INTRODUCTION
Characteristics of services compared to goods include intangibility, heterogeneity, simultaneous production and consumption (inseparability), and perishability. Tangibility spectrum shows which industries are tangible dominant or intangible dominant. Services encompass a wide range of industries from healthcare to professional services, financial services, hospitality, travel, and more. Christopher Lovelock defines services as economic activities offered to bring about desired results for recipients.
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Presentation Transcript
SELL THE FOLLOWING PRODUCTS Salt Salt Soft Drinks Soft Drinks Detergents Detergents Automobiles Automobiles Cosmetics Cosmetics Fast- -food Outlets Fast Outlets food Fast Outlets Fast- -food Outlets food Advertising AgenciesAirlines Advertising Agencies Airlines Investment Management Investment Management Consulting Consulting Teaching Teaching
Characteristics of Services Characteristics of Services Compared Compared to Goods to Goods Intangibility Intangibility Heterogeneity Heterogeneity Simultaneous Production and Consumption (Inseparability) Simultaneous Production and Consumption (Inseparability) Perishability Perishability
Characteristics of Services Compared to Goods Tangibility Spectrum Salt Salt Soft Drinks Soft Drinks Detergents Detergents Automobiles Automobiles Cosmetics Cosmetics Fast- -food Outlets Fast Outlets food Intangible Dominant Intangible Dominant Tangible Dominant Tangible Dominant Fast Outlets Fast- -food Outlets food Advertising Agencies Advertising AgenciesAirlines Airlines Investment Management Investment Management Consulting Consulting Teaching Teaching
An act or performance performed by one party to another An economic activity that does not result in ownership
Health Care hospital, medical practice, dentistry, eye care Professional Services accounting, legal, architectural Financial Services banking, investment advising, insurance Hospitality restaurant, hotel/motel, bed & breakfast Travel airline, travel agency, theme park Others hair styling, pest control, plumbing, lawn maintenance, counseling services, health club, interior design
Chirstopher Lovelock : Services are economic activities offered by one party to another, most commonly employing time-based performances to bring about desired results in recipients themselves or in objects or other assets for which purchasers have responsibility.
PRODUCTION STORAGE SALE CONSUMPTION
SALE PRODUCED & CONSUMED AT SAME TIME
Problems Solutions Use of tangible clues Use of personal source of information Creation of a strong organizational image Lack of service inventories Lack of patent protection Difficulty in displaying or communicating services Difficulty in pricing services
Problems Solutions Physical connection Involvement of customers in the production process Involvement of other customers in the production process Special challenges in mass production Selecting & training public contact personnel Consumer management Use of multi-site locations
Problems Solutions Difficult to standardize service quality control Customization Standardization
Problems Solutions Higher demand than maximum availably supply / optimal supply level Lower demand than optimal supply level Demand & supply at optimal levels Creative pricing Reservation system Development of complementary services Development of non peak demand
Customer has access to but not ownership of activity or facility Stress advantages of non-ownership (eg. Easier payment systems)
Basis Tangibility Basis Goods Goods are tangible. Can be patented Goods Services Services are intangible. Cannot be patented Not possible Highly perishable. Cannot store for future use High heterogeneity. Difficult to standardize Not possible Both process take place simultaneously Services Transfer of ownership Perishability Possible Less Perishable. It can be stored as inventory Heterogeneity Goods can be standardized. Less heterogeneity Possible Takes place at different places Reselling Production & consumption
Basis Customer relationship Marketing mix Basis Goods Low 4 P s Traditional marketing mix Low Easy Goods Services High 7 P s Extended marketing mix High Difficult Services Customer Involvement Mass Production
Economy Agriculture Industrial Services
Crawling out stage prior to 1980 Marketing channels Marketing theories Identified characteristics of services Scurrying about stage : 1980- -1986 Crawling out stage prior to 1980 1. - - - 2. Scurrying about stage : 1980 - Services classification - Managing quality in service operations- GAP model - Expanded marketing mix - Service encounter, Relationship marketing, Internal marketing etc., - Emergence of Service marketing 1. 1986
3. Walking erect stage : 1986-2000 Focus on marketing problems of services Service encounters, Service design, perceived service quality, customer satisfaction, Internal marketing & Relationship marketing. 4. Galloping stage : 2000 till date Increase in growth of service sector Main contributors to GDP of the country.
Service Sector Wholesale Transportation Service Sector Wholesale and Retail trade Transportation & Warehousing Related Sales to business / individuals Transportation or storage. Modes : Air, Water, Rail, Road & Pipeline Establishments that provide electricity, natural gas, steam, water, sewage removal Establishments that produce and distribute information and provide the means to distribute or transmit these products and / or process data Related activities activities and Retail trade & Warehousing Utilities Utilities Information Information Financial Activities Finance & Insurance Real estate, rental & leasing Financial Activities Engaging in financial transactions Selling or allowing the use of assets Public Administration Government Government
Service Sector Professional & Business Services Professional, scientific & technical Service Sector Professional & Business Services Related Activities Related Activities Legal advice, accounting, architectural, engineering, computer services, consulting, health care, research & others Undertake a decision making role in the company or enterprises Performing routine support activities for other organisation Management of companies and enterprises Administrative support & Waste management Education Education Health care and social assistance Education & health services & health services Provide instruction & training Provide medical care & social assistance Leisure & Hospitality Arts, entertainment & recreation Leisure & Hospitality Services to meet cultural, entertainment and recreational interests Accommodation & food services
Social Changes Social Changes Advances in IT Advances in IT Business Trends Business Trends Government Policies Government Policies Globalization Globalization New markets and product categories Increase in demand for services More intense competition New markets and product categories Increase in demand for services More intense competition Innovation in service products & delivery systems, stimulated by better technology Innovation in service products & delivery systems, stimulated by better technology Customers have more choices and exercise more power Customers have more choices and exercise more power Success hinges on: Understanding customers and competitors Viable business models Creation of value for customers and firm Success hinges on: Understanding customers and competitors Viable business models Creation of value for customers and firm
Social Changes Social Changes Advances in IT Advances in IT Business Trends Business Trends Government Policies Government Policies Globalization Globalization Changes in regulations Privatization New rules to protect customers, employees, and the environment New agreement on trade in services Changes in regulations Privatization New rules to protect customers, employees, and the environment New agreement on trade in services
Social Changes Social Changes Advances in IT Advances in IT Business Trends Business Trends Government Policies Government Policies Globalization Globalization Rising consumer expectations More affluence Personal Outsourcing Increased desire for buying experiences vs. things Rising consumer ownership of high tech equipment Easier access to more information Migration Growing but aging population Rising consumer expectations More affluence Personal Outsourcing Increased desire for buying experiences vs. things Rising consumer ownership of high tech equipment Easier access to more information Migration Growing but aging population
Social Changes Social Changes Advances in IT Advances in IT Business Trends Business Trends Government Policies Government Policies Globalization Globalization Push to increase shareholder value Emphasis on productivity and cost savings Manufacturers add value through service and sell services More strategic alliances Focus on quality and customer satisfaction Growth of franchising Marketing emphasis by nonprofits Push to increase shareholder value Emphasis on productivity and cost savings Manufacturers add value through service and sell services More strategic alliances Focus on quality and customer satisfaction Growth of franchising Marketing emphasis by nonprofits
Social Changes Social Changes Advances in IT Advances in IT Business Trends Business Trends Government Policies Government Policies Globalization Globalization Growth of Internet Greater bandwidth Compact mobile equipment Wireless networking Faster, more powerful software Digitization of text, graphics, audio, video Growth of Internet Greater bandwidth Compact mobile equipment Wireless networking Faster, more powerful software Digitization of text, graphics, audio, video
Social Changes Social Changes Advances in IT Advances in IT Business Trends Business Trends Government Policies Government Policies Globalization Globalization More companies operating on transnational basis Increased international travel International mergers and alliances Offshoring Foreign competitors invade domestic markets More companies operating on transnational basis Increased international travel International mergers and alliances Offshoring of customer service of customer service Foreign competitors invade domestic markets
Increase in Affluence Working women Greater life expectancy Greater complexity in life Increase in Affluence More leisure time Growth in population of DINKS Greater complexity of products Greater concern for resource scarcity & Ecology Young generation Technology Key driver Migration More leisure time Increasing number of new product Cultural changes Consciousness of healthcare Economic liberalization
Service Triangle Management Framework Molecular Model Servuction Model Services triangle Marketing model Six market model
Focus Focus : : Revenues & operating cost Ignores satisfaction & sustainable profits. Ignores : Role personnel play customer Beliefs : Difficult to find good employees Better to rely on technical machines / systems Employees are indifferent, unskilled, incapable of fulfilling any duties. Beliefs :
Focus : Focus : To serve customers / Service delivery Beliefs Beliefs : Firms should be organized Framework Framework : Depicts 6 key relationships
6 KEY RELATIONSHIPS 1. Firms service strategy communicated to the customer 2. Service strategy communicated to firm s employees 3. Focus on consistency of service strategy & systems developed to run day to day operations
4. Impact of organisational system upon customers. 5. Importance of organisational systems & employee efforts 6. Customer/service provider interaction.
MOMENTS OF TRUTH ( MOT ) MOMENTS OF TRUTH ( MOT ) Interaction between customer and service provider give rise to service encounters or critical incidents. The quality of these interactions is the source of customer satisfaction. Jan Scandinavian Airline System Jan Carlzon Scandinavian Airline System Carlzon, CEO, , CEO,
Pictorial representation of the relationship between the tangible and intangible elements of a firm s operation
Depicts the factors that influence the service experience I a. Contact personnel Eg. Parking attendants, Receptionist, hostesses I b. Service providers Eg. Waiter, Dentist, Physician, Instructors
Other customers Other customers Servicescape Servicescape Customer Customer Contact personnel/ Service providers Contact personnel/ Service providers Invisible organizations and systems Invisible organizations and systems
II Other customers III Invisible organisation systems - Rules, regulations & processes upon which organisation is based.
IV Servicescape - Use of physical evidence to design service environment Ambient conditions : Eg. Room temperature& Music Inanimate Objects : Eg. Assist firm in completing tasks such as furnishings & business equipment Physical evidence : Eg. Sign / symbols and personal artifact
I The company II The customer III The provider (Internal customers) Eg. Employees, franchisees, channel partners, distributors, wholesalers, retailers etc.,
Game of promises Game of promises I External marketing : Makes promises II Internal marketing : Keeps promises III Interactive marketing : Enables promises
1. Customer Markets 2. Referral Markets 3. Influence Markets 4. Recruitment Markets 5. Supplier Markets 6. Internal Markets
Most service products cannot be inventoried Intangible elements usually dominate value creation Services are often difficult to visualize and understand Customers may be involved in co-production People may be part of the service experience Operational inputs and outputs tend to vary more widely The time factor often assumes great importance Distribution may take place through nonphysical channels
I Marketing issues A. Managing Differentiation 1. Services premises 2. Packaging 3. Service personnel 4. Tools and equipment use 5. Customers 6. Convenience B. Managing productivity C. Managing service quality
II Ethical issues 1. Aggressive promotion 2. Invasion of privacy 3. Misleading claims backed by poor service performance III Communication issues 1. Management of technology 2. Management for budgetary provisions for communication 3. Management of communication content
Implications Implications Difference Difference Marketing- -Related Marketing Related Tasks Tasks Customers may be turned away Customers may be turned away Most service products cannot be inventoried Most service products cannot be inventoried Use pricing, promotion, reservations to smooth demand; work with ops to manage capacity Use pricing, promotion, reservations to smooth demand; work with ops to manage capacity Harder to evaluate service & distinguish from competitors Harder to evaluate service & distinguish from competitors Intangible elements usually dominate value creation Intangible elements usually dominate value creation Emphasize physical clues, employ metaphors and vivid images in advertising Emphasize physical clues, employ metaphors and vivid images in advertising Greater risk & uncertainty perceived Greater risk & uncertainty perceived Services are often difficult to visualize & understand Services are often difficult to visualize & understand Educate customers on making good choices; offer guarantees Educate customers on making good choices; offer guarantees Interaction between customer & provider; but poor task execution could affect satisfaction Interaction between customer & provider; but poor task execution could affect satisfaction Customers may be involved in co Production Customers may be involved in co- - Production Develop user equipment, facilities & systems; train customers, provide good support Develop user- -friendly equipment, facilities & systems; train customers, provide good support friendly
Implications Implications Marketing- -RelatedTasks Marketing RelatedTasks Difference Difference Behavior of service personnel & customers can affect satisfaction Behavior of service personnel & customers can affect satisfaction Recruit, train employees to reinforce service concept Shape customer behavior Recruit, train employees to reinforce service concept Shape customer behavior People may be part of service experience People may be part of service experience Hard to maintain quality, consistency, reliability Difficult to shield customers from failures Time is money; customers want service at convenient times Hard to maintain quality, consistency, reliability Difficult to shield customers from failures Time is money; customers want service at convenient times Operational inputs and outputs tend to vary more widely Operational inputs and outputs tend to vary more widely Redesign for simplicity and failure proofing Institute good service recovery procedures Redesign for simplicity and failure proofing Institute good service recovery procedures Time factor often assumes great importance Time factor often assumes great importance Find ways to compete on speed of delivery; offer extended hours Find ways to compete on speed of delivery; offer extended hours Electronic channels or voice telecommunications Electronic channels or voice telecommunications Distribution may take place through nonphysical channels Distribution may take place through nonphysical channels Create user secure websites and free access by telephone Create user- -friendly, secure websites and free access by telephone friendly,
