Designing and Managing Services

submitted Yogesh Dhanik MT 11 IND003

2003 Prentice Hall, Inc.

To accompany A Framework for Marketing Management, 2nd Edition

Slide 0 in Chapter 12

Objectives
- Learn how services are defined and

classified.
- Understand how service firms improve their competitive differentiation, service quality, and productivity. - Identify how goods-producing

companies can improve their customer

support services.
2003 Prentice Hall, Inc.

Nature of Services
Government Sector
(Indian railways , military services ,loan agencies)

Private Nonprofit Sector

(Museums ,charities, Colleges , churches, hospitals etc)

Service Industry Sectors

Business Sector
(Airlines , hotels, insurances co. management consulting firms etc..)

Manufacturing Sector
(Accountants ,computer operators)

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Nature of Services

eLibrary.com is an example of a service in which industry sector?

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Nature of Services
Service Mix Categories
Major service with minor good Pure service; no tangible good

Pure tangible good; no service Milk

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Hybrid: Tangible equal part goods with goods and service some services

Computer Meal at Snacks -Air & Warranty Restaurant Travelling

Legal Advice

Nature of Services
Characteristics
* Intangibility * Inseparability * Variability * Perishability

* Cannot be touched, seen, tasted,

heard, or smelled before purchase * Lack of trial means higher consumer risk * Consumers rely on cues to draw quality inferences * Marketers must try to tangibilize the intangible

2003 Prentice Hall, Inc.

Nature of Services
Characteristics
* Intangibility * Inseparability * Variability * Perishability
* Services are produced and consumed at the same time (air travel) * Service providers and sometimes other customers become part of the service (restaurant) * Strong preferences for service providers exist

2003 Prentice Hall, Inc.

Nature of Services
Characteristics
* Service providers vary with respect to attitudes, skills, mood, etc. Even the same provider may give different service on a different day.

* Intangibility * Inseparability

* Quality control is critical:

* Variability * Perishability

Hiring the right people Standardizing service Monitoring satisfaction

2003 Prentice Hall, Inc.

Nature of Services
Characteristics
* Services can not be inventoried or otherwise stored

* Intangibility
* Capacity / demand management is critical:

* Inseparability * Variability * Perishability

Demand side strategies Supply side strategies

2003 Prentice Hall, Inc.

Nature of Services
Demand-Side Strategies
Develop Complimentary Services Cultivate Nonpeak Demand

Use Differential Pricing

Install Reservation System
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Nature of Services
Supply-Side Strategies
Plan facilities for future expansion Introduce peak-time efficiency routines

Hire part-time employees

Important Characteristics

Increase consumer participation

Share services
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Marketing Strategies

Elements in a Service Encounter

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Marketing Strategies
* People, physical evidence, and process must be considered in addition to the 4 Ps when creating external marketing plans.

* Successfully delivering a service often

depends on staff being trained via internal marketing efforts.

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Marketing Strategies

Three Types of Marketing in Service Industries

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Marketing Strategies
Continuum of Evaluation for Different Types of Products

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Marketing Strategies
Marketing Tasks
* Managing differentiation * Managing service quality * Managing productivity
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- Can not differentiate on price alone

- Innovative features

- Delivery system
Reliability Resilience Innovativeness

- Image and branding

Marketing Strategies
Marketing Tasks
* Managing differentiation * Managing service quality * Managing productivity
2003 Prentice Hall, Inc.

- The service quality model identifies five gaps that can cause service delivery failure
- Service companies that successfully address these gaps follow common practices

Service Quality Model

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Marketing Strategies
Based on service quality model, Researchers Identified the Following Five determinants of Service Quality: - Reliability-> ability to perform the promised Service accurately. - Responsiveness

- Assurance
- Empathy -Tangibles

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Marketing Strategies
Characteristics of Well-Managed Service Firms
Commitment from top management Firm and customer monitoring system

Important Characteristics
A strategic concept
High standards
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Satisfaction of employees and customers

Marketing Strategies
Marketing Tasks
* Managing differentiation * Managing service quality * Managing productivity
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- Have service providers work more skillfully

- Decrease service quality, increase service quantity

- Industrialize the service

- Reduce need for service - Design a more effective service

- Give customers incentives to serve themselves

- Use technology

Managing Product Support Services

* Product support services are often sources of competitive advantage * When designing service support programs, marketers must consider key customer concerns:
Failure frequency Downtime duration Out-of-pocket expenses
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Managing Product Support Services

Optional Service Contracts

Facilitating Services

Components
Value-Augmenting Services

Designing Service Offerings

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THANK YOU

2003 Prentice Hall, Inc.