1. India’s Economy_The Road Ahead
Video-
India’s Economy_The Road Ahead

2. Overview of Chapter 1 Why Study Services? The Service Industry.
What are Services?
Characteristics of Services and difference between Product & Service.
The Expanded Marketing Mix Required for Services.

3. Why Study Services?

4. Why Study Services? (1) Services dominate economy in most nations
Understanding services offers you personal competitive advantages
Importance of service sector in economy is growing rapidly:
Services account for more than 60 percent of GDP worldwide
Almost all economies have a substantial service sector
Most new employment is provided by services
Strongest growth area for marketing

5. Why Study Services? (2) Video- The Growth Potential of Service Sector
Most new jobs are generated by services
Fastest growth expected in knowledge-based industries
Significant training and educational qualifications required, but employees will be more highly compensated
Will service jobs lost to lower-cost countries? Yes, some service jobs can be exported

6. Changing Structure of Employment as Economic Development Evolves
Share of
Employment
Agriculture
Services
Industry
Time, per Capita Income
Source: IMF, 1997

7. Share of Major Sectors in Total Employment (per cent)
Agriculture & allied
Industry
Services

8. Why Study Services? (3)
Powerful forces are transforming service markets
Government policies, social changes, business trends, advances in IT, internationalization
These forces are reshaping
Demand
Supply
The competitive landscape
Customers’ choices, power, and decision making

9. Services & The Indian Economy- Video on India’s GDP for the last….

10. GDP 9.3 6.7 8.6 8.9 6.7 4.5 4.7 Expected GDP for 2014-2015- 5.3-5.4
Sector
GDP
Expected GDP for
The services sector has emerged as the fastest growing sector of the economy and the second fastest growing in the world, with a CAGR of 9 per cent, behind China with a CAGR of 10.9 per cent during the period from 2001 to 2012.

12. Share in GDP Sector 1999-2000 2007-2008 2012-2013 2013-2014(P)
Agriculture & Allied
23.2
16.8
13.9
Industry
26.8
28.7
27.3
26.1
Services
50.0
54.4
58.8
59.9
Trade, hotels, transport, and Communication
21.2
25.9
26.59
26.4
Financing, insurance, real estate & Business Services
14.5
16.1
19.1
20.6
Community, social, and personal
14.4
12.4
12.8
12.9

13. Sector (P)
Agriculture & allied
Industry
Services
Trade, hotels, transport, and
communication
Financing, insurance, real estate
business services
Community, social, and personal
services

14. Examples of Service Industries- Video_Getting to knw the serivce sector
Health Care
hospital, medical practice, dentistry, eye care
Professional Services
accounting, legal, architectural
Financial Services
banking, investment advising, insurance
Hospitality
restaurant, hotel/motel, bed & breakfast,
ski resort, rafting
Travel
airlines, travel agencies, theme park
Others:
hair styling, pest control, plumbing, lawn maintenance, counseling services, health club

15. What Are Services?

16. What Are Services? (1) The historical view
Goes back over 200 years to Adam Smith and Jean-Baptiste Say
Different from goods because they are perishable (Smith 1776)
Consumption cannot be separated from production, services are intangible (Say 1803)

17. Defining Services Services
Are economic activities offered by one party to another
In exchange for money, time, effort service customer expect value from access to goods, labor, professional skills, facilities, networks, and systems, but they do not normally take ownership of any of the physical elements involved.

18. Difference Between a Goods & Services
Video- Differences Between a Product & Service

19. Differences Between Goods and Services
Intangibility
Heterogeneity
Simultaneous
Production
and
Consumption/
Inseparable
Perishability

20. Implications of Intangibility
Services cannot be inventoried
Services cannot be patented
Services cannot be readily displayed or communicated
Pricing is difficult

21. Implications of Heterogeneity
Services are heterogeneous across time, organizations and people
Service delivery and customer satisfaction depend on employee actions
Service quality depends on many uncontrollable factors
There is no sure knowledge that the service delivered matches what was planned and promoted

22. Implications of Simultaneous Production and Consumption
Customers participate in and affect the transaction- Real Time nature of Service
Customers affect each other
Employees affect the service outcome
Decentralization may be essential
Mass production is difficult

23. Implications of Perishability
Cannot be saved, stored, resold, reclaimed and returned
It is difficult to synchronize supply and demand with services
Services cannot be returned or resold

24. Table 1-2 Services are Different
Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, “Problems and Strategies in Services Marketing,”
Journal of Marketing 49 (Spring 1985):

25. Expanded Marketing Mix for Services
Video-
Service Marketing Mix
Service marketing Mix2

26. Services Require An Expanded Marketing Mix
Marketing Mix- the elements an organization controls that can be used to satisfy or communicate with customers.
Traditional MM- 4 P’s
Expanded Mix for Services- People, Physical Evidence, Process, Productivity & Quality

27. The 8Ps of Services Marketing
Product Elements
Place and Time
Price and Other User Outlays
Promotion and Education
Process
Physical Environment
People
Productivity and Quality
Fig 1.9 Working in Unison: The 8Ps of Services Marketing

28. Product- Key Strategic Decisions
Physical good features Quality Level Accessories Packaging Warranties Product lines Branding

29. Place- Key strategic decisions
Channel Type Exposure Intermediaries Outlet location Transportation Storage Managing Channels

30. Promotion- KSD
Promotion Blend Salespeople- selection, training, incentives, Advertising-media type, Types of ads Sales Promotion Publicity Internet/web strategy

31. Price- KSD
Flexibility Price Level Terms Differentiation Discounts allowances

32. People
All human actors who play a part in service delivery and thus influence the buyer’s perception: namely, the firm’s personnel, the customer, and other customers in the service environment.

33. People
‘provider is the service’- e.g consulting, counseling, teaching, famous doctor

34. People
Small part in the service delivery- a telephone installer, an airline baggage handler.

35. People
Customers themselves influence service delivery- e.g patients greatly affect the quality of service, when they comply or do not comply with health regimens prescribed by the doctor.

36. Physical Evidence
The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate the performance or communication of the service.
E.g brochures, letterheads, business cards, reports, signage and equipment
Might include the physical facility where service is offered- the servicescape- e.g. retail bank branch facility

37. Process
The actual procedures, mechanisms, and flow of activities by which the service is delivered- the service delivery and the operating systems
E.g. Southwest Airlines Vs Singapore airlines
Video- The Oberio Group- an awesome place to work

38. Video- Marketing Mix- The 7th P