Unit 1
Introduction to
Services Management
Marketing What
isn’t There
Syllabus
#
1.
2.
3.
4.
5.
6.
CHAPTER NAME
TOPICS
Introduction
Meaning of Service; Characteristics of services; Classification of services; marketing mix of services; customer
(10 Hours)
involvement in services; building customer loyalty; GAP Model; Balancing Demand & Capacity.
Educational
Meaning; Nature; Advantages; Structure of Indian Educational System; Challenges in Education System;
Services
Modern Trends in Educational System; Entry of foreign universities.
(8 Hours)
Tourism &
TOURISM: Introduction; Concept & Nature of Tourism; Significance & Impact of Tourism; Market Segmentation
Hospitality Services in Tourism; Tourism marketing Mix; Management of Travel Services; Role of Travel Agencies & Travel
(12 Hours)
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.
Healthcare Services Hospitals – Evolution of Hospital Industry – Nature of Service – Risk involved in Healthcare Services –
(8 Hours)
marketing of medical services – Hospital extension services – Pharmacy, nursing – Medical Transcription.
Banking and
BANKING: Introduction – Traditional Services – Modern Services – Recent Trends in Banking Services.
Insurance Services INSURANCE: Introduction – Meaning and Definition of Insurance – Types of Insurance – Life Insurance –
(8 Hours)
Products of Life Insurance – General Insurance – Types of General Insurance – Insurance Agents and other
Intermediaries .
ITES and Business ITES: Introduction – Growth, Types, Job opportunities in ITES. BPO: Meaning, Nature of Work in BPOs,
Process Outsourcing Classification of BPO and Call Centers, Service Level Agreements (SLAs), Functions and Services of BPOs.
(8 Hours)
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
#
Country
1 United States
2 China
3 Japan
4 Germany
5 France
6 United Kingdom
7 Brazil
9 Russia
8 Italy
10 India
11 Canada
12 Australia
Agriculture Industry
1.12% 19.10%
9.10% 42.60%
1.20% 27.50%
0.80% 28.10%
1.90% 18.30%
0.70%
21%
5.40% 27.40%
3.90%
36%
2% 24.20%
17.40% 25.80%
1.80%
28.60%
4%
26.60%
Manufacturing Driven Economies
Country
Agriculture Industry Services
Services #
2% 66.90% 31.10%
79.70% 1 Saudi Arabia
0.70% 59.40% 39.80%
48.30% 2 United Arab Emirates
14.30% 46.90% 38.80%
71.40% 3 Indonesia
9.10% 42.60% 48.30%
71.10% 4 China
11.20% 40.60%
79.80% 5 Iran
78.30%
Agrarian Economies
67.20% #
Country
Agriculture Industry
60.10% 1 India
17.40% 25.80%
73.80% 2 Indonesia
14.30% 46.90%
56.90% 3 Thailand
13.30%
34%
69.60% 4 Iran
11.20% 40.60%
10% 30.70%
69.40% 5 Argentina
Data as on 2014, Source: International Monetary Fund, World Economic Outlook Database
48.20%
Services
56.90%
38.80%
52.70%
48.20%
59.20%
Agriculture
5.90%
Global Level
Industry
30.50%
Services
63.60%
SECTOR WISE CONTRIBUTION TO
WORLD'S GDP
Argiculture
Industry
Services
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 MANAGEMENT
SERVICES MARKETING
SERVICES
Services management refers to
Services marketing is a planned
Services are intangible
process through which
products, deeds and processes planned activities of supply chain
system that intersects and connects organizations satisfy the needs of
that are exchanged directly
actual company sales and the
the customer by selling intangible
from the producer to the
customer.
products, deeds and processes.
customer.
Nature and Scope of Services
1. Intangibility—Customers can’t 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 can’t 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.
SERVICE
HOW IT IS DONE? (BY DEVELOPING ABSTRACT IDEAS)
Banking
Anticipate consumer needs, simplify the experience, and learn from every interaction and maintain
customer’s 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 Theatre
Offer 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 Cards
By offering services and benefits based on customer lifestyle
Insurance
Developing 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. Perishability—Customers have to use it or lose it.
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”.
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.
2. Perishability—Customers have to use it or lose it
Techniques to encourage demand for the service during slack times
TECHNIQUE
DESCRIPTION
CASE-IN-POINT
This involves charging a higher price during Movie theatres like PVR, Fame, Fun cinemas and Inox charge more
Flexible pricing
peak season and low price during off-peak for movie tickets and snacks on weekends and public holidays and
periods.
prices are slashed on weekdays.
Wonder-La an amusement park in Bangalore operates all rides on
In this technique marketers adjust their
weekends and holidays where as on weekdays some of the rides are
Capacity management
offerings in an attempt to match demand.
put on hold, further for each ride to operate a minimum number of
audience are required.
Café coffee day has come up with concept of chat over breakfast
This involves stimulating demand during offand a good coffee. MacDonald’s has recently launched breakfast
Non-peak demand
peak hours when power demand is usually
service (7am to 10:30am) to stimulate demand during off-peak
low.
hours.
BSNL offer many channels for bill payments such as internet, mobile,
Complementary
They are designed and offered to provide
ATMs collection centres etc. Most of the banks have an ATM attached
services
alternatives to avoid rush.
to bank.
This involves an arrangement whereby the
Airlines, and railways use reservation systems to effectively to
Reservation system
service is reserved for the customer.
manage the demand levels.
Nature and Scope of Services
3. Variability—Lack 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.
Variability in services
Service
Variability
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.
A lecturer teaching a same subject for different section may not be able to deliver uniformity in the
Class room lectures
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”
Food and Restaurant
3. Variability—Lack of consistency in service performance
Nature and Scope of Services
The following are some of the measure to overcome service variability
Strategy 1
By adopting good human resource management practices
• 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.
Strategy 2
Standardizing service delivery:
• 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.
Strategy 3
Understanding customer:
• 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.
Strategy 4
Feedback and Follow up:
• In order to understand the perception of customer about the service offered, customer’s 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
4. Inseparability—Produced 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 detached—meaning 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
Commodity
Intangible products that
are exchanged directly
from the producer to
A raw material or
the customer.
primary agricultural
product that can be
bought and sold, such
as copper or coffee.
Scope of Product
Person
• Car,
• Pen,
• Camera,
• Book,
• Shaver
• Salam Khan
• Katrina Kaif
Physical product
Idea
• Switzerland
• Kashi
• Ooty
• Anti-corruption
• Gay Rights
• Women
Protection
• Education
• Insurance
• Banking
Place
PRODUCT
Physical Aspect
Functional Aspect
Symbolic Aspect
Services
APPLICATION
What it is ?
What is does?
What it means to the users emotion?
Difference between
Product and Service
Tangibility
Nature
Transferability
Storage and
Transportation
Quality
Peculiarity
Separability
Products are tangible
A physical commodity
Transfer of ownership is possible
Possible
Services are intangible
A service is an action
Transfer of ownership is not possible
Not possible
Can be standardized
Homogenous
Production and distribution are
separated from their consumption
Difficult to standardise
Heterogeneous
Produced and Consumed
simultaneously
Classification of
services
On the basis
of
Marketability
On the basis
of people
orientation
On the basis
of
Inseparability
On the basis
of Tangibility
On the basis
of end user
On the basis
expertise
Classification
of Services
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:
Semi-separable services:
• This includes services that cannot be
separated from the service provider,
These services are produced and
consumed simultaneously.
•
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:
Non-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.
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:
Semi-separable 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.
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:
Consumer 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.
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:
Non-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.
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
Non-profit services
•
•
For-profit services are generally rendered to
generate income for producer and their
employees. For example consulting and
outsourcing 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
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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
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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
Understanding
Market
Product
Development &
Launch
Product Life
Cycle
management
• 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.
• This involves studying the competition, industry and overall business environment and finally preparing
SWOT analysis.
• The creation of products with new or different characteristics to meet the needs of the customers.
• 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 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 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 improvement
Product development strategy
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
Product factors
Market factors
Wrong segmentation
and targeting
Unattractive features
Poor demand
management
Weak positioning
strategy
No uniqueness (USP)
Changes in consumer
taste and
preferences
Distribution related
problems
Flawed Product
Changes in
environmental factors
Questionable pricing
strategy
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.
Product Portfolio
−Product Mix−
Personal care
House care
Food and beverages
−Product Lines Width−
Ponds
Product
line
depth
Ponds age miracle
Ponds flawless white
Ponds white beauty
Ponds gold radiance
Lux
Lakme
Lux peach & cream
Lux strawberry & cream
Lux freash splash
Lux sandal & cream
Lux body wash
Lux pack dior
Lakme Absolute range
Lakme colour crush
Lakme dresser
Lakme lip range
Lakme perfect radiance
Lakme sun expert range