Services Marketing

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Marketing
Marketing as per Peter Drucker – the aim of marketing is
to know and understand the customer so well that the
product or service fits him and sells itself.

Chartered institute of marketing– marketing as the process

of discovering, expecting and suiting the customer needs
and at the same time making profits.

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 Services
• “When u build a manufacturing plant, it
starts depreciating on the day it
opens.
• The well – served customer, on the other
hand, is an appreciating asset.
• Every small act on his or her behalf ups the
odds for repeat business and priceless
word – of – mouth referral”
-Tom Peters management guru
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 Services

• Service is performance
1. • Service does not mean ownership of anything

• Goods are produced.

2. • Services are performed.

• Service is purchased.
3. • Service purchased –is just the use of/access to facility.

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 Services

• Traditionally difficult to define.

• Which services are created and
delivered to customer are
difficult to define because many
inputs & outputs are intangible.

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 Service …definition

• Service is an act or performance offered by one party to another .

Although the process may be tied to a physical product, the performance
is essentially intangible and does not result to any owner ship of any factor
of production.
• Services are economic activities that create value and provide benefits for
customers at specific times, place.

• Philip Kotler ---”service is any activity of benefit that one party can offer to
another that is essentially intangible and does not result in the ownership
of anything. Its production may or may not be tied to a physical product

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 Service sector….

• Comprises of bulk of today’s economy.

• US – 73% & Canada 67% of GDP.
• Consists of vide variety of industries that sell to individual customers ,
business customers , government customers , NGO’s.
• Change in economy – boom in agriculture, manufacturing – increased
demand for brand new services and traditional services.

• Japan -- is it still known for being a manufacturing country ??????

• India too is following the footsteps…..

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 Service organizations…

• Large international corporations –airlines , banking, telecom, hotel chains,

freight transportation…..
• Locally owned small business– restaurants, laundries, taxi services,
internet services, courier etc.,…
• B-2- B services…
• Franchised service outlets--- food , education…

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 Gats Classification.
 General agreement on trade in services classifies 155 activates as service.
 Major 11 categories are
1. Business services.
2. Communication.
3. Construction & Engg.
4. Distribution.
5. Education.
6. Environment.
7. Finance.
8. Health.
9. Tourism.
10. Recreation.
11. Transport

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 Classification of services..

High Medium Low

contact contact contact
services services services.

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 • Hair dressing
High C.S. • medical services Banking,
purchase of retail goods.

• Management consulting
• Insurance
Medium C.S. • Personal financial services.

• Radio services
Low C.S. • Information processing services.
• Remote fixes of software

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 Reasons for growth of services industry…

Reason Effect Service effected

Affluence Per capita income Pest control, personal security,

Interior design. beauty parlors,
event management etc..
Leisure time Travel & Holiday Travel agencies, Hotels,
entertainment, career prospects
Health Consciousness Awareness Health clubs, Spas, Old age homes ,
gyms, yoga, meditation
Working Couples Working wives Day care centers, home delivery,
packed food
Product complexity Variety available Water purifiers, Microwaves, PC,
(= AMC)
Life complexity Lack of time Tax consultants, legal service,
property advisors, Investment
advisors..
Resource scarcity & Ecology Need of conservation Car pools, water management,
high rise apartments ..
New Products IT PCO, pager, e- commerce , Internet
service provider, mobile service
providers, cyber café

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• Tangibility -- The quality of being
perceivable by touch.

• Intangibility--The quality of being

intangible and not perceptible by touch

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Tangibility Spectrum

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 Differentiating services from goods…

Pure tangible goods Wheat ,sugar, soap, cosmetic etc.

Tangible good –Accompanied service Computer, cars air conditioners,

machinery-after sales service

Major service accompanying minor Beauty saloon providing cosmetics

goods & service Child care centers providing baby
food.

Pure service Surgery, consultancy teaching

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 Goods vs. services

• Unique characteristics that distinguish goods from service

• Services are performance , deeds efforts.

• Services can’t be felt, seen ,tasted or touched as goods.

• Example movie tickets vs. shoes.

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 Characteristics of services

• Intangibility
• Heterogeneity
• Inseparability.
• Perishability

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 Intangibility
• Product is physical.--- Can be felt ,seen , smelt, tested..
• Service is not tangible till it is experienced or consumed.
• Different people have different expectations with regard to the same
service…
• Quality of service not strictly measurable…..

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 Problems with intangibility -

• Lack of ability to be stored.

• Lack of protection of patents.
• Difficulty in displaying or communicating services.
• Difficulty in pricing services.

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 Solutions to intangibility problems.
 Use of tangible clues. – assist customer in making service evaluation.
( insurance advt. in media…)
( ICICI bank --- strong ATM network….)
 Use of personal source of information.
( due to lack of objective means of evaluation
customer looks to wards friends , family )
offering incentive to existing customers for
roping in new customers)
 Creation of strong organizational brand.
( results in loyalty i.e. Maruti , Sony)
 In separatibility– 1.Service provider physical connection to service being
provided.
2.Customer’s involvement in the service process.
3.Involvement of other customer in the service process.

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 Problems caused by inseparability

• Physical presence of the service provider ---like dentist.

• Evaluation of the service provider done by language, clothing, personal
hygiene, IP communication skills.
• Face to face interaction with customer– make employee satisfied.
• Involvement of customer in the service production process…
a) customer to be physically present to receive service.
b) Customer need to be present to start the service –dry cleaning,
auto repair etc..
c) Need of the customer to be mentally present -- thru internet..

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Unlike goods which are first produced ,sold , consumed…
services are first sold, produced and consumed.

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 Involvement of other customers…

• Restaurants --- Smoking in non smoking areas..

Parking full means better service / food.

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 Challenge in mass production of service…

• How to successfully mass produce service…

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 Solutions to inseparable problems..

• Emphasis on selection ,training public contact personnel.

• Consumer management. ( reservation in restaurant…)
• Use of multi site locations (ATM , McDonald's…..)

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 Heterogeneity

• Heterogeneous is an adjective used to describe an object or system

consisting of multiple items having a large number of structural variations.

• It is the opposite of homogneous.

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 Heterogeneity

• Goods & services –Another difference- un ability to control the service

quality before it reaches the customer.
• Service offered by one employee may differ from the other…
• Example - McDonald's franchise – moods swings of individuals before
service.

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Solutions to heterogeneity

Customization. … Dell
customization & service.

Standardization…. ATM , auto

car wash, Key in orders on line.

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 Perish ability..

• Service can’t be inventoried. ( Like movie tickets , airline tickets etc..)

• Matching the demand & supply in service is a challenge…

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 Solution to perish ability..

• Creative pricing- (early bird incentive , happy hours )

• Demand strategy – (reservation system, complimentary system,
development of non peak demand)
• Supply strategy. - Part time utilization. capacity sharing (Doctors
sharing cost of equipment), advance preparation of
expansion, utilisation of third party, Increase in
customer participation.

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 Service marketing -- system

Service marketing triangle

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 Issues before a service organization

• Services premises.
• Packaging.
• Service personnel.
• Tools & equipment used.
• Customers.
• Convenience.
• Nature of service establishment.
• Managing productivity.
• Managing service quality.

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 Nature of service marketing.

• Narrow definition of marketing. By service providers. – Had only Advt, sales

promotion, segmentation rare, --differentiation , new product development,
service quality…????
• Lack of appreciation of marketing. Skills in service org.
• Difference of org. structure of service firms.
• Problems in determining the cost of services.

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 External marketing--
making promises

Interactive marketing—
keeping promises

Internal marketing –
enabling promises

c.s. --- Federal express..

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Service marketing system for high contact service

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Service marketing system for Low contact service

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Tangible elements & communication components in SM

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Customer expectation & perception of service

Customer
expectations

Desired Adequate
service service
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 Desired service --- Adequate service

1. It is the level of service the customer hopes to receive // the level of

performance wished for.

2. Lower level of service expectation that the customer is willing to accept.—based

on past experience, lack of remuneration to the service provider , socio -
economic background of the service provider etc…

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Zone of tolerance

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 Diff. Between characteristics of goods and service

• Different goods and services have varying magnitudes of

search, experience & credence qualities
• search qualities of goods can be estimated before purchase --
experience quality can be estimated only after purchase.
• Qualities that can`t be assessed completely are called
Credence qualities.

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 Dimensions of S.E.C. qualities

Search qualities Experience qualities Credence qualities

Tangibility Access Competence
Credibility Courtesy Security
Reliability
Responsiveness
Understanding customer
communications

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 Search quality
• For services include…..
• Price,
• Convenience.
• Mannerisms of service personnel.
• Promptness of service.

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 Experience qualities
• Taste of home delivered food.
• Wear ability of dress bought from boutique
etc.

• Service have higher experience characteristics than goods.

• E.g. air line travel…courtesy of cabin crew,

departure & arrival, quality of food, seating
comfort etc..

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 Credence qualities

• Customer often lack the knowledge & experience to judge the credence
qualities of the service.
• E.g….. Bread may claim to have nutrition's..difficult for the customer to
ascertain..
• Services of professionals –doc, consultants,…services are accepted on
faith.

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 Customer
• Decision
• Making
»Process

& implications on service provider.

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 Customer decision making process..
• Need perception.—difference in actual state & desired
(Hungry –need to buy food-remove hunger)
• Search for info.-need felt-decides to purchase- search for info. To full
fill needs (from –personal ,commercial ,public source, experimental) &
perceived risks.(financial risk, functional ,physical, psychological, social,
time risk)
• Evaluation of alternatives.—compare & evaluate services of alternatives.
(Well defined attributes )e.g interior decoration –different from home to
home & customer to customer.( emotions- influence on customer-
evaluation ability)
• Purchase & consumption.- trail purchase, repeat purchase, long term
commitment purchase)
• Post purchase evaluation.– compares performance vs. expectations. –
satisfied customer becomes loyal,

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 Implications for service providers

• Customer gather info. From personal source– marketer needs to be careful in

satisfying existing customers.
• Services are intangible- customer needs assistance to assess value of high
credence qualities.

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 Customer expectations
• SATISFACTION IS THE LEVEL OF A CUSTOMER`S FELT STATE RESULTING
FROM COMPARING A PRODUCT`S OR SERVICE`S PERCEIVED
PERFORMANCE STANDARD AGAINST THE CUSTOMER`S EXPECTATION…..

• KOTLER

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 Customer expectation
• Five dimensions to measure service quality
• Assurance --- to use knowledge & courteous behavior to instill trust and
confidence in customer regarding service.
• Empathy– ability to show concern for customers and devote individual
attention to each customer.
• Reliability—ability of service provider to accurately perform promised
service.( efficiency , handling of customer complaints, pricing etc).
• Responsiveness – prompt & service.
• Tangibles -- physical facilities- equipment of service, dress & appearance
of service personnel.

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 Service level expectation

desired
adequate

Zone of tolerance
low high

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 Factors influencing desired service factors influencing adequate service

• Customer needs – Maslow's hierarchy of • Transitory service intensifiers – pizza

needs. –customer hungry wants food does not come in 20 minutes or C.C.
immediately – customer thirsty wants not accepted when buying medicines
water immediately.
in emergency.
• Enduring service intensifiers
• Perceived service alternatives --
housing loans form different sources.
• Self perceived service role – dress
designer find dress as per
Derived expectations.
service Customer
expectation philosophy • Situational factors – power failure
interupts service of cable.
Conducted Attitude & • Predicted service expectations.–
tour—expect service flight will be delayed due to weather
food & travel providers
conduct but reaches on time.
arrangement

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 Customers criteria for service evaluation

• Speed.
• Certainty.
• Ease
• Personal recognition.

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 Customer perceptions

• Service encounter – customer estimates the quality of

service during encounter – e.g. – banks.

• Service evidence – personnel , process & physical

environment. E.g.- hotels

• Image – perceived image in the mind of the customer.

a +ve image can ignore some poor service, however repeated
bad service will change the same.

• Price – tangible nature of service – customer assume the quality of

service

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 Strategies to influence customer satisfaction

• Enhance customer satisfaction thru service encounters.- recover from service

failure, flexibility in delivering service, assistance in handling difficult customers.
• Reflect evidence of service- behavior & physical evidence.
• Communicate & create realistic image.- make promises & keep them.
• Enhance customer perception of quality & value thru price.

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 Market research in service

• Post transactional survey- immediately after service- questioner after

dinner or questioner just before aircraft lands.
• Customer complaints comments & inquiry survey – use feedback and
analyzing comments and taking remedial actions helps improve service.
• Total market survey – take opinion from all customers – existing, lost ,
potential customers.– find out customers needs.-take suitable actions.
• Employee survey –opinion of front line employees who come in direct
contact with the customer.

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 Service Quality -- Dimensions

• Reliability – Ability to perform promised service dependably & accurately.

e.g FedEx…..
• Responsively – Willingness to help customers & provide prompt
service.
• Assurance – Employees ability to inspire trust & confidence. E.g.-
Insurance , brokerage, legal services
• Empathy – Caring , Individual attention to customers. E..g. customized
services..E.g.-- Hotel
• Tangibles – Appearance of physical facilities equipment, personnel &
written materials. E.g. – travel agents putting attractive
pictures..

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 Servqual scale

• Measures five dimensions on a scale of 7

points.

• Generic dimensions used by customer to evaluate services

• Credibility, Security, Access, Communication,
Understanding customer, Tangible, Reliability,
Responsiveness, Competence, Courtesy…..

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 Gap Analysis

• Gap 1- Not knowing what the customer

expects.
• Gap 2 – Not selecting the write service designs
& standards.
• Gap 3 - Not delivering to service standards.
• Gap 4 - Not matching performance to
promises.

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Gap model – service quality

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 Process of market research

Define the problem &

research objectives

Develop scales of
measurement

Develop & implement the

research program.

Coding & tabulating data.

Interpreting. and analyzing

findings

Reporting findings 64
 Approach to upward communication

Management listening Research on internal

approach customer

Executive visit to Employee

customers suggestion
UPWARD
COMMUNICATION

Research on
Research on external
customers customers

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 Customer analysis

• Analysis customer needs.

• There buying pattern.
• Ways in which they can be satisfied.

• Analysis helps in ::
• Identify the competition in the market.
• To identify ,why customer choose one product/service over the other.
• To analysis the present strategies of the co. vis. Competition.

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Strategic
issues in
service
marketing

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 Market segmentation & targeting

• Mkt. Segment- a group of customers who respond in a

similar way to a given set of market stimuli
• Mkt. segmentation- the process of dividing a market
into distinct groups of buyers with different needs/
characteristics / behavior, who might require separate
products or marketing mix..
• Targeting .. A process of estimation & comparison
previously identified segments for selecting one or
more segments that fetch best result for business.

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 Mkt. Segments
• Undifferentiated Mkt. approach – mass marketing. Approach
aimed at all consumers by offering single product / service.

• Differentiated Mkt. approach.- targeting various customers

segments with different products & services.
(Nokia – Hi flyers, Trendsetters, Social contact, Assured)

• Concentrated mkt. approach.- single segment strategy to

serve limited segments in a total market.

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 Targeting

• Basis of targeting –
• Segment size & growth potential.
• Structural attractiveness
• Companies objectives & resources.

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 Targeting strategies
• Single segment strategies.- target single segment, develop single
marketing mix & gain specialization.
e.g. – software firm catering to logistic solutions only
• Selective specialization – targeting more than one segments.
e.g. financial firm target retired persons & working women.
• Product specialization – single product or service to various segments
e.g. conference halls in hotels used for corporate meetings, birthday
parties, get together, kitty parties etc..
• Market specialization- target segment remains same , company tries to
cater to different needs by offering products / services
e.g – your institution – various courses.
• Full mkt. coverage.—various products & services for the entire market
E.g.– hindi movie released with sub tittles abroad.

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 Positioning
&
Differentiation
of services

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 Positioning

• “Positioning is not what u do to the product,

Positioning is what u do to the mind of the
prospect…”
by
unknown
• Positioning is defined as the process of
establishing & maintaining a distinctive place
in the market for an organization or for its
individual; products/ services in offering.

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 Positioning strategies by potter

• Product differentiator

• Low cost leader.

• Nicher.

• Company should concentrate in one strategy rather than trying to be good

in all and failing subsequently.

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 Specific positioning strategies….

• Attribute positioning – service provider positions on attributes / feature e.g.-

Allahabad bank positions as oldest bank in India
however Positioning service strategy based on feature does not work too well.
• Benefit positioning – offer add on benefits as customer pschye is to analyze the
benefits e.g – ICICI bank , Citi Bank –ATMs & internet banking, bill payments etc..
• Use / application positioning.—positioned as best for a certain application –SBI –
positioned best for education loans.
• User positioning – positioned for specific target users – India as destination for
tourists

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 Specific positioning strategies….cont.

• Competitor positioning strategy– positioned against competition ..e.g.

IIPM positioned against IIMs- “dare to think beyond IIMs”.

• Category positioning– category leader & becomes synonymous with the

service– e.g. Essel world for entertainment.

• Quality & price positioning-service is positioned as possessing a certain

standard, at a particular price… Taj Hotels high quality service at high
price.

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 Differentiation

• A company is said to have achieved differentiated competitive

advantage when its customers perceive the service offered as
different from competition based on elements of marketing
mix– product / service , price, promotion , distribution etc…

• DELL , AMWAY……

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 Differentiating attributes

• To meet the following criteria…

• Important – customers in the target group view the difference offered by
the firm as very important & high value to it.
• Distinctive– service offered is not offered by its competitor or unique
service offered.
• Superior – the firms makes it an obvious choice for customers to opt for..
• Communicable– difference offered by firm should be easily explained &
communicated to customers.

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 Differentiating attributes…cont

• Preemptive- Difference offered in service is not easily copied by

competitors.
• Affordable – customer should be able to pay for the difference in price.
• profitable.– Firm should be able to offer difference to customer with out
losing out on profitability.

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Managing

demand
&
capacity

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 Demand patterns

• Sketching demand patterns– Co. has to track & sketch

the demand level. (Done by maintaining
customer data base & monitoring the
varying demand over a period of time)Demand
of services can be easily predicted.
• Foreseeable cycles-- demand of financial services increases around
financial year close.
• Random demand variation – some demands cycles are variable –
healthcare & insurance?
• Demand pattern by Mkt. segment- Maintain data base – tour operators
, insurance ,tax saving schemes.

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 Capacity constraints

equipment Facilities

Capacity
constraint

time Labour

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 Strategies to match demand & capacity

• Demand shift .. Shift customers to a time when demand is low e.g. cell
phone call rates….
• Varying the original service offer– catering during non marriage season –
economical.
• Communicating with customers – Banks talk to customers when salaries
etc are been handled..some customers choose to come at another time..
• Altering the time of service delivery – Banks worked 6 days –now 7 days
• Price differentiation – price variations between high demand vs. low
demand—happy hours

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 Adjusting capacity to meet demand..

• Time – extended hours to meet excess demand.

• Labour- employed on contract basis - get as per demand
• Facilities – increase capacity –restaurant putting extra tables, more seats in
theatre, airlines adding more flights…
• Equipment—hire additional when needed ( owen , computers etc)
• Cross training of employees to meet extra demand.

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Marketing
mix
for
services

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 Traditional marketing. mix

• 4 P`s—product- place- price – promotion

• Adequate for product marketing.
• however they are inadequate
• for
• services …..
• because ___________

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 Inadequacy of 4 P’s

• Product are tangible – Services are intangible in nature.

• Part of promotion of services takes place at the time of consumption itself.
• PSU producing services –partly subsidized, standardized – Mkt.mix ignores
this aspect.
• Dual role of service customers – co- producers and end consumers-
unnoticed by 4Ps.
• 4ps fails to capture – distribution services.

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 The extended P’s

• People- Co. invest in People(attracting, Training, retaining best talent

• Process – ATMs- reduce human intervention / errors/ increase
customer satisfaction.

• Physical evidence – TV commercial / brochures etc for holiday

destination..

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 Product :: service packaging

• Product – can be defined as an idea, a service or a good that involves a mix of

tangible or intangible elements, with an aim to satisfying customers.
• Packaging a service is a critical component of mkt. mix.
• E.g.--burger at McDonald's viz. road side burger.
• British airways vs. other cheaper airlines.
• Difference is the quality and the service packed along – for a price.

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Service product level

Core
product
Actual
product
Augmented
product
Potential
product

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 Service product level..cont

• Core product – core benefit of any product is

to satisfy the basic needs of a customer.
• Example– a tax consultant- core service is to calculate tax to be
paid- also files return, sell some financial instrument, advises on
investments.

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 Actual product

• Tangible aspect attached to a service ,along with the service is the product
itself.
• This facilitates the delivery of core product to the customer.
• Marketers develop the actual product after the core benefits are decided.
• Characteristics of actual product are –features, design , quality level,
packing & brand name.

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 Actual product
Actual product level

Design

Brand name
Quality level
Core product

qq

packaging
Features

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 Augmented product

• The intangible aspects that support a service

constitute the augmented product along with
the actual product.
• Warranty , installation support, delivery,
customer service – etc are augmented
products.
• E.g.– caterer hired for wedding,-- core product
food .—if decoration ,inviting guests, serving
them is also done by caterer then these are
augmented products..
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 Potential product
• Features or benefits that can be added & which would be of value to the
customer .
• Hair styling – computer aided pictures to help decide
a suitable hair style…..

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 Service product decisions – growth strategies

Existing products New products

markets
Existing

Market penetration Product/service development

markets

Market development Diversification

New

“Ansoff’s” product growth matrix

Mkt. penetration Product /service Market development diversification

development
Sell more of existing New product New markets with New market with
product for bigger /service in existing existing services new products
mkt. share mkts.

100
 PLC

Develop strategy

Turn around strategy

Stabilize strategy

Harvesting strategy

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Pricing
services

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“The key to making the sale is to communicate VALUE ! Do it so
strongly…that the price seems reasonable in relation to the product or
service you are offering”
A customer perception of what is a “reasonable price” is important than
what you want to charge for your product or service. And the customer
decides what’s reasonable based on perceived value for money, not price.
it’s creating this perception of value that tells the customer -
”the price is right”
Noel Peebles author “Sell your business the easy way”

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 Key characteristics of pricing in service
• Customer’s perceptions are different for goods & services.
Customer finds easy to pay for a home theatre than flying by a particular
airline or choosing a holiday destination.
• Price is a measure of quality of service::Customer turns to pricing to
assess the quality of service , in absence of info from other source.
E.g. a beauty parlor charges 250/- instead of 150 for the same service & is
considered to offer better quality service…
• Non monetary cost & pricing:: Non monetary cost perceived as time cost,
search cost , psychological cost & convenience cost.
• Difficulty in comparing prices of services::

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 Pricing objectives

• Survival
• Present profit maximization.
• Present revenue maximization.
• Prestige.
• Product quality leadership.

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 Other options

• Pricing can be done to make market unattractive for competition.

• How would co. like to position its services.
• How do the competition react to price changes.
• What is the duration of life cycle of services.
• How does the elasticity of demand fluctuate.
• Is the service capability over utilized or underutilized.

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 Approaches to pricing services.

Market oriented
Competition based
Cost based pricing pricing/demand
pricing
based pricing
• Cost plus pricing/basic • Market skimming • Destroyer pricing
cost covering • Penetration • Price matching
• Contribution pricing pricing. • Price bidding
• Working back
method/ expected
• Price to meet
return customer
expectation.
• Discount & sales

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 Promotion
of
services

• Many attempts to communicate are mollified by saying too much………

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Promotion

thru

communication

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Modes of communication
1.Oral
2.Written
3.Face to face
4.Online communication
5.Media.

Type of communication
Internal
external

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 Elements of promotion mix

Direct
Sales marketing
promotion

Promotion
elements
mix Personal
selling

Publicity &
public relations
advertising

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 Promotional strategies for services.

• Services can’t be inventoried..decrease use in peak & increase during lean

times.
• Reduce role of intermediaries ::
• Role of service personnel::
• Service delivery location
• Customer as a co- product.:: chef cooks food in front of customer, as per
requirement.

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 Strategies for effective promotion

• Effective planning.
• Focused objective.
• Perfect timing.
• Value added thru tie-ups & promotions.
• Employee motivation.
• Well differentiated campaign.
• Regular evaluation of campaign .

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 Promotional techniques

• Sampling.
• Premium
• Prize promotion.
• Price /quantity promotion
• Refunds & future discounts.
• Coupons…

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 Design of a service promotion

• Which service to promote.

• Who would be the target customer.
• What value addition be there to the brand.
• Is the timing right for promotion
• Duration of promotion.
• Who is benefited from promotion.

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 Relationship marketing --definitions

1. Relationship mkt. is attracting, maintaining & (in multi-service

organizations) enhancing customer relationship.
2. An integrated & coordinated effort to identify, maintain & build up a
network with individual customers & employees & continuously
strengthen the network for mutual benefits of both sides , through
interactive, individualized & value added contacts continiously over a
longer period of time.
3. Relationship mkt. is to identify , establish, maintain & enhance,& when
necessary terminate relationships with customers so that the objective
regarding economic & other variables of all parties are met. This is
achieved thru exchange & fulfillment of promises.

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 Benefits of R.M.

• Long term relationship for both customer &

organization.
• Lower cost & increased profitability.
• Requirements & expectations of customer
base.
• Reliable service provider.

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 R.M.---Benefits to Co.

• Customers will continue to avail the services..

• Increase revenue from existing customers.
• Existing customers will provide FREE word of mouth publicity.
• By establishing & strengthening relationship –easy to retain customers.
• With relationship & quality of services –very few customers will go to
competition.

119
 R.M.---Benefits to customers

• Customer opts for service repeatedly-

• Saves on time & effort on choosing new S.P.
• Personalized services
• Special services.

120
 Customers markets

• Efforts required to maintain existing customers.

• Satisfied customer will come again & avail the services.
• Employees & managers to work as a team to make the experience more pleasant.
• Co. should work on complaints & suggestions –update the customer about the
steps taken.
• Service experience to go beyond expectations – leads to actively
recommendations of service to others.

122
 Internal markets

• Employees – internal customers – internal markets

• Better facilities & good atmosphere leads to satisfies employees-better services to
customers.
• Cos. Strive to win employee loyalty & commitment.
• Helps in retaining employees- better service to customers with complete
commitment.

123
 Suppliers Mkt.

• Cos need basic infrastructure & facilities to provide service.

• Cos. Depend on suppliers to provide them.
• Good relations with suppliers.

• E.g.--Courier & airlines

124
 Referral Mkt.

• Referral Mkt – existing customers , intermediaries , consultants etc.

• Good relations helps in better service & more business for Co.
• Reward referrals…..

125
 Recruitment market

• Attracting talent from institutes…

• Cos. need to maintain contacts with institute heads etc .
• Sponsor student events , conduct work shops etc..
• Placement agencies, head hunters

126
 Influence markets

• Share holders , financers, consumer protection groups, environmentalists,

government, media, trade unions, general public…

127
Services Blue print

128
 Internal marketing

• Viewing employees as customers – viewing jobs as internal products that

satisfies the needs of internal customers while addressing the objectives
of organization.

129
 Role of Internal marketing…

• Customer attraction & retention.

• Employee retention & motivation.
• Corporate image.
• Change management.
• Cos. Performance & continuity.

130
 Components of internal marketing….

• Recruitment & selection

• Motivation.
• Education & training.
• Coordination.
• Empowerment.
• Rewards.
• Communication.
• Knowledge sharing.

131
 SERVICES
FUNCTIONS
AND
BLUEPRINT

132
 New service development process

Generation of idea

Screening Service launch

Testing the concept Infrastructure development

Business analysis Test marketing

&
Design of service
 Customer Service Management Cycle

Customer Service Customer Service

Where you want it to be Where it is now

Stage 5 Stage 1
Provide proactive Understand the service
Problem solving Seekers

Stage 2
Stage 4
Set customer service
Check up regularly
Standards
Stage 3
Build a winning
Team 134
STAGE 1: UNDERSTAND THE
CUSTOMER

• Specific service niche : Determined by the

targeted services and the service seekers
• Characteristics
» People/Things orientation
» High/Low tech
» Personal Interaction : Physical, Mental, Emotional
» Time involvement
» Location
» Complexity: Actual, Visual
» Flexibility
» Numbers served per transaction
» Training
» Supervision 135
 Developing the Service seeker profile

• Values and beliefs

• Attitudes
• Social habits and norms
• Preferences
• Expectations

136
 Customer Perception of the service and service
provider
• The service profile: Service characteristics, Service seekers
wants and needs and perceptions of requisite characteristics

• Characteristics include
» The service purpose
» The degree of necessity
» The magnitude of importance
» View of results
» Relative cost and benefits
» Perceived risks

137
 STAGE 2::SET CUSTOMER STANDARDS

• Establish a target
• Communicate expectations
• Create a valuable management tool
• Dimensions in strong customer service: Procedural and
personal
• Standard areas of procedural dimension: Timing, Flow,
Flexibility, Anticipation, Communication, Customer Feedback,
Organization and Supervision
• Standard Areas of personal dimension : Appearance, body
language and tone of voice, attentiveness, tact, guidance,
selling skills, gracious problem solving

138
 Writing customer service standards

• Timeliness
• Anticipation
• Attitude
• Customer Feedback
• Appearance
• Guidelines for developing customer service standards

139
 STAGE 3: BUIDING A WINNING TEAM

• Design customer service jobs

• Writing job specifications
• Screening job applicants
• Training for customer service
• Practice leadership skills
• Supportive organizational environment

140
 STAGE 4: CHECK UP REGULARLY
• Service Audit system
• Service seeker feedback system
• Employee feedback system

141
 STAGE 5: PROACTIVE PROBLEM SOLVING

• Create supportive climate for solving problems

• Appoint teams to identify problem areas
• Select teams to improve through
brainstorming
• Transferring team problems and complaints
into opportunities

142
COMPONENTS OF SERVICE BLUEPRINT

Customer
Actions
Line of External Action

Onstage
Contact
Employee
action Line of visibility

Backstage Contact Line of internal

Employee Action action

Support
Process

143
 Components……..
• Line of External Interaction:
Line above which all customer interactions take place e.g.
Interactive Marketing
• Line of Visibility:
Area up to which the customer knows of organizational
processes.Influenced by visible interactions
• Line of Internal Interaction:
Not Visible; helps in effective service delivery; Customer is
ignorant

144
 Components……….

• Contact Employee Actions:

» Onstage contact employee action between
the lines of interaction and visibility
» Backstage contact Employee actions taking
place between lines of visibility and
internal interaction
• Support Processes:
» Support contact employees in service
delivery
» Occur behind the line of internal
interaction
145
 STEPS IN SERVICE BLUEPRINTING
• Identification of service to blueprinted: Purpose and goals identified for inside
and outside customers
• Service blueprinted from customers point of view: Customers steps in
purchase, consumption and delivery to be mapped /eliminate unnecessary activities
• Identification of employee actions: Identify Both onstage and backstage
actions/linkages between customers and contact personnel and between employee
• Identification of support activities: Support activities also to be identified and
blueprinted
• Giving physical evidence to each customer action step: Customer needs to
undergo experience; hence to reduce perceived risk will decide based upon the
tangibility of physical evidence
• Identification of employee actions: Identify Both onstage and backstage
actions/linkages between customers and contact personnel and between employees

146
CLASSIFICATION OF EMPLOYEES

• Contactors
» Frequent/regular customer contact
» Well Trained/motivated to serve customers on day
to day basis
» Recruitment based on responsiveness
» E.g. Zenith and Eureka Forbes, Outbound Call
centers

• Modifier
» Not directly involved
» Frequent customer contact
» High levels of customer relationship skills
» E.g. Receptionists, Inbound call centers 147
DEVELOPING MARKETING –ORIENTED SERVICE ORGANIZATION
Shared values
• We will become a fully customer-driven
organization. Style
Strategy:
• Customer comes first • Top management support for
• Integrated plan for
• Marketing expenditure are an investment. marketing through symbolic
development of marketing
• Services paramount. actions and commitment of
orientation.
• Formulized definitions of time to marketing and
Shared customer related activities.
markets and mission.
• Detailed specification of
Values • Open communications
marketing objectives. between all functional groups
Style and marketing staff.
• Commitment to Strategy
implementation. • Recognition and reward of
customer/market – oriented
behavior.

Systems Structure
Systems Structure
• Customer intelligence • Simple structure based on
reports. Skills / markets/geography.
• Competitor intelligence Staffing • Key account sales structure
reports. to service most important
• Marketing planning and Skills / Staffing customers
control systems. • Recruitment of an adequate number of • Decentralized marketing
• Remuneration and people with requisite marketing skills staff to provide close and
performance appraisal • Marketing training programs and facilities. fast support to customers.
systems geared to • Knowledge of market. • Staff rotation to non
support marketing • Analytical skills in segmenting markets marketing staff through
orientation. and identifying decision-making units. 151
customer contact positions