CURRENT AND FUTURE CHALLENGES IN SERVICES

Services Marketing

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INSEPERABILITY

MARKETING CHALLENGES Physical connection of the service provider to the service Involvement of the customer in the production process Involvement of other customers in the production process

POSSIBLE MARKETING SOLUTIONS Emphasis on selecting and training public contact personnel Consumer Management Use of multisite locations

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HETEROGENEITY

MARKETING CHALLENGES Lack of ability to control service quality before it reaches the

consumer. Most errors are one-time events and cannot be foreseen nor corrected

ahead of time Consistency of service varies from firm to firm, among employees of

the firm and also while interacting with the same service provider on day-to-day basis

Service standardization and quality control are difficult to achieve and maintain since each employee is a different personality

POSSIBLE MARKETING SOLUTIONS Customization Standardization

INTANGIBILITY• Means that cannot be seen

• Service cannot be touched• There is no precise standardisation method for services• Services cannot be patented• There are no inventories in services• The consumer is part of the service process because he consumes the service.

• This causes increase in the uncertainty level• To reduce this factor, customers look for signals of service quality.• Bowen (1990) argued that intangibility has been over emphasized and it is difficult

to understand. • ‘Intangibility can be reduced by using strong messages in advertising and publicity

in order to support a clear position’ (Davies, 1998).

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EXAMPLES• In case of online ticket booking• In case of restaurants • The ability of a teacher to teach• Airline passengers have no guarantee for a good

flying experience or safe arrival of their baggage before the journey.

• A cosmetic surgery where the result of the surgery can’t be seen by the consumer before the surgery.

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CHALLENGES

• Standardization• Pricing the service• Buying a promise

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NON OWNERSHIP• You cannot own or store a service like you can a

product• Services are used or hired for a period of time• Customer pays only to secure access to or use of the

service

EXAMPLES• Aeroplane ticket • Hotel room• Banking services

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CHALLENGES• Non ownership can

sometimes make it difficult for a customer to assess and appreciate the advantages of purchasing the service.

• The marketer therefore needs to pay particular attention in emphasizing benefits of non-ownership

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PERISHABILITY• Once a service has occurred it cannot be repeated in

exactly the same way• You cannot put service in the warehouse, or store in

your inventory

EXAMPLES• Restaurants• Doctors treatment• A movie or airline ticket

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CHALLENGES• Perishability can affect company performance as balancing

supply and demand is very difficult

EXCEPTIONS

• Services are stored in systems, buildings, machines, knowledge and people. The emergency clinic is a store of skilled people, equipment and procedures. The hotel is a store of rooms

• No proper mechanism to manage the misbehaviour of customers towards the frontline employees.

• 70% of female retail workers are subjected to harassment by consumers at work.

Negative outcomes for frontline workers includes increased intention to quit, loss of interest in their work, withdrawal from customer interactions, and reduced job performance.

CUSTOMER MISBEHAVIOUR

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PRODUCTIVITY IN SERVICE SECTOR• Difficult to define productivity in service

sector.• To different people, productivity means

different things.• Hard to standardize the inputs and

outputs which are highly heterogeneous.• Trade-off between quality and quantity.• Low or negative productivity growth in

some service industries is connected to measurement problems.

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PROBLEMS IN MEASURING PRODUCTIVITY• Difficult to measure the outputs. (Insurance, gambling,

banking, options trading)• The output includes quality, which is intangible and difficult

to quantify.• The inputs also include both intangible and tangible

elements

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CUSTOMER EXPECTATIONS• Customer expectations are always evolving. • Different customers have different expectations from the

same customer.• Types of Expectations:• Fuzzy Expectations• Implicit expectations• Explicit expectations • Unrealistic expectations

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DEFINING AND MEASURING QUALITY

Garvin identifies five perspectives• Transcendent view: Innate excellence, a mark of

uncompromising standards and high achievement.• Product based approach: Quality as a precise and

measurable variable• User based definition: Quality lies in the eyes of the

beholder• Manufacturing based approach: Conformance to internal

specifications driven by productivity and cost containment.• Value based definition: Defines quality in terms of value and

price

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DESIGNING AN EFFECTIVE SERVICE CUSTOMER ORGANIZATION

Presence or absence of intermediaries • Cut down on cost v/s service quality of interactionHigh contact v/s low contact • More involvement of the customer with the

service(moment of truth), There are greater risk of mistakes of poor service, Complex to manage

• Usually through mail or telecommunication contact, less complex, management control can be tighter.

Duration of service delivery process:• More duration – more value has to be generated and cost will be high due to

internal monitoring and communicating those values to customers.

Level of complexity:• High complexity – assist the user every stage – high cost –train the personnel,

risk of going wrong is high.

Degree of risk:Service managers should identify the consequences of the service failure for their customers. Failure may range from personal inconvenience to monetary loss.

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STRATEGIC CHALLENGES IN SERVICES MARKETING

Positioning a service in marketplaceCompetitive advantage• Value for money• People are the key• Convenience• Quality and speed• Differentiation in meaningful ways

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TO SELECT THE TARGET MARKET• Identifying the market segments with better opportunities• Relating firm’s ability to match competing offerings rather than

looking only for sales and profit potential.• To judge the current and prospective customers how do they see

value generated by the provider.• Redesigning the existing services: Easy or complex?• Believing in expert definition of expert’s perception to reality and

customers perception to reality is way to different. • Concept of copy positioning. : E.g. Marlboro man• Coping up with changes of the perception and expectation of the

target market. E.g. Nokia

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HIT LISTCompetitive Pricing -- Indigo Airlines

Communication – Internal and External

Using Social Media – Lens kart

Technology – Ola (security)

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Quality Control – BPO (cut calls), KFC mouse incident

Efficient Automation ( No Human interaction). E.g. Health care.

Security Issues E.g. banking sector.