Services management Marketing Management MBA

1. Service Management
Prof.RKP MMS : Sem IV
Service Management
People, Process & Technology

2. Service Management
Prof.RKP MMS : Sem IV
Core Content
Introduction – Nature of Service
Service Marketing Mix
Service Delivery
Managing Demand & Capacity
Customer Satisfaction
Service Quality Gap model
Service Encounters
Service Recovery
Service Profit Chain
Managing Customer Relations
Managing People
Future outlook

3. Service Management
Prof.RKP MMS : Sem IV
Source of Knowledge
Course
Books
Service Marketing
- Bitner &
Gremler
Service Marketing
- Lovelock &
Walker
Service Marketing
– Govind Apte
Manuals
Business : Today,
World, India
ET, Mint, BS, HT
Sectoral Reports
/ Industry
Assoucations

4. Service Management
Prof.RKP MMS : Sem IV
Internal Evaluation
40 Marks
20 Mark -
Presentation
10 Mark –
Class
Participation
10 Mark –
Class Test

5. Service Management
Prof.RKP MMS : Sem IV

6. Service Management
Prof.RKP MMS : Sem IV
Relevance of Service

7. Service Management
Prof.RKP MMS : Sem IV
Factoids of Service Sector
20%
Growth Rate
40%
Total Employed Population
50%
Key Industries
60%
Contribution to GDP
70%
New Job Opportunity

8. Service Management
Prof.RKP MMS : Sem IV
What are Services !!!
A Service is any act or performance one party can offer to another that is
essentially intangible and does not result in the ownership of anything
Its production may or may not be tied to a physical product.
Increasingly, however, manufactures, distributors and retailers are providing
value- added services, or simply excellent customer service, to differentiate
themselves

9. Service Management
Prof.RKP MMS : Sem IV
Service Management
Service Management is a continuous process of providing end to end
solutions, in terms of understanding client’s requirements and ensuring
smooth transition of activities through proper implementation of technology
Service Management
Service
Marketing
Service Delivery Supply Chain Quality Control
Service Profit
Chain
Technology

10. Service Management
Prof.RKP MMS : Sem IV
Service Categories
Pure Tangible goods
Tangible goods with accompanying services
Hybrid
Major service with accompanying minor goods
Pure Service

11. Service Management
Prof.RKP MMS : Sem IV
Service Dominance: Tangibility Spectrum

12. Service Management
Prof.RKP MMS : Sem IV
Service Characteristics

13. Service Management
Prof.RKP MMS : Sem IV
Service Characteristics
 Intangibility: To reduce the uncertainty buyers will look for evidence of
quality. They will draw inference about the quality from place, people,
equipment, communication material, symbols, price that they see. Therefore,
the service provider’s task is to “manage the evidence”, to tangibilize the
intangible.
 Inseparability: Services are typically produced & consumed simultaneously.
If a customer renders the service, then the provider is part of the service.
 Variability : Largely deals with the quality of the service provider.
( Private Hospital vis-à-vis Government Hospital )
 Perishability : It is not a problem when demand is steady, when demand
fluctuates, service firms have problem

14. Service Management
Prof.RKP MMS : Sem IV
Service Industries
Aviation
Health &
Wellness
IT / ITES
BFSI
Telecom
Education
Media &
Entertainment
Hospitality
& Tourism
Advisory &
Consultative
Hotels &
Restaurants
Retail &
Logistics

15. Service Management
Prof.RKP MMS : Sem IV
Why Service Marketing ?
Service Based Economies
Service as a Business Imperative
Deregulated Industries
Emergence of Technology
New Ways to Deliver Offerings

16. Service Management
Prof.RKP MMS : Sem IV
Service Marketing
Services Based Economies
• First, Service marketing concepts and strategies have developed in
response to the tremendous growth of service industries, resulting in their
increased importance to the world economies
• The growth & economic contribution of the service sector have drawn
increasing attention to the opportunities within service sector industries
worldwide

17. Service Management
Prof.RKP MMS : Sem IV
Service Marketing
Country Percent of GDP Attributed to Service
Unites States of America 78.6
France 77.2
United Kingdom 73.4
Japan 73.1
Australia 70.0
Germany 70.0
Singapore 66.2
India 60.7
Brazil 54.0
China 40.0
Source The World Fact book, 2008
Services Based Economies

18. Service Management
Prof.RKP MMS : Sem IV
Service Marketing
Service as Business Imperative
• Manufacturing, Marketing & Technology industries such as Automobile,
FMCG, CD’s, Computers are also recognizing the need to provide quality &
revenue producing services in order to compete worldwide
• From GE & IBM to HUL & Sony to Hyundai & Dell, companies are
recognizing the opportunity to grow and profit through services ? Why ?

19. Service Management
Prof.RKP MMS : Sem IV
Service Marketing
Service as Business Imperative
• Because the quick pace of developing technologies and increasing
competition make it difficult to gain strategic competitive advantage
through physical products alone
• Plus, Customers are more demanding. Not only they expect excellent, high
quality goods, they also expect high level of customer service and total
service solutions along with them

20. Service Management
Prof.RKP MMS : Sem IV
Service Marketing
Deregulated Industries
• Deregulatory moves have taken place in U.S. and many other economy’s
across Globe
• As a result, marketing decisions that used to be tightly controlled by the
government are now partially, and in some case’s totally, within the
control of individual firms
• Telecom, Insurance, Aviation, Hospitality, Retail
• Needless to say, deregulation created a turmoil across industries,
accelerating the need for more sophisticated, customer-based and
competition marketing

21. Service Management
Prof.RKP MMS : Sem IV
Service Marketing
Emergence of Technology
• Technology – is currently shaping the field and profoundly influencing the
practice of Service Marketing
Technology
BFSI Automobiles
Media &
Entertainment
Consumer
Durable’s
Retail Telecom

22. Service Management
Prof.RKP MMS : Sem IV
Service Marketing
Emergence of Technology
Retail
Online Shopping
Telecom
Customized Schemes Value Added Services
Media & Entertainment
Interactive Session E-paper
Automobiles
After Sales Services GPS
BFSI
Online Banking Personalized Banking

23. Service Management
Prof.RKP MMS : Sem IV
Service Marketing
• Innovation
Technology
• First Mover Advantage ( FMA)
Innovation
• Control of Resources ( CoR)
FMA
• Manufacturing
CoR
• Economies of Scale ( EoS)
Manufacturing
• Cost Advantage
EoS
• Market Growth
Cost Advantage
• Market Share
Market Growth
• Market Leader
Market Share

24. Service Management
Prof.RKP MMS : Sem IV
Service Marketing
New Ways to Deliver Offerings
• With the increase in competitive scenario, today marketer’s are forced to
offer their services in the most innovative manner possible
• As a result of which, the Service marketing as a concept is gaining more
prominence and has already started influencing the buying behaviour of
the end users

25. Service Management
Prof.RKP MMS : Sem IV
Service Marketing
New Ways to Deliver Offerings
Mobile number portability
Low Cost Carrier airlines
12 hrs of offline Banking facility
Maximum Banking networks
Online Presence
Extended Warranties
VAS
Convenience offerings ( Home Deliveries )
Quality measures

26. Service Management
Prof.RKP MMS : Sem IV
What is Service Marketing
• An integrated effort to deliver value ( convenience, timeliness or comfort )
to customers and manage customer relationships in ways that benefit the
organization and its stakeholder
• Any act which understand and satisfy the consumer’s actual need to
optimum and influence the buying decision of the end user

27. Service Management
Prof.RKP MMS : Sem IV
Service Marketing Mix
Marketing Mix :
• The elements organization controls that can be used to satisfy, reach and
communication with customers
• 4 P’s : Product, Price, Place and Promotion
Expanded Mix for Services
• Because services are usually produced and consumed simultaneously and
also service are intangible, customers will be looking for any tangible cue
to help them understand the nature of the service experience.

28. Service Management
Prof.RKP MMS : Sem IV
Service Marketing Mix
Process
Physical
Evidence
People
• These elements appear as core decision variables in any Service
Marketing Plan
•The notion of a mix implies that all the variables are interrelated and
complement each other

29. Service Management
Prof.RKP MMS : Sem IV
Service Marketing Mix
People
• All human resources who play a part in service delivery and thus influence
the buyer’s perceptions : namely, the firm’s personnel, the customer and
other customers in the service environment
Physical Evidence
• The environment in which the service is delivered and where the firm and
customer interact, and any tangible components that facilitate
performance or communication of the service
- Facility Design
- Equipment, Signage, Statement ( Billings, Business Cards)

30. Service Management
Prof.RKP MMS : Sem IV
Service Marketing Mix
Process
• The actual procedures, mechanisms and flow of activities by which the
services is delivered - the service delivery and operating system
- Flow of activities
- Number of Steps
- Customer Involvement

31. Service Management
Prof.RKP MMS : Sem IV
Presentations
Details :
•Total Marks : 20 M
- Allocation : Content : 12 M ( 6 M each for Hardcopy & PPT)
- Commn / Cordn : 7 M
- Attire : 1 M
•Time Limit : 20 mins per Group
• Team needs to divide themselves into 2 subgroup : Presentation Group /
Q&A Group, consisting of equal number of students
• Logical & Valid Questions from students will be appreciated
• Marks : Weighted Average of individual scores

32. Service Management
Prof.RKP MMS : Sem IV
Presentations
Topics for Presentation :
• BFSI Sector
• Media & Entertainment Sector
• IT / ITES
• Retail
• Logistics
• Telecom
• Hospitality / Tourism
• Aviation
• Education
• Advisory / Consultative
• Health & Wellness
Scope of Presentation :
• Industry Overview :
- Overall Market size
- Industry growth rate
- GDP Contribution
- FDI Limits
- Existing Companies
• PEST Analysis
• Swot Analysis
• Case Analysis of the leading
player in that industry
• Future Outlook

33. Service Management
Prof.RKP MMS : Sem IV
Customer Focus
Customer :
• Any individual who has propensity to consume and an ability to pay, is
treated as a customer
Consumers
End users
Decision
Makers
Influencers
King

34. Service Management
Prof.RKP MMS : Sem IV
Customer Focus
Staying Focused on the Customer
From the firm’s point of view, all strategies are developed with an eye on the
customer, and all implementations are carried out with an understanding of
their impact on the customer
• Decisions regarding :
- New services
- Communication Plans
- Operation process
- Human resources, are considered in terms of their impact on
customers

35. Service Management
Prof.RKP MMS : Sem IV
Customer Focus
Customer Satisfaction
• “Everyone know what satisfaction is, until asked to give a definition. Then,
it seems, nobody knows” – Richard Oliver
• Satisfaction is the consumer’s fulfillment response. It is a judgment that a
product or service feature, or the product or service itself, provides a
pleasurable level of consumption- related fulfillment
• “Satisfaction is the customer’s evaluation of a product or service in terms
of whether that product or service has met the customer’s need and
expectations”

36. Service Management
Prof.RKP MMS : Sem IV
Customer Focus
What determines Customer Satisfaction :
Customer Satisfaction
Reliability Responsiveness Assurance Empathy Tangibles
Service Quality Dimensions

37. Service Management
Prof.RKP MMS : Sem IV
Customer Focus
Reliability : Delivering on Promise
• Ability to perform the promised service dependably and accurately
• Reliability means that the company delivers on its promises – promises
about delivery, service provision, problem resolution and pricing
Responsiveness : Willing to Help
• The willingness to help customers and to provide prompt service
• This dimension emphasizes on attentiveness & promptness in dealing with
customer requests, questions, complaints and problems
Assurance : Inspiring Trust & Confidence
• Defined as employees’ knowledge and courtesy and the ability of the firm
( Service Provider) and its employees to inspire trust & confidence

38. Service Management
Prof.RKP MMS : Sem IV
Customer Focus
Empathy : Treating Customers as Individuals
• Defined as the caring, individualized attention that the firm provides its
customers. The essence of empathy is conveying, through personalized or
customized service, that customers are unique & special and that their
needs are understood
Tangibles : Representing the Service Physically
• Defined as the appearance of physical facilities, equipment, personnel and
communication materials.

39. Service Management
Prof.RKP MMS : Sem IV
Value Delivery
Customer Relationship Management
Value Creation
Customer Benefits
Value Exploration
Cognitive Space
Customer Focus
Value Delivery
Using its capabilities & infrastructure to deliver value offering
Value Creation
Creating new promising new value offering
Value Exploration
Identifying new opportunities
Customer Focus
39
Holistic Marketing Orientation
• The holistic marketing framework is designed to address three key
management questions :

40. Service Management
Prof.RKP MMS : Sem IV
Customer Focus
The Customer Gap
• The customer gap is the difference between customer
expectations & perceptions.
Expected
Service
Perceived
Service
Customer Gap

41. Service Management
Prof.RKP MMS : Sem IV
The Customer Gap
• Customer Expectations are standards or reference points that
customers bring into the service experience, whereas
Customer Perceptions are subjective assessments of actual
service experience.
• The source of customer expectations are marketer-controlled
factors ( such as pricing, advertising, sales promotion) as well
as factors that the marketer has limited ability to affect
( innate personal needs, word-of-mouth communications,
competitive offerings) are source of Customer perceptions

42. Service Management
Prof.RKP MMS : Sem IV
The Customer Gap
• In a perfect world, expectations & perceptions would be
identical : Customers would perceive that they have received
what they thought they would and should.
• In practice these concepts are often, even usually, separated
by some distance.
• Broadly, it is the goal of service marketing to bridge this
distance and formulate strategies to close this customer gap

43. Service Management
Prof.RKP MMS : Sem IV
The Customer Gap
• To close the all-important customer gap, the gaps model
suggest that four other gaps – the Provider gaps – need to be
closed. These gaps occur within the organization providing the
service (hence the term provider gaps) and include :
Gap 1
• Not knowing what customers expect
Gap 2
• Not selecting the right service designs & standards
Gap 3
• Not delivering to service designs & standards
Gap 4
• Not matching performance to promises

44. Service Management
Prof.RKP MMS : Sem IV
Customer Gap -1
Customer Expectations
Inadequate marketing research orientation
Lack of upward communication
Insufficient relationship focus
Inadequate service recovery
Company’s perceptions of Customer
Expectations

45. Service Management
Prof.RKP MMS : Sem IV
Customer Gap -2
Customer-
driven service
designs &
standards
Poor service
design
Absence of
customer
driven
standards
Inappropriate
physical
evidence &
servicescape
Management
perceptions
of Customer
expectations

46. Service Management
Prof.RKP MMS : Sem IV
Customer Gap –3
Customer driven
service design &
standards
Deficiencies in
human resource
policies
Customers who
do not fulfill
roles
Problems with
service
intermediaries
Failure to match
supply &
demand
Service Delivery

47. Service Management
Prof.RKP MMS : Sem IV
Customer Gap -4
Service Delivery
Lack of
integrated
service
marketing
communication
Ineffective
management of
customer
expectations
Overpromising
Inadequate
horizontal
communications
External Communications to Customers

48. Service Management
Prof.RKP MMS : Sem IV
Gaps Model of Service Quality

49. Service Management
Prof.RKP MMS : Sem IV
Service Quality Gaps Model Audit
The Service quality gap model is a useful way to audit the service
performance & capabilities of an organization.
The model has been used by many companies as an assessment
or service audit tool because it is comprehensive & offers a way
for companies to examine all the factors that influence service
quality.
To use the tool, a company documents what it knows about each
gap and the factors that affect the size of the gap

50. Service Management
Prof.RKP MMS : Sem IV
Types of Service Expectations
Minimum
tolerable
expectations
I expect terrible
service from
this restaurant
but comes
because the
price is low
Acceptable
expectations
I expect this
restaurant to
serve me in an
adequate
manner
Experience
based norms
Most times this
restaurant is
very good, but
when it gets
busy the service
is slow
Normative
expectations
As expensive as
this restaurant
is, it ought to
have excellent
food & service
Ideal
expectations or
desires
Everyone says
this restaurant
is as good as
one in france
Low High

51. Service Management
Prof.RKP MMS : Sem IV
Zone of Tolerance
• Services are heterogeneous in that performance may vary
across providers, across employees from the same provider,
and even with the same service employee
• The extent to which customers recognize and are willing to
accept this variation is called the Zone of Tolerance
Desired Service
Zone of Tolerance
Adequate Service

52. Service Management
Prof.RKP MMS : Sem IV
Zone of Tolerance
• If service drops below adequate service – the minimum level considered
acceptable – customers will be frustrated and their satisfaction with the
company will be undermined
• If service performance is higher than the zone of tolerance at the top end
– where performance exceeds desired service – customers will be pleased
and probably quite surprised as well
• You might consider Zone of Tolerance as the range or window in which
customers do not particularly notice service performance. When it falls
outside the range, the service gets the customer attention in either
positive or negative way

53. Service Management
Prof.RKP MMS : Sem IV
Service Encounters or Moment of Truth
• From the customer’s point of view, the most vivid impression of service
occurs in the service encounter or moment of truth, when the customer
interacts with the service firms.
• The Disney corporation estimates that each of its amusement park
customer experiences about 74 service encounters and that a negative
experience in any one of them can lead to a negative overall evaluation.
• Marriott Hotels learned this through their extensive customer research to
determine what service elements contribute most to customer loyalty.
They found that four of the top five factors came into play in the first 10
minutes of the guest’s stay.

54. Service Management
Prof.RKP MMS : Sem IV
Service Encounters or Moment of Truth
A service encounter occurs every time a customer interacts with the service
organization. There are three general types of service encounters :
• Remote Encounters – ATM / Online Transaction
• Phone Encounters
• Face to Face Encounters

55. Service Management
Prof.RKP MMS : Sem IV
How customer respond to service failures
Service Failure
Complaint
action
Complain to
provider
Negative word
of mouth
Exit / Switch Stay
Third party
action
No Complaint
action
Exit / Switch Stay
Dissatisfaction
/ negative
emotions

56. Service Management
Prof.RKP MMS : Sem IV
Service Recovery
Service
Recovery
Strategies
Act Quickly
Provide
Adequate
Explanations
Treat
Customer
Fairly
Cultivate
Relationships
Learn from
the lost
customers
Make the
service fail
safe
Encourage &
track
complains
Learn from
recovery
experiences

57. Service Management
Prof.RKP MMS : Sem IV
Service Guarantees
A guarantee is a particular type of recovery tool. In a business context, a
guarantee is a pledge or assurance that a product service offered by a firm
will perform as promised, and if not then some form of raparation will be
undertaken by the firm.
“Service organizations, in particular, are beginning to recognize that
guarantees can serve not only as a marketing tool but as a means for defining,
cultivating and maintaining quality throughout an organization “

58. Service Management
Prof.RKP MMS : Sem IV
Service Guarantees
The benefits to the company of an effective service guarantee are numerous :
• A good guarantee forces the company to focus on its customers
• An effective guarantee sets clear standards for the organization
• A good guarantee generates immediate and relevant feedback from
customers
• The guarantee reduces the sense of risk and builds confidence in the
organization
• Information generated through the guarantee can be tracked and
integrated into continuous improvement efforts
• When the guarantee is invoked there is an instant opportunity to recover

59. Service Management
Prof.RKP MMS : Sem IV
The Service Triangle
Service Marketing is about promises – promises made and promises kept to
customers. A strategic framework known as the service triangle, visually
reinforces the importance of people in the ability of firms to keep their
promises and succeed in building customer relationships
Employees Customers
Company
Internal Marketing
“Enabling the Promise”
External Marketing
“Making the promise”
Interactive Marketing
“Delivering the promise”

60. Service Management
Prof.RKP MMS : Sem IV
Pricing of Services
Cost based
Demand
based
Competition
based

61. Service Management
Prof.RKP MMS : Sem IV
Customer Definition of Value
•Value Pricing
•Segmentation
Pricing
•Price Bundling
•Complementary
Pricing
•Results – Based
•Prestige Pricing
•Skimming Pricing
•Discounting
•Odd Pricing
•Penetration
Pricing
1.Value is low
Price
2.Value is
everything I
want in a service
3.Value is the
quality I get for
the price I pay
4.Value is what I
get for what I
give
1. For dry cleaning, Fast food restaurant
2. MBA Degree, Medical services, Rock Concert, Social Club
3. Hotel for a vacation, Computer service contract
4. House-keeping service , Hairstylist, Executive education