Marketing of Services a lesson

Management Tutorial -Marketing of services

Difference between goods and services

Q 1: Outline the basic difference between goods and services and the resulting challenges and opportunities for services business.

Ans: “SERVICES ARE ACTIVITIES, BENEFITS, OR SATISFACTIONS WHICH ARE OFFERED FOR SALE, OR PROVIDED IN CONNECTION WITH SALE OF GOODS.”

- American Marketing Association

Here activities like Hair Cut, Massage, training & development etc.

The benifits are like Credit cards. ATM cards, Mobile facilities Etc.

Services are deeds, processes and performance

Intangible, but may have a tangible component

Generally produced and consumed at the same time

Need to distinguish between SERVICE and CUSTOMER SERVICE

services are
like postal service, courier service,transportation,banking, education, etc
there are products like fridge, telivision, motorbike, car washing machine these products should have good after sales service and it has warenty attached to it .

“Goods is a set of tangible physical attributes assembled in an identifiable form to provide want satisfaction to customers.”

Goods are classified into two consumer goods which are used in daily life like tooth paste ,soap, coffee ,tea, prestige pressure pans etc

services are like postal service, courier service, transportation, banking, education, etc
there are products like fridge, television, motorbike, car washing machine these products should have good after sales service and it has warranty attached to it .

1. Tangibility, 2) change of ownership 3) services are heterogeneous, goods are homogeneous

When one buys a refrigerator it is defined as a good but then the service angle is the part that starts after the sales of the good. Service is an important part of the entire package that one buys. It is more entwined when one buys a laptop. The laptop is a physical good but then the service in terms of soft wares/installations etc is a continuous process. It is difficult to detach the service from the physical good. Both are now part of the package.

Goods - things you can touch - tangible
Services - things you cant touch - but you can see their effect intangible
services are not physical, they are intangible
A Service is a type of a product.
Services have special characteristics that make them different than products.
A product without physical characteristics; a bundle of performance and symbolic attributes designed to produce consumer want satisfaction

Challenges for services.

: the challenges for the service marketing are

1) Quality improvement: The service provider always find it difficult to improvise the quality of service for various reasons like chances of rejection in deviation in service delivery.

2) Communicating new services: Another important issue is communicating a new service so that customers can be attracted for trial.

3) Maintaining image: A Hair dresser cannot perform the haircut same every time, there is variability in the delivery of service so maintaining image is very difficult task.

4) Motivating and sustaining employee commitment: Once the employee receives some good experience, demands for higher remuneration and retaining the employees gets difficult.

5) Coordinating marketing, operations and human resource efforts

6) Setting prices: Since the cost of production and delivery of services is difficult to determine setting price gets even more difficult.

Q 2: Elaborate on expected services marketing mix. Suggest strategic by which these can be communicated to the customers.

Ans: Service Marketing Mix

Product

Anything that can be offered to a market for attention, acquisition, use or consumption.

Satisfies a want or a need.

Includes:

With goods
Pure Services
Persons
Places
Organizations
Ideas
Combinations of the above

Price

The price is the amount a customer pays for a product.

It is determined by a number of factors including market share, competition, product identity and the customer's perceived value of the product.

Pricing Policies, Margins, discounts and rebates

Terms of delivery, payment terms, credit terms, and installation charges.

Resale price, Maintenance

Place

Place represents the location where a product can be purchased.

It is often referred to as the distribution channel.

It can include any physical store as well as virtual stores on the Internet.

Channel of distribution

Types of Intermediaries.
Location of outlets
Channel remuneration
Transportation, Warehousing and Inventory Levels

Promotion

Promotion represents all of the communications that a marketer may use in the marketplace.

Promotion has four distinct elements - advertising, public relations, Personal Selling and Sales promotion.

Advertising covers any communication that is paid for, from television and cinema commercials, radio and Internet adverts through print media and billboards.

Media Mix

Public relations are where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events

Personal selling

Personal Presentations by a Firm’s Sales Force.

Selling Expertise
Size of Sales Force
Quality of Sales Force

People: SERVICE PERSONNEL ARE THE PEOPLE WHO PROVIDE THE ORGANIZATION'S SERVICES TO CUSTOMERS.” E.g. Operators, Bus-drivers, Chefs, Receptionists, Security guards, Waiters, Bank -Clerks, lift Attendants, librarians etc.

Physical EvidenceTHE PHYSICAL EVIDENCE IS DEFINED AS THE ENVIRONMENT IN WHICH THE SERVICE IS DELIVERED AND WHERE THE FIRM AND THE CUSTOMERS INTERACT ; AND TANGIBLE COMMODITIES THAT FACILITATE PERFORMANCE OR COMMUNICATE THE SERVICE”.

COMPONENTS OF PHYSICAL EVIDENCE

EXTERIOR FACILITIES
INTERIOR FACILITIES
OTHER TANGIBLES

ELEMENTS OF PHYSICAL EVIDENCE

Organization Physical Facilities Other Tangibles

(Service Scope)

Facility Exterior Business Cards

Exterior design Stationary

Signage Billing Statements

Parking Report

Landscape Employee Dress

Surrounding Environment Uniform Brochures

Facilities Interior

PROCESS

PROCESS REFERS TO THE WAYS OF UNDERTAKING TRANSACTIONS, SUPPLYING INFORMATION AND PROVIDING SERVICES TO THE CUSTOMERS IN A MANNER WHICH IS ACCEPTABLE TO THE ORGANISATION.”

TYPES OF PROCESS

LINE OPERATIONS
JOB SHOP OPERATIONS
INTERMITTENT OPERATIONS

Q 3: If you were the manager of a service organization and wanted to apply the gap model to improve service; which gap would you start with? Why? In what order would you proceed to close the gaps?

Ans: Theory of the Gaps Model

Perceived service quality can be defined as, according to the model, the difference between consumers’ expectation and perceptions which eventually depends on the size and the direction of the four gaps concerning the delivery of service quality on the company’s side

Customer Gap = f (Gap 1, Gap 2, Gap 3, Gap 4)

The key points for each gap can be summarized as follows:

Customer gap: The difference between customer expectations and perceptions – the
service quality gap.

Gap 1:The difference between what customers expected and what management perceived about the expectation of customers.

Gap 2: The difference between management’s perceptions of customer expectations and the translation of those perceptions into service quality specifications and designs.

Gap 3:The difference between specifications or standards of service quality and the actual service delivered to customers.

Gap 4:The difference between the service delivered to customers and the promise of the firm to customers about its service quality

The magnitude and the direction of each gap will affect the service quality. For instance, Gap 3 will be favourable if the delivery of a service exceeds the standards of service required by the organization, and it will be unfavourable when the specifications of the service delivered are not met.

Applications of the Gaps Model

First of all the model clearly determines the two different types of gaps in service marketing, namely the customer gap and the provider gaps. The latter is considered as internal gaps within a service firm. This model really views the services as a structured, integrated model which connects external customers to internal services between the different functions in a service organization. Important applications of the model are as follows:

1. The gaps model of service quality gives insights and propositions regarding customers’ perceptions of service quality.

2. Customers always use 10 dimensions to form the expectation and perceptions of service quality

3. The model helps predict, generate and identify key factors that cause the gap to be unfavourable to the service firm in meeting customer expectations.

Q 4: a) Why are customer experiences so important in evaluating process for services?

Ans: Actualyy all customer services are a kind of process for satisfying the customer.

The customer receives the services as per the classification we have:

Services can be broadly classified under the following headings:

People Processing (e.g. hairdresser, medical)

2. Possession processing tangible actions to goods and other physical possessions belonging to customers e.g. computer repairs, dog obedience training etc.

Knowledge Processing e.g. education, entertainment etc.
Information Processing- intangible actions directed at customers' assets e.g. accounting, investment advice etc.

Generally possession and people processing services are more tangible than knowledge or information processing. For possession and people processing services, clients can see/touch/feel the outcomes, and they may even be personally involved in the delivery of the actual service. Additionally, tangible services usually incorporate a higher level of personal contact (intensity or frequency) between the provider and the customer.

Q 4. B) Explain how color, light, temperature, artifact affect the service experience of customer.

Ans: THE ENVIRONMENT IN WHICH THE SERVICE IS DELIVERED AND WHERE THE FIRM AND THE CUSTOMERS INTERACT ; AND TANGIBLE COMMODITIES THAT FACILITATE PERFORMANCE OR COMMUNICATE THE SERVICE contributes a lot to the customer satisfaction or to increase the perceived value of the service.

COMPONENTS OF PHYSICAL EVIDENCE

EXTERIOR FACILITIES
INTERIOR FACILITIES
OTHER TANGIBLES

ELEMENTS OF PHYSICAL EVIDENCE

Organization Physical Facilities Other Tangibles

(Service Scope)

Facility Exterior Business Cards
Exterior design Stationary
Signage Billing Statements
Parking Report
Landscape Employee Dress
Surrounding Environment Uniform Facilities Interior Brochures
Interior Design
Equipment
Signage
Layout
Air quality/ Temperature

Where color, light, temperature, artifact play important role in the service experience of customer.

Q 5: What are the problems involved in cost based pricing for services? As the manager of a car rental company, how will you set your prices?

Ans: Cost Based Pricing

In Cost-plus Pricing the expected profit on product being sold is added to cost of production per unit of the product.

Break-even Analysis and Target Profit Pricing: This is another cost-oriented pricing approach. Here the firm tries to determine the price that will produce the profit it is seeking. It is known as target pricing. Normally some companies keep 10 to 20 percent profit on its investment. Target pricing uses the concept of break-even chart.

After you've determined your break-even points which establish floors for your price, there are strategies for establishing pricing based upon additional financial objectives, such as:

Establishing a high price to make high profits initially. This strategy is used to recover high research and development costs or to maximize profits before competitors enter the market. (Pharmaceutical companies often use this strategy when introducing new drugs.)

Setting a low price on one or more products to make quick sales to support another product in development. (Some companies also employ this strategy when they need to increase cash flow.)

Setting prices to meet a desired profit goal. For example, if the desired profit per unit is 20 percent and unit costs are $10 (taking into account your fixed and variable costs), set your price at $12.

You may also determine how many units you will need to sell to meet a profit goal by using the following formula.

Break-Even Unit Volume = (Fixed Costs / Unit Contribution Margin)^*
^* Unit Contribution Margin = Selling Price per Unit - Variable cost per unit.

Each of the three cost based pricing methods described begin with a product cost subtotal. To calculate product cost you need to include the costs of production, promotion and distribution. Add the profit level you want from the business to the product cost subtotal to determine your product price. The amount of profit you add to the product cost subtotal can be set according to three different methods.

All types of cost based pricing will be more accurate if you use a complete product cost subtotal. The key to accuracy is to ensure all cash and non-cash costs are included in the product cost subtotal. You need to set a value for your management expertise and labor. Using your land or capital equipment also must be valued along with depreciation on your machinery and buildings. These values are included in the product cost subtotal.

Disadvantages of cost-plus pricing

provides no incentive for efficiency
tends to ignore the role of consumers
tends to ignore the role of competitors
use of historical accounting costs rather than replacement value
use of “normal” or “standard” output level to allocate fixed costs
inclusion of sunk costs rather than just using incremental costs
ignores opportunity costs
contractors may not focus on performance because the cost is always covered by the client

Q 6: a) Discuss the importance of world of mouth communication for healthcare services.

Ans: Someone’s observance of the purchase or its outcome served as a stimulant to WOM communication in 6.5 percent of the cases. For example, a positive communication about a tanning salon began with a compliment about the communicator’s suntan. Similarly, a negative communication began when the receiver commented on the communicator’s new hair style.

Interestingly, 6.1 percent of the communications were stimulated when two or more people were collectively trying to select a service. Of the 18 communications that fell into this category, 13 pertained to the selection of restaurants (i.e. people were trying to decide where to eat). One positive communication occurred when room-mates were trying to decide which long-distance service they wanted to use in their house. A negative communication came about when next-door neighbors were collaborating on the purchase of roofing services.

The remaining five categories of stimuli that were identified collectively accounted for less than 10 percent of the total responses. These categories were:

· communication stimulated by the marketing organization’s promotional efforts;

· communication stimulated by the receiver’s (not communicator’s) satisfaction or dissatisfaction;

· communication stimulated by someone’s (other than the recipient of the information)
observance of the need for a service;

· communication stimulated by media exposure (not related to the marketing organization’s
promotional efforts); and

· unsolicited comment.

Q 6. b) Differentiate between core, facilitating and supporting services, giving suitable examples.

Ans: Core services is a bundle of benefits or activities- For example the State bank of India serves the customer with its core banking services.

The placement facilities provided by the educational institution would be Facilitating service as its core facility is academic activities.

Whereas the supporting services of the education institute would include career counseling activities.

Q 7: As the marketing of health club or movie theatre, design the service product and suggest positioning strategy.

Ans: Though there are no specific strategies for hgealth care or hospital marketing, a systematic approach to marketing has evolved over the past few years. “Unlike earlier, now the corporatews prefer a long-term association with the healthcare institution by signing a memorandum of understanding .” says Deepika Gupta,

marketing executive, S L Raheja Hospital, Mumbai.

Marketing experts believe that a sound Client Relationship Management (CRM) forms the basis for soliciting corporate tie-ups, today.

Events, both indoor and out-reach programmes, play a significant role in marketing of healthcare institutions. Continuous medical education, awareness sessions for general public, check-up camps for public, organizing events on various health days, conducting interviews of specialists on visual media, informative and interactive website, printing and making readily available various emergency or appointment numbers are the commonest marketing tools.

“As patients are the best ambassadors, it is important to take care of their needs and provide them with best possible care. Their apprehensions should be addressed so that they have the courage to come back to the same facility,” he adds. Agrees Anantram, “In this business, every satisfied customer brings thousand new customers.”

Fortis was the first hospital to organize an exhibition in the National Capital Region, wherein the general public could visit all departments of the hospital and get answers from experts. Secondly, Fortis launched a dialysis technician programme for women from the weaker section of society in which they were given free training by the hospital and they will be assimilated in the hospital itself.

Apart from organsing CMEs almost every week, camps, there’s a special OPD where consultants charge Rs 100 only. Internally, we have patient co-ordinators, counsellors, ward in-charge etc to take care of all need of patients. There’s also a system of taking feedback from patients and visitors.

Q 8: How do operations and human resource functions contribute to meeting the needs of service customers?

Ans: Customer Service

Many products, services and experiences are supported by customer services teams. Customer services provided expertise (e.g. on the selection of financial services), technical support (e.g. offering advice on IT and software) and coordinate the customer interface (e.g. controlling service engineers, or communicating with a salesman). The disposition and attitude of such people is vitally important to a company. The way in which a complaint is handled can mean the difference between retaining or losing a customer, or improving or ruining a company's reputation. Today, customer service can be face-to-face, over the telephone or using the Internet. People tend to buy from people that they like, and so effective customer service is vital. Customer services can add value by offering customers technical support and expertise and advice.

People: SERVICE PERSONNEL ARE THE PEOPLE WHO PROVIDE THE ORGANIZATION'S SERVICES TO CUSTOMERS.” E.g. Operators, Bus-drivers, Chefs, Receptionists, Security guards, Waiters, Bank -Clerks, lift Attendants, librarians etc.

ROLES PERFORMED BY SERVICE PERSONNEL

a) PRODUCTION

b) OPERATIONAL

MAINTAINING & IMPROVING SERVICE PERSONNEL QUALITY & PERFORMANCE
CAREFUL SELECTION & TRAINING OF SERVICE PERSONNEL
INTERNAL MARKETING
USING PRACTICES TO OBTAIN CONSISTENT BEHAVIOUR
ENSURING CONSISTENT APPEARANCE
PERSONNEL AUDIT
SALES-RELATED SYSTEMS
COMPLAINT SYSTEMS
SUGGESTION SCHEMES
AUDIT VISITS

CUSTOMER SATISFACTION SURVEY.

Q 9; a) Describe how the thee-stage model of services consumption could explain consumer behavior in a low contact services like investing?

Ans: three-stage model of service consumption:

a framework depicting how consumers move from

1. A prepurchase stage (in which they recognize their needs, search for and evaluate alternative solutions, and make a decision), to

2. A service encounter search (in which they obtain service delivery), and thence

3. A post-encounter stage (in which they evaluate service performance against expectations)

Low-contact services

Services that require minimal or no direct contact between customers and the service organization.

Q 9: b) Discuss the importance of word of mouth communication for health care services.

The remaining five categories of stimuli that were identified collectively accounted for less than 10 percent of the total responses. These categories were:

communication stimulated by the marketing organization’s promotional efforts;
communication stimulated by the receiver’s (not communicator’s) satisfaction or dissatisfaction;
communication stimulated by someone’s (other than the recipient of the information)
observance of the need for a service;
communication stimulated by media exposure (not related to the marketing

organization’s promotional efforts), and

· unsolicited comment.

Q 10: Discuss how multi-brand strategies can succeed and what the strategies should be based on in the hotel industry?

Ans: Yum! Brands, Inc., based in Louisville, Ky., is the world's largest restaurant company in terms of system restaurants with more than 36,000 restaurants in over 110 countries and territories and more than 1 million associates. Yum! is ranked #239 on the Fortune 500 List, with revenues in excess of $11 billion in 2008. Four of our restaurant brands – KFC, Pizza Hut, Taco Bell and Long John Silver's – are the global leaders of the chicken, pizza, Mexican-style food and quick-service seafood categories,

Q11: Describe the three ways by which information –based services can be distributed internationally and give and example of each?

Ans: Let us understand the information distribution with the example of capital market data industry.

The capital market data industry has experienced a slow growth of less than 5% / year in the past five years. The market is divided into two distinct segments:

The market for integrated data market applications. It is the high-end subset of the total capital market data market: institutional front office users who need real-time prices and news as well as historical and analytical information. The applications are targeted specifically for institutional brokers and investment managers whose needs are research intensive, e.g. Morgan Stanley.

The retail capital data market. This market segment includes the brokers who emphasize transaction services, charging lower commissions by minimizing ancillary advisory services (e.g. Charles Schwab). It also includes the aggregators of financial information who target individual investors (e.g. Hoovers)

During our research, we observed that several institutional brokers (e.g. Merrill Lynch) and some exchanges (e.g. NASDAQ) have also joined the market for catering to the retail sector.

The three vendors of capital market data, e.g. Bloomberg, Reuters, Bridge, buy data from exchanges and distribute them to institutional and retail brokers as well as directly to the retail market.

The Flow Of Capital Market Data

Integrated Data Market

The capital market data industry has changed the traditional boundaries and relationships between market data vendors & their customers. The movement in the industry from video page feeds to digital feeds has led to increasing commodization of market data by allowing users to easily replace data sources.

Market data vendor’s responses have been twofold: expand across the financial markets (equity, fixed income, foreign exchange and commodities) and expand the range of product offerings, which include data distribution and integration, trading systems and electronic messaging, news and media.

Source: The Tower Group

Q 12: Discuss the impacts of the competition and globalization on people processing, possession processing, and information-based service categories? Give at least one example of a firm that falls into each category.

Ans: Classification based on core transformation process:

1. People-processing services

2. Information-processing services

3. Possession-processing services

Services can be broadly classified under the following headings:

People Processing (e.g. hairdresser, medical)
Possession Processing tangible actions to goods and other physical possessions belonging to customers e.g. computer repairs, dog obedience training etc.
Knowledge Processing e.g. education, entertainment etc.
Information Processing- intangible actions directed at customers' assets e.g. accounting, investment advice etc.

Generally possession and people processing services are more tangible than knowledge or information processing. For possession and people processing services, clients can see/touch/feel the outcomes, and they may even be personally involved in the delivery of the actual service. Additionally, tangible services usually incorporate a higher level of personal contact (intensity or frequency) between the provider and the customer.

Q 13: Explain what a fully-focused and a market-focused strategy are and discuss the opportunities and risks inherent in selecting each strategy.

Ans: Focus Strategy

The focus strategy concentrates on a narrow segment and within that segment attempts to achieve either a cost advantage or differentiation. The premise is that the needs of the group can be better serviced by focusing entirely on it. A firm using a focus strategy often enjoys a high degree of customer loyalty, and this entrenched loyalty discourages other firms from competing directly.

Because of their narrow market focus, firms pursuing a focus strategy have lower volumes and therefore less bargaining power with their suppliers. However, firms pursuing a differentiation-focused strategy may be able to pass higher costs on to customers since close substitute products do not exist.

Firms that succeed in a focus strategy are able to tailor a broad range of product development strengths to a relatively narrow market segment that they know very well.

Some risks of focus strategies include imitation and changes in the target segments. Furthermore, it may be fairly easy for a broad-market cost leader to adapt its product in order to compete directly. Finally, other focusers may be able to carve out sub-segments that they can serve even better.

Focusing develops core competencies that can act as an entry barrier.
Negotiate because of few alternatives.
Suppliers have power because of low volumes, but a differentiation-focused firm is better able to pass on supplier price increases.
Specialized products & core competency protect against substitutes.
Rivals cannot meet differentiation-focused customer needs.

Q 14. Write short notes on the following.

a. Job content

Ans: This includes such areas as problem-solving, assessing the quality of your own work and learning new things. The Fourth European Wotking Conditions Survey (2005) found that most European workers are responsible for assessing the quality of their work themselves (73%) and solving unforeseen problems on their own (81%). Also, for a majority of Europeans, work involves learning new things (70%). Only 43% of European workers consider that their job involves monotonous tasks.

b. Procedural justice

The idea of procedural justice as perceived by consumers has not been explored in the consumer behavior literature, although there has been some mention of consumer perceptions of fair treatment. This article describes the development of a scale using procedural justice as its theoretic base. to measure consumers' perceptions of fair treatment when they complain. Results indicate that consumers make a distinction between the complaint process and the outcome of their complaint, indicating that procedural justice has further research potential. In addition, the proposed scale possesses the psychometric properties of an acceptable scale.

The way a retailer handles complaints from consumers about products, services, or staff affects the quality of the relationship between the consumer and the retailer. Numerous explorations of this topic exist in both academic and practitioner literature Although relatively few dissatisfied consumers complain , those who do may actually increase their loyalty to the retailer in situations where their complaints are handled effectively.

over 80 percent of dissatisfied customers who chose to exercise their voices and whose complaints were handled effectively in a timely manner expressed repurchase intentions. Similarly, found that of the dissatisfied customers who did complain to the seller, about 70 percent repurchased from the business. Of those who felt their complaint was fairly resolved, the repurchase percentage jumped to 95 percent. As an added bonus, those customers created positive word-of-mouth reports by telling an average of five people about their positive experiences

c. SERVQUAL

SERVQUAL was originally measured on 10 aspects of service quality: reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding or knowing the customer and tangibles. It measures the gap between customer expectations and experience.

A service quality model that identified perceived service quality into five dimensions: tangibility, reliability, responsiveness, assurance, and empathy.

1. Tangibles involve the appearance of physical facilities, including the equipment, personnel, and communication materials.

2. Reliability involves the ability to perform the promised service dependably and accurately.

3. Responsiveness involves the willingness to help customers. You can reach the customer service department of McDonald's Restaurants of Canada Limited at (416) 446-3932 or write to us at:

McDonald's Restaurants of Canada Limited
Customer Relations
1 McDonald's Place
Toronto, ON
M3C 3L4

4. Assurance involves the knowledge and courtesy of employees and their ability to convey trust and confidence. This assurance includes competence, courtesy, credibility and security.

McDonald's has assumed a leadership role in ensuring, where possible, the development of new food products that do not include the use of unnecessary allergens.

McDonald's provides a complete ingredient and nutrition breakdown called McDonald's Food Facts, which is available in every McDonald's restaurant across Canada and online under Our Food. By referencing Food Facts prior to a purchase, consumers with allergies can easily identify any ingredients that they may be sensitive to

5. Empathy involves the provision of caring, individualized attention to customers. This empathy includes access, communication, and understanding the customer.

d. ISO 9000

Created by International Organization for Standardization (IOS) which was created in 1946 to standardize quality requirement within the European market.

IOS initially composed of representatives from 91 countries: probably most wide base for quality standards.

Adopted a series of written quality standards in 1987 (first revised in 1994, and more recently (and significantly) in 2000).

Prefix “ISO” in the name refers to the scientific term “iso” for equal. Thus, certified organizations are assured to have quality equal to their peers.

Created to meet five objectives:

Achieve, maintain, and seek to continuously improve product quality in relation to the requirements.

Improve the quality of operations to continually meet customers’ and stakeholders’ needs.

Provide confidence to internal management that quality requirements are being met.

Provide confidence to the customers that quality requirements are being met.

Provide confidence that quality system requirements are fulfilled.

Consists of three documents

ISO 9000 – Fundamentals and vocabulary.

ISO 9001 – Requirements.

Organized in four sections: Management Responsibility; Resource Management; Product Realization; and Measurement, Analysis and Improvement.

ISO 9000: 2000 QUALITY MANAGEMENT PRINCIPLES

ISO 9004 – Guidelines for performance improvements

Principle 1: Customer Focus

Principle 2: Leadership

Principle 3: Involvement of people

Principle 4: Process approach

Principle 5: Systems approach for management

Principle 6: Continual improvement

Principle 7: Factual approach to decision making

Principle 8: Mutually beneficial supplier relationship.

Originally intended to be a two-party process where the supplier is audited by its customers, the ISO 9000 process became a third-party accreditation process.

Independent laboratory or a certification agency conducts the audit.

Re certification is required every three years.

Individual sites – not entire company – must achieve registration individually.

All costs are to be borne by the applicant.

Q 2: A) Compare and contrast the characteristics of “goods” and services. Suggest the marketing implications also?

Ans: “SERVICES ARE ACTIVITIES, BENEFITS, OR SATISFACTIONS WHICH ARE OFFERED FOR SALE, OR PROVIDED IN CONNECTION WITH SALE OF GOODS.”

- American Marketing Association here

Activities like Hair Cut, Massage, training & development etc.

The benifits are like Credit cards. ATM cards, Mobile facilities Etc.

Services are deeds, processes and performance

Intangible, but may have a tangible component

Generally produced and consumed at the same time

Need to distinguish between SERVICE and CUSTOMER SERVICE

services are
like postal serive, couier service,transportation,banking, education, etc
there are products like fridge, telivision, motorbike, car washing machine these products should have good after sales service and it has warenty attached to it .

“Goods is a set of tangible physical attributes assembled in an identifiable form to provide want satisfaction to customers.”

Goods are classifed into two consumer goods which are used in daily life like tooth paste ,soap, cofee ,tea, presitge pressure pans etc

services are like postal service, courier service, transportation, banking, education, etc
there are products like fridge, television, motorbike, car washing machine these products should have good after sales service and it has warranty attached to it .

1. tangibility, 2) change of ownership 3) services are heterogeneous ,goods are homogenious

Q 2: b) Differentiate between core service and peripheral services?

Ans: core service Are the main missionof the organization like A bank stsnds for core banking servces i.e. deposit and withdraw of money.

Peripheral Services

These are services that require a fairly quick response, but are not very high priority. For example, printer toner and supply issues; users should expect printers to be replenished within an hour, critical and basic services will take priority however.

Peripheral services at wedding ceremonies

Food and beverages

Photography of the wedding

Parking at your ceremony

Hotels

Storage

For storage of outer garments, bridal bouquets et cetera,

Q 3: What do you think are the main reasons for including the elements of people in the marketing mix for services? Elucidate.

Ans: People are the most important element of any service or experience. Services tend to be produced and consumed at the same moment, and aspects of the customer experience are altered to meet the 'individual needs' of the person consuming it. Most of us can think of a situation where the personal service offered by individuals has made or tainted a tour, vacation or restaurant meal. Remember, people buy from people that they like, so the attitude, skills and appearance of all staff need to be first class. Here are some ways in which people add value to an experience, as part of the marketing mix - training, personal selling and customer service.

Training.

All customer facing personnel need to be trained and developed to maintain a high quality of personal service. Training should begin as soon as the individual starts working for an organization during an induction. The induction will involve the person in the organization's culture for the first time, as well as briefing him or her on day-to-day policies and procedures. At this very early stage the training needs of the individual are identified. A training and development plan is constructed for the individual which sets out personal goals that can be linked into future appraisals. In practice most training is either 'on-the-job' or 'off-the-job.' On-the-job training involves training whilst the job is being performed e.g. training of bar staff. Off-the-job training sees learning taking place at a college, training centre or conference facility. Attention needs to be paid to Continuing Professional Development (CPD) where employees see their professional learning as a lifelong process of training and development

Personal Selling

There are different kinds of salesperson. There is the product delivery salesperson. His or her main task is to deliver the product, and selling is of less importance e.g. fast food, or mail. The second type is the order taker, and these may be either 'internal' or 'external.' The internal sales person would take an order by telephone, e-mail or over a counter. The external sales person would be working in the field. In both cases little selling is done. The next sort of sales person is the missionary.

Here, as with those missionaries that promote faith, the salesperson builds goodwill with customers with the longer-term aim of generating orders. Again, actually closing the sale is not of great importance at this early stage. The forth type is the technical salesperson, e.g. a technical sales engineer. Their in-depth knowledge supports them as they advise customers on the best purchase for their needs. Finally, there are creative sellers. Creative sellers work to persuade buyers to give them an order. This is tough selling, and tends to o ffer the biggest incentives. The skill is identifying the needs of a customer and persuading them that they need to satisfy their previously unidentified need by giving an order.

Customer Service

Many products, services and experiences are supported by customer services teams. Customer services provided expertise (e.g. on the selection of financial services), technical support(e.g. offering advice on IT and software) and coordinate the customer interface (e.g. controlling service engineers, or communicating with a salesman). The disposition and attitude of such people is vitally important to a company. The way in which a complaint is handled can mean the difference between retaining or losing a customer, or improving or ruining a company's reputation. Today, customer service can be face-to-face, over the telephone or using the Internet. People tend to buy from people that they like, and so effective customer service is vital. Customer services can add value by offering customers technical support and expertise and advice

Q 4: The competition in fast food industry became intense with the coming of Wimpy, McDonalds, KFC, etc. Suggest for Nirula’s so as keeping their customers in spite of the competition?

Ans: Nirula's, a well-known name in the hospitality industry, had like all success stories a small beginning. The Nirula's Family came to Delhi in 1928. The Nirula brothers before going into the Hotel and Food Service Industry tried their hand at various professions including running a pharmacy, optician shop and a photo studio.

Nirula’s good is great and it is certainly VFM. The food suits the taste buds of North indian but not every indian and this was the main negative point for the chain not to grow as was expected.

Nirula’s ice creams and shakes are good and loved by all ages. Why do not only open desert chain? Think Nirula?

The restaurants are well decored, good and pleasing atmosphere, nice ambience and yet trendy with a blend on indianished feeling.

Nirula has good customer following and also have good reputed brand name however one can say not properly leveraged. I remember few years back they opened branches in Middle east which had to be closed down in less than a year. well, the reasons were many. With this experience the management may be able to work out some positive strategy to re-enter different market

Q 5: b) Can value add-ons give you a competitive edge?

Ans: Value is the product benefits offered to the customers. This value helps in designing the core and the peripheral product and services.

Like the FedEx customers gets n. of benefits. The most obvious is fast and reliable package delivery. However, when using customers also may receive some status and image value. customers usually weigh these and the other values against the money , effort. Psychic costs of using the service and that gives it a competitive edge to the FedEx

Some of the values customers prefer in product: Delivery: how fast the product or service is delivered to the customer

Installation: work done to make a product operational. Like in RO

Customer training: training to Customer to use the product properly and efficiently.

Consulting Service: advising

Repair: Availability of Services: Maruti

Q 6: a) With economic liberalization and market forces becoming more vibrant, what future prospects do you see for existing nationalized banks in India?

Ans: the economic liberalization begun in 1991-92, permitted foreign and private players to start their operations in the country, and these, with their cost-efficient technologies and value-added services backed by aggressive marketing, offered a stiff competition to PSBs by luring away customers from PSBs. As a result, along with other PSBs’, Bank of Baroda’s market share started declining giving a rude jolt to the Bank's management which felt forced to take steps to contain the slide-down. And thus started the re-branding initiative in mid-2005 – a major initiative in the history of PSBs in the Indian banking industry. Allahabad Bank
Allahabad Bank is the oldest Public Sector Bank in India having branches all over India, offers wide ranging attractive Deposit Schemes to the Non-Resident Indians.
Andhra Bank
Andhra Bank was founded by Dr.Bhogaraju Pattabhi Sitaramayya. The Bank was registered on 20th November 1923 and commenced business on 28th November 1923 with a paid up capital of Rs 1.00 lakh and an authorised capital of Rs 10.00 lakhs.
Bank of Baroda
Bank of Baroda has been a long and eventful journey of almost a century across 20 countries. Starting in 1908 from a small building in Baroda to its new hi-rise and hi-tech Baroda Corporate Centre in Mumbai, is a saga of vision, enterprise, financial prudence and corporate governance

Bank of India
Bank of India was founded on 7th September, 1906 by a group of eminent businessmen from Mumbai. The Bank was under private ownership and control till July 1969 when it was nationalised along with 13 other banks.

Bank of Punjab
Bank of Punjab has a wide area network of branches across the country. Customers in excess of 55,63,07 serviced by a team of 961 dedicated professionals. The bank has established correspondent banking relationships across 60 countries.

Banknet India
Banknet India, promoted & managed by senior bankers, is a research company that focuses on IT deployment in the banking industry. Banknet India brings out publications & reports specific to Banking, IT-BPO industry based on extensive industry research & surveys.

Canara Bank
Founded as Canara Bank Hindu Permanent Fund in 1906, by late Sri. Ammembal Subba Rao Pai, a philanthropist, this small seed blossomed into a limited company as Canara Bank Ltd. in 1910 and became Canara Bank in 1969 after nationalisation.

Q 6: b) Do you think branding is possible in mutual funds? Give justification for your answer.

Ans: Brand Name Value among Mutual Funds

Does a brand name entice you to pick a fund? Mutual fund companies think so. As investors continue to dump record-breaking bucket-loads of money into mutual funds, some firms are opting for snappier brand names in the hopes of luring cash to their coffers.

Branding is one of the major topics within the mutual fund industry these days. Life is hard for the new kid on the block that must compete with such household names as Fidelity and Vanguard, but it's also getting tougher for established funds whose brands vanish after a merger with another company.

Financial Research Corp. of Boston devoted its entire February 1998 industry report to the subject. "Fund companies face the challenge of distinguishing themselves among many competitors that appear similar" to the investor, the report says. "Fund companies have to consider what drives the consumer, what makes him or her feel good, and what are the attributes of a fund that the consumer really values."

Funds are undoubtedly stepping up their efforts to get their brands in the forefront of an investor's mind. In the first quarter of 1998, mutual fund companies increased advertising spending by about 25% to $193 million, compared with the previous year's first quarter, according to New York-based Competitrack. Roth IRA advertising represents only a fraction of the increase.

Some mutual fund firms are giving themselves fresh starts with revamped names. New England Investment Co. decided after 67 years in the mutual fund business that its name sounded too regional, and might repel any prospective investors outside the New England area. So, it changed its company name to Nvest.

New England isn't the first to think a regional name might put off potential investors. Four years ago, the Southeastern fund family decided that it might convince more investors to place their money in its funds if it changed its name to Longleaf. Unlike Nvest's fund family, Southeastern's name change filtered through to its individual mutual funds.

It seems to have worked. For instance, the fund currently called Longleaf Partners had taken seven years to surpass $500 million in assets. After the name change, the fund's assets doubled within nine months to $1 billion, and three years later is still growing steady at $3.4 billion. Of course, the performance of the Longleaf funds and the competency of the managers has likely had more of an impact on the asset growth than the fund's name change--we hope.

In contrast, the family of CT&T Funds was recently renamed the Alleghany Funds. The fund family didn't have much choice about the matter; the original CT&T name stood for Chicago Trust & Title, which was spun off from the parent company, Alleghany, in March. Recognizing the same regionalization fears as New England, the nearly five-year-old mutual funds under Alleghany's umbrella--Chicago Trust and Montag & Caldwell--have kept their own names, since they belong to money management firms that have existed for decades, and are more widely recognized by brokers and financial advisers who sell those funds.

Some regional locations are beneficial to a fund. And yet, at least in one instance, the group is more concerned about where it lands in the alphabetical newspaper listings of mutual funds.

Interactive Investments, which invests in high-tech stocks, has located its managers near the heart of California's Silicon Valley. The firm's original fund, Technology Value, has been a success, in terms of performance. The fund was not marketed with the firm's formal Interactive Investments name, however. When Interactive Investments came out with two more funds--one of which invests in biotechnology, not technology--the firm negated a possible branding switch to, say, the Silicon Valley Funds. Instead, it has opted for Firsthand Funds. It's less of a mouthful for prospective investors, and it denotes the managers' previous work experience in the fields in which they now invest. Best of all, as the firm's partner in charge of marketing says, the new name will position the three funds just after Fidelity in newspaper listings.

Other fund families are fresh off of acquisition sprees and battling with ultralong names. Take Morgan Stanley Dean Witter & Co. and its subsidiaries, Van Kampen American Capital and Miller Anderson Sherrerd's MAS funds. The latter has a relatively low-key brand name, while Van Kampen built its brand with currently unfashionable fixed-income investments.

But now that they're under one umbrella, and managers are starting to cross-manage funds, Morgan Stanley Dean Witter has decided to follow Gap's model for separate branding of its Gap and Old Navy blue jeans. All of the funds will soon split into two distinct fund family names. A portfolio will be managed by the same people, but the funds investing in that portfolio will have different labels on them for the different sales channels. Like the higher-end Gap jeans that are sold in The Gap's fancy mall stores, any mutual fund sold by Morgan Stanley Dean Witter's own sales representatives will be called Morgan Stanley Dean Witter funds. But, like Old Navy's warehouse feel, Morgan Stanley Dean Witter's funds sold directly to individuals, or through outside brokers or financial advisers, will have a different, yet-to-be-determined name, according to Van Kampen American Capital's president and chief executive officer, Philip Duff.

American Century is also grappling with ultralong mutual fund names. Soon after Twentieth Century's 1996 acquisition of Benham Group, the two firms decided to rename the overall fund company American Century Investments, and keep the funds' original brands tacked on the funds. Sure, that may have bumped American Century up to the top of the newspaper listings, but the move spawned fund names like American Century-20th Century New Opportunities, and American Century-Benham Short Term Government. They've become so long and tedious that the firm may dump all of the brands for a single new one.

We've all experienced brand name changes. Some work; some don't. Kentucky Fried Chicken, for example, decided fried food was so passé in the health-conscious 1990s that it successfully changed its brand to KFC. But you can still get fried food there, of course.

And after a horrendous plane crash, ValuJet bought AirTran Airways and assumed AirTran's name. Perhaps it learned a lesson from PanAm, which, after its own bankruptcy bout following the disastrous Flight 103 crash over Lockerbie, Scotland, decided to resurface using the same brand name. PanAm eventually failed again.

Of course, it's important for fried-chicken eaters and airplane travelers to look beyond a label. But it's even more important for mutual fund investors searching out a fund; they should instead concentrate on a particular investment style, the skills of a fund manager, and low fees.

Besides, no multimillion-dollar brand-awareness campaign will ever cover up pitiful performance by a horrible manager, or erase age-old brands, like Steadman, from our memory.

Q 7: What are the implications of core facilitating, and supporting services for marketers of education? Discuss the concept of an augmented service product with the help of examples from educational services?

Ans: Marketing of education is gaining momentum with the entry of private institutions, change in people's attitude towards education and the changing scope for the different courses being offered. The technological changes and shrinking global boundaries have increased the significance of marketing for education services. The education service can be described as a high contact, consumer and people based service.

However, innovative methods like using multi-media kits while providing the service are making interaction between and instructor and student less significant. With the changes in customer education and the job market, the market for unconventional courses is increasing. So no marketer can afford to ignore these markets. As the education service is intangible, inseparable and perishable, certain implications exist for marketing.

And service quality is not consistent for all customers, or even a single customer at all times. So the marketers' job becomes tough. They are required to ensure that these features of the education service are better utilized to meet the varying needs of customers. The marketing mix can be better utilized to overcome the problems associated with the service specific features of education.

The augmented services in education services
By offering education with enhanced features like updated syllabus and industry interaction, they can improve the quality of the product. With franchising and better infrastructure facilities and experienced instructors, marketers can meet customer expectations. With the right mix of all the Ps, tailor-made customer focused courses can be offered.

Technology like computers, LCD projectors and multimedia, has helped service providers offer better service to more customers. It has enabled instructors to deliver the service in less time in an effective manner to even a large group in high contact regular education. It has enabled them to concentrate more on knowledge management rather than on preparation of teaching notes.

It has paved the way for increasing the scope of the market and scale of operations with the introduction of modern systems like web based training. There has been a complete transformation in the field of education in India in the past 10-15 years. Of late, a shift in focus from conventional courses like engineering and commerce to specialized courses like environmental management, hotel management and fashion designing can be witnessed

The others important augmented services awe
RECRUITMENT
TRAINING
Career counseling etc.
Industry interface.
The Augmented Service Offering

The service process, the buyer-seller interactions, are perceived in a number of ways, which naturally differ from situation to situation.

Due to the characteristics of most services, there are, however, three basic elements, which from a managerial point of view constitute the process

Accessibility of the service;
Interaction with the service organisation; and
Consumer participation.

These elements are combined with the concepts of the basic package, thus forming an Augmented

Service Offering . It is, of course, essential that these three elements of the product offering are

geared to the customer benefits which have initially been identified to be sought by customers in the selected target segments.

Q 1: Critically evaluate the contributions of service sector I the growth of India Economy?

Ans: A closer scrutiny of India’s service sector reveals that amongst services, business services

has been one of the fastest growing services in the 1980s closely followed by banking and

insurance .In the 1990s, we find that a similar trend continues for business services, which grows by almost 20 percent, but while the growth in banking has increased growth in insurance sector has slowed down in the 1990s. The prime drivers of growth in services, apart from business services in the 1990s, are found to be communication services (with average growth of around 13.6 %) and hotels and restaurants (with average growth of around 9 %). However, there is a fall in the growth rates of railways, dwellings and real estate, legal services and public administration and defense in the 1990s.

Average Annual Growth Rates in Services

1980s 1990s

Trade (Wholesale trade and retail trade)5.9 7.3
Hotels and Restaurants6.5 9.3
Railways4.5 3.6
transport6.3 6.9
storage2.7 2
communications6.1 13.6
banking 11.9 12.7
Insurance 10.9 6.7
Dwellings, real estate 7.7 5
Business services 13.5 19.8
legal services 8.6 5.8
public administration, defense 7 6
personal services 2.4 5
Community services 6.5 8.4
other services 5.3 7.1
Source: CSO

Q 2: a) What are the major differences between the marketing Mix of product from that of services?

Ans: Marketing Mix

Product

Anything that can be offered to a market for attention, acquisition, use or consumption.

Satisfies a want or a need.

Includes:

Physical Products
Services
Persons
Places
Organizations
Ideas
Combinations of the above

Convenience Products

Buy frequently & immediately

Low priced

Many purchase locations

Includes:

Staple goods

Impulse goods

Emergency goods

Shopping Products

Buy less frequently

Gather product information

Fewer purchase locations

Compare for:

Suitability & Quality

Price & Style

Specialty Products

Special purchase efforts

Unique characteristics

Brand identification

Few purchase locations

Unsought Products

New innovations

Products consumers don’t want to think about

Require much advertising & personal selling

Price

The price is the amount a customer pays for a product.

It is determined by a number of factors including market share, competition, product identity and the customer's perceived value of the product.

Pricing Policies, Margins, discounts and rebates

Terms of delivery, payment terms, credit terms, and installation charges.

Resale price, Maintenance

Place

Place represents the location where a product can be purchased.

It is often referred to as the distribution channel.

It can include any physical store as well as virtual stores on the Internet.

Channel of distribution

Types of Intermediaries.
Location of outlets
Channel remuneration
Transportation, Warehousing and Inventory Levels

Promotion

Promotion represents all of the communications that a marketer may use in the marketplace.

Promotion has four distinct elements - advertising, public relations, Personal Selling and Sales promotion.

Advertising Advertising covers any communication that is paid for, from television and cinema commercials, radio and Internet adverts through print media and billboards.

Media Mix

Public relations Public relations are where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events

Personal selling

Personal Presentations by a Firm’s Sales Force.

Selling Expertise
Size of Sales Force
Quality of Sales Force

ROLES PERFORMED BY SERVICE PERSONNEL

a) PRODUCTION

b) OPERATIONAL

MAINTAINING & IMPROVING SERVICE PERSONNEL QUALITY & PERFORMANCE

CAREFUL SELECTION & TRAINING OF SERVICE PERSONNEL
INTERNAL MARKETING
USING PRACTICES TO OBTAIN CONSISTENT BEHAVIOUR
ENSURING CONSISTENT APPEARANCE

PERSONNEL AUDIT

SALES-RELATED SYSTEMS
COMPLAINT SYSTEMS
SUGGESTION SCHEMES
AUDIT VISITS
CUSTOMER SATISFACTION SURVEY

COMPONENTS OF PHYSICAL EVIDENCE

EXTERIOR FACILITIES
INTERIOR FACILITIES
OTHER TANGIBLES

ELEMENTS OF PHYSICAL EVIDENCE

Organization Physical Facilities Other Tangibles

(Service Scope)

Facility Exterior Business Cards

Exterior design Stationary

Signage Billing Statements

Parking Report

Landscape Employee Dress

Surrounding Environment Uniform Brochures

Facilities Interior

Interior Design

Equipment

Signage

Layout

Air quality/ Temperature

PROCESS

PROCESS REFERS TO THE WAYS OF UNDERTAKING TRANSACTIONS, SUPPLYING INFORMATION AND PROVIDING SERVICES TO THE CUSTOMERS IN A MANNER WHICH IS ACCEPTABLE TO THE ORGANISATION.”

TYPES OF PROCESS

LINE OPERATIONS
JOB SHOP OPERATIONS
INTERMITTENT OPERATIONS

THE 7 P's OF NIRULA's

1. PRODUCT:
Nirulas offers variety of products like savories and pastries, vegetable and non vegetable burgers and pizzas, sandwiches, cookies, footlongs, platters, condiments and syrups, Indian food in form of thali, nan, roti, tandoori and curries, ice creams, ice cream shakes, milk shakes, triple sundaes and various beverages.

Thus Nirulas is one stop-eating joint for customers, which offers variety of food, i.e. both Indian and western with plenty of other items that can be consumed as snacks or as part of main meal.
2. PRICE:
Nirulas offers its products at a fair price. Its vegetarian and non vegetarian burgers range from Rs. 20 to Rs 60. Regular pizzas range from Rs 65 to Rs 105 both in the vegetarian and non vegetarian categories. Vegetarian and no vegetarian thalis cost Rs 79 and Rs 89 to the customers. Footlongs range from Rs 60 to Rs 75n tandoori and curries range from Rs 40 to Rs 110n sandwiches cost Rs 46 and platters about Rs 60 to Rs 70. Condiments and syrups cost Rs 34 to Rs 60, ice creams Rs 20 to Rs 60. Soda fountain and beverages range between Rs 10 and Rs 60. Apart from these super meal deals ranging from Rs 60 to Rs 120 are offered to the customers.
3. PROMOTION:
Nirulas promotional activities are targeted towards children primarily. They offer complimentary cakes and complimentary present for the birthday child in children parties. Apart from this they have an ice cream of the month, which is different every month. In certain outlets, Nirulas offers free tea or coffee on orders in excess of Rs 50. Apart from these Nirulas has super value meals that provide greater value for money to customers.
4. PLACE:
Nirulas outlets are evenly distributed throughout the Delhi and NCR region. Nirulas generally opens its outlets in commercial areas which are thickly populated throughout the day. Apart from this nirulas also offers free home delivery to its customers.
5. PHYSICAL EVIDENCE:
Nirulas interiors are simple and yet a decent dÃ©cor and cleanliness is maintained in the nirulas outlets.
6.PROCESS:
The food processing process is visible to the customers i.e. if the customers desire they can view the food being manufactured.
7. PEOPLE:
The people involved in the production and delivery process to the customers at nirulas have uniforms and aim to address to customers orders as quickly as possible.

Q: Q 2: b) what are he main difficulties in cost-based pricing in the case of services?

Ans: Cost Based Pricing

In Cost-plus Pricing the expected profit on product being sold is added to cost of production per unit of the product.

After you've determined your break-even points which establish floors for your price, there are strategies for establishing pricing based upon additional financial objectives, such as:

Setting a low price on one or more products to make quick sales to support another product in development. (Some companies also employ this strategy when they need to increase cash flow.)

You may also determine how many units you will need to sell to meet a profit goal by using the following formula.

Break-Even Unit Volume = (Fixed Costs / Unit Contribution Margin)^*
^* Unit Contribution Margin = Selling Price per Unit - Variable cost per unit.

Disadvantages of cost-plus pricing

provides no incentive for efficiency
tends to ignore the role of consumers
tends to ignore the role of competitors
use of historical accounting costs rather than replacement value
use of “normal” or “standard” output level to allocate fixed costs
inclusion of sunk costs rather than just using incremental costs
ignores opportunity costs
contractors may not focus on performance because the cost is always covered by the client

Q 5: What is the role of service processes in service marketing? What are the major factors influencing service processes?

Ans: Process in Services

Characteristics of Service Process Design and Implementation

Types of Process

Line or Flow Operations
Job Shop Process
Planning a Service Process

Service Blueprinting

Elements of Blueprinting
Reading a Service Blueprint
Developing a Service Blueprint

Factors Influencing Process Efficiency:

Planning
Service Personnel
Technology
Location and décor
Customer's Role

Service Positioning through Structural Change

Reduced Complexity
Increased Complexity
Reduced Divergence
Increased Divergence

Process is an important element of the marketing mix that determines how a service should be created and delivered to the customer. The characteristics of service process include complexity, divergence, service location, customer participation and the service itself –whether it is technology based or process based. The types of process include line or flow operations and job shop process.

The planning of a service process includes different elements like the conversion process, the equipment required, flow of process, quality of service personnel, service location, layout design and the organizational structure. Further, we discussed an important aspect of service process called the service blueprint that maps all the processes and elements involved in service creation and delivery including the service personnel and customers.

The elements of service blueprint include customer actions, onstage and backstage employee actions, and support processes to their minutest detail. Further, the interaction among these elements is explained through the line of interaction, line of visibility and line of internal interaction. These will help a service provider to clearly read a blueprint and identify the activities that add value to the customer so that he can concentrate on such activities.

Developing a service blueprint involves identification of the service, identification of the customer segments, mapping the service processes according to the customer's point of view, mapping the onstage and backstage employee actions, the identification of internal support processes, and finally the physical evidence involved in service delivery.

The factors that affect the efficiency of a process include planning, service personnel, technology, location, décor, and the customer's role. Further, a service positioning can be changed by structural changes by reducing or increasing divergence, or by reducing or increasing complexity of services. Finally, a service provider is required to know how to balance marketing and operation functions in a service organization for greater success, as both functions are equally important.

Service encounters

The growth of the service society has brought about an increase in service encounters, which in turn means that people meet more often in this type of regulated interactions, either as customer or as employed. Service encounters have also increased in importance since

competition between companies/organizations has become tougher.

Q 6: What are he different types of service encounters? Critically comment on the influence of various factors influencing encounters.

Ans: Being an effective service manager demands more than just the direct management of service encounters. We shall cover some different approaches to managing services in an indirect way.

Role theory

Role theory is a learned set of behaviors that guides or directs how an individual operates in a given setting. Roles are passed down from employee to employee through on-the-job training. Thus, by understanding the frameworks of roles, managers can exert indirect control over the service encounter. Customers' satisfaction derives from how well both the consumers and service providers have performed their roles relative to expectations. This is called role congruence.

Most roles in organizations are paired, some examples from different industry sectors are:

host and guest ¾ hospitality
master and servant ¾ personal service
mentor and student ¾ education
buyer and seller ¾ retailing.

Script theory

Script theory is concerned with the use of key words and phrases which both participants recognize, and in effect can be used by employees to guide the customer through a transaction. Many organizations prepare scripts for emergency situations such as bomb threats and handling customer complaints because during service interruptions, panic or stress can interfere with the ability of an employee to think clearly. The script then becomes a device for coping with problems.

Below is an example of a simple script for telephone use in a company:

1. The telephone is to be answered within three rings by the nearest person. But do not leave a customer you are attending in order to answer the phone

2. Company phones are not to be used for personal business. Incoming calls for employees will not be permitted except in emergencies

3. Employees answering the telephone should say 'Good (morning/afternoon/ evening) (name of organization) (your location) (your name) speaking, how may I help you?'

Always thank the caller. Say 'Thank you for calling' before hanging up.

Process refers to the way in which operations and marketing functions in an organization work in tandem to ensure the customer's expectations are met. Take an example of a container terminal: one measure of the process is truck turnaround, which a customer can compare worldwide as the operation is more or less standardized.

Q 7: You are the consultant hired by a chain of fast food restaurants, define how would you ensure reliability, assurance, responsiveness, empathy and tangibility in service offered by the restaurant?

Ans: SERVQUAL was originally measured on 10 aspects of service quality: reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding or knowing the customer and tangibles. It measures the gap between customer expectations and experience

A service quality model that identified perceived service quality into five dimensions: tangibility, reliability, responsiveness, assurance, and empathy.

1. Tangibles involve the appearance of physical facilities, including the equipment, personnel, and communication materials.

2. Reliability involves the ability to perform the promised service dependably and accurately.

4. Assurance involves the knowledge and courtesy of employees and their ability to convey trust and confidence. This assurance includes competence, courtesy, credibility and security.

5. Empathy involves the provision of caring, individualized attention to customers. This empathy includes access, communication, and understanding the customer.

Q 3: People in services- both providers and customers – play an important role in the delivery of services, from facilitating the delivery to tangibalizing the services. Elucidates.

Ans: Employee on in service delivery.

i.e. People include both employees and customers as customers also play an important role in the service delivery process. But we are going to focus on employees as far as this article is concerned. From the above discussion it is obvious that employees play an important role in the services marketing because of the vary reason that employees are involved in the process of delivery of any service e.g. a waiter in a restaurant is actually the conductor of all the process related to the customers. So it is of great importance that he gives the right image to the customer otherwise the customer might never return. So those employees that are a part of service delivery, we can call them customer-contact service employees, play an absolutely crucial role in building a repute for any service.

The importance of customer-contact service employees can be understood because of the following statements, which will also show that why employees may be the most valuable asset of a services organization. Customer-contact service employees are very important because:

They are the service
They are the organization in the customer’s eyes
They are the brand
They are marketers

In many cases, in a service, there is just the employee and nothing else i.e. employee is the service e.g. haircutting, physical trainers, legal services etc. This means that the service being offered by the business is the employee. Thus, investing in the employee is same as investing in the manufacture of a product.

A customer-contact service employee may reflect the image of the service organization even if he or she is not directly providing the required service. If you enter a hospital, every employee that you encounter from the receptionist to the clerk might influence your opinion about that organization. Thus, employees sometimes do become the organization in customer’s eyes.

Employees also become the brand for a service. A very good example can be of a university which is well reputed amongst students. The quality of most universities is judged by the caliber of the teachers that are teaching there. When a student interacts with a professor, he has positive emotions about the university only when he feels that the teacher is knowledgeable and understanding and has complete control over his subject. We can say that one reason, among others, LUMS is thought to be better than other universities is due to the perception that its faculty contains more PhDs than anybody else, hence having better educational quality than others. Thus, an employee also becomes the brand for a service.

Because contact employees represent the organization and can directly influence customer satisfaction, they perform the role of marketers. They physically embody the service and are walking billboards from a promotional point of view. If we are on the road and we see a person sitting on a motorcycle, going to deliver a free delivery, or to deliver letters or documents, you can tell from their appearance, clothing or even kind of vehicle that which organization they belong to. So, even when the service employees are just doing their duty, they are acting as marketers for their organization.

Here I would like to refer to Mr. Dennis Harting who says “What is the most valuable asset that a company has? Is it the name, customers, goodwill, physical resources, or product line? The answer is that it is none of these. A company's most valuable resource is its' employees. Any organization will go only as far as the people who are driving it. In fact, a company is really just a group of people who interact for a common purpose. They are the ones who make up the organization”.

He also states that “It is important that managers and owners begin to realize that the employees are the most valuable asset any organization can have. Those who accept this new business model will structure their compensation and bonus program to reflect this belief.”

Above discussion only points to one thing, generally for every business, and particularly for any services business, employees are definitely the most valuable assets. We personally feel that in Pakistan employees are still not given the right place and importance. One feels that more and more attention should be paid to role of employees in services and investments should be made to improve the most valuable asset of services.

Q 1: Marketing of Maruti car and Hertz car on rent are two different things’. Analyze the differences in their marketing. Discuss its implication on marketing.

Ans: MUL's M-800 was ideally suitable for Indian customers as it was reasonably priced, fuel efficient and was sleek and easy to drive when compared to the models then available. With the success of its M-800, MUL soon replaced Hindustan Motors as the leader in the passenger car market.

There was a gradual decline in the market share of MUL over the years from 1999 to 2004. This happened even though MUL had slashed prices of certain models on a couple of occasions.

Launch of new variant models

Despite analysts predicting that the M-800, the bread and butter model of MUL, would be phased out, the company asserted that it would take necessary steps to maintain its leadership position. MUL had three compact car models -- Alto, WagonR, and Zen -- competing with Hyundai Santro, Tata Indica, and Fiat Palio...

Increase in dealers profitability

During 2003 and 2004, MUL visualized and implemented a strategy for its dealers to increase their profitability levels in view of increased competition. According to the strategy, the 300-odd dealers of the company were asked to strengthen their manpower, increase the salaries of their sales agents, and offer them better incentives...

Promotional offeres

Faced with stiff competition and declining market shares, MUL focused its promotions strategy on targeting two-wheeler owners

Change the life

In 2003, MUL launched novel offers like "Change Your Life" campaign and also offered vehicle insurance 'for Rupee One only', to attract customers.

Television campaigns.

In 2003, MUL came out with a toy car advertisement that became popular for its simplicity and straightforward message. The advertisement depicted a child playing with a toy car. When reprimanded by his father the child replies, 'Kya karoon papa petrol khatam hi nahin hota' (What should I do? The petrol never finishes)...

'2599' offer

In 2004, MUL introduced the '2599' offer under which a consumer could buy an M-800 by paying an EMI of Rs 2,599 only, for a period of seven years. The down payment was fixed at Rs 40,000. MUL entered into an agreement with the State Bank of India (SBI), the largest bank in India, to promote this scheme...

'Teacher Plus' scheme
To further penetrate into the market, MUL continued to focus its efforts on the rural markets and specific target groups. In 2004, it introduced the 'Teacher plus' scheme, in a tie-up with SBI, aimed at teachers who were interested in buying a new car...

Maruti 'True Value'
There was a gradual decline in the market share of MUL over the years from 1999 to 2004. This happened even though MUL had slashed prices of certain models on a couple of occasions...

Hertz is a worldwide car rental company operating in more than 150 countries of the world. Hertz offers high quality car rental services as well as other services related to tourism.

with approximately 3,500 locations in the United States and 7,500 worldwide.

An affiliate marketing programme has been selected by Hertz Rent-A-Car, a car rental organization, in order to increase the level of its Internet bookings across Europe.

Hertz has been providing services to travelers with disabilities for some time. She points out that Easy-Access is simply one more example of the company's commitment to easing the burden of travel for individuals with physical disabilities. In 1965, Hertz introduced hand controls for disabled travelers and currently makes the controls available at most rental locations in the United States and Canada. This equipment is available at no additional charge.

Other Accommodations

Steering wheel spinner knobs are also available at many US and Canadian Hertz locations. Travelers needing spinner knobs should request them at the time of reservation. Travelers who are blind or otherwise unable to drive themselves can rent Hertz cars in their names, provided that they are accompanied by a licensed driver at the time of rental. However, such drivers still must meet the Hertz minimum age requirement of 25.

Accessible Parking

All Hertz corporate locations have designated accessible parking at car-return areas. When returning a rental car to a Hertz location, renters should ask the Hertz representative how to find the accessible parking area.

Making Reservations

For any special accommodation, communication at reservation time is key. The Hertz reservation system can accommodate requests for left-hand controls, right-hand controls, and steering wheel spinner knobs. The system also makes note of blind renters requesting to be accompanied by drivers and customers or members of a traveling party who have disabilities. Reservations involving special circumstances can usually be accommodated with as little as eight hours' notice at major airport Hertz centers and as little as 24 hours notice at other locations.

Just the Latest Step

The Easy-Access shuttles are just the latest step in the company's plan to serve people with disabilities. Stifter notes, "We continually seek ways to make travel, and car rental in particular, as easy and convenient as possible for all of our customers."

Following in the footsteps of U-Haul and Enterprise, Hertz rental cars is rolling out its car-sharing program in December, starting with New York, London and Paris. Unlike Enterprise or U-Haul, though, Hertz will be going after consumers.

“Hertz’s car sharing is located in city environments and is available directly to consumers. In addition, it is going after B2B business as well as B2C, government and universities,” says Paula Rivera, a spokeswoman for the company.

Called Connect by Hertz, the Hertz car-sharing service will mimic existing car-sharing services by providing access to cars in lots throughout cities as opposed to merely offering the service through its existing rental lots. “We’re starting out in neighborhood parking locations, specifically parking garages and on-street parking areas,” Rivera says.

Though starting out in just three cities, Hertz plans to expand its car-sharing service quickly in 2009. “We have aggressive plans for expansion and are keeping all of our options open,”

Q 2: Analyze any six ways by which Jet Airways can extend/stretch its capacity to manage demand. Give reasons to support your answer.

Ans: India’s biggest airline by market value, Jet Airways (India) Ltd slumped the most in five months in Mumbai after it announced plans to further cut capacity amid declining travel demand.

Motivated by the challenges faced by the telecom industry during the past decade, in this paper we study a dynamic capacity expansion problem for service firms. There is a random demand for the firm's capacity in each period: the demand in excess of the capacity is lost, and revenue is generated for the fulfilled demand. At the beginning of each period, the firm might increase its capacity through purchasing equipment for immediate delivery, which is constrained by a random supply limit, or it might sign a future contract for equipment delivery in the following period. We assume that the firm's capacity might partially become obsolete due to natural deterioration or technology innovation. We aim at characterizing optimal capacity expansion strategies and comparing the profit functions as well as the optimal control policies of different options. Specifically, we show that the optimal capacity expansion policy for the current period is determined by a base-stock policy. Compared with the case where no future contracts are available, the optimal control parameters of capacity expansion are always smaller. We further show that when the obsolescence rate is deterministic, the optimal policy for capacity expansion through future contracts is also a base-stock type. The results are extended to the cases with stochastically dependent capacity supply limits and stochastically dependent demand processes, which establish the robustness of the optimal policy in various market conditions.

Jet expects to reduce capacity by 10% on top of the 30% it has already eliminated, Chairman Naresh Goyal said in Kuala Lumpur. Singapore Airlines Ltd, Qantas Airways Ltd and other Asia-Pacific carriers have slashed routes and cut capacity as the global recession pummels air travel demand.

“You may be able to cut down costs by reducing the capacity,”

Analysts say one of the main reasons is their desire to improve profitability.
Last year, as airlines indulged in cut-throat competition, Indian aviation industry lost Rs 1,620 crore ($400 million). The industry lost heavily despite robust demand growth because supply outstripped it.

That is changing now. Players like Jet are consciously keeping away from insane price war as they chase profits instead of market share. They do not mind trading higher load factor for better yields.

Last quarter, Jet's revenue passenger kilometre , which is the number of kilometres flown by revenue passengers, dipped 7.7% to 2,129 million from 2,306 million last year.

Analysts say, with lower number of seats to sell, Jet was under no pressure to sell more tickets in the lower price range.

We also introduced “Jet Airways Konnect” (JAK), our single class no frills services from May 2009. This strategy has been implemented due to change in demand pattern and less business class traffic as a result of lower travel spends by corporates. The initial results have been very encouraging. “Jet Airways Konnect” is currently operating at Seat Factors of mid to high 70s.

However, Jet Airways will continue to offer 2 class full services on prime routes, where there is substantial demand for business class.

Q 3: ‘Providing physical evidence provides various types of benefits’. Analyze these benefits using suitable examples?

Ans: Physical Evidence THE PHYSICAL EVIDENCE IS DEFINED AS THE ENVIRONMENT IN WHICH THE SERVICE IS DELIVERED AND WHERE THE FIRM AND THE CUSTOMERS INTERACT ; AND TANGIBLE COMMODITIES THAT FACILITATE PERFORMANCE OR COMMUNICATE THE SERVICE”.

COMPONENTS OF PHYSICAL EVIDENCE

EXTERIOR FACILITIES
INTERIOR FACILITIES
OTHER TANGIBLES

ELEMENTS OF PHYSICAL EVIDENCE

Organization Physical Facilities Other Tangibles

(Service Scope)

Facility Exterior Business Cards

Exterior design Stationary

Signage Billing Statements

Parking Report

Landscape Employee Dress

Surrounding Environment Uniform Brochures

Facilities Interior

Interior Design

Equipment

Signage

Layout

Air quality/ Temperature

Q 4: “Many marketers are of the view that role of advertising is far greater than personal selling in promotion of services”. Critically analyze this statement using relevant examples.

Ans: Personal Selling:
THE PROCESS THROUGH WHICH A SELLER PERSUADES THE CUSTOMERS TO BUY THE PODUCTS OR SERVICES.

Personal selling is a promotional method in which one party (e.g., salesperson) uses skills and techniques for building personal relationships with another party (e.g., those involved in a purchase decision) that results in both parties obtaining value. In most cases the “value” for the salesperson is realized through the financial rewards of the sale while the customer’s “value” is realized from the benefits obtained by consuming the product. However, getting a customer to purchase a product is not always the objective of personal selling. For instance, selling may be used for the purpose of simply delivering information.

Because selling involves personal contact, this promotional method often occurs through face-to-face meetings or via a telephone conversation, though newer technologies allow contact to take place over the Internet including using video conferencing or text messaging (e.g., online chat).

Advertising:
Advertising is defined in Webster's dictionary "as the the action of calling something to the attention of the public especially by paid announcements, to call public attention by emphasizing desirable qualities so as to arouse a desire to buy or patronize: promote."

Advertising is a mass-mediated communication. For communication to be classified as advertising it must be:
1) paid for,
2) delivered to an audience via mass media, and
3) be attempting to persuade.

In order to persuade, or be effective the advertisement must communicate to the audience the message it wants to relay. If for example, the advertisement is trying to sell a particular product than it must persuade the audience that for whatever functional or emotional reason they need to purchase the product.

Advertising has always played in immense role in our society. Without advertising, the average consumer would not be able to be told what to buy. They would have nothing in their home, because no one told them to buy anything. It has become fact that advertising affects our daily lives.

newspaper, and internet has launched a new type of advertising. Advertisers are beginning to use famous entertainers in their advertisements so that people pay attention to them. Almost every advertisement that is seen today has somebody that the consumer will recognize. Whether it be a movie star, a comedian, athlete, or a reality television star, the advertiser will make sure that a percentage of the viewing audience knows that person. Not only do they attract our attention with the use of somebody famous, they also attract our trust.

Although wide variations exist among service professions, several common attributes affect the role of advertising in the service industries. For example, because a service is intangible, it cannot be evaluated before purchased or consumed. Depending on the degree of intangibility, the consumer's assessment becomes that much more difficult, and the role of advertising becomes increasingly important. Other common attributes of service professions include the variable length of the purchase cycle, products that are non-standardized and personalized, service perishability, and consumer participation in the service exchange. A case study of health care advertising illustrates the necessity and effectiveness of advertising in a service profession. Multiplying health care options, changes in consumer perceptions, and ethical issues are all forcing hospitals to become more responsive to consumer demand, and to embrace the principles of marketing. Consumers are making major decisions and searching for ways to distinguish alternatives. Advertising, by providing information about service marketing, serves a useful function for the consuming public.

Q 5: a) “Growth in service economy is linked to the growth of the public sector services.” Do you agree or disagree with the statement? Give reasons to support your answer.

Ans: The study found that states with a higher share of Gross State Product in state and local government had better private economic growth than other states between 1990 and 1997, and performed equally well between 1997 and 2004. Increased public sector GSP was also associated with increases in economic growth. While we wouldn’t argue that enlarging government causes private economic growth, these findings make clear that it doesn’t stand in the way.

It is increasingly apparent that health needs cannot be met through reliance on public (government) resources alone. In fact, in many counties, less than half of the population has access to public health services.The private sector provides an alternative and complementary means of expanding health services, products and infrastructure. However, the private sector is not a panacea. Both public and private sector actors have roles to play in addressing the complex and unique challenges faced by developing countries to develop and maintain effective health systems issues.

The Public Sector
The public sector has several responsibilities related to health care provision, including:

Direct service provision;
Regulate the health care industry and medical products;
Provide incentives to make services affordable, maintain a skilled workforce and ensure research and development of new products.

The public sector is responsible for providing direct goods and services to the population. In many countries, the government plays a central role in building and managing health systems, including hospitals, clinics, human resources, medical equipment, supply chains, storage facilities and general infrastructure. The largest overall use of public health funds is allocated to human resources and nearly half of total health spending is allocated to pharmaceutical companies in some developing countries. The government also plays a key role in health care financing, by providing insurance, subsidies and conditional cash transfer programs. Increasingly, the management and supervision of health systems is becoming decentralized, with authority shifting from the centralized government to regional and district offices.

Governments play an important role in regulating and energizing the private sector. Regulatory mandates are necessary to monitor and maintain the quality of private sector services, but overregulation may stifle private sector growth. Regulation is also necessary for licensing or certifying health care providers, pharmacies, laboratories and pharmaceuticals.

Standard drug regulations and a common regulatory framework implemented by the government may also make it easier for private sector companies to register drugs and other health products.
Legal restrictions on the marketing, distribution or prescription of health care products, such as contraceptives, may also prevent private sector manufacture and distribution. For example, many countries in West Africa ban specific types of advertising for contraceptives and do not permit physicians to fill contraceptive prescriptions.

The government can also provide financial incentives for private sector growth. Government and donor subsidies can encourage the private sector to provide specific services, particularly for impoverished populations.

Q 5: b) To what extent is the service provider needed to customize service and exercise judgment?

Ans: Customers want more customized, personalized products and services, but companies struggle to cost-effectively deliver them. Improving communication and coordination between operations and sales and marketing is one critical path to profitable customization.

The compute technology is helping a lot in this process to develop from the scratch, the customers see what they will get from the very beginning, and know exactly how much it will cost and are aimed to keep things simple. Its like cooking pizza, just choose ingredients: buy template, insert texts, substitute graphics, edit color scheme, change sound track, add pages and serve to your visitors hot! the web designers can convert any customizable template from all design providers into true and unique piece of art.

Q 6: a) Explain the Ansoff’s product-growth Matrix with relation to services industry.

Ans: The Ansoff Growth matrix is a tool that helps businesses decide their product and market growth strategy.

Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets.

The output from the Ansoff product/market matrix is a series of suggested growth strategies that set the direction for the business strategy. These are described below:

Market penetration

Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets.

Market penetration seeks to achieve four main objectives:

• Maintain or increase the market share of current products – this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling

• Secure dominance of growth markets

• Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors

• Increase usage by existing customers – for example by introducing loyalty schemes
A market penetration marketing strategy is very much about “business as usual”. The business is focusing on markets and products it knows well. It is likely to have good information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research.

Market development

Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets.

There are many possible ways of approaching this strategy, including:

• New geographical markets; for example exporting the product to a new country

• New product dimensions or packaging: for example

• New distribution channels

• Different pricing policies to attract different customers or create new market segments

Product development

Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets.

Diversification

Diversification is the name given to the growth strategy where a business markets new products in new markets.

This is an inherently more risk strategy because the business is moving into markets in which it has little or no experience.

For a business to adopt a diversification strategy, therefore, it must have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks.

Q 6: b) Why is maintaining customer relation important? Give its importance with relation to the Banking Industry.

Ans: Maintaining Customer Relationship

Customer Relation

We know the best clients are often those who keep coming back to you for more. Customer Relationship Management (CRM) is of huge impotance we rather than attempting to climb that mountain, this article focuses on how to maintain an objective relationship with a client that you can be invited for your service for over an extended period of time.

Steps of building Customer Relationship Management in Insurance:

Maintain all your customer information in one place
Know and understand your customers
Manage every lead from initial contact to contract
Know your best revenue opportunities
Focus on closing deals rather than just prospecting for new business
Spot the best sales campaigns

Tips to Build Customer Relationship in Insurance:

Make special care with existing clients

It’s the existing client who can really help you to grow consulting business.

If our relationship with the old clients is maintained, and hopefully increase, its value if you can show a continued impartiality and an objective viewpoint toward the changing needs of the organization. Over a period of time,you can inevitably develop personal relationships with the organization’s staff members also . It’s only natural that some ties should grow between you or your staff and the organization when you work together for a period of time, but with careful management these relationships can be a valuable vehicle in strengthening your relationship with the clients and relations can generate manyfold business leads for us or our organization.

Take stock in the relationship

Take some time to think about how the decision-makers in the organization perceive you and your value to their organization. If you’ve received repeat business from them so far, there must be some trust in you and your judgment.

Listen to client input

As you conduct your business at a growing pace, take time out to remember the design process when proposing a solution. Do you still table a number of ideas and then rationalize these out to refine the final design? This is bound to take more time, but it does help you to take an objective view.

Business needs change, technology changes. But if you can demonstrate that the solutions you’ve provided throughout your history with the organization were both strategic and took the client’s input into consideration, you’ll be at an advantage when the organization considers future consulting needs. Depending on your working method with your client, you should involve them at different stages in the proposal, implementation, and evaluation stages.

Long-term relationships can be of great benefit to all parties, so practicing the methods of nurturing them is vital for business growth. Su ccessful businesses have always grown on building relationships, and in a service industry such as insurance, relationships revolve around value and trust. When carefully managed,

Why maintaining Long Term Relationship through after Sales Service is Important

Building customer relationship especially providing after sales service is of outmost importance in insurance industry because without it some bad word of mouth spread in market and company loses its existing as well as future or prospective customers

Maintaining Long Term Relationship through after Sales Service

It is imperative to maintain customer relationship after selling Insurance product to maintain good relationship with customer.

We can understand with following example:

An Agency Manager of Insurance Company from its New Delhi branch called to ram and requested soumen to take a X policy. He told him that he was a retired person and wants to invest savings in FD so that a guaranteed interest return is ensured. He assured him that with X policies, will get that much interest return, and in addition some more money depending on the market situation. He explained that he has nothing to lose, and he will keep him informed how policy is performing. Based on his assurance, SOUMEN purchased a policy. True to his assurance he kept in regular touch, and after few months wife also took a policy

The trouble started when SOUMEN received an e-mail from Insurance Company Mumbai office that his first policy has gone into causation as premium has not been paid. Ram was shocked. He immediately phoned the Agency Manager but his mobile was reported out of service. Ram sent him an e-mail but it returned undelivered saying that this e-mail ID is no longer working. SOUMEN replied to Mumbai office that their Agency Manager has taken premium cheque from him and how can it was not deposited. Ram was informed that this person has left the job.

SOUMEN last two month’s interaction with Insurance Company’s personnel at New Delhi and Mumbai has been the worst nightmare. An officer of company leaves the job and every working system comes to a total collapse. SOUMEN wanted them to designate another person as my contact point but every person in Insurance Company was trying to sell another policy to him.

Reaction of Customer:

I have spent all my life in Management Systems but have never seen such sub-standard customer care service. The young executives are only interested in meeting their sales targets and do not hesitate in painting false rosy pictures and giving false promises. In my language it is worst than cheating.

They implement the practice of non-discriminating customer service strategy continuously and fail to get hold of real profit-making customers so as to carry out different treatments or provide one-to-one customer service. The banks' database has accumulated a huge amount of customer data but an effective data mining system that can used to conduct data analysis is unavailable. The banks cannot even identify different accounts of the same customer, let alone the offer of one-to-one customer service. The banks' failure of integrating various data has created many "isolated data islands". This problem in the finance sector makes it hard for the decision-making level to understand the overall database operation and therefore, they cannot provide effective assistance through making decisions.

Traditionally, banking business is divided by finance products. Saving account is a system while international card is another. There is nothing wrong indeed. However, in order to survive in the competitive market, our bank, based on emphasising on transaction process and bad debt investigation, must focus on the function of sales and service. We must change from the scenario stated at the left side of the following chart to the scenario at the right side.

There is no overnight transformation from being finance product-centred to customer-centred. Due to the business nature of the banking sector, this transformation has to be at a gradual pace. In the first phase, we suggest to launch the task in two basic areas: firstly, to improve the products by targeting on customers such as China Merchant Bank's innovative launch of "All in One Card". Secondly, service needs to be improved. For example, the offer of relevant and convenient channels to customers (call centre, Internet, short messages, etc), standardised workflow of each contact point and a satisfactory complaint management system.

In the second phase

In the second phase we hope to integrate and utilise effective customer data that based on the offer of basic service. Therefore, we can have a higher level of analysis on customer demands and customer behaviour, as well as different customer services.

The bank has many core business systems and customer data is spread everywhere in these systems. Before providing different services, first of all the bank needs to integrate various customer data sub-systems, to form a unified customer data system and then the foundation of CRM. It can provide unified customer data to various business departments, mainly include basic data, account relationship, and data regarding the relationship of third party derivative finance products.

The establishment of a unified customer data system will combine diversified channels with good service interface that offered by the bank to its customers. And through good service interface bank managers or call centre staff will be able to have sufficient customer data at once to interact with customers in the course of customer contact. Therefore, they can complete the tasks of product sale or service swiftly and accurately. Besides, the bank needs to make sure that data obtained through various customer communication channels such as call centre, the Internet and mobile facilities is consistent and can be shared.

A basic customer data system should have the following functions:

1. Customer files
2. Enquiry function
3. Customer relationship
4. Account conciliation
5. Credit ranking management
6. Memo / record of history
7. Customer security management and risk control

In the third phase

With the result of customer behaviour analysis obtained from the second phase, the third phase is about further considering how to have an overall improvement of bank products and business processes.

The key value of CRM in the banking sector is realised in analysis. It will help you to have a better understanding of customers and their needs, allow you to maintain your profits and risk management on one hand, and to provide better customer service on the other. Its goals are to analyse what has happened while also predict what will happen soon (e.g. what kinds of customers are likely to leave, what kinds of products are commonly demanded by all customers) according to historical data and data mining technique. Vibration analysis is the driving force of the launch of promotion activities that targeting on customers with "risk". Meanwhile, the discovery of product groups will lead to suggestions of cross sales among all customers. A good CRM system will provide ready-made model and tools to assist clients in conducting relevant analysis.

Targeting on the banking sector, the analysis of CRM data mining tools have provided with industry model, such as:

- Connection and categorisation analysis: can be applied to cross sales or upward sales of finance products, include the analysis of the connection between customer groups and relevant relationship between customers and product groups.

- Decision analysis: can be applied to the maintenance and prediction of behaviours of a certain customer groups.

- Scoring (Deterioration) analysis: can be applied to customer scoring and credit ranking, etc.

- RFM model: to categorise customers in detail through three aspects according to whether customers have any business with the bank recently (recency), the frequency of business (frequency) and the amount involved (monetary).

In the course of customer contact, we found that customers showed great interest in our CRM system. Moreover, they would like to ask me a question - what is the best business practice of our CRM? After an introduction, I would always share my experience with them: I love playing bridge. When I was at high school, I bought a book written by a bridge master that covers 12 traditional rules of winning, such as to give an A card so as to view the cards of the table player, the second player always give away smaller cards while the third player always give away larger cards. In fact, nowadays many banks have a basic understanding of CRM, such as high quality of service, customer data integration, different services to different levels of customers, and maintain customers who have high value. However, what makes our bank distinctive, how to show customer care in detail and how to create a true understanding of customers? The bridge master has mentioned the thirteen rule of winning a bridge game. I think this is also the fundamental way of maintaining good customer relationship - thinking.

Q 7: a) Who in your opinion provides better service –Dominos or Pizza Hut? Elaborate on the difference in service provided by Dominos and Pizza Hut.

Ans: Pizza Hut pizzas versus Domino's pizzas

In comparing the pizzas of fast-growing Pizza Hut with that of the beautiful Domino, we really might not need to take a deep breath to say which is better.

Both Pizza Hut and Domino and two very great fast food chains respected all over the world. They both have their base in the United States, where most fast food chains started their activities.

Some people prefer Pizza Hut's pizzas to Domino's and vice versa. It all has to do with individual tastes and needs. However, this doesn't stop us from judging the both of them generically, using a general standard and tool.

COST

Pizza Hut's pizzas are appreciably and comparatively cheaper than Domino's pizzas. There really is no accurate reason for this difference in price, even though the difference is not very considerable. However, some might attribute this to the fact that Pizza Hut is quite bigger than Dominos, having more outlets, and so can fairly reduce their food costs and still not feel it.

TASTE

Pizza Hut tastes better than Dominos. Most consumers around the world agree with this. Domino is sometimes seen as a company following after the pattern of the mighty Pizza Huts. Pizza Huts are number one in terms of pizza tastes. Their pizzas are very sumptuous, even better than that of the McDonald's.

Pizza Hut really has done a lot to ensure they maintain this position of presenting very sweet pizzas to the "hungry" world that will "give away anything" to get something sweet. So no doubt, Pizza Hut's pizzas are sweater.

VALUE

In terms of good value for your money, Pizza Hut is also better. This is easy to tell. If Pizza Hut pizzas taste better and are cheaper, then they should have a better value for money. People really want to feel the effect of their money, especially when it comes to fast foods. I think the Pizza Huts have done a lot to ensure the consumers partake at least a bit of this effect.

SERVICES / DELIVERY

When it comes to services and delivery of pizza orders, I think both Domino and Pizza Hut are average. None is better than the other. However, Pizza Hut is most likely to get better sooner than the Dominos, because merely studying their recent activities, they are really doing a lot to improve on their services

Q 7: b) Suggest innovative marketing strategies to a new chain willing to compete with Dominos and Pizza hut.

Ans: Mr Whippy carried out considerable market research, which led to the development of new packaging, a new logo and colour scheme that transported the Mr Whippy brand to a broader market appeal. The take away business develops a comprehensive annual marketing plan with the resources of a leading design and marketing agency.

The national promotions strategy of Mr Whippy used in the past marketing materials like Amazing $1 Deal, Titanic Promo, Yoghurt Promo, 99 per cent Guilt Free Promotion and Colour In and Eat Free. The features of local marketing included a new Giant Mr Whippy Costume walking around the centre, giving away free product, encouraging visits to the store

Domino's philosophy rested on two principles – limited menu and delivering hot and fresh pizzas within half-an-hour.

Domino's Pizza faced intense competition because it had not changed its menu of traditional hand-tossed pizza. The other pizza chains offered low-priced breadsticks, salads and other fast food apart from pizzas. Domino's faced tough competition from Pizza Hut in the home delivery segment also. Little Caeser was eating into Domino's market share with its innovative marketing strategies.

Domino's also gave franchises to candidates recommended by existing franchisees. Outside the US, most of Domino's stores were franchise-owned. Domino's was also credited for many innovations in the pizza industry and setting standards for other pizza companies. It had developed dough trays, corrugated pizza boxes, insulated bags for delivering pizzas, and conveyor ovens.

Domino's entered India in 1996 through a franchise agreement with Vam Bhartia Corp^[2] in Delhi. With the overwhelming success of the first outlet, the company opened another outlet in Delhi.

By 2000, Domino's had outlets in all major cities in India. When Domino's entered India, the concept of home delivery was still in its nascent stages. It existed only in some major cities and was restricted to delivery by the friendly neighborhood fast food outlets. Eating out at ‘branded'restaurants was more common. To penetrate the Indian market, Domino's introduced an integrated home delivery system from a network of company outlets within 30 minutes of the order.

Goutham Advani (Advani), Chief of Marketing, Domino's Pizza India, said, “What really worked its way into the Indian mind set was the promised 30-minute delivery.” Domino's also offered compensation: Rs.30/- off the price tag if there was a delay in delivery. For the first 4 years in India, Domino's concentrated on its ‘Delivery’ strategy.

Q 1: a) Critically evaluate the contribution of service sector in the growth of Indian Economy?

Ans: The emergence of India as one of the fastest growing economies in the world in the 1990s

can be attributed, to a large extent, on the rapid growth of its service sector. The growth of output in the service sector in the 1990s has been much higher than the growth of output in agriculture or industry. Consequently, contribution of services to GDP in the period 2001-2004, has been more than 60 per cent per annum.. In order to arrive at some policy direction it is imperative to examine the performance of different services and assess the economy’s potentials and constraints in these services. The service industry forms a backbone of social and economic development of a region. It has emerged as the largest and fastest-growing sectors in the world economy, making higher contributions to the global output and employment. Its growth rate has been higher than that of agriculture and manufacturing sectors. It is a large and most dynamic part of the Indian economy both in terms of employment potential and contribution to national income. It covers a wide range of activities, such as trading, transportation and communication, financial, real estate and business services, as well as community, social and personal services.

In India, services sector, as a whole, contributed as much as 68.6 per cent of the overall average growth in gross domestic product (GDP) between the years 2002-03 and 2006-07.

The most important services in the Indian economy has been health and education. They are one of the largest and most challenging sectors and hold a key to the country's overall progress. A strong and well-defined health care sector helps to build a healthy and productive workforce as well as stabilize population. The 'Ministry of Health and Family Welfare' is responsible for implementation of various programmes in the areas of health and family welfare, prevention and control of major communicable diseases as well as promotion of traditional and indigenous systems of medicines. Accordingly, it is carrying out measures like National health policy, implementing National Rural Health Mission (NRHM) in different States, conducting surveys and studies, etc. While, education strongly influences improvement in health, hygiene and demographic profile. The 'Ministry of Human resource Development' is involved in eradicating illiteracy from the country. It is concerned with universalisation of elementary education, achieving full adult literacy, laying down of National Policy on Education, meeting needs of secondary and higher education for all, etc. India has achieved impressive demographic transition owing to the decline of crude birth rate, crude death rate, total fertility rate and infant mortality rate as well as gained high literacy rate in the country.

The era of economic liberalization has ushered in a rapid change in the service industry. As a result, over the years, India is witnessing a transition from agriculture-based economy to a knowledge-based economy. The knowledge economy creates, disseminates, and uses knowledge to enhance its growth and development. One of the major functional pillars of this economy is Information Technology (IT) and IT-enabled services (ITeS) industry. The 'Department of Information Technology' has been making continuous efforts to make India a front-runner in the age of Information revolution. IT continues to be a dominating sector in the overall growth of the Indian industry. A large number of Indian software companies have acquired international quality certification. Several policies have also been framed on the key issues of IT infrastructure, electronic governance as well as IT education.

Another major and upcoming service industry has been media and entertainment. It is basically an intellectual property-driven sector with small to large players spread throughout the country. It covers film, music, radio, broadcast, television and live entertainment. It plays a significant role in creating people's awareness about national policies and programmes by providing information and education to all. The 'Ministry of Information and Broadcasting' is responsible for formulation and administration of the rules, regulations and laws relating to media industry. Besides, retailing has been one of the fastest growing service sector both in terms of turnover and employment. Many national and global players have been investing in the retail segment and are making all efforts to further expand the sector.

All this shows that services hold immense potential to accelerate the growth of an economy and promote general well-being of the people. They offer innumerable business opportunities to the investors.

Q 1: b) Identify three reasons for the growth in the service sector in India?

Ans: Reasons for the growth in the service sector in India are as follows:

· INCREASE IN AFFLUENCY

· INCREASE IN LEISURE TIME

· WORKING WOMEN

· LIFE’S COMPLEXITY

· INCREASED LIFE EXPECTENCY

· RANGE OF NEW PRODUCTS

· PRODUCT COMPLEXITY

· RESOURCE SCARCITY

· GLOBALISATION

A closer scrutiny of India’s service sector reveals that amongst services, business services has been one of the fastest growing services in the 1980s closely followed by banking and insurance .In the 1990s, we find that a similar trend continues for business services, which grows by almost 20 percent, but while the growth in banking has increased growth in insurance sector has slowed down in the 1990s. The prime drivers of growth in services, apart from business services in the 1990s, are found to be communication services (with average growth of around 13.6 %) and hotels and restaurants (with average growth of around 9 %). However, there is a fall in the growth rates of railways, dwellings and real estate, legal services and public administration and defense in the 1990s.

Average Annual Growth Rates in Services

1980s 1990s

· Trade (Wholesale trade and retail trade) 5.9 7.3

· Hotels and Restaurants 6.5 9.3

· Railways 4.5 3.6

· transport 6.3 6.9

· storage 2.7 2

· communications 6.1 13.6

· banking 11.9 12.7

· Insurance 10.9 6.7

· Dwellings, real estate 7.7 5

· Business services 13.5 19.8

· legal services 8.6 5.8

· Public administration, defense 7 6

· personal services 2.4 5

· Community services 6.5 8.4

· other services 5.3 7.1

· Source: CSO

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