Services Marketing

Basant Purohit
[email protected]

1 25dec 2010
 Framework

 Participant's gain [Ends]

 Participant's pain [Means]

 Introduction
 Service Communication mix
 Service Pricing
 Strategizing the marketing of services
 Managing service delivery
 Demand-capacity balance
 Managing relationships
 GAPS model

2 25dec 2010
 Participant's gain [Ends]

 You will become familiar with the characteristics of

services, categories of services, service
communication mix, basis of pricing in services &
GAPS model

 You will become expert in

(a) strategizing the marketing of services
(b) managing service delivery

3 25dec 2010
 Participant's pain [Means]

 End term exam: 50%

 Project Presentation: 30%
 Quizzes: 20% [best out of 2]
 Be on time – actually, plan on reaching 5 minutes before class is due to
start
 Submit summary of learnings from earlier class, if absent in such sessions
 Isolate yourself from interfering noises [mobiles, neighbors]
 Contact information :
– E-mail: [email protected]
– Phone: 94086-04057
 Anything else?

4 25dec 2010
 End term exam [Means] 50%

Section A - consisting of 10 multiple choice questions [10]

Section B - consisting of 5 questions, which test the conceptual

and analytical abilities [20]
: half pg for each answer

Section C - consisting of 1 / 2 case studies with 2 - 3 questions in

each of them [20]
:3/4 pg for each answer

5 25dec 2010
 Project [Means] 30%

 Choose a service firm

 Explain economic importance of the chosen service firm
 Identify the crucial (a) operational, marketing, financial
and HR management issues (b) factors affecting the
chosen service firm
 Categorize the firm chosen [w.r.t processing, tangibility,
time, orientation]
 Identify some threats and opportunities
 Prepare a practical recovery strategy

6 25dec 2010
 Pain [contd..]

 A

7 25dec 2010
 Service Marketing

 What is service?
"intangible" and the output is viewed as an activity

8 25dec 2010
 Service Marketing [contd..]

 Nature of services

 Ex of service industries

9 25dec 2010
 Service Marketing [contd..]

10 25dec 2010
 Service Marketing [contd..]

Characteristics of Implications [+, -]

service
Intangibility ? ?

Perishability ? ?

Heterogeneity ? ?

Spontaneity ? ?

11 25dec 2010
 Service Marketing [contd..]

 Service categorization:
A] Processing element

Possession processing [FedEx]- low contact

Inform'n processing [SBI]- low contact
Mental stimulus processing [Vodafone]- low contact
People processing [Indigo]- high contact- customer inputs
are mandatory/co-producer

12 25dec 2010
 Service Marketing [contd..]

Service categorization:
B] Degree of tangibility:
Moderate [McD]- standardization
Low [SBI, Indigo, Vo'ne, Fed'x]- customization

C] Time dimension:
Continuous delivery- V'ne : CRM, CLV
Discrete delivery- FedEx, Indigo

13 25dec 2010
 Service Marketing [contd..]

D] Orientation:
Equipment involvement- FedEx, Indigo, V'ne- std'n
Personnel involvement- Investment and consultancy-cus'n

 Influencing factors
Govt policies [Fin & Inves't, Insurance]
Social changes [Vod'e, Indigo]
Business trends [FedEx]

14 25dec 2010
 Service Marketing [contd..]

 Role of services:

Decreasing / stable / increasing; why?

Pattern in developed and developing countries?

% contribution to GDP

15 25dec 2010
 Service Marketing [contd..]

 Input and output factors responsible for change in sectors

contributing to GDP of an economy

 Ex of each characteristics of service

 Additional marketing-mix elements compared to goods marketing

and their role
- people, process, physical evidence

 Customer satisfaction= f [servqual, prodqual, price, .. ]

peer customer's behavior

16 25dec 2010
 Service Marketing [contd..]

 3 major tasks- differentiation, service quality, Increase

productivity

 Physical evidence- provide tangible cues for potential

customers to deduce the product quality

17 25dec 2010
 Revision

 Service characteristics: their marketing implications and

relevant strategies

 Increasing tangibility

 3 major tasks: differentiation, Service quality, Increase

productivity

 Differentiation is difficult to achieve: rarely able to compare

alternative services in advance of purchase

18 25dec 2010
 Revision

 Sources of differentiation

 Role of physical evidence: tangiblising service attributes

 Evaluation process by customers

 service firm restricting service to target customers

19 25dec 2010
 Positioning services in competitive markets

20 25dec 2010
 Positioning services

 Sources of differentiation
4Ps
Processes
People
Physical evidence

McD- The world's best quick service restaurant experience

IDBI- Banking for all
FedEx- Overnight delivery

21 25dec 2010
 Service Communication mix

 Discrepancies b/n service delivery & external communications

in the form of exaggerated promises & the absence of
information about service delivery aspects

 Affects customers perceptions of service quality

 Customer education and expectations

 Consistency and clarity among all 'touch points' [internal and

external]

22 25dec 2010
 Service Communication mix [contd..]

 Relevant, timely, concise, focused, systematic, creative

23 25dec 2010
 Service Pricing

 Costs
 Competition
 Value to customers

uncertainty guarantees, flat, benefits-driven

relationship bulk, bundling
low-cost leadership
 Government regulations
 Company's objectives [revenue, capacity, demand]
 Time and effort [physical, mental] involved in accessing the services
 Non-ownership, variability in inputs and outputs, difficulty in
evaluation, time factor and channels of distribution

24 25dec 2010
 Service Pricing

Service Basis for pricing

Finance and Investment

Restaurants

Freight

Tele-services

25 25dec 2010
 Revision

 processing of- people, information, possessions and mental

stimulus

 Positioning services

 Role of service communication mix

 Service Pricing

26 25dec 2010
 Strategizing the marketing of services

1] Identification of a target market segment

common characteristics, common needs
demographic, geographic, behavioral, psychographic

2] Development of a service concept

What are important elements of the services to be provided, stated in
terms of results produced for customers?
How are these elements supposed to be perceived by the target market
segments?

27 25dec 2010
 Strategizing the marketing of services [contd..]

3] Codification of an operating strategy to support the

service concept
Efficient transmission of tacit knowledge requires its codification into
explicit forms

What are important elements of the strategy?

Is it operations, marketing, Finance or human resources?
On which will the most effort be concentrated?
Where will investments be made?
How will quality and cost be managed + measured in terms of
incentives and rewards?

28 25dec 2010
 Codification of an operating strategy [contd..]

 Codification can be accomplished in a # of ways:

-encoding of organizational knowledge in formulas, codes, expert
systems, “spec sheets,” or budget information
-expressing knowledge in natural language formats, such as reports,
memos, or policies
-Codification can greatly facilitate flows of knowledge between employees/
subsidiaries, and thereby help to identify new opportunities or emerging
threats across markets and geographical regions
-Codification can facilitate involuntary transfer of strategic know-how to
competitors
-organizations might abstain from codification and choose to keep their
knowledge secret

29 25dec 2010
 Strategizing the marketing of services [contd..]

4] Design of the service delivery system

What are important features of the service delivery system,
including (a) role of people, (b) technology, (c) equipment, (d)
layout, and (e) procedures?

What capacity does it provide normally and at peak levels ?

To what extent does it (a) help ensure quality standards, (b)

differentiate the service from competition and (c) provide
barriers to entry by competitors

30 25dec 2010
 Strategizing the marketing of services

31 25dec 2010
 Managing service delivery

 Process of managing the performance provided to the

customer as specified in the contractual performance metrics
 Convenience (time, place)
 Where, when and how
 In people-processing, delivery has large impact on customer
experience
 Sequencing, extent of outsourcing, serving protocol [fcfs, priority
for large a/cs, qlty of personnel employed for different value services]

32 25dec 2010
 Demand-capacity balance

 Constraints of time [consultancy, legal], labour [health, saloon],

equipment [telecom, health club] and facilities [hotels, airlines,
school, theatres]

 Incentives for non-peak usage [demand mngt]

 Stretch resources, cross-train, outsource and share
[supply mngt]

33 25dec 2010
 Managing relationships

 Internal customers

 External customers
Reactive, proactive

34 25dec 2010
 GAPS model

35 25dec 2010
 Revision

 Strategizing the marketing of services

Identification of a target market, Development of a service
concept, Codification of an operating strategy & Designing the
service delivery system

 Demand-capacity balance

 Managing relationships [with whom, how, why]

36 25dec 2010
 Thank You

37 25dec 2010