By Venkatesh.N

ByVenkatesh.N

Koshys college

1st Chapter SERVICE MANAGEMENT

Service

>A service is an action of doing something to some one which is essentially (purely) intangible…

>“Service is an act or performance offered by one party to another that is essentially intangible and does not result in the ownership of anything.”

What is Management • Management is an individual or a group of individuals that

accept responsibilities to run an organisation. They Plan, Organise, Direct and Control all the essential activities of the organisation. Management does not do the work themselves. They motivate others to do the work and co-ordinate (i.e. bring together) all the work for achieving the objectives of the organization.

• Management brings together all Six Ms i.e. Men and Women, Money, Machines, Materials, Methods and Markets. They use these resources for achieving the objectives of the organisation such as high sales, maximum profits, business expansion, etc.

What is service management

• A structure basic of supply chain management that connects actual company sales and the customer. The goal of service management is to maximize service supply chains as they are typically more complex that the supply chain of finished goods. The purposes of service management is to reduce high costs by integrating products and services and keep inventory levels smaller.

Classification of service • It is required to design & apply marketing techniques to

completely satisfy the customer & increase profit & identify new emerging services

• Classification can be done on the following basis • Classification by industry• Classification by target effect• Skill level of service provider (professional/Non

professional)• Labour intensiveness(people-based/ equipment-based)• Degree of customer involment

Classification of service

• Marketable vs unmarketable service• Producer service and consumer service• The level(degree) of service in the product• Ex:-pure service(teaching)• Independent service added to the product to

make the product more attractive.• Degree of consumer participation

Classification by industry • Entertainment industry • Education• Telecommunication • Transportation• Government services• Health• Hospitality industry• Business services

Classification by target effect

Based on degree of customer involment • People processing:- service aimed at physical care Ex:-

health care, clinics, restaurants, hospital, hair stylist, fitness centers.

• Mental Stimulus processing:- services aimed at mind of customer Ex:-education, information, entertainment, consulting, psychotherapy.

• control processing:- Service aimed at physical possession & tangible assets Ex:- repair & maintance, Laundry, repair Services, House cleaning services

Contd….• Information processing:- service for

tangible assets Ex:- banking legal consultation, brokerage , financial service.

• Skill level of service provider:- • Teacher• Doctor• Engineer• Accountant

Lobour Intensiveness

• Mechanic• Electrician • Labour• Artisan

Degree of customer contact

• High degree (every day)-TV channels, Mobile etc…..

• Moderate Degree(regular)- teacher, barber, washer man etc…

• Low degree(occasional)-priest, doctor etc…

Layman or layperson:-(a professional person)

Characteristics of services

Characteristics Intangibility: It cannot be taste, feel & smell before they are bought

unlike physical product. The intangibility creates a feeling of uncertainty about the outcome of service.

Inseparatebility: Services cannot be separated from the services provided (we

cannot separate the service from the product) in fact the product delivers consumption of a service.

Variability: Services of highly variable. It is almost impossible to have

the same service from the same seller the second time.

Contd….Customer participation: Service product is not a one side activity customer

are core product of services. The product quality of services greatly depends upon the ability, skills and performance of the employees as well as the activity and performance of the customer.

No ownership here we cannot transfer ownership from one

person to other person that particular service belongs to particular person because its purely intangible

Pershability They cannot be stored

Goods / Services

Product• Goods/service manufactured by organizations for

the end-users are called products/Services • Products can be of two types - Tangible Product

and Intangible Product (Services)An individual can see, touch and feel tangible products as compared to intangible products.

• A product in a market place is something which a seller sells to the buyers in exchange of money.

Good example:- here you can see both product as well as service (tangible and intangible) Once you open the saving account , current account, or demat account you will receive a card documents from the bank that is tangible and once u started doing transaction (receiving service from the bank )that is intangible.Bank will be providing life insurance(product) bond that bond itself tangible and later you will be receiving service that is intangible

Price

• it is a key element of the marketing mix. All the other elements represent costs—for example, expenditure on product design (product),advertising and salespeople (promotion), and transportation and distribution (place). Marketers, therefore ,need to be very clear about pricing objectives, methods and the factors that influence price setting

Place refers to the location where the products are available and can be sold or purchased. Buyers can purchase products either from physical markets or from virtual markets. In a physical market, buyers and sellers can physically meet and interact with each other whereas in a virtual market buyers and sellers meet through internet.

Promotion• Promotion refers to the various strategies and ideas

implemented by the marketers to make the end - users aware of their brand. Promotion includes various techniques employed to promote and make a brand popular amongst the masses.

• Promotion can be through any of the following ways:

– Advertising• Print media, Television, radio are effective ways to entice

customers and make them aware of the brand’s existence.• Billboards, hoardings, banners installed intelligently at

strategic locations like heavy traffic areas, crossings, railway stations, bus stands attract the passing individuals towards a particular brand.

Contd…

– Taglines also increase the recall value of the brand amongst the customers.

–Word of mouth• One satisfied customer brings ten more customers along

with him whereas one dis-satisfied customer takes away ten more customers. That’s the importance of word of mouth. Positive word of mouth goes a long way in promoting brands amongst the customers.

People

• People - The individuals involved in the sale and purchase of products or services come under people.

• Peoples are the ultimate users of product/service• Here service provider can get feedback about the

banking service and there is chance of re design the service or modify to fulfill their need and attract the more number of customer.

Process

• Process - Process includes the various mechanisms and procedures which help the product to finally reach its target market

• Service process is the way in which a service is delivered to the end user

• Process is something related to• How do people consume service• What process do the have to go through to acquire

the service

P.Evidence • With the help of physical evidence, a marketer tries

to communicate the USP’s(unique selling propositions) and benefits of a product to the end users.

• Ex:-if a customer is going to meet bank employ to know about the home loans while explaining a service provider will be showing some broachers , Documents, bonds , company website , these are all physical evidence.

Functions of service management• Marketing objectives:- the marketing objectives may be

short term or long term. They have to be in coherence(unity) with the organizational goals

• Planning:-after setting objectives the organization should plan to achieve those objectives. This includes sales forecast, marketing programmes and marketing strategies

• Organizing:-the organizing functions involves structure of marketing organization, duties responsibilities and powers of various members of the marketing organization

• Coordination :-it involves coordination of among various activities such as sales forecasting, product planning , product designing and development, transportation, warehousing etc..

• Directing:-Direction In marketing management refers to the development of new markets, employee communication, motivation and control of employees.

• Control;- Controlling refers to the effectiveness with which the marketing plan is implemented.(it involves purpose of standards , evaluation of actual performance and adoption of corrective measure).

• Staffing:-the marketing manager coordinates with human resource manager to hire the staff with the desired capacity.(here in this step the company is recruiting the employees to a particular job to run marketing actives)

• Analysis and evaluation:-marketing management involves tha analysis and evaluation of the productivity and performance of each employees.

CONSUMER INVOLVEMENT

• CONSUMER INVOLVEMENT Consumer involvement refers to degree of information processing or extent of importance that a consumer attaches to a product. The degree of involvement has a very significant effect on consumer behaviour. When more expensive products are to be purchased, the consumer gets more involved in purchase process but he may not be equally involved in a product which is just a rupee or two priced.

 EXAMPLES OF CONSUMER INVOLVEMENT

• Take the example of: CAR - As it is a expensive product so consumer will get highly involved resulting in higher involvement. BOOK - The book purchased by a student for preparing competitive exam may not be as expensive as car, yet the customer gets highly involved because it is a important product. MEDICINE - When a medicine is being purchased, which may not be very expensive, yet the customer may be highly involved in checking that it shouldn’t react him.

•  LOW INVOLVEMENT- Low involvement purchases are not really important to consumers, have little relevance and need very limited information processing.

• SOME INVOLVEMENT- Some involvement purchases are of little bit importance to customers. It includes some evaluation of alternatives.

• HIGH INVOLVEMENT- High involvement purchases are those which are important to consumers such as complex, expensive, risky or ego-intensive products & require extensive information processing.

TYPES OF INVOLVEMENT MEDIA HIGH INVOLVEMENT

• MEDIA- Print media such as newspaper & magazines are high involvement media because information is processed clearly leading to attitude formation and finally behaviour.

• LOW INVOLVEMENT MEDIA- TV is a low involvement media because it is a primarily pictorial, allowing viewers passive and holistic processing of information.

Consumer behaviour in service the study of individuals, groups, or organizations and the processes

they use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. It blends elements from psychology, sociology, social anthropology and economics. It attempts to understand the decision-making processes of buyers, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general.

Contd..

Customer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer.

What is a Target Consumer?

• To be considered a customer group, people need to act in a similar manner.E.g. – People who cook after 8 hours of work are not a customer

group. They will behave differently depending on whether they have children, how many people they cook for, and whether they use prepared foods.

– Working people who minimize their use of prepared food and are concerned about nutrition is a customer group

A target Customer

•  A target customer is a group of customers towards which a business has decided to aim its marketing efforts and ultimately its merchandise.  A well-defined target market is the first element to a marketing strategy. The marketing mix variables of product, place (distribution),promotion and price are the four elements of a marketing mix strategy that determine the success of a product in the marketplace.

The Consumer Buying Process

Purchase Decisions• Product Choice• Location Choice• Brand Choice• Other Choices

Consumer

Marketing Inputs Product Price Promotion Place

Psychological Inputs• Culture• Attitude• Learning• Perception

Demographic Factors

• Age• Stage in Family Life Cycle• Occupation & Education Levels• Economic Circumstances (Income Trends)• Lifestyle• Social Influence Variables

• family background/composition• reference groups (clubs, associations, etc.)• roles and status

Focus of Analysis

• What are the TRENDS?– Percentage of consumers in the workforce– Education Levels– Income Levels– Composition of the family–Minority consumers as a percentage of the

population• How will this affect your business?

Six Key Factors for Evaluating Customers

• Customer Characteristics– Number of Customers– no difficulty of Finding Customers– Spending Patterns

• Customer Value to Company– Dollar Value of Sale– Repeat Sales– Ongoing Sales Support

• Customers stay loyal when we create value for them

• Value can be created for customers through – Confidence benefits

•Confidence in correct performance

•Ability to trust the provider

•minor worry when purchasing

•Knowing what to expect and receive

Why are Customers Loyal? (1)(Service Insights 12.1)

Why are Customers Loyal? (2)

–Social benefits

•Mutual recognition and friendship between service provider and customer–Special treatment

•Better price

•Discounts not available to most customer

•Extra services

•Higher priority when there is a wait

• Target the right customer and match them to what firm can deliver– How do customer needs relate to operations elements?– How well can service personnel meet expectations of different types of

customers?– Can company match or exceed competing services that are directed at same

types of customers? • Focus on number of customers served as well as value of each

customer – Some customers more profitable than others in the short term– Others may have room for long-term growth

• “Right customers” are not always high spenders– Can come from a large group of people that no other supplier is serving well

Targeting the Right Customers and Searching for Value, Not Volume

Common Objectives of CRM Systems (1)(Service Perspectives 12.3)

• Data collection • Data analysis• Sales force automation • Marketing automation • Call centre automation

Common Failures in CRM Implementation• Service firms attach installing CRM systems with having a customer

relationship strategy• Challenge of getting it right with wide-ranging scope of CRM• Common reasons for failures

– presentation CRM as a technology initiative– Lack of customer focus– Insufficient appreciation of customer lifetime value

(CLV)– Inadequate support from top management– Underestimating the challenges in date combination

Managing Customer Relationships and Building Loyalty (1)

• Customer loyalty as an important driver of profitability for service firms so firms need to– Assess value of loyal customer– Narrow gap between actual and potential

customer value• To understand the customer-firm relationship, firms should

establish a relationship with customers by creating “membership” relationships

• Four types of marketing– Transactional marketing– Database marketing– Interaction marketing– Network marketing

Managing Customer Relationships and Building Loyalty

• Wheel of Loyalty shows how firms can:

– Build a foundation of loyalty

– Create loyalty bonds

• Building a foundation of loyalty involves:

– Good fit between customer needs and capabilities

– Searching for value, not just volume

– Obtaining customer satisfaction through service quality

Managing Customer Relationships and Building Loyalty

• Customer loyalty bonds include:– Reward-based bonds– Social bonds– Customization bonds– Structural bonds

• Bonds can also be created through membership relationships and loyalty programs

• Strategies for reducing customer defections include:– Analyzing customer defections and monitoring

declining accounts– Implementing effective complaint-handling and service

recovery procedures– Increasing switching costs

Managing Customer Relationships And Building Loyalty

• Customer relationship management (CRM) is a whole process by which relations with customers are built and maintained.

• An integrated CRM system includes– Strategy development process– Value creation process– Multichannel integration process– Performance assessment process

• Cresting a successful CRM program requires understanding common failures in CRM implementation and knowing how to get it right

THANK YOU