classification of services
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Classification of services. Classification based on the nature of service act. Tangible actions towards customers Passenger transportation Health care Beauty saloon Restaurants Tangible actions towards customers’ possessions Freight transportation Industrial equipment repairs - PowerPoint PPT PresentationTRANSCRIPT
CLASSIFICATION OF SERVICES
Classification based on the nature of service act
Tangible actions towards customers Passenger transportation Health care Beauty saloon Restaurants
Tangible actions towards customers’ possessions Freight transportation Industrial equipment repairs Laundry and dry cleaning Lawn care Veterinary care
Classification based on the nature of service act (contd..)
Intangible actions towards customers’ intellect Education Broadcasting Theaters Museum
Intangible actions towards customers’ assets Banking Legal services Accounting Security insurance
Classification based on the nature of service act (contd..)
Key questions: Does the customer need to be present
physically throughout the services? Does the customer have to be present
only to initiate or terminate the transaction?
Is customer’s presence not required at all?
Is a customer changed as a result of the service?
Classification based on the type of relationship the customer has with the service provider Continuous delivery/Membership related
Insurance Telephone subscription College enrollment Banking Trade associations
Continuous delivery/Without formal relationship Radio station Police protection Public highway
Classification based on the type of relationship the customer has with the service provider (contd..) Discrete transaction/ Membership related
Long distance phone calls Theater series subscriptions Commuter ticket or pass
Discrete transaction/ without formal relationship Car rental Mail service Toll highway Pay phone Movie theater Public transportation
Classification based on the type of relationship the customer has with the service provider (contd..) Key questions:
Can anything be done to move informal to member relationship?
Where can there be tradeoff between pricing and usage rates?
Classification based on the scope for customization and judgment in service delivery High judgment/ High customization
Professional services Surgery Beautician Plumber
High judgment/Low customization Education Preventive health care programs College food services
Classification based on the scope for customization and judgment in service delivery Low judgment/High customization
Telephone services Hotel services Retail banking
Low judgment/Low customization Public transportation Routine appliance repair Movie theater Spectator sports
Classification based on the scope for customization and judgment in service delivery Key questions:
Is it desirable to limit customization and get benefited by standardization and economies of scale?
Should customization be increased to reach wide range of customers?
Should service be simplified so that less judgment is required by the contact person?
Should service be updated in order to capitalize on the expertise of the staff?
Classification based on the nature of demand and supply for the service
Peak demand met without major delay/Wide fluctuation Electricity Natural gas Telephone Hospital maternity services Police and fire emergencies
Peak demand met without major delay/Narrow fluctuations Insurance Legal services Banking Laundry and dry cleaning
Classification based on the nature of demand and supply for the service
Peak demand met with delay/ wide fluctuations Accounting and tax preparations Passenger transport Hotel, Motel Restaurant Theater
Peak demand met with delay/ narrow fluctuations Similar to without delay but where the scale of
operations is very small comparitively
Classification based on the nature of demand and supply for the service
Key questions: What is the nature of demand fluctuation? Does
it have a predictable cycle? What are the underlying causes for these
fluctuations? Could marketing effect a change? What opportunities exists to change the level of
supply? Should alternative strategies be adapted for
adopting differential pricing? Should a new mix of strategies be experimented
with, involving both capacity and price?
Classification based on the method of service delivery
Customer to organization/ Single site Theater Saloon
Customer to organization/Multiple sites Bus services Fast food chain
Organization to customers/Single site Lawn care service Pest control Taxi
Classification based on the method of service delivery
Organization to customers/Multiple site Mail delivery Emergency repairs
At an arm distance/Single site Credit card company Local TV station
At an arm distance/Multiple site Broadcast network Telephone company
Classification based on the method of service delivery
Key questions: Should the service be delivered at a
single site or multiple sites? What is the most convenient type of
transaction for the customers? Would the service quality improve or
deteriorate with the type of change in interaction?
Can suitable intermediaries be used in order to establish multiple outlets?
MARKETING MIX
Elements of the service marketing mix
Product Price Promotion Place People Process Physical evidence
Product ( Service package) Services are products. Even though
intangible, they are things Consumer services:
Shoe repair, dry cleaning and clothing alterations
Shopping services: Insurance, banking, airline travel and
automotive repairs Specialty services:
Legal services, medical care, hair styling
Conceptualization of the service concept
Customer benefit concept: Customers are not buying goods. They
are buying specific benefits and values Purchase bundle comprises of:
Physical items- tangible elements that come with services
Sensual benefits- those experiences which hits one or more of customer’s senses ex: aroma, taste, ambiance.
Psychological benefits- which are determined by the customer subjectively.
Service concept The general benefits the service provider
will offer Core benefits Expected benefits Augmented services Potential services
Service offer and service package It spells out in more detail those services
to be provided, how they will be provided and to whom
It is the elements that make up the total service package, including both the tangible and intangible components of the service.
Service delivery system How the service is provided to the
consumer. This speaks about the interaction
between the customer and the service provider and the interaction between the customer and the service facility.
It is a carefully designed blueprint that describes how the service is rendered to the customers.
Analysis of the service
Basic framework, services are classified into: Core services Secondary services
But, the managerial perspective classifies it as: Core service: is the reason for being in the business Facilitating services: they are the support services
which are used to add value to the core service. Reception, check-in service etc
Supporting service: are used as a means of competition only. Without them, the core service can be used but the total service package may be less attractive.
Price
A customer pays for some product or service because of its ability to satisfy some specific need or want.
Price is the value attached to the product by the service provider and it must compliment with the value attached by the consumer
Managerial tasks in pricing involves Establishing pricing objectives Identifying the factors governing the
price Determining the methods of pricing Formulation of pricing strategies and
policies
Price is service is also called as Professional service- fees or
retention charges Transport- fare Insurance- premium Clubs- subscription, membership Hotel- tariff, rent etc
Special issues to be considered Since service is intangible, many service firms
portray their quality as the value for the customers’ money
A service provider always uses price as a tool to manage the demand
In certain cases, a customer may have to spend time, exert physical efforts or bear psychic cost. So the marketer has to include these intangible aspects of the cost related factors while fixing the price
In some service industries especially public sector, price cannot be used as a tactical tool as the Govt. determines the price
Pricing strategies
Most marketers use competitive pricing
Some firms who like to ration the supply would charge a higher price than the market price
Higher price can also serve as an indication about the higher perceived quality
Pricing strategies
Flexible pricing is more prevalent in service sector than in other fields
Some service firms either do not have a fixed price list or do not follow it in making price quotations
Some firms mainly try to meet competition, some firms attempts to use tables of standard costs and a few even attempt to bargain with the customers.
Most service marketers appear to have a definite profit margin in mind when quoting prices
A Pricing decision maker should consider: Set annual profit and sales margin Target a definite price margin while
quoting prices for each job Determine and understand their cost
structure Review and update their price schedules
regularly Work to secure higher rather than lower
average price Strive for greater price flexibility
Promotion
It is a combination of strategies that an organization uses to communicate the service benefits to customers and influence them to buy their services
They don’t sell any of their products. Instead, they sell the dreams and experience that the customer would want to have by availing a service
McDonald’s, makemytrip.com, axis bank etc
Promotion mix
Advertising Personal selling Direst mails Sales promotion Publicity Word of mouth Corporate identity
Advertising
Experience Beliefs Values Policies Process Customer oriented aspects
Personal selling
The service provider has to be utmost knowledgeable
Telephone orders Outbound tele-marketing Sales support staff Delivery personnel
Direct mails
Medicines Medical insurance These direct mails also play the role
of follow-ups to track the response of the customers to the promotional activities of the company
Sales promotion
Sampling, display, demonstration becomes difficult
Premiums Contests Sign-up rebates
Publicity
News release Stage activities Press conferences Sponsorship
Word of mouth
Customers are closely involved in service delivery and they tend to talk about their service experience to the potential customers
An outsider promoting a company without any monetary gains can add more value and trust in the minds of the prospective customers
Corporate identity
Refers to the use of distinctive colours, symbols
Lettering in prominent visible elements such as: Signage Vehicle Uniform Stationary
To provide a unifying and recognizable theme linking all the firm’s operations
Place
Place no more means a geographical location where buyers and sellers meet.
But in services, service being intangible, the service provider has to be present at the time of the delivery of services.
At the same time, certain services like mail and ATM do not require the presence of the service provider
Distribution is he provision of personal service and information to the customer. It adds value to the service
The strategies involved in making the services available and accessible to the customer, will focus on two major factors: Where should he service be made
available- the choice of location? Who should deliver the service- the
choice of channel?
Importance of location in pricing Who the target customers are? What is the degree of interaction required
between the provider and customer in the delivery of the service?
To what extent convenience of accessibility will affect customer decision making regarding use of the service?
Is the service technology-based or people-based? How do competitors operate their service? Can new system and technology be used to
improve existing location decision?
Modes of selling
Directly to the customers Use an intermediary who act on
behalf of the buyer or seller- the intermediary may be an agent or a contracted franchise
People
The problem lies in the inseparability of the production consumption interface
The satisfaction of not only the recipient of the service, that is the customer, but also the providers of the service, that is the company’s own personnel becomes extremely important
Different roles of the service personnel Primary- where the service is actually
carried out by the service provider Ex: Teachers, Consultants, Doctors, Lawyers etc
Facilitating- where employees facilitate the service transaction and participate in it. Ex: Bank counter staff, Waiter at a hotel, Front office personnel, compounder etc
Ancillary- where the employees helps to create the service exchange but is not part of it. Ex: travel agent, insurance agent etc
Level of presence of the service personnel Customer contact employees-
These come in contact with the customers in the process of the service delivery
They are also called as the frontline staff or “boundary spanners”
These have a great influence on the customers’ perception about the service as the customers try to find tangibility of service in them
As they influence the customers a lot, they are marketers too
There might be either high contact or low contact
Support personnel or non-contact personnel- These do not come in contact with the
customers Chefs in the hotel, laundry staff in the
hotel etc They possess high technical skill and
have high competency level They may be management support or
technical support Without these people the customer
contact employees cannot perform
Human resource planning in service involves: Hire the right people Develop people to deliver service quality Provide needed support system Retain best people
Internal marketing The key element of healthy business, is the
individual contribution of every employee, both contact and support to the ultimate result of increase in company value
Process
It is concerned with the way in which the service is delivered How the personnel delivers the service Added value of the service becomes an important
competitive weapon in differentiating the service Ex: Banks. Storing money is the basic activity
but they introduced so many added services like ATMs, Debit Cards, Over drafts etc
Many benefits from service occur not so much as a result of what is offered, but, in the way in which it is offered
Designing a service process Location Facility design and layout for effective
customer and work flow Procedure and job definitions for service
providers Measures to ensure service quality Extent of customer involvement in the
service delivery Equipment selection if it is equipment
based service delivery
Physical evidence
Since the service is intangible, it is important for the client to search for tangible or physical clues which enable them to evaluate the service
Physical evidence verifies either the existence or the completion of a service
Categorization
Peripheral evidence- Is usually possessed as part of the
purchase of a service It has little or no independent value Ex: a Cheque book, an ATM card,
Napkins etc
Essential evidence- It cannot be possessed by the consumer It may be so dominant in its impact on
service purchase and use that it must be considered virtually an element in its own right
Ex: transport vehicle, office premise, staff uniform etc
product place promotion Price people Process Physical evidence
Physical attributes
Channel type Promotion blend
Flexibility Employee research
Flow of activities-customized/standardized
Facility design
Quality level Outlet location Sales people: number, selection, training, incentives
Price level Training No. of steps- simple/complex
Aesthetics
Product lines Intermediaries Advertising: targets, media types, types of ads
Terms Motivation Level of customer involvement
Functionality
Branding Segmentation Sales promotion
Differentiation Rewards Ambient conditions
Positioning Franchising Publicity Discounts Teamwork Equipment
New services Managing channels
Direct marketing
allowances Communicating culture and values
Signage
Motivating channel members
Employee uniform and appearanceBusiness card
Statementguarentees
CONSUMERS IN SERVICE INDUSTRY
Introduction
Consumer purchased goods/services based on their mental and economic forces.
The mental forces creates desires and wants to satisfy pride, fear, love, fashion etc
Economic forces included the purchasing power
Fundamentals of marketing concept: The service provider should first
determine the needs and expectations of the target group of customers
Organize the input to deliver the service
Achieve customer satisfaction to earn profits
Managing customer relationship and building loyalty
Service firms’ problems:
How to create and deliver superior service?
How to sustain service improvement efforts- in short, how to build “customized” organization?
Model of buyer behaviour
marketing stimuli other stimuli buyer's black box buyer's response
product economic buyer characteristics buyer's
decision making process
product choice
price technology dealer choice
place cultural
purchase timing
promotion political buyer's response
Buyer characteristics
Cultural factors Values, practices, customs, social class etc
Social factors Family, friends, relatives, colleagues, reference groups etc
Personal factors Age, life cycle stage, occupation, economic
circumstances, life style etc Psychological factors
Motive, perception, learning etc How do customers learn about the services offered for sale? How do they learn to recognize and recall these products
and services? What process they develop in buying and consuming habits?
Buyer decision making process