Kripa Kalro - Ism - Chp 10

CHAPTER 10: INTEGRATED SERVICE MANAGEMENT

8 P MODEL : COXSWAIN MODEL

8 P MODEL : COXSWAIN MODEL PROCESS PRODUCT

PLACE & TIME

PROMOTION & EDUCATION

PRICE & OTHER COSTS

PRODUCTIVITY & QUALITY PEOPLE

PHYSICAL EVIDENCE

A. PRODUCT The term “product” is defined as a bundle of attributes capable of exchange or use, usually a mix of tangible and intangible forms. It may be an idea, a physical entity, or a service, or any combination of these.

LEVELS OF SERVICES

LEVEL CONTENTS

EXAMPLE

1

Basic

Food

2

Basic+ minimum conditions

3

4

Kitchen, serving space, menu availability In addition to expected Sparkling floors, Smiling employees, ambience Exceed expectations Welcome flowers, Welcome Drink Beyond the usual

SUPPLEMENTARY SERVICES: SERVICE FLOWER Locker facility Card room

Transport

Swimming

CORE: Food and shelter

Shopping

Casino Medical services

Lounge

Supplementary services

CORE AND PRODUCT SURROUND BASIC FEATURES

PRODUCT SURROUND CORE PRODUCT

ADDED VALUES

Consists

Impact

Cost

Core product

Basic features

30%

70%

Product surround

Added values

70%

30%

CONTINUUM OF PRODUCT ATTRIBUTES Most Goods

Most Services

Difficult to evaluate

High in search attributes

High in experience attributes

Complex surgery

Legal services

Education

Computer repair

Entertainment

Haircut

Lawn fertilizer

Restaurant meals

Foods

Motor vehicle

Chair

Clothing

Easy to evaluate

High in credence attributes

TYPES OF NEW SERVICES TYPE

EXAMPLES

Major Innovation

First broadcast TV. Service

Start up business

ATM, Vending Machines

New service for currently served market

Library starts a restaurant

Service Line Extensions

New Courses, New Sectors, New dish on menu

Service Improvements

Extended Banking hours

Style Changes

New design on bank cheques

NEW SERVICE DEVELOPMENT PROCESS 1. 2. 3. 4. 5. 6. 7. 8.

Exploration & Idea Generation Screening Concept testing Business analysis Service development Test marketing Commercialization Evaluation

PRODUCT LIFE CYCLE

SERVICE PRODUCT DECISIONS EXISTING PRODUCTS

NEW PRODUCTS

EXISTING MARKETS

Market penetration

Product development

NEW MARKETS

Market Development

Diversification

IGOR ANSOFF`S PRODUCT GROWTH MATRIX

B. PRICE • Only element of the marketing mix which generates revenue. All others generate cost • Importance of income groups, Competition and Government Regulations • “Perceptions of quality” • Influence of Pricing on service Sector • Pricing Objectives

METHODS OF PRICING 1)    6)   

COST BASED: Basic Cost/ Cost Plus Contribution Working Back/ Expected Return/ Rate Of Return

MARKET ORIENTED/ DEMAND BASED: Skimming Penetration Price Discrimination (Customer, Product, Location, Time, Quantity)  Pricing to meet customer expectations  Discounts and Sales

1)   

COMPETITION BASED: Destroyer Pricing Going Rate Pricing/ price matching Price bidding/ close bid pricing

6) VALUE STRATEGIES:     

Satisfaction Based: Service Guarantee Benefit Driven Pricing Flat Rate Pricing Convenience Pricing

A. Relationship Based:  Long term contracts  Price Bundling C. Efficiency Pricing

A. PLACE a) Time: doctor 4-7 pm pharmacy 24 hours b) Method: Physical Electronic c) Speed and convenience: channel of distribution must be short since services are intangible and inseparable

PLACE OF INTERACTION/ OPTIONS FOR SERVICE DELIVERY Service provider

customer

Service provider

customer

Service provider

customer

S

CHANNEL DECISIONS

E R

DIRECT

V

U

I

S

C E

FRANCHISEES

O

ELECTRONIC CHANNELS

I

E R

M E

V

D

T O

P R

C

R AGENTS AND BROKERS

MARKET COVERAGE STRATEGIES 1. Intensive Distribution 2. Selective Distribution 3. Exclusive Distribution

D. PROMOTION “Promotion is used in hope of influencing the recipients feelings, beliefs or behavior, through any form of communication.”

ICICI sindhoor campaign Amity Education Taj- “She” Campaign

GUIDELINES FOR SERVICE COMMUNICATION

     

Provide tangible clues Make the service understood Communication continuity Promising what is possible Capitalizing on word of mouth Direct communication to employees

ORIGINATING SOURCES OF MESSAGE RECEIVED BY THE TARGET AUDIENCE Messages originating within the organization Front-line staff tion c u d Pro nels Chan

Mark Chan eting nels

Service outlets Advertising Sales promotions Direct marketing Personal selling Public relations

Word of mouth

Messages originating outside the organization

Media editorial

A U D I E N C E

PROMOTION MIX ELEMENTS 1. 2. 3. 4. 5. 6. 7. 8.

Advertising Personal selling Sales promotion Public relations Word of mouth Direct mail Tele-marketing E-marketing

PROCESS OF COMMUNICATION ENCODES SENDER

SELECTIVE EXPOSURE

MESSAGE

CHANNEL

RECEIVER DECODES

FEEDBACK PRE TESTS AND POST TESTS

E. PEOPLE Who provide the service

SERVICE PROVIDER

Who receive the service

SERVICE RECEIVER/ CUSTOMER

PEOPLE EXTERNAL

INTERNAL

Other customers

Employees

Students of other divisions

Teachers

ROLE OF EMPLOYEES IN SERVICES High contact – Low contact services Professional – Non- Professional Services

Primary Role Facilitating Role Ancillary Role

INTERDEPENDANCE CYCLE/ THE SERVICE MANAGEMENT TRINITY

Operations Management

Marketing Management Customers

Human Resources Management

KEY CONCEPTS • • • • • •

Recruitment Training and development Motivation Retaining Boundary spanning Emotional labour & Surface Acting

VIMP CONCEPT : EMPOWEREMENT “Removing the barriers that prevent workers from exercising judgment and creativity” 4. Suggestion involvement: Big Mac, Fedex pay for suggestion schemes 5. Job involvement 6. High involvement

PARTIAL EMPLOYEES • Some service providers treat customers as “partial employees” so as to improve the service quality and productivity. • Customer is both employee and customer • Example: student council

F. PHYSICAL EVIDENCE “Physical evidence is the environment in which the service is delivered and where customers and firms interact. Any tangible commodities that facilitate performance or communicate the service are also physical evidence.” ELEMENTS OF PHYSICAL EVIDENCE  Exteriors  Interiors  Other tangibles

PHYSICAL ENVIRONMENT

AMBIENT FACTORS

DESIGN FACTORS

SOCIAL FACTORS

Furniture Smell in hospital

Tables Operation theatres Lights

Other patients

EVIDENCE

ESSENTIAL EVIDENCE

Equipments in gym

PERIPHERAL EVIDENCE

Brochure/ magazine

PURPOSE OF SERVICE ENVIRONMENT/ INFLUENCE ON BUYER BEHAVIOUR  Message-creating Medium

 Attention-creating Medium

 Effect-creating Medium

G. PROCESS: VVVVIMP “ It is the way of undertaking transactions, supplying information and providing services in a way that is acceptable to the consumers and effective to the organizations. Since service is inseparable, it is the process through which consumers get into interaction with the service provider”

FUNCTIONALTY

EASE OF USE

DESIGN OF PROCESS

ASTHETICS

EG. ATMS

SECURITY

Tells us the actual sequence in which service flows to every customer

Every service will have: • Complexity: steps involved • Divergence: variability in each step.

standard

complexity

divergence example

high

low

Airlines

high

Doctors/ restaurants

customized Low

STAGES OF SERVICES Pre-transaction Stage •Observing •Enquiring

Transaction Stage •Meeting with agents •Customization of service package •Purchasing

Post-transaction Stage •After sales service (e.g. Information, Extra advice, Additional services).

VIMP CONCEPTS 2. CRITICAL MOMENTS/ CRITICAL INCIDENTS/ MOMENTS OF TRUTH 3. SERVICE ENCOUNTERS 4. CIT 5. BLUE PRINTING 6. ROLE AND SCRIPT THEORIES 7. SERVICE MAPPING 8. CUSTOMER CONTACT WITH SERVICES 9. CUSTOMERS AS COPRODUCERS

1. CRITICAL MOMENT/ INCIDENTS/ MOT “All those moments when you come in contact with the service provider which leaves either a satisfying or a dissatisfying experience for either or both of them” Venn Diagram - Carlzon (chief executive) Scandinavian Airlines coined the term MOT 4. SERVICE ENCOUNTER “Entire length/ duration/ period during which customers interact directly with the service” • Service encounters must meet the customers expectation. • Venn Diagram

1. Could be: • Single encounter: restaurant • Series/ multiple encounters: doctor/ consulting • Different places/locations: airlines- baggage, check in, etc • Different employees: restaurant 2. Could be: • Shorter period encounter • Longer period encounter

3. CRITICAL INCIDENT TECHNIQUE :( CIT ) “Method to collect and categorize moments of truth and critical moments”

Cit helps to find

Customer satisfaction

Customer dissatisfaction

CHANGES

4. BLUE PRINTING • “Process/ design needed to make sure that the critical moments are encountered correctly” • “A blue print is a visual portrayal of a service plan. This is a technique used when planning a new or a revised process and prescribes how to function” • Allows the service marketer to evaluate which tasks are more important/ critical and which are prone to failure. • BP helps turn complaints into repeat business

Stages in blue printing 1. 2. 3. 4.

Represent the service product in molecular structural formula Breaking down the process into logical steps Recognizing the variability in the process Identify the backstage elements in the process

Q) WHAT IS BLUE PRINTING. EXPLAIN WITH AN EXAMPLE: 10 MKS. VVVVVIMP

EXAMPLE : AN OVERNIGHT STAY IN A HOTEL

5. ROLE AND SCRIPT THEORIES • Role: A set of behavior patterns learned through experience and communication • Role congruence: In service encounters, employees and customers must act out defined roles for good outcomes • Script: Predetermined stereotyped sequence of actions that defines a well known situation. A script will have a set of activities that has conventional roles, props, even sequences, standard entering conditions and standard outcomes

Script tells a customer

His role

Sequence of events

Other peoples actions

INTERACTION BETWEEN ALL 3

“CUSTOMER SATISFACTION WILL ALWAYS DEPEND ON WHETHER HE HAS RECEIVED SERVICES AS PER THE SCRIPT”

6. SERVICE MAPPING “Service mapping is a technique which is used to

portray an existing service situation and provides a useful tool to access and identify service evidence opportunities.”

Service maps tell us: • How to deliver a service • Role of employee • Interaction with customers SM gives a visual picture of the entire organization

LAYERS AND FEATURES OF SERVICE MAPS: IMP PROCESS

customer

Front Stage

Front line Service Structure

Line of visibility

employees Back stage

Support staff Management Services

Line of Interaction

Line of internal interaction Line of Impletation

EG: educational institution- COLLEGE Teaching Students Teachers, Professors, Service Structure

Front Stage Line of (classrooms) Interaction Line of visibility

Peons Staff Office and Admin Staff

Admissions & H. R. C. office

Principal’s HSNC, Principal, Vice Principal Office

Line of internal interaction Line of Impletation

7. LEVELS OF CUSTOMER CONTACT WITH SERVICES • High contact: customers visit the service facility / provider in person. Teacher. • Medium contact: customer contact is limited. Travel agency. • Low contact: very little. Call center. The 3 levels are based on: • The extent of interaction with the service personnel • The extent of interaction with the Physical elements • The extent of interaction with both

Types of Customer Contact: •

Constant physical contact

•

Constant communication contact (call center)

•

Sporadic physical contact (medical services)

•

Sporadic communication contact (financial services

(barbers)

8. CUSTOMERS AS COPRODUCERS (3 LEVELS OF CUSTOMER PARTICIPATION) • LOW- service is provided regardless of any individual purchase. Theatre. Online buying. Flight. • MODERATE- Inputs required for service creation. Restaurant. • HIGH- Co-production. Service is created from the customers purchase & active participation. Counseling/ learning.

H. PRODUCTIVITY & QUALITY PRODUCTIVITY: How inputs are transformed into outputs : THE TRANSFORMATION PROCESS QUALITY : Degree of satisfaction a customer gets from a service, by meeting their needs, wants and expectations  Competitive advantage = Good quality  Competitive disadvantage = Poor quality  In services quality is perceived by – supplementary services.( flower)

COMPONENTS OF SERVICE QUALITY QUALITY

TECHNICAL QUALITY

FUNCTIONAL QUALITY

EXTRINSIC

INTRINSIC

GARVINS 5 PERSPECTIVES OF QUALITY Transcendental:

Quality = excellence. Quality is synonymous with innate excellence, a mark of uncompromising standards & high achievements

Product-Based:

Quality is precise and measurable

User-Based:

Quality lies in the eyes of the beholder

ManufacturingBased:

Quality is conformance to the firm’s developed specifications

Value-Based:

Quality is a trade-off between price and value

DIMENSIONS/ DETERMINANTS OF QUALITY 1. Credibility: 2. Security: locker facility 3. Access: hotel answering in 3 rings 4. Communication: proper rates given 5. Understanding the customer: making customers welcome at reception 6. Tangibles: car park 7. Reliability: airlines ensuring baggage 8. Responsiveness: willingness to help. Idbi. 9. Competence: Ability 10. Courtesy:

10 DIMENSIONS 3. Tangibles

5 DIMENSIONS 3. TANGIBLES

5.

Reliability

5.

RELIABILITY

7.

Responsiveness

7.

RESPONSIVENESS

9. 10. 11. 12.

Competence Courtesy Credibility Security

10. ASSURANCE

14. Access 15. Communication 16. Understanding the customer

15. EMPATHY

SERVQUAL SCALE • Includes the 5 dimensions of quality • “Servqual is based on the premise that customers can evaluate a firms service quality by comparing their perceptions of its service with their expectations” • Servqual: Instrument developed by Parasuram, Ziethaml and Berry Servqual to measure the level of customer satisfaction with respect to quality

SERVQUAL SCALE: RATER

R

A

T

E

R

SERVICE QUALITY

RATER: VIMP CONCEPT •

RELIABILITY: Ability to perform the required service dependably and accurately

•

ASSURANCE: Knowledge and accuracy of the employees and their ability to convey trust and confidence

•

TANGIBLES: Appearance of physical facilities, equipments, personnel and communication material

•

EMPATHY: Caring individual attention to the customer. It involves Customizing services

•

RESPONSIVENESS: Willingness to help customers and provide prompt service

5 STAR OF QUALITY: VIMP Reliability

Responsiveness

Empathy

Assurance

Tangibles

QUALITY: HOUSING SECTOR RELIABILITY

Rahejas – know their construction will be excellent Delivery of house on time

ASSURANCE

Trust the big names Security, fire alarms Gate of bldg, surrounding area, park, car park etc

TANGIBLES EMPATHY

Interior designer, architect, watchman knowing residents

RESPONSIVENESS Real estate agent, plumber, electrician of bldg come immediately

QUALITY SHORTFALLS Customer expectations based on: • Individual needs and wants • Recommendations: word of mouth • Service marketor/provider • Past experience Quality v/s expectations 8. Good quality: more than expectations 9. Adequate quality: within tolerance zone 10. Quality shortfall: outside/ below tolerance zone

GAPS IN SERVICES: GAP MODEL/ GAP ANALYSIS CUSTOMER

Customer needs and expectations

1. Knowledge Gap

MANAGEMENT

Management definition of these needs

2. Standards Gap Translation into design/delivery specs

3. Delivery Gap Execution of design/delivery specs

4. I.C.Gap

5. Perceptions Gap Customer perceptions of product execution

7.

Advertising and sales promises

6. Interpretation Gap Customer interpretation of communications

Service Gap Customer experience relative to expectations 1, 6, 7 – external – between customer and organization 2,3,4,5 - between different functions and departments within organization

•

The knowledge gap: The difference between what the service provider believes the customers expect and the customers actual needs and expectations

•

The standards gap: The difference between management perception of customer expectations and the quality standards established for service delivery

•

The delivery gap: The difference between specified delivery standards and the service providers actual performance on these standards. Eg. Pizza half hour delivery promise.

•

The internal communication gap: The difference between what the company's advertising & sales personnel think are the products features, performance & service quality level and what the company is actually able to deliver

•

The perception gap: The difference between what is actually delivered and what customers perceive they have received

•

The interpretation gap: The difference between what a service providers communication efforts actually promise and what a customer thinks was promised by these communications

•

The service gap: The difference between what customers expect to receive and their perception of the service that is actually delivered

Quality shortfall occurs here in 7th gap

No.

1

2

3

Gap

Remarks

Knowledge

Narrow Kotak: “We believe the customer wants the right product and quick claim settlements.” Customer: “I need the right product and want speedy settlements for every claim.”

Standards

Negligible Kotak meets the customers the customer’s expectations of high quality service standards, that are at par with the best in the industry.

Delivery

Substantial Customer’s usual expect speedy claim settlement. The processing time is often longer than what the customers expect.

4

Internal communications

Narrow Kotak’s employees are well trained to explain the features of the products as mentioned on their advertisements.

Perceptions

Negligible Life insurance policies of Kotak deliver exactly what the customer perceives one to be.

6

Interpretation

Narrow Kotak does not complicate its advertisement campaigns and the employees are trained well to explain technicalities in a simple fashion. Hence customers are able to interpret communications.

7

Service

5

Negligible-Narrow

PRESCRIPTIONS FOR CLOSING GAPS 1. 2. 3. 4. 5. 6. 7.

Learn what customers expect Establish the right quality standards Ensure that the service performance meets standards Ensure communication promises are realistic Explain to the customer what the service has done for them Pretest all advertising so there is no communication gap Try to match customers perception to what is being delivered

SERVICE GUARANTEE: VIMP CONCEPT • “Predefined standards where the customer is entitled compensation in case of failures” • “Is a promise to customers ensuring highest of standards” • Examples: Dominoes, Mc Donald's

ADVANTAGES OF GUARANTEES • Force firms to focus on what customers want & expect in each element of the service • Set clear standards telling customers and employees what the company stands for • Require development of systems for generating meaningful customer feedback and acting on it • Force service organizations to understand why they fail and encourage them to identify and overcome potential fail points • Reduce the risk of purchase decision and build up long term loyalty

Service guarantee must be: • Unconditional • Easy to understand • Meaningful • Easy to invoke • Quick and easy to collect Service Guarantee types: • Express/ stated/ explicit • Implied/ implicit • Satisfaction guarantee • Service attribute guarantees DIFFERENCE BETWEEN GURANTEE AND WARRANTY