XIME / PGDM-B2B –RS–1302-March-2010 Plan for this Session Managing Innovation –Management of Innovation –Innovation & Technology –Innovation & the Development of New Products Quality Function Deployment Managing Business Services –Role & Importance –Buying Services –The Marketing Mix
XIME / PGDM-B2B –RS–1302-March-2010 Quality Function Deployment (QFD) QFD – for identifying: The attributes the customer wants in the product Establish link between these attributes and the product design Process involves understanding, and then marrying: The Voice of the Customer The Voice of the Engineer
XIME / PGDM-B2B –RS–1302-March-2010 Voice of the Customer Identify customer needs –The benefits the product should deliver –Necessary to identify, and focus, on the main ones –Relatively easy to do if the market is homogenous –Weight each attribute: enables QFD to balance it with cost
XIME / PGDM-B2B –RS–1302-March-2010 Voice of the Engineer Translate customer needs into product design Put onto a matrix against what the customer wants, and compared with competition
XIME / PGDM-B2B –RS–1302-March-2010 New Product Success / Failure - Factors Success Product Uniqueness / Superiority Market Knowledge Marketing Proficiency Technical & Production Proficiency Failure Price, with no economic benefit Obsolete in terms of whats available Customers satisfied with existing product
XIME / PGDM-B2B –RS–1302-March-2010 Cant forget the law! Woods First Law Of Procrastination NOW is the time to do things later! Woods Second Law Of Procrastination Procrastinate today! (Tomorrow may be too late.) Woods Third Law Of Procrastination Never put off till tomorrow what you can do the day after tomorrow!
XIME / PGDM-B2B –RS–1302-March-2010 Managing Business Services Look at the following products: 1. Water purifier 2. UPS 3. Computer network in an organization What is common to all of them?
XIME / PGDM-B2B –RS–1302-March-2010 Business Services – Role & Importance In India, Services sector has grown –1990-91 44% of GDP –2000-0153% of GDP –2007-0863% of GDP 2006-07 11% growth in Services vs. 9% in GDP Employment – Services 34%, second only to Agriculture (52%) Growth in other sectors (Manufacturing, Agriculture, etc) will spur growth in Services New Services
XIME / PGDM-B2B –RS–1302-March-2010 Services – Broad Categories Products supported by Services –Repairs & Maintenance –Training on use of Equipment / Services –Distribution & Delivery Pure Services –Consulting –Banking –Training –Recruitment
XIME / PGDM-B2B –RS–1302-March-2010 Defining Services - Services vs. Products ServicesProducts IntangibleTangible1. 2.Consumed when produced Lag between Production & Consumption Can be storedCant be stored3. 4. StandardizedHighly variable 5.Buyers are not owners Buyers are owners
XIME / PGDM-B2B –RS–1302-March-2010 Buying Services Services are mostly –Intangible –Non-standard Hence more difficult to evaluate. Important for the service provider to look at: 1.Attributes that are important to the buying segment 2.Variance of these attributes amongst buyers in the segment 3.How all service providers rate on these attributes
XIME / PGDM-B2B –RS–1302-March-2010 Services - Attributes Types of attributes vary from objective to highly subjective Attributes can broadly be classified as: –People related –Equipment related Examples of industries and the attributes they look for are:
XIME / PGDM-B2B –RS–1302-March-2010 Services – Importance of Attributes Extent To Which Equipment (Facility)-Related Attributes Form Part Of The Service Package Extent To Which People-Related Attributes Form Part Of The Service Package HighMediumLow High Rented storage, Conferences in hotels Airline, Car rentals Data mining & analysis services Medium SeminarsMaintenance contracts, AV rentals Freight movement, waste disposal Low Banking, Consulting, Advertising Equipment repairs, Newspaper clipping
XIME / PGDM-B2B –RS–1302-March-2010 Services – Selection Prime factor, besides Cost, is Perceived Quality Selection can be looked at on: –Determinant Attributes Differences between suppliers apparent enough for customer to decide –Minimizing Risk Differences in attributes enough, so customer minimizes risk (Market reputation etc)
XIME / PGDM-B2B –RS–1302-March-2010 Services – Quality Quality has 3 components: –Corporate Image Most vague! –Technical Quality (What the customer gets) Can be measured Rational –Functional Quality (How the customer is served) Difficult to measure objectively (compared to Technical) Weights decided by the customer
XIME / PGDM-B2B –RS–1302-March-2010 Services – Marketing Mix Involves 1.Identifying Market Segments Service segments are usually narrower Focus on what buyers expect vs. what they need 2.Development of the Service Package Defining customer benefits Articulating the benefits Service specifications Defining employee roles 3.Pricing
XIME / PGDM-B2B –RS–1302-March-2010 Service Package Translated into Level 1 Buyer BenefitBenefits sought by Buyer Level 2 ServiceBenefits offered by Seller Level 3 Service SpecsWhat the Seller will deliver Delivery to BuyerService + Processes + People Level 4 At time of delivery, make sure physical evidence is available!
XIME / PGDM-B2B –RS–1302-March-2010 Pricing the Service Package Unique nature of Services creates opportunities and problems Pricing depends on many factors –Demand: Difficult to forecast. What capacity does one plan for? What does one do with idle capacity? –Bundling Pure Mixed –New Business Cross selling
XIME / PGDM-B2B –RS–1302-March-2010 Promoting Services Communicating through employees –Front line assets Word of mouth
XIME / PGDM-B2B –RS–1302-March-2010 Services - Distribution Direct Intermediaries Franchising
XIME / PGDM-B2B –RS–1302-March-2010 Services - Failure Reasons for failure arise from: –Wrong segmentation –Wrong choice of Marketing Mix Defining buyer benefits and matching it with the service
XIME / PGDM-B2B –RS–1302-March-2010 A bonus? Table A Resolution 1. Place it for discussion … & 2. Remove it from discussion! Bag Of Snakes A business situation with many unexpected problems
XIME / PGDM-B2B –RS–1302-March-2010 Moving Forward Next Session: PGDM-RS-14 Date:Thursday, Mar 04, 2010 Subject:Managing Channels -
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