Services Management Unit 1 Introduction to Marketing What isn’t There

Services Management Unit 1 Introduction to Marketing What isnt There

Syllabus #CHAPTER NAMETOPICS 1.Introduction (10 Hours) Meaning of Service; Characteristics of services; Classification of services; marketing mix of services; customer involvement in services; building customer loyalty; GAP Model; Balancing Demand & Capacity. 2.Educational Services (8 Hours) Meaning; Nature; Advantages; Structure of Indian Educational System; Challenges in Education System; Modern Trends in Educational System; Entry of foreign universities. 3.Tourism & Hospitality Services (12 Hours) TOURISM: Introduction; Concept & Nature of Tourism; Significance & Impact of Tourism; Market Segmentation in Tourism; Tourism marketing Mix; Management of Travel Services; Role of Travel Agencies & Travel Organization Tour Operations - Meaning and services. HOSPITALITY: Concept of Hotels; Facilities; The guest Cycle; classification of hotels; Marketing Mix of Hospitality Industry- Hospital service Management- Facilities; Personnel; Administration; Hospital service extensions - Pharmacy; Mid wife; Marketing the medical transcription services. 4.Healthcare Services (8 Hours) Hospitals Evolution of Hospital Industry Nature of Service Risk involved in Healthcare Services marketing of medical services Hospital extension services Pharmacy, nursing Medical Transcription. 5.Banking and Insurance Services (8 Hours) BANKING: Introduction Traditional Services Modern Services Recent Trends in Banking Services. INSURANCE: Introduction Meaning and Definition of Insurance Types of Insurance Life Insurance Products of Life Insurance General Insurance Types of General Insurance Insurance Agents and other Intermediaries. 6.ITES and Business Process Outsourcing (8 Hours) ITES: Introduction Growth, Types, Job opportunities in ITES. BPO: Meaning, Nature of Work in BPOs, Classification of BPO and Call Centers, Service Level Agreements (SLAs), Functions and Services of BPOs.

Service Industry Outlook Most of the economies across the globe have undergone major changes in terms of political structure, economic reforms, financial reformation, demographic changes and other amendments. Services Driven Economies #CountryAgricultureIndustryServices 1 United States1.12%19.10%79.70% 2 China9.10%42.60%48.30% 3 Japan1.20%27.50%71.40% 4 Germany0.80%28.10%71.10% 5 France1.90%18.30%79.80% 6 United Kingdom0.70%21%78.30% 7 Brazil5.40%27.40%67.20% 9 Russia3.90%36%60.10% 8 Italy2%24.20%73.80% 10 India17.40%25.80%56.90% 11 Canada1.80%28.60%69.60% 12 Australia4%26.60%69.40% Global Level AgricultureIndustryServices 5.90%30.50%63.60% Manufacturing Driven Economies #CountryAgricultureIndustryServices 1 Saudi Arabia2%66.90%31.10% 2 United Arab Emirates0.70%59.40%39.80% 3 Indonesia14.30%46.90%38.80% 4 China9.10%42.60%48.30% 5 Iran11.20%40.60%48.20% Agrarian Economies #CountryAgricultureIndustryServices 1 India17.40%25.80%56.90% 2 Indonesia14.30%46.90%38.80% 3 Thailand13.30%34%52.70% 4 Iran11.20%40.60%48.20% 5 Argentina10%30.70%59.20% Data as on 2014, Source: International Monetary Fund, World Economic Outlook Database Thus services are becoming an essential source of national income and a major contributor to economic growth and employment.

Meaning & Definition of Services 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. According to Philip Kotler, A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. The Service Industries Journal Defines Services as any primary or complimentary activity that does not directly produce a physical product, this is the non goods part of transaction between buyer(customer) and seller (provider).

Conceptual Clarity SERVICES Services are intangible products, deeds and processes that are exchanged directly from the producer to the customer. SERVICES MANAGEMENT Services management refers to planned activities of supply chain system that intersects and connects actual company sales and the customer. SERVICES MARKETING Services marketing is a planned process through which organizations satisfy the needs of the customer by selling intangible products, deeds and processes.

Nature and Scope of Services 1. IntangibilityCustomers cant see, touch, or smell a.Intangibility signifies inability of seeing, feeling, touching and weighing, services are intangible and do not have a physical existence. Therefore customers cant see, touch, or smell service. b.This is most defining feature of a service which primarily differentiates it from a product, in case of tangible products a customer can inspect and judge the product, however this may not be possible in case of services. SERVICEHOW IT IS DONE? (BY DEVELOPING ABSTRACT IDEAS) BankingAnticipate consumer needs, simplify the experience, and learn from every interaction and maintain customers trust and belief. College Education By providing a conducive learning environment in terms of Library, Computer Labs, Interactive Learning, Recreational Facilities, Hostel facilities, Classrooms and Lectures. Movie TheatreOffer a exceptional consumer experience through state of the art projection and sound systems, unique ambience, e-booking, specialty food, which can be ordered and delivered on ones seat! Credit CardsBy offering services and benefits based on customer lifestyle InsuranceDeveloping trust, offer the best value for money, and set the standards in dealing with customers. In order to demonstrate the tangibility of a services firms assess the customer's perception of an experience and derive a clear picture of customer expectation from the service and also craft a set of enforcements and provide physical cues to reassure the customer experience.

Nature and Scope of Services 2. PerishabilityCustomers have to use it or lose it. a.Perishability refers to feature of a service that makes it impossible store, return or resell, thus services are highly perishable compared to physical products. b. The perishable nature of services creates difficulty for both customer and marketers. Christopher H. Lovelock well know author of Services Marketing says, Lost opportunity in a service business is rather like having a running tap in sink with no plug. The flow is wasted unless customers or their possession that require servicing are present to receive it.

TECHNIQUEDESCRIPTIONCASE-IN-POINT Flexible pricing This involves charging a higher price during peak season and low price during off-peak periods. Movie theatres like PVR, Fame, Fun cinemas and Inox charge more for movie tickets and snacks on weekends and public holidays and prices are slashed on weekdays. Capacity management In this technique marketers adjust their offerings in an attempt to match demand. Wonder-La an amusement park in Bangalore operates all rides on weekends and holidays where as on weekdays some of the rides are put on hold, further for each ride to operate a minimum number of audience are required. Non-peak demand This involves stimulating demand during off- peak hours when power demand is usually low. Caf coffee day has come up with concept of chat over breakfast and a good coffee. MacDonalds has recently launched breakfast service (7am to 10:30am) to stimulate demand during off-peak hours. Complementary services They are designed and offered to provide alternatives to avoid rush. BSNL offer many channels for bill payments such as internet, mobile, ATMs collection centres etc. Most of the banks have an ATM attached to bank. Reservation system This involves an arrangement whereby the service is reserved for the customer. Airlines, and railways use reservation systems to effectively to manage the demand levels. Techniques to encourage demand for the service during slack times 2. PerishabilityCustomers have to use it or lose it

Nature and Scope of Services 3. VariabilityLack of consistency in service performance a.Variability characteristic of a service explains inability of services providers to offer same level of service consistently, this means that even the same service performed by the same individual for the same customer can vary. ServiceVariability Food and Restaurant Zinger burger offered in all the outlets of KFC are almost identical. However, when it comes to services rendered by counter staff it may vary. Class room lectures A lecturer teaching a same subject for different section may not be able to deliver uniformity in the content. Sometimes students backgrounds and interests also comes into picture, the lecture that you find fascinating might put your friend to sleep. Thus element of variability in services is quite common on account of a large measure of the human element Variability in services

The following are some of the measure to overcome service variability By adopting good human resource management practices Strategy 1 The personal interaction between consumers and service providers is the heart of most service experiences. Therefore it is important to recruit right candidates and also adequately provide training, commission based salaries to develop customer orientation in employees. Standardizing service delivery: Strategy 2 The standardized service delivery involves use of successfully designed principles and practices that focuses upon improved output. This involves use of strategies like First time right, flowcharts and standard operating procedures to guide service providers in offering a uniform level of service and guaranteed results. Understanding customer: Strategy 3 It is important for marketers to carefully understand all relevant buyer behaviour and service usage characteristics. Understanding customer and responding to their needs is the heart of the servicing process, Marketer should be highly concerned about customer satisfaction. Feedback and Follow up: Strategy 4 In order to understand the perception of customer about the service offered, customers views about service performance has to be collected through surveys and feedback. The outcome of response collected from the respondents (Customers) can be represented in form of a graph, chart or map which will help marketer to understand satisfaction level of the customer and take appropriate actions. Nature and Scope of Services 3. VariabilityLack of consistency in service performance

Nature and Scope of Services 4. InseparabilityProduced and Consumed simultaneously a.The characteristic of a service that means that it is impossible to separate the production of a service from the consumption of that service. b.On account of technological advancement the skill and expertise of doctors, cooks, beauticians, lecturers and the other service provider can now be detachedmeaning they can made available on internet, phone etc.

Product Vs. Service Conceptual Clarity Product A product is a bundle of tangible and intangible utilities that can be acquired through exchange process to satisfy a need or a want. Goods Goods are to tangible items held for sale in the regular course of business. The difference between goods and product is very narrow, goods are consider to be physical and exclude services. Service Intangible products that are exchanged directly from the producer to the customer. Commodity A raw material or primary agricultural product that can be bought and sold, such as copper or coffee.

Car, Pen, Camera, Book, Shaver Physical product Salam Khan Katrina Kaif Person Switzerland Kashi Ooty Place Anti-corruption Gay Rights Women Protection Idea Education Insurance Banking Services Scope of Product PRODUCTAPPLICATION Physical AspectWhat it is ? Functional AspectWhat is does? Symbolic AspectWhat it means to the users emotion?

Difference between Product and Service TangibilityProducts are tangibleServices are intangible NatureA physical commodityA service is an action TransferabilityTransfer of ownership is possibleTransfer of ownership is not possible Storage and Transportation PossibleNot possible QualityCan be standardizedDifficult to standardise PeculiarityHomogenousHeterogeneous SeparabilityProduction and distribution are separated from their consumption Produced and Consumed simultaneously

Classification of services Classification of Services On the basis of Tangibility On the basis of Inseparability On the basis of Marketability On the basis of people orientation On the basis of end user On the basis expertise On the basis of profit motive

1. On the basis of Tangibility Not all services are truly intangible and therefore on the basis tangibility services further can be classified into Core and augmented Services. Core services: Customer gets from the service directly upon the performance of service. Augmented services: The Augmented service is a supportive benefit provided to enhance the value of core service.

2. On the basis of inseparability: Inseparability of service means service provider and consumer must interact or meet a specific time and place mutually agreed upon in order to derive the benefits of the services. Inseparable services: This includes services that cannot be separated from the service provider, These services are produced and consumed simultaneously. Semi-separable services: Semi-separable services requires the customer to obtain an outcome without the intervention of a human provider and thus eliminating the need for customers to interact with people at all.

3. On the basis of marketability: Marketability is a parameter that judges whether a service will appeal to consumers and if it can be sold at a certain price range to generate a profit. Marketable services: These services can be traded and exchanged for money for deriving personal benefit from the exchange process. For example banking and financial services. Non-marketable services: These services usually provided to people or society without any intension of return from the beneficiary, a good portion of services are represented by non-marketable services.

4. On the basis of people orientation: Customers' expectations play a critical role in their service experiences and evaluations, in order to meet these expectation personal interaction between consumers and service providers plays an important role. People-Based Services: These are services in which people play a major role in service delivery, here services provider depend on their employees to deliver, understand and meet what the customer wants and needs with service through employees' abilities. Semi-separable services: Some services combines a mixture of both tangible and intangible elements in order to deliver accurate service the customer's desires.

5. On the basis of end user: The end user of a service indicates the one who actual consumes the service. Business Services: They are primarily concerned with services that are exchanged between business firms This involve sales and purchases of goods and services amongst various businesses, governments and market intermediaries to facilitate the finished product which is generally re-sold to an end user. Consumer Services: They are primarily concerned with services that are provided to individuals so that their desires can be met.

6. On the basis of expertise: People who are experts, recognised and considered reliable for their great skill or knowledge in a particular field, that enables them to rapidly and effectively solve problems in the problem domain, whose occupation is rendering of services. Professional Services: Professional services are offered by professional such as medicine, law, engineering, accounting and teaching etc. In order to provide professional service a specialized knowledge, educational training and practical experience on specific organized field of learning is required. Non-professional Services: People who provide non-professional services do not posses any expertise in a particular field. In other words non-professional services are paid services and it does not require advanced education or training to provide service delivery.

7. On the basis of profit motive: all the economic enterprises do not take up profit motive as their business objective. In this context services can be broadly classified into for-profit and non- profit services. For-profit services For-profit services are generally rendered to generate income for producer and their employees. For example consulting and outsourcing services. Non-profit services Non-profits services are generally founded to serve a humanitarian or environmental need. For example ambulance services.

Activity: Classification of Services On the basis of Tangibility Core services Augmented services On the basis of Inseparability Inseparable services Semi-separable services On the basis of Marketability Marketable services Non-marketable services On the basis of people orientation People-Based Services People and Equipment Services: On the basis of end user Business Services Consumer Services On the basis expertise Professional Services Non-professional Services On the basis of profit motive For-profit services Non-profit services Fire service offered by government Garbage collection by BBMP Ambulance services Outsourcing services Job placement offered by consulting Services of servants, maids and baby sitters Cardiologist performs operation Charted accountant files income tax returns Accounting services Tax consultation Mutual funds Insurance Dormitory Electricity, gas and water supply Law enforcement Cemetery Self-checkouts at the supermarket Bank ATMs Online share trading Plumber and carpenter Car dealers provide pickup and delivery of your car Colleges offer hostel, food and recreation services to students

Activity: Classification of Services On the basis of Tangibility Core services Augmented services On the basis of Inseparability Inseparable services Semi-separable services On the basis of Marketability Marketable services Non-marketable services On the basis of people orientation People-Based Services People and Equipment Services: On the basis of end user Business Services Consumer Services On the basis expertise Professional Services Non-professional Services On the basis of profit motive For-profit services Non-profit services Automatic car washes Museums Movie theatres Personal trainers

Conceptual Framework: Market Mix The term "marketing mix" became familiar after an article written by Neil H. Borden published in 1964, Borden began using the term in his teaching in the late 1940's after he learned about it from an associate, James Culliton, who had described the marketing manager as a "mixer of ingredients". This ingredients consist of planning, pricing, branding, distribution channels, personal selling, advertising, promotions, packaging, display, servicing, physical handling, and fact finding and analysis. Edmund Jerome McCarthy an American marketing professor in 1960, reduced the Marketing Mix concept & grouped these ingredients into the four elements: Product Price Place and Promotion

Marketing Mix Product Product Variety Product Attributes Packaging Branding Servicing Price Pricing Strategies Discounts Credit terms Place Warehousing Transportation Inventory Channels Promotion Sales Promotion Advertising Direct Marketing Public relations Sales force

Product Management Product management is a process of planning, developing and marketing of products throughout the product life cycle. It consist all activities needed to get the product to market and after sales service. Product Concept development This involves generating ideas for new products on the basis problems faced by consumers or based on customer needs. These ideas come from customers, distributors, people within the company, and research conducted by the company. Understanding Market This involves studying the competition, industry and overall business environment and finally preparing SWOT analysis. Product Development & Launch The creation of products with new or different characteristics to meet the needs of the customers. Product Life Cycle management This involves managing the product throughout its product life cycle. Life cycle of product includes various stages like introduction, growth, maturity and decline stage.

Product development strategy Product improvement Product Improvement is an effort to incorporate additional feature or delete existing feature & design to make the product more satisfying, attractive & competitive to the customer. Product improvement is as a matter of necessity to meet the changing needs of customers. Product imitation Product imitation involves reproducing similar products existing in the market, even if they do not exactly compete within the same market sector. The general rule is that imitation is lawful unless products protected by exclusive rights are imitated, that is unless trademarks or trade names or industrial designs are imitated. Marketers must differentiate claearly between imitation and copying. Product innovation Product innovation is the creation and subsequent redesigning of a product that is either new, or based on the initial product. Innovation is the key to survival in the competitive markets, to drive down costs, to improve productivity, to utilize the most of existing resources and to develop a unique selling point. E.g. Apple iPhone.

Stages of New Product Development Idea Generation Screening and Evaluation Marketing Strategy Development Business evaluation Product development Test Marketing Commercialization

Why do products fail? Reasons for Product Failures Institutional factors Wrong segmentation and targeting Weak positioning strategy Distribution related problems Questionable pricing strategy Product factors Unattractive features No uniqueness (USP) Flawed Product Market factors Poor demand management Changes in consumer taste and preferences Changes in environmental factors Low profitability on account of higher than anticipate costs

Product Portfolio Product portfolio refers to set of different products that an marketer offers to customers. It combines product lines, product width and product depth. 1.Product Mix Product mix describes entire range of products a firm offers for sale. An ideal product mix helps marketers increase sales by offering a product or service that will meet the demands of almost any consumer. 2. Product Line A product line refers to a number of products that are related and has in common most of their main characteristics, manufactured by a single company. The objective of having product lines is to ensure that all products within a line are purchased by all kinds of consumers. 3. Product mix width The number of different product lines a marketer produces, a marketer can expand its operations by adding more product lines to its product mix and also reduce the risk of putting all its eggs in one basket by developing several different product lines. 4. Product line depth (assortment) A product line contains a number of sub-products this is called as product line depth.

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Services Management Unit 1 Introduction to Marketing What isn’t There