Embed Size (px)
DESCRIPTION
Citation preview
AMITY GLOBALBUSINESS SCHOOL
Before We Discuss Mkt. of Services
We shall discuss the following questions
1. What is the dominant logic of business and has it changed over the years?
2. What is marketing and has the meaning and role of marketing changed?
AMITY GLOBALBUSINESS SCHOOL
What is Business? An organization engaged in the trade of goods, services, or both to consumers (Sullivan & Sheffrin, 2003).
An economic system in which goods and services are exchanged for one another or money, on the basis of their perceived worth. Every business requires some form of investment and a sufficient number of customers to whom its output can be sold at profit on a consistent basis (http://www.businessdictionary.com/definition/business.html)
AMITY GLOBALBUSINESS SCHOOL
Some of Those Changes…Evolution of human needs…
Transaction to Selling to Marketing
And now from Marketing to Relationships and Partnerships!
The emergence of institutions of business…
Increased complexity and competitiveness…
Technology…… Movement of goods and people…. Movement of Information!
AMITY GLOBALBUSINESS SCHOOL
One Such Change
The focus was on “exchange” and the “tangibles”… like “money”, “product”, “quantity”….
The encounter with the customer
The product & money are still important. But marketing battles are won on “intangibles” like how a customer feels & how long he stays….
AMITY GLOBALBUSINESS SCHOOL
With Such Changes…The way business is done changed… The reasons of success and failure of companies changed…
It was no longer enough to have a “good product”…. “a good brand”…. “be rich”…. “be an old and respected company”….
AMITY GLOBALBUSINESS SCHOOL
These changes are driven by changes in primarily two constituencies
Ability & Know How of Companies
The Consumer
AMITY GLOBALBUSINESS SCHOOL
Ability & Know How of Companies
Technology: Increased ability to understand customers, manufacture, deliver, service, maintain relations
New Markets: Local, Global and Glocal
Orientation: Inward to Outward, Selling to Marketing
Human Resources: More people who are able to plan, innovate and deliver
AMITY GLOBALBUSINESS SCHOOL
The ConsumerIncome Levels: More people in cities and villages are earning more, so have more money to spend, thus have more power.
Consumerism: The Indian customer is becoming “consumption” oriented rather than “save money” oriented
Media: Satellite TV, Internet, FM… More information to customers…. “Information Symmetry”
More Choice: More companies offering more products means much more choice!
AMITY GLOBALBUSINESS SCHOOL
Implications For MarketingThe way we define marketing had to be adjusted to accommodate the changes and the way we market….. So the definition of marketing had to change!
Marketing had to grow beyond its foundations on “products” and acknowledge the need for a dedicated science of marketing of the intangibles… The Services.
AMITY GLOBALBUSINESS SCHOOL
For a discussion on evolution of how we define marketing, please visit:
http://www.slideshare.net/AshishPillai1/what-is-marketing-13513619
AMITY GLOBALBUSINESS SCHOOL
Why Discuss Services?Services sector accounts for more than 55% of the GDP of India. (GDP of India = 1.85 Trillion $)
AMITY GLOBALBUSINESS SCHOOL
Emergence of Services MarketingEmergence of a stand alone field of Services Marketing occurred in three distinct stages
The Crawling Out Stage(Pre 1980s)
The Scurrying About Stage
(1980 - 1985)
The Walking Erect Stage(Post 1986)Tracking the Evolution of the Services Marketing Literature
Fisk, Raymond P; Brown, Stephen W; Bitner, Mary Jo, Journal of Retailing; Spring 1993; 69, 1
AMITY GLOBALBUSINESS SCHOOL
What We Used to Think of Services?A technical after-sale function that is provided by the service department
The old view of explaining the meaning of services was rooted in the traditional 4Ps school of marketing
That relegated services to a support function to be undertaken by the company independent of and post culmination of the marketing effort
AMITY GLOBALBUSINESS SCHOOL
What are Services?
“All economic activities whose output is not a physical
product or construction, is generally consumed at the time it
is produced, and provides added value in forms that are
essentially intangible concerns of its first purchaser”
“Deeds, processes and performances provided or co-produced by one entity or person for another
entity or person”
AMITY GLOBALBUSINESS SCHOOL
Terms ClarifiedService Companies: Whose core product is a service.
Services as Products: Intangible product offerings which customers value and will pay for.
Customer Service: Service provided in support of the company’s core products which do not necessarily have to be services themselves.
Derived Service: The service derived from the purchase and use of a tangible product.
AMITY GLOBALBUSINESS SCHOOL
IHSP – The Characteristics of Services
Intangibility
PersishabilitySimultaneity
Heterogeneity
Nature of Services
AMITY GLOBALBUSINESS SCHOOL
IntangibilityIncapable of being perceived by the sense of touch, as incorporeal or immaterial things
Services cannot be inventoried
Services cannot be easily patented
Services cannot be readily displayed or communicated
Pricing is difficult
AMITY GLOBALBUSINESS SCHOOL
HeterogeneityService delivery and customer satisfaction depend on employee and customer actions
Service quality depends on many uncontrollable factors
There is no sure knowledge that the service delivered matches what was planned and promoted
AMITY GLOBALBUSINESS SCHOOL
SpontaneityCustomers participate in and affect the transaction
Customers affect each other
Employees affect the service outcome
Decentralization may be essential
Mass production is difficult
AMITY GLOBALBUSINESS SCHOOL
PerishabilityIt is difficult to synchronize supply and demand with services
Services cannot be returned or resold
AMITY GLOBALBUSINESS SCHOOL
Self Service Technologies
Phone based (interactive voice response systems)Internet or online basedFree standing kiosksCombination
Self-Service Technologies are technological interfaces that enable customers to produce a service independent of direct service employee involvement
AMITY GLOBALBUSINESS SCHOOL
Benefits of SSTIncreased speed, efficiency and accuracy
Expanding sales through more information and choice
Lower costs for sellers and the buyer
Higher customer loyalty and retention
AMITY GLOBALBUSINESS SCHOOL
SSTs Fail!44% of SST users recall dissatisfying experience (Journal of Marketing)
None of top 50 retail web sites rated as “excellent” (Gartner)
Just 25% of kiosk triers think it’s valuable, will use again (WSJ)
Only 12% of online inquiries to top 150 financial cos. answered and satisfactorily (Microsoft)
10 of 12 reasons for online dissatisfaction is poor customer service (Resource Marketing)
AMITY GLOBALBUSINESS SCHOOL
Why Do SSTs Fail?
Most frequent dissatisfaction is technical failure (43%)
Next is process failure (36%)
Third is technical design (17%)
Only 4% is customer’s fault
AMITY GLOBALBUSINESS SCHOOL
SSTs offer opportunity to magnify the customer
experience. If it works, it will magnify the positive
experience and if it fails, it will magnify customer
negativity.
In the current competitive business environment, you
need the benefits SSTs offer but just imagine what can
happen if it fails!!
AMITY GLOBALBUSINESS SCHOOL
HeterogeneityService delivery and customer satisfaction depend on employee and customer actions
Service quality depends on many uncontrollable factors
There is no sure knowledge that the service delivered matches what was planned and promoted
AMITY GLOBALBUSINESS SCHOOL
SimultaneityCustomers participate in and affect the transaction
Customers affect each other
Employees affect the service outcome
Decentralization may be essential
Mass production is difficult
AMITY GLOBALBUSINESS SCHOOL
Perishability
It is difficult to synchronize supply and demand with services
Services cannot be returned or resold
AMITY GLOBALBUSINESS SCHOOL
Money is in Services!!Even in the Manufacturing Sector!
network administration
network technical support
network equipment
nonproductive operations by end user
(downtime, file management, etc.)
administration
technical support
desktop hardware
yard operations, railroad administration,
other
train operations
Infrastructure
freight car services
locomotive services
locomotives
other
finance
repair
insurance
gas
used car purchase
new car purchase
Total expenditure:5X product costs
Total expenditure:21X product costs
Total expenditure:5X product costs
100%
80%
60%
40%
20%
0%
annual cost of PC use: $6,259
total annual cost of rail operations: $29 billion
average annual household expenditure: $6,064
Personal Computers
Locomotives Automobiles
The sale of a product accounts for only a small portion of overall revenues.
Providing services to customers is where the real money is.
AMITY GLOBALBUSINESS SCHOOL
Service Marketing ChallengesDefining and improving quality
Ensuring the delivery of consistent quality
Designing and testing new services
Communicating and maintaining a consistent image
Accommodating fluctuating demand
AMITY GLOBALBUSINESS SCHOOL
Service Marketing ChallengesMotivating and sustaining employee commitment
Coordinating marketing, operations, and human resource efforts
Setting prices
Finding a balance between standardization versus customization
AMITY GLOBALBUSINESS SCHOOL
7 Ps of Service MarketingThe 4 Ps – Product, Price, Place, PromotionPeopleAll human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment.
Physical EvidenceThe environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.
ProcessThe actual procedures, mechanisms, and flow of activities by which the service is delivered—the service delivery and operating systems.
AMITY GLOBALBUSINESS SCHOOL
The Flower of ServiceCore service surrounded by a cluster of facilitating and value enhancing services
Eight petals; 4 Facilitating Supplementary Services and 4 Value Enhancing Supplementary Services
Facilitating: Information, Order Taking, Billing and Payment
Value Enhancing: Consultation, Hospitality, Safekeeping and Exceptions
AMITY GLOBALBUSINESS SCHOOL
FacilitatingInformation: Customer needs information about various elements and aspects of the service to evaluate it and make decisions
Order Taking: As services cannot be stored, the customer needs to place the order as the first step in the whole transaction. Order taking can also be facilitated
Billing: Accuracy in billing and the customer friendliness of the bill is now a major decision point for the customer
Payment: Credit period, accepted methods, payment points… Don’t all these influence our judgment of services?
AMITY GLOBALBUSINESS SCHOOL
Value EnhancingConsultation: Interaction with the customer to understand their needs with an aim to design a tailor made customer solution (service)Hospitality: Customers may need to be at your premises, for brief durations or for longer periods. When they are at your place, how are they treated?Safekeeping: Sometimes your customers may be required to part with their belongings to co-produce the service. Keep their stuff safe!Exceptions: Non routine services as special considerations granted on request or on judgment
AMITY GLOBALBUSINESS SCHOOL
The Flower of Service
The producer and the marketing intermediaries add the petals to achieve desired customer experience
AMITY GLOBALBUSINESS SCHOOL
The Flower of Service
The Flower of Service clarifies the issues a service
provider should focus upon to develop a complete
customer solution in the form of a service and ensure
that the customer’s experience while purchasing and
consuming the service is exceptional
AMITY GLOBALBUSINESS SCHOOL
Search, Experience & CredenceEconomics of Information: Symmetric information concerning product “quality” is needed to ensure efficiency in markets
Consumers must know what it is they are buying so they can determine and then pay their actual willingness to pay for an item of that quality. Asymmetric or incomplete information lowers quality in a market and may even completely drive out higher quality goods & services.
AMITY GLOBALBUSINESS SCHOOL
Search, Experience & Credence
Informational Quality of Goods and Services
Search Experience Credence
AMITY GLOBALBUSINESS SCHOOL
Search, Experience & CredenceAll goods possess physical properties called search
attributes that customers can feel, taste, and see prior to their purchase decision.
Services are, in contrast, characterised by their experience and credence attributes.
Experience attributes can be evaluated only during and after consumption ……Theatre, Beauty , Hotel etc
Credence attributes cannot be evaluated confidently even immediately after consumption Car Servicing – Did you get ripped off?
AMITY GLOBALBUSINESS SCHOOL
The Service EncounterThe “moment of truth”
Occurs any time the customer interacts with the firm
Critical in determining customer satisfaction and loyalty
Types of encounters: Remote encounters, Phone encounters, Face-to-Face encounters
An opportunity to build trust, reinforce quality, build brand identity, increase loyalty
AMITY GLOBALBUSINESS SCHOOL
A B2C Service Encounter CascadeAGBS Buying New Printers
AMITY GLOBALBUSINESS SCHOOL
Managing Service EncountersThe principle of “thirds”
About one-third of service problems employee based (failure to follow policies and procedures)
Another third company based: e.g. marketing over-promises and products and services not meeting specifications
Final third customer based: incorrect expectations or customer incompetence
About 20% of service encounters cause 80% of complaints!
AMITY GLOBALBUSINESS SCHOOL
Contemporary Issues in Service Encounters
Service Failure & Recovery
Employee response to service delivery system failure
Adaptability
Employee responseto customer needsand requests
Coping
Employee responseto problem customers
Spontaneity
Unprompted andunsolicited employeeactions and attitudes
AMITY GLOBALBUSINESS SCHOOL
Service Encounters - Recovery
DOs
Acknowledge problem
Explain causes
Apologize
Compensate/upgrade
Lay out options
Take responsibility
DONTsIgnore customer
Blame customer
Leave customer to fend for him/herself
Downgrade
Act as if nothing is wrong
“Pass the buck”
AMITY GLOBALBUSINESS SCHOOL
Service Encounters - Adaptability
DOsRecognize the seriousness of the need
Acknowledge
Anticipate
Attempt to accommodate
Adjust the system
Explain rules/policies
Take responsibility
DONTsIgnore
Promise, but fail to follow through
Show unwillingness to try
Embarrass the customer
Laugh at the customer
Avoid responsibility
“Pass the buck”
AMITY GLOBALBUSINESS SCHOOL
Service Encounters - Spontaneity
DOsTake time
Be attentive
Anticipate needs
Listen
Provide information
Show empathy
DONTsExhibit impatience
Ignore
Yell / laugh / swear
Steal from customers
Discriminate
AMITY GLOBALBUSINESS SCHOOL
Service Encounters - Coping
DOs
Listen
Try to accommodate
Explain
Let go of the customer
DONTsTake customer’s dissatisfaction personally
Let customer’s dissatisfaction affect others
![amity MBA (Gen) - 2014 Final[1]](https://img.pdfslide.us/doc/110x75/545e7b16af795944708b485f/amity-mba-gen-2014-final1.jpg)
