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PROCESSES IN SERVICE

There are several basis for classifying services .One significant way is on the basis of processes by which services are created and delivered In marketing of physical goods it hardly necessary to acquaint the consumer with he processes by which the goods are manufactured. That is the responsibility of the production people. In services, however the customers and consumers are often very much involved in production of services It is therefore necessary to understand the processes to which people are likely to be exposed. A process is basically a series of pre-designed actions performed in a particular sequence. Implicit in processes is that there is an input, some through put and finally the output.

UNDERSTANDING SERVICE PROCESS
• • • • There are three main issues in understanding of SERVICE PROCESSES a)VARIETY IN PROCESS b)VALUE ADDITION c)TASK ALLOCATION

• VARIETY IN PROCESSES • Variety relates to the process being fixed non-varying sequence of activities standardised Process has a direct bearing on costs, time, complexity of operations. Lower the variety, lower the costs. • Three types of processes can be mentioned under “VARIETY’

• --RUNNER • Generally refers to a high degree of standardisation. Usually found in high volume activity. —ATMs, checking bank accounts,rly ticketing

• REPEATERS • These types of processes tend to be like ‘Runners’ except that they are a little more complex and occur a little less frequently • This happens when a firm that began with limited range, expands its offering. • They tend to involve re-learning • STRANGERS • These are tot. Rather infrequent. More like one0off.ally non-standardised processes • Difficult to anticipate • Cannot prepare for such resources. • Over a period of time, ‘Strangers’ tend to become ‘Repeaters’ & ‘Runners’

• eg in a hotel ‘Front-end’ operations are likely to be given far more importance than ‘back-end’ tasks. • The customer may not be giving equal value to all the activities.VALUE ADDITION IN PROCESSES • Processes consists of several ‘sub-processes’ or activities • --Therefore it is necessary for the marketers to study which of the activities is contributing more ‘value’ to the customer. • TASK ALLOCATION • Depending on the relative importance of ‘value’ tasks are allocated accordingly. .

• What is therefore getting processed in services? • Broadly two categories are getting processed • a) People • b) Physical objects • For each of these categories the process may be • a) Tangible • b) Intangible .

THE PROCESSING MATRIX • The four dimensions can be mapped as Nature Of Service People Possession Tangible Actions People Processing Passenger Transportation Health Care Lodging Beauty salons Physical therapy Fitness centre Restaurants/bars Barbers Funeral services Possession Processing Freight transportation Repair/maintenance Warehouse/storage Office cleaning Retail distribution Laundry/dry cleaning Re-fuelling Landscaping Disposal/recycling Information Processing Accounting Banking Data processing Data transmission Intangible Action Mental Stimulus Processing Advertising/PR Arts/Entertainment Broadcasting/cable Management consulting .

Mental Stimulus Processing Information Processing Information services Music concerts Psychotherapy Religion Voice Telephone Insurance Legal services Programming Research Securities investment Software Consulting .

PROCESSES contd/- • People Processing • Since time immemorial. physical effort mental energy . health. people have sought services directed a themselves—transportation. • The level of customer involvement may vary a lot--• It may be just 15 min in case of transportation to some days in case of medical needs. • The service provider must reflect on certain non-financial costs ie time. looking more beautiful etc • These are services in which the people must enter the service system physically and engage themselves physically in delivery of the service.

The customer may. . If the service is required for immovable assets—pesticide treatment for kitchens—then the service provider goes to the customer. white washing of house etc • In such a service the physical presence is not a necessity. . of his own choice decide to be physically present • The object is either delivered to the service provider for treatment or the latter arranges for it to be collected. car repair..PROCESSES contd/- • Possession Processing • Often a customer may ask for certain treatment to his possession e g repair of washing machine.

psychotherapy etc • This is one area where the service provider has the power to influence the clients mind—attitude. create and alter perceptions The service provider has to ensure that strong ethical standards are maintained. the focus is on mental communication .PROCESSES contd/- • Mental Stimuli processing • These are services where the service provider is engaged primarily with the mind of the service seeker— education. religious advice. While some physical presence is necessary.

books etc • The services most dependent on timely and correct processing of information are financial services. law.report. It can. research. medical diagnosis. • .PROCESSES contd/- • Information Processing • Information is basically most intangible form of service output. however. be transformed into tangible form by converting it into a document . letters.

the product can be physical goods or intangible offering or a combination of both.g. therefore. the product must perform the basic function—solve the customers problem/satisfy his need.7Ps OF SERVICES MKT-PRODUCT In services. A product may have three levels The Core Product This level has the basic features and is the main reason for consumption In services. e. Retirement Plans FDs –Banks FDs –Reputed Cos Mutual Funds/Pension Funds Stocks-Pvt cos & Govt securities Bullion Real Estate .

competitors step and lure the consumers with differentiation based on technology. additional features etc The differentiating aspects take the form of style.Product • FORMAL PRODUCT • • • • • • contd/- Once the formal product is launched and accepted . marketing. . prices. colour. easy barter Real Estate: reliability/solid growth . features FDs –Banks: Steady returns/Safety/Easy liquidity FDs –Reputed Cos: Higher returns Mutual Funds/Pension Funds Higher returns/growth Stocks-Pvt cos & Govt securities: higher returns/capital appreciation • • • Bullion: secrecy.

Product • • • • contd/- • AUGMENTED PRODUCT With further competition. it is services that has become the deciding differentiator . These were all intangible and in the realm of services. Ultimately. e g Warranties Guarantees After sales service • • • • • Customer education Training Home delivery Installation etc etc. the marketers added more features/attributes to the products for differentiation.

Gold. Platinum. Big Bazaar for mid-segment • . Rajdhani • ICICI Bank has different cards for different customersSilver . Petro Cards • Pantaloon Retail—Pantaloons for upper segment. • Indian Railways---has different trains like Shatabdi.SEGMENTATION IN SERVICES • The services marketer also attends to various segments like in goods marketing. Palaceon-Wheels.

SEGMENTATION contd/• ITC—Premium hotels/Budget hotels/Business Class Hotels • Jet Airways—Jet for upper segment • Jet Lite for mid segment • Wheels-Rent-A-Car have • Transport Corporation of India for their trucking operations • Gati /DTDC for their courier operation • Assam Bengal Corporation for large containers and cargo • Ritco Travels—for customers with travel needs .

right through . expertise HDFC/Delhi Police With you. branding in services also convey six levels of meaning: • --Attribute: 24 hr service from Citi Bank-----Citi never sleeps • --Benefits: SBI—The nation banks on us • --Value: faith .BRANDING OF SERVICES • Like in consumer products. trust.

American Express Cards are indicative of achievers.Branding contd/- • --Culture: Brands also convey the culture: McDonalds/Lufthansa/Dabbawalas / Chowki Dhani • --Personality: Brands also convey personality attributes eg NIIT—an intelligent person • Airtel talks about a can do person • --Users. .

• .Any advertisement of ICICI has a spill over effect on ICICI Lombard. ICICI Bank etc. • Most service organizations offer a line of products rather than a single product.Branding contd/- • Airtel talks about a can do person • --Users. American Express Cards are indicative of achievers. • All the products enjoy the benefits of promotion and advertising . • Branding also ensures greater acceptance of new products as they are perceived to be less risky. ICICI Prudential.

• Branding can .Branding contd/• The intangibility of services makes it difficult for customers to comprehend the totality of service offers..be used at both the corporate and product level. under the umbrella of corporate brand. At the same time. . the sub-brand should spell out the promise being made the particular service. reflect the values of the latter. • Branding stands for a particular way of doing business • Sub-brands.

PRICING • • • • • • • • • • • • PRICING OBJECTIVES Revenue and profit objective Make largest contribution to profit Achieve a certain target level—not necessarily maximising profits Maximise revenue from a fixed capacity Cover allocated costs/incremental costs Cover direct costs of providing a particular service Creating user base Build demand Achieve capacity utilisation Stimulate trials leading to adoption Build market share .

Paratha Wali Gali Delhi • • --Sealed-Bid pricing Here the price is submitted in form of sealed tenders.Transport contracts/canteens/housekeeping are awarded on this basis • • • • --Pricing below competition This approach is generally used when a new entrant enters and under-prices to gain some volume.The market conditions are such that the going rate is preferred. Chowpatty-Mumbai.eg Nehru Place-Delhi. The danger is a) You may go for cash losses b) Competitors may retaliate: .PRICE • • • • • • • COST BASED PRICING --Full cost/mark-up pricing --Marginal/Contribution pricing ABC COMPETITOR BASED PRICING --Going-rate pricing This approach is used where it is difficult to establish the exact cost.

.laggards • VALUE BASED PRICING • No customer will ever pay more for a service than what he thinks its worth. middle-majority . Different customers have different capacity to pay. Hence. The service marketers skill lies in deep understanding of consumers’ demand and his ability to pay.PRICING----contd/• --Pricing above competition • This pricing works when the service is a very exclusive and directed at the upper segment –foreign banks/health clubs in 5-star hotels/restaurants in intercontinental hotels • DEMAND BASED PRICING • This pricing is based on what the customers are willing to pay. It is therefore necessary to gauge the monetary value of the incremental service through market research.—correct identification of early adopters. the marketers have to have a deep understanding of how the consumers perceives the service.

VALUE BASED PRICING • • • • • Value generally is perceived as --Value is low price --Value is whatever I want in a product --Value is the quality I get for the price I pay --Value is what I get for what I pay. contd/- • In services we adopt the concept of NET VALUE • --the sum total of all the perceived benefits less all the perceived costs .

Hitachi because of their guarantees. distribution network.• Value is the ratio of perceived benefits of the service to be purchased to the price and other costs added to it VALUE contd/- • The benefits are product value. warranties. service centers etc . • Service Value • The worth assigned to a co by the customer eg LG. personnel value and image value • Product Value • The worth assigned to a product by a customer eg a Samsung refrigerator because of its technological features. service value.

. • Psychological Costs • The mental energy spent—worrying waiting.delays.The physical energy spent by the customer in acquiring the service.VALUE • Image Value • The worth assigned to a product because of its image contd/- • Monetary Value • The money paid for the item • Time Costs • The time spent by the consumer in evaluating the product vis-à-vis other products • Energy Costs • .

.• RELATIONSHIP PRICING • This approach requires a deep understanding of consumer where the emphasis is on customising so that the customer finds it inconvenient to shift to other service providers.

a service cannot be pre-checked Under such circumstances. multi-dimensional for the comprehension of an ordinary customer. people . Non-searchability:--means that unlike a physical object which can be examined. the credentials of the service provider have to be emphasised and re-affirming the exterior of a nursing home may be very immaculate and clean.-Often services are too complex .novel. rather than physical goods. The issue of intangibility create four areas that need to be attended to Generality—refers to items comprising objects. The task for the marketers is to communicate how his offering is better than others in the market. sate transportation etc Bring to the customers notice the testimony of satisfied customers Mental Impalpability. inspected..—refers to concepts as financial advice. expert legal advice. flight attendants.events that do not have a physical aspect or counterpart but the people are aware of these aspects eg flight service. This is particularly true for new prospects. • . the staff may be dresses in a tidy and crisp uniform but it still doesn't tell you about the skill Such issues are addressed by communicating the degree/experience of the service provider • • Abstractness.PROMOTION-MIX • • As services are performances. it often becomes difficult to communicate the benefits of services.

• Personal selling. • Tele-marketing • E.mailing • Word-of mouth • Customer Training • Customer services .COMMUNICATION MIX • Marketing communications can be • Personal Impersonal • Personal Communication • Refers to personalised messages that establish a two-way communication between the co and the customer.

COMMUNICATION MIX contd/- • IMPERSONAL COMMUNICATION • Impersonal communication refers to a one way message that is directed towards a large mass of prospects and customers rather than specific individuals. • Advertising • Sales promotion • Publicity • Public relations • Instructional materials-web sites/Manuals/Brochures • Corporate design .

Message Transmission • • • • MESSAGES TRANSMITTED THRU PRODUCTION CHANNEL Customer Service from Front-line staff Customer training—B-2-B Service Outlets • • MESSAGES TRANSMITTED THRU MARKETING CHANNELS Personal Selling • • • Trade Shows Advertising Direct Marketing .

.Message Transmission contd/• Sales Promotion • Public Relations • MESSAGE TRANSMISSION FROM OUTSIDE THE ORGANISATION • Word-of-mouth • Customers holding strong views are likely to talk more than the customers having milder views. • Extremely dissatisfied customers are likely to complain much more than highly satisfied customers. • Editorial/Media • Leading service providers may initiate their own media effort.

• Service branding is a blend of • a) The presented brand—how the co presents itself thru controlled communications • b) External brand.BRANDING AND COMMUNICATION • Branding of services is important because strong brands increase the trust of the customers.thru non-marketer controlled channels ie WOM/media/editorials • c) Brand meaning—the dominant perception of the customer and the associations that come to him—not necessarily from personal experiences. .

Branding • Sub-Branding • • • • contd/- Many service organisations resort to sub-branding to differentiate their offerings Air India-’J’ Class/’Y’ class Std/chartered /Kotak/--Platinum/Gold/ Credit Cards Bajaj Allianz -Silver Health/ Gold Policy .

INTANGIBILITY & PERISHABILITY Intangibility and perishability demand that the consumption and production of the services has to be simultaneous. to understand ―Place‖ in services we must ask 1 How to deliver services to the customer? 2 Where and when should the delivery take place? 3 Role of intermediaries in delivery of service 4 How to balance the tangible/intangible components of the service?        . services cannot be produced in one place and consumed in another place.PLACE  To understand the role of distribution in services. Unlike goods. we must remember the basic characteristics of services that differentiate services from products   INSEPARABILITY Due to inseparability of services it is necessary for the service provider and the consumer to meet for the exchange. Hence.

CORE & SUPPLEMENTARY SERVICES  CORE SERVICES     Core services require physical locations which tend to restrict distribution Mahindra Club Holidays can be had only on some locations A major surgery can take place only at a well equipped hospital Major plays/drama are held at Lalit Kala Academy/Kamani Auditorium/Prithvi Theater  SUPPLEMENTARY SERVICES  Information/pricing/timings/ticketing booking/billing/payments are of supplementary nature and tend to be widely distributed. The delivery of supplementary services has reached a very intricate and sophisticated level Internet/Widespread agents/Toll-free numbers/ Customer Care Centers etc   .

TYPE OF CONTACT         The interaction between the service provider & consumer may involve the following variable i) The consumer may go to the co ii) The Co goes to the consumer iii) The co offers service at a single site iv) The co offers service at multiple sites TYPE OF CONTACT Consumer goes to co Co goes to consumer SINGLE SITE Salon/Theatre TV repairs/Gas delivery MULTIPLE SITE Fast Food/DTDC Maruti-On -Road    Co & consumer transact from an arms length TV Broadcasting Stn Web mkt/Tel co LOCATIONS BECOME IRRELEVANT WHEN THE SERVICE PROVIDER AND THE CONSUMER NEED NOT INTERACT WITH EACH OTHER PHYSICALLY. .

CONSUMER BEHAVIOR The location of service provider also depends on the consumers behavior INVOLVEMENT a) High Involvement-Buying an LCD TV/Washing Machine with dryer b) Low Involvement c) Impulse purchase DEMOGRAPHIC PROFILE Age SERVICE DIRECTED TO TYPE OF SERVICE Cardiologist/neurosurgeon .