Service sector management

Chap 1: Introduction to service sectors

WHAT IS SERVICES 1. Services include all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced and provides added value in forms (such as convenience, timeliness, comfort or health). That is essentially intangible concerns of its first purchaser. 2. Services are intangible, inseparable, variable and perishable. Each characteristic poses challenges and requires certain strategies. Marketers must find ways to give tangibility ti intangibles; to increase the productivity of service providers; to increase and standardize the quality of the service provided; and to match the supply of services during peak and non peak periods with market demand. 3. Service industries lagged behind manufacturing firms in adopting and using marketing concepts and tools, but this situation has now changed. Service marketing strategy calls not only for external marketing but also for internal marketing to motivate employees and interactive marketing to emphasize the importance of both high-tech and high-touch. 4. Even product- based companies must provide post purchase service. To provide the best support, a manufacturer must identify the services that customers value most and their relative importance. The service mix includes both presale services (facilitating and value augmenting services) and post sale services (customer service departments, repair and maintenance services). Educational services. Health care services. Tourism services. Financial services. Communication and information services. Transportation services.

Service sector has the ability to create jobs since many of the subsectors in services are labor-intensive. The service sector has an important role in improving production efficiency and promoting technical progress, in addition to directly satisfying consumer needs . Service sector contributes in growth of gross domestic product of a country.

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Service sector contribute a lot towards increasing awareness among people and increase the standard of living of people.

Service sector facilitate education sector in a country because service mainly needs skilled people. Thus, a country can have a big service sector.

Various service sectors in India

Trade Hotels and Restaurants Transport (roadways, aviation, railways,etc) Communication (Post, Telecom) Banking & Insurance Dwellings, Real Estate Business Services Public Administration; Defense Personal Services Community Service Education

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Chap 2: Growth of service sector in India.

INDIAN SCENARIO India stands out for the size and dynamism of its services sector. The contribution of the services sector to the Indian economy has been manifold: a 55.2 per cent share in gross domestic product (GDP), growing by 10 per cent annually, contributing to about a quarter of total employment, accounting for a high share in foreign direct investment (FDI) inflows and over one-third of total exports, and recording very fast (27.4 per cent) export growth through the first half of 2010-11. IMPORTANCE OF THE SERVICES SECTOR FOR INDIA The importance of the services sector can be gauged by looking at its contributions to different aspects of the economy. Services GDP The share of services in Indias GDP at factor cost (at current prices) increased rapidly: from 30.5 per cent in 1950-51 to 55.2 per cent in 2009-10. If construction is also included, then the share increases to 63.4 per cent in 2009-10. 10.6 The ratcheting up of the overall growth rate (compound annual growth rate [CAGR]) of the Indian economy from 5.7 per cent in the 1990s to 8.6 per cent during the period 2004-05 to 2009-10 was to a large measure due to the acceleration of the growth rate (CAGR) in the services sector from 7.5 per cent in the 1990s to 10.3 per cent in 2004-05 to 2009-10. The services sector growth was significantly faster than the 6.6 per cent for the combined agriculture and industry sectors annual output growth during the same period. In 2009-10, services growth was 10.1 per cent and in 2010-11 it was 9.6 per cent. Indias services GDP growth has been continuously above overall GDP growth, pulling up the latter since 1997-98. It has also been more stable the trend was similar, the fall in employment in

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primary sector was less (at -1.1 per cent) with a small commensurate rise in employment in the other two sectors, which was again almost equally divided between the other two sectors.

SHARE AND GROWTH RATE OF SERVICE SECTOR IN 2008-2009

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Chap 3: Introduction
India Transport Sector Indias transport sector is large and diverse; it caters to the needs of 1.1 billion people. In 2007, the sector contributed about 5.5 percent to the nations GDP, with road transportation contributing the lions share. Good physical connectivity in the urban and rural areas is essential for economic growth. Since the early 1990s, India's growing economy has witnessed a rise in demand for transport infrastructure and services. However, the sector has not been able to keep pace with rising demand and is proving to be a

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drag on the economy. Major improvements in the sector are required to support the country's continued economic growth and to reduce poverty. Railways. Indian Railways is one of the largest railways under single management. It carries some 17 million passengers and 2 million tonnes of freight a day in year 2007 and is one of the worlds largest employers. The railways play a leading role in carrying passengers and cargo across India's vast territory. However, most of its major corridors have capacity constraint requiring capacity enhancement plans. Roads. Roads are the dominant mode of transportation in India today. They carry almost 90 percent of the countrys passenger traffic and 65 percent of its freight. The density of Indias highway network -- at 0.66 km of highway per square kilometer of land is similar to that of the United States (0.65) and much greater than China's (0.16) or Brazil's (0.20). However, most highways in India are narrow and congested with poor surface quality, and 40 percent of Indias villages do not have access to all-weather roads. Aviation. India has 125 airports, including 11 international airports. Indian airports handled 96 million passengers and 1.5 million tonnes of cargo in year 2006-2007, an increase of 31.4% for passenger and 10.6% for cargo traffic over previous year. The dramatic increase in air traffic for both passengers and cargo in recent years has placed a heavy strain on the country's major airports. Passenger traffic is projected to cross 100 million and cargo to cross 3.3 million tonnes by year 2010. Transport infrastructure in India is better developed in the southern and southwestern parts of the country.

Airline Industry An Overview

The airline industry came into existence during the 17th centuries. Origin of Indian aviation industry can be tracked to the year 1912. The Indian airline industry is one of the fastest growing aviation industries in the world with private airlines accounting for more than 75 per cent of the sector of the domestic aviation

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market. Earlier airline industry was primarily owned by government; by today Indian airline industry is dominated by privately owned full service airlines and low cost carriers. Currently, India ranks ninth in the global civil aviation market and expecting become one of the top five civil aviation markets in the world over the next five years. A number of domestic airline groups have emerged in a reasonably short span of time to make the market furiously competitive. Air travel remains a large and growing industry. It facilitates economic growth, world trade, international investment, and tourism and is therefore central to the globalization taking place in many other industries. 75% of the market share is owned by private sector. India is the 9th largest aviation market in the world. Major airlines in India are Deccan, GoAir Airlines, Indian Airlines, Indigo, Jet Airways, Kingfisher, Paramount, SpiceJet, JetLite. Records show that the demand for airline travel has been increasing. The number of passengers carried by domestic airlines from January-June 2010 stood at 25.71 million as against 21.1 million in the corresponding period of 2009.

KINGFISHER AIRLINES:
Kingfisher Airline is a private airline based in Bangalore, India. The king of good times Dr. Vijay Mallya of United Beverages Group is the Chairman and CEO of Kingfisher Airlines Kingfisher Airlines Limited launched scheduled airline services on May 9, 2005 with 4 daily flights between BOM & BLR. The airline currently operates on domestic routes. The destinations c o v e r e d b y K i n g f i s h e r A i r l i n e s a r e B a n g a l o r e , M u m b a i , Delhi, Goa Chennai, Hyderabad, Ahmedabad, Cochin, Guwahati, K o l k a t a , P u n e , Agartala, Dibrugarh, Mangalore and Jaipur.In a short span of time Kingfisher Airline has carved a niche for itself. The a i r l i n e o f f e r s s e v e r a l u n i q u e s e r v i c e s t o i t s c u s t o m e r s . T h e s e i n c l u d e : personal valet at the airport t o a s s i s t i n b a g g a g e h a n d l i n g a n d b o a r d i n g , accompanied with refreshments

Service sector management

and music at the airport, audio and video on-demand, with extra-wide personalized screens in the aircraft and three-course gourmet cuisine. Kingfisher Airlines currently operates with a brand new fleet of 8 AirbusA320 aircraft, 3 Airbus A319-100 aircraft and 4 ATR-72 aircraft. It was the first airline in India to operate with all new aircrafts. Kingfisher Airlines is also the first Indian airline to order the Airbus A380.UB holdings Ltd, has acquired 26% stake in the budget airline. In just over two years, Kingfisher Airlines has achieved a market share of 1 0 % a n d h a s o n e o f t h e m o s t a g g r e s s i v e e x p a n s i o n p l a n s o f a l l I n d i a n carriers during 2007. In Jun-07, it dramatically increased its influence in the market with the acquisition of a 26% shareholding in Indias largest LCC.

Chap 4: Segmentation
BASIS OF SEGMENTATION INCOME PURPOSE OF TRAVEL LOCATION LOYALTY SEGMENTATION DEMOGRAPHIC PHYSIOGRAPHIC GEOGRAPHICAL BEHAVIOURAL

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Typically, the industry does this by differentiating between the first-class passenger (who is given substantial extra luxury benefits in their travel experience), the business-class passenger (who gets some of the luxury of the first-class passenger), and the economy-class passenger (who gets none of the luxury of the experience but still enjoys the same flight).

Attributes INCOME LOCATION AGE GROUP PURPOSE OF TRAVEL LIFESTYLE LOYALTY

Elite Fliers >Rs.7lacs p.a. Tier-1,Tier-II 20-35yrs Business, leisure Flamboyant Hard core loyal

Seekers Rs.3 lacs to Rs.5 lacs p.a Tier-1,Tier-II 30-55 yrs Business, Leisure

Bag Packers Rs.2.5 lacs to Rs. 4 lacs p.a Tier-1. 18-30 yrs Point to Point, Short Distance, Leisure

Orthodox/conventional Unmanaged Loyal/switchers Switchers

Chap 5: 7 P's
PRODUCT:
Kingfisher airlines offered unparallel service to its guest. The success of this airlines in a very short period of time can be attributed to the novel services introduced by it. Foll are some features: Roving Agent: a roving agent is check in counter on the move. The guest with the hand baggage are not required to stand in the queue at the check- in counters. The roving agent come to the customer and assist them.

Service sector management

Different check-in options: the airlines allows it customers to do a web check from its website apart from the option of the airport check-in. Special care for accompanied minors, senior citizens and those with reduced mobility: the airlines takes the responsibility of escorting the children safely to their destination. The ground crew assists in check-in and boarding process. The flight attendants take care of the child to ensure a comfortable and enjoyable flight. At the destination, the staff escorts the child to the arrival terminal and meets the person named earlier. Only after checking the credential of the assigned person is the child released. Guest with disabilities can expect a personalized and caring treatment. An escort with a wheel chair can be assigned to the guest. Help in check-in, boarding and disembarkation can also be availed by guest. In-flight entertainment: every seat is treated with an individual TV with LIVE TV as well as pre-recorded in-flight entertainment channels and radio.

PLACE:
Connectivity: Kingfisher airlines flies to 38 destinations across India. These 38 locations cover a wide geography of the country and connect all the metros and major cities. It also has connectivity among the tier 2 cities of the country. FREQUENCY OF FLIGHTS: the airline currently operates 218 flights everyday across its 38 domestic destinations. The frequency between the four metros and other major cities such as Bangalore, ahmedabad, Hyderabad and pune accounts for the maximum number of take offs every day .

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BOOKING OF TICKETS: the customer have an option of booking tickets at the airport , by calling the customer care, through travel agents and by logging on to their website.

PRICE:
Kingfisher airlines has been termed as the first full frills- true value carrier. The airlines has a very well defined target audience which is the Sec A and Sec B+ of the Indian economy and that falls between the age group of 24-45 years with disposable incomes. This section of the population is modern, trendy and upwardly mobile looking for a great flying experience. They have traveled extensively and are aware of the international flying trends. This segment really doesnt mind shelling out as long as they get the experience they are looking for. Gourmet cuisine and in- flight entertainment offered on-board. The whole KINGFISHER EXPERIENCE is about luxury, comfort, enjoyment and relaxation. The passengers are looking forward for value of money and the airline is able to live it up to their expectations.

PROMOTIONS:
Kingfisher airlines has adopted a well rounded approach to reach out to their customers. Their objective is to create a place in the minds of their customers for their brand and to ensure that the message gets across effectively. Kingfisher airlines has 360 degree promotion strategy in place. They reach out to their customers to their through all media of communication such as television, radio, print, outdoor, malls and multiplexes clubs and pubs and their Flight-in magazine.

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They have tied up with several banks across industries such as Tata Tetley, Pepsi , Microsoft, inox, ICICI bank and park hotels. Kingfisher Airlines has introduced a co- branded credit card. This is in association with ICICI bank. The crad owner earns 100 points on every spend. The points can be converted into king miles. The card also comes with a lot of other benefits such as discounts and privileges. King club is the airlines loyalty program. As a member of king club customer enjoys a range of exclusive preveliges and benefits for each membership level from the moment they have reserved their travel till the time they reach their final detination. The more a customer flies with kingfisher airlines the more he will be rewarded.

PEOPLE:
Kingfisher airlines cabin and ground crew is the hallmark of their services. The real winning factor for kingfisher airlines is the quality of staff service being provided to the customers, and it is of course critical that the airline is able to sustain these high quality levels as they experienced continue and rapid expansion. Staff delivers high standard of service efficiency , and in a sincere and charming manner that makes the airline stand out from the rest. The crew undergoes rigorous training programmes. Kingfisher airlines have also instituted the kingfisher training academy to cater to the growing demand for trained service oriented professionals. The academy provides intensive training on airlines orientation covering airline rules and regulations, cabin familiarization, galley management and announcement delivery.

PROCESS :
Following are the process that adds to the satisfaction experienced by kingfisher customers.

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Kingfisher airline facilitates easy booking of tickets. The passenger can book their ticket seats by calling their 24/7 customer care, by logging on to their website, designated travel agents and at the airports. The airline provides its customers with a personalized valet service at all airports across the country. The valet service staff assists the passengers right from the time they reach at the airport till they check-in and also upon the arrival at the destination. Upon arrival, this staff guides the passenger to the right baggage belt and assists them with it. The airline tries to ensure that the passenger can retrieve their baggage after they disembark from the aircraft in the shortest possible time. However, this is also subject to the infrastructure of the airports.

PHYSICAL EVIDENCE:
Fleet: the airline has a brand new fleet of aircraft comprising of 18 ATR 72s, 4 A 319s, 13 A 320s, 8 A 321s, 2 A 330s. Interior of the aircraft: all the aircrafts of kingfisher airlines have designed interiors . The moment a passenger the aircraft, what strikes him is the bold use of red colour. Cleaniness inside the aircraft: all the aircrafts are well maintained fro cleaniness and a pleasant experience.

Chap 6: Quality Dimension

THE 5 DIMENSIONS OF SERVICE QUALITY ARE AS FOLLOWS On Which Customers Judge Tangible: Tangibles are defined as the appearance of physical facilities, equipments, personnel and communication materials. All of these provide physical representations or images of the

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service that customers particularly new customers, will use to evaluate quality. Although tangibles are used by Service Companies to enhance their image, provide continuity, and signal quality to consumers, most company combine tangibles with another dimension to create a service quality strategy for the firm. Reliability: means the ability to perform the promised service dependably and accurately. In other words reliability means that the company delivers on its promises promises about delivery, service provisions, problem resolution, and pricing. Responsiveness: is the willingness to help customers and provide prompt service. This dimension emphasizes on attentiveness and promptness in dealing with customers request, questions, complaints and problems. Responsiveness also captures the notion of flexibility and ability to customize the service to the customers needs. Assurance: is defined as employees knowledge and courtesy and the ability of the firm and its employees to inspire trust and confidence. This dimension is likely to be particularly important for service that the customer perceives as involving high risk and / or about which they feel uncertain about their ability to evaluate outcomes. Empathy: is defined as carrying individualized attention the firm provides its customers. The essence of empathy is conveying through personalized or customized service, the customers are unique and special. Customers want to feel understood by and important to that provide service to them.

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Tangibility 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Visually Appealing Physical Facilities Economical Airfare and Discount Schemes Web-site and Call Center usage Modern Aircraft with up-to-date Facilities Neat Well Dressed and Visually Appealing Staff Seat in Flight of Choice Hassle free Check-in and Boarding Efficient Baggage Handling Mechanism Excellent Quality In-Flight Services Multiple Meal Options of High Quality Reliability Special Need Customers Problems due to Critical Incidents Meet Time Commitment Keep Error Free Records Perform Service right the first time Responsiveness Prompt Service to Customers Always Willing to Help Customers Staff Behavior should Instill Confidence Keep Customer informed about time of Service Staff never too busy to respond to customer's request Assurance Safe Planes and Facilities During Journey Consistently Courteous Staff Knowledge to Answer Customers' Queries Individual Attention to Customer Empathy Staff gives Personal Attention to Customer Customer's Best Interest at Heart Understand Specific Needs of Customers Convenient Flight Schedules Overall Satisfaction with the Airline

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Chap 7: Small Case study

Business Strategies : Kingfisher Airlines Kingfisher Airlines launched its domestic air service operations in May 2005.KFA was promoted by UB group and offered a single class- Kingfisher Class. KFA successfully leverage the youthful and vibrant image of its kingfisher beer brand and called its airlines as Funliners to emphasize the fun-filled experience. Within the first six months of its launch, KFA managed to corner a 6% market share in the domestic air travel mark. KFA started its operation in May 7, 2005, positioning itself as a budget carrier and not as Low Cost Carrier (LCC) KFAs Promotional Strategies As part of its promotional strategy the marketing team of KFA showcased the airline as the new flying experience. The following initiatives were taken as part of its promotional strategy

Advertisements hoardings at airports depicted the stylish interiors of the Funliners, which conveyed youthfull, fun-filled, and world class image. INOX multiplexes in Mumbai publicized KFAs special offers for a month. KFA was the official travel airlines for the cast and crew of Mangal Pandey- the movie. KFA made use of various fashion shows, celebrity golf matches, New Year parties all to build its Kingfisher brand. The UB groups monthly magazine called Pegasus published information about KFA along with other information related to UB group. KFA launched many attractive offers to promote its sales like the King Card in association with ICICI Bank, in August 2005. This was meant to create loyal customers for KFA by providing benefits like privileged access to lounges, restaurants, free

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refreshments at airports, access to 180 golf clubs across India, special invites for lifestyle shows .

In October, KFA launched Chill Times Offer in the month of August 2005 and September 2005. In October they launched the King Saver Offer which said Fly like a King, dont play like one. KFA targeted the frequent fliers business traveler segment, which was dominated by Jet Airways. By offering a King Saver Booklet, This booklet contained six free flight tickets and was presented as a free gift if the passenger bought two such booklets each worth Rs. 26,999.Passengers could avail off this offer if they showed there Jet Privilege Member (Gold or Platinum) card.

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Reference:
Service Marketing- Christoper Lovelock, Jochen Wirtz, Jayanta Chatterjee. Service Sector Management-An Indian perspective- C. Bhattacharjee. Marketing Management- Philip Kotler. Airlines Service Marketing- Sharad Goel http://findpdf.net/ebooks/books-about-service-sector-as-a-growth-engine-for-a-india-

free-download.html. http://www.scribd.com/doc/36663081/introdn-growth-in-service-sector

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