WELCOME TO COURSE ON FUNDAMENTALS OF SERVICE

MANAGEMENT
Session 1 Ganesh Prabhu

Learning Objectives
To develop in students set of competencies and prepare them for careers in the areas of service industry. To enable the students acquire an understanding of the concept and meaning of services management, the relationship process etc To enhance students skills and knowledge in dealing effectively with a portfolio of services customers in a business setting.

Text & Reference
Prescribed Text
• Lovelock Christopher ,Wirtz Jochen and Chatterjee Jayanta, Service Marketing, Pearson Education Publications,

Reference Books
• Hoffman K Douglas and Bateson John E.G., Essentials of Services Marketing: Concepts, Strategies and Cases, Thomson Publications. • Clow Kenneth E. and Kurtz David L., Services Marketing: Operation, Management and Strategy, New Delhi: Biztantra Publications

FSM course plan
Session 1/2
Session 3 Session 4 Session 5

Understanding Services (Ch 1/2)
Strategic Issues in Services MarketingPositioning & targeting customers(Ch 3) Strategic Issues in Services MarketingBuilding Customer relations (Ch 12) Strategic Issues in Services MarketingManaging Demand (Ch 9) Tools for Service Marketers (Ch 4,5,6,7) Challenges for Senior Management (Ch 13,14,15)

Session 6/7/8 Session 9/10

2% in 2009-10 The services sector has been growing at a rate of > 8% per annum in recent years This sector dominates with the best jobs.5% in 1950-51 to 55. best talent and best incomes .The service sector The share of services in Indian GDP has risen from 30.

It is intangible.What is a service? It is the part of the product or the full product for which the customer is willing to see value and pay for it. It may or may not be attached with a physical product . It does not result in ownership.

but it’s what happens to you between take-off and landing that makes the difference Naresh Goyal.Any airline can take you from place to place.Chairman Jet Airways .

“Problems and Strategies in Services Marketing. Services cannot be readily displayed or communicated. Services cannot be patented. Berry. .Services are Different Goods Tangible Services Intangible Resulting Implications Services cannot be inventoried. Employees affect the service outcome. Zeithaml.” Journal of Marketing 49 (Spring 1985): 33-46. It is difficult to synchronize supply and demand with services. Decentralization may be essential. Standardized Heterogeneous Service delivery and customer satisfaction depend on employee actions. Mass production is difficult. Simultaneous production and consumption Customers participate in and affect the transaction. There is no sure knowledge that the service delivered matches what was planned and promoted. Service quality depends on many uncontrollable factors. A. Services cannot be returned or resold. and Leonard L. Pricing is difficult. Customers affect each other. Parasuraman. Production separate from consumption Nonperishable Perishable Source: Adapted from Valarie A.

Tangibility Spectrum Salt  Soft Drinks  Detergents  Automobiles  Cosmetics Fast-food  Outlets   Fast-food Outlets Intangible Dominant Tangible Dominant Advertising Agencies Airlines Investment Management Consulting      Teaching .

Defining the Essence of a Service An act or performance offered by one party to another An economic activity that does not result in ownership A process that creates benefits by facilitating a desired change in: • customers themselves • physical possessions • intangible assets .

pest control. theme park  Others: • hair styling. dentistry. plumbing.Examples of Service Industries  Health Care • hospital. investment advising. insurance  Hospitality • restaurant. lawn maintenance. rafting  Travel • airlines. legal. bed & breakfast. travel agencies. medical practice. • ski resort. eye care  Professional Services • accounting. hotel/motel. architectural  Financial Services • banking. counseling services. health club .

Distinguishing Characteristics of Services  Customers do not obtain ownership of services  Service products are ephemeral and cannot be inventoried  Intangible elements dominate value creation  Greater involvement of customers in production process  Other people may form part of product experience  Greater variability in operational inputs and outputs  Many services are difficult for customers to evaluate  Time factor is more important--speed may be key  Delivery systems include electronic and physical channels .

Internal Services  Service elements within an organization that facilitate creation of--or add value to--its final output  Includes: • • • • • • accounting and payroll administration recruitment and training legal services transportation catering and food services cleaning and landscaping  Increasingly. these services are being outsourced .

transnational companies) .g. digitization. trade agreements)  Social Changes (e.. speed. wireless.. regulations.g. desire for experiences)  Business Trends • • • • • • Manufacturers offer service Growth of chains and franchising Pressures to improve productivity and quality More strategic alliances Marketing emphasis by nonprofits Innovative hiring practices  Advances in IT (e. lack of time. affluence. Internet)  Internationalization (travel.g.Major Trends in Service Sector  Government Policies (e..

new value chains)  Create relational databases about customer needs and behavior.Some Impacts of Technological Change  Radically alter ways in which service firms do business: • with customers (new services. more convenience) • behind the scenes (reengineering. Internet-based business models . mine databanks for insights  Leverage employee capabilities and enhance mobility  Centralize customer service—faster and more responsive  Develop national/global delivery systems  Create new.

The Services Marketing Triangle Company (Management) Internal Marketing “enabling the promise” External Marketing “setting the promise” Employees Interactive Marketing “delivering the promise” Customers Source: Adapted from Mary Jo Bitner. and Philip Kotler . Christian Gronroos.

Ways to Use the Services Marketing Triangle Overall Strategic Assessment • How is the service organization doing on all three sides of the triangle? • Where are the weaknesses? Specific Service Implementation • What is being promoted and by whom? • How will it be delivered and by whom? • Are the supporting systems in place to deliver the promised service? • What are the strengths? .

Marketing Relevant Differences Between Goods and Services .

purchase--may include convenience. quality of personnel • Can’t own people (no slavery!) but can hire expertise and labor  Services cannot be inventoried after production • Service performances are ephemeral—transitory.1  No ownership • Customers obtain temporary rentals. perishable Exception: some information-based output can be recorded in electronic/printed form and re-used many times • Balancing demand and supply may be vital marketing strategy • Key to profits: target right segments at right times at right price • Need to determine whether benefits are perishable or durable .Marketing Implications . or access to facilities and systems • Pricing often based on time • Customer choice criteria may differ for renting vs. hiring of personnel.

equipment.2  Customers may be involved in production process • Customer involvement includes self-service and cooperation with service personnel • Think of customers in these settings as ―partial employees‖ • Customer behavior and competence can help or hinder productivity. so marketers need to educate/train customers • Changing the delivery process may affect role played by customers • Design service facilities. and systems with customers in mind: user-friendly. convenient locations/schedules  Intangible elements dominate value creation • Understand value added by labor and expertise of personnel • Effective HR management is critical to achieve service quality • Make highly intangible services more ―concrete‖ by creating and communicating physical images or metaphors and tangible clues .Marketing Implications .

and by training both employees and customers • Need to have effective service recovery policies in place because it is more difficult to shield customers from service failures .3  Other people are often part of the service product • Achieve competitive edge through perceived quality of employees • Ensure job specs and standards for frontline service personnel reflect both marketing and operational criteria • Recognize that appearance and behavior of other customers can influence service experience positively or negatively • Avoid inappropriate mix of customer segments at same time • Manage customer behavior (the customer is not always right!)  Greater variability in operational inputs and outputs • Must work hard to control quality and achieve consistency • Seek to improve productivity through standardization.Marketing Implications .

what to look for • Create trusted brand with reputation for considerate. informationbased elements instantly and expand geographic reach .4  Often difficult for customers to evaluate services • Educate customers to help them make good choices. ethical behavior • Encourage positive word-of-mouth from satisfied customers  Time factor assumes great importance • • • • Offer convenience of extended service hours up to 24/7 Understand customers’ time constraints and priorities Minimize waiting time Look for ways to compete on speed  Distribution channels take different forms • Tangible activities must be delivered through physical channels • Use electronic channels to deliver intangible. avoid risk • Tell customers what to expect.Marketing Implications .

Important Differences Exist among Services .

consulting. legal. landscaping. cleaning.g.. airlines.g. accounting. banking. freight. retailing.g.. fitness centers Possession Processing e. psychotherapy Information Processing (directed at intangible assets) e.g.. restaurants hotels. insurance. research . haircutting.. repair. education.Four Categories of Services Employing Different Underlying Processes What is the Nature of the Service Act? TANGIBLE ACTS Who or What is the Direct Recipient of the Service? DIRECTED AT PEOPLE DIRECTED AT POSSESSIONS People Processing e. broadcasting. recycling INTANGIBLE ACTS Mental Stimulus Processing e. hospitals.

especially replacing people by machines. may cause dissatisfaction  New processes that improve efficiency by cutting costs may hurt service quality  Best new processes deliver benefits desired by customers • Faster • Simpler • More conveniently  Customers may need to be educated about new procedures and how to use them .Implications of Service Processes (1) Seeking Efficiency May Lower Satisfaction Processes determine how services are created/delivered— process change may affect customer satisfaction  Imposing new processes on customers.

etc.” so:  Think of facility as a ―stage‖ for service performance  Design process around customer  Choose convenient location  Create pleasing appearance. smells  Consider customer needs--info. avoid unwanted noises.Implications of Service Processes: (2) Designing the Service Factory People-processing services require customers to visit the “service factory. toilets. . food. parking.

. mail.Implications of Service Processes: (3) Evaluating Alternative Delivery Channels For possession-processing.g. Service employees visit customer’s home or workplace 4. email. Customers come to a retail office 3.physical channels (e. fax. alternatives include: 1. or information processing services.. Business is conducted at arm’s length through .g. Web site) . mental-stimulus processing. phone. courier service) .electronic channels (e. Customers come to the service factory 2.

business may be lost 2. productive capacity is wasted Potential solutions: .Manage capacity . If demand is low.Implications of Service Processes: (4) Balancing Demand and Capacity When capacity to serve is limited and demand varies widely.Manage demand . problems arise because service output can’t be stored: 1. If demand is high and exceeds supply.

g. and internet (e. anytime‖  New service features through websites.. reservations)  More opportunities for selfservice  New types of services . email. information. but mental-stimulus processing and information-processing services have the most to gain:  Remote delivery of informationbased services ―anywhere.Implications of Service Processes: (5) Applying Information Technology All services can benefit from IT.

social skills. technical skills  Other customers may enhance or detract from service experience--need to manage customer behavior .Implications of Service Processes: (6) Including People as Part of the Product Involvement in service delivery often entails contact with other people  Managers should be concerned about employees’ appearance.

The Services Marketing Mix .

W. O. T. Segmentation & Targeting Segmentation & Positioning Product Place C Price Promotion Competitors Current & Prospective External Market Environment Technologies Political and Legal Cultural and Social Economic .Overview of Marketing Strategy Planning Process Narrowing down to focused strategy with quantitative and qualitative screening criteria Customers Needs and other Segmenting Dimensions Company Objectives & Resources S.

Elements of The Services Marketing Mix: ―7Ps‖ vs. the Traditional ―4Ps‖ Rethinking the original 4Ps  Product elements  Place and time  Promotion and education  Price and other user outlays Adding Three New Elements  Physical environment  Process  People .

The 7Ps: (1) Product Elements All Aspects of Service Performance that Create Value Core product features—both tangible and intangible elements Bundle of supplementary service elements Performance levels relative to competition Benefits delivered to customers (customers don’t buy a hotel room. they buy a good night’s sleep) Guarantees .

and How Geographic locations served Service schedules Physical channels Electronic channels Customer control and convenience Channel partners/intermediaries .The 7Ps: (2) Place and Time Delivery Decisions: Where. When.

advice • persuasive messages • customer education/training . retail. customer service sales promotion publicity/PR  Imagery and recognition • branding • corporate design  Content • information.) personal selling. Persuading.The 7Ps: (3) Promotion and Education Informing. Internet. and Reminding Customers  Marketing communication tools • • • • media elements (print. broadcast. Educating. etc. outdoor.

phone.. premiums  Margins for intermediaries (if any)  Credit terms Identify and Minimize Other Costs Incurred by Users  Additional monetary costs associated with service usage (e.The 7Ps: (4) Price and Other User Outlays Marketers Must Recognize that Customer Outlays Involve More than the Price Paid to Seller Traditional Pricing Tasks  Selling price.)  Time expenditures. travel to service location. parking. especially waiting  Unwanted mental and physical effort  Negative sensory experiences .g. discounts. babysitting.etc.

The 7Ps: (5) Physical Environment Designing the Servicescape and providing tangible evidence of service performances Create and maintaining physical appearances • • • • • • buildings/landscaping interior design/furnishings vehicles/equipment staff grooming/clothing sounds and smells other tangibles Select tangible metaphors for use in marketing communications .

degree of automation .7Ps: (6) Process Method and Sequence in Service Creation and Delivery Design of activity flows Number and sequence of actions for customers Providers of value chain components Nature of customer involvement Role of contact personnel Role of technology.

The 7Ps: (7) People Managing the Human Side of the Enterprise  The right customer-contact employees performing tasks well • • • • • • • • • • job design recruiting/selection training motivation evaluation/rewards empowerment/teamwork fit well with product/processes/corporate goals appreciate benefits and value offered possess (or can be educated to have) needed skills (co-production) firm is able to manage customer behavior  The right customers for the firm’s mission .

and HR Functions Operations Management Marketing Management Customers Human Resources Management . Operations.Managing the 7Ps Requires Collaboration between Marketing.

CIA 1 GROUP FORMATION & TASK BEFORE THE NEXT SESSION .

Courier industry in India 6. Retail industry in India 8. Hospital Industry in India 9.Insurance Industry in India .Industries that I want the class to study 1. Hotel industry in India 3. Education industry in India 7. Airline Industry in India 4. Banking Industry in India 10. Tourism Industry in India 2. Telecom Industry in India 5.

every session there will be a few presentations /discussions Next session – please come with a 5 slide ppt This should cover • Basic industry landscape.size.Industries that I want the class to study As we go through the sessions. key players etc • Analysis of Services Marketing Triangle in each industry .

THANK YOU .

Sign up to vote on this title
UsefulNot useful