INTRODUCTION TO SERVICE

PROGRAM EDUCATIONAL OBJECTIVES

 PEO1: To inculcate knowledge in students with experiential learning and
prepare the for advance study and life long learning.
 PEO2: To develop strategic understanding of fundamental principles of
business and competencies in the area of accounts, marketing, interpersonal
skills, human resource management and entrepreneurship.
 PEO3: To train the students for dynamic business environment and apply
their perspectives through innovation and creativity.
 PEO4: To develop competencies in qualitative and quantitative techniques
to analyse the business data as well as developing an understanding of
economic, legal and social environment of Indian business.
 PEO5: To inculcate leadership skills, professionalism, effective
communication skills, interpersonal skills and team work in students so as to
enable them to manage and collaborate in diverse work environments.
 PEO6: To develop responsiveness to social issues and ability to identify
business solutions to address the same. Students will also be able to
understand the issues of business ethics.
PROGRAM OUTCOMES (POS)
 The program outcomes specify the knowledge, skills, values
and attitudes students are expected to attain in courses or in
a program. The six outcomes of MBA program are as
below:
 1. Business Environment and Domain Knowledge

 2. Critical thinking, Business Analysis, Problem

Solving and Innovative Solutions

 3. Global Exposure and Cross-Cultural

Understanding
 4. Social Responsiveness and Ethics

 5. Effective Communication

 6. Leadership and Teamwork

COURSE OBJECTIVE
 The objective of this course is to help students
understanding various factors affecting consumer
behavior and to understand the process of consumer
buying. Based on the understanding of consumer
behavior, the students are expected to design the strategy.
COURSE OUTCOMES
 CO1: Understand the fundamental concepts of service
marketing and its functions.
 CO2: Identify the role and significance of various
elements of service marketing mix.
 CO3: Analyze customer requirement, measure service
quality and design and deliver better service.
 CO4: Analyze integrated services marketing
communications and services marketing triangle.
 CO5: Examine various pricing strategies and pricing
approaches in service sectors.
 CO6: Understand service marketing applications in
different service sectors.
CAFÉ COFFEE DAY
 You must have been to a Café Coffee Day service outlet
.What all challenges can you imagine running that
coffee shop?
OBJECTIVES FOR CHAPTER 1:
INTRODUCTION TO SERVICES
 Explain what services are and identify service trends
 Explain the need for special services marketing concepts
and practices
 Outline the basic differences between goods and services
and the resulting challenges for service businesses
 Introduce the service marketing triangle
 Introduce the expanded services marketing mix
 Introduce the gaps model of service quality
HOW IMPORTANT IS THE SERVICE SECTOR
IN
OUR ECONOMY?
 In most countries, services add more economic value
than agriculture, raw materials and manufacturing
combined.
 In developed economies, employment is dominated by
service jobs and most new job growth comes from
services
 Jobs range from high-paid professionals and technicians
to minimum-wage positions
 Service organizations can be any size—from huge global
corporations to local small businesses
 Most activities by government agencies and nonprofit
organizations involve services
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
WHAT’S SERVICE SECTOR CONTRIBUTION
IN INDIAN GDP ???

 Currently this sector is the backbone of the Indian

economy and contributing around 53% of the Indian
GDP. Services sector is the largest sector of India. ... Services
sector accounts for 53.66% of total India's GVA of 137.51 lakh
crore Indian rupees. Industrial sector contributes 29.02% with
GVA of Rs. 39.90 lakh crore.
 Gross Value Added (GVA) Regional gross value added using
production (GVA(P)) and income (GVA(I)) approaches.
Regional gross value added is the value generated by any unit
engaged in the production of goods and services.
 The Formula for GVA Is

 ​GVA=GDP+SP−TP

 where SP= Subsidies on products
INTRODUCTION
 Services are deeds,processes and performance
 Intangible, but may have a tangible component

 Generally produced and consumed at the same time

 Need to distinguish between SERVICE and

CUSTOMER SERVICE…
CUSTOMER SERVICE
It is the service provided in support of a company’s core
products.
To illustrate :
 All Consumer durables companies like LG & Samsung
have exclusive service departments.
 Courier companies like First Flight,

FedEx provide a high level of customer service.

LETS DO A SELF-EVALUATION

How much do we spend between goods and services
on a monthly basis ???
EXAMPLES OF SERVICE INDUSTRIES
 Health Care
 hospital, medical practice, dentistry, eye care
 Professional Services
 accounting, legal, architectural
 Financial Services
 banking, investment advising, insurance
 Hospitality
 restaurant, hotel/motel, bed & breakfast,
 ski resort, rafting
 Travel
 airlines, travel agencies, theme park
 Others:
 hair styling,
pest control, plumbing, lawn maintenance,
counseling services, health club
SERVICE SECTOR GROWTH IN INDIA &
CHINA
 Service sector has played a very different role in both the countries.
The share of service sector in India’s GDP is 54% while its share in
China’s GDP is 40.7%. Since the 1990s, China and India have
witnessed spectacular average annual growth rates of 10.2% and
6.2% respectively (for the period 1992-2018). While India has been
hugely successful in its service sector, it has fallen short of the
manufacturing sector.
MAJOR TRENDS IN SERVICE
SECTOR
 Government Policies (e.g., regulations, trade agreements)
 Social Changes (e.g., affluence, lack of time, 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.g., speed, digitization, wireless, Internet)
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

SOME IMPACTS OF TECHNOLOGICAL
CHANGE
 Radically alter ways in which service firms do business:
 with customers (new services, more convenience)
 behind the scenes (reengineering, new value chains)
 Eg. Bill payment through PayTm App saves time.

 Create relational databases about customer needs and

behavior, mine databanks for insights.
 Leverage employee capabilities and enhance mobility. Eg.
Sales executives can devote more time to travel when they
have access to MIS on net available 24/7.
 Centralize customer service—faster and more responsive.
 Develop national/global delivery systems
 Create new, Internet-based business models.

Eg. Dell computers does not have franchisee/ big sales teams…it sells
mostly through net.
NET SERVICING
 Special Offers Direct by Email
 Sign up Now
MARKETING RELEVANT DIFFERENCES BETWEEN
GOODS AND SERVICES

INTANGIBILIT HETEROGENE SIMULTANEO PERISHABILIT

Y ITY US Y
PRODUCTION
AND
CONSUMPTIO
N
SERVICES ARE DIFFERENT
Goods Services Resulting Implications
Tangible Intangible Services cannot be inventoried.
Services cannot be patented.
Services cannot be readily displayed or communicated.
Pricing is difficult.
Standardized Heterogeneous Service delivery and customer satisfaction depend on
employee actions.
Service quality depends on many uncontrollable factors.
There is no sure knowledge that the service delivered
matches what was planned and promoted.
Production Simultaneous Customers participate in and affect the transaction.
separate from production and Customers affect each other.
consumption consumption Employees affect the service outcome.
Decentralization may be essential.
Mass production is difficult.
Nonperishable Perishable It is difficult to synchronize supply and demand with
services.
Services cannot be returned or resold.
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
Services can be bought
or sold but…
cannot be dropped on
your foot !!!
MARKETING IMPLICATIONS
No ownership
 Pricing often based on time
 Customer choice criteria may differ for renting vs. purchase--
may include convenience, quality of personnel
 Can’t own people (no slavery!) but can hire expertise and
labor
 Customers obtain temporary rentals, hiring of personnel, or
access to facilities and systems
MARKETING IMPLICATIONS
Services cannot be inventoried after
production
 Service performances are ephemeral—transitory, 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
 Customers may be involved in production process

 Customer involvement includes self-service and cooperation

with service personnel .Eg withdrawing money from ATM,
hair cut at a saloon.
 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, equipment, and systems with
customers in mind: user-friendly, convenient
locations/schedules
MARKETING IMPLICATIONS
 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
VALUE ADDED BY TANGIBLE VS INTANGIBLE
ELEMENTS IN GOODS AND SERVICES
MARKETING IMPLICATIONS
 Other people are often part of the service product
 Ensure job specs and standards for frontline Avoid
inappropriate mix of customer segments at same
time
 Achieve competitive edge through perceived
quality of employees
 Recognize that appearance and behavior of other
customers can influence service experience
positively or negatively.
 Eg. in a sporting event behavior of fans can add or
reduce the entertainment quotient.
 Manage customer behavior (the customer is not
MARKETING IMPLICATIONS
 Greater variability in operational inputs and
outputs
 Must work hard to control quality and achieve
consistency
 Seek to improve productivity through
standardization, 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
MARKETING IMPLICATIONS
 Time factor assumes great importance
 Offer convenience of extended service hours up to 24/7.
Eg 24 hour banking, extended banking hours.
 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, information-
based elements instantly and expand geographic reach. Eg.
Tata sky , Dish Tv cable services Cable services.
FOUR CATEGORIES OF SERVICES EMPLOYING
DIFFERENT UNDERLYING PROCESSES
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, 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: (2)
DESIGNING THE SERVICE FACTORY.
People-processing services
require customers to visit the
“service factory,” so:
 Think of facility as a “stage” for service performance
 Design process around customer
 Choose convenient location
 Create pleasing appearance, avoid unwanted noises,
smells
 Consider customer needs--info, parking, food, toilets,
etc.
IMPLICATIONS OF SERVICE PROCESSES:
3) EVALUATING ALTERNATIVE DELIVERY
CHANNELS
 For possession-processing, mental-stimulus processing,
or
information processing services, alternatives include:

1. Customers come to the service factory

2. Customers come to a retail office
3. Service employees visit customer’s home or workplace
4. Business is conducted at arm’s length through
- physical channels (e.g., mail, courier service)
- electronic channels (e.g., phone, fax, email, Web site)
IMPLICATIONS OF SERVICE PROCESSES:
(4) BALANCING DEMAND AND CAPACITY
When capacity to serve is limited and demand varies
widely, problems arise because service output can’t be
stored:

1. If demand is high and exceeds supply, business may

be lost
2. If demand is low, productive capacity is wasted
Potential solutions:
- Manage demand
- Manage capacity
(5) APPLYING INFORMATION TECHNOLOGY
(6) INCLUDING PEOPLE AS PART OF THE
PRODUCT
THE SERVICES MARKETING
TRIANGLE
 The three interlinked groups that work together to
develop, promote , and deliver services.
 It is all about promises-promises made and promises
kept to customers.
WAYS TO USE THE
SERVICES MARKETING TRIANGLE
SERVICES MARKETING TRIANGLE
APPLICATIONS EXERCISE
 Focus on a service organization. In the context you are
focusing on, who occupies each of the three points of the
triangle?
 How is each type of marketing being carried out
currently?
 Are the three sides of the triangle well aligned?

 Are there specific challenges or barriers in any of the

three areas?
THE SERVICES MARKETING MIX..7 P’S
THE SERVICES MARKETING MIX..7 P’S
THE SERVICE MARKETING MIX: 7 P’S

 Traditional Marketing Mix

 Expanded Mix for Services: 7 Ps
 Building Customer Relationships Through People,
Processes, and Physical Evidence
 Ways to Use the 7 Ps
 Product
 Price
 Place
 Promotion
 People
 Process
 Physical Evidence
THE SERVICE MARKETING MIX
EXPANDED MARKETING MIX FOR
SERVICES
THE EXPANDED MARKETING
MIX FOR SERVICES
PEOPLE PHYSICAL PROCESS
EVIDENCE
Employees Facility design Flow of activities

Customers Equipment Number of steps

Communicating Signage Level of customer

culture and values involvement

Employee research Employee dress

Other tangibles
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
SERVICE PRODUCT
THE 7PS:
(2) PLACE AND TIME
Delivery Decisions: Where, When, and How
 Geographic locations served
 Service schedules
 Physical channels
 Electronic channels
 Customer control and convenience
 Channel partners/intermediaries
PLACE
THE 7PS:
(3) PROMOTION AND EDUCATION
Informing, Educating, Persuading, and Reminding Customers
 Marketing communication tools

 media elements (print, broadcast, outdoor, retail, Internet, etc.)

 personal selling, customer service
 sales promotion
 publicity/PR
 Imagery and recognition
 branding
 corporate design
 Content
 information, advice
 persuasive messages
 customer education/training
PROMOTION
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, discounts, premiums
 Margins for intermediaries (if any)
 Credit terms
Identify and Minimize Other Costs Incurred by Users
 Additional monetary costs associated with service usage (e.g., travel
to service location, parking, phone, babysitting, etc.)
 Time expenditures, especially waiting
 Unwanted mental and physical effort
 Negative sensory experiences
PRICING
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
PHYSICAL ENVIRONMENT
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, degree of automation
PROCESS
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
 The right customers for the firm’s mission
 fit well with product/processes/corporate goals
 appreciate benefits and value offered
 possess (or can be educated to have) needed
 skills (co-production)
PEOPLE
7PS REQUIRES COLLABORATION BETWEEN
MARKETING, OPERATIONS, AND HR FUNCTIONS

Operations Marketing
Management Management

Customers

Human Resources
Management
WAYS TO USE THE 7 PS
CHALLENGES FOR SERVICES
 Defining and improving quality
 Communicating and testing new services

 Communicating and maintaining a consistent image

 Motivating and sustaining employee commitment

 Coordinating marketing, operations and human resource

efforts
 Setting prices

 Standardization versus personalization