Course-MKT 520

Course Title-Service Marketing

Assignment

Submitted to
Janab Jakaria Arifin
Lecturer, Department of Marketing
Faculty of Business Administration and Management
Patuakhali Science and Technology University (PSTU)
Patuakhali, Bangladesh

Submitted by
Sabbir Ahmed
Student ID-EF-1803011
Registration No. EMBA-00447
4th Semester

Date of Submission: 20.11.2020

Faculty of Business Administration and Management

Patuakhali Science and Technology University (PSTU)
Dumki, Patuakhali
Question-1
a) Define service from both historic & fresh perspective.
b) “A service is rented rather than owned.” Explain what this statement means, and use
examples to support your explanation.
c) Describe the four broad “processing” categories of services, and provide examples for each.
Ans. 1(a)

The historical view:

 Smith (1776): Services are different from goods because they are perishable
 Say (1803): As services are immaterial, consumption cannot be separated from
production.

A Fresh Perspective: Benefits without Ownership

 Services involve a form of rental, offering benefits without transfer of ownership

 Rental of goods:
(a) Payment made for using or accessing something – usually for a defined period of
time – instead of buying it outright and
(b) Allows participation in network systems that individuals and organizations could
not afford.

Ans. 1(b)
The key distinguishing feature of a service is that it is a form of rental rather than ownership.
The Five broad categories within non-ownership framework:

1. Rented goods services. These services enable customers to obtain the temporary
right to use a physical good that they prefer not to own. Examples include boats,
fancy dress costumes, and combine harvesters.
2. Defined space and place rentals. Here, customers obtain use of a defined portion of
a larger space in a building, vehicle, or other area. Examples include a suite in an
office building, a seat in an aircraft / a cabin in a ship/launch, or a table in a
restaurant.
3. Labor and expertise rentals. Customers hire other people to perform work that they
either choose not to do for themselves (e.g., cleaning a house) or are unable to do
because they lack the necessary expertise, tools, or skills. In many instances,
customers may effectively rent the services of an entire team as in car repair,
surgery, and management consultancy.
4. Access to shared physical environments. These environments may be located
indoors or outdoors—or a combination of both. Examples include museums, theme
parks, trade shows, gyms, ski resorts, golf courses, and toll roads. In return for a fee,
customers rent the right to share use of the environment with other customers.
5. Access to and usage of systems and networks. Here, customers rent the right to
participate in a specified network such as telecommunications, utilities, banking,
insurance, or specialized information services. Service providers often create a
veritable menu of terms for access and use in response to varying customer needs
and differing abilities to pay.
Ans. 1(c)
Four Broad Categories of Services—A Process Perspective

Differences exist amongst services depending on what is being processed. In services,

people, physical objects, and data can be processed, and the nature of the processing
can be tangible or intangible. Tangible actions are performed on people’s bodies or to
their physical possessions. Intangible actions are performed on people’s minds or to
their intangible assets.

Classification of services into four broad categories:

 People processing
 Possession processing
 Mental stimulus processing
 Information processing

Who or What is the direct Recipient of the Service

Nature of the Service Act People Possessions
Tangible Actions People-processing (Service Possession Processing
directed at people’s bodies) (Services directed at physical
 Barbers possessions)
 Healthcare  Refueling
 Car repairing

Intangible Actions Mental stimulus processing Information Processing

(services directed at people’s (services directed at
mind) intangible assets)
 Education  Accounting
 Advertising/PR  Banking

Figure: Four Categories of Services

People Processing

People processing involves tangible actions to people's bodies. Examples of people-

processing services include passenger transportation, haircutting, and dental work.
To receive these types of services, customers must physically enter the service system.

As a customer, if you want the benefits of a people-processing service, Customers must:

 physically enter the service factory, a physical location where people or machines
(or both) create and deliver service benefits to customers
 cooperate actively with the service operation

For example, if you want a manicure, you would have to cooperate with the manicurist by
specifying what you want, sitting still, and presenting each hand for treatment when
requested.
Managers should think about process and output from the customer‘s perspective.
Reflecting on the service process helps to identify not only what benefits are created at each
point in the process but also the nonfinancial costs incurred by the customer in terms of
time, mental and physical effort, and even fear and pain.
Possession Processing
 In most possession-processing services, the customer’s involvement usually is
limited to dropping off the item that needs treatment, requesting the service,
explaining the problem, and later returning to pick up the item and pay the bill.
 Customers are less physically involved with this type of service than with people
processing services.
 Production and consumption are separable

A Car Maintenance Service is a Possession-Processing Service, Typically with Limited

Customer Involvement

Mental Stimulus Processing

Mental stimulus processing refers to intangible actions directed at people's minds. It includes
education, news and information, professional advice, psychotherapy, entertainment, and
certain religious activities.
These services touch people’s minds and have the power to shape attitudes and influence
behavior.
Obtaining the full benefit of such services requires an investment of time and a degree of
mental effort on the customer’s part.
Strong ethical standards and careful oversight are required.

Physical presence of recipients not required

Recipients don’t necessarily have to be physically present in a service factory—just mentally

in communication with the information presented.

Services like entertainment and education often are created in one place and transmitted by
television, radio, or the Internet to individual customers in distant locations.

The core content of services in this category is information-based (whether text, speech,
music, visual images, or video), it can be digitalized and made available via downloads,
YouTube and etc.
Services in this category can be “inventoried” for future consumption than their production

o In fact, the same performance can be consumed repeatedly.

o Customers can download electronic content on demand through their computers or
cell phones from a supplier such as Apple’s music/video online shop.

Information Processing
Information processing has been revolutionized by information technology, but not all
information is processed by machines.

Information is the most intangible form of service output, but it may be transformed into
more enduring, tangible forms as letters, reports, plans, CD-ROMs, or DVDs.
Among the services that are highly dependent on the effective collection and processing of
information are financial services and professional services like accounting, law, marketing
research, management consulting, and medical diagnosis.
Question-2
a) What are the five powerful forces transforming the service landscape, and what impact do
they have on the service economy?
b) Illustrate additional three marketing mixes for a service.
Ans.
Transformation of Service Economy
Powerful forces are transforming service markets-
1. Government policies,
2. Social changes,
3. Business trends,
4. Advances in information technology and
5. Globalization
Collectively, these forces are reshaping demand, supply, the competitive landscape, and even
customers’ styles of decision-making.

Government Social Business Advances in Globalization

Policies Changes Trends Information
Technology
 Changes in  Rising consumer  Push to increase
regulation expectations. shareholder  Growth of  More
 Privatization  More affluence value Internet companies
 New rules to  More people short  Emphasis on  Greater operating on
protect of time. productivity and bandwidth transnational
customers,  Increased desire cost savings  Compact mobile basis
employees, for buying  Manufacturers equipment  Increased
and the experiences vs. add value  Wireless international
environment things through service networking travel
 New  Rising consumer and sell services  Faster, more  International
agreements ownership of  More strategic powerful mergers and
on trade in computers, cell- alliances and software alliances
services phones, and high- outsourcing  Digitization of  “Offshoring” of
tech equipment.  Focus on quality text, graphics, customer
 Easier access to and customer audio, and video service
more information. satisfaction  Foreign
 Immigration  Growth of competitors
 Growing but aging franchising invade
population  Marketing domestic
 New markets and product categories markets
emphasis by non-
 Increase in demand for services
profits
 More intense competition

Innovation in service products and delivery systems,

stimulated by application of new and improved technologies

Customers have more choices and exercise more power

Success hinges on:

• Understanding customers and competitors
• Viable business models
• Creation of value for customers and firm
Increased focus on services marketing and management

FIGURE 1.6 Factors Stimulating the Transformation of the Service Economy

 Ans. 2 (b)
Additional three marketing mixes for a service.
For service marketing the traditional 4Ps need to extend by adding three Ps associated with
service delivery—process, physical environment, and people.
Process
Smart managers know that where services are concerned, how a firm does things—the
underlying processes—often are as important as what it does. So, creating and delivering
product elements requires design and implementation of effective processes. Badly designed
service processes lead to slow, bureaucratic, and ineffective service delivery; wasted time;
and a disappointing experience. They also make it difficult for front line employees to do
their jobs well, resulting in low productivity and increased likelihood of service failure.

Physical Environment

The appearance of buildings, landscaping, vehicles, interior furnishings, equipment, staff

members’ uniforms, signs, printed materials, and other visible cues provide tangible evidence
of a firm’s service quality, facilitate service delivery, and guide customers through the service
process. Service firms need to manage “servicescapes” carefully, since they can have a
profound impact on customer satisfaction and service productivity.

People
Many services will always require direct interaction between customers and contact
personnel. The nature of these interactions strongly influences how customers perceive
service quality.

Question-3
a) Describe the basic focus strategies, and give examples of how these work.
b) What are the six questions for developing an effective positioning strategy?
c) What is the distinction between important and determinant attributes in consumer purchase
decisions?

Ans. 3(a)

Basic Focus Strategies for services

In marketing terms, focus means providing a relatively narrow product mix for a particular
market segment—a group of buyers who share common characteristics, needs, purchasing
behavior, or consumption patterns.

The extent of a company’s focus can be described along two dimensions: market focus and
service focus.

Market focus is the extent to which a firm serves few or many markets, while service focus
describes the extent to which a firm offers few or many services.

These two dimensions define the four basic focus strategies shown in the Figure.
 Figure-Basic Focus Strategies for Services

1. Fully focused: a limited range of services (perhaps just a single core product) to a
narrow and specific market segment.

Opportunities:
 Developing recognized expertise in a well-defined niche may provide protection
against would-be competitors
 Allows a firm to charge premium prices.

Risk:
 Market is too small to generate needed volume.
 Demand may be displaced by generic competition from alternative products.
 Purchasers in chosen segment may be susceptible to economic down turn.

2. Market focused: narrow market segment, but has a wide range of services.

 Need to make sure firms have operational capability to do and deliver each of
the different services selected
 Need to understand customer purchasing practices and preferences.

3. Service focused: Service focused firms offer a narrow range of services to a fairly
broad market.

 As new segments are added, firms need to develop knowledge and skills in serving each
 segment.
 Lasik eye surgery clinics and Starbucks coffee shops follow this strategy, serving a broad
customer base with a largely standardized product.

4. Unfocused: broad markets with a wide range of services.

 Many service providers fall into this category.
 The danger with this strategy is that unfocused firms often are “jacks of all trades
and masters of none.”
 In general, that’s not a good idea, although public utilities and government
agencies may be obliged to do so.
 A few departmental stores followed this strategy, and as a result have been
struggling against more focused competitors (e.g., hypermarkets and specialty
stores).

Ans. 3(b)

Positioning Services Six Questions for Effective Positioning Strategy

1. What does our firm currently stand for in the minds of current and prospective
customers?
2. What customers do we serve now, and which ones would we like to target in the
future?
3. What is the value proposition for each of our current service offerings and what
market segments is each one targeted at?
4. How does each of our service products differ from those of our competitors?
5. How well do customers in the chosen target segments perceive our service offerings
as meeting their needs?
6. What changes must we make to our offerings to strengthen our competitive
position?

Ans. 3 (c)
Important versus Determinant Attributes
Consumers usually make their choices among alternative service offerings on the basis of
perceived differences between them.

The attributes that distinguish competing services from one another are not always the most
important ones.
 Important attributes are met by all competing service providers
 do not necessarily sway the purchase decision in favor of one service provider as
opposed to another

For instance, many travelers rank “safety” as their number one consideration in air travel.
They may avoid traveling on unknown carriers or on an airline that has a poor safety
reputation, but after eliminating such alternatives from consideration, a traveler flying on
major routes still is likely to have several choices of carriers perceived as equally safe. Hence,
safety usually is not an attribute that influences the customer’s choice at this point.
 Determinant attributes determine buyers’ choices between competing alternatives.
 service characteristics that are important to purchasers
 Customers see significant differences among competing alternatives on these
attributes
For example, convenience of departure and arrival times, availability of frequent flyer miles
and related loyalty privileges, quality of inflight service, or the ease of making reservations
might be determinant characteristics for business travelers when selecting an airline. For
budget-conscious vacation travelers, on the other hand, price might assume primary
importance.

Question-4
a) Explain what is meant by core product and supplementary services.
b) Explain the Flower of Service concept and identify each of its petals. What insights does this
concept provide for service marketers?
c) Explain the distinction between enhancing and facilitating supplementary services.
Ans. 4(a)
(1) Core product: The core product is the central component that supplies the principal,
problem-solving benefits customers seek.
For example, transport services solve the need to move a person or a physical object
from one location to another, management consulting should yield expert advice on
what actions a client should take, and repair services restore a damaged or
malfunctioning machine to good working order.

(2) Supplementary services: augments the core product, facilitating its use and
enhancing its value and appeal to the customer’s overall experience.
Core products tend to become commodified as an industry matures and competition
increases, so the search for competitive advantage often emphasizes supplementary
services.

Ans. 4 (b)

THE FLOWER OF SERVICE

There are two types of services, the core service which refers to the results and
consequences of purchasing a certain item that a customer expects for the charges of the
item, like for example when a customer purchases an answering machine the end used
(customer) expects from the machine to take messages and store them; on the other hand
there is the other type of service which is the supplementary service referring to the group of
services which either facilitates or enhance the use of the core services.
There are two types of supplementary services:
• Facilitating: either needed for service delivery, or help in the use of the core product.
• Enhancing: add extra value for the customer.

The eight clusters which are identified as either facilitating or enhancing, are displayed as
petals surrounding the center of a flower—called the Flower of Service.
 Figure-The Flower of Service: Core Product Surrounded by
Cluster of Supplementary Services

Facilitating Supplementary Services –

1. Information

To obtain full value from any good or service, customers need relevant information.
New customers and prospects are especially information-hungry. Customers’ needs may
include:
• Directions to service site
• Schedules/service hours
• Prices
• Instructions on using core product/supplementary services
• Reminders
• Warnings
• Conditions of sale/service
• Notification of changes
• Documentation
• Confirmation of reservations
• Summaries of account activities
• Receipts and tickets

Companies should make sure the information they provide is both timely and accurate. If not,
it is likely to make customers feel irritated or cause them inconvenience.

Traditional ways of providing information include using front-line employees (who are not
always as well-informed as customers might like), printed notices, brochures, and instruction
books.
Information can also be provided through videos or software-driven tutorials, touch-screen
video displays, or through company websites.

2. Order-Taking
Once customers are ready to buy, a key supplementary element comes into play—accepting
applications, orders, and reservations.
Order-taking includes-

Applications
• Memberships in clubs/programs
• Subscription services (e.g., utilities)
• Prerequisite based services (e.g. Financial credit, college enrolment)

Order Entry
• On-site order fulfillment
• Mail/telephone/e-mail/web order

Reservations and Check-in

• Seats/tables/rooms
• Vehicles or equipment rental
• Professional appointments
• Admission to restricted facilities (e.g., museums, aquariums)

3. Billing
Billing is common to almost all services (unless the service is provided free of charge).
Inaccurate, illegible, or incomplete bills risk disappointing customers who may, up to that
point, have been quite satisfied with their experience, or worse, such failures add insult to
injury if the customer is already dissatisfied. Billing should also be timely, because it
stimulates faster payment.

It includes
• Periodic statements of account activity
• Invoices for individual transactions
• Verbal statements of amount due
• Self-billing (computed by customer)
• Machine display of amount due

Customers usually expect bills to be clear and informative, and itemized in ways that make it
clear how the total was computed.

4. Payment

In most cases, a bill requires the customer to take action on payment.

A variety of payment options exist, but all customers expect ease and convenience. It
includes the followings:

Self-Service
• Insert card, cash or token into machine
• Electronic funds transfer
• Mail a check
• Enter credit card number online

Direct to Payee or Intermediary

• Cash handling or change giving
• Check handling
• Credit/charge/debit card handling
 • Coupon redemption
• Token, vouchers, etc.

Automatic Deduction from Financial Deposits

• Automated systems (e.g., machine-readable tickets that operate entry gate)
• Human systems (e.g., toll collectors, ticket inspectors)

To ensure that people actually pay what is due, some service businesses have instituted
control systems, such as ticket checks before entering a movie theater or on board a train.
However, inspectors and security officers must be trained to combine politeness with
firmness in performing their jobs, so that honest customers do not feel harassed.

Enhancing Supplementary Services

1. Consultation:

At its simplest, consultation consists of immediate advice from a knowledgeable service

person in response to the request: “What do you suggest?”
It includes-
• Customized advice
• Personal counseling
• Tutoring/training in product use
• Management or technical consulting
A Tax Advisor Provides a Human Touch during the Process of Consultation

Counseling of Dr, Jahagir Kabor about Life style change.

2. Hospitality
Hospitality-related services should, ideally, reflect pleasure at meeting new customers and
greeting old ones when they return. Well-managed businesses try, at least in small ways, to
ensure their employees treat customers as guests.

It includes-
 Greeting
 Food and beverages
 Toilets and washrooms
 Waiting facilities and amenities
• Lounges, waiting areas, seating
• Weather protection
• Magazines, entertainment, newspapers
 Transport
 Security
e.g., In Hospitals, customers are given entertainment (TV, newspapers, or magazines) and
seating arrangement for waiting for service.

The quality of the hospitality services offered by a firm plays an important role in determining
customer satisfaction. This is especially true for people-processing services, because one
cannot easily leave the service facility until delivery of the core service is completed.
3. Safekeeping

When customers are visiting a service site, they often want assistance with their personal
possessions. In fact, unless certain safekeeping services are provided (such as safe and
convenient parking for their cars), some customers may not come at all.
On-site safekeeping services includes coatrooms; baggage transport, handling and storage;
safekeeping of valuables; and even child care and pet care.

The services includes-

Caring for Possessions Customer Bring with Them

• Child care, pet care
• Parking for vehicles, valet parking
• Coat rooms
• Baggage handling
• Storage space
• Safe deposit boxes
• Security personnel

Caring for Goods Purchased (or Rented) by Customers

• Packaging
• Pickup
• Transportation and delivery
• Installation
• Inspection and diagnosis
• Cleaning
• Refueling
• Preventive maintenance
• Repair and renovation

Responsible businesses pay close attention to safety and security issues for customers visiting
the firm’s premises.

4. Exceptions
Exceptions involve supplementary services that fall outside the routine of normal service
delivery. Astute businesses anticipate exceptions and develop contingency plans and
guidelines in advance. That way, employees will not appear helpless and surprised when
customers ask for special assistance. Well-defined procedures make it easier for employees
to respond promptly and effectively. There are several types of exceptions:

Special Requests in Advance of Service Delivery

• Children’s needs
• Dietary requirements
• Medical or disability need
• Religious observances
Such requests particularly are common in the travel and hospitality industries.

Handling Special Communications (Handling of complaints/suggestions/compliments)- It

should be easy for customers to express dissatisfaction, offer suggestions for improvement, or
pass on compliments, and service providers should be able to make an appropriate response
quickly.
 • Complaints
• Compliments
• Suggestions

Problem Solving
• Warranties and guarantees
• Resolving difficulties that arise from using the product
• Resolving difficulties caused by accidents, service failures
• Assisting customers who have suffered an accident or a medical emergency

Restitution - Many customers expect compensation for serious performance failures;

• Refunds and compensation
• Free repair of defective goods
• legal settlements,

Managerial Implications of “Flower of Service”

• Core products do not have to have supplementary elements.
• Nature of product helps determine supplementary services offered to enhance value.
• People-processing and high contact services have more supplementary services!
• Possession-processing services sometimes place heavy demands on safekeeping
elements
• Different levels of service can add extra supplementary services for each upgrade in
service level.
• Low-cost, no-frills basis firms needs fewer supplementary elements.

Ans. 4(c)

There are two types of supplementary services:

• Facilitating: either needed for service delivery, or help in the use of the core product.
• Enhancing: add extra value for the customer.

Facilitating Services Enhancing Services

• Information • Consultation
• Order-taking • Hospitality
• Billing • Safekeeping
• Payment • Exceptions

Question-5
a) Explain the three-stage model of service consumption.
b) Describe the difference between high-contact and low-contact services, and explain how the
nature of a customer’s experience may differ between the two.
c) Illustrate the importance of “moments of truth” in service delivery process.
Ans. 5 (a)

The Three-Stage Model of Service Consumption

Service consumption can be divided into three principal stages: pre-purchase, service
encounter, and post-encounter.
• Customers seek solutions to
aroused needs
• Evaluating a service may be
difficult
• Uncertainty about outcomes
Increases perceived risk
• What risk reduction strategies
can service suppliers develop?
• Understanding customers’
service expectations
• Components of customer
expectations
• Making a service purchase
decision

• Service encounters range

from high- to low-contact.
• Understanding the servuction
system
• Theater as a metaphor for
service delivery: An
integrative perspective
(a) Service facilities
(b) Personnel
(c) Role and script theories

PRE-PURCHASE STAGE

The pre-purchase stage begins with need arousal—the prospective customer’s awareness of
a need—and continues through information search and evaluation of alternatives to a
deciding whether or not to buy a particular service.

The pre-purchase stage includes four steps:

(1) awareness of need,
(2) information search,
(3) evaluation of alternatives, and
(4) Making a purchase decision.

Need Awareness
The decision to buy or use a service is triggered by a person’s or an organization’s underlying
need or need arousal. The awareness of a need will drive an information search and
evaluation of alternatives before a decision is reached.

Needs may be triggered by:

 Unconscious minds (e.g., personal identity and aspirations/goals).
 Physical conditions (e.g., hunger).
  External sources (e.g., a service firm’s marketing activities)

When a need is recognized, people are likely to be motivated to take action to resolve it.

Information Search

Once a need or a problem has been recognized, customers are motivated to search for
solutions to satisfy the need.

Evoked set (consideration set) – a set of products and brands that a consumer considers
during the decision- making process – that is derived from past experiences external sources,
such as advertising, retail displays, news stories, online searches, and recommendations from
service personnel, friends, and family.
Inept set-Not considered because of bad feelings one of the friends. (taking chance absence
of evoked set)

Once an evoked set is in place, the different alternatives need to be evaluated before a final
choice can be made.

Evaluating Alternatives

When faced with several alternatives, customers need to compare and evaluate the different
service offerings. Many services, however, are difficult to evaluate before purchase. Ease or
difficulty of evaluating a product before purchase is a function of its attributes where we
distinguish between three types:
 Search attributes are tangible characteristics customers can evaluate before
purchase. E.g., type of food, location, type of restaurant (e.g., fine dining, casual,
family-friendly, etc.), and price.
 Experience attributes are those that cannot be evaluated before purchase.
Customers must “experience” the service before they can assess attributes such as
reliability, ease of use, and customer support. In our restaurant example, the
consumer will not know how much s/he will enjoy the food, the service, and the
atmosphere until the actual experience.
 Credence Attributes: Credence (acceptance) attributes are those that customers find
impossible to evaluate confidently even after purchase and consumption. E.g.,
hygiene conditions of the kitchen and the healthiness of the cooking ingredients.

Purchase Decision:

After consumers have evaluated possible alternatives, by, for example, comparing the
performance of important attributes of competing service offerings; assessed the perceived
risk associated with each offering; and developed their desired, adequate, and predicted
service level expectations—they are ready to select the option they like best.

Possible alternatives are compared and evaluated, whereby the best option is selected.

Many purchase decisions for frequently purchased services are-

 Simple if perceived risks are low and alternatives are clear
 Complex when trade-offs increase

Trade-offs are often involved

For more complex decisions, trade-offs can involve multiple attributes: In choosing an airline,
convenience of schedules, reliability, seat comfort, attentiveness of cabin crew, and
availability of meals may well vary among different carriers, even at the same fares.

After making a decision, the consumer moves into the service encounter stage.

Service Encounter Stage

After making a purchase decision, customers move on to the core of the service experience:
the service encounter stage, which usually includes a series of contacts with the chosen
service firm.

This stage often begins with placing an order, requesting a reservation, or even submitting an
application (consider the process of obtaining a loan, seeking insurance coverage, or getting
into college or graduate school). Contacts may take the form of personal exchanges between
customers and service employees or impersonal interactions with machines or websites.

Service encounters range from high- to low-contact

A service encounter is a period of time during which a customer interacts directly with a
service provider.

Might be brief or extend over a period of time (e.g., a phone call or visit to the hospital)

Post-encounter Stage

In the postencounter stage of service consumption, customers evaluate the service

performance they have experienced and compare it with their prior expectations.

Satisfaction is as an attitude-like judgment following a consumption experience.

Whereby customers have expectations prior to consumption, observe service performance,

compare it to expectations.

Satisfaction judgments are based on this comparison

• Positive disconfirmation (better)-- if the service is better than expected,

• Disconfirmation (same)- if it is as expected
• Negative disconfirmation (worse)-- if it is worse than expected,
 Ans. 5 (b)

Distinctions between High-Contact and Low-Contact Services

High-Contact Services
In high contact, service entails interactions throughout service delivery between customers
and the organization. The customer’s exposure to the service provider takes on physical and
tangible nature. When a customer visits the facility where service is delivered.

• Customers visit service facility and remain throughout service delivery.

• Active contact
• Includes most people- processing services.
• Example-traditional retail banking, Haircut, Airline Travel etc.

Low-Contact Services
Low-Contact Services are generally the opposite end of the spectrum, low-contact services
involve little, if any, physical contact between customers and service providers or executives.

• Little or no physical contact

• Contact usually at arm’s length through electronic or physical distribution channels.
• Facilitated by new technologies

Ans. 5 (c)

The “moment of truth” metaphor from bullfighting to show the importance of contact points with
customers.

[W]e could say that the perceived quality is realized at the moment of truth, when the service provider
and the service customer confront one another in the arena. At that moment they are very much on
their own. . . . It is the skill, the motivation, and the tools employed by the firm’s representative and
the expectations and behavior of the client which together will create the service delivery process.

A moment of truth is when an interaction occurs between a customer and the service provider that
can leave a lasting positive or negative impression on a customer. . In an ideal case, positive MoTs can
leave a lasting impression. ... Customers experience them and create memories based on them.

Question-6
a) What are some challenges in service communications and how can they be overcome?
b) In what ways do the objectives of services communications differ substantially from those of
goods marketing? Describe four common educational and romotional objectives in service
settings, and provide a specific example for each of the objectives you list.

Ans. 6(a)
Challenges of Services Communications

Problems of Intangibility: Intangibility creates 4 problems:

Generality
 Generality refers to items that comprise a class of objects, persons, or events—
 for instance, airline seats, flight attendants, and cabin service.
 These general classes have physical analogues, and most consumers of the
service know what they are. However, a key task for marketers seeking to create
a distinctive value proposition is to communicate what makes a specific offering
distinctly different from—and superior to—competing offerings.

Abstractness.
 do not have one-to-one correspondence with physical objects

Nonsearchability
 Nonsearchability refers to the fact that intangibles cannot be searched or
inspected before they are purchased.
 Physical service attributes, such as the appearance of a health club and the type
of equipment installed, can be checked in advance, but the experience of
working with the trainers can only be determined through extended personal
involvement.

Mental impalpability
 Customers find it hard to grasp benefits of complex, multi-dimensional new
offerings

Overcoming the Problems of Intangibility

To overcome intangibility
 Use tangible cues in advertising
 Use metaphors

Tangible Cues.

Commonly used strategies in advertising include the use of tangible cues whenever possible,
especially for low-contact services that involve few tangible elements.

It’s also helpful to include “vivid information” that catches the audience’s attention and
produces a strong, clear impression on the senses, especially for services that are complex
and highly intangible.

For example, many business schools feature successful alumni to make the benefits of its
education tangible and communicate what its education could do for prospective students in
terms of career advancement and salary increases.

Use Metaphors.
Some companies have created metaphors that are tangible in nature to help communicate
the benefits of their service offerings and to emphasize key points of difference relative to
competing alternatives. Insurance companies often use this approach to market their highly
intangible products.
Metaphors communicate value propositions more dramatically and emphasize key points of
difference

Ans. 6(b)
Some specific roles performed by marketing communications are appended here:
 Position and Differentiate the Service:
Companies use marketing communications to persuade target customers that their
service product offers the best solution to meet those customers’ needs, relative to
the offerings of competing firms.
 Help customer evaluate offerings and highlight differences that matter
 Customers may have difficulty distinguishing one firm from another
o Provide tangible clues related to service performance
Companies may use concrete clues to communicate service performance
by highlighting the quality of equipment and facilities and by emphasizing
employee characteristics such as qualifications, experience, commitment,
and professionalism.
o Some performance attributes lend themselves better to advertising than
others
For instance, Airlines do not advertise safety because even the
suggestion that things might go wrong makes many passengers nervous.
Instead, they approach this ongoing customer concern indirectly by
advertising the expertise of their pilots, the newness of their aircraft, and
the skills and training of their mechanics.
 Promote contribution of Service personnel and backstage operations
High-quality, frontline staff and back-stage operations can be important service
differentiators.
In high-contact services, frontline personnel are central to service delivery. Their
presence makes the service more tangible and, in many cases, more personalized.

Firm’s expertise is hidden in low-contact services. So need to illustrate equipment,

procedures, employee activities that take place backstage.
Show customers work performed behind the scenes to ensure good delivery
o To enhance trust, highlight expertise and commitment of employees
o Advertisements must be realistic
o Messages help set customers’ expectations
o Service personnel should be informed about the content of new
advertising campaigns or brochures before launch.
For example, Starbucks has publicity materials and web pages that show customers
what service personnel do behind the scenes. Starbucks shows how coffee beans are
cultivated, harvested, and produced—highlighting its use of the finest and freshest.
 Add value through communication content
Information and consultation represent important ways to add value to a product.
Prospective customers may need information and advice about what service options
are available to them; where and when these services are available; how much they
cost; and what specific features, functions, and service benefits are on hand.
  Facilitate Customer Involvement in Service Production
When customers are actively involved in service production, they need training to
help them perform well—just as employees do.
o One approach to training customers, recommended by advertising
experts, is to show service delivery in action.
o Television and videos are effective because of their ability to engage the
viewer and display a seamless sequence of events in visual form.
Some dentists show their patients videos of surgical procedures before
the surgery takes place so that customers know what to expect.
o Streaming videos on web and podcasts are new channels to reach active
customers
Marketers often use sales promotions as incentives to encourage customers to make
the necessary changes in their behavior. For example, giving price discounts is one
way to encourage customers to try and switch to self-service.

 Stimulate or Dampen Demand to Match Capacity

Live service performances (a seat at the theater for Friday evening’s performance or a
haircut at Supercuts on Tuesday morning—) are time-specific and can’t be stored for
resale at a later date.

Advertising and sales promotions can help to change the timing of customer use and
thus help to match demand with the available capacity at a given time.

Examples of demand management strategies:

o Reducing usage during peak demand periods
o stimulating demand during off-peak periods

Question-7
a) How do customers typically respond to service failures?
b) Diagram 3 dimensions of ‘Perceived Fairness’ in service recovery system.
c) What are the different types of jaycustomers, and how can a service firm deal with such
customers?

Ans 7(a)
Customer Response Categories to Service Failures
Figure depicts the courses of action a customer may take in response to a service failure. This
model suggests at least three major courses of action:
 Take some form of public action (including complaining to the firm or to a third party,
such as a customer advocacy group, a consumer affairs or regulatory agency, or even
civil or criminal court).
 Take some form of private action (including abandoning the supplier).
 Take no action.
It’s important to remember that a customer can pursue any one or a combination of
alternatives. Managers need to be aware that the impact of a defection can go far beyond
the loss of that person’s future revenue stream.
Angry customers often tell many other people about their problems
The Internet allows unhappy customers to reach thousands of people by posting complaints
on bulletin boards or setting up their own websites to publicize their bad experiences with
specific organizations
A popular strategy in the past when creating such sites was to add a derogateory suffix (such
as “sucks”) to the name of the offending company.

Ans. 7(b)
Three Dimensions of Perceived Fairness in Service Recovery Processes

FIGURE Three Dimensions of Perceived Fairness in Service Recovery Processes

 o Procedural justice concerns policies and rules that any customer has to go
through to seek fairness.
o Interactional justice involves employees of the firm who provide the service
recovery and their behavior toward the customer. Giving an explanation for
the failure and making an effort to resolve the problem are very important.
However, the recovery effort must be perceived as genuine, honest, and
polite.
o Outcome justice concerns compensation a customer receives as a result of
the losses and inconveniences incurred because of a service failure. This
includes compensation for not only the failure but also time, effort, and
energy spent during the process of service recovery.

Dealing with Complaining Customers and Recovering from Service Failure

 Take complaints professionally and not personally

 Be prepared to deal with angry customer who may behave in an insulting way to service
personnel who may not be at fault
 Take the perspective that customer complaints allow firm a chance to
o Correct problems,
o Restore relationships
o Improve future satisfaction for all
 Develop effective service recovery procedures

Ans. 7(c)
Jaycustomers
A customer who behaves in a thoughtless or abusive fashion, causing problems for the firm,
its employees, and other customers

The word JAY comes from JAYWALKER used to describe people who cross streets at
unauthorized places or in a dangerous manner. The word JAY is a slang term of “stupid”.

More potential for mischief in service businesses, especially when many customers are
present.

No organization wants an ongoing relationship with an abusive customer.

Seven Types of Jaycustomers

1. The Cheat: thinks of various way to cheat the firm

2. The Thief: No intention of paying--sets out to steal or pay less
 Services lend themselves to clever schemes to avoid payment
 e.g., bypassing electricity meters, circumventing TV cables, riding free on
public transportation
 Firms must take preventive actions against thieves, but make allowances for
 honest but absent-minded customers
3. The Rulebreaker
 Many services need to establish rules to guide customers safely through the
service encounter
 Government agencies may impose rules for health and safety reasons
 Some rules protect other customers from dangerous behavior
 e.g. ski patrollers issue warnings to reckless skiers by attaching orange
stickers on their lift tickets
 Ensure company rules are necessary, not should not be too much or
inflexible

4. The Belligerent

 Shouts loudly, maybe mouthing insults, threats and curses

 Service personnel are often abused even when they are not to be blamed
 Confrontations between customers and service employees can easily
escalate
 Firms should ensure employees have skills to deal with difficult situations

o In a public environment, priority is to remove person from other

customers
o May be better to support employee’s actions and get security or the
police if necessary if an employee has been physically attacked

5. Family Feuders: People who get into arguments with other

customers – often members of their own family
6. The Vandal:
 Service vandalism includes pouring soft drinks into bank cash machines;
slashing bus seats, breaking hotel furniture
 Bored and drunk young people are a common source of vandalism
 Unhappy customers who feel mistreated by service providers take revenge
 Prevention is the best cure
7. The Deadbeat
 Customers who fail to pay (as distinct from “thieves” who never intended to
pay in the first place)
 Preventive action is better than cure--e.g., insisting on prepayment; asking
for credit card number when order is taken
 Customers may have good reasons for not paying
 If the client's problems are only temporary ones, consider long- term value
of maintaining the relationship
Question-8
a) What are the four main purposes service environments fulfill?
b) Explain the dimensions of ambient conditions and how each can influence customer
responses to the service environment.

Ans. 8(a)

Service environments fulfill four core purposes.

Specifically, they:
1. Shape customers’ experiences and their behavior.
2. Play an important role in determining customer perceptions of the firm and its
 image and positioning. Customers often use the service environment as an
important quality signal.
3. Can be a core part of the value proposition (e.g., as for theme parks and resort
hotels).
4. Facilitate the service encounter and enhance productivity.

Ans. 8 (b)
Dimensions Of The Service Environment:

Service environments are complex and have many design elements.

1. Ambient Conditions
 Characteristics of environment pertaining to our five senses
 Ambient conditions are perceived both separately and holistically
and include lighting and color schemes, size and shape perceptions, sounds such
as noise and music, temperature, and scents or smells. Clever design of these
conditions can elicit desired behavioral responses among consumers. Consider
the innovative thinking underlying the new trend to transform dental clinics into
relaxing dental spas
2. Spatial Layout and Functionality
 Spatial layout refers to the floor plan, size, and shape of
furnishings, counters, and potential machinery and equipment and the ways in
which they are arranged.
- floorplan
- size and shape of furnishings
 Functionality: ability of those items to facilitate performance

3. Signs, Symbols, and Artifacts

 Explicit or implicit signals to:
- help consumers find their way
Examples of explicit signals include signs that can be used
(1) as labels (e.g., to indicate the name of the department or counter);
(2) for giving directions (e.g., to certain service counters, entrance,
exit, the way to elevators and toilets);
(3) for communicating the service script (e.g., take a number
and wait for it to be called or clear the tray after your meal); and
(4) behavioral rules
(e.g., switch off or turn your mobile devices to silent mode during the performance, or
smoking/no-smoking areas). Signs frequently are used to teach and reinforce behavioral rules
in service settings.

Question-9
a) “Service Employees are Crucially Important”-discuss.
b) What are the factors contributing to difficulty of frontline work?

Ans. 9(a)
Service Personnel: Source of Customer Loyalty & Competitive Advantage
 Customer’s perspective: encounter with service staff is most important aspect of a
service
 Firm’s perspective: frontline is an important source of differentiation and competitive
advantage
 Frontline is an important driver of customer loyalty
o anticipating customer needs
o customizing service delivery
o building personalized relationships

Service employees are so important to customers and the firm’s competitive positioning because the
frontline:
• Is a core part of the product. Often, the service employees is the most visible element of the
service, delivers the service, and significantly determines service quality.
• Is the service firm. Frontline employees represent the service firm, and from a customer’s
perspective, they are the firm.
• Is the brand. Frontline employees and the service they provide often are a core part of the
brand. The employees determine whether the brand promise is delivered.
• Affects sales. Service personnel often are crucially important for generating sales, cross-sales,
and up-sales.
• Determine productivity. Frontline employees have heavy influence on the productivity of
frontline operations.
Many routine transactions are now conducted without involving frontline staff, e.g.,
• ATMs (Automated Teller Machines)
• IVR (Interactive Voice Response) systems
• Websites for reservations/ordering, payment, etc.
However, frontline employees remain crucially important

Ans. 9(b)
Factors contributing to difficulty of frontline work:
• Service employee as boundary spanners.
 They link the inside of the organization to the outside world.
 This multiplicity of the roles in service jobs after leads to role conflict and role
stress among employees
 Customer contact personnel must attend to both operational and marketing
goals.
 Consider management expectation of service staff.
o Delight customers
o Be fast and efficient in executing operational tasks
o Do selling, cross selling and up selling.
o Enforce pricing schedules and rate integrity.

There are three main causes of role stress in frontline positions: organization/client,
person/role, and inter-client conflicts.
 Organization vs. Client: Dilemma whether to follow company rules or to satisfy
customer demands (two-bosses dilemma)
 This conflict is especially acute in organizations that are not customer-
oriented
 Organization vs. Client: Dilemma whether to follow company rules or to satisfy
customer demands (two-bosses dilemma)
 This conflict is especially acute in organizations that are not customer-
oriented
 Client vs. Client (Inter-Client): Conflicts between customers that demand service
staff intervention
Question-10
a) What do you mean “Cycle of failure”
b) What is meant by productive capacity in services? What actions can firms take to adjust
capacity to more closely match demand?

Ans 10 (a)
The cycle of failure
The cycle of failure captures the implications of such a strategy, with its two concentric but
interactive cycles: one involving failures with employees; the second, with customers

The employee cycle of failure

• Narrow job design for low skill levels
• Emphasis on rules rather than service
• Use of technology to control quality
• Bored employees who lack ability to respond to customer problems
• Customers are dissatisfied with poor service attitude
• Low service quality
• High employee turnover

The customer cycle of failure

• Repeated emphasis on attracting new customers
• Customers dissatisfied with employee performance
• Customers always served by new faces
• Fast customer turnover
• Ongoing search for new customers to maintain sales volume

Ans. 10 (b)
Defining Productive Capacity:
The term refers to the resources or assets that a firm can employ to create goods and
services.

In a service context, productive capacity can take several forms:

1. Physical facilities designed to contain customers and used for delivering people
processing services or mental stimulus processing services. Examples include medical
clinics, hotels, passenger aircrafts, and college classrooms. The primary capacity
constraint is likely to be defined in terms of such furnishings as beds, rooms, or seats.
In some cases, for health or safety reasons, local regulations may set an upper limit
to the number of people allowed in for health or safety reasons.
2. Physical facilities designed for storing or processing goods that either belong to
customers or are being offered to them for sale. Examples include pipelines,
warehouses, parking lots, and railroad freight wagons.
3. Physical equipment used to process people, possessions, or information may embrace
a huge range of items and may be very situation specific—diagnostic equipment,
airport security detectors, toll gates, bank ATMs, and “seats” in a call center are
among the many items whose absence in sufficient numbers for a given level of
demand can bring service to a crawl (or even a complete stop).
4. Labor is a key element of productive capacity in all high-contact services and many
low-contact ones. Staffing levels for restaurant servers, and nurses and call center
staff need to be sufficient to meet anticipated demand—otherwise customers are
kept waiting or service is rushed. Professional services are especially dependent on
 highly skilled staff to create high value-added, information-based output. Abraham
Lincoln captured it well when he remarked that “A lawyer’s time and expertise are
his stock in trade.”
5. Infrastructure. Many organizations are dependent on access to sufficient capacity in
the public or private infrastructure to be able to deliver quality service to their own
customers. Capacity problems of this nature may include congested airways that lead
to air traffic restrictions on flights, traffic jams on major highways, and power failures
(or “brown outs” caused by reduced voltage).

Financial success in capacity-constrained business is a function of management’s ability to

use productive capacity as efficiently and profitably as possible.

Adjusting Capacity to Match Demand:

There are several actions that managers can take to adjust capacity as needed. These actions
start from the easiest to implement, to the more difficult.
• Schedule downtime during periods of low demand. To ensure that 100 percent of
capacity is available during peak periods, maintenance, repair, and renovations
should be conducted when demand is expected to be low. Employee vacations
should be taken during such periods.
• Cross-train employees. Even when the service delivery system appears to be
operating at full capacity, certain physical elements—and their attendant
employees—may be underutilized. If employees can be cross-trained to perform a
variety of tasks, they can be shifted to bottleneck points as needed, thereby
increasing total system capacity. In supermarkets, for instance, the manager may call
on stockers to operate cash registers when lines become too long. Likewise, during
slow periods, the cashiers may be asked to help stock shelves.
• Use part-time employees. Many organizations hire extra workers during their busiest
periods. Examples include postal workers and retail store associates during the
Christmas season, extra staff for tax preparation service firms in the spring, and
additional hotel employees during vacation periods and for major conventions.
• Invite customers to perform self-service. If the number of employees is limited,
capacity can be increased by involving customers in co-production of certain tasks.
One way to do this is by adding self-service technologies such as electronic kiosks at
the airport for airline ticketing and check-in or automated check-out stations at
supermarkets.