made by nakul patil

1. SERVICE MARKETING

2. Note: This study material MUST be used,
together with class notes and text books.

3. Module 1
Intangible products such as accounting, banking,
cleaning, consultancy, education, insurance,
expertise, medical treatment, or transportation.
Sometimes services are difficult to identify because
they are closely associated with a good; such as the
combination of a diagnosis with the administration
of a medicine. No transfer of possession or
ownership takes place when services are sold, and
they cannot be stored or transported, are instantly
perishable, and come into existence at the time
they are bought and consumed.

4. 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.”

5. Marketing of goods v/s marketing of
services
Goods Services
A physical commodity A process or activity
Tangible Intangible
Homogenous Heterogeneous
Production and distribution are separation
from their consumption
Production, distribution and consumption
are simultaneous processes
Can be stored Cannot be stored
Transfer of ownership is possible Transfer of ownership is not possible
Difference between Goods and Services
:
Goods

6. Characteristics of a services
1- Intangibility: Services are intangible and do
not have a physical existence. Hence services
cannot be touched, held, tasted or smelt. This is
most defining feature of a service and that
which primarily differentiates it from a product.
Also, it poses a unique challenge to those
engaged in marketing a service as they need to
attach tangible attributes to an otherwise
intangible offering.

7. 2- Heterogeneity/Variability: Given the very
nature of services, each service offering is
unique and cannot be exactly repeated even by
the same service provider. While products can
be mass produced and be homogenous the
same is not true of services. 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.

8. 3- 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. e.g. A customer
dissatisfied with the services of a barber cannot
return the service of the haircut that was
rendered to him. At the most he may decide not
to visit that particular barber in the future.

9. 4- Inseparability/Simultaneity of production and
consumption: This refers to the fact that services
are generated and consumed within the same time
frame. Eg: a haircut is delivered to and consumed
by a customer simultaneously unlike, say, a
takeaway burger which the customer may consume
even after a few hours of purchase. Moreover, it is
very difficult to separate a service from the service
provider. Eg: the barber is necessarily a part of the
service of a haircut that he is delivering to his
customer.

10. 5- Customer Participation: service production is
not a one sided activity. Customers are co-
producers of service. The production quality of
service greatly depends upon the ability, skill
and performance of the employee as well as
customer.

11. 6- No Ownership: You cannot own and store a
service like you can a product. Services are used
or hired for a period of time.

13. Role of service sector in Economy

14. Growth of services- Global and Indian
scenario
Reasons-
1- Intermediate demand from firms
2- Increase in affluence
3- More leisure time
4- Working women
5- Growth in the population of DINKs
6- Greater life expectancy
7- greater complexity of products
8- Greater complexity in life
9- Young generation

15. Significance of Service Marketing
• To reduce dependency on technology
• To increase competitive strength
• Help in creation of new sources of
employment
• To improve the standard of living

16. Classification of services

17. Introduction to service marketing mix
• Product
• Price
• Place
• Promotion
• People
• Process
• Physical Evidence

18. Module II
Consumer decision making process
1- Need recognition
2- Information search
3- Evaluation of alternatives
4- Purchase and consumption
5- Post purchase evaluation

19. Consumer expectations
Customer expectations are the standards or
reference points for performance against which
service experiences are compared and are often
formulated in terms of what a customer believes
should or will happen.
Levels of customer expectations-
1- Maximum level
2- Minimum Level

20. Factors influencing customer
expectations of Services

21. Service Encounters/ Moments of truth
A Service encounter/moment of truth is usually
defined as an instance wherein the customer and
the organization come into contact with one
another in a manner that gives the customer an
opportunity to either form or change an impression
about the firm. Such an interaction could occur
through the product of the firm, its service offering
or both. Various instances could constitute a
moment of truth - such as greeting the customer,
handling customer queries or complaints,
promoting special offers or giving discounts and the
closing of the interaction.

22. Importance
In today’s increasingly service driven markets and with the
proliferation of multiple providers for every type of product or service,
moments of truth have become an important fact of customer
interaction that marketers need to keep in mind. They are critical as
they determine a customer’s perception of, and reaction to, a brand.
Moments of truth can make or break an organization’s relationship
with its customers.
This is more so in the case of service providers since they are selling
intangibles by creating customer expectations. Services are often
differentiated in the minds of the customer by promises of what is to
come. Managing these expectations constitutes a critical component
of creating favourable moments of truth which in turn are critical for
business success.

23. Types of Service Encounters
• Face-to-face encounters
• Phone Encounters
• Remote Encounters

24. Themes related to Service encounters
• Recovery- Employee response to service
delivery system failures
• Adaptability- Employee response to customer
needs and requests
• Spontaneity- Unprompted and unsolicited
employee actions
• Coping- Employee response to problem
customers

25. Managing Customer Satisfaction
Satisfaction is the consumer’s fulfilment
response. It is a judgement that a product or
service provides a pleasurable level of
consumption related fulfilment.

26. Customer Satisfaction, Dissatisfaction
and Delight
Based on the quality of the service experience a customer will either be
satisfied, dissatisfied or delighted. Knowing a customer’s expectation is
instrumental in developing a strategy for meeting and exceeding customer
expectations.
Customer Dissatisfaction: This is a situation when the service delivery fails to
match up to the customer’s expectations. The customer does not perceive
any value for money. It’s a moment of misery for the customer.
Customer Satisfaction: In this case, the service provider is able to match the
customer’s expectations and deliver a satisfactory experience. However, such
a customer is not strongly attached to the bran and may easily shift to a
competing brand for considerations of price or discounts and freebies.
Customer Delight: This is an ideal situation where the service provider is able
to exceed the customer’s expectations creating a Moment of Magic for the
customer. Such customers bond with the brand, are regular and loyal and will
not easily shift to other brands.

27. Factors Influencing Customer
Satisfaction
• Product/Service quality
• Specific product/ service features
• Consumer Emotions
• Attributes for service success and failure
• Perception of equity or fairness

28. Service Failure & Recovery
Service Failures
Even with the best service organizations, failures can just happen –
they may be due to the service not available when promised, it may be
delivered late or too slowly (some times too fast??), the outcome may
be incorrect or poorly executed, or employees may be rude or
uncaring. All these types of service failures bring about negative
experiences. If left unfixed they can result in customers leaving, telling
others about the negative experiences or even challenging through
consumer courts. Research has shown that resolving the problems
effectively has a strong impact on the customer satisfaction, loyalty,
and bottom-line performance. Customers who experience service
failures, but are ultimately satisfied based on recovery efforts by the
firm, will be more loyal.

29. The Recovery-
It is suggested that customers who are dissatisfied, but
experience a high level of excellent service recovery, may be
more satisfied and more likely to repurchase than are those
who are satisfied at the first place. For example, a hotel
customer who arrives & finds there is no room available. In an
effort to recover, the front-desk person immediately upgrades
this guest to a better room at the same price. The customer is
so thrilled with this compensation that he is extremely
satisfied with this experience, is even more impressed with
the hotel than he was never before, and vows to be loyal into
future.

30. Recovery Strategies

31. Module III: Service Development &
Productivity
Service Blueprinting-A service blueprint is an
operational planning tool that provides guidance
on how a service will be provided, specifying the
physical evidence, staff actions, and support
systems / infrastructure needed to deliver the
service across its different channels.

32. Components of service Blueprint

34. process of structuring a blueprint
The process of structuring a blueprint involves six steps:-
1-The identification of the service process, that is supposed to
be blueprinted
2-The identification of the customer segment or the
customers that are supposed to experience the service
3-Map the service from the customer’s perspective
4-Map the actions of the contact employee (onstage and
backstage), and/or technology actions
5-Link the contact activities to the needed support functions
6-Add the evidence of service at every customer action step

35. Managing service operations: Physical
Evidence and Servicescape
The physical evidence demonstrates the quality of
service that the provider provides and wants to
convey to its consumers. Physical evidence should
reflect through the following –
Place – the layout
People – the personnel
Equipment
Communication material
Symbols – the name and logo

36. Example: A “fast” bank would display its physical
evidence as follows –
Place – the place should exhibit clean lines and the layout
should be that which facilitate efficiency
People –the personnel should be enough to handle the
work
Equipment – “state of the art” computers, copying
machines and desks
Communication material – for example, printed material,
e-mails and telephone calls should exhibit efficiency and
speed
Symbol – the name and logo should suggest speed

37. Servicescape
Booms and Bitner defined a servicescape as "the
environment in which the service is assembled and
in which the seller and customer interact, combined
with tangible commodities that facilitate
performance or communication of the service“
Types of Servicescapes-
1-Self service
2- Interpersonal Services
3- Remote Services

38. Dimensions of Servicescape

40. service productivity
What is service productivity? Explain strategies for
improving it?
The productivity of service process is related to
how effectively input resources are transformed
into value for customers. Manufacturing-based
productivity models assume that any change of
input in the production process does not lead to
quality changes in outputs. However, in a service
context, changes in the production resources and
systems do affect the perceived quality of services.

41. Strategies for Improving Service Productivity:
1. Increased use of technology
2. Training and development
3. Recruitment planning
4. Reducing service level
5. Increase or diversify service offerings
6. Changes in demand and supply

42. Managing demand and capacity
Understanding capacity constraints

43. Understanding demand patterns

44. Demand Patterns
• Irregular Demand
• Falling Demand
• Demand to the Level of Optimum Capacity
• Demand Exceeds Optimum Capacity
• Demand Below Optimum Capacity
• Excess Demand

45. Strategies for matching demand and
supply
A- Shifting Demand to Match Capacity
1-Vary The Service Offering
2- Communicate With Customers
3- Modify Timing and Location of Service
Delivery
4- Differentiate on Price

46. B- Flexing Capacity to Meet Demand
1- Stretch Existing Capacity(Time, Labour, Facilities,
Equipment)
2- Use Part time Employees
3- Outsourcing
4- Rent or Share Facilities or Equipment
5- Schedule Downtime during Periods of Low Demand
6- Cross train Employees
7- Modify or Move Facilities or Equipment

47. Module IV : Service Quality
Service quality(SQ) is a comparison of expectations (E)
about a service with performance (P) SQ=P-E
Every customer has an ideal expectation of the service
they want to receive when they go to a restaurant or
store. Service quality measures how well a service is
delivered, compared to customer expectations.
Businesses that meet or exceed expectations are
considered to have high service quality.

48. Dimensions of Service Quality
• Reliability
• Assurance
• Tangibles
• Empathy
• Responsiveness

57. Measuring and improving service
quality
SOFT AND HARD MEASURES OF SERVICE QUALITY
Soft measures—not easily observed, must be collected by talking to
customers, employees, or others
- Provide direction, guidance, and feedback to employees on ways to
achieve customer satisfaction
- Can be quantified by measuring customer perceptions and beliefs
- For example: SERVQUAL, surveys, and customer advisory panels
Hard measures—can be counted, timed, or measured through audits
- Typically operational processes or outcomes
- Standards often set with reference to percentage of occasions on
which a particular measure is achieved
- Control charts are useful for displaying performance over time
against specific quality standards

58. SERVQUAL
SERVQUAL, later called RATER, is a quality management
framework. SERVQUAL was first published in 1985, 1988 by
Valarie Zeithaml, A. Parasuraman & Leonard L. Berry to
measure quality in the service sector. It highlights the main
components of high quality service - reliability, assurance,
tangibles, empathy and responsiveness - that create the
acronym RATER. Businesses using SERVQUAL to measure and
manage service quality deploy a questionnaire that measures
both the customer expectations of service quality in terms of
these five dimensions, and their perceptions of the service
they receive. When customer expectations are greater than
their perceptions of received delivery, service quality is
deemed low.

59. Concept of SERVQUAL system

64. CRM
CRM “is a business strategy that aims to understand, anticipate and
manage the needs of an organisation’s current and potential
customers” .
It is a “comprehensive approach which provides seamless integration
of every area of business that touches the customer- namely
marketing, sales, customer services and field support through the
integration of people, process and technology”
CRM is a shift from traditional marketing as it focuses on the retention
of customers in addition to the acquisition of new customers
The expression Customer Relationship Management (CRM) is
becoming standard terminology, replacing what is widely perceived to
be a misleadingly narrow term, relationship marketing

65. Definition of CRM
“ CRM is concerned with the creation,
development and enhancement of
individualised customer relationships with
carefully targeted customers and customer
groups resulting in maximizing their total
customer life-time value”

66. The purpose of CRM
• The focus of CRM is on creating value for the
customer and the company over the longer term
• When customers value the customer service that
they receive from suppliers, they are less likely to
look to alternative suppliers for their needs
• CRM enables organisations to gain ‘competitive
advantage’ over competitors that supply similar
products or services

68. Six Sigma
Six sigma is a business statistical Strategy.
• Is to identifying defects and removing them from the process of
products/services to improve quality.
• A defect is defined as any process output that does not meet
customer specifications.
• Statistical measure to objectively evaluate processes.
Six Sigma efforts in service processes can increase customer
satisfaction and, consequently, increase sales. They also have the
potential to increase operating margins by reducing processing time
and/or human resources needed. Both of these have the effect of
boosting revenues and profits for any company. To realize the full
potential, it is essential to pay attention to sensible and wise
measurement in the application of Six Sigma to service processes.

70. Module V
Role of service Personnel-
- Employees Are the Service and the Brand.
- They are the organization in the eyes of customers
- They are the marketers
- The way service is delivered by them, can be an important source of
differentiation as well as competitive advantage
- The strength of the customer employee relationship is an important
driver of customer loyalty
- They are a key variable for creating and maintaining competitive
positioning and advertising
- Highly motivated people are at the core of service excellence
- Employee satisfaction and customer satisfaction are highly
correlated
- Service employees are walking billboards

71. Job characteristics-
- Emotional Labour- smiles, making eye contacts, showing
sincere interests, friendly conversation with strangers,
courtesy, empathy, responsiveness etc.
- Sources of conflict
* Person vs role conflict
* Organization vs client
* Client vs client
- Quality and Productivity Tradeoffs

72. INTERNAL MARKETING
Internal marketing is a technique used by
companies that treat employees as customers to
help make all components of the business function
harmoniously and deliver a clear message. Internal
marketing is used by companies of all sizes and in a
variety of industries. This type of marketing is
designed to help companies strengthen their
communications with customers to help sell
products and services and to make branding and
outreach as effective as possible.

73. Objectives of Internal Marketing
• To ensure that the employees are motivated
for customer oriented and service minded
performance.
• To attract and retain good employees

74. Strategies for internal marketing
- Staffing
- Training
- Organizing
- Supporting
- Motivating
- Evaluating
- Rewarding
- Retaining

75. Price Determinants

76. APPROACHES TO PRICING SERVICES
• Cost based pricing
• Competition based pricing
• Demand based pricing

77. Pricing strategies linking to value
definitions

78. CHANNEL STRUCTURES
• Franchising
• Agents and Brokers
• Electronic Channels

79. Franchising

80. Agents and Brokers

81. Electronic Channels

82. Distribution growth Options
Expanding your distribution channels can be an effective
tool to increase your business. Advantages to broader
distribution channels include:
*Heftier profits- Selling to more customers can raise
revenues, cut per-unit costs and boost the bottom line.
*Less risk- If you're selling through one channel, you've
put all your eggs in one basket. Selling through multiple
channels spreads risk.
*Brand building- Making products/services available in
more locations will raise consumer awareness of your
offerings.

83. Growth Options
1. Increase Market Penetration-offering more
services to the same client.
2. Develop New Markets-offering your existing
services to a new market.
3. Develop Alternative Distribution Channels-For
example, firms can partner with a trade
association or business group to get in front of
their membership. Or a firm could partner with
complementary but non-competitive service
firms to widen their reach. Think law firms
teaming up with accounting firms.

84. 4. Develop New Services-This strategy involves
developing a completely new service that you do
not currently offer. On one level, professional
services firms do this every day. No two clients have
identical needs, so services naturally proliferate.
5. New Services to New Markets-It combines the
challenges of developing and launching new
services with the uncertainty and costs of
cultivating a new market.

85. Best Wishes