1 introduction to services

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INTRODUCTION TO

SERVICES

October 1, 2011


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What are Services?

Put in the most simple terms, services aredeeds, processes and performances .


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Definition of Services

Hence our simple, broad definition is one thatdefines services to include all economic

activities whose output is not a physical

product or construction, is generally consumedat the time it is produced, and provides addedvalue in forms (such as convenience,amusement, timeliness, comfort or health) thatare essentially intangible concerns of its firstpurchaser.


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Service

All of the following companies are consideredservice companies: AT&T(telecommunications) , Marriott International (Hotels), American Airlines

( transportation) , Bank One ( financialservices) .

Services can be offered to the marketplace bymanufacturers and technology companies as

well e.g. IBM and Compaq ( traditionallyconsidered manufacturers) offer informationtechnology ( IT) consulting services to themarketplace, competing with firms like EDSand Accenture, traditional service industry

firms.


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Customer Service

Provided by all types of companiesincludingmanufacturing , IT companies and service companies.

Customer service most often includes answering

questions, taking orders, dealing with billing issues,handling complaints and perhaps schedulingmaintenance or repairs.

Customer service is the service provided in support of acompanys core products.

Customer service can occur on site, or over the phone or

via the Internet or through call centers.

Quality customer service is essential to building customer

relationships and should not be confused with servicesprovided for sale by a company


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Tangibility Spectrum

The broad definition of a service implies that intangibility isa key determinant of whether an offering is a service.

It is also true that very few products are purely intangible ortotally tangible.

Instead , services tend to be more intangible thanmanufactured products and manufactured products tend tobe more tangible than services.

The fast-food industry , while classified as a service, alsohas many tangible components such as food, thepackaging and so on.

Automobiles while classified within the manufacturingsector , also supply many intangibles , such astransportation .

Hence when we refer to services we will be assuming thebroad definition of services and acknowledging that there

are very few pure services or pure goods


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Tangibility Spectrum

SaltSoft drinks

DetergentsAutomobiles Cosmetics

Tangible

Dominant

Fastfood

Outlets

Fast-food

OutletsAd agencies

AirlinesInvestment

mgmtConsulting

Teaching

Intangible

Dominant


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Why Services Marketing ?

Why is it important to learn about service marketing ,service quality and service management ?

Services marketing concepts and strategies havedeveloped in response to the tremendous growth of

service industries.


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National Income Unit

Gross Domestic ProductAt Factor Cost

Rs.crs 4,303,654.00

At Current Prices (RevisedEstimates 2007-08)

$Bn. 1,069.00

Structure of GDPAgriculture & allied % share 17.80

Industry % share 26.60

Services % share 56.60GDP Growth

2006-07 % 9.602007-08 % 9.00

Per Capita Income atCurrent Prices

Rupees 33,299.00

Per Capita Income atCurrent Prices

$ 827.00

Economy at a glance ( 2008-09)

Tata Statistical Outline ( 2008-09)


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Imperative in Manufacturing

and IT Early in the development of the field of services

marketing and management , most of the interest andimpetus came from service industries such asbanking and healthcare.

As these traditional service industries continue toevolve and become more competitive , the need foreffective services management and marketingstrategies is still there.

Manufacturing and technology industries such asautomobiles , computers and software are alsorecognizing the need to provide quality service inorder to compete worldwide.

These companies are realizing that a large % of their

revenues and profits are coming from services.


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contd

In mostindustries providing quality service is nolonger simply an option.

The quick pace of developing technologies andincreasing competition make it difficult to gainstrategic competitive advantage through physicalproducts alone plus customers are also demanding

Customers not only expect excellent , high-qualitygoods, they also expect high levels of service along

with them.

As manufacturers and IT companies such as GE andIBM become more and more service- focused , theneed for special concepts and approaches for

managing and marketing services becomes even


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Service Marketing is Different

There was a need for new concepts and approaches formarketing and managing service businesses.

Self-Service technologies is perceived as less servicebecause no human interaction or human personalization isprovided

Excellent service standard in one company will beexpected by the customer from all other companies

Cost-cutting measures have also impacted the serviceindustry which has cut down on man-power and toounderstaffed to provide quality service

Many companies give lip service to customer focus andservice quality , but pay little attention to providing training, compensation, support to staff

Consistent delivery of high-quality service needs to bemaintained and is often a challenge to companies


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Potential for New Service Offerings

Automated voice mail

Interactive voice response system

Fax machines ATM

Internet

These have been possible only because ofnew technologies.


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Enabling both Customers and Employees

Technology enables both customers and employeesto be more effective in getting and providing servicesI.e through self-service technologies customers canserve themselves more effectively and also acrossnational boundaries ( I.e globally)

The Internet is a Service, all organizations thatoperate on the net are providing services- whetherthey are giving information , performing basiccustomer service functions, or facilitating

transactions. This also leaves the consumer to face the darker side

of technology I.e working in isolation, or feeling abreach of privacy


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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

Standardised Heterogeneous

Service delivery and cust satisfaction depend on

employee actions

Service quality depnds on many uncontrollable factors

There is no sure knowledge that the service deliveredmatches what was planned and promoted

Production separate Simultaneous production and Customers particpate in and affect the transaction

from consumption consumption Customers affect each other

Employees affect the service outcome

Decentralizaiton may be essential

Mass production is difficult

Nonpersihable Perishable

It is difficult to synchronize supply and demand with

services

Services cannot be returned or resold

Difference in Goods versus Services Marketing


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Services Marketing Mix

Traditional Marketing Mix

Has the Four Ps Product, Price, Place (distribution) and Promotion.

Mix indicates that all of the variables areinterrelated and depend on each other tosome extent.

However the four Ps require somemodifications when applied to services.


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Product Place Promotion PricePhysical good features Channel Type Promotion blend Flexibility

Quality Level Exposure Salespeople Price levelAccessories Intermediaries Number Terms

Packaging Outlet locations Selection Differentiation

Warranties Trasnportation Training Discounts

Product Lines Storage Incentives Allowances

Branding Managing Channels Advertising

Targets

Media Types

Types of ads

Copy ThrustSales Promtion

Publicity

People Physical Evidence Process

Employees Facility design Flow of activities

Recruiting Equipment Standardized

Training Signage Customized

Motivation Employee dress Number of stepsRewards Other Tangibles Simple

Teamwork Reports Complex

Customers Business cards Customer involvement

Education Statements

Training Gaurantees

Expanded Marketing Mix for Services


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Expanded Mix for Services

People

All human actors who play a part in servicedelivery and thus influence the buyers

perceptions : namely , the firms personnel ,the customer, and other customers in theservice environment.


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Physical evidence

The environment in which the service isdelivered and where the firm and customerinteract, and any tangible components that

facilitate performance or communication ofthe service .

( eg.brochures, letterhead, business cards,

report formats, signage and equipment).Servicescape retail bank branch facility


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Process

The actual procedures , mechanisms, andflow of activities by which the service isdeliveredthe service delivery and

operating systems. E.g. Amongst airlines, Southwest

(standardized service) and SingaporeAirlines ( non-standardized service) .


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Southwest Airlines : Aligning People, Processes and Physical

Evidence

Profitable even post Sept 11, 2001

Has the best customer service record in the

airline industry Employees come first ( Herb Kelleher ,

president now chairman)

Best Baggage handling, on-timeperformance and best customer complaintstatistics.


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contd

PeopleHigher people with attitude and trainthem later for technical skills. Jovial and funattitude amongst the crew

Process- The service delivery process atsouthwest also reinforces the position . For eg: no food on flight, no seat numbers, no

baggage transfers to connecting flights, quickturnaround and low fares

Physical evidence-Aircraft color and logoorange and mustard brown.,Employees dress

casually interactive website

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