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When I am an ORGANISATION I wantCustomers to Give BACK
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Acceptance towards Products & Services Larger Wallet Share & Brand Recall andpreference towards offerings Loyalty and Positive Word-of Mouth Regular Feedback to serve better Referrals to grow bigger at reasonable cost
Co-operation at times of Crisis and Opportunityfor Service Recovery .
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Changing Service Scenario-GlobalScenario
77%
74%
76%69%
69%
50%
Contribution of Services inGDP (YEAR 2001)
USA
UK
FRANCE
GERMANY
JAPANINDIA
78%
78%
78%74%
70%
56%
Contribution of Services inGDP (YEAR 2010)
USA
UK
FRANCE
GERMANY
JAPANINDIA
5Source: Economic Survey 2011-12, Ministry ofFinance
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Changing Service Scenario- IndianEconomy
55%33%
12%
Contribution of VariousSectors in GDP (Year 1950-
51)
Agriculture
Services
Industry
13.90%
56.30%
29.80%
Contribution of VariousSectors in GDP (Year 2011-
12)
Agriculture
Services
Industry
6Source: Economic Survey 2011-12, Ministry ofFinance
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Share of Different Services Sub-Sector
17%
16%
14%
8%
Figure for 2010-11
Trade, Hotels & Restaurants
Financing, Insurance,BusinessServices & Real Estate
Community, Social &Personal Services
Construction
7Source: Economic Survey 2011-12, Ministry of
Finance
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State wise Comparison of Services(Share of services in Gross State Domestic Product)_
86%
82%
35%
40%
40%
Chandigarh
Delhi
Chhattisgarh
Himachal Pradesh
Others (TN,Bengal , Bihar,Maharastra)
0% 20% 40% 60% 80% 100%
Series 1
Series 1
Source: Economic Survey 2011-12, Ministry ofFinance 8
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Baby
sitting or Day Care Services Investment Advisory & Financial Services Event Management Services Transportation/ Logistics/ Maintenance Services Retailing & Online Shopping Consultancy & Market Research Leisure & Life style Management Services. R& D Services.
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Need for Services Why?????? Services today are not just complimentary to products but a newer
method of tackling competition & Survival-Growth Plan To reduce complexity of products To manage Life style changes in order to cope with changing social
roles
Increasing Affluence ( Change in disposable income as a result ofdouble- income households) and improved quality of Life Change in pattern of thinking SPEND rather than SAVE Preference for Leisure . Rise of Life Expectancy requiring more advanced and alternative
medical/ Nursing Care. Greater concern about Ecology & Resource scarcity. Source of Foreign Direct Investment (FDI) in economy
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Factors Stimulating Transformation ofEconomy ---- Service Economy
(Reasons for Growth of Service Sector)
Changes in Regulation Privatization New Rules to Protect Customers, Employees & Ecology New Agreements on Trade in Services
GovernmentPolicies
Rising Consumer Awareness & Expectations, Competition More Affluence More people Short of Time Increased Desire for Buying Experiences Vs. Things More Working Women & Mobility of Labour
Rising Ownership of Technologically Advanced devices &applications
SocialChanges
Manufacturers Add Value through Services & Sell Services Emphasis on Quality Movement, Productivity, Cost-Saving&
Innovative practices ,Internet, Use of Advancedcommunication Medium & Media
Focus on Alliances & Transnational Operations to driverofitabilit & rowth.
Business Trends
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WHAT IS A SERVICE?
As per Philip Kotler Service is an act or
performance offered by one
party to another, that isessentially INTANGIBLE & does not result inownership of anything. Its
production may or may not be tied to a physical product.
As per Adrian Payne An Economic activity that
creates value & provides benefits for customers atspecific TIME & PLACE
by bringing about a desiredchange in, or on behalf of,the recipient of the service
( Either with thecustomers or with theproperty belonging tocustomers)
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Features of Services & Its MarketImplications
1. INTANGIBILITY Product is physical.--- Can
be felt , seen , smelt, tested.
Service is not tangible till itis experienced or consumed. Different people have
different expectations withregard to the same service.
IMPLICATIONS Services cannot be
inventoried
Services cannot be patented Services cannot be readily
displayed or communicated. Consumers perceives it as a
High
Risk proposition Uses Price as a basis for
assessing Quality
So, Organization Needs to Stress on 1. Tangible Clues 2. WOM
3. Focus on Service Quality 13
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2. HETEROGENEITY No two service providers are
same and even the service personnel within the sameorganization makes a completedifference.
The same service can not beeven same to differentcustomers.
IMPLICATIONS Service delivery and
customer satisfactiondepend on employee actions
Service quality depends on
many uncontrollable factors There is no sure knowledge
that the service deliveredmatches what was planned
and promotedSo, Organization should focus on : 1. Careful Employee
Selection, Recruitment, Orientation & Training.2. Communicating Standards and conforming to its adherence.
3. Focus on Quality control. 14
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3. PERISHABILITY
As services can not bestored , if unavailed , theyare treated as Lost.
IMPLICATIONS Services can not be Stored
for Future. Problems with Demand
Fluctuations
So, organization should: 1. Better match between Supply &Demand by way of discounts, promotional schemes etc.
Example: Airlines & Movies Weekend Specials, Early- birddiscounts, Off-Season specials, Group, Senior Citizen rates
or Family Rates.Even Banks today have arranged for privilege banking hoursto map and manage peak hour demands and ensure smooth
flow of operations15
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4.INSEPARABILITY
SEQUENCE OF PRODUCTION &CONSUMPTION PHYSICAL
GOODS
Production
Storage
Sale
Consumption
SEQUENCE OF PRODUCTION &CONSUMPTION SERVICES
Sale
As a result of this feature it leads to customers being Co-Producers of the service & often have to travel to the point ofservice production. Here the Management has to emphasis onimproving service delivery systems and Process. 16
Produced & Consumed at Sametime
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5. LACK OF OWNERSHIP
Whenever a customer pays for a service or utility, he/ she hasaccess to the action or experience , but its only for a stipulatedtime frame and does not own the activity or facility.
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IMPLICATIONS: Stress on advantages of Non-ownership& easier payment systems
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6. SIMULTANEITY
Unlike products, services are produced and consumedsimultaneously. They cant be stocked. As the customer requiresservice (point of sale), services are produced and consumed at thesame time.
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IMPLICATIONS: Due to simultaneity as one of thecharacteristics, In case if services, it is necessary that
buyer and seller should be at the same place unlike products. The production process of services is called Servuction Process
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The 4 Components of a Service
Physical
Product
ServiceProduct
ServiceDelivery
ServiceEnvironment
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Services As a System
The components of Service as a Systemincludes:
1. Service Operations System ( Back & Front End activity)
2. Service Delivery System (Back & Front End activity +Interaction to customer)
3. Service Marketing System (Includes all elements whichcontribute to customers overall view of organization)
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SERVICES AS SYSTEM DIAGRAM.doc
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http://localhost/var/www/apps/conversion/tmp/scratch_2/SERVICES%20AS%20SYSTEM%20DIAGRAM.dochttp://localhost/var/www/apps/conversion/tmp/scratch_2/SERVICES%20AS%20SYSTEM%20DIAGRAM.doc8/13/2019 Services Unit -1
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Types of Goods & Services
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DurableGoods
Non-DurableGoods
GOODS SERVICES
RentalGood
Services
OwnGood
Services
Non-Goods
Services
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Product V/S Services- Differences No PRODUCT SERVICES
1 Product is a Physical object/ good Service is an Action
2 Product is homogenous Heterogeneous in nature3 Product can be inventoried Services can not be inventoried
4 Can be readily displayed on Shelf Cannot be readily be displayed onShelf
5 Production and consumption takes place at different time
Service is produced and consumed atsame time
6 Customer participation does notalways affect transaction
Customer participation affectstransaction
7 Product can be returned or resold Services once rendered cannot bereturned or resold.
8 Mass production is easy Mass production is difficult
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No PRODUCT SERVICES
9 Sure knowledge that product
delivered is same as planned and promoted.
No surety that service delivered is
same as planned and promoted
10 Employees involved in producing product is not a matter of concernfor customers
Employees providing services are amatter of concern for customer.
11 Transfer of Ownership takes place Transfer of Ownership does not take place
12 Easy for customers to assess theQuality of Product & Services
Difficult for consumers to assessQuality
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Classification of Services
People processing : Institutes or education center Possession processing: Bike service center etc.
Mental stimulus processing: Advertising agency, consultancy
Information Processing: Data processing, Lawyers/legalconsultants etc.
1. Based on degree of Customer Involvement
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2. Classification Based on Service Tangibility
Highly tangible: Bicycle on rent Service linked to tangible products: Free after sales services of
Bikes Tangible goods linked to services: Facilities in Rajdhani
Express (Train) Highly intangible: Hair saloon
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Goods Services Continuum
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Pure Goods ServiceRelatedGoods
RelatedPure
Services
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Services Tangibility Spectrum
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3. Classification Based on Service Skills andExpertise Required
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Professional services: Doctors, lawyers Non-professional services: Baby sitting, housekeeping etc.
4. Classification Based on Business
Orientation of Service Provider Not-for-profit organization Commercial organizations
5. Classification Based on Type of End User Customer services Industrial services
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The Services Marketing Triangle
InternalInternal
Marketingarketingz
Interactive Marketing
ExternalMarketing
Company(Management)
CustomersEmployees
Enabling the promise
delivering the promise
Setting the promise
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler
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Development Frameworks forAnalyzing Services
Type of service Nature of relationship shared by the customer with service
organization Service delivery Type of demand and supply of services Extent to which service provider need to customize services
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Myths About Services
Services is a necessary evil for manufacturingfirms
Service sector is labor-intensive and less productive
Service firms earn less revenue when comparedto other two sectors Growth in service economy is linked to growth
of the public sector services Marketing a service is not different from
marketing a product Growth in service sector eliminates jobs from the
manufacturing
GE, Motorola
Wal-Mart
ICICI Prudential,HDFC, TATA-AIG
Examples
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Limitations in Growth of Services
External Forces: Customers can perform services themselves (Eg: People can
cook instead of going to eatery)
Manufactured goods will be produced which replace serviceroles (Eg: Tools replace the service of skilled labour, like easy care fabrics replace cleaning & laundry services)
Manufactured goods will be produced which require less
service attention (Eg: Cars with longer service intervals,equipments with throwaway replaceable parts)
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Internal Forces: Shortage of people with specialized skills Lack of resources and small size of firm Limited competition in some service sub-sectors (Eg: Rail
transport)
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Extended Marketing Mix
Extended Marketing Mix.JPG
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http://localhost/var/www/apps/conversion/tmp/scratch_2/Extended%20Marketing%20Mix.JPGhttp://localhost/var/www/apps/conversion/tmp/scratch_2/Extended%20Marketing%20Mix.JPG8/13/2019 Services Unit -1
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Dimensions Of SEC Qualities
SearchQualities
ExperienceQualities
CredenceQualities
Tangibility AccessCompetence
Credibility Courtesy Security
Reliability &Responsiveness
Understanding theCustomer
Communications
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Consumer Decision Making Process
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Need Perception
Search forInformation
Evaluation of alternatives
Purchase decision
Post-purchaseevaluation
EnvironmentalFactors Culture Subculture Social class Reference groups Family
MarketerActivities
External sources Personal sources Commercial sources Public sources
Internal sources
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Implications for Service Providers
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Customers rely on information obtained from personalsources.
Customers need assistance of service provider to assess the
value of service Co-production Time Intangibility Quality and customization
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