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SERVICE MARKETING
Module 1 : Introduction - Difference between Products and Services, Key
characteristics of services.
Unit Structure :
1.0 Objectives
1.1 Introduction
1.2 Definition
1.3 Key Characteristics of Services
1.3.1 Constraints on the man agement of services and ways of
overcoming them
1.4 Product V/s Services
1.4.1 Concept of Product
1.4.2 How do Services Work
1.4.3 Difference between Products and Services
1.5 Classification of Services
1.6 Exercise
1.7 Bibliography
1.0 OBJECTIVES
The pupil will be capable of :
Describe the idea of services marketing;
Define services;
Discuss the features of services;
Differentiate between products and services; and
Categorise services after completing this module
1.1 INTRODUCTION
Marketers need to learn more about selling service products as India shifts
becoming increasingly toward a services -based economy. To put it simply,
services are actions or benefits that one party might provide to another that
are basically intangible and therefore don't lead to the ownership of
anything. As a result, we can understand how services differ from
products. munotes.in
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2 Over the last ten years, services have grown in importance within the
Indian economy. Services have risen to prominence ever since this trend
was established in the 1990s. Service organisati ons are simultaneously
experiencing a significant and severe increase in competitiveness. These
organisations must therefore manage their businesses in a more
professional manner. Perhaps it is because of this environment that
marketing is becoming a more important component in service
organisations. You will learn about the idea of services in this unit.
1.2 DEFINITION OF SERVICES
The American Marketing Association was one of the first to describe
services, defining them as "activities, benefits, or satisf actions which are
offered for sale, or delivered in connection with the sale of goods" as early
as 1960.
This definition had a very constrained perspective on services by stating
that they can only be provided in combination with the sale of products.
Acco rding to Regan's second definition, which was put forth in 1963,
"services represent either intangibles producing satisfaction directly
(transit, housing), or intangibles yielding satisfaction jointly when
acquired either with commodities or other services (credit, delivery)." For
the first time, services were regarded as wholly immaterial goods that
could satisfy customers and be marketed similarly to physical goods.
Services are any action or benefit that one person can provide to another
that is fundamen tally intangible and does not result in the ownership of
something, according to Kotler and Bloom's definition from 1984. Its
creation may or may not be connected to a tangible good.
Services are business operations that provide value and benefit consumers
at particular times and locations in order to effect the desired change in -
or on behalf of - the service recipient. (Source: Christopher H. Lovelock;
Edinburgh Business School; Service Marketing Barbara Lewis, Suzanne
Fernie, and Sandra Vandermerwe )
This definition considers the following crucial characteristics of services:
Services are primarily "activities" or "series of activities" rather than
"things."
Services are therefore intangible.
Services are generated and consumed simultaneously because they take
place in interactions between customers and service providers.
Consumers have a part to play in the production process because services
are offered as a solution to customers' problems.
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3 Service Sector In India: - Case let
The rise of the global economy is important to service industry.
Particularly in the GDP -contributing open trade nations, it is growing and
creating job opportunities. The production of the service sector is
positively correlated with per capita income. The service sector in Ind ia
contributes significantly to both employment and the country's overall
economic output.
A useful productivity indicator is service quality. It materialises when
businesses take the opportunity to offer its customers higher -quality
services in order to b oost customer happiness. The labour force is another
crucial component because the service industry relies heavily on workers.
As a result, just as raw materials and machinery are crucial to the
manufacturing business, so too are labour and technical exper t aspects in
the service sector.
Types
Service sector is broadly classified into:
Consumer Services: Individual customers will be the target market.
Retail and hospitality are two examples.
Business Services: The organisations or other enterprises will b e the
target market. Information technology and marketing services are two
examples.
Public Service: Delivering services to the general public is known as
public service. Example Education and healthcare
Examples of Companies in the Service Sector
Hospital ity, transportation, financial services, retail sales, real estate,
banking, media and entertainment, information technology, and education
are a few examples of tertiary sector firms. Together, these industries
produce a wide range of jobs in the service sector, including those for
teachers, doctors, retail salespeople, consultants, and engineers.
Some of the major Service Industries of India:
Healthcare :
The healthcare industry offers services that aid in maintaining and
enhancing people's health. The im provement of people's general physical
and mental health and well -being on a global scale depends on it. One
industry that calls for qualified individuals includes those who have
training in medicine, dentistry, psychology, and assistive technology.
Additi onally, the demand for better medical care is spurring innovation in
medical equipment, supplies, and services.
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4 Information Technology
A wide range of different industries are served by the IT sector. It can
function as an internal IT department or as an o utside provider of IT
services, offering a range of services such consulting, software
administration, cloud computing, and data management.
Entertainment and the Media
Media: Businesses that market movies, TV shows, printed materials, etc.
make up this se ctor. The services in this field concentrate on giving the
general public access to entertaining and educational content. The Walt
Disney Company and McGraw -Hill Company are two examples of
companies in this industry.
Education
The education sector consist s of for -profit, nonprofit, and public
organisations that work to improve the nation's human capital. Every
company needs a sizeable percentage of competent workers, and the
education sector offers the atmosphere for developing a variety of
professional hu man resources.
India's service sector
In India, the tertiary sector is both the largest and fastest -growing.
India is one of the top 10 Leading exporters and importers in global trade
in commercial services, according to World Trade Statistical Review,
2020. India provides employment, aids in export, and draws in foreign
direct investment.
An economy dependent on agriculture was transformed into one
dominated by the service sector in the 1990s as a result of liberalisation
and a number of economic changes. The importance of the service sector
expanded due to a number of causes, including economic development,
the easing of FDI restrictions, rising per capita income, improved
education, and changes in lifestyle.
For instance, the availability of highly skille d labour and technology
improvements have contributed to the expansion of enterprises in the IT
sector. Services are currently being outsourced from developed nations to
emerging nations like India. It causes the Indian industry to expand as a
result. Gove rnment investment on social, personal, and community
services has also increased, which has fueled sector growth.
(https://www.wallstreetmojo.com/service -sector/ )
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5 1.3 KEY CHARACTERISTICS OF SERVI CES
With a better understanding of a service's features our ability to manage it
from an economic and marketing perspective will improve. Services are
immaterial, inseparable, variable, and perishable. Every characteristic has
issues, and each issue needs a strategy to be resolved.
Source:(shorturl.at/nrtD4)
http://1.bp.blogspot.com/QDI4R5lBMuk/Uk_HvSYslpI/AAAAAAAAAE
Q/JMT6JEoNxdA/s1600/s ervice -characteristics.png
Because services are intangible, consumers cannot physically see, touch,
feel, taste, smell, or even hear them before making a purchase.
According to the principle of inseparability, services are created,
delivered, and used al l at once. Manufacturing occurs in the production
unit in the case of produced items, after which the products are stored in
inventory and shipped to the distribution outlet, where consumers pick
them up for consumption.
When services are given variably, they typically differ in terms of service
scope, delivery time, and quality. Since most services are provided by
humans, they vary.
Services that are perishable cannot be stored.
Example: When a cinema hall seats remain vacant during a show with
only few number of viewers, the unfilled seats stay unsold, however
unsold produced goods can be added to inventory and sold the next day.
Services are frequently less standardised than goods, generated and
consumed simultaneously, and are somewhat intangible. Due to the
inherent marketing implications of these distinctive service qualities,
service marketers must implement effective marketing tactics.
1. Intangibility: Typically, services cannot be touched, tasted, felt, heard,
or smelt prior to purchase. Before (and occasionally during and after)
the service delivery, the potential consumer cannot understand the
service. For many car repair customers, for instance, the service is
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6 entirely invisible to them; they frequently cannot see what is being
done and many are ac tually unable to assess what has been done.
2. Implication: Intangibility creates issues since it may be challenging for
consumers to understand what is being offered before and even after
receiving the service. Determining the degree of intangibility and the
management action necessary to make the service more tangible
presents a problem for the service provider. The first duty needs using
some kind of measurement, while the second task entails giving
consumers concrete evidence, like a booklet to explain the service. Fig
Some Implications of Intangibility :
Source:
https://www.yourarticlelibrary.com/wp -
content/uploads/2014/04/clip_image002236.jpg
1. Inseparability : Services like carpet cleaning and plumbing can be
generated and provided in settings where the customer's presence is not
required. Some services, like distance learning courses, may rely more
on written communication than others, while others, like home
banking, may rely more on technology. There is always a chance that
production and consumption will be inseparable, regardless of the type
and degree of relationship.
Implication: Because the consumer participates in the service's
creation and delivery, t he service provider needs to be careful about
what is created and how it is created. The chance of repeat business
may be influenced by how teachers, doctors, bank tellers, lawyers,
vehicle mechanics, and hairdressers behave in front of the consumer.
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7 Some Implications of Inseparability :
Source:
https://www.yourarticlelibrary.com/wpcontent/uploads/2014/04/clip_imag
e005_thumb19.jpg
1. Variability: Variability i n service performance is an inevitable result
of simultaneous production and consumption. Depending on who offers
the service, as well as when and how it is delivered, the quality may
vary. One hotel offers a quick, effective service, whereas another
nearb y offers a slow, ineffective service. One hotel staff is cordial and
helpful, while another is haughty and impeding, in that hotel. Over the
course of a day, performance might vary, even within one employee.
Implication: The first step in reducing variabi lity is to identify the
sources. It could be because an employee has undesirable personality
qualities that are difficult to spot throughout the recruiting process.
Nothing much can be done about this other than to cross one's fingers
and hope the employee decides to leave his job. However, variances in
performance could have valid, sensible explanations. For instance, it
might be the result of inadequate training, supervision, and
communication, as well as a general lack of ongoing support.
1. Perishability: Services cannot be kept for sale or usage later due to
their perishability. Unused hotel rooms, unpurchased airline tickets, and
unfilled college spots cannot be claimed back. Services cannot be saved
because they are performances. When demand vastly outw eighs supply,
it cannot be satisfied by moving products out of a warehouse, as in
production. Similarly, the revenue and/or value of that service is lost if
capacity vastly outweighs demand.
Implications: Service firms frequently experience changes in dem and,
which could be problematic if they are uncontrollable. It is necessary to munotes.in
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8 establish strategies for achieving a better balance between supply and
demand. In contrast to things, services cannot be stored. A automobile
manufacturer who is unable to sell the entirety of its output during the
current period may carry forward stockpiles to be sold during the
following one.
2. Heterogeneity: Despite the fact that conventional processes might be
employed, such as when handling a travel reservation, scheduling
servicing for a customer's car, or obtaining a quote for life insurance. A
service's individual "units" may vary from one another. Franchise
businesses make an effort to maintain a degree of uniformity, but it is
ultimately challenging to guarantee the same level of output in terms of
quality. Even if this factor also applies to some product marketing, it is
challenging for customers to evaluate quality before to purchase.
3. Lack of ownership: Because a consumer may merely have access to or
use a facility, the re is a fundamental difference between a service
company and a product industry (e.g. a hotel room, a credit card).
Payment is required to access, use, or hire items. With the exception of
limitations imposed, say, by a hire purchase arrangement.
1.3.1 Constrai nts on the management of services and ways of
overcoming them :
Source:
https://www.yourarticlelibrary.com/wpcontent/uploads/2014/04/clip_imag
e009_thumb8.jpg
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9 1.4 PRODUCT V/S SERVICE
There are no such things as service businesses, according to Levitt. T here
are only service sectors with more or less service components than other
industries. Everybody is in service , practically every tangible core
physical product had an associated intangible service component. As a
result, everyone is serving.
Ms. G. Ly nn Shostack, a vice president at Citibank, first proposed that
marketing "entities" are mixtures of separate intangible and tangible
characteristics in 1977. We can see that not all products and services fall at
one spot if these absolute tangible and inta ngible elements are taken to the
two extremes of a continuum. From absolutely tangible things like salt to
absolutely intangible services like education, there is a spectrum.
Source:
https://www.researchgate.net/The -tangible -intangible -dominant -
continuum _fig8_43185404
The other strategy of making distinctions between various products was
put up by Theodore Levitt. He claims that products can be divided into
two groups: search goods and experiential goods.
Search goods are typically packaged items that cu stomers may view,
assess, and try before making a purchase.For instance, a car, shampoo, etc.
Contrarily, experience goods are ones that one can view or assess after
making a purchase.For instance: Vacations, teaching, etc.
Some people refer to search res ults as physical things, while others refer to
them as tangibles. As said, there is a spectrum between the two extremes,
and certain products may fall within this range. munotes.in
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10
The viewpoint of Levitt has been further explained and broadened by
Philip Kotler, w ho proposes four categories into which the relationship
between a product and a service can be divided.
First, there is the pure tangible good, which is comparable to a commodity
and makes it challenging to discern between the products offered by
different suppliers even though they appear to be the same. There are
virtually no intangibles or services connected to either of the products.
Second, it consists of a physical commodity and related service. In this
instance, the offer consists of a service or ser vices in addition to a tangible
commodity. In this case, an attempt is made to set the product apart from
rival items based on service.
Example: Consider two brands of Television one has 3 years guarantee
and other has 5 years guarantee, based on guarantee the products are
differentiated.
Thirdly, there are small commodities or services that go along with the big
service. In this instance, the manufacturer or supplier is essentially
providing a service to the market and may or may not be bundled with
ancill ary goods or services
Example: Tourism company is offering basically travelling, but along with
it provides food and entertainment.
Fourth is pure service. Example: Counselling, tutoring.
Frequently, services and products are contrasted.
1.4.1 Concept of p roduct :
An item for sale is called a product. Most importantly, it is a tangible
physical object. Products can be bought, sold, stored, and transported.
After the transaction is complete, we can transfer the item, give it back, or
even exchange it for a di fferent one. There are countless products all
around you if you look. Products include things like laptops, cars,
furniture, food items, mobile phones, and laptops. munotes.in
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11 In the production process, manufacturers buy items as raw materials and
then sell those thi ngs as finished goods. Every thing is manufactured at a
cost, and it is priced accordingly. In addition, a product's price might
change depending on its quality, marketing, and market.
1.4.2 How Do Services Work?
A service can be defined as an exchange tha t does not entail the physical
transfer of things from the vendor to the customer. In essence, it is work
performed on behalf of another person by one or more people. You can get
these things done for you by other individuals, businesses, and the
governmen t. Services include things like banking, health care, education,
insurance, and transportation. As opposed to products, which are tangible
physical objects, services are intangible and non -physical. The booking
agent, for instance, is giving you a service when you make a reservation
for a vacation, but the reservation itself is abstract and cannot be handled,
stored, or moved.
1.4.3 Difference between Product and Service
Product Service
Meaning Products are
things or
systems made
available to
consumers. Services are
transactions where
no physical
commodities are
moved from the
supplier to the
customer.
Category Tangible Intangible
Creates It creates v alue It creates
relationship
Expenses More Expensive Less Expensive
Who approaches whom? Customers
receive
products. Consumers visit
services.
Production Products are
created, shipped,
and kept in
storage. Services cannot be
produced, kept in
storage, or moved. munotes.in
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12
1.5 CLASSIFICATION OF SERVICES
Services can be categorised using the following criteria:
1) By Market Segment : Because different markets have unique wants
and characteristics, different market segments require distinct service s.
According to the types of markets or final clients supplied, the
following service types exist:
End User : Services purchased by clients for their own usage are
referred to as "end consumer services."
For instance, body massages, aesthetic treatments, and hair trimming.
Business Consumer Services, also known as Business to Business
(B2B) services, refer to the many services that businesses purchase.
Examples include consulting, market research, advertising, etc. Consistency Products offered
may be same in
consistency.
There is never a single
delivery of a certain
service that is precisely
the same as prior or
upcoming deliveries.
Separability Product and the
company producing
it are separate Service cannot be
separated from its
provider.
Customization Products cannot be
modified to meet
specific needs. The
business must
introduce new
products to reach its
target market. Services may be
promptly adjusted
because they differ from
person to person.
Returnability The product can be
returned Service can’t be
returned.
Durability The lives of
products are longer.
Even if I put a book
on the shelf and it
doesn't sell today, I
can still sell it in the
future. A service supplied today
that is not used will
never be recovered. If I
don't rent out my hotel
room tonight, I'll never
be able to do so a gain; it
will be lost forever.
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13 2) By Degree of Tangibility : The degree of tangibility affects the types of
services as well. The services can be divided into the following
categories according to their degree of tangibility:
Extremely Tangible : When a service includes a tangible product
offering, it is said to be "highly tangib le." The lifespan of these items
can occasionally be short.
For instance, someone can rent a car for a set amount of time. The
consumer must deliver the vehicle back to the service provider after
this time period has passed.
Service Relating to Tangible G oods : Commercial entities give their
products some sort of warranty. Customers are given temporary access
to complimentary services if they experience any problems with the
products. These kinds of free services fall within this category.
For instance, the maker of a cell phone might offer a customer a brief
period of free service.
Highly Intangible : The user isn't given a real product when using these
services. For instance, a consumer visiting a yoga studio just receives
the yoga exercises. Customers can experience the center's tranquil
atmosphere, but no other tangible goods are provided.
3) By Provider Service : The kind of services is significantly determined
by the skills and capabilities of service providers. Depending on the
knowledge and skills needed by the service provider to provide services
to the clients, the various types of services can be divided into the
following categories:
Professional Services : In order to provide these services, formal
training is required.
For instance, the services pro vided by doctors, IT specialists, attorneys,
etc.
Non-Professional Services: Offering services to clients doesn't call for
any professional training. Examples of these services, where service
providers do not require professional training, include houseke eping
and babysitting.
4) By Business Orientation : A service organization's level of business
orientation affects the services it provides. A service organisation could
be public, private, for profit or nonprofit purposes.
Non-profit services' primary goals are to benefit society rather than
make a profit.
As an illustration, consider charitable hospitals, public schools, etc.
Commercial services : The primary goals of such services are to
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14 For instance, the services provided by banks, insurance brokers, and
airlines.
5) By Level of Regulation : The level of rules that the government
imposes might serve as another basis for categorising different services.
Different services can be grouped into the following categories
according to the level of regulation:
Highly Regulated : To control these services, a wide range of laws and
regulations have been developed.
Examples: hospitals, insurance, public transit, etc. are a few examples.
Some of the services are just lightly regulated and su bject to fewer
limitations. Take fast food, catering, etc. as examples.
Non-Regulated : Some of the services are not subject to any rules.
Taking care of the lawn, painting the house, using the computer, etc.
1.6 EXERCISE
State whether the following stat ements are true or false:
1. Services are only provided in conjunction with the purchase of
products or as part of a package deal.
2. Both physical and intangible services are available.
3. Customers are crucial to the provision of services.
4. Courier services have minimal customer contact.
5. A high contact service is teaching.
6. Unskilled workers perform hair cutting services.
7. The quantity of tangible commodities included in fast food restaurant
services is substantial.
Match the following set s:
Set A Set B
1. There is no way to store services. a. Intangibility
2. Services are not patentable b. Inseparability
3. Difficulty in service quality control c. Heterogeneity
4. No widespread service production d. Perishability
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15 1.7 BIBLOGRAPHY
1. Vinnie Jauhari, Kirti Dutta (2017), Service Marketing Text and Cases
Second edition, Oxford University Press 2009,
2. Kotler, P., and Keller (2007) A Framework for Marketing
Management 3rd ed. New Jersey: Prentice Hall.
3. Lovelock, C.H., Patterson, P.G. and R .H. Walker, (2001). “Services
Marketing: An Asia -Pacific Perspective”, 2nd edition, Prentice Hall,
NSW.
4. Hitesh JhanjiEXCEL BOOKS PRIVATE LIMITED A -45, Naraina,
Phase -I, New Delhi -110028 for Lovely Professional University
Phagwara
5. https://www.enotesmba.com/2015/06/introduction -to-service -
marketing.html
6. https://www.brainkart.com/articl e/Introduction -to-Service -
Marketing_5997/
7. https://www.wallstreetmojo.com/service -sector/
8. http://1.bp.blogspot.com/QDI4R5lBMuk/Uk_HvSYslpI/AAAAAAA
AAEQ/JMT6JEoNxdA/s1600/service -characteristics.png
9. https://www.yourarticlelibrary.com /wp-
content/uploads/2014/04/clip_image002236.jpg
10. https://www.yourarticlelibrary.com/wpcontent/uploads/2014/04/clip_i
mage005_thumb19.jpg
11. https://www.yourarticlelibrary.com/wpcontent/uploads/2014/04/clip_i
mage009_thumb8.jpg
12. https://www.researchgate.net/The -tangible -intangible -
dominantcontinuum_fig8_43185404
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16 2
CONSUMER BEHAVIOR IN SERVICES
Unit Structure :
2.0 Objective
2.1 Introduction
2.1.1 Consumer Actions in the Service
2.1.2 Important of Consumer Behavior
2.1.3 7 Different Members of the Buying Centre of an Organisation
2.1.4 Factors Influencing Con sumer Behavior
2.3 Summary
2.4 Refrences
2.0 OBJECTIVE
1) Is to understand the relationship between consumer behaviour and
customer value, satisfaction, trust, and retention.
2) To understand what consumer behaviour is and the various types of
consumers.
3) To understand the relationship between consumer behaviour and the
marketing concept, the societal marketing concept, as well as
segmentation, targeting, and positioning.
4) To comprehend how marketers may better meet the requirements and
wishes of customers thanks to modern technology.
5) To comprehend how marketers are more able to contact customers
wherever they want to be reached
6) To comprehend how the state of the global economy is causing
unpredictability in consumer spending.
2.1 I NTRODUCTION
The study of people, groups, or organisations and all the behaviours
connected to the acquisition, consumption, and disposal of products and
services is known as consumer behaviour. Consumer behaviour refers to
how a person's feelings, attitude s, and preferences influence their
purchasing decisions. The formal study of consumer behaviour examines
individual traits like demographics, personality lifestyles, and behavioural
variables (such as usage rates, usage occasion, loyalty, brand advocacy, munotes.in
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Services
17 and willingness to provide referrals) in an effort to understand people's
desires and consumption habits. ty, brand advocacy, and willingness to
provide referrals). For a business to be successful with both the launch of
new items and its present lineup of p roducts, it is imperative to
comprehend consumer behaviour. Every customer approaches purchasing
a certain product with a unique thought process and mindset. There are
several risks for product failure if a corporation doesn't comprehend how a
consumer wil l react to a product.
Consumer behaviour varies as a result of evolving fashion, technology,
trends, lifestyles, disposable money, and similar other variables. To
coordinate marketing efforts appropriately, a marketer must be aware of
the aspects that are changing.
According to Engel “Consumer behavior is the actions and the decision
processes of people who purchase goods and services for personal
consumption”
2.1.1 Consumer Actions in the Service
We all purchase various services for a variety of reasons. One individual
could choose dining out for the delicious cuisine, while another would
choose a posh restaurant for prestige. While the other could like to read
Business Standard, one might want to read The Times of India. Depending
on the service a client may have gotten, their conduct may vary from one
to the next. Not everyone will necessarily be satisfied with the service they
receive.
2.1.2. Important of Consumer Behavior
1. Differentiation by Consumer:
A marketing strategy called customer differentiati on is utilised to
differentiate one consumer from a group of connected consumers. This
helps to develop a target market of clients who display similar or matching
behaviours. Despite having a specific consumer demographic in mind,
there may still be differ ences amongst particular clients. Each consumer
group is unique, and each group's requirements and desires are distinct
from those of other groups. A marketer may create unique marketing
campaigns when he is aware of the differences between each set of
consumers.
Your plans may be adjusted to meet the demands of various client groups
with the aid of consumer differentiation. You may increase the depth and
readth of your offerings once you've differentiated your target
audience.You'll be able to assist a lar ger number of clients successfully.
2. Customer retention:
According to Professor Theodore Levitt. “Consumer behavior is of most
importance to marketers in business studies as the main aim is to create
and retain customers,” munotes.in
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18 In addition to attracting new consumers, consumer behaviour is crucial for
keeping current ones as well. A happy customer is more inclined to make
the same transaction again. Therefore, it is important to sell the product in
a way that encourages repeat purchases from customers. Theref ore, it is
obvious that acquiring clients and keeping them is crucial. Only by
comprehending and paying attention to the consumer's purchasing
behaviour can this be accomplished.
3. Create a Marketing Program That Is Relevant:
Marketing programmes that ar e successful are made possible by an
understanding of customer behaviour. Based on their behaviour, each ad
may communicate particularly to a distinct set of customers.
For instance, when marketing to children, you may need to keep an eye out
for media lik e TV advertising, school activities, and blogs that cater to
young mothers. You'll need to use several message strategies for various
customer segments.
Marketers may better understand what drives consumer behaviour by
studying consumer behaviour. The same reason might also be utilised in
advertising to increase consumers' interest in buying something.
Additionally, marketers should base judgements on customer behaviour
when it comes to the company logo, discounts, packaging, and gifts.
4. Predicting Market Trend:
Analysis of consumer behaviour will be the first to point to a change in
market patterns. For instance, nutritious cuisine and environmental
friendliness are currently popular trends among customers. Many
businesses, including McDonald's, have noti ced this shifting market
tendency. McDonald's introduced healthier meal alternatives based on
consumer behaviour.
A corporation can avoid spending a lot of money and energy on making a
product that won't be profitable by instead performing a customer
behav iour research. For instance, a company won't squander money
creating a product in the summer that won't sell. The business chooses a
manufacturing plan based on customer behaviour that will reduce
marketing and warehouse expenses.
5. Competition:
Finding o ut the answers to some of the following issues is one of the most
crucial benefits of studying consumer behaviour:
Why would a customer choose your rival over you?
What characteristics of your competitors' products draw customers in?
What shortcomings do c ustomers see in your products as compared to
those of your rivals? munotes.in
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Services
19 Understanding and dealing with competition are made easier by
studying customer behaviour. Your brand may have a competitive edge
based on customer expectations.
6. Innovate New Products:
We are all familiar with some of the household brands, like Wheaties
Dunk -a-Balls Cereal, Colgate Kitchen Entrées, Earring Magic Ken Doll,
and New Coke. Do you notice any similarities between these two
products? Yes, they all fell short.
The unfortunate rea lity is that the majority of new initiatives and products
fail. According to the industry, an estimate of new product failures ranges
from 33% to 90%. Businesses continuously make great efforts to boost the
probability that their innovative concepts or new goods will be successful.
One of the most crucial methods is to carry out a thorough and careful
analysis of consumer behaviour.
Nike discovered through customer behaviour analysis that while the
majority of their target market does not consist of competi tive athletes,
many of them aspire to be more like them. Therefore, Nike launched a
"Find Your Greatness" campaign to promote athletics in the London
Olympics in 2012. It was meant to inspire individuals of all physical
capacities —not just top -tier athlete s—to follow their aspirations of
becoming athletes. The campaign was thoughtfully planned and data -
driven, of course, and every decision was carefully considered before
being made. Many customers were motivated by this message, and target
consumers found it to be very appealing.
7. Improve Customer Service :
Different degrees of customer service are needed by consumers, and
knowing how your client base differs from one another can help you
deliver the best service possible.
For example, if you own an electron ics store, high school or college
students buying a new laptop are more likely to be aware of the features
they desire than someone buying his first computer. With the first
demographic, your service objective will be to inform customers about the
most rece nt technological trends, whereas with the second, you'll need to
invest more time in educating the client, ascertaining his unique needs, and
even instructing him on how to use the features of his new electronic
device.
2.1.3 7 Different People in an Organ ization's Buying Centre
1. Initiators:
Typically, users are the ones that have a demand for a product or item and
then a supplier. However, there may be times when senior management,
maintenance, the engineering department, or other parties sense the
neces sity or recognise it. Initiators are those who "initiate" or begin the
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20 2. Users:
Users of numerous goods fall within this group. If they have strong
technical skills like engineers and R&D personnel and are also effective
communicators They are essential to the purchasing process. They also
serve as starters.
3. Buyers:
They are the ones with the official power to choose the supplier and
determine the conditions of the transaction. They are crucial in choosing
suppliers, engaging in nego tiations, and occasionally influencing the
product specifications. Getting offers or bids, analysing them, choosing the
supplier, negotiating the terms and conditions, issuing purchase orders,
following up, and keeping track of delivery are the main duties or
obligations of purchasers. In order to save time and money, many of these
processes are now automated.
4. Influencers:
By creating product requirements, technical staff, specialists, consultants,
and certified engineers act as influencers. Simply descr ibed, they are
members of the organisation who have a say in a customer's purchase.
When there are significant long -term costs and rewards, it may also be the
top management. Influencers offer data for analysing options strategically.
5. Deciders:
The mark eting representative among the members must be aware of the
decision -makers in the organisation and make efforts to connect with and
keep in touch with them. The official organisational structure may be
misleading, and the choice may not even be made by th e buying division.
In most cases, the buying executive may make the final decision for
regular purchases. Senior executives make decisions, however, when it
comes to expensive and technically challenging items. The decision -
makers are those who choose the suppliers and the requirements/
specifications for the products.
6. Approvers:
Approvers are those who provide their approval to the suggested activities
of deciders or purchasers. They could also be members of senior
management, the financial team, or use rs.
7. Gate Keepers:
A gatekeeper functions as an information filter. He is the person the
marketer must get through before he can speak with the decision -makers.
The formulation of industrial marketing tactics and the salesperson's
approach depend heavily on an understanding of the gatekeeper's function.
They only let information reach the decision -makers that supports their
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Consumer Behavior In
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21 2.1.4 Factors Influencing Consumer Behavior
Many distinct aspects affect consumer behaviour. A marketer should make
an eff ort to comprehend the variables that affect consumer behaviour.
These are the top 5 elements that affect how consumers behave:
1. Psychological Factors :
A key factor in determining customer behaviour is human psychology.
Despite being challenging to quanti fy, these elements have the potential to
affect a buyer's choice.
Several significant psychological aspects include:
i. Inspiration :
When someone is sufficiently driven, it affects their purchasing decisions.
A person has a variety of wants, includi ng those for self -actualization,
esteem, security, and social needs. The fundamental requirements and
security needs take precedence over all other demands out of all these
needs. Therefore, a consumer's motivation to purchase goods and services
can be inf luenced by their fundamental necessities and security needs.
ii. Sensation :
Consumer behaviour is significantly influenced by consumer perception.
Consumer perception is the process through which a customer gathers
facts about a product and interprets thos e facts to generate an impression
of that specific product.
Customers form opinions about products based on what they see in
commercials, promotions, customer reviews, social media comments, etc.
As a result, customer perception has a significant impact on what people
choose to buy.
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22 iii. Education :
A person gains greater knowledge about a product when they purchase it.
Over time, via experience, we learn new things. Learning is dependent on
a consumer's abilities and knowledge. While practise can help with skill
development, experience is the only way to learn new things.
Learning may be conditioned or cognitive. In conditional learning, a
situation is repeatedly presented to the customer, who eventually develops
an opinion about it. Contrarily, in cognitive learning, the buyer will use his
knowledge and abilities to find fulfilment and a solution in the thing he
purchases.
Contrarily, in cognitive learning, the buyer will use his knowledge and
abilities to find fulfilment and a solution in the thing he purch ases.
iv. Beliefs and Attitudes :
Consumers hold specific attitudes and ideas, which have an impact on their
purchasing decisions. The consumer behaves a certain manner toward a
product based on this mentality. The brand image of a product is
significantly influenced by this mentality. Therefore, in order to build their
marketing strategies, marketers work very hard to comprehend customer
attitudes.
2. Social Factors :
Due to their social nature, humans are always surrounded by individuals
who can affect thei r purchasing decisions. Humans attempt to mimic other
people and also want to fit in with society. Their purchasing decisions are
therefore impacted by others around them. These components are thought
of as social components. Several societal factors inclu de:
i. A family :
Family has a big impact on how people behave when they go shopping. A
person develops their preferences as a child by seeing their family
members make purchases, and they stick with those tastes as they age.
ii Reference Organizations :
A reference group is a collection of persons that a person identifies with.
Members of the reference group generally influence one another and have
comparable shopping preferences.
Roles and status A person's position in society has an impact on him. If a
person holds a high position, his purchasing decisions will be heavily
impacted by his position. While a staff member or employee of the same
organisation will have a distinct buying pattern, the chief executive officer
of a company will make purchases that r eflect his standing.
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Consumer Behavior In
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23 3. Cultural factors :
A collection of individuals is connected to a certain community's beliefs
and ideals. A person's conduct is greatly impacted by the culture associated
with the community from where they are originally. Among the cu ltural
influences are:
i. Culture :
Cultural variables have a substantial impact on consumer purchasing
behaviour. The fundamental beliefs, needs, desires, preferences,
perceptions, and behaviours that a consumer learns from close relatives
and other influe ntial persons in their life are included in the category of
cultural factors.
ii. A subculture :
There are several subcultures within each cultural group. The ideas and
values of these subcultural groupings are similar. People from diverse
religions, castes , geographic locations, and nations can make up
subcultures. By themselves, these subcultures constitute a client segment.
iii. Social Class :
Every civilization in the world has some kind of social class. The social
class is influenced by a number of chara cteristics in addition to money,
including employment, family history, educational attainment, and
residential location. The social class has a key role in predicting consumer
behaviour.
4. Personal Factors :
Consumers' personal circumstances have an impact on what they buy.
These individual characteristics vary from person to person, resulting in
various views and purchasing patterns.
i. Age is one of the personal aspects:
Age is an important factor that influences consumer behaviour. Younger
consumers have distinct buying habits than middle -aged consumers.
Elderly consumers behave entirely differently while making purchases.
Teenagers will be more inclined to purchase brightly coloured clothing and
cosmetics. Middle -aged people are concerned about their fam ily's home,
possessions, and automobile.
ii. Salary :
A person's purchasing habits may be influenced by their income.
Consumers with greater incomes have more purchasing power. A customer
has more opportunities to spend on opulent goods when they have more
disposable cash. Contrarily, low - or middle -income consumers spend the
majority of their income on necessities like food and clothing.
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24 iii. Profession :
The consumer's profession has an impact on their purchase choices. A
person usually purchases items that are suitable for his or her line of work.
For instance, a doctor would purchase clothing in accordance with this job,
but a professor would do the opposite.
iv. Way of life :
A person's lifestyle is their attitude and how they interact with others in
socie ty. The lifestyle of a customer has a significant impact on their
purchasing habits. For instance, when a customer follows a healthy
lifestyle, his purchases will be related to healthier substitutes for fast food.
5. Economic Factors :
The economic state o f a nation or market has a significant impact on
consumer purchasing patterns and choices A wealthy nation has a strong
economy, which increases the amount of money on the market and
increases consumer purchasing power. Consumers are more inclined to
spend money on goods when they perceive the economy to be in good
shape.
A weak economy, however, reveals a market that is in trouble as a result of
unemployment and declining purchasing power. A consumer's purchase
choice is significantly influenced by economi c reasons. Several significant
economic factors include:
i. Individual Income :
A person's purchasing power rises in tandem with their level of disposable
income. Disposable income is the sum of money that remains after a
person's basic needs have been met.
Increased discretionary income results in greater spending on a variety of
goods. But concomitant to the decline in disposable income was a decline
in multi -item expenditure.
ii Family Income :
The combined income of a family's members is referred to as fa mily
income. When there are more wage earners in the household, there is more
money to spend on necessities and extras. A larger family's income
encourages its members to spend more money. The inclination is to
purchase additional luxuries that a person wo uld not have been able to
afford when there is extra money available for the household.
iii Consumer Credit :
Easy financing options for consumers who want to buy items encourage
more expenditure. Customers may now easily obtain credit from sellers
through the use of credit cards, simple instalment loans, bank loans, hire
buy, and several other credit options. Consumers tend to buy more luxuries
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25 iv. Liquid Assets :
Spending on comforts and pleasures is m ore common among consumers
with liquid assets. Assets that can be quickly turned into cash are known as
liquid assets. Liquid assets include cash on hand, bank deposits, and
securities, for instance. Higher liquid assets provide a buyer more
confidence to purchase luxury products.
v. Savings :
The amount of savings a consumer desires to make from his or her income
has a significant impact on that consumer. If a person elected to increase
his savings, his spending on purchases would decrease. A customer will
spend the majority of his income on goods if he wants to save more
money.
2.3 SUMMARY
Services often have a different purchasing procedure than produced items.
The intangibility of the services makes it challenging to assess them before
to purchase. The th ree steps of manufacturing, while identical to produced
commodities,
Input, process, and output variables all apply to consumer decision -
making, but the process variable changes dramatically for services.
Buyer behaviour is influenced by a variety of thin gs. The sociocultural,
psychological, individual, and situational elements fall under this category.
Because services are rich in experience and credibility, as opposed to
products, which are rich in search criteria, buyer conduct for services is
very diff erent from that of things.
2.4 BIBLOGRAPHY
1. Adrian Palmer, Principles of Services Marketing, London: McGraw
Hill, 1998, p.87
2. J.A. Howard and J.N. Sheth, The Theory of Buyer Behaviour, New
York, John Wiley and Sons; 1969
3. R.P. Fisk, Toward a Cons umption/Evaluation Process Model for
Services, in Donnelly and George, Marketing of Services, 1981
pp.191 -195.
4. Valarie A. Zeithaml, How Consumer Evaluation Processes Differ
Between Goods and Services, in (Donnelly and George, Marketing of
Services, 198 1 pp.191 -195) pp.39 -47.
5. John E.G. Bateson, “Perceived Control and the Service Encounter, in,
John A.Czepiel, Michael R. Solomon, and Carol F. Suprenanat, eds.,
The Service Encounter, (Health: Lexington Mass), 67 -82
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26 3
7PS OF SERVICE MARKETING
Unit Structure :
3.0 Objective
3.1 Introduction
3.2 7Ps of Service Marketing
3.3 SERVQUAL Model
3.4 Exercise
3.5 Bibliography
3.0 OBJECTIVE
Customers are informed about the value of products and services through
marketing. While marketing is sometimes viewed as the culmination of
promotional efforts, it is actually a collection of actions that results in the
ideal balance of price, product creation, distribution, and advertising for a
firm to succeed. It intersects, but is not the same as, the notions of
advertising, marketing, market research, and sales. It is both a science and
an art. There are a variety of marketing models that may be used to build
and implement marketing strategies according to the demands of the
business and the target audience. Here are a few of the most popular
marketing models to start.
3.1 INTRODUCTION
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27 3.2 7PS OF SERVICE MARKETING ARE
1. Product :
In the service sector, the term "product" refers to the actual service.
Marketers base the service's feat ures and advantages on what customers
want. Services are intangible when compared to physical commodities.
Most services lack shelf space and are not tangible objects. They are
therefore more challenging to describe. Particular importance is given to
the b rand name or distinguishing emblem while identifying services.
Service businesses pay close attention to branding techniques in order to
stand out in the eyes of customers. The brand serves as a signal for
distinctiveness, image, and identity in addition t o identification. It is
simpler for service firms to continue offering their present services and to
launch new ones when their brand is well -known.
E.g. Carpet cleaning or deck cleaning are two examples of services.
2. Price :
Intangible activities include services. Pricing is frequently used as a gauge
of service quality. Consumers compare the price of a good or service to its
perceived worth.
For instance, when we go to the dentist, they charge us for the services
they provide.
3. Place (Distribution) :
Frequently, the producer is located where the service is received.
Customers visit the dentist's office or a hair salon. Because of this,
location, or distribution, plays a crucial role in the provision of services.
The producer's services are no longer inse parable from them as of late.
Producers may now provide various services online without clients
physically visiting the service provider's site thanks to technology.
Consider banking services. Check deposits, money transfers, and bill
payments are just a f ew of the various operations that may be done online.
4. Promotion :
Because services are essentially intangible, marketing, especially
advertising, has great value for many services. Most services don't have a
place on a shelf, thus advertising is the onl y way to get noticed or heard.
E.g. Television, periodicals, radio, the internet, billboards, and social
media are all possible places to advertise.
5. People :
The performance of the individuals who offer the service is used to
evaluate service companies. The effectiveness of the service company
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28 Because of this, service organisations place a specific emphasis on the
individuals who deliver the service. This has anything to do wit
6. Phy sical Evidence :
The physical setting in which the service provider and customer
communicate is crucial. It affects how the customer views the level of
service.
The tangible elements around the service, such as the structures, grounds,
cars, furniture, sign age, brochures, social media, websites, and equipment,
are all considered physical proof of the service.
To provide the consumer a positive image of the service, service providers
pay close attention to how they handle tangible evidence. This relates to
the idea of evidence management or impression management.
E.g. You enter a bakery to purchase freshly made bread. They have a nice
selection, and their samples are delicious. However, you observe that the
countertops and floor are filthy and that there are s pider webs in the wall
corners. You choose not to visit the bakery once more, despite the fact that
you enjoy their freshly made pastries. It serves as an illustration of why
impression management is so important for service businesses. Even when
they prov ide excellent service, clients may still be adversely affected by
tangible evidence.
7. Process :
Services should be developed in a manner that is clearly stated. The
specification of the service's step -by-step delivery method is called the
process. Process is used to describe the actual steps, processes, and
activity flow used to generate and provide the service.
Most service businesses construct a client contact audit to list the actions
completed during service delivery. The flowchart of the points of con tact
between the client and service provider is the customer contact audit. It
offers instructions for both clients and staff. By ensuring that the required
measures are performed to ensure a seamless delivery of the service, it
also contributes to improvi ng the service's quality.
3.3 SERVQUAL MODEL
Managers in a range of sectors can use the SERVQUAL Model (service
quality gap model) as a gap method to assessing service quality. The GAP
model was created in 1985 by Berry, Zeithaml, and Parasuraman.
This mod el's major objective is to:
Determine the discrepancies between the services provided at various
stages of the service delivery process and the expectations of the
customer.
Creating a fix for the problems that have been identified
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29 3.4 EXERCISE
1) Define service marketing? What are the 7 p’s of marketing?
2) Explain SERVQUAL MODEL?
3.5 BIBLOGRAPHY
1) KOTLER, P. - Principles of marketing.
2) 7ps: A brief summary of marketing and how it works b y Berkshire
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30 4
CUSTOMER RELATIONSHIP MANAGER
Unit Structure :
4.0 Objective
4.1 Introduction
4.2 Component of CRM
4.3 Summary
4.4 Bibliography
4.0 OBJECTIVE
The main objective of a CRM system is to improve the customer
experience. The most reliable strategy t o achieve success for your
organisation is to carry out this goal. All other objectives serve to further
this aim when you make increased customer satisfaction your CRM's
primary purpose.
4.1 INTRODUCTION
In order to manage and analyse customer interactio ns and data across the
customer lifecycle, businesses employ a mix of practises, strategies, and
technology known as customer relationship management (CRM). In order
to optimise client retention and boost revenue, it is important to improve
interactions wi th consumers. CRM systems collect data about clients
through a variety of points of communication between them and the firm,
including social media, direct mail, live chat, the corporate website, and
the company's phone line. CRM systems may also provide s taff workers
who deal with consumers in -depth knowledge of their personal data,
purchasing history, shopping preferences, and issues.
4.2 COMPONENT OF CRM
CRM systems have had a lot of extra features added to them throughout
time to increase their use. According to system capabilities, some of these
features allow managers to automate different workflow automation
activities, such as tasks, calendars, and alarms, as well as the ability to
monitor performance and productivity based on data collected inside t he
system. Other features include recording various customer interactions via
email, phone, social media, or other channels.
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Customer Relationship
Manager
31 Marketing automation:
CRM platforms with marketing automation features may automate
routine processes to improve marketing initiat ives at various stages of
the lead generating lifecycle. To convert a sales lead into a paying
client, the system may, for instance, send email marketing content
automatically when sales prospects enter the system.
Sales force automation:
In order to follo w up on leads, acquire new clients, and build a loyal
clientele, sales force automation systems keep track of customer
connections and automate various sales cycle chores.
Contact centre automation:
Contact centre automation can involve prepared audio that helps with
customer problem -solving and information distribution. It is designed to
eliminate the tiresome portions of a contact centre agent's job Customers
can be satisfied using a range of software solutions that work in
conjunction with the agent's des ktop tools to reduce call times and
expedite customer support operations. Chatbots and other automated
contact centre solutions can enhance the user experience for customers.
Geolocation technology:
Geolocation technology often known as location -based se rvices, is a
feature of some CRM systems that enables the creation of geographic
marketing campaigns based on the physical locations of consumers,
occasionally connecting with well -known GPS (global positioning system)
apps. To discover sales prospects bas ed on a location, geolocation
technology may also be utilised as a networking or contact management
tool.
Workflow automation:
CRM solutions streamline routine duties for firms to enable staff to
concentrate on innovative and higher -level jobs. managemen t in
charge. CRM allows for the tracking of sales leads, giving sales teams a
central location to enter, monitor, and analyse lead data. HRM, or
human resource management. CRM systems enable the tracking of
employee information inside a company, including contact information,
performance reviews, and benefits. This enables the HR department to
effectively manage the internal personnel.
4.3 SUMMARY
Services marketing is a type of advertising that companies who offer their
clients a service use to raise thei r brand recognition and sales. Services
marketing, as opposed to product marketing, is concerned with promoting
immaterial exchanges that benefit consumers.
Effective service marketing techniques are used by advertisers to win over
clients' confidence and demonstrate the value of their services. To assist munotes.in
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32 them sell their services, businesses may build their service marketing
tactics on the promotion of concepts, advantages, and promises.
A tool known as customer relationship management (CRM) is used to
hand le all interactions and relationships between your business and its
clients. The objective is straightforward: to strengthen commercial ties.
CRM solutions help companies stay in touch with customers, streamline
processes, and increase profitability.
4.4 BIBLIOGRAPHY
1. Service Marketing Mix – 7 P’s of marketing by BHASIN H
2. Services Marketing International Edition –Zeithamal V., M. J. Bitner
and D.Gremeler.
3. Services Marketing – Text and Cases – Rajendra Nargundkar, 2nd
Edition by McGraw -Hill Companies
4. Servi ces Marketing by Lovelock, Wirtz & Chatterjee 7 edition
5. Services Marketing, Indian Edition By Valarie A Zeithmal, Dwayne D
Gremler, Mary Jo Bitner, Ajay Pandit
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33 5
COMPLAINT HANDLING, SERVICE
FAILURE & SERVICE RECOVERY
Unit Structure :
5.0 Objective
5.1 Introduction
5.2 Meaning of Complaint
5.3 Importance of Complaint Handling
5.4 Customer Compliant Handling procedure
5.5 Services Failure
5.6 Service Recove ry
5.7 Jay - Customers
5.8 Exercise
5.9 Biblography
5.0 OBJECTIVE
After finishing this chapter, you should be able to: define service recovery;
explain its significance and stages; discuss its relationship to customer
value; identify potential service f ailure areas in the retail sector; and
describe various service recovery strategies.
5.1 INTRODUCTION
Imagine receiving a bill for your mobile phone for Rs. 5,000 while the
average monthly charge you have been paying for the last 5 years is no
more than Rs . 1000. What response would you have? Would you wish to
reprimand the telecom service provider executive right away? Would you
like to go to the service provider's nearby office to directly see the
executive and have the charge adjusted? You must have bee n practising
the phrases you would use to reimburse the company for such a
catastrophe in the bill computation for this entire time. Do you believe the
service provider has also practised the responses they will offer you?
Additionally, how many times a we ek do you practise? A service manager
would anticipate that all of his executives have received training in this
procedure for dealing with irate and unhappy consumers like you.
Even the finest organisations are susceptible to failure. They could be the
result of the service not being available when promised, being delivered
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34 subpar. All of these failures result in unpleasant experiences. If they are
not resolved, consumers may leave, c omplain to others, or even file a
complaint with the customer service department.
While some complaints are made as the service is being delivered, others
are made after the fact. Depending on how the complaint is handled in
either situation, the client ma y decide to stick with the business or look for
new suppliers in the future.
5.2 MEANING OF COMPLAINT
Data on complaints may be quite helpful for the growth of your company
since it enables you to evaluate performance, spot trends in complaints,
and bette r tailor your offerings to meet consumer expectations.Adopting a
restrictive definition of a complaint will prevent you from accurately
determining the true level of dissatisfaction or the needs of your
customers.
The term "complaint" has a very broad def inition: "An expression of
dissatisfaction made to a supplier in relation to, (a) Carrying on business
as a carrier; (b) Carrying on business as a carriage service provider; (c)
Supplying a content service using a listed carriage service; and (d)
Supplying a telecommunications product's among your customer base.
5.2.1 disgruntled consumer behaviour: Typically, a disgruntled
consumer will exhibit a few distinct behavioural patterns.
a) The client remains silent but decides not to repurchase the same service .
This is the first typical sign of a disgruntled customer.
b) Loud consumer – The second customer who complained can protest
loudly and discourage others from purchasing the same brand in the
future.
The third behaviour is when a dissatisfied client g oes to the service
provider's customer care desk and asks for a resolution to his issue.
d) Consumer seeking legal remedy - The last behaviour is for an unhappy
customer to contact the judicial system to seek redress for his complaint.
The third sort of customer is the most straightforward for a service
provider to handle. This is true because the customer offers the service
provider an opportunity to please him and keep him around for future
service needs. Furthermore, these complaints are actually feedb ack that
can help with future service delivery and performance improvements. The
majority of the time, customers prefer filing informal complaints and
hardly ever go to the service desk, unless the claim has a significant
financial or delicate character. I f the client doesn't think the company will
offer a fair remedy, he or she may decide not to file a formal complaint.
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Complaint Handling,
Service Failure & Service
Recovery
35 5.3 THE IMPORTANCE OF HANDLING COMPLAINTS
Taking action in response to customer concerns is crucial. It is true that
phoney complaints c an occasionally surface. The cause of the complaint
may frequently be an uncontrolled element. However, it is in the interest
of the service organisation to not only address such a situation quickly but
also to make sure that this complaint -related issue d oesn't come up again.
Even if an unhappy customer may already have a bad opinion of the
service provider, his opinion might be changed by treating the issue
skillfully. In actuality, a well addressed complaint can even increase
customer satisfaction. Let's examine a few reasons why service
organisations should have a well -thought -out complaint management
process.
Lead by example: An organisation may prevent the development of a bad
reputation as a result of any missteps in the provision of services by
deve loping and implementing a rapid and responsive complaint
management policy. Such a method is sometimes credited to only
forward -thinking businesses that might lead their sector by establishing
excellent service standardsThus, a formal system for handling c omplaints
is helpful for improving the quality of services by lowering the causes of
complaints.
Positive brand image: Based on the services it provides to customers and
the experiences it fosters for them, every service organisation aspires to
have a po sitive brand image. A complaint management system helps an
organisation uncover the reasons why it is not providing its customers
with high -quality services.
b) Upgrade technical issues: Frequently, complaints about service delivery
are caused by technica l issues rather than actual deficiencies. If the issue
has previously gone unnoticed for any reason, the complaints may be a
way to find it and remedy it. A hotel room's malfunctioning water heater is
one example of a potential issue. Through customer comp laints, service
providers are frequently alerted to the need for such service
improvements.
5.4 THE PROCEDURE FOR HANDLING CUSTOMER
COMPLAINTS
No service provider wants to hear that their support system or
method of service delivery is flawed. However, cr iticisms have to
be viewed as chances to enhance the creation and delivery of
services. Additionally, by taking complaints seriously and
resolving customers' grievances to their satisfaction, service
providers can win over a customer and hope that he will spread
the word about their values. Therefore, it is critical that all service
organisations have a uniform process for handling customer munotes.in
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36 complaints. The stages for creating a procedure for managing
client complaints are as follows:
a. Have an organisatio nal strategy for accepting complaints: There
should be an organised, well -thought -out process for gathering client
complaints. The client should be encouraged to voice a complaint to
the company directly as opposed to keeping it to himself and venting
to other possible customers of the service provider. The company
should view a complaint as an opportunity to collaborate with the
customer in producing and improving the products and services
offered by the company.
b. Identify the sources through which com plaints are received. The
organisation has to be reachable through a variety of channels in order
to receive complaints. For instance, the customer should be able to get
in touch with the appropriate department to file a complaint about the
quality of the service in person, by mail, by email, by phone, or by text
message. This creates a favourable image of the service provider by
demonstrating a receptive attitude towards addressing concerns and
enhancing the quality of the provided services.
c. Create a sys tem for sharing complaints with everyone: The
organisation should create a system that allows complaints to be
logged into the service organisational system and distributed to all
personnel and authorities who need to be informed. This is crucial so
that n o complaint goes unanswered and so that each complaint may
teach us something about how to improve service quality overall.
d. Inform the Service staff: The Service personnel should be informed of
and made aware of the complaint receiving system. Two appro aches
are involved in this. The service staff should be aware that the
standards for the quality of the services should be upheld, and they
should also be aware of the process for managing complaints in case
there are any further complaints in the future.
e. Teach the Service Staff to Acknowledge and Handle Complaints: The
Service Staff should be taught to Acknowledge and Handle
Complaints, as well as Handle the Situation in Front of Loud and
Angry Customers. If there is a complaint, the staff should be train ed in
politeness and given confidence. Dealing with a customer who is irate
and complaining could be difficult. Because of this, the service
personnel has to be properly taught to handle the issue by remaining
composed while being proactive when they get a complaint.
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37 f) Establish authority for managing complaints: The top management
must designate the roles or individuals in the service organisational
structure who will be in charge of handling the received complaints.
Who should be contacted to resolve a customer complaint should be
well known to the service team. Not only should this individual have
the power to settle the complaint, but they ought to make it a top
priority. A customer who is complaining shouldn't be made to wait or
be ignored because doi ng so might make his issue worse. As a result,
the service organisation must develop and put into action a well -
thought -out plan for the acceptance and professional handling of a
customer complaint. This strategy is just as crucial as a marketing or
financ ial plan.
5.5 FAILURE OF SERVICES
Sometimes providing poor customer service is the result of doing
something, and other times it is the result of doing nothing. Simply put, a
service failure occurs when a customer's expectations are not met by the
service performance .
A consumer would often anticipate being reimbursed for their
inconvenience in the form of any combination of refunds, credits,
discounts, or apologies when a service failure happens. The opposite of a
successful service is one that leaves cus tomers unsatisfied. Poor quality,
harsh behaviour, and late delivery are all examples of service failure. All
of these instances result in the client not getting the service they were
promised. Everybody occasionally experiences service failure. One of the
times I received subpar service was when I ordered a meal from a
restaurant and discovered a long hair inside of it. When I told our server,
he returned the plate, filled it with extra food, and then gave it to me.
However, the hair was still present. I h aven't returned to the eatery since
then. Customers act in this manner when a service outage is not handled
effectively.
The management team's plan, the managers' level of leadership, and
employees' innate motivations are the main causes of service failure s.
• Management strategy: Management should be able to plan and strategize
business operations and policies to ensure that every facet of the
organisation is well -organized to lower the likelihood of service failure.
• Leadership qualities of managers: Man agers must be able to use their
leadership abilities to inspire, oversee, and correct organisational
processes and activities to achieve greater customer satisfaction and a
lower rate of service failure.
• workers' natural instincts: Since workers are the ones who offer service
and interact with customers, a significant portion of customer service
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38 are inconsistent with the customer service objective while dealing with
their workforce. Th erefore, in order to work effectively and efficiently,
employees need to be well -trained and skilled.
Although service failures are a common occurrence, management must
deal with the difficult task of recovering from them. A service failure
always has a hi dden potential; it is up to the management to decide
whether it will get worse or whether it will serve as a model for recovery.
There are four steps to service recovery for each service failure, and they
are as follows:
Step 1: Express regret and beg for pardon
Listen to the consumers after a service breakdown and don't interject. Give
a sincere and genuine apology for the mistake. Give them all the details
about what caused the service failure as well.
Go through the complaint with your customer in Step 2:
Always read the complaint in its entirety since you could be missing
anything. Because sometimes customers may also be mistaken or make
false complaints, this also aids in determining who is actually at fault.
After a failure has occurred, we can also f ind the customers' expectations.
Step 3: Resolve the Issue and Follow Up:
Try to repair the issue with the best alternative in the third phase of service
recovery, then follow up with the client. A passenger who paid $8 for Wi -
Fi connectivity on a Southwe st Airlines trip was not provided with the
service. Later, the airline refunded the money, which helped Southwest
Airlines gain a devoted customer.
Stage 4: Clearly Describe the Issue: Recording customer complaints and
service issues is the final stage in service recovery, and it also involves
preparing staff members for problems that may resemble them in the
future. The only method to stop major issues from reoccurring is to
carefully record the issue for subsequent investigation.
There are some service fa ilures that cannot improve service recovery. It is
up to management or a manager to decide how to handle the circumstance.
To handle the failure and maintain excellent relations with the clients,
quick thinking and empathy are necessary. Because the majori ty of
customers don't complain, it is easy to lose customers in a service market
where there aren't any complaints. However, because customers feel
heard, service failure and recovery help to improve customer relations and
boost customer loyalty.
Response of the Customer to a Service Failure:
The issue of how customers would respond in the event of a service
outage emerges. Or, put another way, how customers respond when the
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39 customers in the event of a service failure? The following four main
options are available to the client:
Avoid action.
• Send the service provider a complaint.
• Taking legal action through a third party, such as a consumer protection
organisation, consumer affairs or regulatory agency, a civil or criminal
court, etc.
• Stopping the services of the same provider and discouraging others from
using similar suppliers.
Therefore, a customer's response to a service failure depends on their
knowledge of the company, their resources, their attitude, and the
circumstances surrounding their purchase. Innocent clients often react
calmly and almost ever protest. Active, knowledgeable, and experienced
consumers, however, strongly disagree and take all the necessary action in
their opinion. These customers will not accept any compromises on
service quality, and the business must ensure that they are happy with the
results or they may damage the brand's reputation and persuade others to
stay away from the business by spreading unfa vourable rumours.
5.6 SERVICE RECOVERY
An organization's response to a service breakdown is referred to as service
recovery. Failures may happen for a variety of reasons, including when a
service is not available when it is expected, when it is provided l ate or
slowly, when the result is inaccurate or poorly performed, and when staff
are impolite. Customers react negatively to all of these failures and feel
disappointed. If they aren't resolved, customers may stop doing business
with the company, complain to others about their bad experiences, or even
take legal action against it. According to research, efficiently addressing a
customer's issue has a significant influence on the customer's pleasure,
loyalty, and financial performance. Customers who encounte r service
failure but are ultimately happy as a result of the company's recovery
efforts will be more devoted than those whose issues are not handled.
More people are likely to return if their concerns are immediately
addressed compared to those whose comp laints are not. Less people are
likely to visit those who never complain.
5.6.1 Service Recovery Stages:
The stages of service recovery in an organisation are represented by the
following bullet points:
First Stage: Expiring At this point, the customer's service is effectively
over.No complaints are handled. They disregard irate clients. A defective
cargo prompts letters to VIPs and even the CEO, but no one responds.
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40 Stage 2: Reactive: A reaction is given after receiving customer concerns.
However, it's a careless process with no specified objectives for the
response and no one taking responsibility for this business process.
Stage 3: Active Listening: At this point, the solution to the problems
consumers have expressed is structured. Guidelines are in pl ace for the
response, and certain personnel are in charge of responding to complaints.
It is still reactive, though.
Fourth Stage: Attention Moving from reactive to proactive solicitation of
consumers with problems is the key transition from Stage 3 to Sta ge 4.
Since most customers don't bother to file complaints, this is crucial. They
just switch to other goods vendors. We've all done this, right? It takes a lot
of effort to whine!By encouraging customers to voice their grievances, the
solicitous duty is p erformed. Event surveys, often referred to as
transactional or transaction -driven surveys, are a popular method for
obtaining feedback on problems. More than simply a high level
measurement of customer satisfaction must be captured in the survey
design. Ac tion must be possible according to the design. The endeavour is
made more difficult by the need for anonymity.
Stage 5: Rechecking/Repeat Behaviour: When business process
improvement or six sigma programmes are combined with the complaint
identification p rocess to enable root cause analysis and resolution, the
highest level of service recovery practises is attained. Customers'
problems are reported to the owners of business processes so that the
process design may be reviewed.There are essentially two laye rs of
feedback loops. The first is client feedback for the business. Second, input
from the company's business partners who interact with customers .
5.6.2 Elements of An Effective Service Recovery System :
Human issues, whether real or imagined, are caused by service failure.
The strategy should be compassionate, regardless of the cause. To
approach such issues carefully, sensitivity and empathy are needed.
Therefore, they must be handled with the same caution as glass. The
phrase "Justice delayed is justice denied" should be taken seriously when
dealing with customer issues. Designing a redressal system that offers
correct feedback in a timely, cost -effective manner that is acceptable to the
organisation and its consumers presents a number of issues for mana gers.
To manage or address issues swiftly and to create an effective recovery
system, one must be aware of the various components of the service
recovery system. Because the different components that go into the
redressal process might vary from organisati on to organisation and
scenario to situation, it is not required that a certain approach is
appropriate for all organisations and for all sorts of problems. Thus,
various issues are addressed using a recovery system. The following list
includes each of thi s system's components:
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41
(i) A recovery system, as shown in the accompanying figure, consists of
three phases, the first of which is making sure that everything is done
correctly. But there is always a chance of doing something incorrectly,
so noth ing is ever guaranteed to be right. If it did occur, issues should
be resolved using a productive complaint management process. The
second step is represented by it. Finally, successful issue solving
results in client loyalty and satisfaction. Following is a quick summary
of key actions:
(ii) Always do things correctly the first time: The marketer should first
focus on finishing the work correctly on the first go. The marketer
should make all effort feasible in this direction for this. The marketer
needs to establish a suitable service design system while also taking
into account the wants, requirements, and goals of the consumers. The
marketer should refrain from holding any prejudices. Market research
may be a huge help at this point.
(iii) Identification of t he Issue: The marketer must follow a successful
complaint management approach if a service fails for whatever reason.
Finding the root of the issue is the first step in solving this. Because a
specific choice is made in the context of a real problem. A nee d for a
solution and a query are presented as a problem . It is comparable to the
doctor diagnosing a patient. Therefore, efforts should be made now to
pinpoint the actual problem. The root of the issue, or what the genuine
problem is, should be emphasised. Additionally, there should be an
effort made to establish a cause and effect relationship. The first step Do the job
right first time Effective procedure
for complaint handling + = Customers'
satifaction and
loyality
Identity the problem
Resolve complaints
efficiently
Learn from the past
experience
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42 in problem resolution is recognising the issue. There are several
techniques that aid in problem detection, including market research to
track compla ints and cultivate a "complaints as opportunity" culture.
(iv) Effective issue Solving: After an issue has been recognised, the next
stage is to find the best solution. There could be several types of alter -
natives that can fix the issue. Future path of action might be used to
identify an alternative. It is important to note that every organisation
may have a unique method for handling issues. It relies on an
organization's size, financial situation, managerial style, effectiveness
of the administrative process , and other factors. However, a general
strategy that works in the majority of situations is:
Identification of the issue.
Alternative development; evaluation; alternative selection; alternative
implementation; and feedback
To address this, marketers shou ld create efficient mechanisms and
provide complaint management training.
(V) Learn from the Past: It is usually advantageous for marketers to
prevent mistakes from happening again. because it results in time and
financial waste. As a result, a wise marke ter constantly tries to draw
lessons from the past and act appropriately. The marketer should
focus on positive prior events and steer clear of negative ones. He
ought to apply root cause analysis for this. He can improve his
efficiency and become competen t and efficient by taking into
consideration his prior experience.
5.6.3 Recommendations for a Successful Service Recovery System:
1) Take quick action: Time is of the importance to achieve a full recovery
if the complaint is raised during service deliver y. In cases when
complaints are filed after the event, many businesses have rules in place
mandating prompt responses. Even though a comprehensive resolution is
probably going to take longer, quick recognition is still crucial.
2) Acknowledge errors but a void becoming defensive: Act agressively:
Taking a defensive stance might imply that the organisation is hiding
anything or is hesitant to properly investigate the problem. As a result, one
should approach situations aggressively.
3) To observe and compre hend the issue from the perspective of the
customer: The only way to comprehend what consumers believe has gone
wrong and why they are angry is to look at the situation through their
eyes. Service employees should refrain from drawing judgements based
only on their personal perceptions.
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43 4) Participatory environment: The objective should be to achieve a
compromise rather than to win a debate or disprove the customer's
ignorance. Arguments seldom diffuse anger and prevent listening.
5) Attempt to comprehe nd the customer's emotions: Employees must
adopt the mentality of "I can see why you're upset." This is the first step
in mending a broken connection and will aid in developing a rapport.
6) Give consumers the benefit of the doubt: Not all complaints are
legitimate or from sincere customers. Until there is convincing
evidence to the contrary, the customers' complaints should be
considered to be legitimate. It may not be worthwhile to haggle over a
refund or other recompense if there is little money at risk; but, if there
is a lot of money at play (as in insurance claims or prospective
litigation), extensive study is needed. if the same consumer has a
history of complaining. It is best to go into more depth regarding the
prior performance.
7) An open system t o address the issue: When quick fixes aren't feasible,
letting consumers know how the business intends to proceed
demonstrates that remedial action is being made. It also establishes
timeliness expectations.
7) Customer feedback on progress: No one should be in the dark. Stress
and anxiety are produced by uncertainty. If people are informed and
given regular updates, they are more likely to put up with
interruptions.
A monetary payment of offer or a comparable service in kind should be
made available when co nsumers did not obtain the service in
accordance with the promises or incurred substantial inconvenience as
a result of the failure of the service. Such a move could also assist
lower the likelihood that the consumer would file a lawsuit. Service
promises are frequently stated up front. Customers frequently express a
need for an apology and a promise to prevent future occurrences of the
same issues.
8) Customer dissatisfaction brought on by poor service: one of the biggest
obstacles is regaining the client 's trust in order to continue the business
connection in the future. This might encourage persistence and follow -
through by not only calming their rage but also persuading them that
steps are being done to prevent a recurrence of the same difficulties.
The rehabilitation efforts should focus on fostering customer loyalty
and word -of-mouth advertising.
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44 5.7 JAY - CLIENTS
Customers that act carelessly and abusively and cause issues for the
business, its staff, and other clients are known as "Jay customers." The
name "JAY" derives from the term "Jaywalker," which is used to refer to
those who cross roadways illegally or in a risky way. The slang term for
"stupid" is JAY. We must address customer fraud in order to deter abuse
and opportunistic behaviour.More op portunity for mischief in service
industries, particularly when there are many of consumers present.No
business wants a persistent connection with a belligerent consumer.
Customers of many types:
1] The Thief: He or she goes out to steal or pay less with no intention of
paying.This consumer refuses to pay for services and either tries to pay
less than the full amount by swapping price tickets, disputing the bill on
spurious grounds, etc., or is actively stealing products and services. Such
customers engage in activities like sneaking into movie theatres and using
public transportation for free.
[2] The Offender: Some clients disregard the law. Rules may be
established by the service provider to guarantee safety or they may be
imposed by government agen cies, etc. When these rules are ignored, it
may be problematic for both the service and the clients.
3] The Aggressive: These individuals are common at supermarkets,
airports, and hotels. They may be yelling aggressively or verbally abusing
others while ma intaining composure. They could act in this way when
they are ignored, when the service is poor or breaks down, when the
personnel is useless, or when the instructions are issued wrongly.
4] Family feuders: Individuals who frequently engage in conflict wit h
members of their own family.
5] The Vandal: Service vandalism includes damaging hotel furnishings,
slicing bus seats, and dumping soda into bank ATMs.
• Young people who are bored and intoxicated frequently commit
vandalism.
• Disgruntled clients who be lieve service providers have mistreated
them exact revenge.
(6) Deadbeat customers are those who refuse to pay for the services they
have got. Customers may act in this way for a variety of reasons. They
may not be able to pay, even though they may not ob ject to being paid.
They are not like thieves.
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45 5.8 EXERCISE
1) Describe service recovery and the importance of it.
2) Describe the service recovery process.
What different methods of service recovery are there? Explain.
4) "Service recovery produces more l oyal customers." Share
your thoughts.
5) What advantages can employee training programmes offer
for service recovery? Explain.
6) What might go wrong with a retail service?
5.9 BIBLOGRAPHY
1) Fisk, Raymond P. and Stephen J. Grove (2000), “BroadeningService
Marketing: Building a Multidisciplinary Field, “ in Trends and
Perspectives in the Service Sector, Dieter Spath and WalterGanz,
eds. Munich: Hanser Verlag.
2) Hirchman, O.A. (1970) Exit, Voice, and Loyalty: Responses to
Decline the Firms, Organizations, and States (Boston, Harvard
University Press).
3) Lovelock Christopher and Wirtz Jochen 2006,Services
Marketing,New Delhi,Pearson Education
4) Zeithaml, V.A. & Bitner, M.J. (1996) “Services Marketing” New
York, McGraw -Hill.
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46 6
IMPROVING SERVICE QUALITY
Unit Structure:
6.0 Objective
6.1 Introduction to Service Quality
6.2 Meaning of Service Quality
6.3 Important Dimensions of Service Quality
6.4 Important Attributes
6.3 Steps that Lead to a Better Management of Service Qu ality Delivered
to the Customers
6.4 Quality Standards
6.5 Methods to Monitor Service Quality
6.6 Service Quality Model
6.7 Strategies for Improving Customer Service Quality
6.8 Summary
6.9 Bibliography
6.0 OBJECTIVE
There are many ways to increase t he quality of service provided by your
company, from setting goals for that service that are well -defined and
measurable to motivating your staff to leveraging customer feedback and
upgrading your service tools to better serve your customers.
6.1 INTORDUCT ION TO SERVICE QALITY
The emphasis on the accessibility of high -quality services to the final
consumers may be found in the combination of the two phrases service
and quality. The concept of quality focuses on the standard or
specification that a company providing services guarantees. We cannot
define a precise limit for quality. The potential for excellent creation is
limitless. Science -based ideas and inventions pave the path for the creation
of high -quality products. More frequent innovations mean fewer gaps in
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47 Similar to companies that produce things, companies that generate
services are also important in fostering research and developing novel
ideas that set them apart from rivals and open up lucrative market niches
for them to exploit. Given this context, it is not surprising that innovation
processes are more common in developed nations.
Users that experience the sweetness of top -notch services demand the
same from other organisations, therefore the quality that is ge nerated
defines the border of expectations. The routes for happiness or
disappointment are paved by the expectationsIf we are successful in
exceeding people' expectations, they will be happy, and their contentment
will pave the path for us to get a larger portion of the market.It is
important to note that the expansion of resources and efforts to provide
services in line with customer expectations results in the service quality
satisfaction. Additionally, it is believed that there are two categories of
service quality: technical quality and functional quality.with the objective
of raising the standards of the services we provide in terms of quality.
Organisations that provide services must determine the factors
contributing to consumers' growing unhappiness and implement the
necessary (technical or functional) steps to reduce it.
The technical measures focus our attention on technological breakthroughs
and developments that aid to raise the calibre of services. It emphasises
the use of technology or the desir e for a service that is technology -driven.
The functional measurements focus our attention on enhancing the calibre
of the services provided by the workers, which opens doors for working
style, workplace culture, creation of a lucrative package, behavioura l
profile of employees, and other factors.The frequency of technical
advancements in comparison to the rising impact of high-performing staff
leads to the development of technology -driven, user-friendly services with
a new level of quality. By placing a high focus on behavioural traits
including attitudes, service -mindedness, accessibility, interpersonal
interactions, attractiveness, and dedication, employers may increase the
functional quality of their workforce. It is true to state that top
management did not purposefully design the system to include poor
service quality or service breakdowns.
6.2 MEANING
Customers should always come first when defining the term "service
quality," since they are the ones who will ultimately determine whether or
not the no tion is met. Customers place the highest value on quality, and it
also serves as the foundation for their opinions.
At least four views have been taken into consideration when defining
service quality:
(i) Excellence: Although it is a sign of a committed learner and high
success, excellence's characteristics can alter drastically and quickly.
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48 (ii) Value: It encompasses a number of aspects, although quality and value
are two distinct conceptions, with the former emphasising benefit to
the receiver and the latter highlighting sense of matching or
surpassing expectations.
(iii) Conformance to requirements: This enables accurate measurement,
although it's possible that customers of a service are unaware of or
unconc erned with internal requirements.
(iv) Meeting and/or Exceeding Expectations: This definition is inclusive
and applies to all service sectors, however expectations shift and may
be influenced by interactions with other service providers?
6.3 IMPORTANT DIM ENSIONS OF SERVICE QUALITY
The customer's impression of service quality determines it. Customers,
however, consider a variety of influences when forming judgements about
the quality of the services they receive. All the criteria that customers use
to asse ss the quality of a service must be understood by service marketers.
The following eight quality dimensions were defined by David Garvin in
his essay "Competing on the Eight Dimensions of Quality," and they apply
to both goods and services.Performance, fea tures, dependability,
conformance, durability, usability, aesthetics, and perceived status are a
few of them.The following five aspects of service quality have been
deemed essential by Parasuram, Zeithmal, and Berry as a further
refinement of their first f actor discovery.
These are:
Tangibility: Since services are tangible, clients gauge the quality of the
services they receive by comparing the tangibles that go along with them.
It is the way the communication tools, staff, and physical infrastructure all
look. Customers react to questions concerning the physical layout and
amenities that FFR provides to its clients in this survey by filling out a
specially developed questionnaire.
Reliability: The capacity to deliver the given service consistently and
corre ctly. Reliability refers to a company's ability to keep its
commitments, including those regarding delivery, service supply, issue
resolution, and price. Customers like to do business with organisations that
honour their commitments, particularly those rel ated to the outcomes and
fundamental elements of the services they provide. The reliability
expectations of customers must be understood by all businesses.
Businesses who don't offer the essential service that customers believe
they are purchasing let down their clients in the most blatant way.
Response time and readiness to assist clients are examples of
responsiveness. This dimension places a focus on being attentive and
timely while responding to client requests, inquiries, complaints, and
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49 responsiveness to them. The idea of flexibility and the capacity to tailor
the service to the demands of the consumer are also captured by
responsiveness.
Assurance: To inspire confidence and trust. The ability of the company
and its workers to foster a sense of trust and confidence is referred to as
assurance. This factor is likely to be particularly significant for services
that consumers c onsider to be high -risk and/or for which they lack
confidence in their capacity to assess. The individual who connects the
client to the business, such as the marketing department, may exemplify
trust and confidence. Employees are therefore aware of the si gnificance of
earning consumers' trust and confidence in order to achieve a competitive
edge and to earn their loyalty.
Empathy: It indicates that the business gives each of its consumers the
kind of attentive care they deserve. In certain nations, it is c rucial to
provide each client their own special attention in order to demonstrate that
the business is doing all possible to meet their demands. Empathy is a
bonus that boosts client loyalty while also earning the consumers' trust and
confidence. consumers ' expectations are always growing in this cutthroat
marketplace, and businesses must do all in their power to satisfy them.
Otherwise, dissatisfied consumers will look elsewhere.
6.4 IMPORTANT ATTRIBUTES
The method used to evaluate services for commoditie s is different from
the method employed by customers. Services tend to be high in recognised
quality and experience whereas goods tend to be high in search
characteristics.
1. Searching for:
Consumers can assess search criteria before making a service or p roduct
purchase. The search criteria include things like colour, style, fit, feel,
scent, and price. Products like shoes, clothes, washing machines, and
vehicles rank well in online searches.
Additionally, the search qualities of business goods like office supplies,
component parts, and raw materials are frequently very high. Considering
that they rank highly in search results, consumers may readily assess the
quality of products before making a purchase.
2. Experience Qualities:
Consumers may only assess e xperience quality during or after the
consuming process. Experience -rich services include food, catering,
meals, entertainment, and cosmetic surgery. Lawn services, delivery
services, and other services with extensive experience are included under
business services. Evaluation doesn't happen until after the service has
been used or even while it is being used. For instance, a restaurant meal
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50 3. Credence Qualities:
Even after they have finished their consumpt ion, consumers still struggle
to evaluate traits of credibility. Consumer services with strong credibility
attributes include those related to accounting, funerals, education, and
veterinary care.
Examples from the business world include marketing services and
financial counselling. Few customers possess the medical or tax expertise
necessary to assess if a service was properly done. A business looking to
assess consultancy or advertising services will find the same to be true. It
is obvious that assessing services with high credibility attributes is
challenging.
6.4.2 Steps that lead to a Better Management of Service Quality
Delivered to the Customers :
Today, any service organisation must prioritise service quality. This is
especially true given the current level of global competitiveness and the
large number of companies in the service sector. The airline industry
serves as one such example of service gaps. Customers may still have to
wait when forecasts are incorrect, and in certain cases they may not even
receive service, like when airlines overbook the amount of seats available
on a flight.
In such circumstances, overbooking victims may get compensation for
their trouble. Some businesses (such as hotels, airlines, conferences/
training programmes, and the atres) charge clients who don't show up or
cancel their reservations within a certain time frame in an effort to reduce
the no show problem.
However, taking the following actions could help manage the level of
customer service quality more effectively:
1. Differentiate Customers Who Are Waiting: Not all customers must wait
the same amount of time for service. Some businesses distinguish between
clients based on need or customer priority, enabling some to wait less time
for service than others.
Such differen ce, sometimes referred to as "queue discipline," represents
management guidelines for choosing the next person to serve. The
discipline of first -come, first -served is the most popular. But the
guidelines could be followed.
Differentiation may be made on th e basis of things like:
i. Customer importance: By offering them a dedicated waiting space or
separate lines, an organisation may give priority treatment to frequent
customers or those who spend a lot of money with them.
ii. Job Urgency: Customers with the most urgent needs may be attended to
first. The approach employed in emergency medical treatment is this one.
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51 conditioning repair, to give precedence to clients whose air conditioners
aren't w orking above those who call for regular maintenance.
iii. Length of the Service Transaction: Shorter service transactions
frequently receive preference through "express lanes." Other times, if a
service provider anticipates that a transaction will take lon ger than
expected, they will refer the client to a specific provider who only works
with clients with special needs.
iv. Paying a Premium Price: Customers who pay more are frequently
given priority via distinct check -in lines or expedited systems (for
exam ple, first class on an airline).
2. Make Waiting Fun, or at Least Tolerable: Customers can be more or
less happy even when they must wait depending on how the business
manages the wait. Of course, how clients feel about their service
experience will be inf luenced by how long they really had to wait.
Customers' feelings and impressions throughout the wait have an influence
on customer satisfaction, not only the length of the wait itself.
David Maister offers numerous waiting -related ideas in a classic paper
titled "The Psychology of Waiting Lines," each of which has implications
for how organisations might make waiting more enjoyable, or at least
tolerable:
i. Time Feels Longer When Unoccupied Than When It Is Occupied: In
contrast to when they are engaged in ac tivities, clients who are idle are
more prone to become bored and notice the passing of time. Offering
waiting clients something to do may enhance their experience and may
also be advantageous to the business, especially if the activity has benefits
of its own or is somehow connected to the service. According to research
conducted in an airline scenario, passengers' levels of rage and
unhappiness rise as their level of ambiguity about the wait rises.
ii. According to research, it can help consumers feel mor e optimistic,
tolerate the wait, and ultimately rate the service more favourably by telling
them how long they should expect to wait and/or where they stand in the
queue.
iii. Unjustified Waits Are Longer Than Justified Waits: When people are
aware of why they are waiting, they usually exhibit more patience and less
anxiety, especially when the reason for the wait is valid. Giving clients an
explanation might help them feel less apprehensive and may even enable
them to anticipate their wait time, if only ro ughly. Customers who are
waiting but don't know why start to feel helpless and frustrated.
iv. Inequitable wait times seem to be longer than equitable ones because
consumers feel like they are waiting while those who arrived after them
have already receive d service. When there doesn't seem to be any order in
the waiting room and there are many of clients waiting to be served, this
can happen quite simply. The finest queuing systems for minimising munotes.in
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52 apparent injustice are those that follow the first -come, firs t-served
principle.
As was previously said, there can be reasons to employ alternative
methods to choose who would be served next. For instance, the most
dangerously ill or injured individuals would be seen first in an emergency
medical crisis. Fairness of waiting times shouldn't be a problem if
consumers understand the priority and the rules ar e presented and applied
correctly.
6.5 QUALTIY STANDARDS
Initially, production and manufacturing were the contexts in which quality
standards were formed. The major goal was to raise the standard and
compliance of the product. Quality performance now extends to all facets
of marketing.
This is due to the fact that each functional area individually affects the
organization's performance and levels of customer satisfac tion. Quality
systems' primary focus is on procedures and processes in order to improve
performance. In order to maintain a set of service quality standards, some
quantifiable standards known as benchmarks are developed. Quality must
apply to all organisat ional operations and be both practical and non -
restrictive. Additionally, the commitment of everyone in the
organization —not just a designated quality manager —is required for good
service quality.
More value is received by the buyer when the quality is hig her. Better
business performance results from this.
i. Benchmarking:
An organisation should now be able to establish quality standards that can
be regulated and monitored and that satisfy consumer expectations after
thoroughly researching quality concerns in both its internal and external
markets. To do this, standard measurements must be established.
Measuring performance both internally and publicly requires the creation
of a baseline number and a standard indicator. The organization's desired
operational standard is the baseline. This may be thought of as a
benchmark, or a metric by which performance can be assessed.
When discussing standards nowadays, it is necessary to compare them to
rivals. For instance, the airline can assess its benchmark criteria b y
examining the quality standards of competing airlines. The standards of
allied industries like railroads and other alternative routes of transportation
must also be studied by the airlines at the same time.
ii. Quality Assurance:
The following is a list of the steps in the quality process for service
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53 (i) The organisation should define quality.
(ii) Order an internal and external market analysis.
(iii) Consider a competitive analysis
(iv) Create quality standards through the benchmarking pr ocess.
(v) Compare actual performance to the quality benchmarks.
(vi) Create a quality strategy to close any gaps in quality.
(vii) Create programmes for the correct application of quality standards.
(viii) Regularly control and observe the business' perfo rmance in terms of
service quality.
A thorough examination of the protocols/frameworks, training, and
communication would be required for the aforementioned procedure.
6.6 METHODS TO MONITOR SERVICE QUALTITY
Organisations should continuously assess the qu ality of their services in
addition to implementing quality management practises and service
quality improvement methods. This will make it easier for management to
guarantee that clients obtain the calibre of service that their business
promises.
The mana gement can keep an eye on service quality using the following
techniques:
1. Perform customer surveys: Service businesses should frequently
perform customer surveys to learn whether consumers have any
complaints about the services provided or the service staf f (see, for
instance, the Sheraton customer survey). Customers should be provided
questionnaires to get their feedback and score the level of service the
business provides. Additionally, efforts should be made to identify the
causes of any unhappiness.
2. Mystery shoppers, who go to service locations pretending to be
customers, can also be utilised to spot issues with service quality. These
researchers pay close attention to both how the service is provided and
how the customers interact with it. They pinpo int any flaws in the service
procedures that there may be. The management can then take the
appropriate steps to address the shortcomings.
3. Keep an eye on Customer Feedback: Managers should pay close
attention to any complaints, recommendations, or even praises that
customers may make. In cases of complaints, the management should
work to identify the underlying reasons of the issues and take steps to stop
them from happening again. If a customer offers some suggestions,
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54 viability and applicability, and implement the suggestions that are
worthwhile and workable.
If customers compliment service staff, management should encourage
those staff members to keep providing high-quality service by rewarding
them.
3. evaluate Service Blueprints and Problem -Tracking System:
Management has to continuously evaluate service blueprints and find any
issues. The management should adjust the monitoring and problem -
tracking methods as needed. To make sure that all the phases in a service
process are covered, service blueprinting is the act of displaying the full
service process in the form of a graphic or diagram.
A service manager can evaluate the effectiveness of the service on paper
since the service blueprint contains details on every single event and
activity engaged in the service. Before using the standard testing methods
(such test marketing, etc.), he might adjust the service process.
It is undoubtedly not an easy or simple task to improve service quality.
6.6.1 The Service Triangle Management Model
Within the service marketing triangle, there are three different types of
marketing.
Internal marketing is advertising to the company's workers. External
marketing is advertising to the public.
Interac tive marketing, which involves marketing to both customers and
staff.
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55 1) Inside sales in the service triangle:
When internal marketing is active, holistic marketing is most effective. An
advertising company always works to maintain the motivation of its o wn
staff. They are offered an absurd amount of events to attend in order to
make them happy. They also need to be in a good attitude because the
most of the time they are working really hard to use their creativity to
provide their clients with the best se rvice possible.
Additionally, these same advertising firms give their staff the freedom to
make the best choices in front of clients. This empowerment significantly
boosts drive and self -assurance.
And that is the main goal of internal marketing based on t he service
triangle. fostering employee motivation and self -assurance so they can
successfully interact with consumers and earn money for the business.
2) External Marketing :
marketing to customers on behalf of the business. As consumers, we are
exposed to this form of marketing the most frequently. The different forms
of service marketing include direct marketing, public relations, sales
promotions, advertising, and, more significantly in the modern day,
internet marketing.
3) Interactive marketing: This t ype of marketing takes place whenever a
customer interacts with an employee, including retail stores, restaurants,
malls, banks, and other public spaces. Customers and staff interact through
marketing inside the service triangle. .
Another effective strateg y for influencing consumers is interactive
marketing. It is most frequently used to assist customers in making
decisions about purchases. If a shop executive is under orders to unload
Samsung stock, he will only promote Samsung favourably and attempt to
influence you to purchase the brand.
Personal selling, customer service, and communicating with consumers on
social media and other interactive platforms are some of the several types
of interactive marketing.
The industrial sector and the services sector es sentially vary in two key
ways. One is that businesses in the services industry must be more
adaptable for their clients. Second, this flexibility creates stress, which a
services provider should be prepared to manage.
The service marketing triangle is a f antastic tool for illustrating all the
interactions that occur in the services sector as well as the many marketing
tactics that may be used depending on those interactions.
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56 6.6.2 Fishbone Diagram :
An instrument for examining process dispersion is the fi shbone diagram.
The design is also known as the "Ishikawa diagram," after its creator
Kaoru Ishikawa, and the "fishbone diagram," since the entire thing
resembles a fish skeleton. The graphic shows the primary reasons and
minor causes that contribute to an outcome (symptom).
It is a brainstorming tool for teams that is intended to find probable issues'
fundamental causes. It may be referred to as a cause and effect diagram
due to its purpose. A issue that has to be solved is typically represented by
the "fi sh head" in a traditional Fishbone diagram. The effects' causes are
then arranged along the "bones" and categorised into several groups along
the branches. Additional causes can be listed alongside additional side
branches. Consequently, a fishbone diagram 's basic structure is shown
below.
The Fishbone diagram's main objective is to graphically depict the link
between a particular outcome and all the factors that affect it. This tool's
primary goals are:
finding the underlying causes of an issue.
Concentr ating on a particular problem without complaining or
engaging in pointless conversation.
Identifying regions with a data shortage.
The Fishbone diagram can be used to: • Concentrate focus on a single
problem or issue.
Have the team focus on the reasons rather than the symptoms.
Arrange and visually depict the numerous hypotheses on the potential
fundamental causes of an issue.
Illustrate how multiple elements affecting a situation are related to
one another.
Highlight crucial connections between div erse factors and potential
causes
Add more information on how process behaviours. . munotes.in
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57
Following are the steps for creating and interpreting a cause -and-effect
diagram:
Step 1: Identify and precisely describe the result or impact that will be
examined.
Create the issue and enter it in the box on the diagram's right side.
Everyone involved must have a thorough understanding of the
problem's nature and the process or product under discussion. If no
one understands the goal of the meeting, the issue won't be solved
during that meeting. The following guidelines must be followed in this
step:
Select the effect that will be investigated. Effects are described as
certain quality traits, issues brought on by work, planning goals, and
similar things.
Operational Definitions should be used. Create an operational
definition of the effect to guarantee comprehension.
Keep in mind that an effect can be either good (an objective) or bad (a
problem), depending on the topic at hand.
Using an effective strategy that conc entrates on the intended result
helps to promote pride and ownership over productive regions. This
could result in a positive environment that motivates the group to
participate. It is best to express the consequence positively wherever
possible.
By conce ntrating on a poor outcome, the team may become distracted
and start blaming and expounding on the causes of the issue. However,
it can be simpler for a team to concentrate on the root of a problem
than the factors that lead to great results. While you sho uld be wary of munotes.in
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58 the consequences of focusing on a negative outcome, getting a team to
pay attention to potential problems can sometimes create a more laid -
back environment and increase group participation.
Choose the strategy that will work best for your gr oup.
Step 2 - Draw the spine on a chart pack, make the effect box, then
place the chart pack where everyone can see it.
• Sketch a right -pointing horizontal arrow. The spine is as shown.
• Include a brief explanation of the effect or result that the proced ure
produces to the right of the arrow.
• Define a frame around the effect description.
Step 3: Determine the primary causes(G) that have an impact on the
effect under investigation.
These serve as categories under which to record the numerous reasons
associated with the major branches of your diagram's major branches.
• Decide which primary factors —or categories —will be used to group
other potential causes. Use category names that are appropriate for the
diagram you are making.
• List the primary categorie s that your team chose to the left of the effect
box, some above and some below the spine.
• Outline each category label with a box, and link the box to the spine with
a diagonal line.
Step 4: For each main branch, find additional particular elements
that could be the effect's source. Find as many reasons or factors as
you can and tie them to the big branches as subbranches.
• Specify in depth each cause. List a minor cause beneath both major
causes if it pertains to both of them.
Step 5: Determine ever -higher layers of causes and keep grouping
them into related causes or categories.
Asking a series of why questions will help you achieve this. If one
branch contains too many subbranches, you might need to divide your
diagram into smaller ones. Any three Ms and a P, the four Ps, or a
category you provide can be rephrased as an impact.
Analyse the diagram in step six. You can find reasons that need more
research by using analysis. Considering that Cause -and-Effect
Diagrams only show Potential Causes, you mig ht want to use a Pareto
Chart to guide your team in choosing the first cause to concentrate on.
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59 Examine the "balance" of your diagram, making sure that the majority of
the categories have equivalent amounts of detail.
• A dense concentration of things in one region can suggest that more
research is required.
• A primary category with few distinct causes may suggest that further
causes need to be found.
• You might need to group together multiple big branches that contain
only a few minor branches into a si ngle category.
• Keep an eye out for reasons that keep cropping up. These could be the
underlying causes.
• In order to calculate the impacts of any adjustments you make, look for
things you can measure in each cause.
Fishbone diagrams have the following a dvantages: • They aid in
identifying underlying causes; • They promote group involvement; •
They represent cause and effect linkages in an organised, readable
manner.
• Increases understanding of the process by assisting everyone in learning
more about th e variables at play and how they connect
• Identifies locations for data collection
6.7 STRATEGIES FOR IMPROVING CUSTOMER
SERVICE QUALTIY
Customer service seems to be one of those things where you can never
improve. Even when you believe your company is doing a wonderful job
of going above and beyond for its customers, another firm comes along
and completely destroys you. The fact is that, as with most things in life,
the bar can always be raised a little bit.
Over the past several years, the definit ion of customer service has evolved
beyond one -on-one conversations over the phone or in person to
encompass social media and other online strategies in front of a much
bigger audience. Follow these advice to succeed if you want to raise your
sales by enha ncing your customer service.
1. Be aware of your mission: What drives your company forward, and
why do customers need your goods or services? Before even attempting to
modernise your customer care strategy, it is crucial to pause and consider
this. After d etermining your mission, divide it into long - and short -term
goals. These will enable you to gauge your progress so that you can keep
tabs on the outcomes and adjust as necessary.
2. Request input: It's important to obtain consumer feedback in order to
enhance both your customer service and the overall operation of your firm. munotes.in
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60 Find innovative ways to ask your customers for feedback, for as by
sending them surveys by email or SMS.
3. Stay ahead of the responses: Social media is very quick and simple for
everyone to utilise. Additionally, customers are using these platforms to
share their interactions, favourable or negative, with a brand with their
whole following. It is beneficial for firms to interact with these consumers
by swiftly responding to all forms of feedback on whichever platform their
customers are using, as these customers often expect a response within a
few hours.
4. Cross -sell: By ensuring that your sales reps are taking advantage of
every chance to cross -sell, you may simply raise your sale s without
launching a brand -new marketing campaign. When you offer a customer a
product or service in addition to those they are already considering,
especially when those products or services are connected, you are cross -
selling. For instance, you may off er a rain cover together with a rucksack
if someone is looking to buy one for an outdoor activity. More sales will
result from the additional items you can add to the initial purchase. This is
a crucial talent to impart to sales representatives and custome r care
personnel as it has been shown to increase sales and improve client
satisfaction.
5. Provide value -added services: Customer care employees go beyond
simply attending to customer needs and difficulties. Additionally, they
ought to be imparting knowl edge and details about the products and
services. Sharing expertise is a fantastic method to add value for your
clients and be at the front of their minds when they need guidance or
information. Your social media channels are the ideal channels for
informi ng every one of your customers.
6. Establish a referral programme: Offering rewards is a smart way to
establish a referral programme. Asking your customer to recommend your
business to their community in exchange for some sort of reward is the
greatest app roach to ensure that you'll obtain plenty of high -quality
referrals. People love free stuff. According to studies, those who are
introduced to a business by current clients are 18% more likely to stick
around.
7. Educate your staff: As the operation's bea ting heart, your customer
service crew needs thorough training in all of the aforementioned topics.
Customer service personnel are sometimes the sole point of contact a
customer will have with a business; they are the real face of the enterprise.
They will be your most useful instrument for promoting your brand
identity and products when properly taught and given the freedom to make
judgements that will promote customer happiness.
8. Take responsibility: As the organization's leader, you are ultimately
accountable for all that occurs. If you want a good customer service staff
that will go above and beyond, you must support and manage the team.
You must be a leader who accepts responsibility for mistakes and provides
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61 6.8 SUMMARY
It boosts sales. Customers are more likely to work with a company whose
products they consider to be of great quality. Additionally, customers are
more likely to keep making frequent purchases from companies that
provide excellent customer ser vice. It reduces the cost of marketing.
6.9 BIBLOGRAPHY
Ravi Shanker, ‘Services Marketing: The Indian Perspective’, Excel
Books
C Bhattacharjee, Services Marketing, Excel Books, New Delhi
Christopher H Lovelock, Services Marketing, third edition, Prentic e
Hall, US
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62 7
NEW DEVELOPMENTS IN SERVICE
MARKETING
Unit Structure :
7.0 Objective
7.1 Introduction
7.2 New Service Development
7.3 Types of New Services
7.4 Service Redesign
7.5 New Service Development Process
7.6 Challenges in New Service Development
7.7 Peer-to-Peer Sharing
7.8 Summary
7.9 Bibliography
7.0 OBJECTIVE
We discuss the launch of new goods and services in this lesson. We hear
both success and failure tales regarding brand -new, cutting -edge goods.
To develop and effectively launch new products or services, it involves
money, time, and effort. This session will begin by examining the causes
of new product failures.
7.1 INTRODUCTION
All businesses depend on the introduction of new goods and services You
must invest in their growth if you want th e business to grow and be
profitable. However, starting the development process is dangerous. It
requires a lot of structure and preparation.
Often, new technology is insufficient to distinguish the products offered
by manufacturing companies. Instead, mixt ures of goods and services —
referred to as hybrid offerings —create a competitive edge. As a result,
manufacturing companies must not only come up with new technology
solutions to compete and expand, but also create and implement service
strategies through n ew service development (NSD) and service operations.
Insights on how manufacturing companies might employ NSD to create a
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63 The separation or integration of the service business with the traditional
business was an early study focus on service infusion in industrial
organisations. Recently, the topic of discussion has changed to include or
exclude NSD from new product development (NPD). Some services, but
not all, appear to benefit from t he integration of NSD and NPD. Although
there have been suggested specific NSD processes for manufacturing
companies, many of which require fewer stages than NPD processes,
many services continue to be developed outside of the official NSD
process. There a re also disagreements on whether NSD should be carried
out in manufacturing companies as part of the NPD process, in a distinct
NSD process, or whether everything should be seen as service innovation
and a new process should replace the NPD and NSD process es.
The introduction of new technologies and enhancements to product
performance are the foundation of research on innovation in
manufacturing companies. Value is not seen as being jointly generated
with a consumer, but rather via traits and functions. As a result,
innovations frequently focus on enhancing the performance of a product or
service rather than on enhancing the conditions necessary for value co -
creation in a client relationship. We define service innovation, in line with
Gallouj and Weinstein ( 1997), as any modification that alters one or more
service attributes. Service innovation cannot be described by theory
derived from observations of product innovation since new services differ
from goods in their innovation modes.
7.2 NEW SERVICE DEVELOPM ENT
1. To survive and thrive, organisations must engage in new service
development (NSD). However, the procedure can be difficult, time -
consuming, expensive, and frequently ineffective. Customers are
involved in the service system and production process as co -producers,
or participants. As a result, efficient NSD concentrates on creating
service requirements that satisfy customer wants and specifications.
Other stakeholder groups could also have their own requirements for
the service. However, a number of mode ls and methods have been
created that can help managers and others create fresh, improved
services.
2. Services include ideas from the insurance, banking, hotel, hospitality,
and IT sectors, among others.
3. Since services are intangible, it is even more cruci al that new services
be developed with the four following fundamental characteristics.
4. Services must be impartial and objective.
5. Services should be specific rather than general.
6. In order to produce new services, services should be grounded in re ality
and evidence rather than opinion.
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64 7. Services ought to be methodical; they shouldn't be metaphysical.
It is essential to outline or structure new service development and adhere
to the specified stages. Instead of using objective designs that take in to
account information about customer perception, market demand, and
feasibility, new services are frequently developed based on internal
peoples' subjective suggestions about "what should be services and where
they will succeed". Since the shows are creat ed and watched
simultaneously and frequently feature interactions between customers and
employees, it is essential that both parties participate in the process of
developing new services.
It is crucial for a new service development system to have four
fundamental qualities since services are intangible. (1) It has to be
unbiased and not subjective. (2) It must be clear and not ambiguous. (3) It
must be fact -based rather than opinion -based. (4) The focus must be
methodological rather than philosophical.
Empl oyee participation in the design and development process enhances
the possibility that a new service will be successful because workers may
spot organisational problems that must be fixed to enable the provision of
the service to consumers. Customers shoul d be included in the process of
developing new services since they frequently take an active role in
service delivery.
Employee participation in the design and development process enhances
the possibility that a new service will be successful because worke rs may
spot organisational problems that must be fixed to enable the provision of
the service to consumers.
Customers should be included in the process of developing new services
since they frequently take an active role in service delivery.
7.3 TYPES OF N EW SERVICES
A) A major invention is a new service for an unknown market. Examples
from the past include the launch of the first broadcast television
services and the nationwide, overnight small package delivery service
by Federal Express.
b) New services for a market that is already supplied by items that
address the same basic demands make up start -up firms. Examples of
services include the development of health maintenance organisations
to offer a different method of providing healthcare and online banki ng
for financial transactions.
c) New services for the currently serviced market indicate attempts to
provide current organisation consumers with a service not previously
offered by the firm (even if it may be provided by other munotes.in
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65 businesses).For instance, seve ral airlines provide phone, Internet, and
fax services while flying.
d) Service line extensions are augmentations of the current service line,
such as the addition of new menu items by a restaurant, new routes by
an airline, new legal services by a law firm , or new courses or degrees
by a university.
e) The most prevalent form of service innovation may be service
improvements. Longer service hours, quicker service process
execution, or augmentations like more amenities in a hotel room are a
few examples of cha nges to the characteristics of already -offered
services.
f) Style adjustments are among the smallest service advances, despite the
fact that they are frequently very noticeable and have a big impact on
how customers feel, think, and behave. Ex: Modifying a r estaurant's
colour scheme.
7.3 SERVICE REDESIGN
Redesigning current services is another effective strategy for service
expansion and growth, as many businesses have found.
Self-service: Putting the consumer in a producing mode as opposed to
a passive, receiving one is one way to redesign. The consumer will
gain more from the service process redesign in terms of personal
control, accessibility, and timeliness.
Direct service: Bringing the service to the consumer rather than
requesting them to visit th e supplier is referred to as direct service.
This might entail providing the service to the client at their place of
business or residence.
Pre service: This kind of redesign focuses on the front -end procedures
and streamlines or enhances the service acti vation. Pre -admission
processing at a hospital, express check -in at a hotel or vehicle rental,
and pre -paying tolls on roads are a few examples.
Bundled service: Combining many services into one is another method
to revamp what is now available. Cust omers gain from this because
they get more value and convenience than they would have if they had
bought each service separately.
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66 Physical service: Physical redesign aims to improve the customer's
experience by altering the tangibles used in conjunction with the
service or its physical setting. The interior renovation of Mid way
Express Airlines' aircraft has largely altered the overall airline travel
experience.
7.4 NEW SERVICE DEVELOPMENT PROCESS
Even though the procedures are the same for both servic es and tangible
goods, how they are carried out varies greatly.
Development of new services or products is rarely a fully linear process.
That is helping many businesses develop new services more quickly.
There are several processes that may be completed c oncurrently, and in
rare cases, a step may even be bypassed. "Flexible product development"
refers to the process of developing a new service or product that involves
many processes being completed at once.
planning ahead: The development of service concep ts is determined by the
front end.
a) Reviewing the vision and purpose is undoubtedly the first step in
developing a new service. a) Business strategy creation. If they are
unclear, the organization's general strategic direction must be decided
upon and accep ted.
b) Development of a new service strategy: The objectives, vision,
resources, and expansion strategies of the organisation will determine
the kinds of new services that are appropriate. The organisation will be
in a better position to start coming up with particular ideas if it defines
a new service strategy (perhaps in terms of markets, types of services,
time horizon for development, profit criteria, or other pertinent
elements).
Utilising the framework is one way to get started creating a new
servic e strategy . The framework aids in the identification of potential
growth avenues for an organisation and serves as a stimulant for
original
thought.
a) Idea Generation: The official solicitation of fresh ideas is the process's
subsequent phase. The new serv ice strategy screen outlined in the step
before may be used to filter the concepts created at this stage. There munotes.in
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67 are several paths and approaches for finding new service concepts.
Serving consumers and seeing how they use the company's goods and
services ma y also help to spark ideas for new improvements. Formal
brainstorming, asking for suggestions from workers and customers,
conducting user research, and learning about competitors' offers are
some of the most popular techniques.
b) Service Concept Development and Evaluation: The intangibility and
concurrent production and consumption of services, in particular,
impose complicated demands on this stage of the process. It's
challenging to put an abstract concept into real language and depict an
elusive service. After an idea has been clearly defined, it is crucial to
create a description of the service that accurately captures its unique
qualities and traits, and to ascertain the initial reactions of both
customers and employees to the concept. The servicedesign document
would outline the issue the service addresses, go over the justifications
for providing the new service, list the advantages of the
serviceprocess, and justify the use of the service.
c) Business Analysis: Assuming that both clients and staff ga ve the service
concept high marks during concept creation, the next stage is to assess
its viability and possible financial benefits. At this point, operational
viability, cost assessments, demand analyses, and revenue estimates are
all evaluated.
Impleme ntation: The new service idea is ready to move on with the
process once it has cleared all of the front -end planning barriers.
c) Testing and service development: When creating new physical items,
this step include building product prototypes and gauging user
acceptability. Again, this stage is challenging since services are
intangible and generally generated and consumed concurrently. All
stakeholders in the new service, including consumers and contact
personnel as well as functional representatives from mark eting,
operations, and human resources, should be included at this stage of
service development in order to handle the difficulty. In this stage, the
idea is polished to the point where a comprehensive service blueprint
outlining the service's implementati on strategy can be created. The
blueprint will probably change across several revisions based on
feedback from all of the stakeholders mentioned. For instance, when a
sizable state hospital was developing and evaluating a new collection
of services, it inc luded medical researchers, computer programmers
and operators, librarians, telecommunications specialists, and records
clerks in addition to the physician users.The last phase in the service
delivery process is for each region to transform the final design into
detailed implementation plans for its portion of the process. Because
defining the specifics of the new service at this point requires such
sophisticated service development, design, and execution. If not,
ostensibly unimportant operational elements can make a promising
new service concept fail. munotes.in
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68 d) Market Testing: It is challenging to test new services in isolation since
the delivery system for existing services is frequently entwined with
new service offerings. Additionally, because the organisation onl y has
one point of delivery in some circumstances, such as a single -site
hospital, it might not be viable to expand the service to a remote
market region. However, there are other approaches to evaluating the
impact of marketing mix variables. For a while, the new service may
be made available to organisation personnel and their families in order
to gauge how they would react to changes in the marketing mix.
e) Commercialization: The market is now the focus of the process. In this
stage, there are two main objectives. The first step is to foster and
uphold acceptance of the new service among a sizable group of service
delivery workers who will be in charge of daily service quality. If
acceptability has been factored in by include important groups in the
design and development process from the beginning, this work will be
simpler.The second goal is to keep an eye on every part of the service
both before it is introduced and during the whole service cycle. If it
takes the user six months to fully enjoy the serv ice, then rigorous
monitoring must continue for at least that long. Every aspect of the
service, including phone calls, in -person interactions, billing,
complaints, and delivery issues, should be evaluated. Costs and
operational effectiveness need to be mo nitored as well.
f) Post-introduction Evaluation: Based on the actual market response to
the offering, the information obtained during the service's
commercialization can be assessed at this stage and modifications to
the delivery method, personnel, or mark eting mix factors made.
7.5 CHALLENGES IN NEW SERVICE DEVELOPMENT
a) The features of a new service product may have an impact on the
buyer's decision. Consumers may view these elements as integral
components of the "core" service or as "peripheral" to it. T he brand,
the colour, the design, or the package may all have a significant role in
the consumer's choice to acquire a tangible product.
b) Branding: "The marketing of services typically does not place much
emphasis on branding, brand development, or brand acceptance."
Branding is undoubtedly challenging due to the challenges of
upholding quality consistency in service environments. In a research
on brand loyalty conducted in the context of the computer rental
industry, it was discovered that there was no s ingle factor that caused
customers to cancel, keep, or extend their rental agreements.
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69 c) Patent: Since services are intangible, there are no patents. Thus, it is
challenging to stop rivals from stealing service innovations, even
though trade names can be p rotected. Because they are simple to copy,
innovations can have short life cycles.
d) Warranties: Warranties are frequently connected to the sales of
products. However, they could be crucial components of service
marketers' strategies. A warranty is an agre ement by the seller that the
item being sold is suitable for its intended purpose or satisfies certain
requirements. These agreements might be either inferred or stated.
Warranties may be crucial for promoting specific services. Financial
services can bene fit from factors like investment programmes that
ensure payments despite changes in the external environment.
e) Service Product (e) After -sale Service: The selling of tangible goods is
typically linked to after -sale service. But it also applies to markets f or
services. For instance, as part of their services, airlines can help
customers reserve hotels and rent cars. Insurance companies can
counsel customers on any policy adjustments they should make as
their personal circumstances change. Stockbrokers can he lp clients
rebalance their share portfolios. And a dentist can perform a checkup
after performing dental work.
f) The removal of service -based goods is, of course, not simple, and
businesses may use a variety of tactics before doing so, including
selling over seas, maximising profitability during the remaining life, or
revitalising the product in some way. The need for structured
processes to support decision making in this area is still there
notwithstanding these actions.
7.6 PEER -TO-PEER SHARING
A peer -to-peer (P2P) economy is a decentralised system in which two
people work together to exchange goods and services directly or to
manufacture products and services jointly without the need of a
middleman, incorporated corporation, or commercial enterprise. In a peer-
to-peer transaction, the delivery of the item or service and the exchange of
money happen directly between the buyer and the seller. A private person
or independent contractor who owns both their equipment (or means of
production) and their final outp ut typically acts as the producer in a peer -
to-peer economy.
A capitalist system may coexist with a P2P economy. Retail and
commercial software coexist with open -source (P2P) software.
Alternatives to hotels and inns or taxi and livery services, respective ly,
include services like Uber and Airbnb. By offering intermediate services, munotes.in
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70 such as a network to link buyers and sellers and process payments, and
utilising private contractors to supply services directly to clients, these
businesses function as a mix be tween typical capitalist organisations and
pure P2P activity.
P2P transactions have a higher risk of failure on the side of the supplier to
deliver, a lower chance that the goods will meet expectations for quality,
and a higher chance that the buyer won't pay. This additional risk may be
offset by cheaper prices and reduced overhead costs.
The peer -to-peer economy is similar to the economic production of the
pre-industrial age, when everyone was a self -producer, in that providers of
P2P goods or services ow n their finished product and means of
production. This system was replaced by more effective economic systems
that provided greater productivity and wealth. The P2P economy is now
much more viable thanks to the Internet and the IT revolution, which has
also encouraged investment in service providers who, while not directly
producing P2P goods or services, work to make P2P transactions more
transparent, secure, and effective.
The current status of developing P2P economy is only the most recent
illustration o f the benefits of the Internet for users. Today's self -producing,
Internet -enabled capitalism is substantial and disruptive enough for
businesses and authorities to have taken notice. That demonstrates the
enormous potential it has for future innovative bu siness models.
Peer -to-Peer (P2P) Service Examples
Open -source applications: Anyone can view and/or alter the software's
source code. Open -source software aims to do away with the requirement
for a central publisher/editor by crowdsourcing software coding, editing,
and quality control among writers and consumers.
Filesharing: Filesharing is the exchange of media and software files
between uploaders and downloaders. Filesharing services can provide
screening and protection for shared data in addition to peer -to-peer
networking. Additionally, they might let users circumvent intellectual
property restrictions in an anonymous way or, alternatively, they might
help with intellectual property enforcement.
• Online marketplaces: An online marketplace is a network wherein
individual vendors may locate potential purchasers for their products.
Online marketplaces may provide services including escrow, payment
processing, seller advertising, buyer and seller ratings based on past
transactions, and buyer and seller rati ngs.
• Blockchain and cryptocurrency: A blockchain is a component of
cryptocurrency technology. It is a network where users may send, receive,
and verify payments devoid of a clearinghouse or central issuer of money.
Making and enforcing smart contracts a s well as conducting business with
cryptocurrency are made possible by blockchain technology. munotes.in
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71 • Homesharing: Homesharing enables landlords to rent out all or a portion
of their residence to transient tenants. Homesharing services frequently
handle payments , guarantee quality, or rate and qualify owners and
tenants.
• Ridesharing: A platform for automobile owners to provide chauffeur
service to individuals looking for a cab. Platforms for ridesharing and
homesharing provide comparable services.
7.9 SUMMARY
To develop and offer new services to its clients, professional service
companies take part in new service development projects. Future client
wants are anticipated, and proactive innovative solutions to problems or
issues are developed. The goal of new s ervice development is to offer new
services that clients will value and that differentiate your business from
the competitors.
7.8 BIBLOGRAPHY
Ravi Shanker, ‘Services Marketing: The Indian Perspective’, Excel
Books
C Bhattacharjee, Services Marketing, Ex cel Books, New Delhi
Christopher H Lovelock, Services Marketing, third edition, Prentice
Hall, US
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