Q1.

Ans

Explain the types of new service developments and its stages? Types of New Service Development and its stages Before discussing about the types of services, let us first learn the meaning of new service development. Products that are not developed within a framework are less likely to succeed when compared to those developed and implemented within a structured planning framework. The new service development system must have four basic characteristics because of the intangible nature of service. The four basic characteristics are:

Service must not be subjective, it should be objective.

t should be well defined not vague or ambiguous. t must be based on facts rather than opinions. t should be a step wise procedure rather than a philosophical one. The process of development of a new service should indeed follow a structure and a set of defined steps but this structure need not be too rigid. Service involves the interaction of customers and employees. Services are consumed as soon as it is produced. The involvement of employees in the design and implementation of new service design is beneficial since they are in direct contact with customers and know e!actly what the customers e!pect. "ustomers are also often involved in the design of new service as they sometimes play an active role in service delivery. Types of new services The following could be considered as different types of new services:

#ajor or radical innovations are services associated with markets that are not defined yet. Start$up businesses consist of new services for markets that already have products that meet customer needs.
New services for currently served market are associated with offering customers with new services that were previously not offered by the company. Service line extensions are the expansion of the existing service line. Service improvements represent changes in the already existing services; this could changes in features of existing services. Style changes are the simplest service innovation and have a significant effect on customer perception, emotions and attitudes. Stages in new service development %igure & show the stages involved in new service development.

Figure 1: Stages in New Service Development 's shown in figure 1, the first two stage of new service development include front-end planning and implementation. et us first discuss the front-end planning. !ront end planning

1. Business strategy development or review: (very organisation has a uni)ue vision and mission. ' 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. *ew service strategy development: ' 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. ' new service strategy could be defined in terms of markets, types of services, time hori+on for development, profit criteria, or other factors.

3.

dea generation: ,eneration of new ideas is the ne!t 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. %or a tangible product, forming the product description and drawings and presenting it to customers would be the ne!t step. Service being intangible, places comple! demands on this phase of the process. -escribing an intangible service in concrete terms is difficult.

5. Business analysis: (stimating the economic feasibility and potential profit implications form a part of the ne!t step after
development. -emand analysis, revenue projections, cost analyses and operational feasibility are assessed at this stage. 'fter learning about the front$end planning, let us now discuss about the implementation. "mplementation

1. Service development and testing: This is the step where product prototypes are constructed and customer acceptance is tested.
This step presents uni)ue 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. t is in this step that the service is refined and service blueprint is drawn out.

2. #arket testing: This is the stage where market acceptance is evaluated by introducing the new service in a test market. -ue 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 mi!.

3. "ommercialisation: The service goes live and is introduced in the marketplace in this stage of the process. This step involves
the building and maintaining acceptance of the new service in the market. (!cellent internal marketing will contribute significantly to the success of the new service.

4. Post introduction evaluation: 't this point, the information gathered during commercialisation of the service can be reviewed
and changes made to the delivery process, staffing, or marketing mi! variables on the basis of actual market response to the offering. Service never remains the same. .ence it is necessary to evaluate the changes so as to improve service )uality.

Q2. Ans

Explain the concept of lack of inventory capability in managing supply and demand in services !anaging Demand and Supply of Service " #ack of $nventory %apability 'fter knowing the strategies to match capacity and demand, let us see how we can handle the demand and supply of services. /ack of inventory capability in services is the underlying fundamental issue in the management of supply and demand. Service firms face the problem that they cannot store their inventories during a slow moving period for a higher demand period later. Perishability of services is the cause of lack of inventory capability. Services are produced and consumed simultaneously and hence, there is lack in inventory capability. %or e!ample, airline seats that are not sold on a particular day cannot be resold on another day. The useful capacity of that seat has perished. The other problems associated with services are that they cannot be transported from one place to another nor can they be transferred from one person to another. !or example, hotel services cannot be moved to another location during low demand periods. !luctuating demands and lack of inventory capability combined together result in a number of potential outcomes as shown in figure #

Figure 2: &ariations in Demand 'elative to %apacity The straight hori+ontal lines in the figure represent service capacity and the sloping lines indicate customer demand for service. "apacity is generally fi!ed in many services and hence, designated by a flat hori+ontal line. The demand fluctuates and hence it is represented by the sloping line. The uppermost hori+ontal line indicates ma!imum capacity. %or e!ample, the number of rooms in a hotel remains constant but the demand fluctuates. The optimal capacity is represented in between the second and third hori+ontal line. 0ptimal capacity is the ideal use of capacity from the company and customers perspective. The middle of the figure 1 represents the basic four scenarios that can arise due to the different combinations of capacity and demand. $hey are% &xcess demand% 'aximum capacity is exceeded by the level of demand. "n this scenario, business may be lost since some customers are driven away. $he (uality of service may not match what was promised even though the customer is served. $his happens because the employees are overworked and the facilities are also overtaxed.

-emand e!ceeds optimum capacity: The )uality of service will suffer, due to crowding, overuse, and pushing staff beyond
their abilities to deliver consistent )uality.

-emand and supply are balanced at the level of optimum capacity: Staff and facilities are kept occupied at an optimal level.
.ere, employees are not overworked, facilities are maintained and the customers receive prompt )uality service.

(!cess capacity: 0ptimum capacity is way above demand. t results in low productivity and profits, since the productive
resources such as labour, e)uipment and facilities are underutilised. The service )uality is e!cellent since the customers need

not wait for facilities and have the complete attention of the staff. "ases where the service )uality depends on the presence of other customers, customers may feel disappointed thinking that they have chosen an inferior service provider. The challenges faced in managing supply and demand may not be the same for all companies. The e!tent of demand fluctuations over time and e!tent to which supply is constrained are the two main reasons that govern the seriousness of the problem. 0rganisations that e!perience wide fluctuations in demand are telecommunications, hospitals, transportation, and restaurants. (!amples of firms with narrower fluctuation are insurance, banking, and laundry services. n certain cases such as electricity and natural gas, peak demand can be met even when demand fluctuates. n some other cases such as hospital emergency rooms, restaurants and hotels the peak demand e!ceeds the capacity. Q3. Ans (hat is the integrated marketing process model Explain in brief $ntegrated !arketing %ommunication for Service This is the concept under which a company integrates and coordinates its many communications channels to deliver a clear, consistent, and compelling message about the organisation and its services . "ntegrated marketing communication for services is considered to be the combination of market communication, planning, and discipline. "t is developed to make the maximum market impact. "t is also considered to be a part of the marketing communication planning. ntegrated #arketing "ommunications 2 #"3 is an approach, which coordinates and integrates all sources, places, functions, and marketing communication tools within a company into a flawless process that can ma!imise the impact on the user, while maintaining the low cost for the company. #arketing mi! is a part of the marketing plan and promotion is a part of the marketing mi!. Promotional activities include advertising by using different media, sales promotion, and personal selling activities. t also includes internet marketing, sponsorship marketing, direct marketing, database marketing, and public relations. #" is the integration of all these different promotional tools along with other components of marketing mi!, in order to gain an edge over competitor. #" uses a data$ driven approach to identify the areas of the customer interest and develop a strategy with the right channels to create a stronger brand$consumer relationship. This approach involves knowing what to use, when to use, and how to use the different media resources to mark the ma!imum impact on the consumer and their choice. The starting point of the #" is the marketing mi! which constitutes different styles of marketing, advertising, and sales. $he main aim of the organisation is to maintain communication between the customer and the organisation. ) comprehensive integrated marketing communication planning is needed to accomplish this task. *ustomer lifetime value and the regression analysis are the important elements in the "'* approach. +e can refer to the integrated marketing process model, which shows the interrelationship between various processes of a marketing system. $his marketing model is applicable to both the product and services.

Figure 3: $ntegrated !arketing )rocess !odel The figure 4 shows how different processes of the business system interact with each other to develop sales, profit, and brand e(uity. "t is a closed process cycle, in which all the processes are interdependent on each other for proper functioning and achieving the goal setup for them. ,rief discussions of the main processes are as follows%

 %ross functional monitoring: 'll parts of the organisation should be monitored for the performance while delivering )uality
Q . Ans service and should be evaluated for maintaining the brand relationship. S(*T analysis: S50T stands for strengths, weakness, opportunity and threats. t is a method for evaluating strategic planning and can be built into the strategic planning model of the organisation. Database and information technology: This enables the organisation to take the decision faster by conducting research and implementing new technologies, which meet the re)uirement of customers. +rand messages: t involves the strategic consistency of brand positioning using big creative ideas and mass media for spreading those messages to the masses. +rand relationship: Building the brand relationship with the customer re)uires a continuous interaction between the organisation and the customer. t will help in building up the brand e)uity and maintaining a healthy customer relationship. Define Service Sector in $ndia and %lassify the ma,or service sectors *verview of Different Service Sectors Services sector is constantly growing and it accounts for more than 67 per cent of world ,ross -omestic Product 2,-P3. ,rowth in economy results in the growth of public income. n an underdeveloped economy, e!penses are more on agricultural sector in order to satisfy the primary needs of people. 's the economy starts growing, e!penditure starts shifting to the industry. The shift from agricultural economy to industrial economy has increased incomes, which has eventually increased the standard of living of people. 5hen income increases and people are able to meet their basic needs and e!penses on the services start to grow. This marks the transaction of the economy from developing economy to developed economy. The analysis of developed economies show that the e!pense on services witness more growth as economy turns from developing to developed. This breakage refers to the activity where firms start focusing on core functions and sub$contract non$core functions to the services sector. ,rowth of the service sector marks the importance of the ndian economy in the world economy. /et us now see the classifications of service sector. Service sector classification Service sector consists of many verticals. 'll the sectors, which provide the support service in a way or other, belong to service sector. t could be the service provided by banking institutions or the service provided to you by your local retailer. They all form a part of the service sector. The figure - shows different sectors of the service sector domain.

Figure : Service Economy The service sector constitutes various sectors that provide different services and each sector may have its own set of allied services. /et us outline major sectors:

(ducation and health service sectors provide services like education for students and healthcare services for sick people in the
economy. %or e!ample, university and colleges, hospitals, medical diagnostic centre, research labs, and medical shops. %inancial services sector deal with financial aspects and provide services related to finance. %or e!ample banks, insurance agencies and so on. ,overnment service sector provide services like transportation services, post office services, ration card and free education for poor and underdeveloped people, and various other services offered by the government for the economy or for public interest.

 nformation service sectors provide you with some information like newspapers, news channels, radio, maga+ines, and so on. /eisure and hospitality service sector provide services related to tourism. t constitutes of all those resorts, restaurants, hotels
and so on which provide you food and lodging services. .

Professional and business service sector provide support services to various industries. t could be either the services from an
T company or the services from a charted accountant, lawyers, architect, and so on.

Transportation and utilities sector provide the transportation facilities. 'irlines, railways and travel agencies, belong to this
service sectors. This includes services like packers and movers services, goods transportation or the transportation service for public. 5holesale and retail trade sector provide services that are concerned with the selling of commodities that could be sold loose. t could be either in organised way like the big retails brand chain or an unorganised way like those general merchant shops. 0ther service sectors my include customers in their activities like entertainment services, .air styling, pest control, plumbing, lawn maintenance, counselling services, health club, child care services, and so on. Q!. Ans "ention the technical option in the #ervice "ar$eting? $nnovations in Services !arketing #arketing in the fast growing economy needs innovations. 5hen we are trying to focus our marketing on two different segments like in rural market and in global market, a good and innovative approach is needed. So let8s move onto the innovations in the service marketing. nnovation is a change in the thought process for doing something, or the useful application of new inventions or discoveries. Thus innovations are the means of generating new, radical ideas for improving the e!isting facilities. n the service marketing sector, innovations are always needed to gain an edge while competition in the market over other competitors nnovations help in providing better services to the customers and help the organisation to maintain the )uality of the service and eventually helps to take them to the ne!t level. 5ith the popularity of the new electronic media, there have been a lot of innovations in the services and in the marketing field. %or e!ample, telemarketing, e$marketing, e$"ommerce are just to name a few. 9ust a few decades back, there was no concept of online shopping and online transactions. But today, online transactions have become so much popular that every organisation provides such facilities and they are always on the top of the priority list. %or e!ample we can take the e!ample of the online social networking websites like %acebook or 0rkut: these provide facilities to the public to remain in contact with their friend from around the world. They are the innovations in the field of services by using the concept of the information technology. 5ith them another innovation came that was social gaming, which is now the latest trend and has opened a new area of market growth and revenue generation for the companies. These kinds of innovations are always re)uired in the market to gain the attention of the consumers. The need of innovation is generally in the components of the marketing mi! 2product, place, promotion and price3. Through innovation, we can get better product, and search for better place to sell our services. nnovative ideas can enhance the e!perience of customer in the promotions of the product. Through innovations in the production and marketing strategy, we can also get more profit while being able to reduce the overall cost of the product that customer has to pay for the product. 'n innovation model for services has been proposed by Professor -ick den .ertog of Tilburg ;niversity. .e identifies following four areas of the service innovations, which is shown in table 1. %a&le 1: -reas of Service $nnovation 'nnovation (escription t refers to the innovation in the service concepts. t could be new service or the old service with some new innovations. ,enerally, innovations try to decrease the intangible characteristics of the services. %or e!ample a bank providing a new type of account. t refers to interface between the company and the client. nnovations in this field can help to make a better communication channel between the customer and company. %or e!ample, a retail company can change the dress of their staff and introduce new guidelines for interacting with the customers it refers to the system that makes the final delivery to the client. The delivery system can take new measures to ensure fast, consistent, and punctual delivery of the services to the client. The final delivery is very important as it affects the e!perience of the customer greatly. t should always be what you promise is what you deliver. %or e!ample, a courier

The service concepts

The client interface

The service delivery system

company can set up time limit for the delivery of the couriers to the clients. t refers to the use of technology in the service system. There are always new technological advancements in the market. Theses advance$ments should also be included in the service sector to provide the client a new and improved services system so that the e!perience of client with the company keeps on getting better. %or e!ample introduction of online tracking system of courier delivery

Technological options

These innovations can help the organisations to interact with their clients in better environment and also helps them to maintain the standards of their service.

Q). Ans

(hat are the key benefits of %'! (hat are the main difficulties involved in %'! +enefits of %'! .aving discussed lifetime customers and customer loyalty, we will now discuss the benefits of "<#. "<# is implemented by the company to provide more velocity to their effort in maintaining lifetime customer and customer loyalty. "<# can benefit both the company and the customers. The information stored in "<# helps the company to get more information about the customers. The customers get the benefit of the desired )uality of services. /et us now discuss the benefits "<# provides to customer and the company. +enefits for customers:. %onfidence benefit: The customers are confident about the )uality of service and the service provider itself. This is one of the benefits that the customers en.oy when they are involved in a long term relationship with the company. $he company knows what the customer expects and the customer knows what kind of service they can expect from the service provider. 'oving from one service provider to another service provider generally involves more investment of money and time. !or example, if a customer is associated for a long time with a telecom company, he would be confident about the (uality of the telecom network the company is having.

Social benefit: 5ith the long term relationship with a company or firm, customer can get a social support benefit. 0ver the
time, customer develops a feeling of familiarity with the company and the service being provided. %or e!ample, long term customer of a telecom company gets more attention and help from the staff of the company. The local staff might be more familiar with the customer.

Special treatment benefit: 5ith the long term relationship, customer can get the benefit of special treatment like benefit of
doubt, special discounts, preferential treatments, special offers and special services. These services can help the companies to maintain their relationship with the customer and enhance them. 0n the other hand, customer feels more familiar in the environment of the company. %or e!ample, a customer can get special calling rates or can get special discounts while paying his monthly telephone bills. +enefits for company:.

Economic benefit: <elationship based service companies tend to achieve higher overall return on their investment than the
transaction based service companies. These high overall returns come from reduced marketing cost, reduction in administrative cost, increase in the e!pense by customer, good margin in profit without reduction in price of the services. 's the satisfaction of the customer increases with the service provider, service provider keeps getting more of the business from the satisfied customers.

%ustomer behaviour benefit: The best benefit that a service provider company can get from the satisfied and long term
customer is the free mouth$to$mouth publicity. This kind of publicity has more impact because they are tested by the customer. The second benefit that the company can get from the loyal customer is that they try to help the company to

provide )uality services and also help the company to perform better. They can inform the company about the possible low side of the services provided by the company. The third benefit that the company can get from the long$term customer is that they can share their e!perience with the services of the company with other customers. %or e!ample, in a health clinic, a long term customer can help the other customer to understand the unsaid code of conducts and also act as a mentor to the new customer. This way the company will get the implicit and e!plicit help from the loyal customers.

/uman resource management benefit: /oyal customers can help in making the job of the staff much easier with the
previous e!perience with the company. t is easy to train new staff by allowing them to deal with the loyal customers as the behaviour of the customer is known. 5orking is easy with the long term customers and also staffs like to work for the company which has a stable customer base. This helps the company to maintain the )uality of service and also to reduce the cost turnover and training of the employees. %rom the above discussion, we could understand that relationship marketing is crucial for both the company and the customer. "ompanies are putting more effort in the relationship marketing so that they can have a stable customer base, which can provide them with more benefit in the future. t also reduces the investments involved in the marketing, staffing and administering the services, while still maintaining the )uality of the services and maintaining the profit of the company.

Difficulties $nvolved in %'!:. n the previous section, we have discussed the benefits of "<#. 'lthough "<# provides many benefits, it also has some difficulties involved with its implementation. /et us now discuss about these difficulties in this section. /ike in any management approach, "<# also has some difficulties involved in its planning and implementation. "<# checks for the following:

.ow the company manages the relationships with the customer.

f the company follows a relationship based approach or a transaction based approach. The main problems involved in the "<# are as follows:

Excessive cost: The implementation and development of "<# re)uires huge investment of resources. t also re)uires time
investment. nvestment is re)uired in training man power, developing customer relationship, and in creating effective policies.

$nsufficient focus on main ob,ectives: The development of a good "<# re)uires effective implementation of the company
policies, the policies need to be clearly defined. The implementation of the "<# should focus more on the primary objectives than on the secondary objectives. f a detailed and comple! definition of the policies is not provided, then the clarity in their focus may reduce leading to inefficient "<# development.

#acking resources: "<# development and implementation is a resource hungry process. Sometimes it may lack the
resources while in the development or implementation phase. There is always a need for large number of resources in the "<#, even while it is in the operational stage also.

%omplex system: "<# is a comple! system. t interrelates with almost all the departments of the company. t also has to
store the information of the customers and has to analyse the stored information. The comple!ity of the "<# often misleads the developmental and implementation process into different direction, far away from the framed policies. The comple!ity of the "<# makes it difficult for a new person to understand the system to use all the facilities provided by the system.

(rong need selection: 5hile developing the "<# system, there is a need for the proper selection of the re)uirements. The
"<# is generally built around these needs provided by the company. f wrong selections are provided, it will affect the effective performance of the "<# system. The re)uirements must be clearly defined and implemented.

Not customer centric: The most important aspect in the "<# is that it has to be customer centric. f the "<# tends to be
more company defined, it will lack the ability to capture all the aspects of the customer and may miss out in collecting some important information from the customer that might be crucial for analysis and framing out the policy.

 Slow returns: The returns from the "<# are generally slow. The returns come over a period of time in the form of long term
customer relationship. There is a huge investment cost of the "<# and "<# will take time to return this cost back to the company. The return also depends upon the effective use of the "<# and effective policies being developed on its basis. 'lso, effective and efficient implementation of those policies.