Introduction Nature of Services, Services Marketing Mix Decisions

Introduction Nature of Services

Services - Facts

An action of an individual or an organization leading to some kind of benefit and/or satisfaction to the customer Services are intangible products

Services - Features

Intangible, Nontransferable, Perishable, Distinct Standardization not possible, (Cannot be owned), Simultaneous Consumption, Difficult to measure Quality, Seasonality of Demand

Introduction Nature of Services

Some Economic Facts

India is 15th in Services Output on world map 23% of total work force is employed in Service Sector only second to agriculture (60%) and above manufacturing (17%)

It has largest share in GDP (55% - 2007) (15% - 1950)

Service Sector growth rate is close to 9% IT, It enabled services and BPO form almost 1/3rd part of the sector Organized retail services amount to only 4%

Introduction Nature of Services

Reasons for Growth of the Sector

End of Licence Raj Privatization

Increased Customer Protection

Change in Lifestyle Exposure of Consumer to world Dependence on Automation Internationalization

Introduction Nature of Services

Types of Services

Directed at Human Body

Transport, Healthcare, Lodging, Beauty Salons, Fitness centre, Restaurants, Barber

Directed at Possessions
Freight, Repairs, Warehousing, Cleaning, Distribution, Laundry, Gardening

Directed at Human Mind Advertising, PR, Broadcasting, Consulting, Education, Music, Religious services

Directed at Intangible Possessions Accounting, Banking, Data Processing, Legal services, Research

Introduction Nature of Services

Concept of Service Factory

It is necessarily Service Outlet and consolidated effect of actual Service Delivery Composed of factors that make Service Delivery not only satisfactory but in case of many services, Enjoyable The criticality of Managing services It revolves mainly around the ACTUAL Service Delivery or Operations aspect of Services In short, its a Stage where Service delivery is Performed

Introduction Nature of Services

Balance of Demand and Supply

Biggest challenge in Services because Services cannot be stored When supply is available Demand may not be available When Demand is at peak Supply may not be possible Challenge is to strike balance E.g. Excess booking by Hotels, Excess admissions by Institutes

Introduction Nature of Services

7 Ps of Services Marketing Process

People

Place

Product Physical Evidence Promotion

Price

Introduction Nature of Services

Product

Features of Service offered Supplementary and Complimentary Services Conditions attached (* and Fine prints) Results / Effects of Services

Introduction Nature of Services

Product Considerations in Creating Service

Physical facilities Equipment People Requirement Partnerships and Collaborations Geographic and Demographic segment covered Scheduling of service List of specific tasks to be performed Market knowledge 7 Ps Supplementary services (if any) Mental effort involved Physical effort involved

Introduction Nature of Services

Product Example

Core Product - Air Travel from point A to point B (Traveling Service) Augmented Product (Complimentary Services) Allied services which complement to actual travel Tangible elements Aircraft, Food and Drinks served Intangible elements Service frequency, Pre and Post flight Services, In flight Services, Actual transporting from point A to point B

Introduction Nature of Services

Place (and Time)

Where the Service to be provided E.g. Dr.s Clinic OR Home visit The time at which Service can be available E.g. an Online Service is usually available 24/7 Orkut Maximum availability and possibility for customer to avail Service at Place of convenience plays major role in success E.g. Cheque deposit and Cash withdrawal facility from home.

Introduction Nature of Services

Price

Cost to customer Competitor prices Relative cost / benefit e.g. Haircut under the tree and in Salon In case of high end Services it need not be effective and competitive pricing

Introduction Nature of Services

Price - Considerations

Cost based pricing Value based pricing (1) Value is low price, (2) Value is utility, (3) Value is Quality for the price paid, (4) Value is what one gets for what one gives (By Valarie Zeithaml, University of North Carolina) Competition based pricing What airlines endured in past few years

Introduction Nature of Services

Promotion

Very crucial Service provider needs to pay keen attention to what is being promised Value of services needs to be established through effective communication mode used is mostly Infotisement In case of Tangible Product, manufacturer is rarely in direct contact with customer; in case of Services Provider of services and Customer are in direct contact Mouth-to-mouth publicity (Recommendation) plays a major role in success

Introduction Nature of Services

Promotion Internal Communication

Intra organizational communication to imbibe Service Value to People involved Motivation Promotion Advertising Strategies

Highlight Capacity of organization, Past performance statistics, Customer testimonials, Independent audit of services, Provide experience of services Stimulate demand One ticket free on another, Happy hours, Kid goes free with Parents Dampen demand High ticket rates in Holidays, Entry charge, Parking charge etc.

Introduction Nature of Services

Promotion Advertising Strategies

Messages originating from outside the organization are vitally significant

Word of Mouth Media Attention Promotion Ethical Issues in Services Promotion

Unrealistic Service Promises

Introduction Nature of Services

Physical Evidence

The location of outlet In Mumbai Town side is considered as up market location as compared to suburbs The Building, Surroundings, Cleanliness, Parking facilities, Signage, Printed promotion material Furnishing of outlet, equipment condition In general, consolidated impact of Physical environment of Service outlet

Introduction Nature of Services

People

Major determinant of Perception of a Customer about Service Quality Voice based Services Clear diction, Conversational Skills Actual services (Hotel staff, Airline staff, Salon staff) Cleanliness, neatness, good looks, conversational skills Technical Services Thorough know-how Recruiting, training, motivation is of utmost importance

Introduction Nature of Services

Process

Creation and Delivery of Service It is sequence of actions It has to be well rehearsed to make it effective and avoid waste of time E.g. Excessive delay in serving food will reduce number of customers in a span of time Front end staff suffers if operations staff goofs up in Process

Introduction Nature of Services

Process - Considerations Creating a process chart (Service Blueprint) Create a script for employees and customers Act I - Prologue and Introductory scene Welcoming etc. Act II Delivery of core product Service Delivery Act III The drama concludes Billing etc. Identifying Fail points Setting service standard Plan B Failure proofing the Service Problem of Customer Misbehaviour Thief, Rulebreakers, Vandals, Violent, etc.