were promised. Customer is considered to be the bread and butter. at some point the customer will decide weather to stay with that provider or switch to a competitor. there can be again severe ramification. 3rd step: Avoid defending the company and offer a rational explanation. it’s to be said that there is service failure. When the service failure occurs. 4th step: Offer some extra benefits 5th step: Have a proper follow up and make sure no mistakes this time. 18 ONLY FOR MANAGEMENTPARADISE. hence retaining them is the biggest challenge. (Though in many cases they are responsible for nuisance) There are again five steps involved in order to deal with service failure.COM MEMBERS| [Complied By Vishal. B ] . 2nd step: Listening to the customers.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] saying or doing nothing. so that he can easily forget about the service failure and is retained.

arranging for some alternative mode of transporting or complies with the customer condition. They are mentioned below. 5) After listening and collecting data. Before understanding how to handle. 1) The frontline employee handling complaints should stay calm under any circumstances. provide a proper follow-up. 2) Let the customer get the story off their chest. let us see what are the factors. B ] . In this case listening skills comes into picture. ACTION PLAN TO SOLVE THE PROBLEM : Handling complaints is a big challenge for every company today.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] A customer expects 3 shorts of fairness in case of service recovery. They are mentioned as below. tell the customer. 19 ONLY FOR MANAGEMENTPARADISE. but he still expects fairness and courtesy in the language and tone used by the addresser 2.do not interrupt. first the company is supposed to acknowledge the customer. 4) Get facts by using question and try to find out the real and whole story behind it.now when the company realizes that there is service failure they should end up compensating. 8) Record the action to be taken and inform anyone else in the organization involved.COM MEMBERS| [Complied By Vishal. which can result in customer’s complaints. 1. his needs and the company’s policy.when there is service failure. “I’m sorry for the inconvenience. 6) Take action if you have authority or involve manager or concerned person. Give attention to the customer. The outcome should be taken by considering the customer. which is involved. Service failure and complexity in procedure both together might result in a disaster as far as customer is concern. The officer just need to show concern like. 7) If corrective action cannot be taken immediately. just identify appropriate action considering company’s policy and customer’s expectation. Interaction fairness: . this will only cause irritation.to know in detail about the incidence of service failure or to avail the compensation. let me see what I can do”. There are ten steps involved in handling such airline flights delayed departure complaints effectively. 3) Avoid admitting any liability at this stage. 9) Look into the matter. Due to this the customer might turn erate. There should be simplicity in procedure. Procedure fairness: . It’s better to give bad news rather giving false news. make him feel important. Outcome fairness: . 3.

Place and Promotion. It is not only related to traditional pricing tasks of establishing selling price to customers. the price to ensure it is not too cheap or too expensive. how to minimize other burdens of customers 20 ONLY FOR MANAGEMENTPARADISE. and finally. In short. by examining each and carefully and adapting them to your customer's needs. All these elements need to be targeted at the right people at the right time. you will continue to produce and needed products and services 1) Product element: Managers must select the feature of both the core product (either a good or service) and the bundle of supplementary service elements surrounding it. In order for your business to tackle this correctly. you need to get the right type of mix (marketing mix). continue to seek improvements EIGHT COMPONENTS OF INTEGRATED SERVICE MANAGEMENT The Marketing Mix (THE 5 P’s OF SERVICES MARKETING) In order for your business to sell its products and services as successfully as possible. setting trade margins and getting credit terms but also. delayed departures of flights). B ] . (Solution is only for the taken example. i.e.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] This ten approaches if followed effectively. they must be attentive to all aspects of the service performance that have the potential to create value for customers 2) Price and other user costs: . where you are best distributing your product. with reference to the benefit desired by customers and how well competing products perform.COM MEMBERS| [Complied By Vishal. how you can create interest and awareness for your products. you need to look at what products you are selling in detail to ensure they will be attractive and needed. the mix should include four main elements: Product. reduce waste • Set productive capacity to match average demand • Automate labor tasks • Upgrade equipment and systems • Train employees • Leverage less-skilled employees through expert systems • Change timing of customer demand • Develop customer trust • Understand customers’ habits and expectations • Pretest new procedures and equipment • Publicize the benefits • Teach customers to use innovations and promote trial • Monitor performance. complaints can be handled properly and possibly a customer can be retained. OTHER SOLUTIONS • Control costs.This components addresses management of the expenditures and other outlays incurred by customers in obtaining benefits from the service product. Price.

printed materials.Productivity relates to how inputs are transformed into outputs that are valued by customers. and other visible cues all provide tangible evidence of the firms service quality. equipment. wants and expectations. 8) Productivity and quality: .: .umbrella may symbolize protection and a fortress. successful service firm devote significant effort to recruitment. Improving productivity keeps costs under control Quality refers to the degree to which a service satisfies customers by meeting their needs. security. signs. mental and physical efforts and unpleasant sensory experiences such as noises and smells. E. staff members. landscaping.COM MEMBERS| [Complied By Vishal. media such as TV. Invest in quality profitably i.No marketing program can succeed without effective communications.Many services depend on the direct.depending on the nature of the service being provided. vehicle.Delivering product elements to customers involves decisions on the place and time of delivery as well as on the methods and channels employed. c)Encouraging to take action at a specific time (purchase). B ] . A tangible element such as insurance and advertising is often employed to create meaningful symbols. 4) Promotion and education:. Delivery may involve physical or electronics distribution channels or both). radio. postures. Communication can be delivered by individuals such as sales people and trainers. by considering incremental cost and incremental revenue. So. 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. b)Persuading target customers of the merits of a specific product. The above four are the traditional marketing mix. 6) Physical evidence:. cyberspace and Time:. magazines. newspaper. The EXTENDED marketing mix for services marketing isas follows : 5) People: . 7) Process: . Service quality helps in product differentiation and building customer loyalty.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] while purchasing such as time. 21 ONLY FOR MANAGEMENTPARADISE. training and motivating their personnel.The appearance of buildings.e. personal interaction between customers and a firm’s employees (such as getting a haircut or eating at a restaurant).It is the method and sequence of actions in which service operating system works. This interaction strongly influences the customer perception of service quality.annoys customers which leads to likelihood of service Failures. Communication is educational in nature for new customers.g. This component plays three vital roles: a)Providing needed information and advice (awareness). (Concentrating on a particular segment of the market). This promotion is usually used as incentives to catch customer’s attention and to motivate them to act. websites etc. interior furnishing. Badly designed process: . 3) Place .

Lack of communication among divisions makes this problem worse. these are the 8ps of service management. which are the essence of it. packaging. According to Philip Kotler “a product is anything that can be offered to market for attention.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] Thus. organization (red cross) and idea (aid awareness). Although you may not have to change where the product is delivered to the customer. service (banking). This happens even in well-managed organizations. if you improve the product or service you probably have to change the price because it costs more to produce. person (political person). place (holiday resort). The marketing mix should be viewed as an integrated and coordinated package of benefits that reflect the characteristics of customers and various targeted publics and satisfy their needs.and if they aren't satisfied you are unlikely to meet your objectives. warranties.. appearance. PRODUCT MIX Introduction ‘Product’ includes name. the problem is worse still. It includes physical objects (TV).” Conventionally.. Remember: If your marketing mix doesn't meet their needs they will not be satisfied . However. The integration of each p’s is necessary for the successful service management Collectively these are the tools organizations uses to develop offerings to satisfy their target market(s) . the only tools at their disposal. what is offered for sale is benefits. operational case. features. 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. One problem in many organizations is that different divisions may be responsible for different elements of the marketing mix. which is delivered and consumed. Service is a bundle of benefits and has relevance for a specific target market. Hence. Note that the elements of the marketing mix should be integrated because each element of the mix usually has some impact. quality. And if they don't share the same view of organizational objectives. a product is an object. acquisition use or consumption that satisfy a want or need. For example. The result is that the offering is confusing to the target market. It also includes pre-sale and post-sale services like training. wants. Hence. on the other three. design. maintenance and replacements. repairs. B ] . range and size. and expectations. in services there is no or very little tangible elements.COM MEMBERS| [Complied By Vishal. the package of benefits should have a customer’s perspective. direct or indirect. Levels of product: Kotler has identified 5 levels of a product 1) Core product 2) Basic product 22 ONLY FOR MANAGEMENTPARADISE.

) Interaction with service organization (Between employees and customer. his willingness to share information and use service equipments) The package should also include the management of service image through encouraged word of mouth and market communication.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] 3) Expected product 4) Augmented product 5) Potential product Kotler suggested that a product should be viewed in three levels. with other customers) Consumer participation. Water cooler • Potential product : Greetings for New Year. Level 4: Augmented product: What additional non-tangible benefits can you offer? This meets the customer’s desires beyond his expectations – (Prompt room service. Interest. Bath are important. 24 hour banking The PACKAGE CONCEPT of Service product – suggests that what you offer to the market si a bundle of different services – tangible and intangible. All Hotels provide rest and sleep. 2. FD. The aim is to ensure that your potential customers purchase your one service. aroma etc) 5. quietness) 4. which is in fact based on customer’s experience and evaluation. Recurring deposit • Expected product : Correct transaction records. 1. Level 2 Basic Product: Basic functional attributes. convenient timing. music. 3.. Yet another service is the supporting service – it is used to increase the product value (a car rental in a hotel). For eg. The basic product is not equivalent to the service product which the customer perceives. B ] . Level 1: Core Product. Without this the service would collapse (a bell boy in a Hotel). Level 5 : Potential product : The possible evolutions that can be made to make the product a distinguishedoffer (all suite room) In a Bank these can be • Core Product (Safety of deposits. Thus the functional attributes like Room. Bed. Easy loans • Basic product : Savings deposit. location. sleep etc. Product Decisions 23 ONLY FOR MANAGEMENTPARADISE. convenient timing • Augmented product : Congenial waiting room. timely service.COM MEMBERS| [Complied By Vishal. large towels. Therefore there is a need for an augmented product – like Accessibility (number and skills of personnel.(how well the customer is aware about the process of service delivery. A customer going to a Hotel is buying rest. with physical and technical resources. There is a core service and around it are built the auxiliary or facilitator service. What is the core benefit your product offers? This is the fundamental benefit or service that the customer is buying. infrastructure etc. Level 3 : Expected product : Set of attributes that the buyer expects (Clean room.

2.com and Business. (Recently within the UK banking industry we have seen the introduction of Internet banks such as cahoot. The value of brands in oday’s environment is phenomenal. 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 competitors”. quality and reliability to their target market. These include: • Consumer benefits – assess what benefits the consumer looks for • Service concept – To translate it to suitable service offer • Develop augmented offer BRANDING: One of the most important decisions a marketing manager can make is about branding. which is used by an organization to differentiate itself from competitors. A brand is a tool.com and marbles. a term. Coca-Cola threatened legal action against UK retailer Simsbury after introducing their Classic Cola. As service itself does not offer unique tangible benefits. Service market is getting more competitive and there is as increasing proliferation of brands in the service sector. there importance is expected to rise due to the following reason. Brands have the power of instant sales. As a new service development assumes greater importance. Customer gives more significance to the service provider than the individual service products that the 24 ONLY FOR MANAGEMENTPARADISE. Generic names like Bank. they convey a message of confidence. as some brands can be cash cows for organizations. 3. the risk of product launch is reducing in the context of umbrella branding. Brand decision is important for tangible goods. which displayed similar designs and fonts on their cans. 4. Internet branding is now becoming an essential part of the branding strategy game.com have been sold for £m’s. Brands have to be managed well. who have huge resources to ensure their success within the market. B ] .[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] When placing a product within a market many factors and decisions have to be taken into consideration. Ask yourself what is the value of a pair of Nike trainers without the brand or the logo? How does your perception change? Increasingly brand managers are becoming annoyed by ‘copycat’ strategies being employed by supermarket food retail stores particular within the UK. a symbol. In many organizations they are represented by brand managers. It is five times cheaper to retain customer than to attract new ones. 1.COM MEMBERS| [Complied By Vishal. But in the case of service offering branding is still in its infancy. brand development tangibilises the service.com the task by brand managers is to insure that consumers understand that these brands are banks! Branding of Services and its Importance Philip Kotlar defines a brand as “a name.

development and expansion plans of an organization. 3. professional looking uniform.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] provideroffers. However no matter how good the corporate brands may be the quality of service determines the success of the image. B ] . Ones the corporate brand is developed it is found that service firms move with relative easy to other service product categories. Encourages repeat usage using sales promotions. PRICE MIX Introduction: This element of the marketing mix is related to the decision influencing the fee structure. Advantages of branding services 1. Jeevan Mitra etc. As services cannot be inventoried. this leads to branding the service providers cooperate image. advertising etc. In case of service firms corporate branding reflects the service itself. We find pricing decisions important because the pricing decisions are to influence the maintenance. professional firm are usually differentiated on the basis of their corporate name and reputation rather than the specific service they offer. To create an image of quality and consistency. rate of interest. It is considered to be the most critical component of the marketing mix. To support the positioning strategy. The service organization brand name is reinforce by courteous employees. Airlines. 7. 6. the various schemes of LIC like Jeevan Kishore. commission charged and paid by the service generating organizations. Offers a powerful tool for relationship building. fastfood restaurants. Example Suvidha Account of Citibank. Primarily companies resorts to corporate brand building with a goal of maximizing market capitalization and creating shareholders wealth. the management of pricing is important but at the same time more critical and challenging. Therefore. Banks especially have recognized the importance of corporate image and identity and have used slogans. To reduce price comparison. 2) As services need to have some tangible element attached to it. To tangibilise the intangible. banks. pricing should encourage customers to use the service during period of low demand. 4.COM MEMBERS| [Complied By Vishal. 25 ONLY FOR MANAGEMENTPARADISE. There are instance where the service itself is branded. Both from economic and social standpoint. Keeps current customers satisfied by developing and sustaining a unique service advantage. service pricing should be based on costs so as to take into account the tangible clues. Guidelines for service pricing: 1) Pricing strategy should enable handling demand fluctuations successfully. logos and other means to brand themselves. 5. 2.

Thus many services are sold in terms of input units rather than units of measured output. and the profit margin is a percentage of full costs (direct + overhead) Problems in cost-based pricing services: a) It is difficult to define the units in which a service is purchased. Thus pricing too low can give wrong signals and pricing too high can set expectations that the firm may find it difficult to match in service delivery. 2) Competition-based pricing: This approach focuses on the prices charged by other firms in the same industry or market. This in particular in some cases. c) Service cost may not represent true value. a darner charging same price for a expensive suit and an ordinary pant. Price is normally not used to judge quality. Bus operators will have to consider prices of train. Price is taken as an indicator of quality. For e. This method is widely used by industries such as utilities. 1) Cost-based pricing: In cost-based pricing. overhead costs are a share of fixed costs. E. Competition-based pricing does not always imply charging the identical rate others charge but rather using others prices as an anchor for the firm’s price. such as in the 26 ONLY FOR MANAGEMENTPARADISE. and thereby arrives at the price. Also. The costs being a major component of employee time are difficult to allocate. contracting.g. This approach is used predominantly in two situations: (a) When services are standard across providers. B ] .[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] 3) Service price as an indicator of quality: Services not having specific brand names to indicate quality.g. customers use price as an indicator of quality. consultant. Approaches to pricing services: The 3 approaches to pricing services are: 1) Cost-based pricing 2) Competition-based pricing. b) Where a firm provides multiple services.g.g. Because goods are dominated by search qualities. E. teacher etc. a company determines expenses from raw materials and labor.COM MEMBERS| [Complied By Vishal. It also includes the stage ofstrategic low pricing to attract first time customers.g. wholesaling and advertising. The basic formula for costbased pricing is Price = Direct costs + Overhead costs + Profit margin Direct costs involve materials and labor that are associated with the service. Thus the concept of price or unit is vague. adds amounts or percentages for overhead and profit. 3) Demand–based pricing. where the price variation is too much with in a particular class of service (e. Tour operators). 4) Pricing strategy should cope-up with the degree of competition operation with in certain geographic and time zone. where the risk associated with the service is high (e. Heart surgery).

It is difficult to convert this non-monetary cost into monetary cost. INTRODUCTION Another important element of the marketing mix is place mix. 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 organizations. The better thing is direct selling. In some of the cases we find that providers have no option but to locate the units/branches as per the instructions of the apex body. All of these factors can and should be accounted for in a company’s pricing decisions. insurance agents etc. travel agency. who market the tangible part of the service offering OR there can be agents who are trained to provide the 27 ONLY FOR MANAGEMENTPARADISE. such as in the airline. inconvenience. At the most there can be one agent like in the case of insurance. involves setting prices consistent with customer perceptions of value: prices are based on what customers will pay for the services provided.COM MEMBERS| [Complied By Vishal. (b) Heterogeneity of services across and within providers makes this approach complicated. The third major approach to pricing. Due to this tehe channels of distribution are made very short. services requiring time. Hence the traditional channels of product marketing like wholesalers cannot be used. Similarly because of inseparability they have t be produced and sold simultaneously. Eevn retailing cannot be an independent activity. attractive and healthy surroundings or so. transported and inventoried. Due to the intangibility. services cannot be stored. E. (b) Information on service may be less available to customer.g. psychological and search costs should be riced lower. may be sensitive to nonmonetary prices and may judge quality on the basis of price. demand-based pricing. safety or protection availability of the infrastructural facilities. Banks charge different rates of commission for drafts and other services. (b) In oligopolies where there are a few large service providers. Agents when employed can have two types of functions – either they market the services lke travel agents. Neither approach takes into consideration that customers may lack reference price. E. making it difficult to assess the price. courier eye.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] dry cleaning industry. Problems in demand-based pricing: (a) There is an element of non-monetary costs and benefits which must be considered while calculating perceived value. Some of the essential features are taken into consideration such as easy and convenient accessibility. Problems in competition-based pricing: (a) Small firms may charge too little and not make margins high enough to remain in business.g. 3) Demand-based pricing: The first two approaches of pricing are based on the company and its competitors rather than on customers. B ] . THE PLACE MIX.

Capacity Scheduling. Capacity planning is known as planning the capacity in the face of future. expectations. the organizations are supposed to know the demand position so that the potentials are enriched to increase the quantity or capacity of generating the services and second. A detailed scheduling of man. preferences. Capacity Planning. we find them moving backward. the task of facing the challenges and threats in the markets is simplified considerably. This throws light on both the aspects-first. the creation of time and place utility is very important. goals of the service firm. The strategic plan would make the ways for the mobilization of financial resources to cater to their increasing requirements. By capacity planning. minds active to know about the future and continue to enrich our potentials to manage the future. It is much more significant that we keep our eyes open. availability of capital and the quality of human resources. attitudes which make an advocacy in favor of technologies to fulfill their expectations and this is not possible unless we think in favor capacity planning. B ] . the organizations are also required to know about the likes and dislikes. Banks often have extension counters or use money collectors. materials. There are a number of critical variables requiring due consideration in the process such as.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] service Like a Shahnaz Hussain Beauty parlour. make it difficult to optimize the development of marketing resources to cope with the changing requirements. When we talk about capacity planning. It is against this background that strategic planning assumes a place of outstanding significance. It is not sufficient that we are interested only in managing our present. Further as there is no actual transfer of ownership. market segments served and the level of service quality aimed at. our prime focus is on strategic planning since the process of enriching strength can’t be made possible within a couple of days. The organizations not managing the future fail in managing the demand and supply position. If an organization is strong. our emphasis is on the management of strength. Hence proper location to cover maximum cuxtomers becomes important. PROMOTION MIX 28 ONLY FOR MANAGEMENTPARADISE. How much of what (service) will be needed to achieve its pre-determined goals is an important consideration that makes an advocacy in favor of capacity planning and scheduling. make possible a contraction in their resistance power and both on quantitative and qualitative fronts. We can’t deny the fact that if an organization succeeds in maintaining the process of profit generation. money and machines (four M’s) is essential for each element of the service mix.COM MEMBERS| [Complied By Vishal. the financial health of that organization becomes so sound that the task of satisfying the employees and investors is simplified considerably.

salesman and prospect influence the other. The creativity is found to be an essential aspect of advertising. 2) Publicity/public relations: All the organizations need to develop and strengthen the public relation activities to promote their business. c) It is two-way communication. Thus we find personal selling a personal communication. e) It is an exercise for selling the goods and services. It involves not only individual but the social behavior too. B ] .COM MEMBERS| [Complied By Vishal. details on the place through which it is sold and details on the pricing are transmitted through promotion. b) It is an oral presentation in conservation. The most important thing in the context of public relations is the instrumentality of executives in projecting a positive image of the services offered. COMPONENTS OF THE PROMOTION MIX: 1) Advertising: Advertising is paid form of persuasive promotion since it plays an effective role in informing and sensing the customers. They should have the potentials to throw a positive imprint on the prospects. The following facts are observed regarding the personal selling: a) It is a direct personal relation between the buyer and seller. which increases the importance of professional excellence in making the advertising processes productive. This component of promotion is found effective though the organization don’t make any payment for publicity. The promotion communicates to customer’s information on the other elements of marketing mix. 3) Personal selling: The personal selling is found instrumental in promoting the business of service generating organizations. Personal selling is basically a method of communication. each of the person in face-to-face contact. 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. 29 ONLY FOR MANAGEMENTPARADISE. d) It is personal and social behavior. Personal selling is a process of informing the customers besides persuading them to purchase products being influenced by personal communication. The advantage of product itself. It is just a process of communication in which an individual exercises his or her personal potentials. inter-personal communication and more so direct selling.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] INTRODUCTION: The promotion mix is found instrumental in informing. It is also significant that they know the art of developing rapport with the media people. such as product. tact. f) It is found more effective in the service generating organizations. seller-buyer interaction. sensing and persuading the prospects or customers. pricing and place. skill and ability to influence the impulse of prospects and to transform them into customers. g) It is based on the professional excellence of an individual.

The service generating organizations in general and the banking.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] h) It is an important element of the promotion mix. 4) Sales promotion: Marketing activities other than personal selling. The telemarketing helps in activating the process of advertisement in addition to its instrumentality in increasing the sale. The telemarketing minimizes the dependence of service 30 ONLY FOR MANAGEMENTPARADISE. Sales promotion directed at consumers may be done with a view to increase the products rate of use among existing customers or to attract new customers to the company’s product. transport. sales promotion measures. The instrumentality of telemarketing in persuading the users is substantially influenced by the quality of personnel supposed to discharge the responsibility. hotel. excelling the competition. The motivesare increasing the selling activities. the personal selling may of course be effective but the word-of mouth recommendations are found acceptable in all the conditions by almost all the prospects. Sales promotional activities are devices aimed at reaching the consumer at home or in his business establishment. Tools of sales promotion: a) Gift b) Contest c) Discount and commission d) Entertainment e) Travel and tours f) Additional allowance g) Fairs and shows These are some of the tools of sales promotion offered to both. demonstrations and various non-recurrent selling efforts not in the ordinary routine are the sales promotion measures. such as display shows. B ] . The tools are generally in the form of samples. increasing the market share.COM MEMBERS| [Complied By Vishal. The growing sensitivity of the words and experiences of hidden sales force simplify the task of promoting the business. the providers as well as the users. which is also as word-of-mouth promotion. advertising and publicity that stimulate customers and dealers effectively. insurance. The instrumentality of telephones and televisions are found effective in the process of promoting the business. tourism organizations in particular have been found using telemarketing with the two-fold objectives of selling and advertising. demonstrations and coupons. The advertisements. clearing the old products to be declared absolute in the near future. 6) Telemarketing: Telemarketing is found instrumental in promoting the business. exhibitions. contest. touching the target. 5) Word-of-mouth promotion: Much communication about the performance of the service generating organizations actually takes place by word-of-mouth information. The word-of-mouth recommendations the hidden sales force make the process of communication effective.

B ] .[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] generating organizations on the sales people since just a counter or a center listed in the call numbers serves multi-dimensional purposes.COM MEMBERS| [Complied By Vishal. honesty and sincerity 3) Should be able to use indirect selling techniques (create a derived demand – mobile companies give free sim card) 4) Manage to maintain a fine image by positive word of mouth 5) Packing and customization of service offering TARGET AUDIENCE 1) Buyer (or user/influencer/gatekeeper) 2) Employees (discussed in detail under people) PLANNING THE PROMOTION MIX 1) Advertisement should have positive effects on contact personnel 2) It should be able to capitalise on word of mouth 3) It should provide tangible clues to the customers 4) It should make the service offering easily understandable 5) It should promise only what is possible to deliver 6) It should contribute to the continuity CONSUMER PROMOTION IN SERVICE MARKETING 1) Sampling is less frequently used compared to Goods (Sampling gives consumer a free trial – though now becoming popular) 2) Gift premiums are frequently used to give an element of tangibility 3) Price/quantity promotions can be used to get long term commitments from consumer (frequent flyer programme or group booking in Hotels) 4) Use of coupons are less frequent (coupon with straight price cut OR discount or fees waiver for one or more purchases with original purchase OR Discounts on augmented products – like a free wax polish with car wash) 5) Future discounts are less frequent 6) Prize promotions are frequently used (prize for mobile bank use etc) GUIDELINES FOR SELLING SERVICES 1) It is personal relationship rather than the service itself that results in satisfaction 2) Buyer’s confidence in the seller’s ability to deliver the results is important – hence make a strong impression of competency. PROMOTION OBJECTIVES 1) Develop personal relation with client 2) Make a strong impression of competency. 5) A service provider sells “services” and not just a single service – hence ability to customise the service offering is important (Jain food in Air-lines Hotels etc) 31 ONLY FOR MANAGEMENTPARADISE. 3) As what is sold is intangible – indirect selling techniques have to be adopted (Hotels selling tour programmes) 4) As word of mouth is important – building up a favourable is image is essential. and honesty. sincerity.

AND PROFITS There is concrete evidence that satisfied employees make more satisfied customers (and satisfied customers can. PEOPLE MIX INTRODUCTION The employees of an organization represent the organization in the eyes of the customers. 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. 32 ONLY FOR MANAGEMENTPARADISE. This will result in proper interaction of thecustomers with the service providers which helps the organization to keep the promises (Interactive marketing) EMPLOYEE SATISFACTION. reinforce employees’ sense of satisfaction in their jobs). it should have strategies of Internal marketing. Unless the employees are able and willing to deliver. customer satisfaction will be difficult to achieve. Some have even gone so far as to suggest that unless service employees are happy in their jobs. in turn. CUSTOMER SATISFACTION. Hence the most important marketing strategy is to market the service first to the organization’s employees.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] 6) Public relations becomes important – particularly in industries where advertisement cannot be used as a promotional tool like Hospital industry.COM MEMBERS| [Complied By Vishal.which needs to be fulfilled – this needs internal marketing enabling the comapany to keep up the promises made. the servicepromises will fail. The service profit chain suggest that there are critical linkages among internal service quality. If they are not give proper training in representing the organization and its goals the service efforts will fail. External marketing is nothing but promises made. B ] . There are two types of contact personnel – HIGH CONTACT PERSONNEL and LOW CONTACT PERSONNEL (eg .in a hospital a nurse is a high contact personnel and ward boy may be a low contact personnel) In addition there can be a NON CONTACT PERSONNEL SERVICE TRIANGLE When company makes efforts to do external marketing.

the value of services provided to the customers. an organization must: 1) Hire the right people 2) Develop people to deliver service quality 3) Provide the needed support systems 4) Retain the best people 1) Hire the right people: One of the best ways to close gap 3 is to start with the right service delivery people from the beginning. an organization needs to identify them and compete with other organizations to hire them. The model does imply that companies that exhibit high levels of success on the elements of the model will be more successful and profitable than those who do not. The firm act as marketers in their pursuit of the best employees. service-minded workforce.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] employee satisfaction. and ultimately customer satisfaction. This implies that considerable attention should be focused on hiring and recruiting service personnel. product (job) design. To build a customer-oriented. Service profit chain researchers are careful to point out that the model does not cause customer satisfaction. just as they use their marketing expertise to compete for customers. productivity. and promotion of job availability in ways that attract potential longterm employees. rather the two are interrelated and feed ff each other.COM MEMBERS| [Complied By Vishal. HUMAN RESOURCE STRATEGIES: Human resources decisions and strategies primary goal is to motivate and enable employees to deliver customer-oriented promises successfully. retention and profits. organizations need to be conscientious in interviewing and 33 ONLY FOR MANAGEMENTPARADISE. Thinking of recruiting as a marketing activity results in addressing issues of market (employee) segmentation. b) Hire for service competencies and service inclination: Once potential have been identified. The strategies presented here are organized around four basic themes. B ] . a) Compete for the best people: To get the best people.

c) Be the preferred employer: One way to attract the best people is to be known as the preferred employer in a particular industry or in a particular location. Organizations are well suited to empowerment strategies to ones in which (1) the business strategy is one of differentiation and customization. Service competencies are the skills and knowledge necessary to do the job.COM MEMBERS| [Complied By Vishal. once it has hired the right employees. That is. the organization must train and work with these individuals to ensure service performance. While the key to empowerment is giving employees authority to make decisions on the customer’s behalf. 2) customers are long-term relationship customers. employees need ongoing training in the necessary technical skills and knowledge and in process or interactive skills. but may instead relate to basic intelligence or physical requirements. Other strategies that support a goal of being the preferred employer include providing extensive training. and any operational rules the company has for running its business. cash machine procedures in a retail store. Service competencies may not be degree related. skills. Companies are increasing their use of information technology to train employees in the technical skills and knowledge needed on the job. Service employees also need training in interactive skills that allow them to provide courteous. B ] . Employees need the knowledge and tools to be able to make these decisions and theyneed incentives that encourage them to make the right decisions. (4) the business environment is 34 ONLY FOR MANAGEMENTPARADISE. such as attaining a doctor of law degree and passing the relevant state bar examinations for lawyers. Most service organizations are quite conscious of and relatively effective at training employees in technical skills. 2) Develop people to deliver service quality: To grow and maintain a workforce that is customer oriented and focused on delivering quality. a)Train for technical and interactive skills: To provide quality service.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] screening to truly identify the best people from the pool of candidates. caring. career and advancement opportunities. (3) technology is nonroutine or complex. Achieving particular degrees and certifications validates competencies. It has been suggested that service employees need two complementary capacities: they need both service competencies and service inclination. authority alone is not enough. and authority to serve the customer. responsive. underwriting procedures in an insurance company. excellent internal support and attractive incentives and offering quality goods and services that employees a proud to be associated with. b) Empower employees: Empowerment means giving employees the desire. tools. an organization must develop its employees to deliver service quality. Examples of technical skills and knowledge are working with accountingsystems in hotels. and empathetic service.

determine their needs. By first acknowledging that everyone in the organization has a customer and then measuring customer perceptions of internal service quality. By promoting teamwork an organization can enhance the employee’s abilities to deliver excellent service while the camaraderie and support enhance their inclination to be excellent service providers. service workers require internal support systems that are aligned with their need to be customer focused. it is nearly impossible for employees to deliver quality service no matter how much they want to. Through the audit. 3) Provide need support systems: To be efficient and effective in their jobs. they can be easily frustrated in their desire to deliver quality service. Without customer-focused internal support and customer-oriented systems. Internal customer service audits and internal service guarantees are two strategies used to implement a culture of internal service quality. an organization can begin to develop an internal quality culture. and make improvements. internal organizations identify their customers. or the needs of internal employees. or their equipment fails. b) Provide supportive technology and equipment: When employees don’t have the right equipment. demanding and challenging. and other departments as well as evaluations of technology used on the job were all strongly related to employee satisfaction and ability to serve customers. an organization’s internal processes should be designed with customer value and customer satisfaction in mind.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] unpredictable. teammates.COM MEMBERS| [Complied By Vishal. tradition. cost efficiencies. To do their jobs effectively and efficiently. Employees who supported and that they have a team backing them up will be better able to maintain enthusiasm and provide quality service. Because service jobs are frequently frustrating. and (5) managers and employees have high growth and social needs and strong interpersonal skills. Providing service and customer oriented internal processes can therefore imply a need for total 35 ONLY FOR MANAGEMENTPARADISE. a) Measure internal service quality: One way to encourage supportive internal service relationships is to measure and reward internal service. internal procedures must support quality service performance. In other words. c) Develop service-oriented internal processes: To best support service personnel in their delivery of quality service on the front line. In examining customer service outcomes researchers found that internal support from supervisors. In many companies internal processes are driven by bureaucratic rules. c) Promote teamwork: The nature of many service jobs suggests that customer satisfaction will be enhanced when employees work as teams. B ] . a teamwork environment will help to alleviate some of the stresses and strains. service employees need the right equipment and technology. having the right technology and equipment can extend into strategies regarding workplace and workstation design. measure how well they are doing.

Employee turnover. trains and develops them to deliver service quality.COM MEMBERS| [Complied By Vishal. and overall service quality. This kind of wholesale redesign of systems and processes has become known as “process reengineering. to use discretions be concerned about the customer. organizations conduct periodic internal marketing research to assess employee satisfaction and needs. can be very detrimental to customer satisfaction. People who deliver service day in and day out need to understand how their work fits into the big picture of the organization and its goals.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] redesign of systems. and thus basic marketing strategies can be directed at them. causing these good employees to search for job alternatives. Example 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. they need to share an understanding of the organization’s vision.5 IMPORTANCE OF EMPOWERING PEOPLE IN SERVICES An organization that emphasizes customer service needs people at the frontline to do the service. especially when the best service employees are the ones leaving. He feels empowered to do so. 6. to take initiative to provide satisfaction through exceptional service. Reward systems need to be linked to the organization’s vision and to outcomes that are truly important. a) Include employees in the company vision: For employees to remain motivated and interested in sticking with the organization and supporting its goals. it must reward and promote them. c) Measure and reward strong service performers: If a company wants the strongest service performers to stay with the organization. The person at the front must fell empowered to do in the circumstances. The products that the organization has to offer its employees are a job and quality of work life. Some firms spend lot of time attracting employees but then tend to take them for granted. and provides the needed support must also work to retain the best ones. B ] . Empowering cannot be done through a formal delegation of authority. if he does not feel empowered. employee morale.” 4) Retain the best people: An organization that hires the right people. sales or some other dimension that can potentially work against good service. Many companies have adopted the idea that employees are also customers of the organization.6. Often the reward systems in organizations are not set up to reward service excellence. meaning that feels a sense of 36 ONLY FOR MANAGEMENTPARADISE. Reward systems may value productivity. A person with authority may not exercise that authority. b) Treat employees as customers: If employees feel valued and their needs are taken care of. To determine whether the job and work life needs of employees are being met. they are more likely to stay with the organization.

process. from what is to be done . he believes that the organisation will applaud him for having done something that had to be done. 37 ONLY FOR MANAGEMENTPARADISE. PHYSICAL EVIDENCE MIX THE EVIDENCE OF SERVICE As services are intangible. B ] . that he is doing the right thing . Following are the importance of empowering the people in services:1) An empowered employee focuses on results. He “sees” constraints but not does not feel prevented thereby . 2) He does not consider himself bound by rules and procedure.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] dedication to the organization. The figure depicts the three major categories of evidence as experienced by the customer: people. The new mix elements essentially are evidence of service in each moment of truth. instead he tries to overcome the constraints. 3) He believes that the organization expects him to be aware of the ends to be achieved and to act in furtherance thereof. On the contrary. 6) He feels that he is dedicating to satisfy the customer to upgrade organization reputation 7) An empowered employee may be willing to challenge company policies at meetings with sensors. These categories together represent the service and provide the evidence that tangibilizes the offering. 4) He believes that the organization will not find fault with him for having one something new and nusual. 5) He believes that he is expected to take the initiative and ensure that the customer needs are met and thereby maintain and enhance the reputation of the organization.COM MEMBERS| [Complied By Vishal. the customers are searching for evidence of service in every interaction they have with an organization. that he feels it is his duty to save the organization as much as possible . authorityor function . He is not inhabitant by formalities of position . and physical evidence.

phone. All these types will operate in face – toface service encounters as in the one just described. B ] . When a guest enters the hotel for a stay the first encounter of the guest is the door attendant and frequently with receptionists at the reception. PHYSICAL EVIDENCE It is the environment in which the service is delivered and where the firm and customer interact.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] All of these evidence elements.COM MEMBERS| [Complied By Vishal. letter head. equipment etc. 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 quality and creating customer satisfaction. The three types of evidence may be differentially important depending on the type of service encounter (remote. and any tangible components that facilitate performance or communication of service. It includes all tangible representations of the service-such as brouchers. knowledgeable? Does she handle the enquiries fairly and efficiently?) and the physical evidence of the service (is the awaiting area clean and comfortable). face – to – face). in somecases the physical facilities where 38 ONLY FOR MANAGEMENTPARADISE. The quality of that encounter will be judged by how the registration process works (How long is to wait? Is the registration system computerized and accurate?) The actions and attitudes of the people (Is the receptionist courteous. helpful.

Airlines). Employees however feel that an investment in environments is an indication of management’s concern for their job satisfaction.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] service is offered is important e. temperature) • Space (spatial layout and functionality. of service scape can influence customer expectation. At other end employee performs without any interaction (mail order business) here physical evidence is designed to promote operational efficiency.. (E. medical reports. ability of equipment and furniture to accomplish interactions) • Decor and artefacts (c) Social setting: Employee uniform. Physical evidence includes (A) Physical facilities (essentials and peripherals) (B) Physical setting (appearance of premises) (C) Social setting (appearance of staff) The decision on the physical evidence will differ in terms of customeremployee interaction.e. colour. Others like hospitals.i. (b) Consist of service environment • Ambient factors (light. Certain service environments are simple requiring very little space or equipment (ATM. The quality 39 ONLY FOR MANAGEMENTPARADISE. signboards. Essential Evidence: They are dominant features like building area.satisfaction and other behavior.g. furniture etc.. In other services such as telecommunication the physical facilities may be irrelevant. hotels are elaborate environment where proper planning is needed.COM MEMBERS| [Complied By Vishal. In shopping mall soft music is played/crossroads had hired separate parking space.. They are called lean environment. In this case other tangibles like billing statements become important. surroundings are important.g. parking space. Peripheral Evidence: They are less dominant like admission card. (a) Physical facilities: The potential customers form impression about the service organization on the basis of physical evidence like building.. MANAGING SERVICE QUALITY To compete successfully a firm must define how the customers perceive the service quality and in what way the service quality is influenced. At one end is self-service of customer without any interaction with employee (ATM) where physical facilities must be to attract customer and user friendly. etc. appearance etc. B ] . Hence the challenge is to strike a balance. Banks. in a hotel the parking lot. In this case physical evidence must be planned to facilitate the activities of both. Between the two extremes is a situation where both customer and employee interact. Vending machine). Bitner identifies Physical Facilities and Environment as SERVICE SCAPES However too much decor may make customers feel that they are paying for the expensive décor.

Perceive quality > expected quality. Perceptions are judgment of the consumers about the actual service performance or delivery by a company. • Process – operational flow of activities. The evidence of service that are experience by the customer are people. • Dimensions – reliability.COM MEMBERS| [Complied By Vishal. Dissatisfied customer. process and physical evidence. 1). 3). While comparing the expected and perceived service quality the following may be the outcome. When a customer comes to the service provider he comes with some expected quality. assurance. • People – contact employees. empathy and responsiveness. A very important factor in important service quality is to always keep promises and not guarantee which the firm cannot deliver 40 ONLY FOR MANAGEMENTPARADISE. Result = satisfied customer.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] can be of seen from two angles (1) Technical quality (What is delivered) (2) Functional quality (How it is delivered). Apart from these the corporate image of the service provider as well as the service can also influence the perceived quality. • Physical evidence – tangible aspect of service. PERCEIVED SERVICE QUALITY Customer service is about perception. Perceive quality = expected quality. B ] . When he takes the service he experiences a service quality – this is his perceived quality. Perceive quality < expected quality. • Dimensions – reliability and promptness of service. customers search for the evidence of quality in every interaction they have with a service firm. 2). other customers or the customer himself. Result = delighted customer. Since service are intangible.

B ] . • Managers have to understand how the technical and functional quality of a service is influenced and how the customers perceive these quality dimensions. • Different customers possess different zones of tolerance • Zones of tolerance vary for different dimensions fo service • Zones of tolerance vary for first time and recovery service QUALITY GAPS To manage the perceived quality of a service one has to match the expected service and perceived service to each other so that consumer satisfaction is achieved. The model clearly 41 ONLY FOR MANAGEMENTPARADISE. If the service levels fall below this level. two things are critical: • The promises about how the service will perform given by traditional marketing activities and communicated by word-of-mouth. In order to develop greater understanding of the nature of service quality and how it is achieved in an organization.COM MEMBERS| [Complied By Vishal. The extent to which the customers recognize and are willing to accept this variation is called as zone of tolerance. customers will be frustrated. ‘A Gap Model Of Service Quality’ was developed.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] ZONE OF TOLERANCE The services provided are varying between organizations. must not be unrealistic when compared to service received by the customer. To keep the gap between expected service minimal. between employees and even with in employees at different times.

which are as follows: Gap1 (Marketing Information Gap) : Difference between consumer expectations and management perceptions of consumer expectations arising due to inadequate or inaccurate management understanding of customers’ service expectations Gap2 (Standard gaps) : Difference between management perceptions of consumer expectations and service quality specifications arising due to Management’s failure to develop performance specifications reflecting customer’s expectations. These Gaps develop due to the following reasons GAP 1 : • Lack of adequate market research • Lack of upward communication between front line staff and Management • Lack of interaction with the customers • Lack of segmentation to identify specific needs of the customers GAP 2 : • Lack of commitment from Management (they may perceive that customer expectations are unreasonable) • Lack of Goal setting • Lack of resources GAP 3 : • Ineffective recruitment • Role ambiguity • Lack of training/incentives to perform to the staff • Lack of training to customer on use of service and their roles • Lack of pre-testing when new procedures are introduced • Lack of understanding of customer habits – how they prefer to consume a service (a customer may prefer a slow delivery of food in an exclusive restaurant compared to an Udipi restaurant) GAP 4 : • Exaggerated promises 42 ONLY FOR MANAGEMENTPARADISE.COM MEMBERS| [Complied By Vishal. Gap3 (Service Performance Gap) : Difference between service quality specifications and the service actually delivered. Gap5: Difference between the perceived service and expected service. B ] .[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] indicated that the consumer’s quality perceptions are influenced by a series of five distinct gaps occurring in the organizations. This gap depends on the size and direction of the first four gaps associated with the delivery of service quality. Gap4 (Communication Gap) : Difference 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.

Pre-test new procedures and equipments before introducing them. 2. both among customers and employees.[SEMESTER 5] • • [SERVICE SECTOR MANAGEMENT] Ineffective communication Lack of Horizontal communications with in the organization GAP 5 Too much of Gaps (1 to 4) To close the gaps the following things should be implemented: 1. it changes between weekdays and weekends. Develop customer trust through long-term strategy rather than a snipshot superficial programme. a customer wouldprefer extended hours for a meal in a exclusive restaurant. It changes between the first weeks to the fourth week of the month. by force or by any other external forces. 3.. It created more confusion. e. Monitor and evaluate performance. 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. Understand customers’ habits on how they prefer to consume a service. in the same way as traffic routes at India Gate or Connaught Place are notified through press and television before introducing them. when Indian Airlines introduced computerized reservation system to improve its service. As one goes along introducing changes. 4. e. These measures should be restricted to redesign of facilities and procedures or extending to educating. and proved to be countered productive. shopping behaviour is not even throughout the month. Promote the benefits and stimulate trial. it found that at most places the system remained down most of the time. 5.. communicating and promoting the efforts. 43 ONLY FOR MANAGEMENTPARADISE. One can learn from experience—good or bad. 6. eg. The success in innovation lies in encouraging trial by making the benefit obvious. Understand the determinants of consumer behaviour in terms of their choice. B ] .g.COM MEMBERS| [Complied By Vishal. The failure of a productivity improvement programme is more damaging than otherwise.g. corrective measures should also be taken simultaneously.. 7.

complaints and problems. FedEx. personnel at small firm know customers by name and build 44 ONLY FOR MANAGEMENTPARADISE. etc. In other words reliability means that the company delivers on its promises – promises about delivery. The essence of empathy is conveying through personalized or customized service. For example. 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.  Empathy: is defined as carrying individualized attention the firm provides its customers. For example. the customers are unique and special. B ] .  Responsiveness: is the willingness to help customers and provide prompt service. service provisions.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] THE 5 DIMENSIONS OF SERVICE QUALITY ARE AS FOLLOWS On Which Customers Judge The Service Quality  Reliability: means the ability to perform the promised service dependably and accurately. Customers want to feel understood by and important to that provide service to them. and pricing.COM MEMBERS| [Complied By Vishal. insurance. this company effectively communicates and delivers on the reliability dimension. This dimension emphasizes on attentiveness and promptness in dealing with customer’s request. questions. brokerage. For examples. problem resolution. banking.  Assurance: is defined as employee’s knowledge and courtesy and the ability of the firm and its employees to inspire trust and confidence. Responsiveness also captures the notion of flexibility and ability to customize the service to the customers needs.

reputation. and baggage areas. 45 ONLY FOR MANAGEMENTPARADISE. plan themselves. Reliability: flights to promise destination. uniform. Assurance: credential. Empathy: understanding clients industry acknowledges and adapts to specific clients needs. provide continuity.COM MEMBERS| [Complied By Vishal. and equipment. 2. adapt to change.  Airlines (consumers): 1. skills. Although tangibles are used by Service Company’s to enhance their image. personnel and communication materials. and name of the community. good listening. Tangibles: waiting room.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] relationships that reflect their personal knowledge of customer’s requirements and preferences. most company combine tangibles with another dimension to create a service quality strategy for the firm. Reliability: delivers plans when promised and within budget. gets to know the client. uniforms. 5. Empathy: acknowledges customers by name. Responsiveness: accessible. billing statement. 4. 2. exam rooms. good safety records & competent employees. ticketing counters. Responsiveness: accessible. equipment’s. in flight baggage handling.  Medical care (consumer): 1. dress of the employees. no waiting. Tangibles: repair facility. Responsiveness: prompt and speedy system of ticketing. Assurance: trusted name. depart and arrives on time. 5. Assurance: knowledge. When such a small firm competes with large firms. remembers previous problem and preferences. 4. and reputation. All of these provide physical representations or images of the service that customers particularly new customers. and signal quality to consumers. 2.  Architecture (business): 1. Tangibles: aircraft. and patients. and equipment’s. 5.  Tangible: tangibles are defined as the appearance of physical facilities. report. will use to evaluate quality. 4. waiting areas. Responsiveness: returns. respond to request. 3. remembers previous problems. Empathy: acknowledges patients as a person. 3. Assurance: knowledgeable mechanics. 3. Reliability: problem fixed the 1st time and ready when promised. Tangibles: office areas. B ] . Reliability: appointments are kept on schedule diagnoses prove accurate. phone calls. 4. credentials. 2. willingness to listen. Empathy: understanding of special individual needs. knowledge and skills. 3. the ability to be empathetic may give the small firm a clear advantage. Examples of how customers judge the 5 dimensions of service quality:  Car repair (consumers): 1. 5. written materials. no waiting. anticipates consumer needs.

Customer participation is necessary because of which it will be easy to achieve in some service environments. which compares specific functions such as distribution and after sale service. 3. Competitive Benchmarking. Competitive Benchmarking: At a second level competitive Benchmarking can be used. This is probably the most frequently use where comparisons are made with directly competitive organization. Internal Benchmarking. But important thing is how performance is measured &this is clear link to the strategy of organization. 2.. Super market chain might benchmark operations across stores. office areas.[SEMESTER 5] [SERVICE SECTOR MANAGEMENT]  Information processing (internal): 1.COM MEMBERS| [Complied By Vishal. Responsiveness: prompt response to request not “bureaucratic’ deals with problems promptly. and dress of employees. this is done in informal manner. Empathy: knows internal customers as individuals and departmental needs. Internal Benchmarking: Internal Benchmarking is normally carried by large organization by way of comparison between operation units. For e. 3. Responsiveness: quick website with easy access and no down time. different colleges under the same authority. 4. 5. Benchmarking is a part of process of continuous improvement.g. Reliability: provides correct information and executes customer’s requests accurately. Functional or Generic Benchmarking. Benchmarking can be applied at three levels: 1. brand recognition credential apparent on site.  Internal brokerage (consumer and business): 1. Functional or Generic Benchmarking: The third approach is Functional or Generic Benchmarking. A comparative impression gained of the service without examining the different facets in a structured way & attempting to measure them. Tangibles: internal reports. Often however. 3. 4. Tangibles: appearance of the website and collateral. Reliability: provides needed information whenever requested. The advantage 46 ONLY FOR MANAGEMENTPARADISE. 2. For e.g: As a hotel owner. Assurance: knowledgeable staff. 2. Empathy: ability to respond with human interaction as needed. it is possible to ‘sample’ the service to competitor simply by ‘posing’ the guest. Assurance: credible information sources on the site. financial across branches. B ] . well trained. BENCHMARKING OF SERVICES Benchmarking means measuring the performance of a business against that of the competitors in order to establish ‘best practice’. 5. credentials.

B ] .[SEMESTER 5] [SERVICE SECTOR MANAGEMENT] here is that information is sometime easier to obtain than when comparison are being made with competitors. Care has to be taken in selecting the dimension & sales to be used for performance measuring and ensuring that due account is taken of all relevant factors.COM MEMBERS| [Complied By Vishal. 47 ONLY FOR MANAGEMENTPARADISE.

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