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Master of Business Administration- MBA Semester 4 MK0015 – Services Marketing and Customer Relationship Management - 4 Credits (Book ID: B 1328) Assignment Set -1 (60 marks)







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Q.1. Discuss briefly about customer retention strategies in Customer relationship management .

Answer: Customer retention

is the activity that a selling organization

undertakes in order to reduce customer defections. Successful customer retention starts with the first contact an organization has with a customer and continues

throughout the entire lifetime of a relationship. A company’s ability to attract and

retain new customers, is not only related to its

or services, but strongly

related to the way it services its existing customers and the reputation it creates

within and across the

Maintain a Database: If you don’t keep track of who your customers are, how can you be sure that you are earning their repeat business? It is vital to keep a database of customer details, including (if possible) their names, contact information, and purchase history. This database will become an invaluable tool in recognizing who your most valuable customers are and how to get in contact with them.

Stay in Touch: No matter how happy your customers are with your business, they can be courted by more aggressive salesman and special offers. Make sure you maintain your relationships by staying in touch with your customers. You can use newsletters or e-mail lists to stay in touch and to let customers know about your new products or sales. For repeat customers and large accounts, the personal touch is best. Call and e-mail to check in to find out if your company can provide any services or to find out if past purchases are living up to expectations. For very high-end clients, a personal dinner is a nice touch. Remember: You don’t have to keep in touch just to try to sell them something. Customers appreciate the ongoing communication and businesses that are also willing to listen.

Welcome Complaints: Customer complaints might seem like a death sentence that means you have lost their business forever. However, complaints are really an opportunity to win your customer’s loyalty by showing them that you are committed to customer service and to providing the best product. Complaints also show you how can improve your product or service so that you can win over new customers. Always welcome complaints and other feedback as a chance to grow.

Loyalty Programs: Many businesses offer loyalty and rewards programs to entice customers into repeat business. These can be discounts or point accrual programs based on the amount purchased or the quantity of items purchased. Other value-added options for your customers include special promotions for repeat customers, or even a special gift. These do not have to be significant discounts or expensive gifts: Even small gestures make a big impression.

Do a Good Job: This is the easiest and most obvious customer-retention strategy there is: Offer the best product or service that you can. If you do this, your customers will want to return to do business with you. No amount of programming or special discounts will entice customers to buy an inferior product or to pay for bad service. Always offer the highest-quality product or service that you can, and your business will draw in customers.

Q.2. Explain briefly the 7P’s of marketing mix

Answer: The 7P’s of service marketing mix are:

· Product: This should provide value to the customer though it need not be a tangible product. Every good is associated with a service component as is every service with a physical good. However, the degree of association may vary. For example, when a person goes to a beauty saloon, the expertise of beauticians is a service where as the instruments, cosmetics and tools used would be goods. When the person comes out, ideally he/she should be satisfied with his/her transformed appearance. A product as a whole is a combination of service element as well as physical product element. For the product to be successful in the market it must be of a good quality, have a brand name, must have guarantee, features and so on.

· Price: In service marketing, price is fixed for services and depends on the service provider and service delivery. Pricing needs to o be competitive and must necessitate profit. The cost strategy includes discounts and offers. Service rates are often variable and depend on the nature and type of service as well as on customers who may either not entirely use the service or pay only for the service rendered to him/her. For example, if a person buys a movie ticket, he may not wait till the whole movie is complete to come out. Usually, product prices include recommended prices to end-user customers, distributor's trade prices, cash/seasonal/festival discounts, bulk discounts, combo offers, credit terms, payment modes and so on.

· Place: This means where and when the customer buys and consumes the product or service. It is the place where the customer purchases the product and the manner in which product reaches out to the particular place. This happens through various channels like internet, wholesale, and retail traders. In service marketing, it depends on where and how service is delivered to the customer. Mot often, customer goes to the service provider or service provider delivers service to customer’s location. For example, services provided by satellite TV packages is at customer’s home where as a tour package requires customer to make the travel effort. In service marketing, distributors are better known as service providers. The figure 3.2 shows the direct and indirect distribution of product.

· Promotion: This includes adopting various ways to communicate to the customer regarding the product offers of the company. This also includes communicating about the advantages of a product or a service than speaking about its features. Usually adopted promotion techniques include advertising, sales promotions, publicity, direct marketing, exhibitions, displays, packaging, and word-of-mouth. Service marketing even caters to individual customers and designs offers that are tailor made. This is called as personalised or privileged or customised services. For example, matrimonial agencies and sites provide personalised services to their customers.

· People: People include the customers, employees, and management. An essential ingredient to any service provision is the use of appropriate staff and people. In service marketing, customers also have an active role in the service delivery. A good service provider should ensure that the service as well as its experience delights the customers and not just satisfies him/her. Customers should look forward for such experience and benefit from service. For example, home delivery of restaurant food requires the involvement of people – order takers, cooks, parcel handlers, delivery boys and of course the customer who has to provide correct details about his address, dishes ordered and pay the bill immediately at delivery.

· Process: Process refers to the systems used to assist the organisation in delivering the service. Any process whether it is electronic, mechanical or manual, service providers should ensure that it helps in providing efficient service to the customers without causing any disturbance or delays. A service delivery process must assist in raising service quality/standards and reduce service gaps or customer wait. For example, Travel operators should establish a proper process or a system for advance bookings, cancellation, pick-ups, drop, and emergencies during travel so on.

· Physical evidence: In service marketing, physical evidence serves as a proof of service experienced. Since services are basically intangible, certain things can add to the experience of service such as complimentary items offered during service, Pamphlets and brochures that create product awareness. Consumers will make perceptions based on their sensory abilities of the service provision, which will have an impact on the organisations perceptual plan of the service. For example, if you walk into a fine restaurant your expectations are of a clean, comfortable and friendly environment that may give aromatic smell of specialised cuisine











Answer: Stages in new service development are as follows:

  • 1. Business strategy development or review: Every organisation has a

unique vision and mission. A new service can be developed by first reviewing this

vision and mission. The new service developed should align itself with the strategic vision and mission of the organisation. The growth efforts of the organisation must also be considered while developing the new service.

  • 2. New service strategy development: A product portfolio strategy and

defined organisational structure for a new product or service development is critical for the success of an organisation. The goals, vision, capabilities, and growth plans of the organisation need to be considered while developing new types of services. A new service strategy could be defined in terms of markets, types of services, time horizon for development, profit criteria, or other factors.

  • 3. Idea generation: Generation of new ideas is the next step in the process. The

new service strategy screen screens the idea developed at this phase.

Brainstorming, ideas from employees and customers, lead user research, learning about competitors are the methods used for idea generation.

  • 4. Service concept development and evaluation: The development phase

begins once the idea is regarded to fit both the business and new service

strategies. For a tangible product, forming the product description and drawings and presenting it to customers would be the next step. Service being intangible, places complex demands on this phase of the process. Describing an intangible service in concrete terms is difficult.

  • 5. Business analysis: Estimating the economic feasibility and potential profit

implications form a part of the next step after development. Demand analysis,

revenue projections, cost analyses and operational feasibility are assessed at this stage.

Implementation : the different development stages involved in implementation, which include:

  • 1. Service development and testing: This is the step where product

prototypes are constructed and customer acceptance is tested. This step presents unique challenges due to the intangible nature of service and the fact that the production and consumption is simultaneous. These challenges can be addressed by involving all those who are involved in the new service in this step of the process. It is in this step that the service is refined and service blueprint is drawn out.

  • 2. Market testing: This is the stage where market acceptance is evaluated by

introducing the new service in a test market. Due to the nature of services, it is difficult to test services in isolation. The new services might be offered to

employees and their families for a time to assess their responsiveness to variations in the marketing mix.












marketplace in this stage of the process. This step involves the building and

maintaining acceptance of the new service in the market. Excellent internal marketing will contribute significantly to the success of the new service.

4. Post introduction evaluation: At this point, the information gathered during commercialisation of the service can be reviewed and changes made to the delivery process, staffing, or marketing mix variables on the basis of actual market response to the offering. Service never remains the same. Hence it is necessary to evaluate the changes so as to improve service quality.

Q.4. Discuss the GAP Model briefly.

Answer: The GAP model:

This model offers an incorporated view of the relationship between the customer and the company. This model is based on a substantial research performed by several service providers. As in the Gronroos model, it shows the perception gap and summarise the contributory elements.

The provider gaps are those that happen within the organisation. It is the difference between the expectations of the customer and the understanding; the firm has regarding those expectations. Most of the organisations fail to meet the client expectations due to their lack of understanding of those aspirations. The provider gaps include GAP 1, GAP 2, GAP 3, GAP 4 and GAP 5. Each GAP occurs due to the inconsistencies and discrepancies in the quality management process.

GAP 1 : Gap between consumer expectation and management perception: arise the management or service provider

GAP 1 : Gap between consumer expectation and management perception: arise the management or service provider does not correctly perceive what the customer wants or needs.

GAP 2 : Gap between management perception and service quality specification: this is when the management or service provider might correctly perceive what the customer wants, but may not set a performance standard.

GAP 3: Gap between service quality specification and service delivery: may arise pertaining to the service personnel. This could arise due to there being poor training, incapability or unwillingness to meet the set service standard.

GAP 4 : Gap between service delivery and external communication: consumer expectations are highly influenced by statements made by company representatives and advertisements. The gap arises when these assumed expectations are not fulfilled at the time of service delivery.

GAP 5: Gap between expected service and expreanced service: the gap arises when the costumer misinterprate the service quality.

Q.5.Discuss about the marketing of services in Banking sector, Airline industry, Hospitality sector.

Answer: Banking sector: Marketing banks is a combination of functions for providing services to satisfy customers’ financial needs and wants, more effectively and efficiently keeping in view the objectives of the bank. Banking services is the creation and delivery of financial services appropriate to meet customer's needs. Marketing these services play an important role as they provide revenue to the bank.

· Commercial banks: It consists of all those banks that provide banking services to the people and normally charge for the services that they provide. They are further categorised in two as nationalised banks and private banks. As SBI, ICICI BANK etc

· Co-operative banks: These banks are also formed with the help of the government. As seen in figure, they provide the long term and short term credits to customers. Short term credits are provided by the State Cooperative Banks like Uttar Pradesh cooperative Bank Ltd and District Central Cooperative Banks.

· Development banks: the role of these banks is to provide the capital raising services to the industries. There main focus is to help the industries to develop by lending them money. For example IDBI (Industrial Developmental Bank of India), SIDBI (Small Industries Development Bank of India), NABARD (National Bank for Agricultural and Rural Development).and EXIM bank (Export and Import bank of India).

Airline industry: The Indian Aviation sector is one of the fastest growing aviation industries in the world. It can be broadly divided into the following main categories:

· Scheduled air transport service includes domestic and international flights. For example Indian Airlines, Kingfisher airlines, GoIndigo airlines.

· Non scheduled transport service includes charter operators and air taxi operators. For example Pawan Hans, Air Charters India.

· Cargo service includes air transportation of cargo and mail. For example QuickJet, Air Cargo Express, Aryan Air.

The aviation sector is witnessing strong competition as the numbers of operators are rising. Marketing strategies employed by the aviation industry are:

· Marketing planning: Marketing analysis, benchmarking, and competitive analysis are the techniques used for the marketing planning so that the marketing can generate the desired results.

· Branding: Branding plays an important role in the marketing of the company and its product or service. It differentiates the company and its services from the competitors. So it is of paramount importance to maintain the brand value and put effort in the brand management.

· Communication strategy: communicative strategies to customers should be clear and with motive. It should deliver what the company wants to deliver to its customer without any ambiguity.

· Online marketing: Online marketing is one of the premier marketing media for every organisation for its marketing needs. The reach of internet is very large and deep and as most of the banking services are online, so the airlines are also getting online to attract maximum customers towards them.

Marketing of the Hospitality Services: Hospitality sector includes all those services related to hotels, restaurants, lodges, and bars. The growing economy of India is also helping the hospitality sector to grow at rapid pace. The main reasons for the growth of the Indian hospitality sector are due to:

Increase in foreign direct investment. Increase in numbers of foreign visitors.

Increase in the income of the Indian family.

Emergence of the brand Incredible India.

As the numbers of players in the field of hospitality sector are increasing, marketing strategies are also changing. Earlier, hospitality sectors were keener on building brand recognition that attracted those customers who were willing to pay. Now, the hospitality sector is working on new marketing strategies. They are using marketing media very effectively. They are tying up with leading corporate houses to provide them the hospitality services to them. Large chains are being established and same quality is maintained everywhere, so that they can reach customers quickly and provide them with the promised quality of services. Hotels are specialising in the quality of the services they are offering. We can take the example of Taj group of hotels. They have split there hospitality services into two segments mainly in luxury segment under the brand name Taj and budget hotels under brand name Ginger hotels. Even restaurant chains like Nirula’s are getting huge amount of success by delivering the promises they made.

Q.6.Write a short notes on:

A. Pricing strategies of service: The different strategies that are used for pricing of a service:

· Mark-up pricing: The mark-up pricing strategy can be employed for services that cannot be differentiated. For example, it is not possible to differentiate the service provided by BESCOM for Bangalore.

· Value for money pricing: In India, the retailer Big Bazaar uses the positioning line “Is se sasta aur achha kahin nahin”, which means nowhere else you will get such better and cheaper offers. Obviously, the idea of savings convinces huge segment of customers, but the consideration for this strategy is the competence of the retailer to continue being a cost leader. If any other retailer competes this

by offering the same products at lower prices owing to the price sensitivity of the customers, they would make quick exits to go and buy from the new cost leader.

· Image value pricing: This is a very popular method of pricing the products. This method enables to charge premium price for the product. For example: The prices charged by Gillette for its razors, shaving foams, and after shaves are more than its competitor’s price.

B. Roles played by the customers during service delivery: There are three types of roles for the customer in the service delivery process. The customer can be a productive resource, a contributor to quality and satisfaction or a competitor in the service delivery process.

For the service Amtrak expects the customer to take part as a productive resource in the service delivery process to gain a better. For Amtrak it is clearly most effective for a customer to get the tickets from the QuickTrak machine. There is simply no labor involved other than that of the customer himself. The second best way for Amtrak is if the customer orders his tickets online. This way, few employees are needed to send the tickets to the customers’ address. The last and most ineffective way for Amtrak is if the customer makes his purchase at the ticket booth at the train station. Amtrak needs to employ people to sit behind the counter and help the customer. This brings also the risk of complaints and lowering the customers’ perception of the service delivery. They totally depend on the person behind the ticket booth and blame that person for any mistakes. Although the customer still needs to provide the cashier with the necessary information. This leads to the second customer role. The customer can also has to contribute to the quality and satisfaction. The customer will be more satisfied if they think that they have done their part in the service delivery. Therefore it is advisable to involve the customer. By online and QuickTrak purchases the customer is fully involved. The customer needs to find out when and where he wants to go. What level of comfort he desires. If he wants to eat on the train, what he wants to eat. These are all examples of decisions that the customer is involved in.

The third and last is viewing the customer as competitor. By answering the critical factors we can see that there is a way that the customer can be seen as a competitor. The customers’ ultimate goal is to get from point A to point B. There are few different options. The train is one and others might be going by car or taking a airplane.