crm in services marketing & its tools (16rsbe3:2

SENGAMALA THAYAAR EDUCATIONAL TRUST WOMEN’S COLLEGE

DEPARTMENT OF BUSINESS ADMINISTRATON

CRM IN SERVICES MARKETING & ITS TOOLS (16RSBE3:2)

Submitted by

Dr.S.Geetha

Assistant Professor

Department of Business Administration

SengamalaThayaar Educational Trust Women’s College (Affiliated to Bharathidasan University)

(Accredited with ‘A’ Grade {3.45/4.00} By NAAC) (An ISO 9001: 2015 Certified Institution) Sundarakkottai, Mannargudi-614 016.

Thiruvarur (Dt.), Tamil Nadu, India.



Skill Based Elective II (Semester V) CRM IN SERVICES MARKETING &

ITS TOOLS

Unit I

Introduction Services – definition – Role of service sector – Difference between

Services and goods – services characteristics – services marketing and

Relationship marketing .

Unit II

Services Marketing & Delivery Services Market Segmentation – positioning and

differentiation of services – Marketing mix decisions – 7 P’s of service marketing

–Service Delivery – role .

UNIT III

Total quality Control TQM – Need – measures - Recent Trends.

Unit IV

CRM in Services Marketing CRM in Banking – CRM in Insurance – CRM in

Hospital Industry.

Unit V

CRM Tools CRM tools – overall modules – lead management – introduction – lead

to sales life cycle-Communication methodologies–relationship management –

complaint handling .

TEXT BOOKS RECOMMENDED:

1. Adrian Payne, Services Marketing

2. Balasubramaniyan, K., Essence of Customer Relationship Management

3. Helen Woodruffe, Services Marketing

4. Service Marketing and Management – Balaji – S.Chand

5. R.Srinivasan – Services marketing – PHI.

6. KaushikMukerjee – CRM – PHI.

7. Bharat WAkhlu _ Total Quality – S.Chand.

8. CRM in Banking & Insurance – V.V.Gopal



Unit I

Introduction Services – definition – Role of service sector – Difference

between Services and goods – services characteristics – services marketing

and Relationship marketing

Introduction

Service is integral part of human life in modern day. In the light of liberalization,

privatization and globalization, services have been commercialized and have

become more professional in nature. Services can be defined as human efforts,

which provide succor to the needy.

Services constitute a very significant portion of the business market. There has

been an enormous growth of the service sector. It is the largest sector in most of

the economies and it is the fastest growing sector in many of them. The developed

economies are primarily service economies in the sense that the service sector

generates bulk of the employment and income. The contribution of services to

GDP and employment is substantially high in, particularly, the developed

economies.

It may be food to a hungry person, water to a thirsty person, medical services to an

ailing person, education to a student, loan to a farmer, transport to a consumer,

communication aid to two persons who want to share a thought, pleasure or pain.

Services refer to social efforts which include government to fight five giant evils,

which are wants, disease, ignorance, squalor and illness in the society.

Services are activities, benefits or satisfactions which are offered for sale or are

provided in connection with the sale of goods.

Services include a wide range varying from education, transportation, hospitality,

finance, real estates, accounting, banking, insurance, taxation, consultancy, health

care etc. These services are together called the services sector or the tertiary sector.

Meaning



A service is an act, deed, performance or a rendering offered by one person to

another. In a literal sense a service does not involve the transfer of any tangible

commodity.

Service is the way how a provider or producer acts by means of its deeds,

processes or performances so as to satisfy the expectations, deprivations,

motivations and unmet needs of the receives of the outputs of such deeds,

processes or performances

Definition

According to Philip Kotler and Bloom services is defined as “any activity or

benefit that one party can offer to another that is essentially intangible and does

not result in the ownership of anything. Its production may or may not be tied to a

physical product.”

The American Marketing Association defines services as - “Activities, benefits

and satisfactions which are offered for sale or are provided in connection with the

sale of goods.”

SERVICE SECTOR

Service sector is the lifeline for the social economic growth of a country. It is today

the largest and fastest growing sector globally contributing more to the global

output and employing more people than any other sector. The real reason for the

growth of the service sector is due to the increase in urbanization, privatization and

more demand for intermediate and final consumer services .In advanced economies

the growth in the primary and secondary sectors are directly dependent on the

growth of services like banking, insurance, trade, commerce, entertainment etc.

The service sector is receiving much deserved attention resulting from its

inevitable role in a country’s economic development. Where it is mainly focusing

of developing an inbound relationship with the customer. Which helps in terms of

retaining the customer. Because service is an “intangible good” include attention,

advice, experience, discussion. The scope of CRM in service sector is vast where it

includes Govt. Health care/ hospitality education, banking, insurance, financial,

legal, consulting, new a media, tourism retails sales etc.,



Indian Service Sector

Indian service sector has witnessed a major boom and is one of the major

contributors to both employment and national income in recent times. Trading,

transportation and communication, financial, real estate and business services,

community, social and personal services come within the gambit of the service

industry. One of the key service industries in India would be health and education.

They are vital for the country’s economic stability.

ROLE OF SERVICE SECTOR

The scope of services can be interpreted from the viewpoint of various areas or

branches of the services sector. Each sub-sector has its own scope with reference to

its importance and functions. The following are the various areas of services

sector:

1. Information Technology Industry

The industry has performed exceedingly well amidst tough global competition.

Being knowledge based industry; India has been able to leverage the global

markets, because of the huge pool of engineering talent available and the

proficiency in English language among the middle class.

2. ITES sector

Some of the services covered by the ITES industry would be:

Customer interaction services -Non voice and Voice.

Back office, revenue accounting, data entry, data conversion, HR services.

Medical Transcription.

Content development and animation.

Remote education, market research and GIS

3. Retailing

Prior to liberalization, India had one of the most underdeveloped retail sectors in

the world. After liberalization the scenario changed dramatically. Organized

retailing with prominence on self-service and chain stores has changed the

dynamics of retailing. This indirectly contributed to the growth of the packaged

food industry and other consumer goods



4. Insurance:

It helps to minimize ricks. Business is subject to risks. Certain risks can be insured

such as loss by fire, loss by theft, etc. There are various types of insurance such as

life insurance, fire insurance, marine insurance, accident insurance, and so on.

Businessmen and others can insure against insurable risks.

5. Transport:

It solves the problem of place difficulty. In business, there is a place gap from the

place of production to the place of consumption. Goods produced in one part of the

country or globe may be required for consumption in other parts of the country or

globe. Thus, transport services are utilized for bridging the place gap. There are

several modes of transport such as road, rail, water, and air.

6. Warehousing:

It creates time utility. Nowadays, production of goods is undertaken in

anticipation of demand. Goods are not consumed immediately after production.

Thus, goods need to be stored in warehouses, till they are demanded in the market.

Due to warehousing, goods can be produced in large scale, and seasonal goods are

made available throughout the year.

7. Banking:

Banks play an important role in financial markets. The primary functions of the

bank include obtaining deposits, and lending money. Banks perform agency

functions on behalf of its customers such as collection of funds on behalf of the

clients and make payment to third parties on behalf of its customers. Banks also

perform utility functions such as provision of debit cards, credit cards, locker

facility, etc.

8. Retail Trade:

Retail industry contributes 10% of India’s GDP. Currently, retail trade sector

occupies the second position in India’s GDP after agriculture. The Indian retail

market is estimated to be US$ 500 billion in 2012and is projected to reach US $

1.3 trillion by the year 2020. India is one of the top five retail markets in the world

by economic value. India’s retailing industry mostly consists of the local mom and

pop stores, owner manned shops and street vendors. Organized retail supermarkets

are growing but small, with a market share of 4% as of 2008. In Sept 2012



government permitted 51% FDI in multi brand retail and 100% FDI in single brand

retail.

9. Communication:

It facilitates transfer of exchange of information. Communication facilitates

enquiries for goods or services, negotiations of business dealings, placement of

orders, obtaining feedback from customers, etc. There are various means of

communications – written and oral. Information Technology Services: The IT

services play an important role in the economic development of a country. IT

services are used in a wide variety of services such as health care, education,

industry, etc. The IT services contribute significantly to the exports of India. Over

40% of the services exportsis contributed by IT services.

10. Hotel Services:

India is a famous holiday destination in the world, and provides ample facilities for

lodging and boarding. It has state of the art hotels to cater to its ever booming

travel and tourism industry. Many hotels and resorts have popped up in India over

the last few years to cater the accommodation needs of everybody. India is dotted

with hotels that fit in every budget. There are hotels ranging from Luxury Hotels to

Economy Hotels.

11. Tourism:

Tourism sector contributes to the economic growth of India. It provides

employment, contributes to GDP, and earns valuable foreign exchange. Tourism to

India has seen a steady growth, year on year, from less 5 million foreign tourists in

2006 to nearly 7 million arrivals in 2013.The United States is the largest source of

international tourists to India, while European Union nations and Japan are other

major sources of international tourists. Over 12 million Indian citizens take

international trips each year for tourism, while domestic tourism within India adds

about 740 million Indian travelers. In 2013, he tourism sector contributed over US

# 18 billion in foreign exchange and contributed about 6% of GDP. Govt of India

has allowed 100% FDI to give a big boost to this sector.

12.Social Development Services:



The social development services improve the quality of life of people in the

country. The social development services include:

Educational Services

Health and Medical Services

Family Welfare Services

Recreation and Entertainment Services.

13. Business Functions (that apply to all organizations in general)

14. Consulting

Customer Service

Human Resources Administrators (Providing Services Like Ensuring That

employees Are Paid Accurately)

15. Child Care

16. Cleaning,

Repair and maintenance services

Janitors (Who Provide Cleaning Services)

Gardeners

Mechanics

17.Construction

Carpentry

Electricians (Offering The Service Of Making Wiring Work Properly)

Plumbing

18. Death Care

Coroners (Who Provide The Service Of Identifying Corpses And

Determining

Time And Cause Of Death)

Funeral homes (who prepare corpses for public display, cremation or burial)



19.Dispute Resolution And Prevention Services

Arbitration

Courts of law (who perform the service of dispute resolution backed by the

power of the state)

Diplomacy

Incarceration (provides the service of keeping criminals out of society)

Law Enforcement (provides the service of identifying and apprehending

Criminals)

Lawyers (who perform the services of advocacy and decision-making in

Many dispute resolution and prevention processes)

Mediation

Military (performs the service of protecting states in disputes with other

states)

Negotiation (not really a service unless someone is negotiating on behalf of

another)

20Education (institutions offering the services of teaching and access to

information)

Library

Museum

School

21. Entertainment (when provided live or within a highly specialized facility)

Gambling

Movie theatres (providing the service of showing a movie on a big screen)

Performing arts productions

Sports

Television

22. Fabric Care

Dry Cleaning

Laundromat (offering the service of automated fabric cleaning)



23. Financial Services

Accounting

Banks and building societies (offering lending services and safekeeping of

money and valuables)

Real Estate

Stock Brokerages

Tax return preparation

24.Foodservice Industry

25. Hairdressing

26.Health Care (all health care professions provide services)

The term healthcare system refers to a country’s system of delivering services for

the prevention and treatment f diseases and for the promotion of physical and

mental well being

27. Information Services

Data Processing

Database Services

Language Interpretation

Language translation

28. Risk Management

Insurance

Security

29. Transport

Service Car Rental

30.Utilities

Electric Power

Natural Gas

Telecommunications



Waste Management

Water industry

GOODS

Goods are the things that can be offered to a market for attention, acquisition, use

or consumption that might satisfy a want or need of a customer. Goods are tangible

in nature, they can touch, smelled at, gripped, etc., before purchasing.

Goods are again classified into two categories based on their durability. They are

Durable goods, which last for many years like refrigerators, washing machines,

etc., and Non-Durable goods which can only last for small period like consumer

goods soaps, shampoos, coffee powder, etc.

Goods have certain size, shape, physical structure, etc. They are neatly packed,

branded, labeled, etc. and they are produced in advance by forecasting the future

demand and can be stored as an inventory for

SERVICES

Philip kotler, defined “service as an activity or benefit, that one party can offer to

another that is essentially intangible and does not result in the ownership of

anything. The production of service may or may not be tied to a physical product”.

Services are intangible in nature and they cannot be seen, touched, gripped,

smelled at, tasted, etc. Services are perishable in nature and they should be utilized

at a very low time period. Services cannot be stored or produced in advance like

we do for goods.

In services, there is no concept of transfer of ownership between seller and buyer.

The quality of a service cannot be measured. Examples of services are financial

services like banking,insurance,etc. and Transportation services like train travel,

bus travel, etc. hotel services, etc..



DIFFERENCE BETWEEN GOODS AND SERVICES

BASIS GOODS SERVICES

Meaning Goods are the material items

that can be seen, touched or felt

and are ready for sale to the

customers.

Services are amenities,

facilities, benefits or help

provided by other people.

Nature Goods are tangible and

homogeneous in nature.

Services are intangible and

heterogeneous in nature.

Evaluation Very simple and easy Complicated

Return Goods purchased can be

returned if not satisfied and can

get returned.

Services cannot be returned

back once they are provided.

Separable Yes, goods can be separated

from the seller.

No, services cannot be separated

from the service provider.

Variability Identical Diversified

Storage Goods can be stored for use in

future or multiple use.

Services cannot be stored.

Essence Goods are physical things and

involves production

Services are more like a process.

Participation Customers don't participate in

production process of goods

. Customers participate in the

production process of services.

Inventory Goods can be kept in stock for

future sales, inventory of goods

is possible

Services cannot be kept in stock,

inventory of services is not

possible.

Transfer Of

Ownership

Transfer of ownership of the

title is possible in case of

goods.

Transfer of ownership of the

title is not possible in case of

services.

Consumption. In case of goods, production

and distribution can be

separated from consumption.

In case of services, production,

distribution and consumption

occur at a same point of time.

Quality The quality of a product can be

measured and compared with

other products.

The quality of a service cannot

be measured.

Core Value Core value of a good is

produced in a firm or factory or

manufacturing unit.

Core value of a service is

produced at the time of buyer

and seller interaction.



CHARACTERISTICS OF SERVICES

A Service is an act or performance offered by one party to another, They are

economic activities that create value and provide benefits for customers at specific

times and places as a result of bringing desired change. The term service is not

limited to personal services like medical services, beauty parlors, legal services,

etc. The Distinct characteristics of services are mentioned below.

1. Perishability 2. Fluctuating Demand 3. Intangibility 4. Inseparability 5.

Heterogeneity 6. Pricing Of Services 7. Service Quality Is Not statistically

measurable.

1. Perishability:

Services cannot be stored, saved, returned or resold once they have been used.

Once rendered to a customer the service is completely consumed and cannot be

delivered to another customer. eg: A customer dissatisfied with the services of a

barber cannot return the service of the haircut that was rendered to him.

2. Fluctuating Demand:

Service demand has high degree of fluctuations. The changes in demand can be

seasonal or by weeks, days or even hours. Most of the services have peak demand

in peak hours, normal demand and low demand on off-period time.

3.Inseparability/Simultaneity of production and consumption

Personal service cannot be separated from the individual and some personalized

services are created and consumed simultaneously. For example hair cut is not

possible without the presence of an individual.

4. Intangibility:

Services are intangible and have no physical existence. Therefore services cannot

be touched, held, tasted, or melted. It is the most defining feature of a service and

what primarily distinguishes it from a product. Furthermore, it is a unique

challenge for those engaged in marketing service because they are required to

engage tangible features otherwise intangible.



5. Heterogeneity/Variability:

The features of service by a provider cannot be uniform or standardized.eg: All

burgers of a particular flavor at McDonalds are almost identical. However, the

same is not true of the service rendered by the same counter staff consecutively to

two customers.

6. Pricing of Services:

Pricing decision about services are influenced by perishability, fluctuation in

demand and inseparability. Quality of a service cannot be carefully standardized.

Pricing of services is dependent on demand and competition where variable pricing

may be used.

7. Service quality is not statistically measurable:

It is defined in form of reliability, responsiveness, empathy and assurance all of

which are in control of employee’s direction interacting with customers. For

service, customer satisfaction and delight are very important. Employees directly

interacting with customers are to be very special and important. People include

internal marketing, external marketing and interactive marketing.

Advantages of Service Marketing:

Service marketing has grown exponentially over the past decade because of the

variety of benefits it offers companies. Some of the benefits of service marketing

include:

Continuous Sales:

When service marketing focuses on meeting the needs of customers, it causes

repeat sales. Happy customers come back for another purchase. For example, a

customer who has a saving account with Citibank and is happy with services such

as online banking. Phone banking etc will go to Citibank to apply for the loan.

Thus, Citibank’s service marketing efforts translate into higher sales.



\

Reviews and Verbal:

A happy customer is likely to spread the word about his or her experience to

many. Today, in the era of the Internet and rapid communications, reviews play an

important role in deciding whether or not to buy a product. Negative reviews about

product service are rapidly spreading. With the appropriate in-service marketing

strategy, companies can ensure that customers are satisfied with their positive

experiences.

Contributing to Economic Growth:

Service marketing is particularly beneficial to developing countries. It provides an

opportunity to showcase their skills and commitment to quality when it comes to

services. By applying proper service marketing strategies, companies can gain

customers ’trust. Nationally, this leads to an increase in employment levels, an

increase in foreign exchange reserves, an increase in exports and GDP.

CHALLENGES AND ISSUES IN SERVICE MARKETING

(a). Tangibility

A product is tangible, which means the customer can touch and see the product

before deciding to make a purchase. Items such as packaging and presentation

may compel a customer to purchase a product. Services, on the other hand, are

not tangible, which can make them more difficult to promote and sell than a

product.

(b). Relationship and Value

Products tend to fill a customer's need or want, so companies can use this to sell

a product. A service is more about selling a relationship and the value of the

relationship between the buyer and seller of the service. For example, a car is

something a buyer can touch and see as well as use. A service, such as lifestyle

coaching, for example, is not tangible. A lifestyle coach may be able to assist

clients in creating a life plan and implementing steps to transform his life into

one that the client wants to live, but it is not something tangible that the client

can place in his home and look at every day. Therefore, the client needs to

perceive the value of the service, which can be harder to get across.



(c). One versus Many Marketing products tends to involve multiple products that make up the line.

For example, cleaning product manufacturers tend to market not just one

cleaning product. Instead, they have a line of cleaning products to serve the

various needs of their customers. Services, on the other hand, typically have a

single option. It can be harder to promote and sell the reputation of one single

service over the benefits of many different products. (d). Comparing Quality Measuring the quality of a product is easier than measuring that of a service. If

a customer buys a cleaning product to clean the kitchen sink and it doesn’t do

product is zero. On the other hand, it is harder to measure the quality of a

service. (e). Return Factor If a customer purchases a product,thecustomerandcan returnit thedoes product

for her money back or at least to receive a store credit. A service is consumed as

it is offered, so it lacks the return factor that a product has. Some service

providers overcome this by offering money-back guarantees.

Relationship Marketing

Introduction

Relationship marketing involves developing long term relationship with customers

so that they provide you with ongoing business. An organisation must exceed

customer satisfaction expectations to retain and develop long term relationships

with customers. Relationship marketing involves the organisation implementing

strategy to attract and retain customers over the long term. Methods used to attract

customers include lots of marketing campaigns promoting the firm, its products, its

brands and its special (pricing) offers. Methods used to retain customers include

good quality products, competitive prices, loyalty cards, a focus on customer

satisfaction, excellent customer service and even individual account managers for

larger or premium clients.



Meaning

Relationship marketing refers to those marketing activities that are aimed at

developing and managing long-term relationships with the customers.The details

about the customer, his buying patterns, contacts, etc. are maintained in a sales

database and an account executive is assigned to fulfill the needs of the customers

and maintain the relationships successfully.

Relationship marketing recognizes the value of a customer and the significance of

keeping good relations with him

Definition

American Marketing Association (1995), “Relationship Marketing is marketing

with the conscious aim to develop and manage long term and/or trusting

relationship with customers, distributors, suppliers, or other parties in the

marketing environment”.

Relationship marketing is defined as “a strategy that aims at developing and

managing long-term relations with customers, suppliers and distributors in order to

earn and retain the business of the enterprise”.

The Characteristics of Relationship Marketing:

RM is about healthy relationships, which are characterized by concern, trust,

commitment and service.

1. Concern:

Strong relation can be maintained by knowing and understanding the needs of

customers. Howsoever the size of business either it is small retailer or big

manufacturer all enterprise need loyal customers and it can be achieved by

showing concern towards customers. Relationship marketers should be concerned

about the welfare of their customers.



2. Trust and Commitment:

Relationship marketing focuses on developing strong relationship between buyers

and sellers through trust and commitment. Trust can only be achieved if the

strategy is not only transactional but relational. Both buyer and seller has to

understand that strong trust full relation can only be achieved by avoiding focusing

on short-term benefits and investing into building long term relationship.

When commitment and trust are executed together by managers, the outcomes are

efficiency, productivity and effectiveness. But the real challenge often lies in

ensuring demonstrating commitment to the relationship and inculcating trust in

partners.

3. Service:

Those companies which see service to customer as a cost and only are concerned

about their market share will never be able to retain customers. Relation marketing

is not a cost to the company; on the other hand it is a huge return on investment

that is worth every rupee and effort put in. One must always remember this

sequence “service quality leads to customer satisfaction which leads to relationship

strength, which leads to relationship longevity, which leads to customer

relationship profitability.”

RELATIONSHIP MARKETING STRATEGIES.

These are:

(i) Core Service Strategy

(ii) Relationship Customization

(iii) Service Augmentation

(iv) Relationship Pricing

(v) Internal Marketing.



Core service marketing

Core service marketing strategy is one around which a customer relationship can

be established. The ideal core service is one that attracts new customers through its

need meeting character, cements the business through its quality, multiple parts

and provides a base for the selling of additional services over time.

Relationship Customization

The nature of service affords many service firms the opportunity to customize the

relationship. By learning about the specific characteristics and requirements of

individual customers and then comparing these data for use as needed, service

firms can more precisely tailor service to the situation at hand. In doing so, they

provide their customers with an incentive to remain as customers rather than

starting over with other suppliers.

Service Augmentation

Another relationship marketing strategy is service augmentation. Service

augmentation involves building extras into the service to differentiate it from

competitive offerings. An old marketing idea — a better price for better customers.

Relationship Pricing

The basis of relationship pricing, another strategy option available to service

companies pursuing customer loyalty. Relationship pricing means pricing services

to encourage relationships. In effect, customers are given a price incentive to

consolidate much of their business with one supplier.

Internal Marketing

A pivotal relationship marketing strategy for many service firms is internal

marketing. These are several forms of internal marketing. What all forms have in

common is the customer inside the organization. In this case the employee is the

customer and the job is the product.



Classification of Relationship Market:

i. Customer market

ii. Referral market

iii. Supplier market

iv. Employee market

v. Influence market

Customer market

Customer market is where the emphasis is on developing relationships to attract

and retain customers.

Referral market

Referral market includes all organizational contacts that have the potential to act

as advocates for the firm, providing word-of-mouth support for the organisation.(

Examples of referral groups include insurance companies, property brokers,

accountants, solicitors, surveyors and values, and other banks, as well as existing

customers.

Supplier market

The third group is the Supplier market, where the need is to foster cooperative

buyer-supplier relationships — relationships that reflect a ‘win-win’ situation

rather than the traditional and somewhat adversarial focus on getting the lowest

price from suppliers. Thus the emphasis shifts to achieving reliability, quality, on-

time delivery, flexibility in delivery, lowering of costs, and so on.



Employee Market

This recognizes the vital role people play in an organization, and hence the

success of the organization depends on attracting a sufficient number of suitably

motivated and trained employees.

The influence market

Its includeparties that may influence the business environment in which the

organization operates.These parties include government policy-makers, the media,

environmental and other lobbyists, and the general public.

Importance of Relationship Marketing

1. There are higher marketing costs associated with generating interest in new

customers as opposed to already informed existing customers.

2. Close and long-term relationships with customers imply continuing exchange

opportunities with existing customers at a lower marketing cost per customer.

3. Viewing customer exchanges as a revenue stream, as opposed to a compendium

of isolated transactions, enables cross-selling of related services over time and

premium pricing for the customer’s confidence in the business.

4. Strong customer relationships with a high degree of familiarity and

communications on both sides can generate more practical new product ideas from

customers and contact personnel.

5. Good relationships with customers can result in good work for publicity from

successful exchanges and minimal bad work-of-mouth in the event of unsuccessful

exchanges.

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crm in services marketing & its tools (16rsbe3:2

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