2. Marketing Marketing as per Peter Drucker – the aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Chartered institute of marketing– marketing as the process of discovering, expecting and suiting the customer needs and at the same time making profits. 2
3. Services “When u build a manufacturing plant, it starts depreciating on the day it opens. The well – served customer, on the other hand, is an appreciating asset. Every small act on his or her behalf ups the odds for repeat business and priceless word – of – mouth referral” -Tom Peters management guru 3
5. Services Traditionally difficult to define. Which services are created and delivered to customer are difficult to define because many inputs & outputs are intangible. 5
6. Service …definition Service is an act or performance offered by one party to another . Although the process may be tied to a physical product, the performance is essentially intangible and does not result to any owner ship of any factor of production. Services are economic activities that create value and provide benefits for customers at specific times, place. Philip Kotler ---”service is any activity of benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product 6
7. Service sector…. Comprises of bulk of today’s economy. US – 73% & Canada 67% of GDP. Consists of vide variety of industries that sell to individual customers , business customers , government customers , NGO’s. Change in economy – boom in agriculture, manufacturing – increased demand for brand new services and traditional services. Japan -- is it still known for being a manufacturing country ?????? India too is following the footsteps….. 7
8. Service organizations… Large international corporations –airlines , banking, telecom, hotel chains, freight transportation….. Locally owned small business– restaurants, laundries, taxi services, internet services, courier etc.,… B-2- B services… Franchised service outlets--- food , education… 8
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10. Major 11 categories areBusiness services. Communication. Construction & Engg. Distribution. Education. Environment. Finance. Health. Tourism. Recreation. Transport 9
17. Goods vs. services Unique characteristics that distinguish goods from service Services are performance , deeds efforts. Services can’t be felt, seen ,tasted or touched as goods. Example movie tickets vs. shoes. 16
19. Intangibility Product is physical.--- Can be felt ,seen , smelt, tested.. Service is not tangible till it is experienced or consumed. Different people have different expectations with regard to the same service… Quality of service not strictly measurable….. 18
20. Problems with intangibility - Lack of ability to be stored. Lack of protection of patents. Difficulty in displaying or communicating services. Difficulty in pricing services. 19
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22. Problems caused by inseparability Physical presence of the service provider ---like dentist. Evaluation of the service provider done by language, clothing, personal hygiene, IP communication skills. Face to face interaction with customer– make employee satisfied. Involvement of customer in the service production process… a) customer to be physically present to receive service. b) Customer need to be present to start the service –dry cleaning, auto repair etc.. c) Need of the customer to be mentally present -- thru internet.. 21
23. Unlike goods which are first produced ,sold , consumed…services are first sold, produced and consumed. 22
24. Involvement of other customers… Restaurants --- Smoking in non smoking areas.. Parking full means better service / food. 23
25. Challenge in mass production of service… How to successfully mass produce service… 24
26. Solutions to inseparable problems.. Emphasis on selection ,training public contact personnel. Consumer management. ( reservation in restaurant…) Use of multi site locations (ATM , McDonald's…..) 25
27. Heterogeneity Heterogeneous is an adjective used to describe an object or system consisting of multiple items having a large number of structural variations. It is the opposite of homogneous. 26
28. Heterogeneity Goods & services –Another difference- un ability to control the service quality before it reaches the customer. Service offered by one employee may differ from the other… Example - McDonald's franchise – moods swings of individuals before service. 27
30. Perish ability.. Service can’t be inventoried. ( Like movie tickets , airline tickets etc..) Matching the demand & supply in service is a challenge… 29
31. Solution to perish ability.. Creative pricing- (early bird incentive , happy hours ) Demand strategy – (reservation system, complimentary system, development of non peak demand) Supply strategy. - Part time utilization. capacity sharing (Doctors sharing cost of equipment), advance preparation of expansion, utilisation of third party, Increase in customer participation. 30
33. Issues before a service organization Services premises. Packaging. Service personnel. Tools & equipment used. Customers. Convenience. Nature of service establishment. Managing productivity. Managing service quality. 32
34. Nature of service marketing. Narrow definition of marketing. By service providers. – Had only Advt, sales promotion, segmentation rare, --differentiation , new product development, service quality…???? Lack of appreciation of marketing. Skills in service org. Difference of org. structure of service firms. Problems in determining the cost of services. 33
40. Desired service --- Adequate service It is the level of service the customer hopes to receive // the level of performance wished for. Lower level of service expectation that the customer is willing to accept.—based on past experience, lack of remuneration to the service provider , socio -economic background of the service provider etc… 39
44. Diff. Between characteristics of goods and service Different goods and services have varying magnitudes of search, experience & credence qualities search qualities of goods can be estimated before purchase -- experience quality can be estimated only after purchase. Qualities that can`t be assessed completely are called Credence qualities. 43
46. Search quality For services include….. Price, Convenience. Mannerisms of service personnel. Promptness of service. 45
47. Experience qualities Taste of home delivered food. Wear ability of dress bought from boutique etc. Service have higher experience characteristics than goods. E.g. air line travel…courtesy of cabin crew, departure & arrival, quality of food, seating comfort etc.. 46
48. Credence qualities Customer often lack the knowledge & experience to judge the credence qualities of the service. E.g….. Bread may claim to have nutrition's..difficult for the customer to ascertain.. Services of professionals –doc, consultants,…services are accepted on faith. 47
49. Customer Decision Making Process & implications on service provider. 48
50. Customer decision making process.. Need perception.—difference in actual state & desired (Hungry –need to buy food-remove hunger) Search for info.-need felt-decides to purchase- search for info. To full fill needs (from –personal ,commercial ,public source, experimental) & perceived risks.(financial risk, functional ,physical, psychological, social, time risk) Evaluation of alternatives.—compare & evaluate services of alternatives. (Well defined attributes )e.g interior decoration –different from home to home & customer to customer.( emotions- influence on customer-evaluation ability) Purchase & consumption.- trail purchase, repeat purchase, long term commitment purchase) Post purchase evaluation.– compares performance vs. expectations. –satisfied customer becomes loyal, 49
51. Implications for service providers Customer gather info. From personal source– marketer needs to be careful in satisfying existing customers. Services are intangible- customer needs assistance to assess value of high credence qualities. 50
53. Customer expectations SATISFACTION IS THE LEVEL OF A CUSTOMER`S FELT STATE RESULTING FROM COMPARING A PRODUCT`S OR SERVICE`S PERCEIVED PERFORMANCE STANDARD AGAINST THE CUSTOMER`S EXPECTATION….. KOTLER 52
54. Customer expectation Five dimensions to measure service quality Assurance --- to use knowledge & courteous behavior to instill trust and confidence in customer regarding service. Empathy– ability to show concern for customers and devote individual attention to each customer. Reliability—ability of service provider to accurately perform promised service.( efficiency , handling of customer complaints, pricing etc). Responsiveness – prompt & service. Tangibles -- physical facilities- equipment of service, dress & appearance of service personnel. 53
