Services Marketing Session 1st

Dated: -07-03-2010BY: -Neeraj Gupta

Development Frameworks for Analyzing Services

Type of service Nature of relationship shared by the customer

with service organization Service delivery Type of demand and supply of services Extent to which service provider need to

customize services

Classification of Services

People processing : Institutes or education center

Possession processing: Bike service center etc.

Mental stimulus processing: Advertising agency, consultancy

Information Processing: Data processing, Lawyers/legal

consultants etc.

Based on degree of customer involvement:

Classification of services Degree of customer involvement

People processing – person present for dance training Health care centers Passengers transport services Beauty saloons Lodging & boarding Educational Fitness

Classification of services Degree of customer involvement

Possession processing – leaving car with mechanic for servicing, change oil, check the gears, brakes

Laundry & dry cleaning services Postal servicesCourier service Freight transportation

Classification of services Degree of customer involvement

Mental stimulus processing – career counseling from professional counselor

Advertising Entertainment Education Consultancy services

Information processing Market research Accounting Insurance Legal services Programming Data processing Data transmission

Classification Based on Service Tangibility

Highly tangible: Bicycle on rent Service linked to tangible products: Free after sales

services of Bikes Tangible goods linked to services: Facilities in

Rajdhani Express (Train) Highly intangible: Hair saloon etc.

Classification based on service Skills and expertise required:

Professional services: Doctors, lawyers Non-professional services: Baby sitting,

housekeeping etc.

Tangibility Spectrum

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Differences Between Characteristics of Goods and Services Search Qualities:

(Qualities estimated before the purchase) Experiences Qualities:

(Qualities that can assessed after the use of products)

Credence qualities:

(Difficult to assess even after purchase and consumption)

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Differences Between Characteristics of Goods and Services Search Qualities: Price, convenience,

mannerism, promptness Experiences Qualities: Courte owners of

the cabin crew, comfort & facilities, regular attention by nurses

Credence qualities: use of organically grown vegetables, intellectual capital- professional expertise

Continuum of Evaluation for Continuum of Evaluation for Different Types of Products Different Types of Products and Servicesand Services

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IntangibilityDifficult to evaluate

TangibilityEasy to evaluate

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Services

Classification Based on Business Orientation of Service Provider People based Services

High Contact Services-Medical Consultation, education etc.

Low Contact Services-Based on automated machines like ATM’s, automatic weighing machines, automatic vending machines etc..

Classification Based on Business Orientation of Service Provider

Not-for-profit organization Commercial organizations

Classification based on type of end user Customer services-Like hair dressing,

vacations etc. Business to business services- BPO’s,

consultancy’s Industrial services –Technical services

required mostly

Based on the business orientation of service provider

Non-profit organisations - govt schools & social service organisationsCommercial organisations - Airlines, Insurance firms & restaurants

Classification of services

Developing framework for analysing services

Classification of goods Convenience, shopping &

specialty goods Durable & non-durableConsumer & industrial goods

Developing framework for analysing services

5 Qs to determine the category of service

A. What is the type of service?1. Tangible activity- Indian Airlines flies from India

to Sri Lanka- FedEx delivers a parcel sent by a customer in

Delhi to a friend in Chennai

2. Intangible activity – Mgt guru visits a mgt institute & delivers lecture on KM - Insurance agent persuades a customer to purchase life insurance policy for himself & his family members

B. What is the nature of relationship b/w the customer & the service organisation?

Manufacturer offers after sale service Reliable supply of quality products Individual buys a life insurance policy Relationship with telephone companies,

banks & family doctors

C. How is the service delivered?

House-keeping firm visiting customer premises

Online retailing- retailer shipping the product to the customer

Service providers’ presence at multiple locations- No of branches & ATMs within a single city

D. What is the type of demand & supply for the service?

Demand for emergency surgeries varies from one day to another.

A cable operator has to restrict services to 500 households in a locality

E. To what extent is the service provider needed to customise service and exercise judgement?

More scope for customisation– Lawyer changing the way he prepares himself

Little scope for customisation -A movie screened in a theatre –screening, the movie & facilities are quite common

A beautician will adjust the hairstyle & make-up

Method used by technician for installing a machine at the client’s establishment

Myths about services

A. Not necessary evil but source of competitive advantage for manufacturing firm- GE, Motorola & Dell

Myths about servicesB. Service sector is labour intensive & less

productive

No comparison b/w service & manufacturing sector-

software, legal, consultancy & other knowledge-based services require employment of a large no of people, power, transportation & telecommunication services require advanced technology & equipment

Myths about services

C. Service sector earns less revenue than other sectors

Wal-Mart and Microsoft – Fortune 500 companies

Infosys top most outsourcing firm

Myths about services D. Growth in Service sector is linked to public

sector services – Pvt telecom players -Bharti & Reliance (growth in

communication, transportation & hotels-7.8%) Public sector- Insurance cos like LIC facing stiff

competition from ICICI-prudential, HDFC-Standard life, Tata-AIG, ING-Vysya (growth in insurance, real estate & financial services- 6.5%)

Myths about services

E. Marketing of a service is not different from a product

A manufacturer has to emphasize on its features, mileage, durability and the service outlet network

An Airline provider emphasises on the quality of in-flight service offered by its staff, pre & post-flight service, history of on-time departures & arrivals & so on

Myths about services

4Ps of product marketing- more attention

7Ps of services marketing – less attention

Myths about services

F. Growth in service sector eliminates jobs in manufacturing

Availability of low cost labour in developing countries- Decline in employment in the manufacturing sector in developed countries

Jobs in manufacturing sector decline, jobs in service sector increase, creating a balance

Economists attribute the loss of jobs in manufacturing to advances in technology & efforts to improve productivity by restructuring & reengineering

Service Marketing Environment General or External or Macro Environment

Socio-cultural factors Consumption pattern Beliefs and values Age composition Gender structure Family structures

Legal factors Economic factors

Business cycle-consisting of Recession, recovery,growth, decline Political factors Technological factors

Universal Product Code Credit cards technology Electronic Data Capture Data mining and data warehousing technologies Imaging technologies Cellular phone technologies

Service marketing Environment

Task or Internal or Micro Environment External customers/consumers Internal customers/channel partners/providers Competitors

Five Forces Model Rivalry amongst existing service firms Relative power of suppliers Threat of new entrants Threat of substitutes Relative power of customers

Suppliers Regulators

Environmental Scanning-Scenario Building Approach

This process is futuristic, and the decision-maker has to analyze his decisions in relation to his future. The following steps are involved in this technique: Stage 1: Analysis of the Decision(s) Stage 2: Identification of Key Decision Factors Stage 3: Identifying the Socio-cultural Factors Stage 4: Analysis of each of the Key Variables

Separately Stage 5: Selection of Scenario Logics

Any questio

ns