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Services Management

Nature of services Market positioning Service delivery system New service development Services Marketing mix decisions Managing demand, capacity and service assets Service processes- managing service encounter Customer satisfaction and service quality Customer complaints and service recovery Managing service profit chain Managing customer relationships Managing people in service organizations

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Although the process may be tied to a physical product. the recipient of the service. the performance is transitory. ‡ A service is an economic activity that creates value and provides benefits for customers at specific times and places by bringing about a desired change in.Service ‡ A service is an act or performance offered by one party to the other. . or on behalf of. often intangible in nature and does not result in the ownership of any of the factors of production.

Flat organizations 9. Integrity 5. Training of employees . In the field leadership styles 4. Use technology to promptly serve customer 7. Involve customers in organization growth 8.Lessons from Service Leaders 1. Service vision 2. Concern for customers 6. High standards 3.

What is Service Quality ‡ Actual performance by the firm ‡ Customer satisfaction= -----------------------------------------‡ Customers expectations .

relatives.The Customers view of service quality ‡ Customer perceptions of the firm and its offer are shaped by: ‡ a) Word of mouth publicity-like recommendations from friends. neighbors and peer group at work place ‡ b) Personal experience on the part of the customer ‡ c) Personal needs of individual customers ‡ d) External communications like the publicity of the firm in the media and its advertisements and other corporate communications .

‡ a) The quality of service or customer satisfaction=service quality delivered .service expected ‡ b) The value of a service to a customer= Service quality(both the results realized and process by which they are achieved)+ ‡ price and other customer costs of acquiring the service ‡ c) Potential profit leverage in providing the service=value to the customer-cost to the service provider ‡ d) The profitability of a service to its provider=marginvrepeat usagezinvestment .

warranties. ‡ Development of customer-oriented policies like guarantees. ‡ -To create this self-reinforcing process. refund and exchange policies. one has to understand the two important players in corporate profitability-the customer and the firm itself. . replacements.‡ Service encounters or moments of truth are a dynamic force ‡ with a potential to fuel self-reinforcing relationships.

How is Service Quality Measured? ‡ SERVQUAL=(Perception of an ideal company as measured by the rating given by the customer on the ten point scale for each variable . .( Expectation or actual service provided by the rating given by the ten point scale for each variable or for the firm as a whole).

Planning for Service ‡ Strategic Options ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ a) Locating service points near the customer b) Making delivery points user friendly c) Reducing time gap between service sought and delivered d) Product design e) Unconditional guarantee f) Role clarity and empowering people g) Customer service and satisfaction is a result of team-work h) Performance measurement and reward systems i) Research k) Training of people .

the production is separate from consumption whereas in services the production and consumption is simultaneous. Since services are provided by human beings no two services will be precisely alike. ‡ Customers do not obtain the ownership of services. The heterogeneity connected with services is largely the result of human interaction between the service provider and the customer. Customers also participate and affect the transaction. ‡ In case of goods. ‡ Goods are normally standardized whereas services are heterogeneous. . Customers may be involved in the production process. Intangible elements dominate value creation.Differences between Goods and Services ‡ Goods are tangible and services are Intangible. It becomes a bit difficult to quantitatively evaluate service. Services thus cannot be inventoried or patented or readily displayed.

‡ Goods are non perishable whereas services are perishable. ‡ With regards to goods and services. ‡ Time factor assumes great significance and importance for service. Mass production of service is very difficult and services cannot be returned or resold. the distribution channel may assume different forms .

Market positioning ‡ The importance for service firms to adopt focused strategies in their choice of markets and products ‡ What is the distinction between important and determinant attributes in consumer choice decisions? ‡ What are the key concepts underlying competitive positioning strategy in services? ‡ When is it appropriate to reposition an existing service offering? ‡ How can positioning maps help service marketers to better understand and respond to competitive dynamics? .

‡ Identifying and selecting target segments ‡ Market and micro segmentation ‡ Positioning distinguishes a brand from its competitors: ‡ A company must establish a position in the minds of its targeted customers ‡ The position must be singular. market and competitor analysis. . ‡ The position must set a company apart from its competitors ‡ A company cannot be all things to all people. it must focus its efforts ‡ Conduct periodic internal. providing one simple and consistent message.

Service delivery system ‡ Identifying the primary channels through which services are delivered to end customers: a) Direct delivery of service and b) Delivery of service through intermediaries ‡ Direct or company owned channels ‡ Franchising: Advantages: a) A leveraged business format for greater expansion and revenues. C) Knowledge of local markets d)Shared financial risk and more working capital. Disadvantages: Difficulty in maintaining and motivating franchisees b) High dispute between franchisees and franchisers c) customer relationships controlled by franchisee rather than franchiser ‡ Agents and brokers . b) Consistency in outlets.

Challenges and disadvantages: a) Price competition b) Inability to customize with highly standardized services c) Lack of consistency due to customer involvement d) changes in customer behavior e)competition from widening geographies .‡ Electronic channels: benefits: a) Consistent delivery for standardized services b) Low cost c) Customer convenience d) wide distribution e)customer choice and ability to customize f) Quick customer feedback.

‡ Types of new services: ‡ Major or radical innovations ( television or computer) ‡ Start up businesses consists of new services for a market that is already served by existing products that meet the same generic needs ( on line banking for financial transactions) ‡ New services for the currently served market represent attempts to offer existing customers of the organization a service not previously available from the company ( An airline offering fax or internet service during flights) . it has to have the following four basic characteristics: a) Must be objective and not subjective b)Must be precise and not vague c)Must be fact driven and not opinion driven d)Must be methodological and not philosophical.New Service Development ‡ When there is a new service development.

changing the color scheme of a retail chain etc) .‡ Service line extensions represent augmentations of the existing service line ( An airline offering new routes) ‡ Service improvements represent perhaps the most common type of service innovation. ( A hotel room having a WIFI zone) ‡ Style changes represent the most modest service innovations although they are highly visible and can have significant effects on customer perceptions ( revising the logo of a brand.

Stages in new service development Business strategy development or review New service strategy development Idea generation( screen the ideas against new service strategy) Concept development and evaluation ( test concept with customers and employees) Business analysis ( test for profitability and feasibility) Service development and testing ( conduct service prototype and test) market testing ( test the service and other marketing mix elements) Commercialization Post introduction evaluation ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ .