Designing & Managing services N. Banerjee
Categories of a company’s offering Pure Pure tangible tangible good good Good Good w/ w/ accompanying accompanying services services Hybrid Hybrid Service Service w/ w/ accompanying accompanying goods goods Pure Pure service service
What is a Service? A service is any act of performance that one party can offer 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.
Intangible Perishable Inseparable Variable
Service Distinctions • Equipment-based (eg. ATM) or people-based. • Service processes (restaurants have developed cafeteriastyle, fast food, buffet, and candlelight service formats)
• Client’s presence required (surgery) or not (car repair)
• Personal needs or business needs • Objectives (profit or nonprofit) and ownership (private or public)
Figure: Continuum of Evaluation for Different Types of Products
Distinctive Characteristics of Services
Intangibility Inseparability Variability Perishability
Service Intangibility: A challenge for marketers •
Intangibility means ‘palpable’ intangibility & mental intangibility (-Bateson,1977).
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Marketers try to tangibilise the intangible through any number of marketing tools. Place, People, Equipment, Communication material, Symbol & Price play important part.
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Because of the service intangibility a company’s promotional program must be explicit about the benefits to be derived from the service, rather than emphasizing the service itself .
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4 promotional strategies may be used to suggest service benefits and reduce the effect of intangibility Visualization / Association / Physical Representation / Documentation (past performance and future capability)
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Because of the intangibility factors additional P’s like People & Physical evidence have significant roles to play
Class Discussion Question
Q. A hospital positioning itself for cleanliness & hygiene. How you should attach tangibles to service intangibility to facilitate successful positioning.
Inseparability • Simultaneous production and consumption of services.
Variability •
Services provided are highly variable as they depend on who provide them and when & where they are provided.
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So it is imperative to take measures for maintain a standardize quality. • Steps for controlling quality: Invest in good hiring & training procedures so that sales personnel become competent, learn to show courtesy, become trustworthy, their communication skills improve, learn to perform the service consistently and accurately, and become responsive. Standardize the service performance process throughout the organization Monitor customer satisfaction
Perishability • Services are perishable; they can’t be stored. • So, there should be a better match between demand & supply. • Related strategies: On the demand side:
Differential pricing Cultivation of non peak demand Complimentary services Reservation system
On the supply side:
Part time employees Peak-time efficiency Increased customer participation Facilities for future expansion
Elements in a Service Encounter
Service Marketing Mix • Strategies hovers around the service marketing mix: Product Place Price Promotion People Process Physical evidence
Holistic marketing of services • Service marketing triangle; External marketing Internal marketing Interactive marketing
Service Marketing Triangle COMPANY
Internal Marketing
External Marketing
Enabling Promises
Giving Promises
Service Personnel
Delivering Promises
Interactive marketing
External Marketing: Contribute in Creating Expectation Internal & interactive Marketing: Create Perception
Customers
Key marketing issues before a service organization •
The unique characteristics of services present certain key marketing issues before a service provider. These include
Managing differentiation among services Managing productivity Managing Service Quality
Differentiating from competitors •
Service Premises Tangibles
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Packaging
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Service personnel Intangibility
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Tools & equipment used
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Customers
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Convenience
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Name of the service establishment
Managing Productivity Managing productivity in service organizations is a difficult task due to the multifunctional nature of service jobs. For example, in a fast-food outlet, the service personnel perform various tasks which include preparing the food (production), delivering the food to the customers (retail service), ensuring that the have an enjoyable eating experience (customer service), and accepting payment and tendering the change (transaction processing). Inventory management and routine maintenance of the premises may also be a part of the job in some instances. The multifunctional nature of their job makes measuring, monitoring and improving the performance of the personnel in service organizations a complex task.
Service Quality & managing service quality
Dimensions of SEC Quality
Perceived Service Quality, Expected service and Experienced service
The GAP model of service quality (-- Parasuraman et al, 1985)
Customer service expectations •
Sources of customer’s service expectations: Past Exp / WOM / Advt
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Based on the GAP model Customer’s service expectations can be measured along five dimensions of service qualities. They are:
Assurance Empathy Reliability Responsiveness Tangibles •
Companies try not only to satisfy but to delight their customers.
Service level expectation: Zone of Tolerance • •
Customer expectations of service can be of two types: desired and adequate. Desired service can be defined as the service that a customer desires and hopes to receive. Desired service expectations of a customer increase when the customer is experienced and has good knowledge of what to expect in the service.
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The desired service expectations of a customer may also depend on the service expectations of an associated party.
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Adequate service is the minimal level of service that a customer is willing to accept from a service provider and is based on the customer’s perception of what level of service is acceptable to him. Not meeting the Adequate level leads to dissatisfaction.
Zone of tolerance is the gap between a customer’s desired service expectations and the adequate service expectations as shown in Figure 4.1. This zone varies for each customer and for the same customer it differs in different situations. Customers view reliability as the core dimension of any service transaction and are not ready to compromise on reliability. Therefore, their zone of tolerance on the dimension of reliability is narrow. It is also narrow when customers have various service alternatives available.