Services Marketing

Defn: A service is any act or performance that one party can offer to another that is essentially intangible and doesn't result in the ownership of anything . Its production may or may not be tied to a physical product. E.g : Airlines, hotels,banks,insurance,brokers , real estate companies, police,post office, colleges,hospitals.

Reasons for growth in service industry

Changing lifestyle
Increase in affluency Increase in leisure time women in working places

Changing world
Increased life expectancy Increased complexities in life

Changing economies
Globalisation Privatisation/deregulation Changing technology Range of new products Range of complex products

A Partial List of services

Transportation services Railways,Airlines,Local/Interstate Passenger Transportation, Road transportation, Helicopter services, Private aircraft services, water transport Public utilities services water supply , electric supply,gas supply. Communication Telephone,mobile, postal and courier, radio/TV broadcasting/satellite, tele-conferencing Trading services wholesaling/retailing Financial and Insurance Services Banking, Leasing, Security , Brokerage, Investment/retail Banking,Insurance , credit reporting

A Partial list of services

Real Estate Services Renting, Investment consultants, Property consultants, Building and real estate management. Marketing related services Marketing consultancy, Advertising, PR, Tele-marketing, Marketing research, event management. Government Provided services Defence, Police, Transport, Broadcasting, education , medical, infrastructural etc. Hospitality services Hotels and restaurants,catering, home delivery Entertainment services motion pictures, video parlour, game parlours, theme parks, discos, bowling alleys, clubs etc.

A Partial List of Services

Business & Professional Services Management Consultancy, Legal, Accounting(C.A) Other services Security, Lawn care, pet care, printing , data processing , internet caf, training (software, airhostess, public speaking etc.), educational, travel and tourism , health and hospital, creche services, equipment rental , interior designing , laundry and cleaning , computer programming , BPO (CALL CENTERS etc.) , old age homes, warehousing , annual repairs and maintenance ,brand consultants etc.

Product Price Place promotion

Physical Evidence
Customers judge the service quality through the physical evidence defn : The environment in which the service is delivered and where the firm and the customers interact;and any tangible commodities that facilitate performance or communicate the service. Physical evidence enhances customers perception of quality. The general elements of physical evidence include (Organisational Physical facilities)(service scape) 1) Exterior facilities Exterior design Signage Parking Landscape Surrounding environment

Physical evidence
2) Interior Facilities .Interior design Equipment Signage Layout Air quality/temperature 3) Other tangibles Business cards Stationery Billing statements Reports Employee dress/uniform Brochures

Physical Evidence - customer point of view

Physical Evidence Airline lounges Duty free shops Terminal Exteriors Air plane exterior Air plane interior dcor seats ambience music Theme Park Gate area Parking area Signage Layout Rides Lighting Music Insurance Interiors dcor seats ambience SERVICE Airlines Other Tangibles Tickets Embarkation cards Uniformed employees Food beverages

Brochures Tickets costumed characters uniform

Policy document Brochures Periodic statements

Five Dimensions of Quality

Reliability: Ability to perform the promised service dependably and accurately. Assurance: Knowledge and accuracy of employees and their ability to convey trust and confidence. Tangibles: Appearance of physical facilities ;equipment , personnel, and communication materials(physical evidence of facilities). Empathy : caring , individualized attention the firm provides its customers. Responsiveness : willingness to help customer and provide prompt service.

Dimensions/Determinants of Quality-Berry., Parsuraman, Zeithml Dimension Definition/feature Examples

Tangible Relaib ilitty Appearance of physical facilities, equipment, personnel and communicat ion materials Ability to perform the pro mised services dependably and accurately 1)banks facilities 2) Modern airline fleet 3) Modern instruments used by the repair person. 1)When a loan officer says he will ca ll back in 15 minutes , does he do so 2)Is my credit card statement free of error? 3)Airlines Ensuring That The Baggage Arrives On Same Flight At Same Destination 4)Waiters bringing the ordered dishes tot he right table 1) 2) Responding to a customer query quic kly Is the electrician willing to give me specific time when he will co me and repair

Responsiveness

Willingness to help customers and provide prompt service

Co mpetence

Possession of the required skills and knowledge to perform the service

Courtesy

Politeness , respect , consideration and friendliness of contact personnel

1)Tourist informat ion staff knowing exactly where places are located and best time to go and visit these places 2) When call is made to credit card co mpany, is the person at the other end able to answer all queries. 3) co mpetency of bank emp loyees to transact the requirements of customers 1)Does the bank employee have pleasant demeanour? 2) A re the telephone operators in the credit card company consistently polite when answering calls?

Dimensions/Determinants Of Quality
Cred itability Trustworthiness, believability, honesty of the service provider 1)T ravel agent offering advice about long haul flights 2)Reputation of the bank 3)Are the interest rates/fees charged by the credit card company consistent with the service provided 1) 2) 3) 1) 2) 3) Co mmunicat ion Keeping customers informed in a language which they can understand and listening to them, explanation of services offered 1) 2) 3) Understanding the customer Taking efforts to know the customers and their needs 1) 2) 3) 4) A hotel providing safe for e xpensive items How safe is the banks ATM machines Is my credit card safe fro m unauthorised use Hotel answering call in 2-3 rings Tourist informat ion centers open 7 days a week and located near the tourist spot Cred it card co mpany having 24 hour service and toll free te lephone number Does the bank exp lain the various loan schemes in simple non technical language? Does the repair firm ca ll when they are unable to keep a scheduled appointment? Does the tourism emp loyee exp lain the various tourist spots/[packages available in simp le terms Hotel reception staff ma king guests feel we lco me on arrival The bank employee calling you by name when you visit the bank I s the repair firm flexible enough to accommodate my schedule? Does the stock broker suggest the various investment plans possible after understanding the financial object ives?

Security

Freedom form danger, risk or doubt

Access

Approachability and ease of contact

The Parsuram, Ziethaml, Berry Model of service quality-1985

Consumer evaluates service quality experience as the outcome of gap between expected and perceived quality. The model identifies five gaps that can cause unsuccessful service delivery. Gap 1 : The Knowledge Gap or Lack of Understanding (gap between consumer expectation and management perception) e.g : Management team at a hotel might decide that provision of a newspaper at bedroom door is not required but customer expects that. This gap can be narrowed through adequate research Gap 2: The standard Gap or Lack of Development ( Gap between management perceptions and service quality specifications)e.g : The management may not be committed to implement what is necessary either due to ignorance, lack of vision , limited resources or wrong strategy. This gap be closed by standardizing service delivery process wherever possible and setting right organization goals

Gap 3: Delivery Gap ( gap between service quality specifications and the service actually delivered). The management understands the level of service desired by customer and specifies an appropriate set of standards. However service delivery may not be of appropriate quality owing to poor employee performance may be due to improper training or less motivation. This gap can be eliminated by providing employees with adequate support system and HR policies and improving teamwork Gap 4 : Unrealistic expectations or the Internal Communication Gap ( Gap between service delivery and what is communicated about the service to the consumers) This gap can be eliminated through efficient and effective communication system and also by not giving false promises to customers that leads to higher expectations gap 5 : Service gap or Perception gap : ( Gap between perceived and expected service) By bridging gaps 1-4 , gap 5 can be reduced

SERVQUAL
A gap analysis research instrument
created by Parasuraman, Zeithamel, and Berry Introduced in 1988

SERVQUAL Model

SERVQUAL Model Gaps

Gap 1
The difference between actual customer expectations and managements idea or perception of customer expectations

Management Perceptions of Customer Expectations

Expected Service

SERVQUAL Model Gaps

Gap 2
Mismatch between managers expectations of service quality and service quality specifications

Service Quality Specifications

Management Perceptions of Customer Expectations

SERVQUAL Model Gaps

Gap 3
Poor delivery of service quality

Service Delivery

Service Quality Specifications

9

SERVQUAL Model Gaps

Gap 4
Differences between service delivery and external communication with customer

Service Delivery

External Communications to Customers

10

SERVQUAL Model Gaps

Gap 5
Differences between Expected and Perceived Quality

Expected Service

Perceived Service
11

How customers apply quality determinants-examples

Service Car Repair Reliability Mean Time failure, problem fixed right first time and delivered as promised Responsiveness No waiting, easy to access and willingness to respond to requests Assurance Knowledge of the mechanics to rectify the fault/problem Empathy Accessibility and understanding of the problem , calling customer by name and knowing the history of the car Understanding and anticipating needs and problems of customers Tangibles Unifo rmed employees, comfo rtable waiting area , good lay out of workshop, modern equipment for repairing Physical facilit ies like waiting lounge, check-in counter, baggage areas, uniformed employees and aircraft.

Air Travel

Keeping the flights to published schedule

Prompt and speedy handling of ticketing, check in and baggage control

Trusted name , competence and experienced staff , high performance levels

Tangibles Reliability Responsiveness competence courtesy credibility security access Communication Understanding the customer

Tangibles Reliability Responsiveness Assurance

Empathy

People
Service encounter : For service marketers, the core of the service element is the interaction between those providing services and the customer , which is known as service encounter. Carlzon(1987) described this interaction as moment of truth . To achieve customer satisfaction appropriate processes are designed to ensure that the service encounter meets customer expectations. To deliver the satisfactory services , the employees of a company have tio play an important role. Employees must possess personal qualities , ability to understand and satisfy customer needs , flexibility , skills and knowledge. Friendly and warm employees increase customer loyalty. The management in order to deliver satisfactory service must develop jobs to satisfy individuals needs of employees and address following issues:---

PEOPLE
A) Employees : Recruitment Training Motivation Team Work B) Customers Education Training C) Communicating Culture and values D) Employee Research

People
Employees Customer perceives quality of service from appearance, interpersonal behavior , attitude of contact personnel. The frontline managers are the impression makers of an organization In many services like hair dressing, ticketing, legal services, medical services, child care, it is the contact employee who is delivering service . The employees should be developed to deliver the quality dimensions Reliability, Assurance, Tangibles, Empathy and Responsiveness.

Requirements for effective segmentation

Measurable : The size , purchasing power and profile of the segments can be measured. Certain segmentation variables are difficult to measure. E.g It is difficult to find the size of segment of teenage smokers who smoke primarily to rebel against their parents. Accessible .: The segment can be effectively reached and served. Suppose a perfume company finds that heavy users of its brand are single women who are out late at night and frequent bars . Unless these women live or shop at certain places and are exposed certain media , they will be difficult to reach. Substantial : The segments are large and profitable enough to serve. A segment should be the largest possible homogeneous group worth going after with a tailored marketing program. e.g It would not be worthwhile for an automobile manufacturer to develop cars for persons who are shorter then 4 feet. Differentiable : segments are conceptually distinguishable and respond differently to different marketing mix elements and programs . If married and unmarried women respond similarly to sale of fur coats , they dont constitute separate segments. Actionable : Effective programs can be formulated for attracting and serving the segments. For e.g A small airline identified 7 market segments but its staff was too small to develop separate marketing programs for each segment

PROCESS
Process is the way of undertaking transaction , supplying information and providing services in a way which is acceptable to the customer and effective to the organization. Services are rendered and experienced simultaneously.(Inseparability). It is the process through which consumers interact with service provider. E.g Tourism : booking systems for travel and accommodation., use of credit cards for payments, design of queuing system at visitor attraction. While designing a process , the process designer has to maintain a balance between functionality, security , aesthetics and ease of use by customer..

Critical Moments : Customer remains an integral part from preconsumption stage through to post-visit feedback. By monitoring service encounters it is possible to design service delivery systems which guide the interaction between 1) front-line staff and customers 2) front-line and support staff 3) pre-delivery, delivery, post delivery 4) staff and suppliers. The above concept is called service blueprinting . Service Blue Print : is a visual portrayal of a service plan. It is a detailed map or flow chart. This is a technique which is used when planning a new or revised process and prescribing how it ought to function. Preparation of Blue Print : 1) Represent the service in the form of its molecular structure. 2) Break down the process into logical steps. 3) Recognize the variability in the process 4) Identify the back stage elements in the process

Blue Print of Gents barber -front stage.

Greet customer on arrival

Direct customer to waiting area

Ask customer for haircut requiremnts

cut hair

ask customer for product requirments

Receive Thank customer payments on departure.

Blue Print of Gents barber -.

front stage

Greet customer on arrival

Direct customer to waiting area

Ask customer for haircut requiremnts

cut hair

ask customer for product requirments

Receive Thank customer payments on departure.

back stage

opening times

select furniture order newspaper magazines training and update on style laundry towel And apron sweep and clear hair m eet prepare sales rep cash statement bank transfer.

Service Mapping
Service Mapping is a technique which is used to portray an existing service situation and provides an useful tool to assess and identify service evidence opportunities.The process of service delivery, role of customers and employees and the visible elements of the service are simultaneously displayed by the service map. Service maps provides 2 additional features 1) provides greater attention to customer interaction 2) provides a visual representation of the structure of the service.

Service Mapping
<-------------Process------------------------>

Customer Front line employees support staff structure management services

Line of intetraction Line of visibility line of internal interaction line of implemetation

Service Map of Overnight hotel stay

customer

arrives gives bags check in go to room receive bags sleep at hotel to bell boy

shower call order room servicefood

eat

check out

contact person (visible

greets and takes registers bag registration system

delivers bag

delivers food

process check out

invisible process

take food order prepare food