Unit - 5

Overview of Current Trends in

Service Industries
 Healthcare Sector
Healthcare is an important emerging sector with
many large corporate hospitals being created.
India’s big pharmaceutical firms such as Ranbaxy
have also forayed into specialty hospitals. India has
earned a name for itself in heart care and other
specialized streams such as ophthalmology.
Medical tourism is also booming.
 Healthcare Sector in India
The process of the private sector entering into the healthcare segment began in the late
1970s, and early 1980s and 1990s. The factors which influence private participation in the
healthcare segment are as follows (Baru 1998):

• Global actors including bilateral and multilateral agencies, pharmaceutical, medical

equipment industries, insurance companies, and research institutions have played a critical
role in shaping health policies across the world.
• The role of the state in each country, especially in terms of investments in public
health services, pharmaceuticals, medical equipment, and insurance sectors in each of these
countries.
• The growth of the middle-class and their influence on both the demand and supply of
private health services.
Growth of the healthcare industry
in India
 Healthcare in India

The growth drivers of healthcare sector in India include

(i) affordable treatment costs,

(ii) rising population of the country and awareness among people about
healthcare disorders,
(iii) increase in focus on models like public private partnership (PPP),
(iv) constantly rising interest of people in medical tourism,
(v) rising disposable income,
(vi) quicker diagnosis, leading to timely treatments,
(vii) initiatives such as wellness check-ups and medical insurance taken by
corporate houses, and
(viii) rising penetration of health insurance.
 Health Tourism
According to a KPMG–FICCI report (2014) medical tourists are defined
as people from various countries who travel across international borders
to receive some form of medical aide or treatment. In 2012, the global
medical tourism industry was estimated at around $10.5 billion. It is
expected to grow at a CAGR of 17.9% from 2013–19 to reach $32.5
billion in 2019. Additionally, due to the highly fragmented nature of the
industry there are various estimates of the market size. The USP of Indian
medical tourism industry is the combination of high quality facilities,
competent, English-speaking medical professionals, cost effectiveness,
and various tourist attractions. Various estimates peg the cost of
treatments in India between $3,000 and $10,000, while dental, eye, and
cosmetic surgeries cost 3–4 times less in India as compared to western
countries. Additionally, medical tourists usually get a package deal that
includes flights, hotels, treatment, and, often, a post-operative vacation
from travel agents.
 Modern Healthcare Management

Third-party administrator (TPA) can play a major role by managing

the healthcare needs of groups of individuals. A TPA will negotiate
better deals for their customers and sort out the medical claims for a
fee. On the other hand, a PPO can manage almost all the healthcare
needs of their customers. However, PPOs cannot provide insurance
cover, as they do not assume the risk of their clients. But now, with
private insurance operators coming into the picture, most PPOs and
TPAs will turn into health maintenance organizations (HMO), by
linking their products with insurance companies, or even hospitals.
(As of today, HMOs are not allowed in India).
 Banking Sector In India
• The banking sector is the backbone of any financial system and
economy. Commercial banks play an important role in the
development of underdeveloped/developing economies by
mobilization of resources and their better allocation.
• The public sector banks, which still account for the major part of
the Indian banking industry in terms of size and reach are facing
stiff competition from private and foreign banks as also from the
non-banking financial institutions.
• The foreign banks which form only 0.26 per cent of the total
number of branches in India still manage to gather 5 per cent of
the total deposits.
Banking Sector In India
 Banking Trends In India
• The banking system in India has undergone major changes in
the last century. The Indian banking system is regulated by the
central bank of the country, i.e., Reserve Bank of India (RBI),
which was nationalized in 1949.
• RBI, as banker to the government, transacts government
business and manages public debt besides giving temporary
(ways and means) advances.
• It is the sole agency in India to issue currency notes.
• As the controller of banks, RBI grants licenses to conduct
banking business and issues directions to carry on banking
business.
 Marketing Mix for the Banking Sector
•Product Banks offer different types of products. In addition to
the traditional products like plain vanilla deposit accounts and
loans banks have now added a wide portfolio of products, a large
number of which are technology enabled.
•Pricing management is significant in India because other non-
banking financial institutions charge least possible fees for
services rendered. However, RBI and Indian Banker’s
Association (IBA) regulate pricing policies of banks in India.
Thus, the rate of interest and rate of other services are fixed by
RBI and IBA. Hence, there is not much scope for differentiation
based on pricing and product.
 Marketing Mix for the Banking Sector
• Promotion: They are promoted actively through the print
media, radio, television, outdoor hoardings, and banners.
Banks also organize customer meets, which is a forum to
mobilize business and provide promotional materials such
as pens, calendars, and diaries.
• Place Banks are easily accessible from the different
branches present in an area. Changing technology has also
brought about changes in the channels of distribution of
banking services. Services are being increasingly distributed
via the following means:
• ATMs
• Tele-banking
• Cards
• Online banking
 Marketing Mix for the Banking Sector
• Process With the basic product offered by different banks being the same,
the differentiation comes in the form of mode of delivery. The
foreign/private banks score in this area by having a better organized
delivery.
• People When banks upgraded their technology they realized that they did
not need the number of staff they had. By announcing attractive schemes
to the employees so that they could take voluntary retirement, different
banks were able to retain the quality staff that was open to adapting to
the new technologies being introduced.
• Physical evidence In keeping up with the change in technology the
ambience of the banks were also paid attention to. The growing
competition from foreign banks, which had a well appointed and
standardized office forced the public sector banks to sit up and take note
of their ambience.
 Critical Factors for Success
• Ability of the services product: The needs of the customers are
varied and banks providing a whole portfolio of services are
required to satisfy these needs.
• Availability or services distribution: The availability of the
services at an arms length is what the customers are looking
for.
• Incidence of affable services.
• Use of the Internet: Using the Internet as a service channel
rather than a pure sales tool is required (KPMG 2006).
• Recognition of and relationship with the customer.
• Mature, enthusiastic, knowledgeable, friendly, and
cooperative staff providing prompt and reliable service.
 Critical Factors for Success
• Reward for the customers in the form of interest rates.
• Management of customer perceptions about the bank.
• Trust and confidence in the bank.
• Ambience.
• Complaint redressal mechanism and availability of help desks
for customer convenience.

Note: Refer lecture notes for this Unit

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