Service Markeitng SC

7/30/2019 Service Markeitng SC

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Services Marketing


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The service sector

The services sector has been growing at a rate

of 8% per annum in recent years

More than half of our GDP is accounted for

from the services sector (57%-60%)

This sector dominates with the best jobs, best

talent and best incomes


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There are no such thing as serviceindustries. There are only industries

whose service components are

greater or less than those of otherindustries. Everybody is in service.

-Theodore Levitt


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What is services?

It is the part of the product or the full

product for which the customer iswilling to see value and pay for it.


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Service definitions

An activity or series of activities of more or less

intangible nature that normally, but not

necessarily, take place in interactions between

the customers and service employees and/or

physical resources or goods and/or systems of

the system provider which are provided as

solutions to customers problem- Gronroos (1990)


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Any activity or performance that one party can

offer to another that is essentially intangible

and does not result in ownership of anything.

Its production may not be tied to physical

product

- Philip Kotler (1991)


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What is a service?

It is intangible.

It does not result in ownership.

It may or may not be attached with a physicalproduct


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Services could meet

Personal needs haircuts, tuition, massage

parlors

Business needs courier services, office

cleaning services, delivering fresh flowers


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Most products have a service

component

They could be

Equipment based (kiosks, ATMs)

People based varying skill levels


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Characteristics of services

Intangibility

Inseparability

Perishability Variability


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Intangibility

Physical intangibility ( taste, odor, feel)

Mental intangibility ( grasp or measure..)


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Implications of intangilbility

Services cannot be stored

Services cannot be patented

Services cannot be displayed Decision regarding advertising and marketing

is difficult


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Inseparability

Outlet accessibility can limit the area covered

by the service.

Image is important: Image affects the

perception of the service.


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Implications of inseparability

Cannot be mass produced at a central location

Operations have to be decentralized so that

the services can be provided directly to the

customers


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Perishability

Services cannot be stored or held in inventory.

If not used when available, they go to waste.


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Implications of perishability

Cannot be inventoried

Short lived value of service

There is lot of time pressure ( both for salesand operation)


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Variability

Service quality tends to vary considerably.

Haircut from your hair dresser vs. Big Mac


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Implications of variability

Services cannot be standardized

Difficulty in setting quality controls

Difficulty in communicating the clients Determination of quality is possible only after

the performance of the service


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Difference between physical

goods and servicesPhysical goods Services

tangible intangible

homogeneous heterogeneous

Production and distribution areseparated from consumption

Production, distribution andconsumption are simultaneous

processes

A thing An activity or process

Core value processed in factory Core value produced in the buyer-seller

interaction

Customers do not participate in the

production process

Customers participate in production

Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership


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Goods Services Resulting Implications

Tangible Intangible Services cannot be inventoried

Services cannot be patented

Services cannot be readily displayed or communicated

Pricing is difficult

Standardized Heterogeneous Service delivery and customer satisfaction depend on

employee action

Service quality depend on many uncontrollable factorsThere is no sure knowledge that the service delivered

matches what was planned and promoted

Production separate

from Consumption

Simultaneous

production and

consumption

Customers participate and affect the transaction

Customers affect each other

Employees affect the service outcome

Decentralization may be essential

Mass production is difficult

Non perishable Perishable It is difficult to synchronize supply and demand with

services

Services cannot be returned or resold


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The three additional Ps of Service

Marketing

People

Physical evidence

Process


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Product

Physical good features

Quality level

Accessories

Packaging

Warranties

Product lines

Branding

Place

Channel type

Exposure

Intermediaries

Outlet locations

Transportation

Storage

Managing channels

Promotion

Promotion blend

Sales people

Number

Selection

Training

Incentives

Advertising

Targets

Media types

Types of Ads

Copy thrustSales promotion

Publicity

Price

Flexibility

Price level

Terms

Differentiation

Discounts

Allowances

People

Employees

Recruiting

TrainingMotivation

Rewards

Teamwork

Customers

Education

Training

Physical Evidence

Facility design

Equipment

SignageEmployee dress

Other tangible

Reports

Business cards

Statements

Guarantees

Process

Flow of activities

Standardized

CustomizedNumber of steps

Simple

Complex

Customer involvement


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Factors promoting service sector FOREIGN DIRECT INVESTMENTS

BETTER LIVING STANDARDS

HIGH DISPOSABLE INCOME

CONVENIENCE FACTOR

DUAL INCOME HOUSEHOLD

NEW TECHNOLOGICAL DEVICES

CONCERN OF PRODUCTIVITY


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Challenges confronted by service

sector INFRASTRUCUTRE

TECHNOLOGY

EMPLOYEES

CONSUMERS

COMPETITION

SUPPLIERS


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Macro environment factors that

affect the service marketPOLITICAL

ECONOMICAL

SOCIAL

TECHNOLOGICAL


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POLITICALECOLOGICAL/ ENVIRONMENTAL ISSUE

CURRENT / FUTURE LEGISLATIONS OF THE HOME MARKET

GOVERNMENT POLICIES

HOME MARKET LOBBYING/ PRESSURE GROUPS

FUNDING GRANTS AND INITIATIVES


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ECONOMICAL ECONOMY SLOWDOWN

INTEREST AND EXCHANGE RATES

TAXATION SPECIFIC TO PRODUCTS/ SERVICES

BUYING AND SPENDING POWER OF THE CUSTOME

ECONOMY TRENDS AND SITUATION


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SOCIALLIFESTYLE TRENDS

CULTURE

BRAND , COMPANY & TECHNOLOGY IMAGE

CONSUMER ATTITUDES & OPINIONS

CONSUMER BUYING PATTERNS


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TECHNOLOGICAL COMPETING TECHNOLOGY DEVELOPMENT

REPLACEMENT OF TECHNOLOGY/ SOLUTIONS

TECHNOLOGY ACCESS/ PATENTS


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Service triangle


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The framework has 6 relationships

The service firm strategy must be communicated to its

customers

The service strategy also be communicated to firm employees

There should be consistency in the service strategy and the

systems that are developed to run day to day operation to

achieve strategic goals

The impact of organizational systems on the customer

The importance of organizational system and employee

efforts

The interaction between customer and service provider


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Service triangle marketing model


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References : Valarie Ziethaml, Mary Bitner, Dwayne Gremler, Ajay Pandit, 4th Ed, Services

marketing- Integrated Customer Focus Across the Firm. McGraw Hill companies

Christopher Lovelock, Jochen Wirtz, Jayanta Chatterjee, Service Marketing-

People, Technology, Strategy, 6th Ed, Pearson

Vinnie Jauhari, Kirti Dutta, Services- Marketing, Operations and

Management, Oxford Higher Education


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MANAGING SERVICES

MARKETING MIX

MOD-2


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CONTENTS

Customer gap

GAPS Model of service quality

Managing the gaps for enhanced service

quality

SERVQUAL

Service blue print


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EXPECTED

SERVICE

PERCEIVED

SERVICE

CUSTOMER GAP

CUSTOMER GAP


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Gaps Model of Service Quality

Expected service

Perceived service

Service delivery

Customer driven service designs

and standards

Company perceptions of

consumer expectations

External communication

to customers

CUSTOMER

COMPANY

Gap 1

Gap 2

Gap 3 Gap 4

Customer Gap

THE PROVIDER GAPS


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THE PROVIDER GAPS

Gap 1- Not knowing what customers expect

Gap 2- Not selecting the right service

designs and standards

Gap 3- Not delivering to service standards

Gap 4- Not matching performance with

promises


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GAP 1: NOT KNOWING WHAT CUSTOMER

EXPECT

EXPECTEDSERVICE

COMPANY PERCEPTION

OF CONSUMER EXPECTATION


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Causes for Gap 1

Inadequate marketing research orientation

Lack of upward communication

Insufficient relationship focus

Inadequate service recovery


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Gap 2: Not having right service quality designand standard

CUSTOMER DRIVEN SERVICE

DESIGN AND STANDARS

MANAGEMENT PERCEPTION OF

CUSTOMER EXPECTATIONS


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Causes for Gap 2

Poor service design

Absence of customer driven standards

Inappropriate physical evidence and

servicescape


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Gap 3: Not delivering to service design andstandards

CUSTOMER DRIVEN SERVICE

DESIGN AND STANDARS

SERVICE DELIVERY


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Causes for Gap 3

Deficiencies in human resource policies

Customer who do not fulfill roles

Problems with service intermediates

Failure to match supply and demand


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Gap 4: Not matching performances withpromises

SEVICE DELIVERY

EXTERNAL COMMUNICATIONSTO THE CUSTOMERS


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Causes for Gap 4

Lack of integrated service marketing

communications

Ineffective management of customer

expectations

Overpromising

Inadequate horizontal communications


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SERVQUAL

Reliability

Responsiveness

Assurance

Empathy

Tangibles


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SERVICE DESIGN & SERVICE BLUE

PRINT


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Service Design

Service design is a process across 4 Ds

Discover

Define

Develop

Deliver


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It is about understanding the client, organization

and market, develop ideas, translate them

into feasible solutions and to help in

implementing them


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Characteristics of service design

Service design represent client perspective

Service design addresses unique features of

the services

Service design integrates expertise from

various disciplines

Service design is interactive

Service design is ongoing

Diff t ki d f ti i l d d i


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Different kind of expertise included in

service design

Management

Product development

Human resources

Process management

Quality management

Strategy


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Marketing

Communications

Public relations

Branding

Price

Promotion


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Research

Psychology

Ethnography

Market research

Observation

Testing


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Design Interaction design

Interface design

Experience design Interior design

Sensualization

Product design

Participatory design


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Challenges of service design

Oversimplification

Incompleteness

Subjectivity

Biased interpretation


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Stages in new service development

Front end planning

o Business strategy development or review

o New service strategy development

o Idea generation

o Concept development and evaluation

o Business analysis


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Implementation

o Service development and testing

o Market testing

o Commercialization

o Post introduction evaluation


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New service strategy matrix

Offerings

Markets

Current customers New customers

Existing service Share building Market development

New service Service development Diversification

*Ansoffs Matrix


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Service design benefits: True understanding of market needs

Higher value with the resource available

Changes organizational culture

New perspective on future development

Higher effectiveness

Higher efficiency

Connects organization and clients

Higher quality experiences as basis of success

Differentiation against competition

Brand affinity


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Service blueprint

A Service Blueprint is a picture or a map that

accurately portrays the service system so that

the different people involved in providing it

can understand and deal with it objectivelyregardless of their roles or their individual

points of view.

The three important contents of an


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The three important contents of an

Service Blueprint

Process

Evidence

Points of contact

Steps involved in building service


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Steps involved in building service

blueprint

Identify the process to be blueprinted

Identify the customer or segment targeted

Map the process from customer point of view

Map contact employee actions, onstage and

backstage

Link customers and contact person needed to

support functions Ask for evidence of service at each customer

action step


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Structure of a Service Blueprint


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Advantages of Service Blueprinting

Brings clarity to the service delivery process

Enables identification of critical incidents, which

contribute or damage the consumer experience

Provides insight on areas where employees need tobe trained

Enables further improvement of the process

Helps to put coordination activities in perspective


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CONSUMER AND BUYING

BEHAVIOR

MOD 3


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Qualities of services

Search qualities

Experience qualities

Credence qualities


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PROPERTIES OF OFFERINGS

SEARCH QUALITIES : Attributesthat a consumer can determine beforepurchasing.

They include colour, feel, style, price, fit,

hardness, & smell.Goods like automobiles, furniture, jewelry, &

clothing have high search quality because

prepurchase determination & evaluation of their

attributes is possible. Goodshigh in search quality can easily be evaluated.


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EXPERIENCE QUALITIES

Attributes that can be discerned only afterpurchase or during consumption. Vacations

and restaurant meals have high experience quality

because their attributes cannot be known or

assessed until they have been consumed.

They are more difficult to evaluate.


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CREDENCE QUALITY

Includes the characteristics that the consumerfinds almost impossible to evaluate even after

purchase & consumption. Wheel

alignment in automobiles, a surgery have high

credence quality. Most

difficult to evaluate because the consumer may be

unaware of or may lack sufficient knowledge to

appraise the level of satisfaction


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Stages in Consumer Decision Making & Evaluation of Services

Need

RecognitionInformation

Search

Evaluation of

alternatives

Purchase &

Consumption

Post purchase

Evaluation


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Need Recognition

1. Physiological needs-Biological needs such as food,water, and sleep.

2. Safety and security needs-Shelter, protection, andsecurity.

3. Social needs-Affection, friendship, and acceptance.4. Ego needs-Prestige, success, accomplishment, and

self-esteem.

5. Self- actualization-Self-fulfillment and enriching

experiences.

I f ti S h


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Information Search

Use of personal sources-friends andexperts

Non-personal sources-mass or selectivemedia

Perceived risk-Intangible, non-standardised, and usually sold withoutguarantees or warranties.

Evaluation of Service Alternatives

Evoked Set

S i P h & C ti


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Service Purchase & Consumption

Emotion and Mood

Service provision as Drama

Service Roles and Scripts

Compatibility of Service Customers

Post Purchase Evaluation

Attribution of Dissatisfaction

Innovation diffusion

Brand loyalty

Consumer behavior model (consumer decision


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Consumer behavior model (consumer decision

making process)

EKB Model

Black Box model

Nicosia model

( )


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EKB model (Engel Kollat Blackwell)

Five distinct aspects in consumer


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Five distinct aspects in consumer

decision making in EKB Model

Input

Information processing

Decision process

Decision variables

External factors

l k


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Black Box

Black BoxINPUT OUTPUT

l k d l


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Black Box Model

Bl k b d l


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Black box model

Stimuli

Customer characteristics

Responses

Ni i M d l


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Nicosia Model

Changing dynamics of the Indian


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Changing dynamics of the Indian

consumers

Income growth

Increased disposable income

Women participating in the workforce

Education and health services Entertainment

Comfort with technology Technology babies ( 8-19 years of age)

Impatient aspirers (20-25 years of age)

Balance seekers (26-50 years of age)

Arrived veterans (51-60 years of age)

F t i fl i b i b h i


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Factors influencing buying behavior

Cultural factor

Social factor

Personal factors

Psychological factors

C lt l f t


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Cultural factors

Culture is a complex whole which includes

knowledge, belief, art, moral, custom and any

other capabilities and habits acquired by man

as member of the society External material culture

Internal material culture

Subculture

Social class

S i l f t


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Social factors

Reference groups

Family

P l f t


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Personal factors

Age Customer lifestyle

Stage of family life cycle

Married couples

Child bearing families

Families with pre school children

Families with school children

Families with teenagers

Families as launching centers (first child gone to last child leaving home)

Middle aged parent (empty nest to retirement) Aging family members (retirement to death of both spouses)

Stages in family life cycle Characteristics Relevance of purchasing


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Married couples Relative independence,

present and future oriented

Furnishing apartments, travel,

clothing, appeal totogetherness

Child bearing couples Youngest child under 6,

limited independence, future

oriented

Goods and services geared

towards the child, family

oriented items

Families with school children Young child, dependent future

oriented

Savings, home , education,

insurance

Families with teenagers Independent child, high

income level

Home, luxury, education,

family vacations

Families as launching centers Children independent and

earning

Retirement, travel, home,

luxuries

Middle aged/ aging family

members

Children independent, no

children at home

Health, luxuries, self

gratification

C lif t l


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Consumer lifestyle

Lifestyle: is a constellation of individual characteristics thatreflect certain behaviors, such as participation in social groups

and relationship with significant others, commitment to

certain behaviors and a central life interest

SRI I t ti l VALS f k


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SRI Internationals VALS framework

Innovators

Thinkers

Achievers

Experiencers

Believers

Strivers

Makers

Survivors

Innovators


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Innovators

They are successful, sophisticated and havehigh self esteem. Image is important to them,

not as evidence of status or power but an

expression of their personalityEg: owning an Rolls Royce, using a chartered

flight

Thinkers


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Thinkers

Motivated by ideals, thinkers have moderaterespect for the status quo institutions of

authority and social decorum, but are open to

new ideasEg; people taking the services of Indian Airlines

Achievers


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Achievers

They lead a goal oriented lifestyle, motivatedby the desire for achievement. They have

many wants and needs and are very active in

consumer market place People opting for tutorials supporting their

education, short term programs of premier

institute

Experiencers


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Experiencers

Self expression is the prime motivator. Youngenthusiastic and impulsive customers, they

quickly become enthusiastic about new

possibilities but equally quick to cool. Theseavid consumers are heavy spenders

Services from KFC, Caf Coffee Day

Believers


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Believers

They are conservative and conventionalpeople with concrete beliefs based on

traditions. Opting for familiar products and

established brands, the believers arepredictable consumers

People purchasing groceries from the

traditional mom & pop shop (Kiranas)

Strivers


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Strivers

Trendy and fun loving, strivers are motivatedby achievements. They are also concerned

about the opinions and approvals of others

and like to demonstrate their ability to winover peers

People taking international tour plans,

Makers


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Makers

They are practical people who are motivatedby self expression. Makers have constructive

skills and value self sufficiency. They are

suspicious of new ideas and big businesses People who seek lots of alternatives to carry

out their living

Survivors


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Survivors

Leading narrowly focused lives, survivors arecautious consumers.. They represent a modest

markets for most products and services

People availing the services of low costsaloons, retail outlet, public transport etc..



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Perception

Beliefs and attitudes

Learning

Consumer motivation

Perception


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Perception

It is the meaning that consumer ascribe to whatthey see around. The meaning that is given is

influenced by

Past experience or learning Preconceived notions, prejudice and assumptions

Expectations and personality

Family background, previous acculturation, values, beliefs and other social

factors

Genuine knowledge and awareness

Customer perception


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Customer perception

Influenced by two factors

External factor

Internal factor

External factors


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External factors

Size Position

Movement

Repetition

Intensity

Contrast

Color

Directionality

Directionality Format

Isolation

Novelty

Learned attention including

Stimuli

Attractive spokesperson

Scene changes

Size: the size of the stimulant like an advertisement in newspaper


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Size: the size of the stimulant like an advertisement in newspaper,magazine or bill board has a direct bearing on the degree ofperception (giant balloons, giant cut outs) (Image)

Position: the position of the advertisement or communication as astimulant also ensures its distinctiveness

Movement: the human eye tends to seek and lock onto anything thathas a movement, even it happens to be at the periphery of the vision

Repetition: of a message not only ensures more audience but alsohelps memory retention and reinforcement amongst those who havebeen exposed to the message before

Intensity: to capture the attention of the audience, viewers and thecustomers, all marketers use bright sound, psychedelic lighting, neonlights and glowing lights

Contrast: when most communication is in a seamless flow of color

and patterns, human perception tends to capture contrasty imagesquicker ( Image 1, Image 2)

Color: color pictures are more noticed for their depth and varietythan the black and white combinations which are considered dull andmonotonous (Image )

Di i li h d f ll h di i d l d i
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Directionality: the eyes tend to follow the direction and leads given

by elements in the stimuli like in racy advertisement

Format: in retail store, visual merchandising plays a key role in

heightening the perception about the merchandise (Image)

Isolation: when a service marketer separates a stimulus object from

others, making them distinctive . Isolation factor works in enhancing

the perception (Image)

Novelty: customers tend to notice any offer or communication that is

different from what they normally tend to expect. (Image)

Learned attention including stimuli:

Attractive spokesperson:

Scene changes:
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Service Markeitng SC