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Designing and managing Services

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Presentation on theme: "Designing and managing Services"— Presentation transcript:

1 Designing and managing Services

2 Services Service: A form of product that consists of activities, benefits or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. Service industries are everywhere: The government sector, with its court, employment services, hospitals, loan agencies, military services, police and fire department, postal service and schools, in the service business.

3 Classification of services mix
A company’s offering to the market often includes some services. The service components can be a minor or major part of the total offering. There are 5 categories of offerings - Pure tangible goods: Offering consist primarily of a tangible good with no services accompany the product such as Soap, salt, paper - Tangible with accompanying services: The offering consist of a tangible good with one or more services.

4 Cont... - Hybrid: The offering consist of equal part of good and services for example restaurants provide both food and service. - Major Service with accompanying minor goods/service The offering consist of major services along with additional services or supporting goods. For example air travel is a major service of travelling along with food, shopping on air etc is the accompanying minor goods - Pure Services: The offering consist primarily of a service. For example a hair cut or tailoring a suit.

5 Marketing strategies for service firms
The traditional four P’s marketing approach work well for goods, but additional elements require attention in services businesses. Three more elements of marketing mix are suggested which are: People Physical evidence Process

6 Marketing strategies for service firms
People An essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the right staff and training them appropriately in the delivery of their service is essential if the organization wants to obtain a form of competitive advantage. Consumers make judgments and deliver perceptions of the service based on the employees they interact with. Process Refers to the systems used to assist the organization in delivering the service. Imagine you walk into Burger King and you order a Whopper Meal and you get it delivered within 2 minutes. What was the process that allowed you to obtain an efficient service delivery? Banks that send out Credit Cards automatically when their customers old one has expired again require an efficient process to identify expiry dates and renewal.

7 Marketing strategies for service firms
Physical Evidence Where is the service being delivered? Physical Evidence is the element of the service mix which allows the consumer again to make judgments on the organization. If you walk into a restaurant your expectations are of a clean, friendly environment. On an aircraft if you travel first class you expect enough room to be able to lay down.

8 Nature of services Distinctive characteristics of services:
services have four distinctive characteristics that greatly affect the design of marketing programs: intangibility, inseparability, variability, and perish ability. Intangibility: unlike physical products, services cannot be seen, tasted, felt, heard or smelled before they are bought. For example a person getting cosmetic surgery cannot see the results before the purchase. Service companies can try to demonstrate their service quality through physical evidence and presentation. Like: Place, People, Equipment, communication material and price.

9 Nature of services Intangibility cont…
Place: the exterior and interior should have clean lines. The desks should be properly placed and the traffic flow should be planned carefully, waiting lines should not get overly long. People: Personnel should be busy, but there should be a sufficient number of employees to manage the work load. Equipment: Computers, copying machines, and desks should be and look like “state of the art”. Communication material: printed material, text and photos should suggest efficiency and speed. Price: the company could advertise that it will give some incentives to customers if the product or service not delivered/offered on time. For example: pizza hut, if unable to deliver the pizza in 20 minutes then the pizza will be free. Banks could advertise that it will deposit RS. 50 in the account of any customer who waits in the line for more than five minutes.

10 Nature of services Inseparability: whereas physical goods are manufactured, put into inventory, distributed through multiple reseller, and consumed later, services are typically produced and consumed simultaneously. Service provider and client interaction is a special feature of services marketing. For example: a barber cannot give a haircut without being present. Variability: the quality of services depends on who provides them, when and where and to whom, services are highly variable. For example, some doctors will provide excellent services other may not. Service buyers are aware of this variability and often talk to others before selecting a service provider. To reassure customers, some firms offer service guarantees that may reduce customers perceptions of risk.

11 Nature of services Perish ability:
services cannot be stored, so their parish ability can be a problem when demand fluctuates. For example transportation companies charge high rate in peak hours, and low rate in off peak hours, because of demand. Some doctors charge patients for missed appointments because the service value (doctors availability).

12 Three types of marketing in Services

13 Three types of marketing in Services cont...
Service marketing require not only external marketing but internal and interactive marketing. External marketing describe the normal work of preparing pricing distributing and promoting the services to customer. Internal marketing describe the work to train and motivate employees to serve customer. Interactive marketing describes the employees skill in serving the clients because the client judges services not only by technical quality but also its functional quality. For example in hospital a successful operation is the technical quality from the doctors, but the way the doctors show their concerns and giving confidence to the patients is the interactive marketing

14 Managing service Quality
The service quality of a firm is tested at each service encounter. If service personnel are bored, cannot answer simple questions, or visiting with each other while customers are waiting, customers will think twice about doing business again with that seller. Customer expectations: customers form service expectations from many sources, such as past experiences, word of mouth, and advertising. Customers compare the perceived service with the expected service. If the perceived service falls below the expected service, customers are disappointed. If the perceived service meets or exceeds their expectations, they are suitable to use the provider again. Successful companies add benefits to their offering that not only satisfy customers but surprise and delight them.

15 Gaps Model for improving service quality

16 Managing service Quality
Customer expectations cont….. There are five gaps that cause unsuccessful delivery of quality service. Gape between customer expectation and management perception: management does not always perceive what customers want. For example: hospital administrations may think patients want better food, but patient may be more concerned with nurse responsiveness. 2. Gape between management perception and service quality perception: Management might correctly perceived customers want but not set a performance standards. Hospital administrators may tell the nurse to give fast service without specifying it in minutes. 3. Gape between service quality specification and service delivery: personnel might be poorly trained, or incapable of or unwilling to meet the standard.

17 Managing service Quality
Customer expectations cont….. Gape between service delivery and external communication: consumer expectations are affected by statements made by company representatives and ads. If a hospital brochure shows a beautiful room, but the patient arrives and finds the room to be cheap and tacky looking, external communication have distorted the customer’s expectations. Gape between perceived service and expected service: this gape occurs when the consumer misperceives the service quality . The physician may keep visiting the patient to show care, but the patient may interpret this as an indication that something really is wrong

18 Best practice of service-quality management
Various studies have shown that well managed service companies share the following common practices A strategic concept Top management commitment to quality High standards Self service technologies System for monitoring service performance and customer complaints. Emphasis on employee satisfaction

19 Best practice of service-quality management
Strategic control: top service companies are customer obsessed. They have a clear sense of their target customers and their needs. They have developed a distinctive strategy for satisfying these needs. Top management commitment: organization such as Marriot, Pearl Continental have a thorough commitment to service quality. Their managements look not only at financial performance on a monthly basis, but also at service performance. High standards: the best service providers set high service quality standards. Citibank aims to answer phone calls within 10 seconds and customer letters within 2 days. Pizza hut aims to deliver the pizza within 20 minutes.

20 Best practice of service-quality management
Self service technology: consumers prefer those services they are convenient. Many person to person service interactions are being replaced by self service technologies. For example Automated Teller Machines (ATMs). Online ticket purchasing. Monitoring systems and customers complaints: top firms audit service performance, both their own and competitors, on a regular basis. customers complaint is a gift if handled well. Companies that encourage disappointed customers complain, and also empower employees to remedy the situation on the spot, have been shown to achieve higher revenues and greater profits than companies that do not have systematic approach for addressing service failures. Pizza Hut prints its toll-free number on all pizza boxes, when customer complains, Pizza Hut sends voice mail to the store manager, who must call the customer within 48 hours and resolve the complaints.

21 Best practice of service-quality management
Satisfying employees as well as customers: Excellent service companies know that positive employee attitudes will promote stronger customer loyalty. Instilling a strong customer orientation in employees can also increase their job satisfaction and commitment, especially if they are in service settings that allow for a high degree of customer contact time.

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