Chapter I

SERVICE SECTOR MANAGEMENT

WHAT IS SERVICES
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.

1.2 DIFFERENCES BETWEEN SERVICES AND CUSTOMER SERVICES

Companies like IBM offers repair and maintenance service of equipment, consultancy,
training services etc. These services may include a tangible product like a report or train
manual. Customer Services , however is the service provided in support of a company’s
core product –like answering question , taking orders ,dealing with billing issue ,
handling complaints etc .Typically there is no charge for customer service is essential for
building customer relationship .Customer services are hence different from services
provided for sale by a company. Federal Express market and delivers services. It also
provides a high level of customer services. Its services are overnight package delivery,
and logistics services. Its customer services include well trained staff who can answer all
question on telephone, on line tracking of parcels etc.

1.3 CONCEPT OF ‘SERVICE MARKETING’

The perception of service marketing focuses on selling the services in the best interest of
users/customers. Marketing a service is meant marketing something intangible. It is
marketing a promise. It is more selling yourself.
In the marketing of services, we go through a number of problems directly or indirectly
influencing the business index. The problems like market segmentation, marketing
information system, behavioural management are studied minutely which simplify the
task of formulating a sound mix for marketing, such as Product mix, Promotion mix,
Price mix and the Place mix. It is important to mention that we find “People” an
important mix of marketing services.
If we market the services in a right direction, the available opportunities can be
capitalized on optimally and also it contributes substantially to the process of
development.
In view of the above, we observe the following key points regarding the concept or
perception of services marketing:
 It is a managerial process of managing the services.
 It is an organized effort for providing a sound foundation for the development of
an organization.
  It is a social process helping an organization to understand the emerging social
problem and to take part in the social transformation process to justify its
existence in the society.

1.4 SERVICE MANAGEMENT

Service Management is :
1) To understand the utility the customers rceicve by consuming or using the service
offering of the organization
2) To understand how the organization (personnel, technology, physical resources,
systems and customers)will b able to produce and deliver this utility
3) To understand how the organization should be developed and managed so that the
intended quality can be achieved
4) To make the organization function so that this quality can be delivered on a
continuous basis

1.5 GOODS SERVICE CONTINUUM

As per Theodore Levit “There is no such things as service industries. There are some
service industries whose service component are greater (or less) than those of other
industries”. Everybody is in service. The point that Leavitt was trying to put across is
that with almost every tangible physical product an intangible service component is
associated. Therefore every body is in service.
He has further put that goods can be put into two categories
(a) Search goods – Goods which the customer can see, evaluate and try them prior to
purchase (soap and shampoo etc.)
(b) Experienced goods – Goods which one can see or evaluate only after the
purchase, while being consumed (Holiday, travel etc)

Prior purchase /
Tangible
Search goods use

Experienced goods: goods, which one can see or evaluate after the purchase like
(holidays, travel etc.)

After purchase /
In Tangible
Experienced goods use
Search goods are tangible goods and the experienced goods are intangible.

Philip kotler suggests 4 categories

1) Pure tangible (salt)
2) Major tangible with minor intangibles (soap)
3) Minor tangible with major intangibles (consultancy)
4) Pure service (teaching)

Investm
Fast
Soft Deterge Automo Cosmet Ad ent Consult Teachin
Salt food Airlines
drinks nts bile ics agency Manage ancy g
outlet
ment

Tangible Dominant Intangible Dominant

The above diagram shows the Service – goods continuum – some goods being tangible
dominant others being service dominant. The fast food outlets has almost 50/50 of
tangible and intangible parts i.e. in this case both tangible factors such (food) and
intangible such as (services) is important. That is the reason it come in the middle.
In case of other products like salt there services won’t play any important role so it is
more towards tangible and in case of teaching profession it is purely service dominated.
We never known about service with out experiencing and in this manner various goods
fall in place according to its category i.e. less service oriented or more service oriented.
 1.6 GOODS AND SERVICES

GOODS SERVICES RESULTING IMPLICATION

TANGIBLE. INTANGIBLE. Services cannot be inventoried.
It cannot be patented nor
Goods are objects, which Services are performance or actions,
readily displayed or
can be seen, felt, sensed which cannot be tasted, felt, touched.
communicated. Pricing of
easily. E.G. health care services. (Treatment, services is very difficult.
surgery)
HOMOGENOUS/ HETEROGENOUS. Service delivery and customer
STANDARDISED satisfaction depends on
Services are frequently produced by
employee actions. Service
Goods have their own human beings so no two services will
quality depends on many
standards & many goods be alike.
uncontrollable factors. There
are alike. E.G. two different clients have is no sure knowledge that the
different service experience from the service delivered matches what
same tax accountant. is planned.

PRODUCTION AND SIMULTANEOUS PRODUCTION Customers participate in &

DISTRIBUTION ARE AND CONSUMPTION. affect the transaction.
SEPERATED FROM customers affect each other.
Most services are sold first and then
CONSUMPTION Employees affect the service
produced and consumed
outcome. Decentralization may
Goods are produced first, simultaneously.
be essential. Mass production
then sold, then consumed. E.G. restaurant services are sold first is difficult.
dinning experience is produced and
consumed.
NON-PERISHABLE. PERISHABLE. It is difficult to synchronize
supply and demand in services.
Goods can be stored in Services cannot be saved, stored or
Right quality has to be
inventory or resold or even returned. E.G. bad haircut.
delivered in the first instance.
returned.
CORE VALUE COREVALUE PRODUCED IN
PRODUCED IN FACTORY BUYER SELLER INTERACTIONS.

CUSTOMERS DO NOT CUSTOMERS PARTICIPATE IN THE

PARTICIPATE IN PRODUCTION.
PRODUCTION PROCESS.
TRANSFER OF NO TRANSFER OF
OWNERSHIP A THING OWNERSHIP.ANACTIVITY/PROCES
S
1.7 SOME DEFINITIONS :

** American Marketing association has defined services as “activities, benefits or

satisfactions, which are offered for sale or provided in connection with sale o goods”.
This definition took a limited view of services as it proposed that services are offered only
in connection with sale of goods.
** Robert Judd defined services as “ a market transaction by an enterprise or
entrepreneur, where the object of market transaction is other than the transfer of
ownership of a tangible commodity”
This recognised three broad areas of services
 The right to possess and use a product (rented goods service)
 The customs creation, repair, or improvement of a product (owned goods service)
 No product elements but rather experience or what might be termed as
experiential possession (non-goods service)
** Blois defines services, as “a service is an activity offered for sale which yields benefits
and satisfactions without leading to physical change in the form of a good”
** Kotler and Bloom defines services as “an activity or benefit that one party can offer to
another that is essentially intangible and dos not result in the ownership of any thing. Its
production may not my not be tied up to a physical product”.
** Gummesson says, “ Services is something which can be bought and sold but which
you cannot drop on your foot”.
** According Gronross “a service is an activity or series of activities of more or less
intangible in nature that normally, not necessarily, take place in interactions between the
customer and the service employees and/or physical resources or goods and/or system of
the service provider, which are provided as solution to customer problems.”
From this it follows that
 Services are by and large activities, or a series of activities rather than things
 As a result they are intangible
 They take place in interaction between the customer and service provider – which
means that services are produced and consumed simultaneously
 Customer has a role to play in the production process as services are provided in
response to the problems of customers as a solution.
1.8 Characteristics of Services and its Marketing Implications
The main Characteristics of Services are :
 Intangibility
 Inseparability
 Heterogeneity
 Perishability
Intangibility
Services are actions and hence they are intangible. Due to this it is not possible to stock
services and hence fluctuations in demand becomes difficult to manage. Hotels have
same number of rooms all through the year but the customers requiring the room are
always varying with some months seeing very few customers while other months seeing a
rush of customers. Further services cannot be patented and any new concept can be
easily copied by competitors. These cannot be readily displayed or easily communicated,
and hence it will be difficult for the consumers to assess the quality. This also creates a
problem for what to include in advertisements and promotional materials. Further the
actual cost of “unit service” is difficult to determine and hence pricing becomes difficult.
Inseparability
Services are generally created or supplied simultaneously. They are inseparable. For
e.g., the entertainment industry, health experts and other professionals create and offer
their service at the same given time. Services and their providers are associated closely
and thus, not separable. Donald Cowell states ‘Goods are produced, sold and then
consumed whereas the services are sold and then produced and then consumed.’
A service is produced when it is consumed eg. a dinning experience. Thus the customers
are present when the service is produced thus other customer play an important role in
satisfaction. The service producer also plays an important role in quality. Thus mass
production is impossible, it is not possible to get economy of scale by centralisation,
operations has to be decentralised to deliver to the consumer directly at convenient
locations. A “problem customer” can result in disruption of service production process
creating a dissatisfaction for himself, other customers and also to the service producer.
Heterogeneity
As services are produced by humans, hence no two services can be identical. Further no
two customers are precisely alike and hence their experiences of the same service are
different. Even the same customer can be with different frame of mind at different times –
which results in differing satisfactions from the same service at different times.
Eg. A tax consultant may provide different a service experience to two different
customers on the same day depending upon their needs and on whether the consultant is
meeting the customer when he is fresh in the morning or tired at the end of the day.
Because of this ensuring a consistent quality becomes a challenging job. The quality
depends upon a number of factors like the customer, service provides, other customers
(their presence or even absence) etc., hence the service provider cannot know if the
service is delivered in a manner which has been originally planned and promoted.
Sometimes services are provided by a third party further increasing the heterogeneity.
Perishability
Services cannot be stored, saved, resold or returned. A bad haircut cannot be returned or
resold to another customer. Hence demand forecasting and creative planning to meet the
demand is a problem. Further one has to be right the first time or if things go wrong one
should have strong recovery strategies to retain the customer goodwill.
Due to these characteristics of services the marketeers face a major challenge in
marketing of Services.
SERVICE MARKETING IMPLICATIONS STRATEGIES TO DEAL WITH
CHARACTERISTICS IMPLICATIONS
INTANGIBILITY  Cannot be stored  Tangible clues
 No Patents  Personal sources
 No ready display  Organizational image
 Communication problems  Cost accounting for prices
 Pricing difficulties  Post purchase
communication
INSEPARABILITY  Consumer involved in  Selection training of
production contact person
 No mass production  Manage consumer
 Supply demand match  Multisite location
 Employees affect the
service outcome.
HETEROGENEITY  Standardization difficult  Industrialized
 Quality control difficult  Customize
 No sure knowledge if
service delivered matches
what was planned &
promoted.
PERISHABILITY  No inventorisation  Cope with fluctuating
demand
 Difficult to synchronize
supply and demand.  Differential pricing
 Non-peak demand can be
developed
 Complementary services
 Reservation systems
 Part-time employees
 Peak time efficiency
routines.
 Consumer participation
 Expandable facilities can
be planned.
 Shared services.
 Better match through
process.
 Chapter II
SERVICES & GROWTH IN ECONOMY
2.1 REASONS FOR THE GROWTH OF SERVICE INDUSTRY

It is obvious that the growth in the services sector has been substantive. The reasons for
this growth are quite a few, some of which are summarized as follows.

 Affluence: - The increase in per capita income from Rupees 238.8 in 1950 to
Rupees 11,934.5 in 1998 is an indicator of he increase in general affluence has
given rise to service like pest-control, personal security, interior designer, etc.
 Leisure time: - People do get some time to travel and holiday and therefore there
is a need for travel agencies, resorts, hotels, and entertainment. There are other’s
who would like to utilize this time to improve their career prospects and therefore
there is a need for adult education/distance learning/part time courses.
 Life expectancy: - The health programmed have significantly contributed to an
increase in life expectancy given rise to services like old age homes, nursing
homes, health care, etc.
 Working wives: - As more and more women have started working, the need for
day care for children has increased, and so is the care with packed food and
home delivery.
 Product complexity: - A large no. of products are now being purchased in
households which can be serviced only by specialized persons like water purifies,
micro wave ovens, home computers, etc. giving rise to the need for services like
after sales service agents for durables, maintenance service providers, etc.
 Life complexity: - As the daily routine gets busier, individuals find it difficult to
manage things on their own. Their leads to an obvious need for tax consultants,
legal advisors, property advisers, etc.
 Resource scarcity and ecology: - As the natural resources are depleting and need
for conservation is increasing, we have seen the coming up of service providers
like pollution control agencies, car, pools, water management, etc.
 New products: - the development in information technology has given rise to
services like PCOs, Pager service providers, Web Shoppe, etc
2.2 CONTRIBUTION OF SERVICE INDUSTRY TO INDIAN ECONOMY AND
WORLD ECONOMY

WORLD SCENARIO
 as economy shifts from developing to developed stage, they will show more and
more shift toward services
 today, the fastest growing segments of the US economy is services
 in 1948 54% of the GDP of US was generated by services which is 80% now
 employment in this sector which was 55% in 1950 is now 83%
 the US balance of trade in goods has remained in the red for many years, but
there has been a trade surplus in services
 today service sector dominates the economics of many developed nations. As
countries develop the role of agriculture in the economy declines and that of
services increase.(china has 50% GDP from service, 35% from industry, and
15%from agriculture)
 during recession it has been seen that service output declines less than industrial
output – the service employment is less sensitive to business cycle fluctuation
 globalisation as strategy for service firm is becoming more important
 Chapter III
UNDERSTANDING THE CONSUMER

3.1 KNOWLEDGE OF THE BUYER

In buying decisions many times other people also influence the decision. In services these
roles are played by many persons. In purchase of any service six distinct roles are played
 Initiator : The person who has a specific need and proposes to buy a service
 Influencer : The person or group of persons whom the decision maker refers to or
who advice the decision maker.
 Gate Keeper : The person or organization or promotional material, which act as
filter on the range of services which enter the decision choice
 Decider : The person who makes the buying decision
 Buyer : The person makes the actual purchaser
 User : The actual user.
For example if a sales executive wants to do a market tour …….
His boss may be the initiator
The travel agency may act as a Gatekeeper
The finance department may be the influencer
The administrative department the buyer
The executive the user. In this case the user may have no role in the buying process.
Hence while targeting a customer the service provider may have to influence other
persons.

3.2 CONSUMER DECISION MAKING.

The consumer’s decision to purchase or reject a product or service is the moment of final
truth for the marketer. It signifies the marketing strategy has been wise, insightful and
effective, whether it was poorly planned and missed the mark. Marketer are, therefore,
interested in the consumer decision-making process by which a consumer selects an
alternative amongst the lot available. The decision not to buy is also an alternative.
A simple consumer decision-making model, ties together the psychological, social and
cultural concepts into an easily understood framework. The decision model has three
distinct sets of variables:
1. Input Variables,
2. Process Variables,
3. Output Variables.
Input Variables:-
Input variables are those variables which affect the decision making process and include
commercial marketing efforts as well as non-commercial influences from the consumer’s
socio-cultural environment.
 Decision Variables:-
The decision process variables are influenced by consumer’s own psychological
fields, which affect their recognition of a need, their pre-purchase search for information
and their evaluation of alternatives.
 Output Variables:-
The output phase of the model includes the actual purchase (either trial or repeat
purchase) and post-purchase evaluation. Both pre-purchase and post-purchase
evaluation feed back in the form of experience into the consumer’s psychological field
and serves to influence future decision processing. (On a holiday a customer may change
hotels in between his stay).

Factors Influencing The Buying Behaviour

Situational Factors : Time, Store’s atmosphere, Marketing Stimuli (the occasion)
Personal Factors : Personality, life style, Other demographic factors like age, gender,
occupation etc.
Social Factors : Culture, reference group, family
Psychological Factors : Perception, attitude, motivation

3.3 CONSUMER EVALUATION OF SERVICES AND THE QUALITIES

INFLUENCING CONSUMER EVALUATION
For ‘consumer’ evaluation process the concept of “goods” has to be considered, as
service characteristics have definite implication on the consumer evaluation process.
Therefore for service industry, the service provider must understand how consumers
choose and evaluate their offerings.
There are three types of products:
 Search product: - search qualities are those attributes of a product which the
customer can determine before the purchase. This is more common in physical goods.

 Experience product: - experience qualities are those attributes which can only
be determined after the purchase, or during the period of consumption.
 Credence product: - it is being said that certain products have such
characteristics which the consumer cannot evaluate even after consumption or purchase.
Such characteristics exist invariably in services. e.g.: wheel aligning of the car, astrology
etc.

TEN SUCH QUALITIES WHICH INFLUENCE THE CONSUMER’S

EVALUATION OF SERVICES (Quality Dimensions of Services)

 Consistency: - it involves consistency and reliability of performances and

dependability. It means that the firm performs the service right the first time. It
also means that the firm honours its promises especially in terms of accuracy in
billing, record keeping and performing the service at the designated time.
 Concern:-it is the willingness or responsiveness of employees to provide the
service. It involves timeliness of service or giving prompt service, calling the
customer back quickly or mailing the transaction slip immediately.
 Competence: - it means having the required skills and knowledge to perform the
service. It involves knowledge and skill of the contact personnel, knowledge and
skill of operating support personnel and research capability of the organization.
E.g. securities brokerage firm.
 Contact:- it involves approachability, access and ease of contact. It means that the
service is easily accessible by telephone; waiting time to receive the services is not
extensive, convenient hours of operation and convenient location of service
facility.
 Courtesy:- it involves politeness, report, consideration and friendliness of contact
personnel. It includes consideration for the consumer’s property. Clean and neat
appearance of public contact personnel. E.g. no muddy shoes on the carpet, proper
telephone operators etc.
 Communication:- it means keeping consumers informed in a language that they
can understand and listen to them. It may mean that the company has to adjust its
language for different consumers – increasing the level of sophistication with a
well educated consumer and speaking simply and plainly with a novice. It involves
explaining the service itself and how much the service will cost explaining the
trade-off between service and cost and assuring the customer that a problem will
be handled.
 Credibility: - it involves trustworthiness, believability, honesty. It involves having
the customer’s best interest at heart thus contributing to credibility, company name
and reputation, personal characteristics of the contact personnel and degree of
hard sell involved in interaction with the customer.
 Confidentiality: - the security and the freedom from risk or doubt, involving
physical safety, financial security or confidentiality.
  Customer knowledge: - it involves making the effort to understand the customer’s
needs, i.e. learning the customer’s specific requirements, providing individualized
attention and recognizing the regular customer.
 Tangibles: - it includes physical evidence of the service, physical facilities, and
appearance of personnel tools or equipments used to provide the service, physical
representations of the service such as a plastic credit card or a bank statement and
other customers in the service facility.

CHAPTER IV
THE SERVICE ENCOUNTERS (“MOMENT OF TRUTH.”)

4.1 MOMENTS OF TRUTH

From the customer’s point of view, the most vivid impression of service occurs in the
service encounter or “Moment Of Truth,” when the customer interacts with the service
firm. This is the foundation to “Satisfaction of Service Quality” – it is where the promises
are kept or broken. This concept was put forth by Richard Norman, taking the metaphor
from Bull Fighting. Most services are results of social acts, which take place in direct
contact between the customer and the service provider. At this stage the Customer
realises the perceived service quality.
4.2 ENCOUNTER CASCADE
Every Moment of Truth is Important – according to Scandinavian Airlines, each one of
their 10 million customers come in contact with 5 employees. Thus the airlines say there
50 million moments of truth – each one is managed well and “They prove they are the
BEST”.
However some encounters are more critical. The encounter cascade refers to a series of
encounters right from the time a customer comes to take the service. The encounter
cascade can be important as any encounter can be critical, as it determines customer
satisfaction and loyalty. If it’s the first interaction of the customer then the initial
interaction will be the first impression. So, these interactions have to be given
importance, as they are critical and influences customer’s perception of the organization.
Example:
A customer calling for the repair service may switch to some other company if he is put
on hold for a long time or even treated rudely. Even if the technical quality of that firm is
superior, the firm may not get a chance to prove themselves in front of the customer.
When the customer has had many interactions with firm, each encounter will be
important as it will create a combined image of that firm. Many positive experiences will
give an image of High Quality and many negative experiences will represent a bad
image. Combination of positive and negative interactions will leave the customer
confused about the Quality.
It is suggested that not all encounters are equally important in building long-term
relations. For every organization, certain encounters can act as a key to customer
satisfaction. For example: for MARRIOT hotels, it is the early encounters that are
important. In a hospital context, a study of patients revealed that encounters with the
nursing staff were more important in predicting the customer satisfaction.
As it is rightly said “one bad apple can ruin the whole basket of apples.” The same
applies in this too; one negative encounter can drive the customer away, no matter how
many encounters had taken place in the past. So a firm has to give a lot of importance to
such encounters.
“A customer who has been using a bank for nearly 15 years is quite happy with the
service. He has a huge deposit and many accounts. One fine morning, when he comes out
of the bank the watch man asks Rs. 10 for parking charges of his car. He goes inside the
bank and informs the clerk at the counter, who directs him to the officer. The officer
directs him to the Manager, who says he is helpless as this is a new policy of the bank.
The customer who was so happy with the bank services decides to close all his accounts –
“Some encounters can be very Critical”.

A Service encounter cascade for a hotel visit

Check- In

Bell person Takes to Room

Among the service encounters a hotel customer experiences are checking in, being taken
to the room by a bell person, eating a restaurant meal etc as shown in the figure. It is in
these encounters that the customer receives an overall view of the organizations service
Restaurant
quality and encounter contributes to customer satisfaction and willingness to do business
with the organization again. As forMeal the company, each encounter represents an
opportunity to prove its potential as a quality service provider and to increase customer
loyalty. Wake-Up Call
Some services have few service encounters and others have many. Mistakes or problems
that occur in the early levels of the service cascade can e critical because failure at one
Checkout
point results in greater risk of dissatisfaction in the long run. MARRIOT Hotels learned
this through their extensive customer survey to determine what service element
contributes to customer loyalty. They found that 4 out of 5 factors came into play in the
first 10 minutes of the guest’s stay.
 IMPORTANCE OF ENCOUNTERS

Although early events in the encounter cascade are likely to be especially important, any
encounter can potentially be critical in determining customer satisfaction and loyalty. If
a customer is interacting with the hotel for the first time, the initial encounter will create
a first impression of the hotel. In these first encounter situations, the customer frequently
has no other basis for judging the hotel, and the initial phone contact or face – to – face
experience with the customer can take on excessive importance in the customer’s
perceptions of quality. Even when the customer has hade multiple interactions with the
hotel, each individual encounter is important in creating a composite image of the hotel
in the customer’s memory. Many positive experiences add up to a composite image of
high quality, whereas many negative interactions will have a positive effect. On the other
hand, a combination of positive and negative interactions will leave the customer feeling
unhappy of the hotels quality, doubtful of its consistency in service delivery, and
vulnerable to the appeals of competitors.
A large corporate customer of an institutional food provider that provides food service in
all of its company dining rooms and cafeterias could have a series of positive encounters
with the account manager or the sales person who handles the account. These
experiences could be followed by positive encounters with the operation staff that
actually set up food service facilities. However, even with these positive encounters, later
negative experiences with the staff who serve the food or the accounting department that
administers the account and billing procedures can result in a mixture of quality
impressions. This variation in experience could result in the corporate customer
wondering about the quality of the hotel and unsure of what to expect in the future. Each
encounter with different people and department representing the food service provider
adds to or detracts from the potential of continuing relationship.

4.3 TYPES OF ENCOUNTERS

A service encounter occurs every time a customer interacts with the service organization.
There are three general types of encounters - remote encounters, phone encounters, and
face – to – face encounters. A customer may experience any of these types of encounters,
or a combination of all three in his or her relations with a service firm.

Types of
Service Encounters.

Encounters

Remote Phone Face-to-Face

Encounters Encounters Encounters
Remote Encounter:-
Encounter can occur without any direct human contact is called as Remote Encounters.
Such as, when a customer interacts with a bank through the ATM system, or with
Ticketron through an automated ticketing machine, or with a mail-order service through
automated dial-in ordering. Remote encounters also occur when the firm sends its billing
statements or communicates others types of information to customers by mail. Although
there is no direct human contact in these remote encounters, each represents an
opportunity for a firm to reinforce or establish perceptions in the customer.
In remote encounter the tangible evidence of the service and the quality of the technical
process and system become the primary bases for judging quality.
EXAMPLE:-
Services are being delivered through technology, particularly with the advent of Internet
applications. Retail purchases, airline ticketing, repair and maintenance troubleshooting,
and package and shipment tracking are just a few examples of services available via the
Internet. All of these types of service encounters can be considered remote encounters.
Phone Encounters:-
In many organizations, the most frequent type of encounter between a customer and the
firm occurs over the telephone is called as phone encounter. Almost all firms (whether
goods manufacturers or service businesses) rely on phone encounters in the form of
customer-service, general inquiry, or order-taking functions.
The judgment of quality in phone encounters is different from remote encounters because
there is greater potential variability in the interaction. Tone of voice, employee
knowledge, and effectiveness/efficiency in handling customer issues become important
criteria for judging quality in these encounters.
Face-to –Face Encounters:-
A third type of encounter is the one that occurs between an employee and a customer in
direct contact is called as Face-to-Face Encounter.
In a hotel, face – to – face encounters occurs between customers and maintenance
personnel, receptionist, bellboy, food and beverage servers and others. Determining and
understanding service equality issues in face – to –face context is the most complex of all.
Both verbal and non-verbal behaviours are important determinants of quality, as are
tangible cues such as employee dress and other symbols of service (equipments,
informational brochures, physical settings). In face – to – face encounters the customer
also play an important role in creating quality service for herself through her own
behaviour during the interaction. At Disney theme parks, face-to-face encounters occur
between customer and ticket-takers, maintenance personnel, actors in Disney character
costumes, ride personnel, food and beverage servers, and others. For a company such as,
IBM, in a business-to-business setting direct encounters occur between the business
customers and salespeople, delivery personnel, maintenance representatives, and
professional consultants. Of all determining and understanding service quality issues in
face-to-face context is the most complex. Both verbal and non-verbal behaviours are
important determinants of quality, as are tangible cues such as employee dress and other
symbols of service (e.g., equipment, informational brochures, and physical settings). In
face-to-face encounters the customer also plays a role in creating quality service for
herself through her own behaviour during the interaction.

CHAPTER V
SERVICE FAILURES AND RECOVERY

5.1 SERVICE FAILURES

Even with the Best organizations failures can just happen – they may be due to the
service not available when promised, it may be delivered late or too slowly (some times
too fast ??), the outcome may be incorrect or poorly executed, or employees may be rude
or uncaring. All these types of failures bring about negative experiences. If left unfixed
they can result in customers leaving, telling others about the negative experiences or
even challenging through consumer courts.
Research has shown that resolving the problems effectively has a strong impact on the
customer satisfaction, loyalty, and bottom-line performance. Customers who experience
service failures, but are ultimately satisfied based on recovery efforts by the firm, will be
more loyal.
THE RECOVERY PARADOX.
It is suggested that customers who are dissatisfied, but experience a high level of
excellent service recovery, may be more satisfied and more likely to repurchase than are
those who are satisfied at the first place.
For example:-
A hotel customer who arrives & finds there is no room available. In an effort to recover,
the front-desk person immediately upgrades this guest to a better room at the same price.
The customer is so thrilled with this compensation that he is extremely satisfied with this
experience, is even more impressed with the hotel than he was never before, and vows to
be loyal into future. The logical, but not very rational, conclusion is that companies
should plan to disappoint customers so they can recover &gain even greater loyalty from
them as a result. This idea is known to be as Recovery Paradox.
The recovery paradox is more complex than it seem. First of all it is expensive to fix
mistakes and would appear ridiculous to encourage service failure-as reliability is the
most important aspect of service quality. According to a research it is observed that a
customer weight their recent experiences heavily in their decision to buy again. If the
experience is negative, overall feelings about the company will decrease and repurchase
intentions will also reduce. If the recovery effort is absolutely superlative then the
negative impression can be overcome.
Then there is a recent study which shows no support to recovery paradox. It shows the
overall satisfaction was consistently lower for those customers who had experienced a
service failure than for those who had experienced no failure, no matter what the
recovery effort is. The explanation for why no recovery paradox is suggested by the
magnitude of the service failure in this study it is-a three hour airplane flight delay. This
type of failure may be too much to be overcome by any recovery effort.
Considering mixed opinions on if recovery paradox exists it is safe to say “doing it right
the first time” is the best and safest strategy. When a failure does occur then every effort
at superior recovery should be made. In cases where the failure can be fully overcome
the failure is less critical, or the recovery effort is clearly superlative, it may be possible
to observe evidence of the recovery paradox.

HOW CUSTOMERS RESPOND TO SERVICE FALIURE

If customers initiate action following service failure, the action can be various
types. A dissatisfied customer can choose complaint on the spot to the service
provider, giving the company the opportunity to respond immediately. Thos is
often the best-case scenario for the company it has the second chance right at
that movement to satisfy the customer, keep his or her business in the future,
and potentially avoids any negative word of mouth.

Some customer chooses not to complaint directly to the provider but rather
spread negative word of the mouth about the company to friend, relatives, and
coworkers. This negative word of mouth can be extremely detrimental because it
can reinforce the customer’s feeling of negativism and spread that negative
impression to other as well. Further, the company has no chance to recover
unless the negative word of mouth is accompanied by a complaint directly to the
company.
CUSTOMER COMPLAINT ACTION FOLLOWING SERVICE FAILURE
Service
Failure

Dissatisfaction/

Negative
emotion

Complaint
Action No
complain
t
Action

Complain Negative Third-party

To provider Word-of-mouth Action

Exit/ Stay Exit/ Stay

Switch Switch
When there is a failure, customer can respond in a variety of ways as illustrated in the
figure. It is assumed that following are the failure, dissatisfaction at some levels will
occur for the customer. In fact, research suggest that variety of negative emotion can
occur following service failure, including such feeling as anger, discontent,
disappointment, self- pity and anxiety.
Many customers are very passive about their dissatisfaction, simply saying or doing
nothing, take action or not, at some point the customer will decide weather to stay with
that provider or switch to a competitor.

SERVICE RECOVERY STRATEGY

Fail safe the Welcome and Act Quickly

services encourage complaints

Treat customer
Fairly

Learn from
Learn from Recovery
lost customer experiences
1) Fail Safe Your Service :-
The first rule of service quality is to do it right the first time. In this way recovery is
unnecessary, customer get what they expect, and the costs of redoing the service and
compensating for errors can be avoided. Even more fundamentally, it is important to
create a culture of zero defections to ensure doing it right the first time. Within a zero
defections culture, everyone understands the importance of reliability. Employee’s and
managers aim to satisfy every customer and look for ways to improve service. Employees
in a zero defection culture fully understand and appreciate the “lifetime value of a
customer” concept. Thus they are motivated to provide quality service every time and to
every customer. Dick Chase, noted service operation expert, suggests that services adopt
the TQM notion of Poka Yokes to improve service reliability. Poka Yokes are automatic
warnings or controls in place to ensure mistakes are not made; essentially they are
quality control mechanisms, typically used on assembly lines.
In a hospital setting numerous Poka Yokes ensure that procedures are followed to avoid
potentially life-threatening mistakes. For example, trays for surgical instruments have
indentations for specific instruments, and each instrument is nested in its appropriate
spot. In this way surgeons and their staff know that all instruments are in their places
prior to closing the patients’ incision. FAIL- SAFE YOUR SERVICE- DO IT RIGHT
THE FIRST TIME
2) Welcome & Encourage Complaints:-
Even in a Zero defections organizations that aims for 100 % service quality, failures
occur. A critical component of a service recovery strategy is thus to welcome and
encourage complaints. Complaints should be anticipated, encouraged, and tracked. The
complaining customer should truly be viewed as a friend.
There are a number of ways to encourage and track complaints. Customer research can
be designed specifically to do this through satisfaction surveys, critical incidents studies,
and lost customer research.
Part of encouraging complaints also involves teaching customers how to complain.
Sometimes they have no idea whom to speak to, what the process is, or what will be
involved. It is best to make this process as simple as possible the last thing customers
want when they are dissatisfied is to face a complex, difficult to access process for
complaining.
One way that the complaining process has been simplified for customers is through
technology. New technologies have resulted in easier access for customers to sales and
service representatives. Toll-free call canters, e-mail, and pagers are all used to
facilitate, encourage, and track complaints, Software application in a number of
companies also allow complaints to be analysed, sorted, responded to, and tracked
automatically.
British Airways, encourages, facilitated and tracks customer as a critical component of
its effective service recovery process. It is apparent that British Airways is highly
dependent on information technology to implement its strategy.
In some cases technology can anticipate problems and complains before they happen,
allowing services employees to diagnose problems before the customer recognizes they
exist. This is the case at companies such IBM and Caterpillar, where information systems
are being implemented to anticipate equipment failures and send out an electronic alert
to the local field technician with the nature of the problem as well as which parts and
tools will be needed to make the repair.
3) Act Quickly:-
Complaining customer want quick response. Thus if the company welcomes, even
encourages, complaints, it must be prepared to act on them quickly. This requires systems
and procedures that allow quick action, as well as empowered employees. Following are
some guide lines to act quickly :

Take Care of problems on the Front Line:-

Customers want the persons who here their complaints to solve their problems whether a
complaints is registered in person, over the phone or via the Internet. The Ritz-Carlton
insists that the first person to hear a complaint from a customer “owns” that complaint
until he or she is sure it is resolved. That means that if a maintenance employee hears a
complaint from a customer while the employee is in the middle of fixing a light in the
hotel corridor, he owns that complaint and must be sure that it is handled appropriately
before returning to his work.
Empower Employees:-
Employees must be trained and empowered to solve problem as they occur. The company
uses customer knowledge database as the key source for immediate problem solving by
its customer service representatives. These representatives are empowered to solve the
customer’s problem, but at the same time they must adhere to stringent requirements
necessary in the health and pharmaceutical administration business.
For service employees, there is a specific and real need for recovery training. Because
customers demands that service recovery take place on the spot and quickly, frontline
employees need the skills, authority, and incentives to engage in effective recovery.
Effective recovery skills include hearing the customer’s problem, taking initiative,
identifying solutions, improvising and perhaps bending the rules from time to time.
Allow Customer to Solve Their Own Problem:-
Another way that problem or complaints can be handled quickly is by building systems
that allow customers to actually solve their own service needs and fix their own
problems. Typically this is done through technology.
4) Treat Customer Fairly:-
In responding quickly, it is also critical to treat each customer fairly. Customers expect to
be treated fairly in terms of the outcome they receive, the process by which the service
recovery takes place, and the interpersonal treatment they receive.
5) Learn from Recovery Experiences:-
“Problem- resolution situations are more than just opportunities to fix flawed services
and strengthen tie with customers. They are also a valuable – but frequently ignored or
underutilized – sources of diagnostic, prescriptive information for improving customer’s
services. By tracking service recovery efforts and solutions, managers can often learn
about systematic problems in the delivery system that needs fixing. By conducting root-
cause analysis, forms can identify the sources of the problem and modify processes,
sometimes eliminating almost completely the need for recovery.
At the Ritz-Carlton employees record every service recovery opportunity and how it was
handled; the employee who gets the complaint is required to do this. This information is
then entered into the customer database and analyzed for patterns and systematic service
issues that need to be fixed. If needed, a project team is assigned to a problematic area to
develop a solution. In addition, the information is entered into the customers personal
data file so that when that customer stays at the Ritz- Carlton again
(No matter what hotel), employees can be aware of the previous experience, ensuring
that it doesn’t happen again for that particular customer.
6) Learn from Lost Customer:-
Another key component of an effective service recovery strategy is to learn from the
customer who defect or decide to leave. Formal market research to discover the reasons
customers have left can assist in preventing failures in the future. This type of research is
difficult, even painful for companies, however. No one really likes to examine their
failures. Yet this is essential for preventing the same mistakes and losing more customers
in the future.
This is most effectively done by depth interviews, administered by skilled interviewers
who truly understand the business. It may be best to have this type of research done by
senior people in the company, particularly in business to business contexts where
customers are large and the impact of even one lost customer is great. The type of depth
analysis often requires a series of “Why” question or “tell me about that” questions to
get at the actual, core reason for the customer’s defection. In conducting this kind of
research, it is important to focus on important or profitable customers who have left not
just everyone who has left the company. An insurance company in Australia once began
this type of research to learn about their lost customers, only to find that the customers
they were losing tended to be their least profitable customers anyway. They quickly
determined that depth research on how to keep these unprofitable customers would not
be a good investment.
7) Return To “Doing It Right”
The set of strategies described follows the figure and leads directly back to the
beginning: “fail – safe the service and do it right the first time”. By integrating all of the
strategies, hotels will find less and less of a need for service recovery. Yet, when those
situations do occur, they will be prepared to impress the customer and keep their
business anyway.
GUEST RELATIONS
The front office should anticipate guest complaints and devise strategies that help staff
effectively resolve the situation. The visibility of the front office means that front desk
agents are frequently the first to learn of guest complaints. Front desk agents should be
especially attentive to guests with complaints and seek a timely and satisfactory
resolution to the problem. Nothing annoys guests more than having their complaints
ignored, discounted, or overlooked. While most front office staff do not enjoy
receiving complaints, they should understand that very few guest actually enjoy
complaining. Employees should also realize that guest who does not have the
opportunity to complaint front office staff often tell their friends, relatives, and
business associates instead.
When guests find it easy to express their opinions, both the hotel and the guests
benefit. The hotel learns of potential or actual problems and has the opportunity to
resolve them. For a guest, this can mean a more satisfying stay. When problems are
quickly resolved, guest often feels that the cares about his or her needs. From this
perspective, every complaint should be welcomed as an opportunity to enhance guest
relations.

CHAPTER VI
EIGHT COMPONENTS OF INTEGRATED SERVICE MANAGEMENT

6.1 The Marketing Mix (THE 5 P’s OF SERVICES MARKETING)

In order for your business to sell its products and services as successfully as possible,
you need to look at what products you are selling in detail to ensure they will be
attractive and needed; the price to ensure it is not too cheap or too expensive; where you
are best distributing your product; and finally, how you can create interest and
awareness for your products. All these elements need to be targeted at the right people
at the right time. In order for your business to tackle this correctly, you need to get the
right type of mix (marketing mix), the mix should include four main elements: Product,
Price, Place and Promotion, by examining each and carefully and adapting them to your
customer's needs, you will continue to produce and needed products and services
1) Product element: Managers must select the feature of both the core product (either a
good or service) and the bundle of supplementary service elements surrounding it, with
reference to the benefit desired by customers and how well competing products perform.
In short, they must be attentive to all aspects of the service performance that have the
potential to create value for customers
2) Price and other user costs: - This components addresses management of the
expenditures and other outlays incurred by customers in obtaining benefits from the
service product. It is not only related to traditional pricing tasks of establishing selling
price to customers, setting trade margins and getting credit terms but also, how to
minimize other burdens of customers while purchasing such as time, mental and physical
efforts and unpleasant sensory experiences such as noises and smells.
3) Place , cyberspace and Time:- Delivering product elements to customers involves
decisions on the place and time of delivery as well as on the methods and channels
employed. Delivery may involve physical or electronics distribution channels or
both),depending on the nature of the service being provided.
4) Promotion and education:- No marketing program can succeed without effective
communications.
This component plays three vital roles: -
a)Providing needed information and advice (awareness).
b)Persuading target customers of the merits of a specific product. (Concentrating on
a particular segment of the market).
c) Encouraging to take action at a specific time (purchase).
Communication is educational in nature for new customers.
Communication can be delivered by individuals such as sales people and trainers, media
such as TV, radio, newspaper, magazines, postures, websites etc.
This promotion is usually used as incentives to catch customer’s attention and to
motivate them to act.
The above four are the traditional marketing mix. The EXTENDED marketing mix for
services marketing is as follows :

5) People: - Many services depend on the direct, personal interaction between customers
and a firm’s employees (such as getting a haircut or eating at a restaurant). This
interaction strongly influences the customer perception of service quality. So, successful
service firm devote significant effort to recruitment, training and motivating their
personnel.
6) Physical evidence:- The appearance of buildings, landscaping, vehicle, interior
furnishing, equipment, staff members, signs, printed materials, and other visible cues all
provide tangible evidence of the firms service quality. The service firms need to manage
physical evidence carefully because it can have a profound impact on customers’
impression as the service itself is intangible.
A tangible element such as insurance and advertising is often employed to create
meaningful symbols.
E.g.: - umbrella may symbolize protection and a fortress, security.
7) Process: - It is the method and sequence of actions in which service operating system
works.
Badly designed process: - annoys customers which leads to likelihood of service
Failures.
8) Productivity and quality: - Productivity relates to how inputs are transformed into
outputs that are valued by customers. Improving productivity keeps costs under control.
Quality refers to the degree to which a service satisfies customers by meeting
their needs, wants and expectations. Service quality helps in product differentiation and
building customer loyalty. Invest in quality profitably i.e. by considering incremental cost
and incremental revenue.
Thus, these are the 8ps of service management, which are the essence of it. The
integration of each p’s is necessary for the successful service management
Collectively these are the tools organizations uses to develop offerings to satisfy their
target market(s) ... the only tools at their disposal. Remember: If your marketing mix
doesn't meet their needs they will not be satisfied - and if they aren't satisfied you are
unlikely to meet your objectives.
The marketing mix should be viewed as an integrated and coordinated package of
benefits that reflect the characteristics of customers and various targeted publics and
satisfy their needs, wants, and expectations. Note that the elements of the marketing mix
should be integrated because each element of the mix usually has some impact, direct or
indirect, on the other three. For example, if you improve the product or service you
probably have to change the price because it costs more to produce. Although you may
not have to change where the product is delivered to the customer, you will almost
certainly have to change the promotion or communication with the customer because you
need to tell the customer about the changes you have made in the product and how the
changes will make it more desirable and satisfying. One problem in many organizations
is that different divisions may be responsible for different elements of the marketing mix.
This happens even in well-managed organizations. The result is that the offering is
confusing to the target market. Lack of communication among divisions makes this
problem worse. And if they don't share the same view of organizational objectives, the
problem is worse still.
6.2 PRODUCT MIX
6.2.1 Introduction
‘Product’ includes name, design, features, quality, operational case, packaging,
warranties, appearance, range and size. It also includes pre-sale and post-sale services
like training, repairs, maintenance and replacements.
According to Philip Kotler “a product is anything that can be offered to market for

attention, acquisition use or consumption that satisfy a want or need. It includes physical

objects (TV), service (banking), person (political person), place (holiday resort),

organization (red cross) and idea (aid awareness).”

Conventionally, a product is an object, which is delivered and consumed. However, in

services there is no or very little tangible elements. Hence, what is offered for sale is
benefits. Service is a bundle of benefits and has relevance for a specific target market.
Hence, the package of benefits should have a customer’s perspective.
6.2.2 Levels of product:
Kotler has identified 5 levels of a product
1) Core product
2) Basic product
3) Expected product
4) Augmented product
5) Potential product
Kotler suggested that a product should be viewed in three levels.
Level 1: Core Product. What is the core benefit your product offers? This is the
fundamental benefit or service that the customer is buying. For eg. A customer going to a
Hotel is buying rest, sleep etc.
Level 2 Basic Product: Basic functional attributes. All Hotels provide rest and sleep. The
aim is to ensure that your potential customers purchase your one service. Thus the
functional attributes like Room, Bed, Bath are important.
Level 3 : Expected product : Set of attributes that the buyer expects (Clean room, large
towels, quietness)
Level 4: Augmented product: What additional non-tangible benefits can you offer? This
meets the customer’s desires beyond his expectations – (Prompt room service, music,
aroma etc)
Level 5 : Potential product : The possible evolutions that can be made to make the
product a distinguished offer (all suite room)
In a Bank these can be
Core Product (Safety of deposits, Interest, Easy loans
Basic product : Savings deposit, FD, Recurring deposit
Expected product : Correct transaction records, timely service, convenient timing
Augmented product : Congenial waiting room, Water cooler
Potential product : Greetings for New Year, 24 hour banking

Corporate Image, Word of mouth

The service concept

Core services
Accessibi Facilitating Interaction
lity of services
Services Supporting
services
Consumer participation
A

Marketing communication

The PACKAGE CONCEPT of Service product – suggests that what you offer to the
market si a bundle of different services – tangible and intangible. There is a core service
and around it are built the auxiliary or facilitator service. Without this the service would
collapse (a bell boy in a Hotel).
AcceYet another service is the supporting service – it is used
to increase the product value (a car rental in a hotel).
The basic product is not equivalent to the service product which the customer perceives,
which is in fact based on customer’s experience and evaluation. Therefore there is a need
for an augmented product – like
Accessibility (number and skills of personnel, convenient timing, location, infrastructure
etc.,)
Interaction with service organization (Between employees and customer, with physical
and technical resources, with other customers)
Consumer participation.(how well the customer is aware about the process of service
delivery, his willingness to share information and use service equipments)
The package should also include the management of service image through encouraged
word of mouth and market communication.
6.2.3 Product Decisions
When placing a product within a market many factors and decisions have to be taken into
consideration. These include:
Consumer benefits – assess what benefits the consumer looks for
Service concept – To translate it to suitable service offer
Develop augmented offer

6.2.4 BRANDING:
One of the most important decisions a marketing manager can make is about branding.
The value of brands in today’s environment is phenomenal. Brands have the power of
instant sales; they convey a message of confidence, quality and reliability to their target
market.
Brands have to be managed well, as some brands can be cash cows for organizations. In
many organizations they are represented by brand managers, who have huge resources
to ensure their success within the market.
A brand is a tool, which is used by an organization to differentiate itself from
competitors. Ask yourself what is the value of a pair of Nike trainers without the brand or
the logo? How does your perception change?
Increasingly brand managers are becoming annoyed by ‘copycat’ strategies being
employed by supermarket food retail stores particular within the UK. Coca-Cola
threatened legal action against UK retailer Simsbury after introducing their Classic
Cola, which displayed similar designs and fonts on their cans. 
Internet branding is now becoming an essential part of the branding strategy game.
Generic names like Bank.com and Business.com have been sold for £m’s. (Recently
within the UK banking industry we have seen the introduction of Internet banks such as
cahoot.com and marbles.com the task by brand managers is to insure that consumers
understand that these brands are banks!

Branding of Services and its Importance

Philip Kotlar defines a brand as “a name, a term, a symbol, or a designed or a
combination of them which is intended to identify the goods and services of one seller
or a group of sellers and to differentiate them from those of competitors”.
Brand decision is important for tangible goods. But in the case of service offering
branding is still in its infancy, there importance is expected to rise due to the following
reason.
1. Service market is getting more competitive and there is as increasing
proliferation of brands in the service sector.
2. It is five times cheaper to retain customer than to attract new ones.
3. As a new service development assumes greater importance, the risk of product
launch is reducing in the context of umbrella branding.
4. As service itself does not offer unique tangible benefits, brand development
tangibilises the service.
Customer gives more significance to the service provider than the individual service
products that the provider offers. Therefore, this leads to branding the service providers
cooperate image. Banks especially have recognized the importance of corporate image
and identity and have used slogans, logos and other means to brand themselves. Ones the
corporate brand is developed it is found that service firms move with relative easy to
other service product categories. Primarily companies resorts to corporate brand
building with a goal of maximizing market capitalization and creating shareholders
wealth. In case of service firms corporate branding reflects the service itself. Airlines,
fast-food restaurants, banks, professional firm are usually differentiated on the basis of
their corporate name and reputation rather than the specific service they offer. The
service organization brand name is reinforce by courteous employees, professional
looking uniform, advertising etc. However no matter how good the corporate brands may
be the quality of service determines the success of the image. There are instance where
the service itself is branded. Example Suvidha Account of Citibank, the various schemes
of LIC like Jeevan Kishore, Jeevan Mitra etc.
Advantages of branding services
1. To tangibilise the intangible.
2. To support the positioning strategy.
3. Offers a powerful tool for relationship building.
4. To create an image of quality and consistency.
5. To reduce price comparison.
6. Keeps current customers satisfied by developing and sustaining a unique service
advantage.
7. Encourages repeat usage using sales promotions.

6.3 PRICE MIX

6.3.1 Introduction:
This element of the marketing mix is related to the decision influencing the fee structure,
rate of interest, commission charged and paid by the service generating organizations. It
is considered to be the most critical component of the marketing mix. Both from
economic and social standpoint, the management of pricing is important but at the same
time more critical and challenging. We find pricing decisions important because the
pricing decisions are to influence the maintenance, development and expansion plans of
an organization.
6.3.2 Guidelines for service pricing:
1) Pricing strategy should enable handling demand fluctuations successfully. As
services cannot be inventoried, pricing should encourage customers to use the
service during period of low demand.
2) As services need to have some tangible element attached to it, service pricing
should be based on costs so as to take into account the tangible clues.
3) Service price as an indicator of quality: Services not having specific brand
names to indicate quality, customers use price as an indicator of quality. This
in particular in some cases, where the price variation is too much with in a
particular class of service (e.g. Tour operators). Also, where the risk
associated with the service is high (e.g. Heart surgery). Price is taken as an
indicator of quality. Thus pricing too low can give wrong signals and pricing
too high can set expectations that the firm may find it difficult to match in
service delivery. Because goods are dominated by search qualities. Price is
normally not used to judge quality.
4) Pricing strategy should cope-up with the degree of competition operation with in
certain geographic and time zone. E.g. Bus operators will have to consider
prices of train. It also includes the stage of strategic low pricing to attract
first time customers.
6.3.3 Approaches to pricing services:
The 3 approaches to pricing services are:
1) Cost-based pricing
2) Competition-based pricing.
3) Demand–based pricing.

1) Cost-based pricing:
In cost-based pricing, a company determines expenses from raw materials and labor,
adds amounts or percentages for overhead and profit, and thereby arrives at the price.
This method is widely used by industries such as utilities, contracting, wholesaling and
advertising. The basic formula for cost-based pricing is
Price = Direct costs + Overhead costs + Profit margin
Direct costs involve materials and labor that are associated with the service, overhead
costs are a share of fixed costs, and the profit margin is a percentage of full costs (direct
+ overhead)
Problems in cost-based pricing services:
a) It is difficult to define the units in which a service is purchased. Thus the
concept of price or unit is vague. Thus many services are sold in terms of
input units rather than units of measured output. E.g. consultant, teacher
etc.
b) Where a firm provides multiple services. The costs being a major
component of employee time are difficult to allocate.
c) Service cost may not represent true value. For e.g. a darner charging
same price for a expensive suit and an ordinary pant.
2) Competition-based pricing:
This approach focuses on the prices charged by other firms in the same industry or
market. Competition-based pricing does not always imply charging the identical rate
others charge but rather using others prices as an anchor for the firm’s price. This
approach is used predominantly in two situations:
(a) When services are standard across providers, such as in the dry cleaning
industry.
(b) In oligopolies where there are a few large service providers, such as in the airline.
Problems in competition-based pricing:
(a) Small firms may charge too little and not make margins high enough to remain in
business.
(b) Heterogeneity of services across and within providers makes this approach
complicated. E.g. Banks charge different rates of commission for drafts and other
services.
3) Demand-based pricing:
The first two approaches of pricing are based on the company and its competitors rather
than on customers. Neither approach takes into consideration that customers may lack
reference price, may be sensitive to non-monetary prices and may judge quality on the
basis of price. All of these factors can and should be accounted for in a company’s
pricing decisions. The third major approach to pricing, demand-based pricing, involves
setting prices consistent with customer perceptions of value: prices are based on what
customers will pay for the services provided.

Problems in demand-based pricing:

 (a) There is an element of non-monetary costs and benefits which must be considered
while calculating perceived value. E.g. services requiring time, inconvenience,
psychological and search costs should be priced lower. It is difficult to convert this
non-monetary cost into monetary cost.
(b) Information on service may be less available to customer, making it difficult to
assess the price.

6.4 THE PLACE MIX.

6.4.1 INTRODUCTION
Another important element of the marketing mix is place mix, which focuses our attention
on the offering of services by the providers to the ultimate users and the place of location
for the service generating organizations. In some of the cases we find that providers have
no option but to locate the units/branches as per the instructions of the apex body. Some
of the essential features are taken into consideration such as easy and convenient
accessibility, safety or protection availability of the infrastructural facilities, attractive
and healthy surroundings or so.
Due to the intangibility, services cannot be stored, transported and inventoried. Hence
the traditional channels of product marketing like wholesalers cannot be used. Eevn
retailing cannot be an independent activity. Similarly because of inseparability they have
t be produced and sold simultaneously.
Due to this tehe channels of distribution are made very short. At the most there can be
one agent like in the case of insurance, travel agency, courier eyc.
The better thing is direct selling.
Agents when employed can have two types of functions – either they market the services
lke travel agents, insurance agents etc, who market the tangible part of the service
offering OR there can be agents who are trained to provide the service Like a Shahnaz
Hussain Beauty parlour.
Further as there is no actual transfer of ownership, the creation of time and place utility
is very important. Hence proper location to cover maximum cuxtomers becomes
important. Banks often have extension counters or use money collectors.
6.4.2 Capacity Planning.
It is not sufficient that we are interested only in managing our present. It is much more
significant that we keep our eyes open, minds active to know about the future and
continue to enrich our potentials to manage the future. The organizations not managing
the future fail in managing the demand and supply position, make it difficult to optimize
the development of marketing resources to cope with the changing requirements, make
possible a contraction in their resistance power and both on quantitative and qualitative
fronts, we find them moving backward. By capacity planning, our emphasis is on the
management of strength.
Capacity planning is known as planning the capacity in the face of future. This throws
light on both the aspects-first, the organizations are supposed to know the demand
position so that the potentials are enriched to increase the quantity or capacity of
generating the services and second, the organizations are also required to know about
the likes and dislikes, preferences, expectations, attitudes which make an advocacy in
favor of quality generation. If the users expect sophistication in services, the
organizations need to use sophisticated technologies to fulfill their expectations and this
is not possible unless we think in favor capacity planning.
The strategic plan would make the ways for the mobilization of financial resources to
cater to their increasing requirements. We can’t deny the fact that if an organization
succeeds in maintaining the process of profit generation, the financial health of that
organization becomes so sound that the task of satisfying the employees and investors is
simplified considerably. If an organization is strong, the task of facing the challenges and
threats in the markets is simplified considerably. It is against this background that
strategic planning assumes a place of outstanding significance. When we talk about
capacity planning, our prime focus is on strategic planning since the process of enriching
strength can’t be made possible within a couple of days.
6.4.3 Capacity Scheduling.
How much of what (service) will be needed to achieve its pre-determined goals is an
important consideration that makes an advocacy in favor of capacity planning and
scheduling. There are a number of critical variables requiring due consideration in the
process such as, goals of the service firm, availability of capital and the quality of human
resources, market segments served and the level of service quality aimed at. A detailed
scheduling of man, materials, money and machines (four M’s) is essential for each
element of the service mix.
6.5 PROMOTION MIX
6.5.1 INTRODUCTION:
The promotion mix is found instrumental in informing, sensing and persuading the
prospects or customers. The marketers bear the responsibility of using the different
components of promotion in such a way that the measures adopted for promoting the
goods or services are found productive. The promotion communicates to customer’s
information on the other elements of marketing mix, such as product, pricing and place.
The advantage of product itself, details on the place through which it is sold and details
on the pricing are transmitted through promotion.
6.5.2 COMPONENTS OF THE PROMOTION MIX:
1) Advertising:
Advertising is paid form of persuasive promotion since it plays an effective role in
informing and sensing the customers. The creativity is found to be an essential aspect of
advertising, which increases the importance of professional excellence in making the
advertising processes productive.
2) Publicity/public relations:
All the organizations need to develop and strengthen the public relation activities to
promote their business. This component of promotion is found effective though the
organization don’t make any payment for publicity. The most important thing in the
context of public relations is the instrumentality of executives in projecting a positive
image of the services offered. They should have the potentials to throw a positive imprint
on the prospects. It is also significant that they know the art of developing rapport with
the media people.
3) Personal selling:
The personal selling is found instrumental in promoting the business of service
generating organizations. Personal selling is a process of informing the customers
besides persuading them to purchase products being influenced by personal
communication. It is just a process of communication in which an individual exercises his
or her personal potentials, tact, skill and ability to influence the impulse of prospects and
to transform them into customers. Personal selling is basically a method of
communication. It involves not only individual but the social behavior too; each of the
person in face-to-face contact, salesman and prospect influence the other. Thus we find
personal selling a personal communication, seller-buyer interaction, inter-personal
communication and more so direct selling. The following facts are observed regarding
the personal selling:
a) It is a direct personal relation between the buyer and seller.
b) It is an oral presentation in conservation.
c) It is two-way communication.
d) It is personal and social behavior.
e) It is an exercise for selling the goods and services.
f) It is found more effective in the service generating organizations.
g) It is based on the professional excellence of an individual.
h) It is an important element of the promotion mix.
4) Sales promotion:
Marketing activities other than personal selling, advertising and publicity that stimulate
customers and dealers effectively, such as display shows, exhibitions, demonstrations and
various non-recurrent selling efforts not in the ordinary routine are the sales promotion
measures. Sales promotional activities are devices aimed at reaching the consumer at
home or in his business establishment. The tools are generally in the form of samples,
contest, demonstrations and coupons. Sales promotion directed at consumers may be
done with a view to increase the products rate of use among existing customers or to
attract new customers to the company’s product.
Tools of sales promotion:
a) Gift
b) Contest
c) Discount and commission
d) Entertainment
e) Travel and tours
 f) Additional allowance
g) Fairs and shows
These are some of the tools of sales promotion offered to both, the providers as well as
the users. The motives are increasing the selling activities, touching the target, excelling
the competition, increasing the market share, clearing the old products to be declared
absolute in the near future.
5) Word-of-mouth promotion:
Much communication about the performance of the service generating organizations
actually takes place by word-of-mouth information, which is also as word-of-mouth
promotion. The word-of-mouth recommendations the hidden sales force make the process
of communication effective. The growing sensitivity of the words and experiences of
hidden sales force simplify the task of promoting the business. The advertisements, sales
promotion measures, the personal selling may of course be effective but the word-of-
mouth recommendations are found acceptable in all the conditions by almost all the
prospects.

6) Telemarketing:
Telemarketing is found instrumental in promoting the business. The telemarketing helps
in activating the process of advertisement in addition to its instrumentality in increasing
the sale. The service generating organizations in general and the banking, insurance,
transport, hotel, tourism organizations in particular have been found using telemarketing
with the two-fold objectives of selling and advertising. The instrumentality of telephones
and televisions are found effective in the process of promoting the business. The
instrumentality of telemarketing in persuading the users is substantially influenced by the
quality of personnel supposed to discharge the responsibility. The telemarketing
minimizes the dependence of service generating organizations on the sales people since
just a counter or a center listed in the call numbers serves multi-dimensional purposes.
6.5.3 PROMOTION OBJECTIVES
1) Develop personal relation with client
2) Make a strong impression of competency, honesty and sincerity
3) Should be able to use indirect selling techniques (create a derived demand –
mobile companies give free sim card)
4) Manage to maintain a fine image by positive word of mouth
5) Packing and customization of service offering
6.5.4 TARGET AUDIENCE
1) Buyer (or user/influencer/gatekeeper)
2) Employees (discussed in detail under people)
6.5.5 PLANNING THE PROMOTION MIX
 1) Advertisement should have positive effects on contact personnel
2) It should be able to capitalise on word of mouth
3) It should provide tangible clues to the customers
4) It should make the service offering easily understandable
5) It should promise only what is possible to deliver
6) It should contribute to the continuity
6.5.6 CONSUMER PROMOTION IN SERVICE MARKETING
1) Sampling is less frequently used compared to Goods (Sampling gives consumer a
free trial – though now becoming popular)
2) Gift premiums are frequently used to give an element of tangibility
3) Price/quantity promotions can be used to get long term commitments from
consumer (frequent flyer programme or group booking in Hotels)
4) Use of coupons are less frequent (coupon with straight price cut OR discount or
fees waiver for one or more purchases with original purchase OR Discounts on
augmented products – like a free wax polish with car wash)
5) Future discounts are less frequent
6) Prize promotions are frequently used (prize for mobile bank use etc)
6.5.7 GUIDELINES FOR SELLING SERVICES
1) It is personal relationship rather than the service itself that results in satisfaction
2) Buyer’s confidence in the seller’s ability to deliver the results is important – hence
make a strong impression of competency, sincerity, and honesty.
3) As what is sold is intangible – indirect selling techniques have to be adopted
(Hotels selling tour programmes)
4) As word of mouth is important – building up a favourable is image is essential.
5) A service provider sells “services” and not just a single service – hence ability to
customise the service offering is important (Jain food in Air-lines Hotels etc)
6) Public relations becomes important – particularly in industries where
advertisement cannot be used as a promotional tool like Hospital industry.
6.6 PEOPLE MIX

6.6.1 INTRODUCTION
The employees of an organization represent the organization in the eyes of the customers.
If they are not give proper training in representing the organization and its goals the
service efforts will fail. Hence the most important marketing strategy is to market the
service first to the organization’s employees.
There are two types of contact personnel – HIGH CONTACT PERSONNEL and LOW
CONTACT PERSONNEL (eg .in a hospital a nurse is a high contact personnel and ward
boy may be a low contact personnel) In addition there can be a NON CONTACT
PERSONNEL (say the Hospital administrative manager). All these people are important
from the service angle

Physical
Support
Non Contact Customer
Personnel SERVICE

Contact
Personnel

Not Visible to Visible to the

the Customer Customer

6.6.2 SERVICE TRIANGLE

COMPANY

Internal Marketing External Marketing

Enabling Promises Making Promises

PROVIDER CUSTOMER

Interactive Marketing
Keeping Promises

When company makes efforts to do external marketing, it should have strategies of

Internal marketing. External marketing is nothing but promises made,which needs to be

fulfilled – this needs internal marketing enabling the comapany to keep up the promises

made. Unless the employees are able and willing to deliver, the servicepromises will fail.
This will result in proper interaction of thecustomers with the service providers which

helps the organization to keep the promises (Interactive marketing)

3 EMPLOYEE SATISFACTION, CUSTOMER SATISFACTION, AND PROFITS

There is concrete evidence that satisfied employees make more satisfied customers (and
satisfied customers can, in turn, reinforce employees’ sense of satisfaction in their jobs).
Some have even gone so far as to suggest that unless service employees are happy in
their jobs, customer satisfaction will be difficult to achieve.
The underlying logic connecting employee satisfaction and loyalty to customer
satisfaction and loyalty and ultimately profits is illustrated by the service profit chain
shown in the figure.
The service profit chain suggest that there are critical linkages among internal service
quality; employee satisfaction; productivity; the value of services provided to the
customers; and ultimately customer satisfaction; retention and profits.
Service profit chain researchers are careful to point out that the model does not cause
customer satisfaction; rather the two are interrelated and feed ff each other. The model
does imply that companies that exhibit high levels of success on the elements of the model
will be more successful and profitable than those who do not.

The Service Profit Chain

Employee
retention Revenue
Externa growth
Internal Employee l Customer Customer
service satisfaction service satisfaction loyalty
quality value
Employee
Productivity Profitability

4 HUMAN RESOURCE STRATEGIES:

Human resources decisions and strategies primary goal is to motivate and enable
employees to deliver customer-oriented promises successfully. The strategies presented
here are organized around four basic themes. To build a customer-oriented, service-
minded workforce, an organization must:
1) Hire the right people
 2) Develop people to deliver service quality
3) Provide the needed support systems
4) Retain the best people

1) Hire the right people:

One of the best ways to close gap 3 is to start with the right service delivery people from
the beginning. This implies that considerable attention should be focused on hiring and
recruiting service personnel.
a) Compete for the best people:
To get the best people, an organization needs to identify them and compete with other
organizations to hire them. The firm act as marketers in their pursuit of the best
employees, just as they use their marketing expertise to compete for customers. Thinking
of recruiting as a marketing activity results in addressing issues of market (employee)
segmentation, product (job) design, and promotion of job availability in ways that attract
potential long-term employees.
b) Hire for service competencies and service inclination:
Once potential have been identified, organizations need to be conscientious in
interviewing and screening to truly identify the best people from the pool of
candidates. It has been suggested that service employees need two complementary
capacities: they need both service competencies and service inclination. Service
competencies are the skills and knowledge necessary to do the job. Achieving
particular degrees and certifications validates competencies, such as attaining a
doctor of law degree and passing the relevant state bar examinations for lawyers.
Service competencies may not be degree related, but may instead relate to basic
intelligence or physical requirements.

c) Be the preferred employer:

One way to attract the best people is to be known as the preferred employer in a
particular industry or in a particular location. Other strategies that support a goal of
being the preferred employer include providing extensive training, career and
advancement opportunities, excellent internal support and attractive incentives and
offering quality goods and services that employees a proud to be associated with.

2) Develop people to deliver service quality:

To grow and maintain a workforce that is customer oriented and focused on delivering

quality, an organization must develop its employees to deliver service quality. That is,
once it has hired the right employees, the organization must train and work with these

individuals to ensure service performance.

a)Train for technical and interactive skills:

To provide quality service, employees need ongoing training in the necessary technical
skills and knowledge and in process or interactive skills. Examples of technical skills and
knowledge are working with accounting systems in hotels, cash machine procedures in a
retail store, underwriting procedures in an insurance company, and any operational
rules the company has for running its business. Most service organizations are quite
conscious of and relatively effective at training employees in technical skills. Companies
are increasing their use of information technology to train employees in the technical
skills and knowledge needed on the job. Service employees also need training in
interactive skills that allow them to provide courteous, caring, responsive, and
empathetic service.
b) Empower employees:
Empowerment means giving employees the desire, skills, tools, and authority to serve the
customer. While the key to empowerment is giving employees authority to make decisions
on the customer’s behalf, authority alone is not enough. Employees need the knowledge
and tools to be able to make these decisions and they need incentives that encourage
them to make the right decisions. Organizations are well suited to empowerment
strategies to ones in which (1) the business strategy is one of differentiation and
customization, (2) customers are long-term relationship customers, (3) technology is
nonroutine or complex, (4) the business environment is unpredictable, and (5) managers
and employees have high growth and social needs and strong interpersonal skills.
c) Promote teamwork:
The nature of many service jobs suggests that customer satisfaction will be enhanced
when employees work as teams. Because service jobs are frequently frustrating,
demanding and challenging, a teamwork environment will help to alleviate some of the
stresses and strains. Employees who supported and that they have a team backing them
up will be better able to maintain enthusiasm and provide quality service. By promoting
teamwork an organization can enhance the employee’s abilities to deliver excellent
service while the camaraderie and support enhance their inclination to be excellent
service providers.
3) Provide need support systems:
To be efficient and effective in their jobs, service workers require internal support
systems that are aligned with their need to be customer focused. Without customer-
focused internal support and customer-oriented systems, it is nearly impossible for
employees to deliver quality service no matter how much they want to. In examining
customer service outcomes researchers found that internal support from supervisors,
teammates, and other departments as well as evaluations of technology used on the job
were all strongly related to employee satisfaction and ability to serve customers.
a) Measure internal service quality:
One way to encourage supportive internal service relationships is to measure and reward
internal service. By first acknowledging that everyone in the organization has a customer
and then measuring customer perceptions of internal service quality, an organization can
begin to develop an internal quality culture. Internal customer service audits and internal
service guarantees are two strategies used to implement a culture of internal service
quality. Through the audit, internal organizations identify their customers, determine
their needs, measure how well they are doing, and make improvements.
b) Provide supportive technology and equipment:
When employees don’t have the right equipment, or their equipment fails, they can be
easily frustrated in their desire to deliver quality service. To do their jobs effectively and
efficiently, service employees need the right equipment and technology. having the right
technology and equipment can extend into strategies regarding workplace and
workstation design.
c) Develop service-oriented internal processes:
To best support service personnel in their delivery of quality service on the front line, an
organization’s internal processes should be designed with customer value and customer
satisfaction in mind. In other words, internal procedures must support quality service
performance. In many companies internal processes are driven by bureaucratic rules,
tradition, cost efficiencies, or the needs of internal employees. Providing service and
customer oriented internal processes can therefore imply a need for total redesign of
systems. This kind of wholesale redesign of systems and processes has become known as
“process reengineering.”
4) Retain the best people:
An organization that hires the right people, trains and develops them to deliver service
quality, and provides the needed support must also work to retain the best ones.
Employee turnover, especially when the best service employees are the ones leaving, can
be very detrimental to customer satisfaction, employee morale, and overall service
quality. Some firms spend lot of time attracting employees but then tend to take them for
granted, causing these good employees to search for job alternatives.
a) Include employees in the company vision:
For employees to remain motivated and interested in sticking with the organization and

supporting its goals, they need to share an understanding of the organization’s vision.

People who deliver service day in and day out need to understand how their work fits into

the big picture of the organization and its goals.

b) Treat employees as customers:

If employees feel valued and their needs are taken care of, they are more likely to stay
with the organization. Many companies have adopted the idea that employees are also
customers of the organization, and thus basic marketing strategies can be directed at
them. The products that the organization has to offer its employees are a job and quality
of work life. To determine whether the job and work life needs of employees are being
met, organizations conduct periodic internal marketing research to assess employee
satisfaction and needs.
c) Measure and reward strong service performers:
If a company wants the strongest service performers to stay with the organization, it must
reward and promote them. Often the reward systems in organizations are not set up to
reward service excellence. Reward systems may value productivity, sales or some other
dimension that can potentially work against good service. Reward systems need to be
linked to the organization’s vision and to outcomes that are truly important.

6.6.5 IMPORTANCE OF EMPOWERING PEOPLE IN SERVICES

An organization that emphasizes customer service needs people at the frontline to do the
service, to use discretions be concerned about the customer, to take initiative to provide
satisfaction through exceptional service. The person at the front must fell empowered to
do in the circumstances. Empowering cannot be done through a formal delegation of
authority. A person with authority may not exercise that authority, if he does not feel
empowered.
Example
A peon who takes responsibility to direct the fireman in a burning office to areas housing
the most important documents is acting without formal authority. He feels empowered to
do so, meaning that feels a sense of dedication to the organization, that he feels it is his
duty to save the organization as much as possible , that he is doing the right thing .
Following are the importance of empowering the people in services:-
1) An empowered employee focuses on results. He is not inhabitant by formalities of
position , authority or function .
2) He does not consider himself bound by rules and procedure.
3) He believes that the organization expects him to be aware of the ends to be
achieved and to act in furtherance thereof. He “sees” constraints but not does not
feel prevented thereby , from what is to be done , instead he tries to overcome the
constraints.
4) He believes that the organization will not find fault with him for having one
something new and unusual. On the contrary, he believes that the organisation
will applaud him for having done something that had to be done.
5) He believes that he is expected to take the initiative and ensure that the customer
needs are met and thereby maintain and enhance the reputation of the
organization.
6) He feels that he is dedicating to satisfy the customer to upgrade organization
reputation
7) An empowered employee may be willing to challenge company policies at
meetings with sensors.
Employee must be trained and empower to solve problems as they occur. The company
uses customer knowledge database as the key sources from immediate problem solving by
its customer service representatives. These representatives are empower to solve the
customer’s problem, but at the same time they must adhere to stringent requirement
necessary in the healthy administration business.
Sometimes employees can even anticipate problem before they arise and surprise
customer with solution. For e.g. Flight attendants on a flight severely delayed due to
whether anticipated everyone’s hunger, particularly young children’s. Once the flight,
they announced to the harried travellers,” thanking you for your extreme patience in
waiting with us. Now that we are on the way, we’d like to offer you complementary
beverage and dinner because we have no. of hungry children on board , we’d like to
serve tm first, if that’s ok with all of you.” The passengers nodded and applauded their
efforts, knowing that hungry, crying children cold make the situation even worse. The
flight attendants had anticipated a problem and solved it before it escalated.

6.6.6 ROLE OF CUSTOMERS

The following sections examine 3major roles played by customers in service delivery:
1. customers as productive resources
2. customers as contributors to quality & satisfaction
3. Customers as competitors.
1) Customers As Productive Resources:
Service customers have been referred to as “partial employees” of the organization

human resources who contribute to the organization’s productive capacity. if customers

contribute effort, time or other resources to the services production process, they should

be considered as part of the organization.

Customer’s inputs can affect the organization’s productivity through both the quality of
what they contribute and the resulting quality and quantity of output generated.
E.G. research suggest that in an IT consulting context , clients who clearly articulate the
solution they desire, provide needed information in a timely manner communicate openly,
gain the commitment of key internal stake holders, and raise issues during the process
before it is too late will get better service. In turn the consulting firm will spend less time
redoing the service or waiting for information, allowing it to be more productive overall.
The contributions of the client thus enhance the overall productivity of the firm in both
quality & quantity of service.
Customer participation in service production raises a number of issues for organization
because customer can influence both the quality and quantity of production because
customers can influence both the quality and quantity of production; some experts believe
the delivery system should be isolated as much as possible from customer inputs in order
to reduce the uncertainty they can bring into the production process. This view sees
customers as a major source of uncontrollability of their attitude and actions. The
conclusion is that any service activities that do not require customer contact or
involvement should be performed away from customers. The less direct contact there is
between the customers and the service production system, the greater the potential; f or
the system to operate at peak efficiency.
2) Customers As Contributors To Service Quality & Satisfaction:
Another role customers can play in service delivery is that of contributors to their own
satisfaction and the ultimate quality of the service they receives. Effective customer
participation can increase the likelihood that needs are met and that the benefits the
customers seeks are actually attained.
E.G. about services such as health care, education, personal fitness, and weight loss,
where the service outcome is highly dependent on customer participation.
In there cases, unless the customers perform their roles effectively, the desired service
outcomes are not possible.
Research suggests that customers who believe that they have done their part to be
effective in service interactions are more satisfied with the service. Customers contribute
to quality service delivery when they ask questions, take responsibility for their own
satisfaction and complain when there is service failure. In addition to their own
satisfaction by improving the quality of service delivered to them, some customers simply
enjoy participating in service delivery. These customers find the act of participating to be
intrinsically attractive.
E.G. they enjoy using the internet to attain airline tickets or they may like to do all of
their banking via ATMs and automated phone systems, o to pump their own gas. Often
customers who like self service in one setting are predisposed to serving themselves in
other setting as well.
3) Customers As Competitors:
A final role played by service customers is that potential competitor. If self service
customer can be viewed as resource of the firm, or as “ partial employees”, self service
customers could, in some cases partially perform the service or perform the entire service
for themselves and not need the provider at all.customes thus in a sense are competitors
of the companies that supply the service. Whether to produce a service for themselves.
E.G. child care, home maintenance, car repair or have someone else provide the service
for them is a common dilemma for consumers.
Similar internal versus external exchange decisions are made by organizations firms
frequently choose to outsource service activities such as payroll, data processing,
research, accounting, maintenance and facilities management. They find that it is
advantageous to focus on their core businesses and leave these essential support services
to other with geater expertise, alternatively, a firm may decide to stop purchasing
services externally & bring the service production process-in-house.
The important thing to remember from this is that in many service scenarios customers
can and do choose to fully or partially produce the services themselves. Thus, in addition
to recognizing that customers can be productive resources and concretors of quality and
value, organizations also need to recognize the customers’ role as a potential
competition.

Strategies For Enhancing Customer Participation

(I) Define: Customer’s job:

The customers job: Helping himself
The Customers job: Helping others
The Customers job: Promoting the Company.
Individual difference: Not everyone wants to Participate.
(II) Recruit ,Educate and Reward Customers.
Recruit the right Customers.
Educate & Train Customers to perform effectively.

(III) Manage the Customer mix.

The level and nature of /customer participation in the service process are strategic
decisions that can impact an organization productivity, its positioning relative to
competitors, its service quality, and its customer participation. Let us examine the
strategies captured for involving Customers effectively in the service delivery process.
The overall goals of a customer participation strategy will typically be to increase
productivity and customer satisfaction while simultaneously decreasing uncertainty due
to unpredictable customer participation is self-service often facilitated by technology.
(i) Define customer jobs: In developing strategies for addressing customer involvement n
service delivery, the organization first determines what type of participation it wants
from customer, thus beginning to define the customers job. Identifying the current level if
participation can serve as a starting point, Customer’s job role may be partially
predetermined by the nature of the service, it may be that the service requires moderate
level of input from the customers in the form of effort o information (e.g. Haircut, tax
preparation) on it may require the customer to actually co create the service outcome
(e.g. fitness training, consulting).
The organization may decide that it is satisfied with the existing level of participation it
required from customers but wants to make the participation more effective.
Alternatively, the organization may choose to increase the level of customer
participation, which may reposition the service in the customer’s eyes. Experts have
suggested, that higher levels of customer participation are strategically advisable when
service production and delivery are inseparable; marketing benefits (oss selling ,
building loyalty) can be enhanced by in site contract with the customer and customers
can supplement for the labour and information provided by employees.
The Customer’s job: helping himself: In many cases the organization may decide to
Increase the level if customer involvement in service /delivery through Active
participation. In such situations the customer becomes a productive resource, performing
aspects of the service heretofore performed by employees or others. Many of the
examples presented in this chapter are Illustration of customers “helping themselves”
(e.g. IKEA of Sweden, Charles Schwab, Kaiser Permanente, Group Health of Puget
sound.)
In each of these Cases, the customer has particular tasks that must be performed to fulfill
his or her role. Te result may be increased productivity for the firm and/or increased
value, quality & satisfaction for the customer.
The Customer’s job: helping others: sometimes the customer may be called or to help
others who are experiencing the service. A child At a day care center might be appointed
“buddy of the day” To help a new child acclimate into the environment. Long time
residents of retirement communities often assume comparable roles to welcome new
residents. Many membership organizations also rely heavily although often informally,
on current members to help orient new members and make them feel welcome. In
performing these types of role, customers are again performing productive functions for
the organization, increasing customer satisfaction & retention. Acting as a mentor o
facilitator can have every the role & is likely increase or her loyalty as well.

The customer’s job: promoting the company

In some cases the customers job may include a sales or promotional Element. As you
know, service customers rely heavily on word of mouth endorsements in deciding which
providers to try. They are more comfortable getting a recommendation from someone
who has actually experienced the service them from addressing the service than from
advertising alone. A positive recommendation from a friend, relative, colleague or even
an acquaintance can pave the way for a positive service experience. Many service
organizations have been very imaginative in getting their current customers to work as
promotes or Sales people.
Individual difference: Not everyone wants to participate. In defining customers job it is
important to remember that not everyone will want to participate. Some customers
segments enjoy self service whereas others prefer to have the service performed entirely
for them. Foe e.g. In health care, it is clear that some patients want lot of information
and want to be involved in they own diagnosis and treatment decisions. Others simply
want the doctor to tell them what to do. Despite these, there are still large numbers of
customers who prefer human high- contact delivery rather than self-service., Because of
these differences in preferences, most Companies find they need to provide service
delivery rather than self service. Because of these differences in preferences most
companies delivery choices for different markets segments.
Often an organization can customize its service to fit the needs of this different segment
those want to participate & those who prefer little Involvement.
(ii) Recruit Educate & reward Customers.
Once the custom’s role id clearly defined the organizations can think in terms of
facilitating that role. In a sense, the customer becomes a “partial employee” of the
organization at some level, and strategies fog managing customer behaviors in service
production and delivery can mimic to some degree the efforts aimed at service employees
suggest that behaviour is determined by role, clarity ability to perform & motivation.
Similarly, customer behaviour in service production. & Delivery situation will be
facilitated when (1) Customers understand their roles and how they are expected to
perform. (2) Customers are able to perform as expected and (3) there are valued rewards
for performing
Recruit the right customers.
Before the Company begins the process of educating and socializing customers for their
roles, it must attract the right customers to fill those roles. The organization should seek
to attract the customers who will be able comfortable with the roles. To do this, it should
clearly communication messages. By previewing their roles and what is required of them
in the service process. Customers can self selection should result in enhanced
perceptions of service quality from the /customers point if view & reduce uncertainty for
the organizations.
To illustrate a child care center that requires parent participation on the site at least on
half day per week needs to communicate that expectation before it ensures many child in
its program. Whatever the case the expected level of participation needs to be
communicated clearly in order to attract customers who are ready & willing to perform
their roles.
Educate & Train Customers Effectively: Customers needed to be educated, or in
essence “socialized” so that they can perform their role effectively. Through the
socialization process, it is possible for service customers to gain an appreciation of
specific organizational values, develop the abilities necessary to function within a
specified context, understand what is expected of them and acquire the skills &
knowledge to interact with employees and other customers.
Many services offer “Customer orientation” programmes to assist customers in
understanding their roles and what to expect from the process before experiencing it.
Universities offer orientation programmes for new students, and often for their parents as
well, to preview the culture, university procedure, & expectation of students.
Customer education can also be accomplished through written literature and customer
“handbook” that describe customer’s roles & responsibilities. Many hospitals have
developed patient handbooks very similar in appearance to employee handbooks to
describe what the patient should do in preparation for arrival at the hospital will happen
when he or she arrives and policies regarding visiting hours and billing procedures.
While formal training and written information are usually provided in advance of service
experience, other strategies can be employed for continuing the customer socialization
The customer required two kinds of orientation (Where am I? And how do I get from here
to there) and function orientation how does this organization work and what am I
supposed to do?) Orientation Aids can also take the form of rules that define customer
behaviour for safety (airlines, health, clubs) for appropriate dress (restaurants,
entertainments venues), and noise levels (hotels, classrooms, theatres).
Reward Customers for their Contribution : Customers are many likely to perform their
roles effectively or to participate actively, if they are rewarded for doing so. Rewards are
likely in the form of increased control over the delivery process, timesavings, monetary
savings, and psychological or physical benefits. For instance, ATM customers who
perform banking services for themselves are also rewarded. Through s for themselves are
also rewarded. Through s for themselves are also rewarded. Through greater access to
their bank, both in terms of locations and times. In health care context, patient who
perform their roles effectively are likely to be rewarded wit better health or quicker
recovery.
Customer may not realize the benefits or reward of effective participation unless the
organizations make the benefits apparent to them. The organization also should
recognize that not all customers are motivated by the some types o rewards. Some may
value the increased access & timesavings then can gain by performing their service roles
effectively. Others may value the monetary savings. Still others may be looking for
greater personal control over the service outcome.
(III) Manage the Customer Mix: Because customers frequently interact with each other
in the process of service delivery and consumption, another important strategic objective
is the effective management of the mix of customers who simultaneously experience the
service. If a restaurant chooses to serve two segments during the dinner hour that are
incompatible with each other for e.g. single college students who want to party and
families with small children who want quite it may find that the two groups do not merge
well. Of course it is possible to manage these segments so that they do not interact with
each other by seating them in different sections or by attracting the two segments at
different times a day.
The process of managing multiple and sometimes conflicting segments is known as
compatibility Segment broadly defined as “a process of first attracting homogeneous
consumers to the service Environment and customer to customer encounters in such a
way as to enhance satisfying encounters and minimize dissatisfying encounters.
To manage multiple segments organizations rely on a variety of strategies. Attracting
maximally homogeneous group of customers through careful positioning and
segmentation strategies is one approach. This is the strategy used Ritz Carlton Hotel
Company.
Other strategies for enhancing customer compatibility include customer “codes of
conduct” such as the regulation of smoking behaviour and dress codes. Clearly such
code of conduct may vary from one service establishment to another. Finally training
employees to observe customer-to-customer interactions and to be sensitive to potential
conflicts is another strategy for increasing compatibility among segments.

Define Customer Effective Customer Recruit, Educate

Jobs Participation and Reward
Customers

Manage the customer

mix (customers taking
the service
simultaneously)

6.6.7 IMPORTANCE OF PEOPLE INTERACTIVE & TECHNICAL

Banking products cannot be separated from the person who markets them. The product
and the seller together constitute a banking product. In designing this product. The same
degree of care and attention needs to be paid to both the product and the seller. The most
impressive and well conceived product could fall if it not implemented successfully
through people .the corporate mission must be communicated repeatedly and effectively
by the top management to all employees.
Services are performed by people. A service is performed that is, service is delivery is
done, by a person belonging to the service organization. There is an interaction between
that person and the customer. The nature of this interaction deicide hoe satisfactory the
service is, in the mind of the customer. Even if all the other elements constituting the
service product function consistently, and with high perfection, there is dissatisfaction
when the people elements fail.
Technology, equipment, system etc. cannot strengthen these weak points. They may help
to eliminates some of the weak points but other weak point will remain. Several hotels
have introduced special categories of service, like crone plaza, of the holiday inn, for
what they call premium segments. This includes provision of sleepers, house coats,
weighing machines etc. during stay as well as free use of heath club and business centre
services. The higher level of service will be experience by the user who pays more, only
when the people in the hotel recognized them as belonging to that higher class.
Deserving special consideration. Assume for a movement that one of the attendance in
the health club is unaware of the full details of the offer of the hotels and keep the
customer waiting till he get confirmation of his entitlement from the manager or holds
him back till his status as a guest is verified. There will be problems.
Technology, equipment, systems etc. cannot substitute for the intimate recognisation that
a personal contact may provide. A fully computerized report from a diagnostic centre on
one’s health condition does not satisfy fully. When a doctor reads it out and explains,
there is better satisfaction.

7 PHYSICAL EVIDENCE MIX

6.7.1 THE EVIDENCE OF SERVICE

As services are intangible, the customers are searching for evidence of service in every
interaction they have with an organization. The figure depicts the three major categories
of evidence as experienced by the customer: people, process, and physical evidence.
These categories together represent the service and provide the evidence that tangibilizes
the offering. The new mix elements essentially are evidence of service in each moment of
truth.
 Contact employees
Customer him/herself
Other customers

PEOPLE

PHYSICAL
PROCESS EVIDENCE
Operational flow of Tangible
activities communication
Steps in process Services cape
Flexibility versus Guarantees
standard Technology
Technology versus Website
human

All of these evidence elements, or a subset of them are present in every service encounter
a customer has with a service firm and are critically important in managing service
encounter quality and creating customer satisfaction.
When a guest enters the hotel for a stay the first encounter of the guest is the door
attendant and frequently with receptionists at the reception. The quality of that encounter
will be judged by how the registration process works (How long is to wait? Is the
registration system computerized and accurate?) The actions and attitudes of the people
(Is the receptionist courteous, helpful, knowledgeable? Does she handle the enquiries
fairly and efficiently?) and the physical evidence of the service (is the awaiting area
clean and comfortable). The three types of evidence may be differentially important
depending on the type of service encounter (remote, phone, face – to – face). All these
types will operate in face – to- face service encounters as in the one just described.

6.7.2 PHYSICAL EVIDENCE

It is 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
service.
It includes all tangible representations of the service-such as brouchers, letter head,
equipment etc. in some cases the physical facilities where service is offered is important
e.g., in a hotel the parking lot, surroundings are important. In other services such as
telecommunication the physical facilities may be irrelevant. In this case other tangibles
like billing statements become important.
Physical evidence includes
(A) Physical facilities (essentials and peripherals)
(B) Physical setting (appearance of premises)
(C) Social setting (appearance of staff)
The decision on the physical evidence will differ in terms of customer-employee
interaction. At one end is self-service of customer without any interaction with employee
(ATM) where physical facilities must be to attract customer and user friendly.
At other end employee performs without any interaction (mail order business) here
physical evidence is designed to promote operational efficiency. Between the two
extremes is a situation where both customer and employee interact. In this case physical
evidence must be planned to facilitate the activities of both. (E.g., Banks, Airlines).
Certain service environments are simple requiring very little space or equipment (ATM,
Vending machine). They are called lean environment. Others like hospitals, hotels are
elaborate environment where proper planning is needed.

(a) Physical facilities: The potential customers form impression about the service
organization on the basis of physical evidence like building, furniture etc.,
Essential Evidence: They are dominant features like building area, parking space,
signboards etc.
Peripheral Evidence: They are less dominant like admission card, medical reports, etc.

(b) Consist of service environment

 Ambient factors (light, colour, temperature)
 Space (spatial layout and functionality- i.e., ability of equipment and
furniture to accomplish interactions)
 Decor and artefacts
(c) Social setting: Employee uniform, appearance etc. of service scape can influence
customer expectation, satisfaction and other behavior. In shopping mall soft music is
played/crossroads had hired separate parking space.
Bitner identifies Physical Facilities and Environment as SERVICE SCAPES
However too much decor may make customers feel that they are paying for the expensive
décor. Employees however feel that an investment in environments is an indication of
management’s concern for their job satisfaction. Hence the challenge is to strike a
balance.

6.7.3 ROLE OF PHYSICAL EVIDENCE:

 Facilitator: It enhances performance level of persons in the environment.
 Socializer: It helps to convey expected roles, behavior, and relationships in
the interaction process (a “No Smoking” or “Silence” sign board)
 Differentiator: It can differentiate the service firm from its competitor.
 Impressions: It helps in shaping first impression of the service encounter.
 Image and identity: It portrays the corporate image and builds corporate
identity.
 CHAPTER VII
MANAGING SERVICE QUALITY

7.1 INTRODUCTION
To compete successfully a firm must define how the customers perceive the service

quality and in what way the service quality is influenced. The quality can be of seen from

two angles (1) Technical quality (What is delivered) (2) Functional quality (How it is

delivered). When a customer comes to the service provider he comes with some expected

quality. When he takes the service he experiences a service quality – this is his perceived

quality.

Expected Perceived Perceived

Service Service Service
Quality

Traditional marketing
activities like
Advertising, Word of
mouth, or PR IMAGE

Technical Functional
Quality Quality
(WHAT) (HOW)
7.2 PERCEIVED SERVICE QUALITY
Customer service is about perception. Perceptions are judgment of the consumers about
the actual service performance or delivery by a company. Since service are intangible,
customers search for the evidence of quality in every interaction they have with a service
firm.
The evidence of service that are experience by the customer are people, process and
physical evidence.
People – contact employees, other customers or the customer himself.
Dimensions – reliability, assurance, empathy and responsiveness.
Process – operational flow of activities.
Dimensions – reliability and promptness of service.
Physical evidence – tangible aspect of service.
Apart from these the corporate image of the service provider as well as the service can

also influence the perceived quality.

While comparing the expected and perceived service quality the following may be the
outcome.
1). Perceive quality > expected quality.
Result = delighted customer.
2). Perceive quality = expected quality.
Result = satisfied customer.
3). Perceive quality < expected quality.
Dissatisfied customer.
A very important factor in important service quality is to always keep promises and not
guarantee which the firm cannot deliver.

Influencing Expectations

Word of Personal Past External

Mouth Needs Experience Communications

Dimensions of Perceived
Service Quality Expected Service Quality
Reliability ES < PS
Responsivenes (Quality surprise)

s ES = PS
Assurance Perceived Service (Satisfactory
Empathy quality)
Tangibles ES > PS
(Unaccepted quality)

7.3 ZONE OF TOLERANCE

The services provided are varying between organizations, between employees and even

with in employees at different times. The extent to which the customers recognize and are

willing to accept this variation is called as zone of tolerance. If the service levels fall

below this level, customers will be frustrated.

 Different customers possess different zones of tolerance

 Zones of tolerance vary for different dimensions fo service
 Zones of tolerance vary for first time and recovery service

7.4 QUALITY GAPS

To manage the perceived quality of a service one has to match the expected service and
perceived service to each other so that consumer satisfaction is achieved. To keep the
gap between expected service minimal, two things are critical: -
 The promises about how the service will perform given by traditional marketing
activities and communicated by word-of-mouth, must not be unrealistic when
compared to service received by the customer.
 Managers have to understand how the technical and functional quality of a
service is influenced and how the customers perceive these quality dimensions.
In order to develop greater understanding of the nature of service quality and how it is
achieved in an organization, ‘A Gap Model Of Service Quality’ was developed. The
model clearly indicated that the consumer’s quality perceptions are influenced by a
series of five distinct gaps occurring in the organizations, which are as follows: -

Gap1 (Marketing Information Gap) : Difference between consumer expectations and

management perceptions of consumer expectations arising due to inadequate or
inaccurate management understanding of customers’ service expectations
Gap2 (Standard gaps) : Difference between management perceptions of consumer
expectations and service quality specifications arising due to Management’s failure to
develop performance specifications reflecting customer’s expectations.
Gap3 (Service Performance Gap) : Difference between service quality specifications and
the service actually delivered.
Gap4 (Communication Gap) : Difference between service delivery and what is
communicated about the service to consumers resulting in discrepancy between
communications to customers describing the service and the service actually delivered.
Gap5: Difference between the perceived service and expected service. This gap depends
on the size and direction of the first four gaps associated with the delivery of service
quality.

These Gaps develop due to the following reasons

GAP 1 :
 Lack of adequate market research
 Lack of upward communication between front line staff and Management
 Lack of interaction with the customers
 Lack of segmentation to identify specific needs of the customers

GAP 2 :
  Lack of commitment from Management (they may perceive that customer
expectations are un reasonable)
 Lack of Goal setting
 Lack of resources
GAP 3 :
 Ineffective recruitment
 Role ambiguity
 Lack of training/incentives to perform to the staff
 Lack of training to customer on use of service and their roles
 Lack of pre-testing when new procedures are introduced
 Lack of understanding of customer habits – how they prefer to consume a service (a
customer may prefer a slow delivery of food in an exclusive restaurant compared
to an Udipi restaurant)
GAP 4 :
 Exaggerated promises
 Ineffective communication
 Lack of Horizontal communications with in the organization
GAP 5
 Too much of Gaps (1 to 4)
To close the gaps the following things should be implemented: -
1. Develop customer trust through long-term strategy rather than a snip-shot
superficial programme.
2. Understand customers’ habits on how they prefer to consume a service. eg., a
customer would prefer extended hours for a meal in a exclusive restaurant.
3. Pre-test new procedures and equipments before introducing them. The failure
of a productivity improvement programme is more damaging than otherwise,
e.g., when Indian Airlines introduced computerized reservation system to
improve its service, it found that at most places the system remained down
most of the time. It created more confusion, both among customers and
employees, and proved to be countered productive.
4. Understand the determinants of consumer behaviour in terms of their choice;
by force or by any other external forces, e.g., shopping behaviour is not even
throughout the month. It changes between the first weeks to the fourth week of
the month; it changes between weekdays and weekends.
5. Teach consumers how to use service innovations—most people don’t know
how to go about treatment in government hospitals—there is a need to make
people aware of how to go about from registration to appointment to check—
 up and treatment, in the same way as traffic routes at India Gate or
Connaught Place are notified through press and television before introducing
them.
6. Promote the benefits and stimulate trial. The success in innovation lies in
encouraging trial by making the benefit obvious.
7. Monitor and evaluate performance. One can learn from experience—good or
bad. As one goes along introducing changes, corrective measures should also
be taken simultaneously. These measures should be restricted to redesign of
facilities and procedures or extending to educating, communicating and
promoting the efforts.

Word of Mouth Personal Needs Past Experience

Expected Service
CONSUMER

GAP 5

Perceived Service

GAP 1 Service Delivery

(Including Pre & Post GAP 4
Contacts) External Communications
to Consumers
GAP 3

MARKETER Transition of Perceptions

into Service Quality
Specifications

GAP 2

Management perception of
Consumer Expectations
7.5 THE 5 DIMENSIONS OF SERVICE QUALITY ARE AS FOLLOWS On Which
Customers Judge The Service Quality

 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. For
example, FedEx, this company effectively communicates and delivers on the
reliability dimension.
 Responsiveness: is the willingness to help customers and provide prompt service.
This dimension emphasizes on attentiveness and promptness in dealing with
customer’s 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 employee’s 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 for services that the customer perceives as
involving high risk and / or about which they feel uncertain about their ability to
evaluate outcomes. For examples, banking, insurance, brokerage, etc.
 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. For example, personnel at small firm
know customers by name and build relationships that reflect their personal
knowledge of customer’s requirements and preferences. When such a small firm
competes with large firms, the ability to be empathetic may give the small firm a clear
advantage.
 Tangible: tangibles are defined as the appearance of physical facilities, equipment’s,
personnel and communication materials. All of these provide physical representations
or images of the service that customers particularly new customers, will use to
evaluate quality.
Although tangibles are used by Service Company’s 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.
Examples of how customers judge the 5 dimensions of service quality:
 Car repair (consumers):
1. Reliability: problem fixed the 1st time and ready when
promised.
2. Responsiveness: accessible, no waiting, respond to request.
3. Assurance: knowledgeable mechanics.
4. Empathy: acknowledges customers by name, remembers previous problem and
preferences.
5. Tangibles: repair facility, waiting areas, uniform, and equipment’s

 Airlines (consumers):
1. Reliability: flights to promise destination, depart and arrives on time.
2. Responsiveness: prompt and speedy system of ticketing, in flight baggage handling.
3. Assurance: trusted name, good safety records & competent employees.
4. Empathy: understanding of special individual needs, anticipates consumer needs.
5. Tangibles: aircraft, ticketing counters, uniforms, and baggage areas.
 Medical care (consumer):
1. Reliability: appointments are kept on schedule diagnoses prove accurate.
2. Responsiveness: accessible, no waiting, willingness to listen.
3. Assurance: knowledge, skills, credentials, and reputation.
4. Empathy: acknowledges patients as a person, remembers previous problems, good
listening, and patients.
5. Tangibles: waiting room, exam rooms, and equipment, written materials.
 Architecture (business):
1. Reliability: delivers plans when promised and within budget.
2. Responsiveness: returns, phone calls, adapt to change.
3. Assurance: credential, reputation, and name of the community, knowledge and skills.
4. Empathy: understanding clients industry acknowledges and adapts to specific clients
needs, gets to know the client.
5. Tangibles: office areas, report, plan themselves, billing statement, dress of the
employees.
 Information processing (internal):
1. Reliability: provides needed information whenever requested.
2. Responsiveness: prompt response to request not “bureaucratic’ deals with problems
promptly.
3. Assurance: knowledgeable staff, well trained, credentials.
4. Empathy: knows internal customers as individuals and departmental needs.
5. Tangibles: internal reports, office areas, and dress of employees.
 Internal brokerage (consumer and business):
1. Reliability: provides correct information and executes customer’s requests
accurately.
2. Responsiveness: quick website with easy access and no down time.
3. Assurance: credible information sources on the site, brand recognition credential
apparent on site.
4. Empathy: ability to respond with human interaction as needed.
5. Tangibles: appearance of the website and collateral.

7.6 BENEFITS OF MAINTAINING SERVICE QUALITY:

1) Improve their image in the eyes of customers. When an organization provides
quality service it will build good brand image. Even the word of mouth will help
increasing the sales.
2) Improve profitability. When there is word of mouth, it leads to increase in sales
and also increase in profits of an organization.
3) Improve staff morale. Employees are having high morale while working with an
organization that is comply with all its duties and social responsibility towards
society and providing satisfaction to its customers.
4) Increase productivity. When an organization is esteem with good brand image and
higher staff morale the productivity would automatically increase.
5) Reduce costs. With higher profitability company can spend more on research and
development that would add more value to product/services with reduced costs.
6) Encourage employee participation. If there is proper working condition in an
organization, it would increase employee participation as well as profits and
image of company.
7) Brings about continuous improvement. Employee participation, increased
productivity, reduced cost will bring continuous improvement.
8) Minimize price sensitive. In long run customer will understand that quality comes
with higher price, and will be attracted towards the service of an organization.
9) Increase customer satisfaction. Expected service quality, excellent after sales
service will lead to higher customer satisfaction.
10) Differentiate themselves from the competitors. Competitive Service quality would
definitely differentiate themselves from those of competitors.

7.7 BENCHMARKING OF SERVICES

Benchmarking means measuring the performance of a business against that of the
competitors in order to establish ‘best practice’. Benchmarking is a part of process of
continuous improvement. Benchmarking can be applied at three levels:
1. Internal Benchmarking.
2. Competitive Benchmarking.
3. Functional or Generic Benchmarking.
Internal Benchmarking:
Internal Benchmarking is normally carried by large organization by way of comparison
between operation units. For e.g.. Super market chain might benchmark operations
across stores, financial across branches, different colleges under the same authority.
But important thing is how performance is measured &this is clear link to the strategy of

organization.

Competitive Benchmarking:
At a second level competitive Benchmarking can be used. This is probably the most
frequently use where comparisons are made with directly competitive organization.
Customer participation is necessary because of which it will be easy to achieve in some
service environments.
For e.g: As a hotel owner, it is possible to ‘sample’ the service to competitor simply by
‘posing’ the guest.
Often however, this is done in informal manner. A comparative impression gained of the
service without examining the different facets in a structured way & attempting to
measure them.
Functional or Generic Benchmarking:
The third approach is Functional or Generic Benchmarking, which compares specific

functions such as distribution and after sale service. The advantage here is that

information is sometime easier to obtain than when comparison are being made with

competitors.

Care has to be taken in selecting the dimension & sales to be used for performance

measuring and ensuring that due account is taken of all relevant factors.
THE PROCESS OF BENCHMARKING.

Determine the Parameters to be measured

Identify BEST competition

Determine data collection method

Compare Competitors performance with

organization’s performance

Establish action plans to close Gaps

Identify the factors that contribute to the

performance Gaps

Set Targets to measure progress

Implement Action Plans

Monitor Performance against Targets

REPEAT
 INDUSTRIES
INDIAN INSURANCE SECTOR

What is Insurance?

Insurance is a contract between two parties whereby one party called insurer undertakes
in exchange for a fixed sum called premiums, to pay the other party happening of a
certain event.

Insurance is a protection against a financial loss arising on the happening of an

unexpected event. Insurance Companies collect premium to provide for this protection. A
loss is paid out of this premium collected from the insuring public. The insurance
Company act as a trustee to the amount collected through premium.

Insurance is generally classified in three main categories, (i) Life Insurance, (ii) Health
insurance and (iii) General Insurance 

To get insurance an individual or an organisation can approach to an insurance

Company directly, through Insurance Agent of the concerned company or through
Intermediaries.

Benefits of Insurance

1. Safeguards oneself and one's family for future requirements

2. Peace of mind-in case of financial loss.  
3. Encourage saving.
4. Tax rebate.
5. Protection from the claim made by creditors.
6. Security against a personal loan, housing loan or other types of loan.
7. Provide a protection cover to industries, agriculture, women and child.

Reasons for buying insurance

Insurance Buys Time and Money

People like to refer to insurance as time insurance, the reason being that insurance
proceeds are paid to the insured's beneficiaries in case of death or on the maturity of the
policy. The money proffered by insurance helps buy time to adjust to the change of
circumstances. Insurance provides large amounts of cash that will keep the lifestyle for
the survivors the way it was before the insured's death.

Insurance Offers Peace of Mind

For the person who buys an insurance policy, it offers absolute and complete peace of
mind. He or she knows that the decision made by him will provide sound benefits in the
future, whether or not the individual may live to see it. The life insurance policy will
subsequently prove this in the future if and when funds are needed. This is the guarantee
of the insurance contract.

Financial Security

The insurance policy offers contractual guarantees to people looking for peace of mind
when they buy life insurance. Life insurance offers complete financial security. The
purchase of life insurance demonstrates concern for a family's future financial well
being.

Regard for Family

The purchase of life insurance clearly displays care and concern for the people the policy
owner loves.

Insurance is Safer

No financial institution can do what life insurance does. No industry can back its
products with reserves and surplus as sound as those of the insurance industry.

The proof of strength and safety that insurance companies have ensured even under the
most adverse of conditions is a matter of pride for the entire insurance industry. For
generation after generation, life insurance has been acclaimed as the very benchmark of
security against which the other industries are measured.
 8 P’s of Service
8 P’s of Service

1. Product Elements

Here, we identify the core product and the supplementary products offered by Rahul
Transport that results in Perfect Service Performance, thus creating value for customers.
We have identified the following:

Core Road Transportation

Supplementary Services Warehousing, Packaging, Loading &
Unloading, Payment Handling, Reverse
Logistics, and Consultancy

The name Rahul Transport itself mentions the core service of the company i.e.,
Transporting Goods from one place to another.

Ever since Liberalisation in 1991, the company felt the need to tune its services to make it
more customer friendly and provide more value added solutions to its clientele. As a
result, the company evolved from a transportation company to a complete end-to-end
logistics company and added newer services, which would satisfy consumer needs.

Warehousing includes
 Warehouse and Inventory Management
 Order collection and Invoicing
 Return Goods Handling

Packaging includes:
 Survey and Estimation of effects to estimate packing and vehicle requirements
 Packing as per client’s specifications
 Unpacking as per client’s specifications
Consultancy includes:
 Inward movement of raw materials
 Outward movement of finished goods
 Movement of consumables and spares
 Information Management
 Load Consolidation and Optimization

As per the Industry, with regards to loading and unloading, there are set norms. At the
place of collection of goods, the party places the goods in such a place from which they
can be loaded on the vehicle. This is the responsibility of the party. But, whether the
party loads the goods on the truck or no solely depends on the terms and conditions of
the contract. As part of their supplementary services, they also provide loading and
unloading facilities to the client. In Hindi this is referred to as Hamali.
Their competency is enhanced because of the fact of their self-owned vehicles, which are
at their beck and call and enhance speedy delivery of cargo.

8 P’s of Service
8 P’s of Service

2. Place and Time

Place and Time refers to how the service is going to be delivered, what time, the methods
and the channels used to deliver the service.

Place of Service Delivery – Rahul Transport has got 40 service outlets throughout the 4
states of its operation. This allows any of its clients to drop into any of the service outlet
to request for a vehicle. For client convenience, these outlets are located at prominent
industrial and market locations. This helps the company to obtain orders faster and
execute them.

The channel they use to deliver the cargo depends on various factors. These are:
 Type of goods
 Final Destination

Type of Goods - If the cargo contains goods which can be overloaded onto the truck, the
company does not use it’s own vehicles. In such instances they outsource the trucks
because overloading affects the performance of their own trucks. As a thumb rule they
cannot refuse the client to overload a particular truck because with certain products it’s
not economically viable. For e.g.: Rice Gunny bags.

Final Destination – If the cargo has to be delivered to a place, which is outside its
network, then the company out sources trucks. They cannot deny such an order in the
first place, because they do not want to dissatisfy their clients. They cannot operate their
own trucks outside their own network, because they do not possess the required permits
for other states.

Thus the channel they use to deliver the service depends on the above 2 factors.

Time of Service Delivery – For clients, it is sometimes important to get cargo across
from one destination to another quickly. In such cases if their truck is not available, they
immediately call for a market truck and ensure speedy delivery of the cargo. The
company makes sure that they deliver the cargo to the required destination within the
promised time period.

The company’s ‘on time delivery ratio’ is approximately 90%. The balance 10% failure
occurs because of external factors that are outside their control. External factors such as
strikes, calamities, accidents, political instability etc. The recent transport strike
tremendously affected the company. The recent ‘Kumbh Mela’ at Nasik has also affected
the service delivery of the company, thus increasing the time taken to deliver the product
efficiently.

8 P’s of Service
8 P’s of Service
3. Process

Customer approaches the company – The customer approaches the company for the
service that he requires. This is a type of service wherein customers either enter into
yearly contracts or just do a retail transaction. A retail transaction would be wherein a
customer would use the transportation service only once based on the rates prevailing on
that day in the market.

Contract customers – The customers prefer to enter into a contract with the company, as
in a contract the rates of transportation are fixed based on yearly averages. So even the
customers get benefit of not discussing or bargaining of rates at every transaction. Also
the customers get advantage of a lower rates in times of peak season when the rates shoot
up as the rates are fixed on supply and demand basis in the market.
If the customer enters into a contract then the different formalities of the contract viz.
contract clauses, promised volume of business, fixing of rates based on yearly averages,
decision on area of operation; are decided.

Transaction process – Both the retail and the contract customers react with the “Traffic
Guy” who is the front line guy at any office of Rahul Transport. The Traffic Guy is the
person who handles the rates of transportation based on his interaction with his sources
in the market. He interacts with the transport market and keeps himself updated about the
prevailing market rates. When the retail customers call him he gives them the prevailing
rates.
He also looks after the availability of the trucks. As per the requirements of the customer
he checks if trucks are available and promises the customer the truck.

Using of self owned trucks or outsourcing – If the customer requires a destination which
is outside the company’s area of operation then the company outsources the trucks. This
means that the company uses trucks from its attached fleet of 125 trucks. This is because
as explained above the company does not have the required permits for areas other than
its area of operation. Also based on the type of cargo company decides the mode. If the
cargo contains goods which can be overloaded onto the truck, the company does not use
it’s own vehicles. In such instances they outsource the trucks because overloading affects
the performance of their own trucks. Also overloading is not based on the company’s
decision, it is rather a customer’s choice. As a thumb rule they cannot refuse the client to
overload a particular truck because with certain products it’s not economically viable.
For e.g.: Rice Gunny bags
Sending of the Transport for loading – After deciding on all the above issues the truck
is sent to the company of the customer or loading of goods. The loading charges are
 borne by the transport company or by the customer based on contract. After the loading
is over the ‘lorry receipt’ is made which is a document, which contains all details about
the goods. This lorry receipt is sent along with the truck and is then stamped by the
receiver of the goods. This lorry receipt then becomes the ‘Proof of Delivery’. If such a
transaction is on Pay on order basis Rahul Transport driver also collects the payment on
the deliver of the goods.
Thus this is the entire process of the delivery of the service. This service is not very
customer oriented and there is not much interaction between the customer and the
company on one to one basis. The interaction only happens at the rate fixing stages and
contract stages. The variation in the service can happen in stages of ongoing
transportation wherein the company might provide warehousing facilities. Also the
company may provide facilities like packaging and unloading.

Service Blue - Printing

Service Blue – Printing

Service Blue Print Diagram

AT
Customer Contract ‘Traffic guy’

AT
Returning of LR Retail
FR
to Customer

Decision on outsourcing of using

Payment collection in self – owned transport based on
case of Pay on Delivery customers requirements

Delivery of goods Sending of

Stamping of Lorry Receipt transportation

Creation of
Transportation Loading of
Lorry Receipt
of goods goods
(LR)

AT – Availability of Transport

FR – Fixing of Rates (only in case of Retail customers.)

 8 P’s of Service
8 P’s of Service

4. Productivity and Quality

Sometimes it happens that cargo has to be sent across to an unviable destination for
which there is no return cargo. In such instances, the company uses the services of
brokers. Brokers play a very important role in the unorganized road transport industry in
India. These brokers are local area brokers and they have information on each and every
truck that will pass their area. These brokers provide Rahul Transport information on
which trucks pass through that area. Thus, Rahul Transport books space on that truck
with the broker. This saves the company a lot of time and effort in trying to reach
unviable destinations, which in turn affects the productivity of the company.

The company also takes good care of its trucks and ensures time-to-time maintenance
and checks. This usually happens when the truck is idle. Sometime it so happens that
when a truck has finished delivering its goods and the next task begins the next day, then
the truck driver uses this idle time to carry out maintenance activities like checking for
oil and the various other important liquids, etc.

The company also ensures productivity by following optimal route planning. In some
cases, when the cargo is small and the destination is common, then the company does not
send a whole truck, but sends a smaller vehicle and also manages to get cargo from other
sources to deliver to the same destination. As a result, the truck does not go half full, but
rather goes fully loaded. This helps it optimize its truck capacity. The various
supplementary services that the company provides has added to the quality of service
delivery of Rahul Transport.

8 P’s of Service
8 P’s of Service
5. People

Customers usually assess the quality of the service by assessing the people who provide
the services. Thus, front office people play a vital role in winning a customer. Thus, the
way they interact and their communication is very important. This all is true for service
sectors in which they come in contact with many individual customers on a daily basis.

In the case of Rahul Transport, they hardly have any walk in customers. Most of their
business is done on the telephone, where the client asks them to send a truck to their
warehouse or a particular destination. Hence, they do not come in direct contact with
any customer. But however, potential clients are handled by the sales team and the
various managers. Thus, they do not feel the need for a highly impressive front office
staff.
In a company like this, the role of the back-office becomes very important because the
efficiency of the service depends on these people. With a total of 250 managerial and
operations staff, more than 85% of the workforce constitutes the back-office staff.

To ensure maximum productivity, the company hires experienced personnel, who know
their task and do not have to undergo training. Thus, saving on training costs.

Important constituents of the workforce are the drivers who can be called as the
executioners, as they are the people on the field delivering the service. Keeping them
happy becomes a very important task. As a result, they are given sufficient monetary
benefits, such as allowances, etc. to keep them satisfied. The company does not over-
burden the drivers with harsh delivery schedules, as they believe this can cause stress
and can result in accidents. The company also refrains their drivers from alcohol
consumption.

When it comes to the labour force such as the drivers,

porters, etc., they are hired from the ‘Mathadi Labour
Board’. This is a union, which supplies labourers to the road
transport industry. Even though these labourers are
members of the board, they work for the company. The
Union is just to protect the interests of the workers.

8 P’s of Service
8 P’s of Service
6. Promotion and Education

Promotion & Education over here refers to informing, advising or encouraging people to
use a particular service provided through websites, brochures, TV advertisements,
magazines and word of mouth publicity.
In the case of the Indian Road Logistics Industry, which is highly unorganized, there is
no formal communication channel through which they promote themselves. Rahul
Transport too, does not use any formal channel to promote itself. It solely depends on
Word of Mouth publicity.
The company has a few brochures and pamphlets which provides a potential client with
information on the company and the various services that the company provide. The
brochures are very attractive and they portray the impressive performance of the
company. The company also carries its name on all its truck in bright yellow. This is an
identifier and also carries out promotion to a certain extent.
 8 P’s of Service
8 P’s of Service

7. Physical Evidence

This refers to any physical evidence that portrays the service quality of the company.

As stated earlier, Rahul Transport is not a logistics company which comes into contact
with individuals, as a result the need for any physical evidence is not really felt. The only
physical evidence they have is their brochures and pamphlets.

8 P’s of Service
8 P’s of Service

8. Price and Other User Costs

This refers to how the service provider minimizes the burden of cost on a consumer.

In the land transport industry, there are two methods of purchasing the service. They are:

 Simple Purchase
Simple Purchase is a normal purchase whereby a client can go to any fleet
operator and ask for the service. Over here the client has to bear the fluctuating
market rates that prevail. And the price of the service also depends on the
distance and the destination.

 Contract Purchase
This is a method of purchase whereby the client enters into a contractual
agreement with a logistics company. This contract helps the client to get a fixed
rate and he does not have to bear the costs of market fluctuations. Moreover, the
client can also avail of certain supplementary services when they have a contract
with a logistics company.

With regards to Rahul Transport, more than 90% of its business comes from Contract
Purchase rather than Simple Purchase. They have very few walk-in customers who
purchase their service.

Pricing of the contract depends on lots of considerations. Some of the considerations are:
 What is the consignment of goods?
  The value of the consignment.
 Destinations to which this consignment needs to be delivered.
 Frequency of delivery
 Expected Volumes
 Time taken to load or unload the consignment
 Place of Loading or Unloading
Taking all these factors into consideration, a contract is entered into with the client.
These contracts maybe annual, half-yearly or quarterly. In the contract a fixed rate is
decided for the delivery of the consignment. The client also gets benefits of
supplementary services such as loading-unloading facility, warehousing facility etc.

When Rahul Transport uses its own fleet of trucks, the various costs that are involved are
broken down into two components – the fixed component and the operating component.

Fixed cost component includes – Truck Capital cost + Finance Cost + Permit
Cost + Insurance Cost + Maintenance & Repairs Cost

The operating cost component includes – Diesel cost + Labour Cost + Labour Allowance
+ Octroi Cost + Toll Cost + Loading & Unloading Cost (Hamali).

Both these components put together contribute to the cost of the product. From the total
cost, diesel cost contributes to around 55% of the cost.

As stated earlier, the company sometimes out sources the trucks to market players and
fleet operators. The price at which they provide the service fluctuates on a daily basis.
This price is dependent on the market supply and market demand. Most of the time the
cost of operating a market vehicle is lesser than the company’s cost of operation. Thus,
on some routes the company only operates market trucks.

Sometimes due to environmental factors the costs of these trucks go up marginally. Like
for e.g., due to the recent Kumbh Mela at Nasik, the price of market trucks went up by
around 50% because their availability reduced. In such cases, the company has to offer
the client the service at the pre-decided rate and has to bear the loss.

These are the various costs involved in delivering the service.

With this we cover the 8 P’s of Service of a service organization. – Rahul Transport Pvt.
Ltd. To understand the service of Logistics better, we have also studied the service of an
MNC – Maersk Sealand.
RAILWAYS BLUEPRINT
A potential customer comes for enquiry regarding the number
of trains between two particular places, their timetable, the
availability of tickets, fares, etc. The person at the counter
refers to the centralised database and reservation system and
accordingly gives information. If the information is
favourable( tickets available or in waiting list), and if the
potential customer has decided to make the reservation, the
database system accordingly sends information to the
reservation counter. The person at the reservation counter
issues ticket to the customer. Then the customer arrrives at
the railway station on the date o the reservation made. He
hires a coolie who takes the luggage to the train in which the
customer is supposed to board, and deposits the luggage in
the boogie where his seat is reserved. The customer to make
sure that there is no mistake in the reservation/ or to see the
status of his reservation checks the PNR status. The list
stating the PNR status, is put up at the railway station on a
notice board by the railway employees.Once everything is in
order, the customer/passenger boards the train. The journey
starts with the motorman starting the engine as per the
instruction of rail traffic operators. The journey is then
monitored and guided by the rail traffic operators through
signals and instructions at stations and driven by motormen.
Meanwhile during the journey, the ticket checker arrives with a
list of pasengers and information on their journey. He checks
the infomation given to him with the tickets of the passengers.
Subsequently, the attendant in the bogie, provides food and
bedding facilities to the passengers. This facility is provided
by the stores and maintained by other railway employees.
Many other railway employees provide pasengers with food
and beverage facilties at different stations. The
customer/passenger finally reaches the destination and gets
down from the train with his luggage. He hires a coolie who
takes the luggage wherever the passenger instructs him to on
the railway premises.
Diagram

Banking industry

INDIAN BANKING SECTOR

BACKGROUND

Sound and healthy banking institutions are the backbone of any economically
strong country. It is the foundation on which the long-term sustainable economic
progress can be built. The Southeast Asian crisis is the latest proof of this basic
principle.

In India the nationalized banks provide a major chunk of the banking services with SBI
and its subsidiaries forming the heart of the banking system. The banking sector can be
broadly divided into three categories:

 Public Sector banks

 Private banks

 Foreign banks

 PUBLIC SECTOR BANKS

Public sector banks have the government as a majority shareholder. This segment
comprises of SBI and its subsidiaries, other nationalized banks and Regional Rural
Banks (RRB). The public sector banks comprise more than 70% of the total branches.
The listed public sector banks are State Bank of India, State Bank of Bikaner and Jaipur,
State Bank of Travancore, Bank of Baroda, Bank of India, Oriental Bank of Commerce,
Dena bank and Corporation bank. State Bank of India also made a GDR issue making it
the first and only Indian bank to do so.

 PRIVATE SECTOR BANKS (OLD)

These banks existed prior to the promulgation of Banking nationalization Act but were
not nationalized due to their smaller size. They mostly focus on niche regional markets,
and thus are smaller in size. These banks are mostly located in south of India and the
driving focus of their business is service standards and technology up gradation. In the
next round of industry restructuring, these banks will see heightened activity. In fact,
there have been takeover attempts for some of these banks, but none has been very
successful.

 PRIVATE SECTOR MANKS (NEW)

Some of the new entrants in the banking sector are making quite a few waves and
bringing about a paradigm shift. Times Bank, IndusInd Bank, Bank of Punjab, HDFC
Bank, ICICI Bank and Global Trust Bank are some of the names in this category. The
level of service offered and the efficiency of the operations is considered much better than
the nationalized banks.

 FOREIGN BANKS

Many foreign banks have set up their branches in India and look set to revolutionize the
way business is done. Standard Chartered is the oldest foreign bank doing business in
this country. Some of other foreign banks with significant presence are HSBC, American
Express bank, Citibank, ABN Amro Bank and ANZ Grindlays Bank.

FUNCTIONS OF A BANK

Functioning of a Bank is among the more complicated of corporate operations. Since

Banking involves dealing directly with money, governments in most countries regulate
this sector rather stringently. In India, the regulation traditionally has been very strict
and in the opinion of certain quarters, responsible for the present condition of banks,
where NPAs are of a very high order. The process of financial reforms, which started in
1991 has cleared the cobwebs somewhat but a lot remains to be done. The multiplicity of
policy and regulations that a Bank has to work with makes its operations even more
complicated, sometimes bordering on illogical. This section, which is also intended for
banking professional, attempts to give an overview of the functions in as simple manner
as possible.
Banking Regulation Act of India, 1949 defines Banking as "accepting, for the purpose of
lending or investment of deposits of money from the public, repayable on demand or
otherwise and withdrawal by cheques, draft, order or otherwise."

Deriving from this definition and viewed solely from the point of view of the customers,
Banks essentially perform the following functions:

 Accepting deposits is one of the two major activities of the Banks.

Banks are also called custodians of public money. Basically, the money is accepted as
deposit for safekeeping. But since the Banks use this money to earn interest from people
who need money, Banks share a part of this interest with the depositors. However,
accepting deposits and keeping track of the money involves a lot of bookkeeping and
other operations. Let us see what the Banks must maintain to provide this service

1. An effective branch network to reach the targeted customer base

2. A system of Intra branch accounting with separate account(s) for
each customer

3. A system of reconciliation at the end of the day

4. Availability of adequate funds at each branch

5. Trained staff for effective customer service

6. Infrastructural inputs like spacing, stationary, comfortable

environment etc.

 Lending money to the public

Lending money is one of the two major activities of any Bank. In a way, the Bank acts as
an intermediary between the people who have the money to lend and those who have the
need for money to carry out business transactions. This activity places its own
requirements on the resources of the Bank. For effective functioning of this, a bank must
possess:

 Sufficient deposits.
 Skills to appraise the potential borrowers and the activity.

 Legal skills for documentation.

 Legal skills for recovery of its dues through the courts.

 Skills to follow up and monitor the end-use of money lent by it.

 An effective credit delivery system.

  Review of credit portfolio.

 Transfer of money

Apart from accepting deposits and lending money, Banks also carry out, on behalf of
their customers the act of transfer of money - both domestic and foreign. - from one place
to another. This activity is known as "remittance business". Banks issue Demand Drafts,
Banker's Cheques, Money Orders etc. for transferring the money. Banks also have the
facility of quick transfer of money also know as Telegraphic Transfer or Tele Cash
Orders.

To deliver this service, a Bank must have:

 An effective branch network or correspondent relationships.

 A system of Inter branch reconciliation

 A system of reconciliation with the correspondents

 Availability of funds at all the centers

 Trustee Business

Banks also act as trustees for various purposes. For example, whenever a company
wishes to issue secured debentures, it has to appoint a financial intermediary as trustee
who takes charge of the security for the debenture and looks after the interests of the
debenture holders. Such entity necessarily have to have expertise in financial matters and
also be of sufficient standing in the market/society to generate confidence in the minds of
potential subscribers to the debenture. While Banks are the natural choice for the
customers, Banks must possess the following to be effective and retain that:

 A track record of sufficient length.

 Facilities for safekeeping.

 Legal skills to take necessary steps for the trusteeship.

 Safe-keeping

Bankers are in the business of providing security to the money and valuables of
the general public. While security of money is taken care of through offering
various types of deposit schemes, security of valuables is provided through
making secured space available to general public for keeping these valuables.
These spaces are available in the shape of LOCKERS. The latter are small
compartments with dual locking facility built into strong cupboards. These are
stored in the Bank's Strong Room and are fully secure. Lockers can neither be
opened by the hirer or the Bank individually. Both must come together and use
their respective keys to open the locker. To make this facility available to its
customers, the Bank must provide:

 Physical structures to house the lockers

 Locker cabinets

 Security arrangements

 Record of access to lockers

 Government Business

Earlier Government business used to be exclusively carried out by Government

Treasuries where all type of transactions took place. However, now Banks act on behalf
of the Government to accept its tax and non-tax receipts. Most of the Government
disbursements like pension payments and tax refunds also take place through banks.
While the Banks carry out this business for a fee to be paid by the Government, providing
this service requires a lot of effort and organization. The Banks must provide:

 Interface with the public

 Liaison with local government departments and government
treasury

 Arrangement for reconciliation with the Government Accounts

Department

 Necessary infrastructure, stationery etc. to cater to the numbers

PRODUCT

Savings Account
ATM Network
7-Day Banking
Telebanking
iConnect-Internet Banking

PEOPLE

Many service require personal interactions between customers and the firm's employees
and these interactions strongly influence the customer's perception of service quality. For
this reason, human resources management policies and practices are considered to be of
particular strategic importance for in delivering high-quality services. Establishing a
customer-oriented culture throughout the firm and empowering employees to provide
quality service cannot be established merely by putting up inspiring posters. Management
leadership, job redesign and systems to reward and recognize outstanding achievement
are among the issues that a successful service manager must address.
  ICICI

ICICI bank views people as a key source of competitive advantage. Consequently the
development and management of human capital is an essential element of its strategy and
key management activity. While ICICI bank is the India’s second largest bank; it had just
over 7,700 employees at March 2002, demonstrating its unique technology driven,
productivity focused business model. ICICI bank continues to be a preferred employer at
leading business schools and higher education institutions across the country. A six-
sigma initiative has been undertaken for the lateral recruitment process to improve
capabilities in its areas. ICICI bank has built strong capabilities in training and
development to build competencies. Training on product and operations is imparted
through web – based training modules. Frontline staff members are being trained on the
regular basis by IT users support group on the various enhancements as well as new
packages designed for offering customized solutions to customers.

 UTI
UTI’s most valuable assets are its human resources and
therefore emphasizes on training and development and
therefore it is accorded high priority at UTI. Competitive
advantage can be gained by continuously upgrading the
knowledge and skills of the staff members. UTI had
9,300 employees as of March 31, 2002. Thirteen
employees employed throughout the year were in
receipt of remuneration of Rs.12 lacs or more per
annum. In order to ensure that a well-motivated
workforce contributes towards the growth of the
institution, our Bank has made inroads towards
establishment of Quality Circle concept among its
employees. The emerging challenges of a liberalised
economy entail on us a responsibility for developing
motivated and knowledgeable workforce to meet the
requirements. Special programmes on functional
training and leadership development to build knowledge
as well as management ability are conducted at a
dedicated training facility. UTI bank seeks to build in all
its employees a total commitment towards exceptional
standards of performance and productivity.

PLACE

The selection of a suitable place for the establishment of a branch is significant with the
view point of making the place accessible and in addition, the safety and security
provisions are also found important. Banking organizations are not free to open a branch
since the RBI regulates the subject of Branch Expansion but so far as the management of
branch is concerned, the branch managers have option to select a place

 ICICI

In 1991 The Bank has established a well-diversified branch network with 24 branches in
15 centres covering 12 states. The bank set up a fully computerized environment with the
State-of-the-art technology at all offices continuously upgrading its strong systems and
procedures with special emphasis on risk management. In 1997 the bank opened 11
branches and 2 extension counters thereby increasing the total network of branches to 33
and extension counters to 4. As on March 31, 2000, bank had a network of 81 branches,
16 extension counters and 175 ATMs. The capital adequacy ratio was at 19.64 percent of
risk-weighted assets, a significant excess of 9 percent over RBI’s benchmark. ICICI has
developed a successful third party distribution model with a growing market share in
distribution of mutual funds, Reserve bank of India relief bonds and insurance products.
This allows us to meet all customer needs through products that are complementary to
those that we offer directly, while leveraging our distribution capability to earn fee
income from third parties. ICICI bank has pioneered a multi-channel distribution
strategy in India, giving our customer 24*7 access to banking services. The enhanced
convenience that this offers the customer has supported our customer acquisition efforts
and migration of customer transactions from branches to lower cost technology enabled
channels. During the year, ICICI Bank continued to expand its non branch channels
aggressively and successfully migrated customer transaction volumes to these channels.
Only 35% of customer induced transactions now take place at branches. ICICI Bank set
up over 500 new ATMs during fiscal 2002, taking the ATMs network to over 1000 ATMs.
Master, Cirrus and Maestro cards can now be used on all our ATMs. Other new
initiatives on ATMs include multilingual screens, bill payments and prepaid mobile card
recharge facility.

 UTI

In order to enhance customer service, UTI has widened its distribution network by
opening several new offices across the country. As on March 31 st 2002, UTI had a
network of 120 offices in India. The bank has pioneered in taking initiatives and
providing one-stop financial solutions to customers with speed and quality. In a way to
reach customers, it has used multiple delivery channels including conventional branch
outlets, ATMs, telephone call-centers and also through Internet.

The Bank was incorporated on 3rd December and Certificate of business on 14th
December. The Bank transacts banking business of all description. In 1998 the Bank has
28 branches in urban and semi urban areas as on 31st July. All the branches are fully
computerized and networked through VSAT. ATM services are available in 27 branches.
In 1999 UTI Bank Ltd inaugurated an off site ATM at Ashok Nagar, taking the total
number of its off site ATMs to 13.m. Today UTI is one of the top five banks that deploy
half the ATM’s total pool. Its network of 546 ATMs is the largest in the country
accounting for nearly 18% of all ATMs in the country.

With geographical and infra structural expansion, the distribution network strategy for
the ICICI and UTI will continues to focus effectively on reaching out to the customer and
providing customized services.

PRICE

ICICI
Interest is paid on the minimum credit balance maintained between the 10th day and last
day of each calendar month in Savings accounts at the rate in force in accordance with
RBI directives. Interest so calculated is rounded off to the nearest rupee, ignoring
fractions of a rupee. Interest is paid every half year in September and March. No interest
is currently payable on the balance maintained in a current account in acceptance with
RBI directives.

SAVINGS ACCOUNT - 8.50%

INTEREST RATES - 8.00%

PROCESS

 ICICI

The use of technology helps ICICI to provide value-added products and services to our
clients in tune with the customer’s requirements. As one of the new generation banks, we
are very well placed to exploit the opportunities being provided by e-commerce. The
increase in the net banking customer base was significant in the last quarter of around
75,000 to 80,000. From our point of view, branch banking has the highest transaction
costs, while net banking costs just one-tenth of that. Thus a major shift from branch
banking to net banking will help us to reduce transaction costs. From the customer’s
viewpoint, they can use banking services at any time according to their convenience.

Following documents are required:

 Income Proof

(A) Salaried Individuals

 Latest salary slip of 3 months.

 Form No.16 for the last 2 years.
 NOC from Employer and/or Employer Society

(B) Businessmen/ Self Employed/ Professionals

 Copies of last 3 years IT returns with computation of income, Balance sheet,

Profit & Loss Account certified by your Charted Accountant.

 Personal Documents

 Age proof (passport/ driving license/ election card

 Address proof (Ration card/ passport/ maintenance receipt)
 Four photographs of Applicant/s and two photographs of each guarantor.
 Bank statement for last 6 months.
  Property Documents

Copies of

 Registered agreement for sale/ lease deed, if any Registration

receipt
 Share Certificate of society (if formed)
 NOC from Builder/ Society/ MHADA/ CIDCO in bank’s
format.
Payment receipts
 Title Clearance/ Search report
 Valuation report from Bank’s approved valuer (in case of
Resale flat only)

PROMOTION
ICICI
In the credit cards business we expanded our distribution to 36 locations. The total
number of credit cards in force increased by 450000 to about 650000 at the end of fiscal
2002. during the year we launched two co-branded cards, with Hindustan Petroleum
Corporation limited (HPCL) and BPL Mobile. We also entered the merchant acquiring
business during the year.ICICI Bank is the largest incremental issuer of credit cards
(including both debit and credit cards) in India. ICICI banks “Ncash” debit cards is a
deposit access product that allows cash withdrawals through ATMs and also enables
purchases at merchant establishments with point-of-sale terminals The card is valid
internationally and earns loyalty points on usage. We also introduced a domestic debit
card variant primarily for our payroll customers. As at March,31,2002,ICICI Bank had
issued about 600000 debit cards. During fiscal 2002,ICICI Bank also implemented two
smart cards projects, at a corporate worksite and an educational institution.

 Single Messaging Service (SMS)

SMS functions through simple text messages sent from your cellular phone. These
messages are recognised and validated by ICICI Bank to provide you with the required
information. For example, when you enter 'IBAL', your cellular phone screen will display
the current balance in your primary account

With SMS, you can perform a wide range of query-based transactions from your cellular
phone, without even making a call. You can use this facility all across the country, if your
service provider happens to be:

 Orange (Mumbai)
 Airtel (Delhi)
 BPL Cellular (Tamil Nadu - other than Chennai)
 BPL Cellular (Maharashtra - other than Mumbai, Goa, Kerala)

 Wireless Application Protocol (WAP)

ICICI was the first organisation in India to offer WAP-based services in May 2000.
Mobile Commerce, using WAP technology, allows secure on-line access of the Web using
mobile devices. With WAP you can directly access the ICICI WAP server, check your
account details and use other value-added services.

 Call Centre

ICICI bank has also focused on the call center as the key channel for its promotion.
ICICI banks call center can now be accessed by customers from 100 cities, and is India’s
largest domestic call center. The call center is a single point of contact for customers
across all products. It provides various self – service options and also personalized
communication with customer service officers for a full range of transactions and
account and product related queries.
INTERNET BANKING TODAY IS BEING USED AS A MAJOR
TOOL OF PROMOTION

 UTI
UTI Bank will has signed a co-brand agreement with the market, leader, Citibank NA for
entering into the highly promising credit card business. UTI Bank and Citibank have
launched an international co-branded credit card. Also, UTI Bank and Citibank have
come together to launch an international co-branded credit card under the MasterCard
umbrella. Again UTI Bank has launch of `iConnect', its Internet banking Product. It has
also signed a memorandum of understanding with equitymaster.com for e-broking
activities of the site. The other tools of promotion that UTI resorts to are:

 Pamphlets
 Word – of – mouth

 Advertising (Print media and Televisions)

 Telemarketing

 Hoardings

BLUE PRINT OF THE SELLING PROCESS

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THE 8 P OF FAME ADLABS

PRODUCT
Service Product / Service Package:

The Core Competency here is SCREENING OF MOVIES. The supplementary products /

services are enormous like the Video Games Parlour & the Food Court. Good options for
food like the Cafeteria where you get food made in hygienic conditions. The ambience is
pleasant with centrally air conditioning, well-illuminated layout. FAME ADLABS is well
known for its DOBLY DIGITAL SOUND.

PRICING

FAME uses differential or flexible pricing for its Multiplex theatres.

Rates:
In the multiplex averages between Rs. 90 & Rs.120 depending upon the box office
performance of the movies screened.
The prices are popularly estimated to be extremely fair prices for the complete
entertainment experience. Reasonable pricing is possible thanks to the government
policies regarding the partial wavier on the extremely high entertainment tax that
multiplex enjoy.

PLACE

It is located at Andheri, Mumbai. From the point of view of public transport it’s closest to
Andheri station. From this station one has an option of hiring a rickshaw, taxi or local
BEST buses.

However, all said and done, there is no denying that FAME is off the beaten track for
most Mumbaikars. Since it is located in the suburbs of city it is not easily accessible and
hence loses out here.

PROMOTION

Initially hyped, FAME attracted a lot of press attention and subsequently the public
flocked to Andheri to witness the spectacle. However after the initial hype died down
FAME did not take a more aggressive role in promotion but instead took a back
seat.FAME beat IMAX by offering its clientele innovative methods of buying tickets via
the MOBILE PHONES (SMS) that completely excluded the requirement of the customer
to visit the theatre before the actual movie experience. The most effective way of
promotion is the daily advertisements in the paper, which promote the movie, which is
currently being screened in the theater, and informs the public.

PEOPLE
Courteous and well-dressed people characterize the Multiplex. The employees are highly
motivated and trained and exude an aura of energy and vibrancy as they perform their
duty with a smile on their lips and a spring in their step. Whilst actually experiencing the
movie, the sin-goers around us are just as important as the employees that escort us to
the theater. Therefore FAME, which attracts the upper strata of the society, SEC A++, is
a very conducive atmosphere and a pleasant environment to enjoy a movie with the entire
family.
 PHYSICAL EVIDENCE

Ambient factors
 Air conditioning

 Excellent ventilation

Design factors

 Uniform appearance

 Extensive parking lot

 Spacious interiors

Social factors
 Well dressed employees

 Courteous

 Genial

 Elite and up market crowd

 Family atmosphere
PROCESS

The process is a sequence of actions to deliver the service to the customer. In this case
the following is the process followed by FAME

The customer arrives to FAME by car and first goes to the ‘pay n park’ to park the car.

The customer then moves on to the ticket window to purchase the ticket for the movie he
is interested to watch.

Then the customer enters the building. Here the usher at the door checks for the tickets.

Then the customer will move on to the screening area and watch the movie.
In the interval the customer will mostly come out to eat or drink something from the
cafeteria.

The customer goes back to the screening area to continue the movie.
 PRODUCTIVITY & QUALITY

Undoubtedly, the FAME caters to the crème de la crème of the crowd in the
Mumbaikars that patronize the theater. Therefore, these people are treated to the best of
quality and productivity by the employees. The customer is the King here.

The service for the multiplex goes as far as actually delivering the tickets to the client’s
home so as to limit the customer’s trouble in actually booking the tickets in advance. The
theater, keeping in mind , its limited accessibility is very considerate towards the people
that determine its success.

RATER

RELIABILITY

RESPONSIVENESS
ASSURANCE

EMPATHY TANGIBLES

RELIABILITY: -People can rely on FAME to screen the best of the movies. The latest
and the most awaited movies are released here. Also the customers can rely on the fact
that it will be a great family experience, they will get value for money, the crowd will be
decent etc. One can rely on FAME for utmost customer delight

ASSURANCE: - FAME has been successful in providing assurance to the customers

with regard to quality. This is in terms of screening of the movie, sound system, good
quality food, cleanliness, ambience, crowd etc. Even if the customer pays a higher price
as compared to other theaters for the ticket, they are assured that they will not be
disappointed. One can be sure that one will get what one expects here.
TANGIBLES: - The layout is very well planned with sophisticated space planning i.e. it
does not look uncomfortable. It is well ventilated, which is very important taking into
consideration the fact that people will be present in large numbers as there are five
movies being screened at one time. All the critical areas are well illuminated which
emphasizes their importance. The seats of the theater are extremely comfortable with
ample of leg space.

EMPATHY: - The personnel at work at FAME are well dressed and presentable. They
are courteous and approachable. They are well spread i.e. there is always someone
available to help no matter where you are within the theater. They have also made
facilities like escalators and lifts made available, which have proven to be of great help
for the elderly and handicapped customers.

RESPONSIVENESS:- The personnel at FAME are very helpful. The employees are
highly motivated and are willing to help the customers at any given point of time. Any
problems or questions of the customers are immediately attended to. They come out to
help you and guide you through the place.
HOTEL

Characteristics

The industry's ups and downs reflect, in part, the limiting characteristics inherent in hotel
keeping.

Perishability:
If the full capacity of the services is not utilized, the service becomes perishable. If a
hotel having an accommodation facility of 100 rooms is able to lease out only 70 rooms
on a particular day, then the remaining 30 rooms or 30% capacity gets perished and can
never be reused. The product is perishable -- a room not sold tonight is lost forever. The
location and product inventory (rooms) are fixed -- they cannot be moved as demand
patterns change. Entry into the business takes large amounts of capital -- creating huge
fixed costs that necessitate high occupancies to achieve a break-even level of volume.
Activity is seasonal -- with all the adjunct problems of operating an ebb-and-flow
business.

Variability:

The fact that service quality is difficult to control compounds the marketer's task.
Intangibility alone would not be such a problem in customers could be sure that the
services they were to receive would be just like the successful experiences their neighbors
were so pleased with. But in fact, customers know that services can vary greatly. Services
are performances, often involving the cooperation and skill of several individuals, and
are therefore unlikely to be same every time. This potential variability of service quality
raises the risk faced by the consumer. The service provider must find ways to reduce the
perceived risk due to variability. One method is to design services to be as uniform as
possible - by training personnel to follow closely defined procedures, or by automating as
many aspects of the services as possible. The appeal of some service personnel -
particularly, the hotel industry- lies in their spontaneity and flexibility to address
individual customer needs. The danger with too much standardization is that these
attributes may be designed right out of the services, therefore reducing much of their
appeal. A second way to deal with perceived risk from variability is to provide
satisfaction guarantees or other assurances that the customer will not be stuck with a bad
result.

Inseparability:

This characteristic is interpreted differently by different service marketing marketers,

but all interpretations point out that special operation problems exist for the firm's
managers. One interpretation of this term is the inseparability of customers from the
service delivery process. In particular, many services require the participation of the
customer in the production process. Unlike goods, which are often produced in a location
far removed from the customer and totally under the control of the manufacturing firm,
service production often requires the presence and active participation of the customer -
and of other customers. Depending upon the skill, attitude, cooperation and so on that
customers bring to the service encounter, the results can be good or bad, but in any event
are hard to standardize.
In hotel industry, the customer has to go to the service provider in order to avail the
service. He cannot use the services just by sitting at his residence. Thus hotel industry is
an inseparable service.

Intangibility:

Intangible services are difficult to sell because they cannot be produced and
displayed ahead of time. They are therefore harder to communicate to prospective
customers. Marketers of services can reduce these risks by stressing tangible cues that
will convey reassurance and quality to the prospective customers. These tangible cues
range from the firm's physical facilities to the appearance and demeanor of its staff to the
letterhead on its stationery to its logo.
In case of hotel industry, the core benefit is getting good food, good boarding and
lodging facilities. The tangible services are those, which one can touch and taste. Thus
hotel industry is tangible.
 Earnings Sensitivity Factors

Profitability in the hotel Industry is dependent on many factors; a few salient ones are
listed below: 
Tourism:
This is the primary factor for the hotel industry. India has great potential of
becoming a major stop for tourists. However, lack of infrastructure has kept the
foreign tourist at bay. The government has been actively participating in propagating
India as an oasis for global travellers. India has always conjured up a fascinating
image in the mind of foreign tourists. India has an advantage of having diverse
cultures, languages and religions, which makes it an exciting tourist destination for
people all over the world.

Business factor:
Liberalization has brought home a new class of MNCs, which has increased the
number of corporate travellers visiting India. Other than metros, developing cities
have also come into the limelight and hence there has been an increase in demand for
hotels in various places. This trend has enthused many hoteliers to set up corporate
hotels. This class of business travellers has reduced their dependence on seasonal
tourism. The industry is again headed for a hit, with the attacks on the world's largest
financial centre in the US.

Room occupancy:
The ARR and occupancy are the other critical factors that determine profitability.
These, in turn, depend on the location, star rating, amenities and quality of service.
The occupancy of Indian hotels and the ARR has been on the decline for the past
three to four years due to the turbulent socio-political environment in the nation and
also because of the East Asian economic crisis. However, the hotel industry reported
impressive earnings and revenue growth for the year ended March 2001.

Seasonality:
India being a tropical nation witnesses an inflow of leisure tourists, mainly during
the winter months of October to March. Hence the hotel industry has a better second
half. In the first half of the year, local tourists prefer April to May and October in the
second half due to summer and Diwali vacations respectively. Other months being
off-season periods, many hotels offer heavy discounts on room tariff to ensure repeat
customers such as corporates, airline crewmembers and tour groups.

Political scenario:
 In the past few years, the hotel industry has been going through a lean phase.
Room occupancy has been on a decline, mainly due to a steep fall in both business
and tourist arrivals. Though the exorbitant rates of five-star hotels as compared to
the quality of services provided is one of the factors for the decline, the fluid political
environment has also had a negative impact and foiled the dreams of the Indian hotel
industry.

Tax structure:
This industry is one of the heavily taxed sectors of India. State governments have
levied various taxes like expenditure tax, luxury tax and sales tax. This is apart from
the income tax levied by the central government. These taxes are as high as 30 per
cent in cities like Chennai, while other Asian countries have a tax structure of 4 to 5
per cent. As a result, Indian hotels are more expensive than their Asian counterparts.
Industry bottlenecks:
Progress of the industry is held hostage to various bottlenecks existing within the
industry like high variable costs. The hotel industry is reeling under high variable
expenses. A high wage bill, maintenance costs and overhead expenses mark the industry.
Domestic hotel chains have a high man-room ratio as compared to their overseas
counterpart.

Differential pricing:
Hotels in India typically offer discounts on published room tariffs to many clients. As a
result, though the occupancy rate of these hotels increases, the ARR does not increase
proportionally. However, the magnitude of discounts varies depending on the nature of
the client location and size of the hotel. Furthermore, in the dual tariff rate system, there
is a domestic currency rate for local travellers and a dollar rate applying to foreign
travellers. Hence there is need of a common yardstick for tariff rates

CORE PRODUCT

At the very center is the core product which satisfies the basic need of the consumer. The
core product in the hotel industry is ACCOMODATION. The role of Hotel International
is to provide basic accommodation facilities. Like a bed for the night and a room with a
bathroom.

FORMAL PRODUCT

When consumer’s expectations grows synchronized with increased competition, the

marketer offers some tangibility to the existing core product, that is, some more features.
Consumers prefer to pay more for these additions and the marketers have more to offer
than the competition.

Hotel International has to provide some additional features like:

Hygiene: It comes next to the basic function of accommodation. Hygiene plays a very
important role in the status of a hotel. An unhygienic hotel will never be able to attract
lot of people, especially if it has to attract a lot of people from foreign countries where
the hygiene conditions are top notch.

Room Service: When people go to hotels, they would expect good and prompt room
service. This means, when they order food or ask for any service, a hotel that provides it
promptly will have a great edge over the other hotels.

Price: The price of the rooms should be such that both the rich and the middle class
people can afford them. Not everyone can afford a very expensive room and also not
everyone will like to stay in a room that does not have some luxurious facilities.

Etiquettes: The people who come in contact with the customers, that is, the reception
people, room service people, and waiters, all have to be trained well to behave in a
manner that pleases the customer. They should be civilized, cultured and polite.

Laundry services

Food and Wine:The food should be of good quality and should be prepared in hygienic
conditions.

CORE PRODUCT AND AUGMENTED SERVICES FOR A LUXURY HOTEL

Hierarchy:

Chief Operating Officer (COO)

|
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General Manager
|
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Departmental Heads
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Sub-Ordinates / Deputy Managers
|
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Operational Staff / Administrative Staff
|
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Front Office Staff
 The hierarchy for the restaurant:

F&B Manager
|
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Assistant Manager
|
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Restaurant Manager
|
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Captain
|
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Steward

Departments:

The various departments it has are:

1. Security
2. Human resource management
3. Food and beverages.
4. Front Office
5. Kitchen
6. Sales
7. Purchase
8. Training
9. Maintenance & Engineering
10. Quality
11. Public relations
12. Finance
13. Marketing
Basis of charging room rate

24 hour basis
 On this basis, a rate is charged for a room taking the time of arrival into account.
E.g. if the person arrives at 0900 hours on the 6 th September a new day will start. the
guest will be charged for one day only for the next 24 hours i.e. till 0900 hours on 7 th
September. This can be very confusing for the receptionist, as she has to keep a track of
arrival times of all the guests. This basis can be adopted in transit hotels as the guests
cannot be expected to arrive and depart at a fixed time and also the stay is short in
transit hotels.

Room night hotels

In this case, a person is charged for the no. of nights he spends in the hotel.

However if he checks in during the day and checks out during the night, he will be

charged only for one night only. The person checking out should do so before dinner time

or before the night out or he will be charged for extra time. None of the hotels preferthis

system of charging in present times.

 Check in and check out basis

Most hotels prefer to have a fixed check in and check out time. Normally,

accepted check out time is 12 noon. This will be influenced by transport factor. So in

some cases check in and check out time may differ. There are several advantages in

having a fixed check in and check out time for guests as well as for the hotel. The guest

knows that he has to check out by certain time or he may be charged extra.

The receptionist knows how many rooms are occupied and how many are
available for sale. The housekeeping department will be aware of the number of rooms
they will have to service as check out room. So better co-ordination is possible between
the various departments to prepare for incoming guests. The hotel can also earn more
revenue from rooms by selling the room more than once to different guests

Types of Accommodation in India

On The Basis Of Standards:

Like most of the countries in world, India also has hotels divided in different
categories depending on their location, facilities, infrastructure, and amenities
provided. All the star hotels in India are government approved with continuous
control on the quality of services offered.

Five star hotel

The most luxurious and conveniently located hotels in India are grouped under Five Star

Deluxe Hotel Category. Five Star Deluxe hotels in India are globally competitive in the

quality of service provided, facilities offered, and accommodation options. These hotels

are located primarily in metropolitan cities like New Delhi and Mumbai and major

tourist destinations like Jaipur

Agra, and Goa. These are top of the line hotels located mostly in the big cities. These

hotels provide all the modern facilities for accommodation and recreation matching

international standards in hospitality. Many of these hotels are situated in the Central
Business Districts of the metropolitan cities or near the centers of transportation

providing exceptional value for the business travelers.

Four Star

A rung below five star hotels, these hotels provide all the modern amenities to the
travelers with a limited budget. Quality of the services is almost as high as the five stars
and above categories. These kind of hotels are there for the travelers with a limited
budget or for the places which might not getting the tourist traffic associated with larger
cities.

Three Star Hotels

These are mainly economy class hotels located in the bigger and smaller cities and
catering to the needs of budget travelers. Lesser in amenities and facilities, these hotels
are value for money and gives good accommodation and related services on the reduced
price. Services would be the stripped down version of higher categories of hotels but
sufficient to fulfill your basic needs.

Two Star Hotels

These hotels are most available in the small cities and in particular areas of larger cities.
Catering to the backpacker tourist traffic, these hotels provide all the basic facilities
needed for general accommodation and offers lowest prices.

One Star Hotels

The hotels with most basic facilities, small number of rooms, and location in the far flung
areas are grouped under One Star Hotel category. These hotels are best when you are
looking for cheapest available accommodation option (apart from camps and hostels).
In a nutshell these are the various requirements according to which a hotel is graded

How Does One Five-Star Hotel Differ From Another?

Except for the location and some subtle variations in themes, most hotels under this
category are the same. All are expected to provide luxurious and most modern facilities.
In that case, what is their unique selling proposition (USP)? In this service-oriented
industry, quality of service provided can hardly serve as a USP. Location could, but not
for everybody. A hotel could be close to the airport for instance. Like The Leela in India.
Or it could be located in a commercial area like The Oberoi or The Taj, both in Mumbai.

Generally speaking, there is very little difference between one five-star hotel and another.
International consultant Stephen Rushmore who has visited around 6,000 hotels in his
career vouches for it.
Overseas, five-star hoteliers try to differentiate their services by adopting various
concepts like heritage, Disney world or environment friendly hotels to name a few. But,
in India very few five-star hotels boast of any such difference.

One such hotel that does is The Orchid. Set up barely a couple of years ago it has created
a name for itself by being a pioneer in the field of environment friendliness. The hotel
that is situated in the vicinity of the Mumbai domestic airport is promoting itself as an
ecotel, or an eco-friendly hotel.

This concept has helped it achieve the ECOTEL certification for demonstrating a high
level of environmental sensitivity in areas of solid waste management, energy efficiency,
water conservation, community involvement and employee education

On The Basis Of Nature:

Heritage Hotels

Heritage hotels in India are best if you are looking for sheer elegance, luxury, and royal
treatment. They are not just another accommodation options but tourist attractions in
themselves. Exquisitely designed and decorated, meticulously preserved, high standards
of service, and ethnic cultural motifs helps the tourists get the complete experience of an
India that otherwise exists only in the history books.
e.g. The Lake Palace Hotel, Udaipur

Beach Resorts Hotels

Peninsular India bounded by Arabian Sea, Bay of Bengal, Indian Ocean and the two
emerald archipelagos of Lakshwadeep and Andaman and Nicobar have a long coastline
of around 7500 km, offering an amazing array of beaches, some popular, some not so
well known.

Wildlife Resort Hotels

A wildlife tour is incomplete if you don’t actually live in a forest for a few days. Imagine
living in a rest house or a tent the midst of the dense wilderness, and waking up to the
twittering of birds, or maybe the roar of a lion! Day trips alone are certainly not enough
to show you the true majesty of the wild, so why not try this too?
Government Approved Hotels

These are the hotels, which might not have applied for star categorization or small
enough to find them in the list. Many of the wildlife resorts, lodges, and hostels are
government approved providing a minimum level of accommodation facilities at far off
places.

Guest houses
These provide the minimum facility of food &beverages along with accommodation. The
standard of accommodation is not as good as a hotel. The menu offered is not as
elaborate as a hotel or similar establishments. Services are not very professional or
specialized. Expenses are very much less in comparison to the above mentioned other
establishments. Generally people who can’t afford the expenses or the luxuries of higher-
class establishments make use of these facilities.

Dormitories
Dormitories mean a building containing one or more accommodation units and may
contain shared kitchen facilities, for use by students enrolled at a post secondary
institution. Dormitories are set up to offer a good environment for studying, and to
experience independent citizen life. The dormitory rooms are furnished with beds, study
tables, chairs, washstands, and telephones. Further, dormitories are equipped with
lounges, laundry rooms, and kitchenettes. Students, therefore, can start studying only if
they bring their personal belongings. A shared building (Life Center) in each area of the
dormitories include a restaurant, public bath, shops, barber shop, and beauty salon.

Holiday Villages

Holiday villages are usually large, self-contained resorts and ideal for people who want
a lively holiday with children's clubs, organized activities and evening entertainments
laid on.Many holiday villages offer children's clubs, run by qualified English speaking
staff, for babies through to late teens. These are invaluable for families, as they not only
give children a chance to meet new friends and have fun, but also give adults some time
off too.However, though standards are improving markedly, somehow this is never a
really smart option. Accommodation, unless rated at least four or five stars, can be
cramped for example.

AUGMENTED PRODUCTS

With further higher expectations of the customer- again synchronized with intense
competition- marketers offer more and more intangible features. All the extra things
provided are service oriented. In the case of Hotels the augmented products include:

Facilities In Room :
Ø CTV Satellite channels
Ø International direct dial
Ø Refrigerator (deluxe rooms and suites)
Ø Bathtub (executive rooms and above)
Ø Running hot and cold water.
Services Provided :
Ø Ayurvedic Massage Center and steam bath
Ø Beauty Parlor
Ø Florist
Ø 24 HRS Room Service
Ø 24 HRS Coffee Shop
Ø Airport Transfer
Ø Ample Car Park
Ø Safe Deposit Lockers
Ø Travel Assistance
Ø Currency Exchange
Ø Same Day Laundry
Ø Direct Dialing
Ø Cable TV
Ø Health Club
Ø Banquet Halls
Ø Back Water Cruises and Package Tours
Ø 24 hrs Check Out
Restaurant/Bar:
1. Variety Restaurant (Indian, Tandoor, Kerala, Continental and Chinese dishes.)
2. 24 hour Specialty Coffee Shop.
3. Family Bar (daily happy hours.)

Promotional Activities:
Ø Regularly conducting Food festivals.
Ø Official host for Motor shows, Fun Carnivals, Fashion shows and other Fairs.

The 8 P’s with reference to The Taj Mahal Hotel

Product Element

This gracious turn-of-the century hotel is located 32 km from the airport and minutes
away from Mumbai's commercial, shopping and banking districts. The Taj Mahal Hotel
has an old-world Heritage Wing and a contemporary Tower Wing. The hotel's premium
suites have been used by royalty and Heads of State.

Taj believes that the their core product is space. This space is supplemented with the
services they provide like the restaurants, health club, banquets, discotheque, bar,
business centers etc. Their other supplementary products also include travel
arrangements, ticketing, airport pick-ups, sightseeing etc. The hotels various other
departments like the house keeping, front office, food and beverage, room service and
maintenance, all provide the supplementary services to the customer.

A few of the Facilities and Services offered are as follows:-

Types of Accommodation
582 centrally air-conditioned rooms including 49 suites.

Tower Wing Rooms: With easy access to the Business Centre, these contemporary rooms
offer guest amenities like Internet connectivity, 2-line speaker phones with international
direct dial facility and voice mail. Mini bar, personal safe, channel music and television
with satellite programmes. A complimentary in-room fax can be provided on request.
Guests have a choice of rooms that overlook the city or face the Gateway of India and the
Arabian Sea.

Heritage Wing Rooms: These rooms are renowned for their architecture and exude an
aura of old-world elegance. Each corridor in this Wing resembles an art gallery, and the
design, décor and furnishing ensure that no two rooms are alike. Guests have a choice of
rooms that overlook the city or pool or face the Gateway of India and the Arabian Sea.

Taj Club: Located on the top floors of the Heritage Wing, Taj Club is designed for the
discerning business traveler. Guest amenities and services include complimentary airport
limousine transfers, private check-in at the Club desk, in-room fax, personal safe, a
complimentary bottle of wine, valet service and complimentary deluxe Continental
breakfast. Taj Club guests can also enjoy complimentary tea/coffee throughout the day
and cocktails during the Cocktail Hour at the Club Lounge. Taj Club also offers guests
exclusive Meeting Rooms and a Business Service Unit on the Club Floor.

Suites: Choose from elegantly appointed Junior Suites, Executive Suites, tastefully
decorated Large Suites, newly renovated Luxury Suites or spacious, plush Grand Luxe
Suites. The finest suites at The Taj Mahal are the luxuriously appointed Presidential
Suites. Each of these suites is decorated with original paintings and antiques that
transport guests into a world of regal luxury and grandeur. Grand Luxe and Presidential
Suite guests can also avail of a personal Valet Service.

Broadband wireless Internet access at select Taj hotels

Now when you stay at select Taj hotels in Mumbai (including The Taj Mahal Hotel), New
Delhi, Kolkata, Chennai, Bangalore and Hyderabad, you no longer need to be in your
room or at the Business Centre to use the Internet. Multiple 'hot spots' located across the
hotels lets you get onto the Internet from almost any place in the hotel - quickly and
without plugging in! What's more, there is a Cyber Butler on call, should you need any
assistance with getting connected.
Facilities and Services
Swimming pool, fitness centre and spa, beauty parlour, barber shop, travel desk, car
rental, pastry shop, book shop, shopping arcade, currency exchange, doctor-on-call and
babysitting. Complimentary use of steam, Jacuzzi and gymnasium at the fitness centre for
all guests. Arrangements for golf, badminton, squash, billiards, tennis and table tennis on
request. 24-hour room service and laundry service

Place and Time

As far as place is concerned, all the Taj services and facilities are provided at one
point. To ensure timely delivery of their services, they have set processes in place and
incase of failure or delay of service, they have built in contingencies and trained their
staff to communicate the delay to the customer in the right manner.
One of the incidents that Mr. Vivek Sah, the Training Manager at Taj provided us with
to explain this concept further is of the implementation of the contingency plan during the
breakdown of the elevator. In case of breakdown of the elevator, the Room Service makes
use of the elevator in the other wing to ensure timely delivery to the customer.
They also have complaint management systems where they encourage customer feedback.
Each of their feedback form is numbered and hence if any feedback form is missing, the
staff is held liable for it. This is to ensure that the management views every feedback
form.
To ensure standadization in their services, they have Standard Operating Procedures
(SOP), e.g the food that is served in the restaurant will be of the same quality and taste at
any given day and time.

Process

In order to ensure that the core product and the supplementary product is developed
and delivered in the right manner and at the right time, the hotel has formed certain set
processes. When the room is being prepared for customer check-in , the house-keeping
department make sure that all the room amenities are provided as per the check list. For
e.g. certain room amenities like 3 embroidered laundry bags, 2 closed slippers with logo,
2 shoe bags, etc. are provided by The Taj Mahal Hotel.
Infact the processes are so specifically laid down that hotel staff are even advised on
what to say and what words to use while talking to a customer. The following example
will illustrate this better. When a customer asks for something to be done instead of
saying “no problem, the staff is taught to say ‘ most certainly’.

The Taj Blueprint

When the service provider comes in contact with the customer, he needs to surpass the
customer’s expectations, for which a blue print is made and followed by the service
provider, in this case the Taj Mahal Hotel.
 Dinner Service Sequence
Procedure
1 Greet Guests Entrance Host(ess) / Manager
Smile using appropriate
salutation,correct posture,eye-
contact and guest name where
2 possible. Entrance Host(ess) / Manager
Smoking/Non-smoking preference to
3 be confirmed. Entrance Host(ess) / Manager
4 Assist guests to their seats. Restaurant Host(ess) / Manager
5 Unfold the napkins, ladies first Restaurant Captain
Suggest the Dinner buffet, and
describe the buffet highlights -
6 specials etc. Table Captain / Manager
Present the food menu along with
the beverage list/ wine menu, if A La
Carte is desired by the guest.
Suggest daily specials and advice
non availability`s, prior to food
7 orders. Table Captain / Manager
Suggest bottled water and offer wine
8 by glass. Table Captain

For wine service, appropriate

9 glassware to be present on the table. Table Captain / Server
10 For all orders, serve ladies first Table Captain / Server
Clear plates accordingly before
guests return after second helping
11 from buffet. Table Captain / Server
For A La Carte orders, plates to be
cleared only after all complete their
12 meal. Table Captain / Server

13 Replenish the cuttlery accordingly. Table Captain / Server

Napkins to be folded neatly in half
and placed on the left arm-chair,
when guests leave for second
14 helping. Table Captain / Server

For A La Carte orders, offer dessert

15 menu and describle items. Table Captain / Server
Offer tea / coffee after entrée and
16 side plates are cleared. Table Captain / Server
Always maintain table top clean,
17 before resetting the table Table Captain / Server
 Place bill folder with cheque on
table for signature, as per guest
18 convinience Table Captain / Server
Thank all guests using their names Captain / Server / Host(ess) /
19 respectively. Table Manager
Captain / Server / Host(ess) /
20 Bid farewell. Restaurant Manager
Upon guest departure, clear table
21 immediately. Table Captain / Server

Productivity

The Taj as a hotel does not compare itself to only Indian hotels, but even with the
hotels internationally as it claims to have “World Class Quality”. In order to ensure that
its inputs are transformed into desired outputs, they provide extensive training to their
employees irrespective of the field they come from.
The Taj Mahal hotel has various quality tools to enhance quality. This involves every
department, as they have to make sure that the raw material as well as the finished
product is of top quality. At The Taj, it is the responsibility of the purchase department to
make sure that the raw materials are purchased at the Right Time, Right Place, Right
Cost and from the Right Source, in order to avoid any hindrances in their productivity
and quality.
Taj has developed enormous credibility in terms of trustworthiness being the oldest brand
of hotels, with the reputation of being World class and honest service provider. Security,
Communication and understanding the customer psychology are special assets the Taj
management has mastered with time.

People

People here mean the customers, employees, management and the society. It is
the final customer who is to be satisfied and this can be done only with the help of the
employees, who are directed and guided by the management. In the end the final motive
of Taj is to provide consistently and relentlessly an Indian experience of warmth and
hospitality by anticipating and exceeding guest expectations. They also provide various
customer services such as ‘The Taj Inner Circle Group’, ‘Taj Advantage’ and ‘Taj
Epicure’.

In order to ensure the productivity of their employees they provide them with various
facilities such as medical help, consultation, traveling facilities, perks and bonuses. The
employers here each have their own lockers in which they keep their uniforms and other
belongings, they also have bunkers with small beds so that the employees working in
shifts can catch some sleep if need be.

In spite of the fact that human resources management is such an integral part of the
service industry of which hotels form a major part, its role has begun to be acknowledged
only recently. The Taj Group of Hotels is probably one of the first Indian hotel chains to
have recognised and respected the significance of HR in the hospitality industry. Says K
S Srinivasan, GM-corporate human resources, The Taj Mahal Hotel, Mumbai,
“Functions like sales, marketing and HR are not hotel-specific, unlike those of chefs,
housekeepers, bartenders, stewards and the like. They are, in fact, common to all
businesses.”

He asserts that HR, as a function, is like a partner in the business in any organisation
and not a stand-alone function. It is the key to effective utilisation of the manpower that
the hotel industry is so dependent on. And the Indian hotel industry is among the most
labour intensive since the number of people serving guests is the maximum here. It is
precisely for this reason that the significance of HR requires to be appreciated.

It is not merely monetary rewards that employees seek today; the intriguing aspect is the
learning experience that the job promises. “It is precisely with this very thought in mind
that the Taj Group of Hotels, a Tata enterprise and one of the oldest hotel chains in the
country, decided on a training programme for the operations trainees,” explains
Srinivasan.

Interactive sessions between the Taj management and the director of the Tata Institute of
Social Sciences (TISS), a Tata educational and research institution, led to an interesting
and comprehensive tailor-made course curriculum being chalked out. Thus was born the
‘Taj TISS HR Associate Programme’, a one-year course comprising four modules that
are designed to give equal importance to and impart balanced knowledge of both the
theoretical and the practical aspects of all HR-related functions of the hotel industry.

After finalising the course details, the Taj made announcements about the course,
offering interested trainees with two to three years of work experience an opportunity to
apply. The response was encouraging and five trainees were shortlisted for the first batch
of the training programme.

Each of the four modules have four sections. The first stage consists of theoretical
lessons, providing a sound background to the practical application of the knowledge
required of them in the second stage. In the third stage, the students return to the Institute
and their performance is evaluated by professors of TISS. In the fourth and final stage,
grades are awarded. While practical training sessions for the first three modules have
been organised at the Taj hotels across the country, the fourth modules practical sessions
had students of the first batch working in Tata companies such as TISCO and Tata
Consultancy Services (TCS). “This gave them a wider scope and more exposure, besides
making them realise that HR skills in a service-specific industry like the hotels are much
more challenging than their application in the manufacturing or any other industry,”
observed Srinivasan. He said he himself had started off in the manufacturing industry
and only later did he move over to the service industry. “I have been in the industry for
over a decade now and am well-set here,” he added.
The key to retaining staff and ensuring the success of any business organisation lies with
the HR department and its effective functioning. Any organisation, including hotels, incur
heavy expenditure on their employees, especially between the time of recruitment and the
employees’ acquisition of the skills imparted during their training. It can be inferred,
therefore, that a high employee turnover rate lowers the efficiency of the staff as a whole
owing to their constant on-the-job training and skill enhancement.
“An organisation must be able to create for itself a unique place and image in the minds
of the employees, both present and prospective. This enables the employees to aspire to
be a part of the organisation, giving it their very best,” says Srinivasan. “Though the
training programme has and will continue to cost us money, we believe that it is truly
worthy investment,” he added.

“The Taj group,” says Srinivasan, “is an expanding organisation and we are a people-
oriented company. What we need are people who can match our organisational
standards. We are also looking to create and ensure a constant supply of good quality
HR professionals, which is why we decided to impart training of an extremely specialised
nature to our management trainees. I have observed them at the end of the programme
and must say that they appear all charged up and raring to go,” he remarked.
The Taj-TISS joint programme is expected to create a demonstration effect in the industry
with more hotel groups placing additional emphasis on the HR training programmes.

To be a successful HR professional, what is required most is the aspirants’ ability to

challenge themselves as well as their colleagues. Only then can they get the very best
from themselves and their team. “Challenges in the HR field are immense and since it is
so people-centric, it is only obvious that professionals should have strong people-
management skills,” explains Srinivasan. Besides this, a right attitude towards the job
and life in general is extremely essential. “As a manager myself, what I would look for in
an applicant would be the ability to fit into my organisation perfectly and be emotionally
balanced, competent and above all, be a cultural fit, fulfiling the basic values that the Taj
is known for,” concludes Srinivasan.

Promotion and Education

They carry out their promotions by the means of calendars, monthly letter to their
‘Inner Circle Customers’, informing them about their upcoming events and offers. Taj
has television advertisements on popular channels like CNBC, and print ads in
magazines and newspapers. Taj takes part in exhibitions like wherein they promote their
holiday packages. They also have special offers during the “off-season” etc. Also The Taj
is the only hotel chain to personify itself and in promotion campaigns and advertisements
the Taj is often referred to as “She” The print ads for the Taj are :-

Physical Evidence

The Taj Mahal Hotel was built in 1903. The architect was Sitaram Vaidya. It had
a very ethnic look to it, which kept up their image of providing an Indian experience of
warmth and hospitality. They realized that modernization is the name of the game and
had The Taj redesigned by Mr. Chambers, Mr. Wilkes and Mr. Bernard from Singapore.

Some of the recent renovations that have been carried out at the Taj are
The exterior has been given a new and modern look while still retaining the old
world charm of the building.

The entrance has splendidly carved bronze and glass doors Soaring onyx columns
stretch to a luminous alabaster ceiling; while underfoot, rich hand-woven carpets set off
a magnificent floor painstakingly inlaid with semi-precious stones. The eclectic mix of
western contemporary style and traditional Indian motifs creates a veritable feast for the
The city's most exclusive restaurant, The Zodaic Grill provides a graceful setting
for an intimate dining experience. Under a magnificent trompe l'oeil dome, they serve the
finest gourmet cuisine complemented by an extensive wine list, as a classically trained
pianist entertains patrons.

Price and Other User Costs

Taj realizes that their prices are high and not affordable by all, but this is due to
various overheads that it incurs and the superior quality that it offers. For e.g. a
roadside sandwich seller sells his sandwich for Rs.10 as he has no overheads and has
no quality standards to maintain, like the quality of the bread and the vegetables. But
at The Taj, they serve the best quality and also incur overhead expenses.
Also the target audience that the Taj caters to are the one’s who come to the Taj
for it’s ambience and world class standards, therefore they say that their prices are
justified as they help The Taj retain the exclusivity that it stands for.

HOSPITAL – THE TYPOLOGY

There are different types of hospitals serving the multi-faceted needs of the
society. There is distinction in their structure, function and performance. This variation is
due to their distinct nature and form

OBJECTIVES
The first criterion for the classification is objective. Here the main objective of
establishing a hospital is taken into consideration. Some hospitals are set up with the
motto of imparting medical education, training and research facilities whereas in some
other hospitals, the prime attention is on health care.
CLASSIFICATION ON THE BASIS OF OBJECTIVES

Hospital

Teaching cum General Special

Research Hospital Hospital

Teaching-cum-Research Hospitals
These hospitals are teaching based. They are found engaged in advancing knowledge,
promoting the research activities and training the medicos. As for example, All-India
Medical Institute, New Delhi, Post-Graduate Medical Education and Research Institute,
Chandigarh, etc…

General Hospitals
The general hospitals also offer teaching and research facilities but these objectives are
secondary. The main objective in the general hospitals is to provide medical care. As for
example, different medical colleges and district and sub divisional hospitals.

Special Hospitals
The main objective of special hospital is to provide specialized medical services. These
hospitals concentrate on a particular organ of the body or a particular disease.

CLASSIFICATION ON THE BASIS OF OWNERSHIP

(Hospital on the basis of Ownership)

Hospital

Government Semi-Government Voluntary Private Charitable

Hospital Hospital Agencies Hospital

The government hospitals are owned, managed and controlled by the government
whereas the semi-government hospitals are found acting as an autonomous body. The
voluntary agencies’ hospitals are owned by the voluntary organizations whereas the
private parties own the private charitable hospitals.
CLASSIFICATION ON THE BASIS OF MEDICINE

(Hospital on the basis of Medicine)

1. Allopathic
2. Ayurvedic
3. Homeopathic
4. Unani
5. Others

Classification on the basis of size

(Hospital on the basis of Size)

Hospital

Teaching District Tehsil/Taluka/ Primary Health

Hospital Hospital Subdivisional Centres
Hospital

On this basis, there are variations in the size of the hospitals. As such, the
teaching hospitals generally have 500 beds, which can be increased according to the
number of students. The district hospitals generally have 200 beds, which can be raised
to 300 depending on population. The teshil / taluk / sub-divisional hospitals generally
have 50 beds that can be raised to 100 depending on population. The primary health
centers generally have 6 beds that can be raised to 10 beds.

PRODUCT
Regarding product Kotler says a product is anything that can be offered to a
market for attention, acquisition, use or consumption; it includes physical objects,
services, personalities, places, organization and ideas. In the case of hospitals, different
types of hospitals offer different services to their users. Some of the hospitals give an
overriding priority to the medical education, training and research whereas some others
concentrate their prime attention on medical treatment. The main product in a hospital
maybe any of the following:

 Medical Services
 Medical Training
 Medical Education
 Medical Research
Medical services can further be classified as follows:

 Line Services
 Emergency
 Out-Patient
 In-Patient
 Intensive Care
 Operation

The aforesaid classification of product is based on different categories of

hospitals. The medical colleges and some of the medical institutes impart medical
education, training and research facilities. It is natural that concentration on product
varies depending on the nature of the hospital. However, it is right to believe that the
ultimate aim of almost all providers is to make available the best possible medical
services and to prepare and train the best medicos. Therefore it is essential that
providers are aware of the nature, behavior, requirements and status of the users. This
helps them in planning and development of the services in the background of users’
changing needs and requirements. The product should be developed keeping in mind the
users’ psychology.

THE FORMULATION OF PRODUCT MIX

The main products of hospitals are medical services. The services rendered by
hospitals or public health centres occupy a place of significance, specially while
designing the product mix. In addition to medical care, some hospitals also impart
education, training and research facilities and some hospitals also educate and train
paramedical officers, nurses and other technical staff. It is thus clear that the nature of
the hospital governs the designing of product mix. The changes in environmental
conditions, global efforts for acquiring sophisticated equipment and appliances also
govern formulation of product mix. This makes it clear that in hospital services the
designing of product mix is influenced by various factors.

MEDICAL CARE
To give care to the sick, to render time-honoured services to the injured and restore the
health of diseased persons are some of the important functions of a hospital. A number of
hospitals are found engaged in rendering Medicare facilities and so their product mix
would normally be confined to the offering of medical aids. It is right to say that the
successful formulation of product mix depends upon the fullness of life of a patient after
leaving the hospital. Thus while framing the product mix, all the services like line, staff
and auxiliary divert a close attention.

ORGANIZING THE LINE SERVICES

 In the emergency services, the casualty services need priority attention. The
casualty department of a hospital makes available round the clock services. This
department is specially meant for patients having illnesses of grave nature requiring
immediate treatment. It is also meant for injured persons. The success of this department
depends on the intelligence and diligence of doctors, paramedical officers, nurses and so
on. Here an emergency ward is needed to provide immediate treatment to needy persons.
In the modern world of medical sciences this department has become an indispensable
part of a hospital as the growing rate of urbanization and lack of traffic sense often result
in major accidents. This department is expected to shoulder the special responsibility of
removing emotional strain, suspense and anxiety of attendants in addition to the best
treatment made available to patients. In order that emergencies are attended quickly and
effectively it is necessary to have an efficient set up, well knit with other departments of
the hospitals with well laid out procedure and work distribution. The casualty department
needs to apply more precautions especially in cases of poisoning and accidents. The
doctors have to honour legal formalities. But here legal procedures should not stand as a
barrier.

Casualty Dept

Reception &
Enquiry

Registration

Examination
Observation

Admission Dressing

Discharge

Normal Health Death

Out patient Services

In the out patient department all patients are examined irrespective of the degree
of illness, whether minor or serious, acute or chronic. The OPD renders diagnostic,
curative, preventive and rehabilitative services on an ambulatory basis. While
constructing the OPD it is important that there is a gap between the indoor area and the
OPD. At the same time it is also essential that it is well connected with the X-ray,
laboratories and other supportive services.

OPD

Registration

Examination

Prescription Investigation Dressing & Admission

Treatment to in-patient
ward &
treatment

X-Ray Laboratory

Tests Discharge
Report
In the
formulation of
product mix for hospitals, it is impact generating that OPD is given due weightage. This
is considered essential to minimise the pressure on indoor services.
The doctors, para-medical officers and nurses should be well trained so that users never
feel dissatisfied. The examination or investigation of diseases is the most significant
aspect of services rendered by the OPD. Writing prescriptions, dressing and treatment
and further admission of patients to in-patient ward need time honoured arrangements.It
is the most sensitive point where hospitals may be successful in projecting their fair
image.

IN-PATIENT SERVICES
 After the examination of patients in OPD, they are advised admission to inpatient
wards, if necessary. The patients are required to make decisions regarding their
admission to a particular ward, whether private or general. Each ward requires a
doctor’s duty room, dressing room, nursing staff station, and other facilities required for
patient care like x-ray, operation theatre, pharmacy and pathology departments etc. The
management should ensure that both general and paying wards are made available
medical facilities without any discrimination.

INTENSIVE CARE UNIT

While managing the line of services the management has to give due attention to
the ICU which is considered to be the heart of the hospital. ICUs are meant for those
patients demanding acute, multidisciplinary and special treatment. This unit is meant for
patients of shock, coma, heart attack, lung, kidney and brain diseases etc. The staffing
pattern of the ICU needs to be planned in a scientific way so that related patients get
proper medical aid without a break or gap. The establishment of ICUs imposes extra
financial burden but these units are so significant that an ideal hospital cannot ignore
them.

OPERATION THEATRES
Operation theatres play a significant role in the product mix of a hospital. While
organising operation theatres management should make available technologically
advanced and sophisticated equipment and appliances. The stand-by power arrangement,
proper ventilation etc. also affect the performance of OT. Also OTs should be manned by
efficient doctors, paramedical staff and nurses. Each OT should have a pre-anesthesia
room and a sterilisation room. In addition there should be a scrub room for nurses and
doctors. The OT also needs a close integration with the blood bank.

SUPPORTIVE SERVICES
To enrich the hospital services certain supportive services are found to be
important e.g. sterilisation, supply and maintenance of instruments, materials and
garments etc. The catering department comprises the kitchen, bulk food stores and dining
rooms and supplies meals in the hospital. Heated trolleys have to be used to transport
meals to patients. Pharmaceutical services also occupy a significant place as they
influence the treatment programme of a hospital. An official laundry is essential to
provide bacteria free garments and clothes. The patients need to be provided with
disinfected and clean linen. The laboratories need to be properly manned and proper
diagnosis needs to be given by them to enable right medical prescription. The
establishment of laboratories should be between the OPD and indoors so that both areas
are covered without delay or disruption. Clinical pathology, blood bank and pathological
anatomy are important areas to streamline functional management of hospital
laboratories. The radiology department should have hi-tech facilities keeping in mind
patient load of the hospital. Currently ultrasound scanning and CAT scanning have been
found significant in improving services of the radiology department. The nursing services
are also important among supporting services. Nursing services are managed by a
matron who is assisted by a sister-in –charge. The norms accepted by the Indian Nursing
Council should be followed. An ideal nurse-patient ratio is 1:5 which is hardly found in
Indian hospitals.
AUXILIARY SERVICES
Auxiliary services consist of registration and indoor case records, stores
management, transportation management, mortuary arrangement, dietary services,
engineering and maintenance service etc. It is important that these services are
maintained properly which would govern the successful operation of a particular
department. The security arrangements, supplies, transport facilities etc cannot be
ignored. For a hospital registration is a must as it helps in collecting statistics for a
hospital e.g. admission , discharge and average stay of patients in the hospital. The
central store issues bulk items. There are different types of stores like pharmacy stores,
chemical stores, linen stores, glassware stores, surgical stores etc. For carriage of
supplies and patients trolleys, wheelchairs and stretchers are used. The hospital also
needs a cold storage or mortuary for preservation of dead bodies till they are claimed by
relatives or for post-mortem. The dietics department plays a vital role as it provides the
hospital menu to meet the needs of patients. The services of well qualified and trained
dieticians help in providing nutritious diets. The engineering and maintenance services
are concerned with hospital building, furniture and other equipment. A security force is
essential to provide protection to the hospital property. Personnel related with defence or
police should be given preference while appointing the security force.

Thus the line services, supportive services and auxillary services are mainly
concerned with medicare facilities available in a hospital. The designing of product mix
is meant to make suitable arrangements for improving the level of services in all
concerned areas and in this context the medical education, training and research
services play a significant part.

MEDICAL EDUCATION: TRAINING AND RESEARCH

The teaching hospitals are mainly engaged in offering medical education
facilities. Research and training facilities are also made available in these hospitals
where patients are used as inputs for teaching and research both by the teachers and by
those who are taught. Medical institutes and medical colleges both offer education,
training and research activities with one difference being that the institutes are
specialised in a particular field and colleges are generalised.
PRICING
The second component of the marketing mix is the pricing strategy. The pricing
decisions keeping in view the Indian condition help hospitals in subserving the interests
of general masses. To be more specific in the developing countries like ours where the
level of income of the general masses is found low, it is significant that pricing decisions
are liberal to the economically weaker sections of the society. The pricing management of
a social institution becomes complicated as the policy makers are expected to assign due
weightage to social considerations. The people living in a welfare state have high hopes
and aspirations from the government. They like cost-free services, albeit they belong to
the affluent sections of the society. Naturally it jeopardizes the task of top management. It
is rather impossible that the government more so in an over populated country makes
available world-class services to all without charging any fee. Moreover, it is also not
rational that we expect free services, though bear the capacity to pay. The application of
marketing principles in the hospitals aims at pricing the services in tune with the paying
capacity of our population. If we earn nothing, we are expected to pay nothing. If we
earn something, we are expected to pay something. If we earn more, we are expected to
pay more. The quality of services should not be allowed to deteriorate, albeit our
development plans impose on the users some additional financial burden. It is
paradoxical that the developing countries have been encouraging degeneration in quality
simply to avoid a basic change in our policy decisions. The marketing principles
advocate that the benefits of the latest developments should be made available to all. The
services should be free or subsidized or cost based or cost plus subsidy compensating
depending upon the paying capacity of our users. None of the socialistic doctrines never
allow degeneration in quality.
The strategies help us in projecting our image. Not only this, if the strategies
are welfare oriented, the task of satisfying the users is also simplified. But the satisfaction
depends upon sophistication. And sophistication can’t be possible unless we change our
pricing strategies. In the Indian setting, a good number of hospitals are managed and
maintained by the government. Some of the hospitals are managed by the charitable
trusts whereas some other hospitals are managed privately. The government hospitals
generally adopt cost-free pricing strategies whereas the trusts and private hospitals
adopt subsidized or cost based pricing strategies. In a few cases, some of the private
hospitals also adopt cost plus subsidy based pricing strategies. The main thing in the
pricing strategy is to link it with the paying capacity of the users so that all the classes
get medical aids without any discrimination.

Free Services: All categories of hospitals should adopt cost-free services to the weaker
sections of the society having no source of income for paying even the nominal charges.
In this context, the trust hospitals and the private hospitals should be given special grants
to avoid an imbalance in their financial management. To some extent, the private
hospitals should also be allowed to continue with the cost plus subsidy strategy for the
affluent sections of the society which would help them in compensating the losses on
account of free services made available to the weaker section.
Subsidised services: The users belonging to the low-income group should be made
available subsidized services. It is meant that the public or the private hospitals make
nominal charges for the services made available to them. It is more or less clear that
subsidized services are a bit lower than the cost involved on treatment. Both the central
and state governments would give the subsidies. Another alternative is to allow hospitals
to adjust the losses by charging more from the affluent sections.

Cost-based Services: this is based on the principle of no-profit, no-loss. Or say, the cost
based strategy in which prices or fees are equal to the costs involved on treatment.

Cost plus Subsidy: this strategy allows charging more than the costs involved on
services but only from the affluent sections and transferring the surpluses to the account
of subsidy for compensating the losses on account of providing free or subsidized
services to the weaker sections and low income group users. No doubt the hospital is a
service generating social institution where this practice may invite multi cornered
comments but we find no alternatives, as degeneration in medical services can’t be
allowed to move upward. If we welcome it, the avenues would be paved for expansion
and modernization of hospitals.

Subsidised

Cost-Based Subsidy

Cost Plus Subsidy

Public Hospitals Private Hospitals

Segment

No – Income Low – Income Middle - Income High - Income

No doubt the standard of services would be uniform but the fee charged for the
services would vary. This would help hospital organizations in charging more from high
and middle income groups, charging equal to cost from the low income group and
making available free services to the no-income group. The dependence on the exchequer
would be minimized but the doors would not be closed for initiating qualitative or
quantitative improvements. Another important advantage of this segmentation is
concerned with implementation of modernization and expansion plan for the hospitals.
The hospitals in general fail in making available to the users the modern facilities due to
inadequate funds. This obstacle would be removed when marketing strategies are based
on this principle. Further this would also simplify the task of doctors, nurses and other
staff specially relating to the study of their behavior. For satisfying the users, it is only
not essential that they are made available the best possible medical aids. In addition to
the medical aids, the behavioral aspect is also found impact generating, especially when
we consider marketing a customer satisfaction-engineering tool. It is natural that the
expectations of all groups can’t be uniform. On one hand, it is judicious that no
discrimination is found in respect of making available the medical aids but on the other
hand, we can’t adopt uniform policy while making available to the users and their
attendants other facilities like standard of room, indoor facilities and other non medical
amenities. This is justified on the ground that all groups are not paying equal fees for
availing their services. Moreover when no income group has been availing the services
without paying any fee, their expectations would not be more than the proper medical
aids. The main purpose of segmenting the market in the hospital services is to study the
uniqueness.

PLACE

Place refers to the contact point between the service provider and the customer.
Two main issues considered regarding the decision of the place are accessibility and
availability of the service to the customer.

PROMOTION

Recently, the administration and management of hospitals has gained prominence

allover the world. Albeit the developing countries have shown their interests in
managing the service generating organizations in general and the hospitals in
particular. The management of a social service organization like a hospital is a
difficult task. It is, ofcourse, thorny especially in the developing over-populated
countries like ours where degree of illiteracy has complicated the task of generating
health consciousness. The multi-prolonged health hazards are found instrumental I
contracting the resistance capacity of general masses but unfortunately they are not
in a position to get the required medical aids. The exchequer finds it difficult to offer
free or subsidized services to the masses. On the other hand, the technological
sophistication has raised the cost of services as the inputs used in making available
the medical services are found costly due to rising inflationary pressure. All these
things necessitate application of marketing principles in hospital management. The
main purpose of applying the marketing principles is to satisfy the users and to raise
the service generating capacity of hospitals. It is found that marketing principles have
been successful in making an assault on multi-faceted problems and this most
neglected service generating social institution has failed in making available to its
users world-class services. The marketing experts advocate that application of
 marketing principles in the hospital services would raise the efficacy of hospitals vis-
à-vis would act as a customer-satisfaction-engineering-tool.

PEOPLE
It is necessary that the staff in the hospital is trained to provide quality patient
care with the help of state – of - the - art technology.
The objective of providing quality service to patients can be achieved by:
1. Motivating employees to be efficient, dedicated and loyal to the organization.
2. Providing regular on – the – job training of employees to ensure continuous
improvement in health care
3. Utilising services of professionally competent medical consultants.
4. Use of the latest technology.

Motivation is not necessarily by giving high salaries. There are many other ways to
motivate employees – concessions should be given to the employee’s near ones and there
should be active participation of the employees in the activities of the hospital.

PROCESS

Process is a set of activities that take an input, convert it and add value to the
input and finally, create an output. Processes are designed by blueprints, which sets a
standard for action to take place and to implement the service.
A process is divided into the following phases in a hospital:
1. The joining phase – which includes
 The arrival of the patient
 Registration – where a patient has to make an initial deposit at the inpatient
billing counter after which a file is opened in the patient’s name to know the
patient’s medical history
2. Intensive consumption phase – which includes
 Diagnosis – where the consultant diagnoses the illness by making the patient
undergo various tests
 Treatment – where the illness is treated with proper medication or surgery
 Information about further actions – the consultant will instruct the patient
regarding the diet to be followed, the medication to be taken etc.
3. Detachment phase – which includes
 Discharge of the patient
 Payment – after the patient is discharged, the bill will bee paid at the billing
counter.
4. Feedback – at this stage, the patient is requested to fill an evaluation form, which
helps the hospital authorities to know the level of satisfaction derived by the
patient. Patient’s suggestions are always considered for improving the hospital
services.
PHYSICAL EVIDENCE

Physical evidence makes a huge impact on the customer. Physical evidence

provides customers means of evaluating the service. Corporate image plays an important
role in terms of physical evidence. This can be developed with corporate relation
programs. Modern hospitals need to create a good ambience. This ambience plays an
important role because when a patient walks into a hospital, he immediately forms an
opinion about the hospital. The staff should follow a dress code to show professionalism
and maintain discipline. The staff also needs to be trained to be understanding, warm and
comforting because the clientele that goes to the hospital is usually disturbed or unhappy.
It is necessary for a hospital to be well organized and segregated into different
departments. All the doctors should be provided with a well – equipped cabin. If possible,
the hospital should be centrally air – conditioned. However, good lighting and ventilation
is a must. Special care should be taken to maintain hygiene; cleanliness and the whole
hospital must be well – lit. This is generally taken care of by the housekeeping
department. A hospital has to keep in mind both the aspects of physical evidence that is
essential and peripheral evidence. Physical evidence plays an important role in a
hospital where the patients are already depressed or traumatized and a good atmosphere
could make all the difference.

PRODUCTIVITY AND QUALITY

Productivity in services is how we transform the inputs into outputs, which are
valued by the customer. Quality is the degree to which the service satisfies a customer by
meeting their wants and expectations.

INTRODUCTION TO BREACH CANDY HOSPITAL

Breach Candy Hospital, a multispeciality hospital, is situated on the coastline of
South Mumbai and has an atmosphere of quietude and unpolluted air. It is a Private
Charitable Trust hospital. The hospital is renowned for its excellent medical expertise,
nursing care and quality of diagnostic reports. The hospital has earned national
recognition as a leader in interventional cardiology. Many techniques in routine use
including Coronary Angioplasty, Magnetic Resonance Imaging and Hysteroscopy were
first performed here. One of the first ICU's in the country was established here. The
hospital is continuously in tune with the latest technology that promotes the health care
and well being of the patient.

ORGANIZATION STRUCTURE:
Chairman / Board of Directors

CEO

Director - Director - Finance

Medicine Engineering Controller

Director -
Director - Director -
Personnel
Nursing Administration
 THE 8 PS OF SERVICES MARKETING FOR THE HOSPITAL
SECTOR
PRODUCT
In the hospital sector, product covers issues such as service package, co-services
and peripherals, managing the service offering ands developing the service offering.
Breach Candy offers the following services:

LABORATORY SERVICES

Pathology caters to all sub-specialties of pathology, providing a comprehensive range of

tests necessary to diagnose various medical problems. The department has an envious
position of being the center for Quality Check referrals from outside. The department is
equipped with the latest technology, fully automated machines, which are manned by
well-qualified & experienced staff, both Medical & Paramedical.

Blood Bank of the Hospital, approved by the FDA is recognized as one of the best in the
city. Facilities are available for autologous transfusion & blood component therapy.

Surgical Pathology, Cytology & Immunohistochemistry Section uses a wide spectrum of

tests for analyzing specimens removed from patients, either at surgery or biopsy. The
department offers High Quality accurate reporting on routine & frozen sections and
consultation material obtained from clinicians in various specialties. Over the years, it
has earned an outstanding reputation for Cancer diagnosis and functions as a referral
laboratory of the Indian Cancer Society.

FUNCTION TESTING SERVICES

Pulmonary Function and Stress Test department is equipped with the latest state of the
art technology and manned by well-trained & experienced staff. Procedures here are
continuously upgraded to reflect the latest test standards. It is one of our busiest
outpatient departments.

Cardiac Catheterisation and Interventional Cardiology laboratory has a highly

qualified & experienced team of professionals, besides availability of latest technology.
India's first Coronary Angioplasty and city's first Rotablator procedure was performed in
our hospital. Balloon Angioplasty for mitral valve disease, correction of certain
congenital heart defects, Pacemaker implantation are commonly performed procedures.
The success & safety rates of interventional procedures match those in the best units in
the world.

The EEG & Evoked Potentials Unit- the department is reputed for its quality of
Neuropsychological reports
DIAGNOSTIC IMAGING SERVICES

Spiral CT Scan: The hospital is equipped with the fastest and the most advanced 'sub-
second spiral' CT scanner with unrivalled features that can scan the whole or parts of the
body. 3-D pictures of the sections can be reconstructed as colour images.

Conventional Radiology : Used to detect variety of disorders, particularly problems

related to chest, abdomen, bones, gastrointestinal tract and kidney functions.

Mammography: Offers a screening test for early detection of Breast Cancer.

Magnetic Resonance Imaging. We have a 1.5 Tesla unit, Philips Gyroscan-the most
advanced MRI scanner capable of carrying out diagnostic and therapeutic procedures.

Ultrasonography: An important imaging modality for Obstetric evaluations. Also an

excellent means of evaluating the liver, gall bladder, and kidney, thyroid, prostrate and
the orbit of the eye.

Colour Doppler Sonography: Enables easy visualizing of arterial and venous systems of
the body.

Operation theatres: There are 8 Operation Theatres housed in three Theatre complexes
catering to the surgical needs of all the patients. The OT's are dedicated to
Cardiovascular Thoracic surgery, Plastic & Reconstructive surgery, Cosmetic surgery,
Orthopaedic, Ophthalmology, Gynaecology, Nephrology, Neurosurgery, General surgery
and others. Theatres 1,2,3 have been totally renovated and are the best in the country.

INTENSIVE CARE SERVICES

Medical Intensive care unit is regarded among the best ICU in the country, serving all-
purpose critical care. The ICU pioneered intensive respiratory care in the country and
set standards matching those in leading hospitals in Western countries.

Surgical Intensive Care Unit looks after critically ill patients following major surgery
including open-heart operations. It has an excellent record of recoveries.

Neonatal Intensive Care Unit, staffed by a team of Peadiatric intensives and nurses give
full range of services to critically ill newborn babies.

High Dependency Unit serves as an intermediate care unit for patients recovering in the
ICU but not well enough to be shifted to the ward.

Daycare Surgery: Endoscopic & Laparoscopic Surgical procedures are conducted to

reduce wherever possible, the length of stay & obviate the risk of open surgery.

Artificial Kidney Dialysis Unit- Patients who’s Kidneys fail, either temporarily or
permanently, are taken care in this unit with dialysis and kidney transplantation.
Maternity Services of the hospital are well renowned all over the country and abroad.
The department of Obstetrics and Gyanecology offers comprehensive services, ranging
from routine examination and family planning to highly specialised procedures. Common
problems treated include abnormal bleeding, uterine fibroids, pelvic infections,
endometriosis and loss of bladder control. The technique of hysteroscopy in India was
first performed in our hospital.

Peadiatric facilities cater to all health care needs of children, from birth to adolescence.
The hospital conducts a 'well-baby clinic' that offers immunisation, monitors growth and
development of children, and counsels mothers on nutrition and other child related
issues.
Outpatient and Casualty services are available for immediate care and treatment.

Physiotherapy department offers its rehabilitative services the clock. A popular feature
about this department is Antennal classes to prepare for labour and delivery and
postnatal exercise classes for new mothers.
Speciality Clinics include Sports Medicine, Dietetics & Weight Reduction, Rheumatology
& Neurosurgery
Health Check-up Schemes ranging from pre-employment check-up to complete medical
evaluation along with consultation are offered on all weekdays, except public holidays
and Sundays.

Ambulance services: The ambulance services are outsourced.

PRICING:
Price is one of the most prominent elements in the, marketing mix. Prices charged
by the hospitals usually depend on treatment prescribed by the consultant and the
facilities offered to the patient.
On admission, an initial deposit is collected at the in-patient billing counter. The
amount depends on the category of room and the treatment / surgical procedure planned.
Various categories of rooms ranging from a shared room to the deluxe suite are
available.
Room Charges and Deposits at Breach Candy Hospital:

GENERAL:
Room Category Tariff (Rs.) Deposit (Rs.)
Deluxe 4,500 40,000
New wing 4,200 40,000
Single Rooms (West) 3,000 30,000
Single Rooms (East) 2,500 25,000
Single Rooms (Shared Bath) 1,500 20,000
Double Shared Room 1,300 20,000
Non – A/C Single Room 1,200 20,000
(Shared Bath)
 MATERNITY:
Room Category Tariff (Rs.) Deposit (Rs.)
Deluxe Maternity 4,500 20,000
Single Room (With 3,500 20,000
Attendant Couch)
Single Room 3,200 20,000
Single Rooms (Shared Bath) 2,400 20,000
Double Shared Room 2,200 20,000
(Shared Bath)
Shared Room (Shared Bath) 1,300 20,000
Labour Room 1,800

INTENSIVE CARE UNITS:

Room Category Tariff (Rs.) Deposit (Rs.)

Surgical 5,000 40,000
Medical 5,000 40,000
Neonatal 1 3,500 35,000
Neonatal 2 2,200 30,000
High Dependency Unit 3,200 30,000
Day Care 900 20,000

The in-house doctors are paid salaries by the hospital as per the hospital norms
whereas the visiting doctors decide the fees in consultation with the patients and only
10% of this fee is retained by the hospital. All the billing transactions are done through
the hospital.

PROMOTION:
Hospitals do not normally undertake aggressive promotion; they rely a lot on
favourable word of mouth. They conduct camps in rural areas to give medical check ups
at reasonable prices, they sponsor visits to old age homes etc. they continuously
introduce different health services and they generally advertise in health and fitness
magazines.
Breach candy hospital does not have formal promotion schemes because it is
already an established brand.
However Breach candy has the Godrej charitable wing, which was set up in June
1979 to offer free medical aid to underprivileged patients. As of now there are 24 beds in
this wing. The hospital also conducts free pediatric camps and eye camps. They also
offer free check ups and free treatment to outpatients from time to time.
Breach Candy’s clientele consists of a lot of celebrities, who, when admitted, are
spoken about in the newspapers which gains a lot of indirect promotion for the hospital.
Some of the celebrities who have been treated by this hospital are the Prime Minister
Mr. Vajpayee, Mr. Dhirubhai Ambani, Shammi Kapoor, Shahrukh Khan, etc.
 The hospital has tie-ups with 150 corporate companies and consulates, which
brings them a lot of business and also, helps in promoting the high – class quality of
service they provide. Corporate Tie-ups - entitles executives to consultation and
admission without payment formalities. The bills are settled directly by the company,
simplifying the admission and discharge procedures for selected employees. Regular
correspondence is maintained with their corporate clients, they are sent brochures and
flyers regularly.

PLACE:
Place refers to the contact point between the service provider and the customer.
Two main issues considered regarding the decision of the place are accessibility and
availability of the service to the customer.
Breach candy is located at a convenient spot especially for its clientele. Breach
Candy Hospital, a multispeciality hospital, is situated on the coastline of South Mumbai
and has an atmosphere of quietude and unpolluted air.

PEOPLE:
Service personnel play an important role in an organization, which provides

services. In a hospital the behaviour and attitude of the personnel providing services is

very important as far as the customers overall perception of the service is concerned. It is

necessary that the staff in a hospital is trained to provide quality patient care using state

of the art technology.

At breach candy hospital many specialists attached to the hospital are nationally
and internationally recognized for their contributions to the field of medicine and
surgery. A few well known doctors attached to this hospital are Dr. Bhattacharya
(Cardiologist), Dr. Sunawala ( Gynaecologist), Dr. Udwadia (Surgeon) etc.
Personalized care by nurses is one of the greatest strengths of the hospital.
Breach candy is renowned for its excellent nursing care spanning the length of the
patients stay from admissions to discharge. Each patient is the focus of individual
attention. Nurses form an integral part of a patient’s health care team. This hospital
maintains a ratio of 1:4 nurses for its patients, which is higher than the standard ratio of
1:5. In the I.C.U. the ratio is 1:1.
Although this hospital is not a teaching cum research type hospital it provides
courses in Critical Care Medicine to its junior doctors.
PROCESS:

In a hospital the process is divided into the following phases:

 The joining phase,

 The intensive consumption phase, and
 The detachment phase and feedback.

Now we will be considering the process blueprint of an Emergency / Police Case

Patient brought in emergency to the hospital

Police Case Non - Police Case

Inform the local police Patient rushed to the Emergency

Police arrives Attended by the doctors

Inquiry by the police at Patient stabilizes

the hospital

Statement of the patient Relatives/patients have to do the

paper work, pay the deposits and
complete all the formalities of the
hospital.
PHYSICAL EVIDENCE:
Physical Evidence is the environment in which the service is delivered with
physical or tangible commodities and where the service provider and the customer
interact.
The Breach Candy Hospital is situated at sea-side and its verandah facing the sea
is very helpful in the recovery of patients. Good hygiene standards are maintained. Also,
exotic food menu is available to the patients including continental food.
When the Prime Minister Mr. Vajpayee was admitted in the hospital, his PMO
was operating his office work from the hospital and an entire floor was booked for the
PM’s officials who were residing there for that duration.
Patients interact daily with nurses and ward boys who have to be extremely polite
and understanding. At Breach Candy, any customer complaint is recorded in a daily
Complaint Record Book and action is taken immediately to rectify the problem.

PRODUCTIVITY AND QUALITY:

Productivity in services is how we transform the inputs into outputs, which are
valued by the customer. Quality is the degree to which the service satisfies a customer by
meeting their wants and expectations.

Medical Research Centre : The Research Centre is recognized by the Indian Council of
Medical Research and the Department of Science and Technology, Government of
India. Its activities include regular weekly clinical meetings in which interesting cases
and advances in medicine are presented. The Library attached to the Research Centre
offers a strong collection of books and journals, carefully selected to meet the needs of
the hospital staff. It also provides access to MEDLINE, the world’s largest medical
database. The research centre continuously strives to improve the medical care given to
patients by devising better ways of preventing, diagnosing and treating diseases. Studies
are carried out using powerful new technologies based on molecular biology. Special
areas of interest include Breast Cancer and infections.

Breast Cancer: Currently the Surgical Pathology staff is conducting studies to identify
early pre-cancerous changes in the breast using tumor markers. The aim is to devise tests
for screening and early detection that will help to reduce deaths from breast cancer. By
studying patients from various ethnic and religious groups, they also hope to discover
whether genetic factors are responsible for the differing prevalence of breast cancer
among various communities in India.

Infections: The Microbiology department is carrying out research to probe the pattern of
hospital infections and their response to antibiotics, concentrating on the drug resistance
level of a common hospital pathogen, Staphyloccus aureus. The goal is to identify the
most effective antibiotics for controlling hospital acquired infections. Among community-
acquired infections, tuberculosis is by far the most lethal. To expedite the diagnosis of
TB, the Molecular Medicine Laboratory has developed an advanced technique known as
polymerase chain reaction (PCR) which gives accurate answers within two days. As the
only centre in Mumbai offering PCR diagnosis of TB, the hospital receives TB samples
from various institutions.

There are 150 beds along with 24 for the underprivileged. Their staff sums up to 900
with the ratio of nurses to patients cming to 1:4, which is higher than the standard of
1:5.

There is a Central Report Center, which gives all the medical reports regarding a
treatment of any patient at altogether instead of the patient having to visit several
locations for various reports.

Since their ambulance service is outsourced from three to four different areas in the city,
it increases productivity as it is more accessible and convenient for the patients.
There is constant improvement in nursing as well as personalized care.

INNOVATION:
Hospitals will soon go hi-tech, not so much in terms of sophisticated medical
equipment, but in that a patient’s kith and kin can virtually visit him/her from any part of
the world and the patient too can communicate with them and relieve their undue anxiety.
Bangalore has emerged as a pioneer in the design of an interactive website used
in making virtual visits to hospitals, thus introducing a human element hitherto,
unthought of. This breakthrough in the usage of information technology for patients was
achieved by the Bangalore based ‘Think Ahead Incorporated’, in designing he website
for a hospital.
The primary advantage of this technology is the mitigation of undue anxiety of
relatives particularly, sons and daughters, children of patients who are settled abroad –
who cannot be at the bedside of the patient undergoing treatment for a heart ailment or a
major surgery. The ‘Virtual Family Visit’ allows relatives to see real time images of
patients through audio – visual files which can be downloaded on their computer by
entering the hospital website through the Internet. These files of the patient are shot by
the hospital using a webcam to show the convalescing patient and his message for his
family members. The files are then uploaded in the hospital website. The family members
can also communicate with the patient by way of sending online get well card to patients.
Besides, they can also get reports of the patient’ condition from the doctor in-charge, if
the relatives so desire.
Wockhardt Hospital, where the virtual family visit is in use, the relatives are
physically able to see their near and dear ones recuperating from the treatment which
avoid emotional trauma. This facility in hospitals is particularly useful when a relative is
unable to rush to the hospital to be physically present due to various reasons. Besides,
the patient himself is to be on the road to faster recovery when he communicates with his
loved ones.
The use of web technology for virtual hospital visit is said to be the first of its
kind in the world. The claim may be true considering that family bonds in the country are
very strong and even extends to close relatives. It may also be one of the reasons why
such a facility had not been thought of in other parts of the world. Besides, scaled – down
joint families are still prevalent where this technology would come in handy. The success
of this facility is revealed by the fact that there were as many as 8,000 hits within two
months after its introduction some time in May, 2000.

ANSWERING A CASE STUDY…….

1. READ, RE-READ AND UNDERLINE KEYWORDS/ PHRASES

2. EXAMINE THE ENVIRONMENT, INDUSTRY. DOES THE COMPANY (ABC, XYZ,

ETC) REMIND YOU OF ANY COMPANY YOU HAVE READ ABOUT?

3. LOOK FOR DATA ON AGE SEGMENTS, INCOME GROUPS, EDUCATION,

LIFESTYLE DIMENSIONS

4. IF THERE ARE GAPS IN THE INFORMATION PROVIDED MAKE SUITABLE

ASSUMPTIONS WITH BRIEF JUSTIFICATION

5. APPLICATION OF CONCEPTS – STATE THE CONCEPTS USED DO NOT

EXPLAIN THEM.

6. TYPICALLY A BMS CASE STUDY HAS 3 QUESTIONS – THEY DO NOT EXPECT

A TOTAL SOLUTION. FOCUS ON THE QUESTIONS POSED.

7. TRY AND LINK THE THREE QUESTIONS SO THAT THE ANSWER FLOWS
LOGICALLY

ALLOCATE YOUR TIME IN PROPORTION TO THE MARKS

ALLOTTED
SHL

1. WAS THE CEO RIGHT IN FIRING THE SALES FORCE T&D CELL
INCHARGE? WHY?
(5 marks)
 Why did they fail?
o What is the selling environment?
o What is the selling methodology?
o What was the selling experience they had?
o Which markets had they worked in?
o Did they have any prior experience of working in these markets?
 What are the pre-requisites for a salesman to be successful in rural markets?
2. WHY DID THE SAME STRATEGY NOT WORK IN RURAL AREAS? (10 marks)
 SHL had made some assumptions
o No test marketing in semi-urban markets
o Demand pattern, consumer profile and behaviour was assumed to be similar
o No specialized training for selling techniques, required attitude for rural
markets

 Profile the rural consumer (Key decision maker) for durables

o Occupation
o Income
o Age

 Identify the hurdles the company would face

3. PROPOSE A MARKETING STRATEGY FOR RURAL MARKETS (5 marks)

 IDENTIFY THE TARGET SEGMENT CLEARLY

 IF YOU THINK NECESSARY YOU CAN MENTION GEOGRAPHIC ZONES
WHERE MARKETING ACTIVITY SHOULD BE FOCUSED (e.g. south more
open to technology products, mindsets not so rigid)
 Before stating your proposed strategy identify factors that will influence
consumer purchase behaviour :
 Infrastructure – e.g. voltage fluctuations, piped water
 Cultural practices prevailing – e.g. common washing areas, decision making
by male head
 Preferences for larger size products, colours
 Influencers : mahajan, panchhead, youth

 Product
o Categorically mention that the urban offering can not be extended
o Product variants
o Features
o Operating instructions
o Positioning, Branding (pneumonic, name)
 Price
o Value
o Cost-benefit
 Promotion
o Region specific message (language barriers)
o Product information
o Create product experience – demos, free washes
o Awareness & interest ?
o Conviction, purchase? : POC
o Which unconventional media?
 o Databasing : postmasters, mandal chiefs
o Service support

 Distribution
o Retail push : POS
o Haats, melas?

TOURISM - SWOT ANALYSIS

STRENGTHS
a. India's geographical location. A culmination of deserts, forests, mountains, and
beaches.
b. Diversity of culture i.e. a blend of various civilizations and their traditions.
c. A wealth of archeological sites and historical monuments.

WEAKNESSES
a. Lack of adequate infrastructure.
b. A xenophobic attitude among certain sections of people.
c. No proper marketing of India's tourism abroad. Foreigners still think of India as a
land of snake charmers.

OPPORTUNITIES
a. More proactive role from the government of India in terms of framing policies.
b. Allowing entry of more multinational companies into the country giving us a global
perspective.
c. Growth of domestic tourism.

THREATS
a. Economic conditions and political turmoil in other countries affects tourism.
b. Aggressive strategies adopted by other countries like Australia, Singapore in
promoting tourism.

The important task is to get tourism accepted as an instrument of development and

national integration. For this it is necessary to create awareness of India's charms as a
tourist paradise and simultaneously addressing the important issue of toning up
infrastructure and then getting down to marketing the product in a pragmatic and result
oriented manner. All segments of the tourism trade should get together and hammer out a
strategy taking into account the ground realities and demands of the future.

TRENDS IN THE TOURISM INDUSTRY IN INDIA

New trends, are being developed by the government to expand the activities under the
tourism industry like:
ECOTOURISM:
Eco tourism is defined as responsible travel to natural areas and sustains the well being
of local people. It is further an amalgamation of interests arising out of environmental,
economic and social concerns. Tourism has become one of the largest global activities
and a way of paying for nature conservation and increasing the value of land. The flow of
dollars can flow back into conservation and make it pay for itself.

The WTO in its projections for the year 2000 estimates that around 1000 million people
will be involved in global tourism. The number is likely to increase. India's share in the
traffic will be around 2 to 2.5 million tourists or even more.Ways in which eco-tourism
and nature-based tourism are being promoted include:
· Eco-tourism projects in Kerala-Coconut Grove and Spice Village Resorts.
· The Bangaram Island Resorts
· Bekal Resorts, Kerala
· Jungle Lodges and Resorts, Karnataka
· The sustainable development project of Andaman.

HERITAGE TOURISM:
This is a new kind of tourism that has come up in recent times. The concept of Heritage
tourism came up to aid & facilitate the curious guests attempt to get to know India's great
traditions. It was realized that the historic homes could be maintained only with their
appropriate reuse. The large Palaces of Maharajas set the trend by becoming five star
hotels. The main charm is the individual attention & personalized services. The homes
are modernized to meet the needs of today's International traveler, with adjoining
bathrooms, running hot & cold water, modern plumbing, even perhaps a swimming pool.
This kind of tourism was developed mostly for the international tourist who wanted to get
the feel of traditional India.

ADVENTURE TOURISM AND HOLIDAY TOURISM:

India's vast geographical diversity provides a vast potential for adventure tourism. All
tastes are catered to and there is something for everyone. From the gentlest to the fast
placed, for the beginners to the experts. Besides this the prices here are lower as
compared to international standards.

Travel agents and tour operators very often specialize in certain fields, offering package
deals for groups as well as individuals. Mountaineering, trekking and rock climbing,
ballooning and hang gliding, camel treks and desert safaris, white water rafting and
river exploration are some of the exciting possibilities. Apart from this there are sports
like skiing, scuba diving and underwater coral viewing, angling, wild life and bird
watching, golf, tennis, badminton, polo, swimming and motor rallies amongst other
sports.

For the tourist in search of sun, sea and surf, there are beach resorts on the western and
eastern coasts.
MOUNTAINEERING:
Scaling the Himalayan Peaks - the greatest adventure of all. The mighty mountains
stretching across the northern borders of India have hundreds of peaks, many yet
unscaled and inviting the intrepid mountaineer. The states of Jammu and Kashmir,
Himachal Pradesh, Uttar Pradesh and Sikkim offer bases for mountaineering
expeditions.There are agents who can make all the arrangements for groups or
individuals including food, transport, porters, camping equipment, etc. The best season
for mountaineering is from May to October and six months notice is required to book a
peak.

TREKKING:
The spectacular Himalayas are the abode of snow and evoke unmatched feelings of
reverence and excitement and offer wonderful bevy of trekking routes. Peninsular India
offers natural beauty of another kind for trekking. The Western Ghats, the Aravalli Hills,
the Satpura range and the Nilgiri mountains have a rich heritage of flora and fauna, each
with a special lure of its own. Treks can be taken along the remote areas or the route
pilgrims have trekked year after year to remote shrines in the mountains. The season for
trekking is April to June and September to November with regional variations. No system
of permits exists in India but trekkers should not enter any restricted areas.

ROCK CLIMBING:
Especially popular in the foothills of the Himalayas wherever there are rocks and hills,
stiff climbs and sheer mountainsides - rock climbing is a popular sport.

BALLOONING:
In its infancy this sport is available only in Delhi. The Balloon Club of India at Delhi's
Safdarjung Airport is the takeoff point and has its headquarters within the complex.

HANG GLIDING:
Recently introduced in India Hang Gliding is available at Pune, Devlali, Mumbai, New
Delhi, Chandigarh, Shimla and Banglore. Kangra and Kasauli are developed as major
hang-gliding centers.

CAMEL TREKS AND DESERT SAFARIS:

The great Indian Thar Desert provides the scene for exploring the old desert routes on
camel back or for the less intrepid in camel carts. Jeep tours can be taken over remote
desert tracks that are rarely taken by tourists. Jodhpur, Jaisalmer and Bikaner are the
starting points for such tours with stops at villages en route.

WHITE WATER RAFTING AND RIVER RUNNING:

The mighty Indian rivers tumble and crash through the mountains to form white water
rapids and terraced cascades. This is a paradise for the white water sportsmen. Ladakh
and Zanskar valley in Kashmir, Lahul valley, the Garhwal Hills and Sikkim are some
popular areas. The Indus, Zanskar, Ganges, Ravi, Beas, Chenab and Teesta are rivers
with both rough and calm waters for both beginners and experts. These rivers are
excellent for canoeing and kayaking.

WINTER SPORTS:
Gulmarg in Kashmir is India's most popular and developed ski resort with most modern
equipment. There is an institute of skiing and mountaineering, which offers training
courses. The Gulmarg - Khilanmarg route is a great experience for ski mountaineering
enthusiasts. Kufri also offers skiing. Along the Rohtang pass, skiing is possible in summer
also. Shimla offers ice-skating, figure skating and speed skating.

MOTOR RALLIES:
Through out the year many rallies are held whose dates can be obtained from the nearest
tourist office. The Himalayan car rally attracts international participation and goes
through the mountains of Himachal Pradesh and Uttar Pradesh.

BEACH RESORTS:
The extensive coastline of India has excellent virgin beaches unspoilt as yet by man. The
best-developed beach resorts are at Goa, Kovalam and Mahabalipuram. Excellent water
sport facilities are available at these three centers. There are other resorts in smaller
cities along the coast of India.

SCUBA DIVING:
The best spot for scuba diving and snorkeling is at the Andaman Islands, which has a
vast plethora of coral and marine life that is equally interesting to the tourist and
naturalist. This clear water permits exciting under water photography for enthusiasts.

WILDLIFE TOURISM:
The Indian subcontinent provides vast variations in geography and climate, which results
in diversity in habitats and wildlife. The Himalayas offer a wide spectrum of landscapes
and wildlife. Tropical forests in its eastern extremity contrast with pine and coniferous
woodlands of western Himalayas. Natural cover varies with altitudes and these
evergreen forests are bounded with high alpine meadows nearer the snowline and
temperate forests of short stout trees in the lower elevations. In the foothills are the
deciduous trees, with shrubs, bamboos, fern and grass. The northern plains, the course of
holy rivers, the great Thar Desert and the Sundarbans, the marshy swamplands, the
volcanic rock of the deccan plateau all provide fascinating habitats that sustain over 350
species of mammals, 2100 kinds of birds - local and migratory, nearly 350 species of
reptile and countless insects. India currently has around 80 national parks and 441
sanctuaries dotted around the country. While some are inaccessible others have excellent
facilities for the visitors. The thrill of spotting herds of wild elephants, deer, a rhino or
even a tiger in its natural environment is very difficult to match.

BUDDHIST CIRCUIT AND PILGRIMAGE TOURISM:

Pilgrimage tourism is a major segment that contributes to the growth of employment and
 local economic development. The National Action Plan announced in the parliament in
1991 recognized pilgrimage tourism for the first time in the country. Temples and tourism
go hand in hand and with the increase in the number of temples the tourism industry also
grew. Today more than 50% of the 9.2 million domestic tourists travel to visit various
places of worship starting from the Ganges to Rameshwaram and Vaishnodevi to
Valankini. In 1998 more than 95 lakh people assembled at the Kumbh Mela, the largest
and the last of its kind in the 20th century. Another standing example is Tirupati in the
south. It is also an example of the best temple management in the country. It has devised
methods by which every devotee pays for the service they get. The government recently
identified 17 places of pilgrimage for developing

The country has embarked on the right path. Upgrading existing infrastructural facilities
and adding new ones should definitely help tourism industry to tap the enormous existing
potential.

8 P’S OF SERVICES MARKETING: RAJ TRAVELS

PRODUCT ELEMENTS
WITH RESPECT TO THE TRAVEL
BENEFIT MEANING
AND TOURISM INDUSTRY
The fundamental benefit or service that Traveling
1. CORE BENEFIT
the customer is buying
2 BASIC Ticketing, hotel reservation
Basic, functional attributes
PRODUCT
3 EXPECTED Set of attributes/conditions the buyer Customer friendliness, good food
PRODUCT normally expects
Prompt services, comfortable and
4 AUGMENTED That meets the customers desires
convenient trip, spectacular sights,
PRODUCT beyond expectations
music
5 POTENTIAL The possible evolution to distinguish Totally customized tour packages, A
PRODUCT the offer grade service at every stage

The services a product offers consist of three levels.

The first level is that of the basic service package which includes core service, facilitating
services and supporting services. In the case of the travel and tourism industry, the core
services would include traveling, ticketing, hotel reservations, food services etc.
The second level is that of an augmented service offering where accessibility, interaction
and customer participation is given equal importance in delivering the service product.
Accessibility of Service
-N umber and skills of personnel
-Working hours and time used in performing various tasks
-Location of service outlet
-Exterior and interior of service outlet
-Infrastructure, hardware, documentation
-The number and knowledge of consumers simultaneously involved in the process

Interaction with service organization

-Interactive communication between employees and customers
Interactions with the physical and technical resources of the organization needed in
-
the service production process
-Interaction with other customers involved in the process.

Customer Participation
How well is the customer aware about the process of service delivery and his or her
-
role
-How well is the customer prepared to share information
-How well is the customer willing to share information or use the service equipment

The third level is that of the market communication of the service offering as in its
absence the augmentation service package does not have any relevance to the customer.

THERE ARE VARIOUS PRODUCTS AND SERVICES OFFERED BY RAJ TRAVELS .

THEIR CORE PRODUCT, ARE TOURS WHICH ARE MADE AFTER A LOT OF
RESEARCH AND TESTING.THEY HAVE VARIOUS INTERNATIONAL AND
DOMESTIC TOURS . SOME OF THE MOST POPULAR ARE EUROPE, FAR EAST,
USA, SOUTH AFRICA , MAURITIUS ,AUSTRALIA AND NEWZEALAND. THESE
PRODUCTS ARE WELL DESIGNED AS THESE ARE ALL INCLUSIVE PACKAGES
AND THERE ARE NO OPTIONALS . SINCE THE BEGINNING RAJ TRAVELS
BELIEVED IN SELLING THE RIGHT PRODUCT AND NEVER BELIEVED IN
SELLING PRICE .
THE DESTINATIONS ARE WELL CHOSEN KEEPING IN MIND THE GENERAL
TASTES OF INDIAN FAMILIES AND THEY OFFER THE BEST OF SIGHTSEEINGS
AT AN ALL INCLUSIVE PRICE .TICKETING ,PASSPORTS ,VISAS , FOREIGN
EXCHANGE , INSURANCE ARE A BUNDLE OF OTHER SUPPLEMENTARY
SERVICE ELEMENTS SURRUNDING IT . CUSTOMERS ARE BENEFITED BY THIS
AS THEY GET AN ALL INCLUSIVE PRODUCT FOR WHICH THEY HAVE TO PAY
FOR ONLY ONCE AND THERE IS NOTHING MORE THAT THEY HAVE TO PAY
WHEN TRAVELLING .
PLACE
Because of intangibility (from production to sales) of services, they cannot be stored,

transported and inventoried. Hence traditional distribution channels available for

product marketing like wholesalers and other intermediaries cannot be used. Even the

retailing cannot be an independent activity. Similarly, because of the inseparability, i.e.,

in case of services production cannot be separated from selling, services must be created

and sold at the same time.

These two characteristics make the channel very short and direct. Most services are
distributed through direct sales. At best one agent or middleman can be added to it, like
in the case of insurance, travel agency, courier service, etc.
So we see that there is a little controversy regarding the distribution of services. There is
one school, which says that since the service cannot be separated from the producer of
the service, direct selling sales channel are the only method of distribution available for
services. The advantage of direct selling is that the service can be offered to the customer
at a lower cost. The other school partially disagrees with this theory and suggests that it
is possible to have intermediaries but the channel of distribution would be rather short
and simple as compared to tangible goods.

THERE ARE VARIOUS DISTRIBUTION BRANCHES THROUGH WHICH RAJ

TRAVELS DISTRIBUTES ITS PRODUCTS .RAJ TRAVELS HAS VARIOUS
BRANCHES ALL OVER INDIA AS WELL AS ONE IN LONDON IN WHICH ALL THE
ABOVE MENTIONED SERVICES ARE PROVIDED UNDER ONE ROOF .
THERE ARE ALSO SALES REPRESENTATIVES THAT ATTEND SALES CALLS AND
HENCE PROVIDE SERVICES AT THEIR DOOR STEPS .
RAJTRAVELS ALSO HAS AN EXHAUSTIVE WEB SITE www.rajtravels.com WHICH
HELPS IN ONLINE BOOKING AND ALSO PROVIDING THE NECESSARY
INFORMATION . THERE ARE VARIOUS OTHER WEBSITES LINKED TO THIS ONE
AND ALSO GIVES INFORMATION ABOUT THE WEATHER IN DIFFERENT
COUNTRIES TIME DIFFERENCES, CURRENCY CHANGE ETC

PROCESS
The importance of process management is that it assures service availability and
consistent quality. Without sound process management, balancing service demand with
service supply is extremely difficult. Service cannot be inventoried; therefore, it becomes
essential to find out ways and means to handle peak load to optimize different customer
needs with varied expertise levels within the service organization.
In marketing management, operations management has been recognized as an integral
function. In manufacturing sector, for example, logistics in distribution are vital to satisfy
customer needs. Similarly, in services sector, where there is no tangible product, the
operations management is vital to deliver satisfaction because here the operations
management would decide how the process of service delivery would function, or in other
words, the interactive experience that would deliver the service benefits to the consumers.
Shostack gave a much-simplified version and described the 'process' in three stages.
First, a process can be broken down in logical steps to facilitate analysis and control.
Second, there are more than one available options of processes in which output may
differ. Finally, each system includes the concept of deviation or tolerance standards in
recognition that the processes are 'real time' phenomena that do not conform perfectly to
any model or description, but function within a norm.
One can observe how changes in complexity and divergence influence their market
position. For managers in service industries, taking a structural approach can help
increase their control over some of the critical elements of the service system
management. Therefore, for marketers in service industries, process design may be a tool
that can substantially increase their impact and role in marketing their services.

ALL THESE SERVICES ARE INTER LINKED AND HENCE FOLLOW A PROCESS .
FIRSTLY AS AN INTERNATIONAL DESTINATION IS CHOSEN THE BOOKING IS
DONE WITH COMPLETE DETAILS ON THE BOOKING FORM REGARDING
MEALS , ROOMS ETC AND THEN THE SAME IS PASSED TO THE TICKETING
COUNTER TO BLOCK THE SEATS AFTERWHICH THIS THE PASSPORT AND VISAS
ARE CHECKED OR PROCESSED AND THEN GIVEN TO THE OPERATIONS
DEPARTMENT TO SEND THE DETAILS TO THE FOREIGN AGENTS TO PROCESS
FURTHER BOOKINGS REGARDING BOOKING OF ROOMS AND SIGHTSEEINGS.

PRODUCTIVITIY /QUALITY
Productivity in services refers to how you transform the inputs into outputs, which are
valued by the customer. Quality refers to the degree to which the service satisfies the
customer by meeting their wants and expectations. Productivity and quality need to be
omnipresent for the industry to complete its service obligations aptly. Only if your firm is
productive and the quality meets the requirements of the customers can your performance
be graded as excellent.

Here are five key things to consider when developing the performance strategy for your
business.

 Have you found a way to fit marketing into your schedule?

 Do you keep track of both your long and short-term projects (including marketing
projects), and review that list daily?

 Do you have a way of combating procrastination and delay?

 Do you maintain the highest standards of integrity and excellence?

 Are you continually working to improve your skills in all areas of your business?
RAJ TRAVELS SLOGAN ITSELF IS “INDIAS FINEST QUALITY TOUR OPERATORS
“ WHICH MEANS THAT QUALITY HAS ALWAYS BEEN AN IMPORTANT ASPECT .
RAJ TRAVELS OFFERS QUALITY TOURS AS IT OFFERS THE BEST OF HOTELS ,
SIGHTSEEING , MEALS ETC .
FOR EXAMPLE RAJ TRAVELS TAKES ITS EUROPEAN PASSENGERS TO EIFFEL
TOWER ON THE TOP LEVEL OR THE THIRD LEVEL AND NOT LIKE THE OTHER
TOUR OPERATORS WHO TAKE THEM ON THE 1ST OR 2ND LEVEL .

PEOPLE
In a service organization, employees are essentially the contact personnel with the
customer. Therefore an employee plays an important role in the marketing operations of
a service organization.
According to him, "the internal marketing concept states that the internal market of
employees is best motivated for service-mindedness and customer-oriented performance
by an active marketing like approach where a variety of activities are used internally in
an active, marketing like and coordinated way." The starting point in internal marketing
is that the employees are the first internal market for the organization.
To realize its potential in services marketing, a firm must realize its potential in internal

marketing - the attraction, development, motivation and retention of qualified employee-

customer through need-meeting job-products. Internal marketing paves the way for

external marketing of services.

The companies that practise internal marketing most effectively will

(1) compete aggressively for talent market share,
(2) offer a vision that brings purpose and meaning to the workplace,
(3) equip people with the skills and knowledge to perform their service roles
excellently,
(4) bring people together to benefit from the fruits of team play,
(5) leverage the freedom factor,
(6) nurture achievement through measurement and rewards, and
(7) base job-product design decisions on research.

RAJ TEAM MEMBERS ARE THE HIGHLY QUALIFIED AND EXPERIENCED

PEOPLE. THERE IS STRONG INTERACTION BETWEEN THE CUSTOMERS AND
THE RAJ TEAM MEMBERS AS ALSO THE TEAMMEMBERS ARE CLOSELY
CONNECTED TO THE CHAIRMAN OF THE COMPANY . THIS RELATION IS
BENEFICIAL TO THE CUSTOMERS AS THEY GET PERSONAL ATTENTION AND
ALSO GET QUOTATIONS IN TIME AS THERE ARE ALSO CORPORATE CLIENTS
AND VARIOUS INCENTIVE TOURS WHICH RAJ TRAVELS CATER TO .
PROMOTION AND EDUCATION
It is now established that there are clear differences in information usage between goods
and services. First, the difference is that consumers of services are less likely to purchase
without information than those of goods. Second, the consumer of services will prefer
personal sources over impersonal sources of information. And third, the basic
characteristics of services have implications for communication strategy. George and
Berry keeping in view the intangibility of services, proposed that in the case of services a
customer is buying the performance of the service personnel and therefore the
advertising in service industries should not only restrict itself to encouraging
consumption, but also it should encourage employees to perform well. They proposed the
following six basic guidelines to help design effective advertising programmes.
 The advertising should have positive effects on contact personnel. . It should
capitalize on the word of mouth.
 It should provide tangible clues to the customers.
 It should make the service offering easily understood.
 It should contribute to the continuity.
 It should promise only what is possible.

Here are five key things to consider when developing the promotional strategy for your
business:

 Are you networking enough? For many service businesses, networking is the key
promotional technique. Join organizations; get to know people; get involved;
keep in touch with people; do what you can to help them; be visible in your
community.

 Do you have a good, solid marketing letter that highlights your benefits and
moves people to take action? This one inexpensive marketing tool is one of the
most powerful when written properly.
 Do you do personal PR such as speaking and writing? Again, these don't take
much money but pay big dividends. Speak at Rotary, your Chamber of Commerce,
at business associations and alumni groups. Write for your local paper; the trade
journal of your industry, or even for someone else's newsletter. You can use the
reprints later for credibility.
 Are you mailing to people on your list? This is an absolute must. Don't let people
forget who you are and how you can help them. From two to six times a year send
clients and prospects a newsletter or other type of keep-in-touch mailing.
 Do you have a Web Site? You should. It doesn't take a lot of money to create a
web page and even less to post it. This is a powerful media that can serve as a
combination direct mail piece, brochure and newsletter. Given the price of entry,
it's crazy not to have one.
RAJ TRAVELS FEATURES IT ADVERISEMENTS IN ALL LEADING NEWS PAPERS
OF THE NATION AND ALSO ON HOARDINGS .THEY TAKE PART IN A NUMBER OF
TRADE FAIRS . THEY HAVE A NUMBER OF ADVATORIALS WHICH EDUCATE THE
PEOPLE ABOUT THE DESTINATIONS THEY WOULD LIKE TO VISIT .

PHYSICAL EVIDENCE
Glynn Shostack once observed, "A physical object is self defining; a service is not" and
therefore the marketing task in service industries is "defining for the service what the
service cannot define for itself."
Though a customer cannot see a service, but definitely he can see various tangible clues
of the service offer like facilities, communication material, objects, employees, other
customers, price, etc. On the basis of his perceptions on the tangible clues, the customer
makes the purchase decision. These clues might be both intended and unintended ones
and, therefore, managing evidence is integral to the service marketing mix. Shostack even
observed that the management of evidence comes first for service marketers.
The argument here is that the physical environment, facilities and atmosphere; give
enough physical evidence to help shape customer perceptions. Many service marketers
have neglected this aspect while the others gave due emphasis to issues like exterior of
buildings, office furniture, layout, colour 0.£ interiors, and even carry-bags, tickets, cash
memos, labels, etc. The advocators of public relations have even coined a specific term
called 'corporate identity' and suggested that such tools can create a visual identity that
the public as customers can recognize. The corporate identity media can successfully
contribute towards the marketing objectives provided they are attractive, distinctive and
memorable.
RAJ TRAVELS IS WELL EQUIPED BY COMPUTER RESERVATION SYSTEMS LIKE
THE AMADEUS , GALILEO AND THE ABACUS WHICH HELPS THEM MAKE
RESERVATIONS .

PRICE AND OTHER USER COSTS

Pricing is yet another variable of the marketing mix. A particular product or service is
acceptable to the customer at a particular price and if the price is increased, it is likely
that the same product or service might become less acceptable to the customer. The other
issue, which is related to pricing, is that of perceptions about quality. Generally, to most
customers, high price means high quality. However, some customers don't need the
highest quality at the maximum price. Detergents are one such example where average
quality detergents at moderate prices are market leaders.
Service pricing follows the principles and practices of pricing of goods and, therefore,
they are either cost based or market based.
Within these categories prices may be profit oriented, government controlled, competitive
or customer oriented. However, the characteristics of services do influence the pricing
and, therefore, different methods of pricing are to be followed.
There are some basic guidelines for pricing of services. These guidelines may help in
developing an appreciation of the framework for service pricing.
1. For services, the pricing strategy should be such that demand fluctuations are
successfully handled. Since services are perishable, they cannot be inventoried. In such a
situation pricing strategy should be such that it should encourage the customers to delay
their use of services till the period of low demand.
2. Service prices should be based on costs so as to take into account the cost of tangible
clues of intangible services. To the first time users of services the "services offer-
package" is less understood if it is primarily dominated by intangibles. Therefore, the
tangible and material content of the service product should be integrated in the 'service-
offer package', which has definite cost implications.
3. The service pricing should be such a to provide value addition and quality indication
to the customers. In situations of "homogeneous" services, the pricing strategy may be
market oriented or customer oriented. But in heterogeneous services, the price may be
used as a quality indicator.
4. The pricing strategy should be such as to cope-up with the degree of competition
operating within a certain geographic and time zone. Services are inseparable from the
person who provides them and the service providers have both geographic and time
limits or markets, which can be served by them.

RAJ TRAVELS HAS TOURS WHICH ARE THE MOST EXPENSIVE IN THE MARKET
BUT THEY ARE YET INDIAS LEADING TOUR OPERATORS AND ACCORDING TO
BBC SURVEY THE NO 1 TOUR OPERATORS IN LEISURE TRAVEL.. THIS IS
BECAUSE OF THE FACT THAT RAJ TRAVELS DOES NOT BELIEVE IN SELLING A
PRICE BUT THE PRODUCT . ALTHOUGH THE INDIVIDUAL AIR FARES ARE THE
CHEAPEST AS RAJ TRAVELS HAS GOOD CONTACTS WITH THE AIRLINES AND
ALSO BULK RESERVATIONS ARE MADE BY THEM. HENCE CUSTOMERS MAKE
MOST OUT OF THEIR MONEY .