MODULE 1 - MARKETING OF SERVICES.pdf

MBA, SEMESTER III MARKETING OF SERVICES MODULE I: INTRODUCTION TO SERVICE MARKETING MS. SIMNU BHATIA DD/MM/YYYY  DIFFERENCE BETWEEN CUSTOMER AND CONSUMER DIFFERENCE BETWEEN GOODS AND SERVICES ...

MBA, SEMESTER III MARKETING OF SERVICES MODULE I: INTRODUCTION TO SERVICE MARKETING MS. SIMNU BHATIA DD/MM/YYYY  DIFFERENCE BETWEEN CUSTOMER AND CONSUMER DIFFERENCE BETWEEN GOODS AND SERVICES  SERVICE “According to Kotler, Armstrong Saunders and Wong (1999) services are activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.” Example: Taxi Service aggregator OLA plans to double operations to 200 cities in current fiscal year. The company, which is looking at small towns for growth, also plans to invest in driver ecosystem, such as training centres and technology upgrade, besides adding 1500-2000 women drivers as part of its pink cab services by women for women.  CHARACTERISTICS OF SERVICES A detailed insight of the distinctive characteristics of services is provided below: 1. Intangibility 2. Inseparability 3. Variability 4. Perishability 5. Simultaneity 6. Heterogeneity 7. Lack of ownership MARKETING OF SERVICES CLASSIFICATION OF SERVICES  SERVICE DESIGN 1. User-centered – Use Qualitative research to design focusing on all users. 2. Co-creative – Include all relevant stakeholders in the design process. 3. Sequencing – Break a complex service into separate processes and user journey sections. 4. Evidencing – Envision service experiences to make them tangible for users to understand and trust brands. 5. Holistic – Design for all touchpoints throughout experiences, across networks of users and interactions.  FACTORS CONTRIBUTING GROWTH IN SERVICE SECTOR 1. Government Policies: Government has taken lot of initiatives to promote the service sector in India. Especially after the economic reforms of 1991, we have seen some significant steps taken by the government to promote the service sector in India. Government regulations and privatization has given a boost to the service sector in India. 2. Social Changes: the last 2 decades in India has seen a radical change in the behaviour and expectations of the consumers. The expectations of the Indian consumers are an ever high. We have seen the ever growing and highest number of affluent people in India in the new millennium. Now consumer are not only purchasing the product but now they look for an experience. Example: Starbucks not only sell one of the finest roasted coffee but also provides an incredible expressive which they call as an “Starbucks Experience” to their customers. The world’s largest coffee chain believes to provide an outstanding customer service to their customers. 3. Business Trends: The trends of during business is also changing rapidly. The manufactures are now adding value through services. The corporate has initiated the total quality revolution. Now the companies aims at providing better quality of services in each and every tough point to their audience. The growth in the franchising business add yet another dimension to improve and standardise the services. Example: McDonald’s never compromise on their QSCV (Quality, Service, Cleanliness and Value) principles while giving their franchise. The franchisee and the staff are trained by the company to provide the standard service throughout the chain of the Mcdonald’s. 4. Advances in Information Technology: The growth of Internet has immensely benefitted the service firms to improve the service. The convergence of computers and telecommunications has proved to be a boon for the service firms and customers. It becomes easier and faster for the service firms to provide quality services to the customers. Example: ICICI Bank offered instant Account opening services to their customers whereby the sales executive of ICICI go to meet their customer with a tablet where the executive can click the photograph of the customer, fill up the account opening form instantly and open a Bank Account then and there. 5. Internationalization: After opening up of the boundary through globalization, we have been some service excellence firm to come to India, Companies like Dell, Samsung, Accenture, IBM, etc. are working on a transnational basis and assimilate the best practices across globe and raise the level of service provided to the customers. International mergers and acquisitions are yet another contributing factor for the growth of the service sector. PRODUCT TO SERVICE  BLUEPRINT OF SERVICE A service blueprint depicts the entire service process on a map and shows the various stages of customer interaction with the service provider, and provides minute details of the service delivery processes, the tangible evidence of the service, and the people involved in carrying it out. Blueprinting helps in breaking up the service delivery process into a series of logical steps. Blueprinting can be used in either designing or redesigning service products.  ELEMENTS OF BLUEPRINTING ⚫ Customer role: This element involves all the steps a customer goes through in selecting a particular service, purchasing it, consuming that service, and finally rating it. For example, a customer visits a restaurant depending on the type of food he wants to eat and his financial position, he interacts with the service personnel in the restaurant and orders the food, he consumes the food, pays the bill, offers a tip, and finally he evaluates the whole experience. □ Onstage and backstage employee actions: Onstage employee action can be any activity performed by the service employees that can be seen by the service personnel. Onstage employees action may include the manner in which a waiter takes the order, the way he serves, etc., which can be seen by the customer. On the other hand, backstage employees actions include those activities performed by the service personnel, which are necessary to support the onstage service personnel. Backstage employees are involved in preparing the food for the customers, arranging them, billing the service, etc.  Support processes: A service blueprint maps all the support services, activities, or processes that help the service personnel in producing and delivering the services. For example, a hotel may provide training for its service personnel (both onstage and backstage) on the aspects of service creation and delivery. This training is a support process. Technology: A service provider needs to look into different aspects of the available technology and the extent to which it needs to be upgraded for delivering the desired services at the expected quality. For example, banks that are planning to introduce internet banking should analyse the available technologies, and upgrade their systems to offer services through the internet. Above example gives the instance of a company imparting technological education to school teachers in India. ⚫ Conversion process: A service provider is required to choose a method of converting inputs into the desired output from the pool of alternatives available. For example, a bank can communicate with its customers through direct mail, facsimile, telephone, courier, internet, mobile phone, etc. The choice should be based on the organization’s ability to bear the costs involved, customer preferences, the service quality level offered by each alternative, user friendliness of each alternative and the speed at which it delivers the services. ⚫ Equipment: A service provider should opt for equipment that is compatible with the other systems in the process. He should also analyze the extent to which it is useful in the process, compare its operating costs with the resultant benefits, assess the knowledge required by the operators to work with the equipment and finally, estimate its maintenance costs. This will help in choosing the right equipment for the process. ⚫ Flow of process: Process flow determines the flow of work from one stage to another to produce the final output. It involves the logical arrangement of service personnel and equipment to perform the operations according to the process. For example, McDonalds has a well-laid process flow with service personnel operating the equipment to deliver the standard services on time. Generally, companies use flow charts to develop the process flow. ⚫ Service personnel: Service personnel play an important role in production and delivery of services. In fact, they provide a competitive advantage to the service provider. A service provider should therefore be careful to hire the right people in terms of qualification and skills. He should then give them the right jobs to do, train and develop them continuously, and motivate them to deliver the best quality service. Service location: As services are intangible in nature, customers attach importance to the service location. They perceive it as an evidence of the quality of service offered Therefore, service providers should choose a location that is easily accessible to customers, has a good infrastructure and the right atmosphere. For example, foreign banks and private banks in India today look entirely different from the old nationalised banks.  HUMAN RESOURCES The basic human resource functions in any organization are recruiting, motivating, training and retaining people. In service organizations, these functions gain greater prominence because of the nature of work of employees, the stress they experience due to their obligation to deliver service that meets customer demands, and the constant pressure from the management to deliver error-free service. Organizations conduct different tests and interviews to select the right candidates from the group of applicants. Most service personnel’s jobs need good communication and interpersonal skills if they need to interact with customers. Therefore, the applicants are tested for these skills too apart from their technical skills. The HR departments of different organizations include a whole lot of exercises in the selection procedure like a written test, a group discussion or an extempore presentation and an interview, or a series of interviews.  MOTIVATING Service organizations need to empower employees so that they can serve the customers better. Many organizations allow their customer service representatives to take decisions related to compensating the customer for service failure, speeding up the service process in special situations, etc. For example, FedEx allowed its service personnel to get customs clearance for a special package on a priority basis to ensure that a father’s wedding gift to his daughter was delivered on time. Empowerment makes employees feel valued and respected by their organization and motivates them to perform effectively. Most IT service organizations offer Employee Stock Options (ESOPs) to their employees. They consider ESOPs a form of empowerment because the owner has a stake in the company and, therefore, has a say in running the business.  MOTIVATING Compensation also plays a very important role in motivating service personnel. A part of the salary can be linked to the performance of employees. This is the concept of variable pay. I t encourages employees to strive to increase the variable proportion of their salary by improving their performance. Organizations can also use performance incentives to enhance employee performance. In this system, a high performing employee is given monetary or non-monetary incentives like public recognition/ felicitation, certificate of excellence signed by the top management, holiday packages, free membership cards, increments in salary, etc.  TRAINING Organizations should take special care in training their service personnel to deliver the service and ensure customer satisfaction. Training enables organizations to impart the desired skills and abilities to new employees and prepare them for the job. Organizations also conduct training and development programmes for existing employees to update their technical skills and improve their interpersonal skills. These programmes can help employees take up greater responsibilities and reach their career objectives. Employees, therefore, believe that that the organisation takes care of them and their career needs.  EMPLOYEE TRAINING AT INFOSYS Infosys has a special education and research group which is entrusted with the responsibility of education and training of employees. The group conducts intensive training ranging from eight to twelve weeks to software engineers recruited from colleges. The training programme involves teaching general concepts as well as job specific skills. Apart from this every year, employees undergo training for two weeks. Interested employees can also take training in general management skills apart from technical skills. The project leaders too are allowed to take some time off to conduct training programmes and workshops for employees. They demonstrate the best practices and new methods to employees who can adopt them and improve the quality of work.  EMPLOYEE TRAINING AT INFOSYS The education and research group is staffed with masters and doctorates in computer science and management. The staff members work on various research projects to identify new and practicable ideas. After approval by the concerned authorities they are included in training programmes. Infosys spends about 5% of it revenues on employee training and education. The major objectives of the training programmes conducted by Infosys are to update software professionals with the latest technical skills, to impart managerial skills to them to handle complex projects, to educate them about new methodologies and tools in software development, and to promote among them commitment to deliver quality product to customers.  RETAINING Management in a service organization should remember that its service personnel will treat the customers much the same way as the management treats them. Therefore, if the management desires to enjoy a loyal customer base, it should first ensure that it has a dedicated employee base. It should treat its employees with concern and empathy. When the management satisfies the needs of employees and addresses their concerns, they, in turn, will strive to satisfy their customers. One of the best ways of retaining valuable human assets in the organization is by recognizing and rewarding performance. Employee performance should be measured periodically and the feedback given to them to enable them know their own strengths and weaknesses. They may also be guided to take the necessary steps to build on their strengths and overcome their weaknesses. Employees who have a successful career with an organization become role models for other employees of the organization and encourage them to stay with the organization to achieve similar success.  BUILDING SERVICE ASPIRATIONS The service generating organisations building service aspirations in the process of generating demand for the services. The aspirations may be generated in two ways, namely, generating aspirations to serve the users and generating aspirations to use the services. Service aspirations of organisation engaged in generating services focus on offering quality services. Quality is generally conceptualized as an attitude towards service.  TECHNOLOGY DEVELOPING 1. Easy accessibility of service 2. New ways to deliver service 3. Close link with customers 4. Higher level of service 5. Global reach of service 6. Cost Rationalisation TECHNOLOGY DEVELOPING  CLASS ACTIVITY Make a blueprint of One-man gents’ barber considering all the factors 1. Highlight the importance of service design 2. Focus attention on process modelling 3. Encourage the development of other diagrammatic techniques in particular, service mapping  ASSIGNMENT 1 Suppose you are opening a salon in Raja Park What all services will you provide? What are the factors of service marketing you will keep in mind? How will you focus on human resource? What would be your USP? How will you inculcate technology in your services? THANK YOU