Sales Management

AMITY GLOBAL BUSINESS SCHOOL
ashishpillai@gmail.com
Before We Discuss Mkt. of Services

We shall discuss the following questions
1. What is the dominant logic of business
and has it changed over the years?

2. What is marketing and has the meaning
and role of marketing changed?
Let Us First Answer..
What is the Logic of Business?
What is Business?
An organization engaged in the trade of goods, services, or both to consumers
(Sullivan & Sheffrin, 2003).
An economic system in which goods and services are exchanged for one another or money, on the basis of their perceived worth. Every business requires some form of investment and a sufficient number of customers to whom its output can be sold at profit on a consistent basis
(http://www.businessdictionary.com/definition/business.html)
Some of Those Changes

Evolution of human needs
Transaction to Selling to Marketing

And now from Marketing to Relationships and Partnerships! The emergence of institutions of business Increased complexity and competitiveness
Technology Movement of goods and people. Movement of Information!

One Such Change
The encounter with the customer
The focus was on exchange and the tangibles like money, product, quantity.
The product & money are still important. But marketing battles are won on intangibles like how a customer feels & how long he stays.
With Such Changes

The way business is done changed The reasons of success and failure of companies changed It was no longer enough to have a good product. a good brand. be rich. be an old and respected company.
These changes are driven by changes in primarily two constituencies
Ability & Know How of Companies
The Consumer
Ability & Know How of Companies

Technology: Increased ability to understand
customers, manufacture, deliver, service, maintain relations
New Markets: Local, Global and Glocal Orientation: Inward to Outward, Selling to Marketing Human Resources: More people who are able to
plan, innovate and deliver
The Consumer
Income Levels: More people in cities and villages are
earning more, so have more money to spend, thus have more power.
Consumerism: The Indian customer is becoming

consumption oriented rather than save money oriented
Media: Satellite TV, Internet, FM More information to

customers. Information Symmetry
More Choice: More companies offering more products

means much more choice!
Implications For Marketing

The way we define marketing had to be adjusted to accommodate the changes and the way we market.. So the definition of marketing had to change! Marketing had to grow beyond its foundations on products and acknowledge the need for a dedicated science of marketing of the intangibles The Services.
For a discussion on evolution of how we define marketing, please visit:

http://www.slideshare.net/AshishPillai1/what-ismarketing-13513619
Why Discuss Services?

Services sector accounts for more than 55% of the GDP of India. (GDP of India = 1.85 Trillion $)
Emergence of Services Marketing

Emergence of a stand alone field of Services Marketing occurred in three distinct stages
The Crawling Out Stage
(Pre 1980s)
The Scurrying About Stage

(1980 - 1985)
The Walking Erect Stage

Tracking the Evolution of the Services Marketing Literature Fisk, Raymond P; Brown, Stephen W; Bitner, Mary Jo, Journal of Retailing; Spring 1993; 69, 1
(Post 1986)
What We Used to Think of Services?

A technical after-sale function that is provided by the service department The old view of explaining the meaning of services was rooted in the traditional 4Ps school of marketing That relegated services to a support function to be undertaken by the company independent of and post culmination of the marketing effort
What are Services?

Deeds, processes and performances provided or
co-produced by one entity or person for another entity or person
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 that are essentially intangible concerns of its first purchaser
Goods Vs. Services
Terms Clarified
Service Companies: Whose core product is a service.
Services as Products: Intangible product offerings which customers value and will pay for.
Customer Service: Service provided in support of the companys core products which do not necessarily have to be services themselves.
Derived Service: The service derived from the purchase and use of a tangible product.
IHSP The Characteristics of Services

Intangibility
Nature of Services
Heterogeneity
Simultaneity
Persishability
Intangibility
Incapable of being perceived by the sense of touch, as incorporeal or immaterial things Services cannot be inventoried Services cannot be easily patented Services cannot be readily displayed or communicated Pricing is difficult
Heterogeneity
Service delivery and customer satisfaction depend on employee and customer actions Service quality depends on many uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and promoted
Spontaneity
Customers participate in and affect the transaction Customers affect each other Employees affect the service outcome Decentralization may be essential
Mass production is difficult
Perishability
It is difficult to synchronize supply and demand with services Services cannot be returned or resold
Self Service Technologies

Self-Service Technologies are technological interfaces that enable customers to produce a service independent of direct service employee involvement
Phone based (interactive voice response systems) Internet or online based Free standing kiosks Combination
Benefits of SST
Increased speed, efficiency and accuracy
Expanding sales through more information and choice Lower costs for sellers and the buyer
Higher customer loyalty and retention
SSTs Fail!
44% of SST users recall dissatisfying experience (Journal
of Marketing) (Gartner) (WSJ)
None of top 50 retail web sites rated as excellent

Just 25% of kiosk triers think its valuable, will use again Only 12% of online inquiries to top 150 financial cos. answered and satisfactorily (Microsoft) 10 of 12 reasons for online dissatisfaction is poor customer service (Resource Marketing)
Why Do SSTs Fail?

Most frequent dissatisfaction is technical failure (43%) Next is process failure (36%)
Third is technical design (17%)

Only 4% is customers fault
SSTs offer opportunity to magnify the customer experience. If it works, it will magnify the positive experience and if it fails, it will magnify customer
negativity.
In the current competitive business environment, you
need the benefits SSTs offer but just imagine what can
happen if it fails!!
The Tangibility Spectrum
Heterogeneity
Service delivery and customer satisfaction depend on employee and customer actions Service quality depends on many uncontrollable factors There is no sure knowledge that the service delivered matches what was planned and promoted
Simultaneity
Customers participate in and affect the transaction Customers affect each other
Employees affect the service outcome

Decentralization may be essential Mass production is difficult
Perishability
It is difficult to synchronize supply and demand with services Services cannot be returned or resold
Money is in Services!!
Even in the Manufacturing Sector!
Personal Computers
annual cost of PC use: $6,259
Locomotives
total annual cost of rail operations: $29 billion
Automobiles
average annual household expenditure: $6,064
The sale of a product accounts for only a small portion of overall revenues. Providing services to customers is where the real money is.
100%
network administration network technical support network equipment
yard operations, railroad administration, other
other finance repair insurance
80%
60%
nonproductive operations by end user (downtime, file management, etc.) administration
train operations gas Infrastructure freight car services locomotive services locomotives used car purchase
40%
20%
technical support desktop hardware new car purchase
0%
Total expenditure: 5X product costs

Service Marketing Challenges

Defining and improving quality
Ensuring the delivery of consistent quality

Designing and testing new services Communicating and maintaining a consistent image Accommodating fluctuating demand
Service Marketing Challenges

Motivating and sustaining employee commitment
Coordinating marketing, operations, and human resource efforts

Setting prices Finding a balance between standardization versus customization
7 Ps of Service Marketing
The 4 Ps Product, Price, Place, Promotion
People
All human actors who play a part in service delivery and thus influence the buyers perceptions: namely, the firms personnel, the customer, and other customers in the service environment.
Physical Evidence
The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.
Process
The actual procedures, mechanisms, and flow of activities by which the service is deliveredthe service delivery and operating systems.
The Flower of Service

Core service surrounded by a cluster of facilitating and value enhancing services Eight petals; 4 Facilitating Supplementary Services and 4 Value Enhancing Supplementary Services
Facilitating: Information, Order Taking, Billing and Payment Value Enhancing: Consultation, Hospitality, Safekeeping and Exceptions
Facilitating
Information: Customer needs information about various elements and aspects of the service to evaluate it and make decisions Order Taking: As services cannot be stored, the customer needs to place the order as the first step in the whole transaction. Order taking can also be facilitated Billing: Accuracy in billing and the customer friendliness of the bill is now a major decision point for the customer Payment: Credit period, accepted methods, payment points Dont all these influence our judgment of services?
Value Enhancing
Consultation: Interaction with the customer to understand their needs with an aim to design a tailor made customer solution (service) Hospitality: Customers may need to be at your premises, for brief durations or for longer periods. When they are at your place, how are they treated? Safekeeping: Sometimes your customers may be required to part with their belongings to co-produce the service. Keep their stuff safe! Exceptions: Non routine services as special considerations granted on request or on judgment
The producer and the marketing intermediaries add the petals to achieve desired customer experience

The Flower of Service clarifies the issues a service
provider should focus upon to develop a complete
customer solution in the form of a service and ensure

that the customers experience while purchasing and
consuming the service is exceptional
Search, Experience & Credence

Economics of Information: Symmetric information concerning product quality is needed to ensure efficiency in markets
Consumers must know what it is they are buying so they can determine and then pay their actual willingness to pay for an item of that quality. Asymmetric or incomplete information lowers quality in a market and may even completely drive out higher quality goods & services.

Informational Quality of Goods and Services
Search Experience Credence

All goods possess physical properties called search attributes that customers can feel, taste, and see prior to their purchase decision. Services are, in contrast, characterised by their experience and credence attributes.
Experience attributes can be evaluated only during and after
consumption Theatre, Beauty , Hotel etc
Credence attributes cannot be evaluated confidently even
immediately after consumption Car Servicing Did you get ripped off?
The Service Encounter

The moment of truth
Occurs any time the customer interacts with the firm

Critical in determining customer satisfaction and loyalty
Types of encounters: Remote encounters, Phone encounters, Face-to-Face encounters An opportunity to build trust, reinforce quality, build brand identity, increase loyalty
The Service Encounter Triad
A B2C Service Encounter Cascade

A Hotel
A B2C Service Encounter Cascade

AGBS Buying New Printers
Managing Service Encounters

The principle of thirds
About one-third of service problems employee based (failure to follow policies and procedures) Another third company based: e.g. marketing overpromises and products and services not meeting specifications Final third customer based: incorrect expectations or customer incompetence
About 20% of service encounters cause 80% of complaints!

Contemporary Issues in Service Encounters

Service Failure & Recovery
Employee response to service delivery system failure
Adaptability
Employee response to customer needs and requests
Coping
Employee response to problem customers
Spontaneity
Unprompted and unsolicited employee actions and attitudes
Service Encounters - Recovery

DOs
Acknowledge problem
Explain causes
DONTs
Ignore customer
Blame customer Leave customer to fend for him/herself Downgrade
Apologize
Compensate/upgrade Lay out options Take responsibility
Act as if nothing is wrong

Pass the buck
Service Encounters - Adaptability

DOs
Recognize the seriousness of the need
Acknowledge
DONTs
Ignore
Promise, but fail to follow through
Anticipate
Attempt to accommodate Adjust the system Explain rules/policies Take responsibility
Show unwillingness to try

Embarrass the customer Laugh at the customer Avoid responsibility Pass the buck
Service Encounters - Spontaneity

DOs
Take time
Be attentive Anticipate needs Listen Provide information Show empathy
DONTs
Exhibit impatience
Ignore Yell / laugh / swear Steal from customers
Discriminate
Service Encounters - Coping

DOs
Listen
Try to accommodate Explain Let go of the customer Let customers dissatisfaction affect others
DONTs
Take customers dissatisfaction personally

Sales Management

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AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

Before We Discuss Mkt. of Services

and has it changed over the years?

and role of marketing changed?

AMITY GLOBAL BUSINESS SCHOOL

Let Us First Answer..

AMITY GLOBAL BUSINESS SCHOOL

What is the Logic of Business?

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

Some of Those Changes

Transaction to Selling to Marketing

Technology Movement of goods and people. Movement of Information!

One Such Change

AMITY GLOBAL BUSINESS SCHOOL

The encounter with the customer

AMITY GLOBAL BUSINESS SCHOOL

With Such Changes

AMITY GLOBAL BUSINESS SCHOOL

These changes are driven by changes in primarily two constituencies

Ability & Know How of Companies

AMITY GLOBAL BUSINESS SCHOOL

Ability & Know How of Companies

AMITY GLOBAL BUSINESS SCHOOL

Consumerism: The Indian customer is becoming

Media: Satellite TV, Internet, FM More information to

More Choice: More companies offering more products

AMITY GLOBAL BUSINESS SCHOOL

Implications For Marketing

AMITY GLOBAL BUSINESS SCHOOL

For a discussion on evolution of how we define marketing, please visit:

AMITY GLOBAL BUSINESS SCHOOL

Why Discuss Services?

AMITY GLOBAL BUSINESS SCHOOL

Emergence of Services Marketing

The Scurrying About Stage

The Walking Erect Stage

AMITY GLOBAL BUSINESS SCHOOL

What We Used to Think of Services?

AMITY GLOBAL BUSINESS SCHOOL

What are Services?

AMITY GLOBAL BUSINESS SCHOOL

Goods Vs. Services

AMITY GLOBAL BUSINESS SCHOOL

IHSP The Characteristics of Services

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

Mass production is difficult

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

Self Service Technologies

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

None of top 50 retail web sites rated as excellent

AMITY GLOBAL BUSINESS SCHOOL

Why Do SSTs Fail?

Third is technical design (17%)

AMITY GLOBAL BUSINESS SCHOOL

AMITY GLOBAL BUSINESS SCHOOL

The Tangibility Spectrum