service mktng PROCESS-

7/29/2019 service mktng PROCESS-

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PROCESSES IN SERVICEThere are several basis for classifying services .One significant way

is on the basis of processes by which services are created anddelivered

In marketing of physical goods it hardly necessary to acquaint theconsumer with he processes by which the goods are manufactured.That is the responsibility of the production people.

In services, however the customers and consumers are often verymuch involved in production of services It is therefore necessary to

understand the processes to which people are likely to be exposed.

A process is basically a series of pre-designed actions performed in aparticular sequence. Implicit in processes is that there is an input,

some through put andfinally the output.


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UNDERSTANDING SERVICE PROCESS

There are three main issues in understanding of SERVICE PROCESSES

a)VARIETY IN PROCESS b)VALUE ADDITION

c)TASK ALLOCATION

VARIETY IN PROCESSES Variety relates to the process being fixed non-varying sequence of activities

standardised Process has a direct bearing on costs, time, complexity ofoperations. Lower the variety, lower the costs.

Three types of processes can be mentioned under VARIETY

--RUNNER

Generally refers to a high degree of standardisation. Usually found in highvolume activity.ATMs, checking bank accounts,rly ticketing


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REPEATERS

These types of processes tend to be like Runners except that they are a little

more complex and occur a little less frequently

This happens when a firm that began with limited range, expands its offering.

They tend to involve re-learning

STRANGERS

These are tot. Rather infrequent. More like one0off.ally non-standardisedprocesses

Difficult to anticipate

Cannot prepare for such resources. Over a period of time, Strangers tend to become Repeaters & Runners


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VALUE ADDITION IN PROCESSES Processes consists of several sub-processes or activities

--Therefore it is necessary for the marketers to study which of the activities iscontributing more value to the customer.

The customer may not be giving equal value to all the activities.

TASK ALLOCATION

Depending on the relative importance of value tasks are allocated

accordingly.

egin a hotel Front-end operations are likely to be given far more importancethan back-end tasks.


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What is therefore getting processed in services?

Broadly two categories are getting processed

a) People

b) Physical objects

For each of these categories the process may be a) Tangible

b) Intangible


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THE PROCESSING MATRIX The four dimensions can be mapped as

Nature Of

ServicePeople Possession

Tangible

ActionsPeople Processing

Passenger Transportation

Health Care

Lodging

Beauty salonsPhysical therapy

Fitness centre

Restaurants/bars

Barbers

Funeral services

Possession Processing

Freight transportation

Repair/maintenance

Warehouse/storage

Office cleaningRetail distribution

Laundry/dry cleaning

Re-fuelling

Landscaping

Disposal/recycling

Intangible

Action

Mental Stimulus Processing

Advertising/PR

Arts/Entertainment

Broadcasting/cableManagement consulting

Information Processing

Accounting

Banking

Data processingData transmission


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Mental Stimulus Processing Information Processing

Information services

Music concerts

Psychotherapy

Religion

Voice Telephone

Insurance

Legal services

Programming

Research

Securities investment

Software

Consulting


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PROCESSES contd/-

People Processing Since time immemorial, people have sought servicesdirected a themselvestransportation, health, lookingmore beautiful etc

These are services in which the people must enter theservice system physically and engage themselves physicallyin delivery of the service.

The level of customer involvement may vary a lot---

It may be just 15 min in case of transportation to somedays in case of medical needs.

The service provider must reflect on certain non-financialcosts ie time, physical effort mental energy


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PROCESSES contd/-

Possession Processing Often a customer may ask for certain treatment to his

possession e g repair of washing machine, car repair,white washing of house etc

In such a service the physical presence is not anecessity. ,The customer may, of his own choice decideto be physically present

The object is either delivered to the service provider for

treatment or the latter arranges for it to be collected. Ifthe service is required for immovable assetspesticidetreatment for kitchensthen the service provider goesto the customer..


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PROCESSES contd/-

Mental Stimuli processing

These are services where the service provider isengaged primarily with the mind of the service seeker

education, religious advice, psychotherapy etc This is one area where the service provider has the

power to influence the clients mindattitude, createand alter perceptions The service provider has to

ensure that strong ethical standards are maintained.While some physical presence is necessary, the focus ison mental communication


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PROCESSES contd/-

Information Processing

Information is basically most intangible form ofservice output. It can, however, be transformed

into tangible form by converting it into adocument ,report, letters, books etc

The services most dependent on timely and

correct processing of information are financialservices, research, law, medical diagnosis.


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In services, the product can be physical goods or intangible offering or a

combination of both, A product may have three levels

The Core Product

This level has the basic features and is the main reason for consumption

In services, therefore, the product must perform the basic functionsolve thecustomers problem/satisfy his need.

e.g. Retirement Plans

FDsBanks

FDsReputed Cos

Mutual Funds/Pension Funds

Stocks-Pvt cos & Govt securities

Bullion

Real Estate

7Ps OF SERVICES MKT-PRODUCT


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Product contd/-

FORMAL PRODUCT

Once the formal product is launched and accepted .competitors step and lure theconsumers with differentiation based on technology. marketing, additional features etc

The differentiating aspects take the form of style, colour, prices, features

FDsBanks: Steady returns/Safety/Easy liquidity

FDsReputed Cos: Higher returns

Mutual Funds/Pension Funds Higher returns/growth

Stocks-Pvt cos & Govt securities: higher returns/capital appreciation

Bullion: secrecy, easy barter

Real Estate: reliability/solid growth

.


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Product contd/-

AUGMENTED PRODUCT

With further competition, the marketers added more features/attributes to the products fordifferentiation. These were all intangible and in the realm of services. e g

Warranties

Guarantees

After sales service

Customer education

Training

Home delivery

Installation etc etc.

Ultimately, it is services that has become the deciding differentiator


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SEGMENTATION IN SERVICES

The services marketer also attends to various segments likein goods marketing.

Indian Railways---has different trains like Shatabdi, Palace-

on-Wheels, Rajdhani

ICICI Bank has different cards for different customers-Silver ,Gold, Platinum, Petro Cards

Pantaloon RetailPantaloonsfor upper segment, Big Bazaarfor mid-segment


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SEGMENTATION contd/-

ITCPremium hotels/Budget hotels/Business ClassHotels

Jet AirwaysJetfor upper segment

Jet Lite for mid segment

Wheels-Rent-A-Car have

Transport Corporation of India for their truckingoperations

Gati /DTDCfor their courier operation

Assam Bengal Corporation for large containers andcargo

Ritco Travelsfor customers with travel needs


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BRANDING OF SERVICES

Like in consumer products, branding in services

also convey six levels of meaning:

--Attribute: 24 hr service from Citi Bank-----Citi

never sleeps

--Benefits: SBIThe nation banks on us

--Value: faith , trust, expertise HDFC/DelhiPolice With you, right through


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Branding contd/-

--Culture: Brands also convey the culture:McDonalds/Lufthansa/Dabbawalas / Chowki Dhani

--Personality: Brands also convey personality attributeseg NIITan intelligent person

Airtel talks about a can do person

--Users. American Express Cards are indicative ofachievers.


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Branding contd/-

Airtel talks about a can do person

--Users. American Express Cards are indicative of achievers.

Branding also ensures greater acceptance of new products asthey are perceived to be less risky.

All the products enjoy the benefits of promotion and advertising.Any advertisement of ICICI has a spill over effect on ICICILombard, ICICI Prudential, ICICI Bank etc.

Most service organizations offer a line of products rather than asingle product.


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Branding contd/-

The intangibility of services makes it difficult forcustomers to comprehend the totality of service offers.

Branding can .be used at both the corporate andproduct level.

Branding stands for a particular way of doing business Sub-brands, under the umbrella of corporate brand,

reflect the values of the latter. At the same time, the

sub-brand should spell out the promise being made theparticular service..


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PRICING PRICING OBJECTIVES

Revenue and profit objective

Make largest contribution to profit

Achieve a certain target levelnot necessarily maximising profits

Maximise revenue from a fixed capacity

Cover allocated costs/incremental costs

Cover direct costs of providing a particular service

Creating user base

Build demand

Achieve capacity utilisation

Stimulate trials leading to adoption

Build market share


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PRICE

COST BASED PRICING

--Full cost/mark-up pricing

--Marginal/Contribution pricing ABC

COMPETITOR BASED PRICING

--Going-rate pricing This approach is used where it is difficult to establish the exact cost.The market conditions are

such that the going rate is preferred.eg Nehru Place-Delhi, Chowpatty-Mumbai, Paratha Wali GaliDelhi

--Sealed-Bid pricing Here the price is submitted in form of sealed tenders.Transport contracts/canteens/housekeeping

are awarded on this basis

--Pricing below competition This approach is generally used when a new entrant enters and under-prices to gain some volume.

The danger is

a) You may go for cash losses

b) Competitors may retaliate:


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PRICING----contd/-

--Pricing above competition This pricing works when the service is a very exclusive and directed at the upper

segmentforeign banks/health clubs in 5-star hotels/restaurants in inter-continental hotels

DEMAND BASED PRICING

This pricing is based on what the customers are willing to pay. Different customers havedifferent capacity to pay. The service marketers skill lies in deep understanding ofconsumers demand and his ability to pay.correct identification of early adopters,middle-majority ,laggards

VALUE BASED PRICING No customer will ever pay more for a service than what he thinks its worth. Hence, the

marketers have to have a deep understanding of how the consumers perceives the service,It is therefore necessary to gauge the monetary valueof the incremental servicethrough marketresearch.


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VALUE BASED PRICING contd/-

Value generally is perceived as

--Value is low price

--Value is whatever I want in a product

--Value is the quality I get for the price I pay

--Value is what I get for what I pay.

In services we adopt the concept ofNET VALUE

--the sum total of all the perceived benefits less all the

perceived costs


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VALUE contd/- Value is the ratio of perceived benefits of the service to be

purchased to the price and other costs added to it

The benefits areproduct value, service value,

personnel valueandimage value

Product Value The worth assigned to a product by a customer eg a Samsung

refrigerator because of its technological features.

Service Value The worth assigned to a co by the customer eg LG,Hitachi because of

their guarantees, warranties, distribution network, service centers etc


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VALUE contd/- Image Value The worth assigned to a product because of its image

Monetary Value

The money paid for the item

Time Costs The time spent by the consumer in evaluating the product vis--vis other products

Energy Costs

.The physical energy spent by the customer in acquiring the service.

Psychological Costs

The mental energy spentworrying waiting,delays,


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RELATIONSHIP PRICING

This approach requires a deep understanding of consumer wherethe emphasis is on customising so that the customer finds itinconvenient to shift to other service providers.


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PROMOTION-MIX As services are performances, rather than physical goods, it often becomes difficult to

communicate the benefits of services. The issue of intangibility create four areas that

need to be attended to Generalityrefers to items comprising objects, people .events that do not have a

physical aspect or counterpart but the people are aware of these aspects eg flight service,

flight attendants. The task for the marketers is to communicate how his offering is better

than others in the market.

Non-searchability:--means that unlike a physical object which can be examined,

inspected, a service cannot be pre-checked Under such circumstances, the credentials of

the service provider have to be emphasised and re-affirming the exterior of a nursing

home may be very immaculate and clean, the staff may be dresses in a tidy and crisp

uniform but it still doesn't tell you about the skill Such issues are addressed by

communicating the degree/experience of the service provider

Abstractness.refers to concepts as financial advice, expert legal advice, sate

transportation etc Bring to the customers notice the testimony of satisfied customers

Mental Impalpabili ty.-Often services are too complex ,novel, multi-dimensional for the

comprehension of an ordinary customer. This is particularly true for new prospects..


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COMMUNICATION MIX

Marketing communications can be

Personal Impersonal

Personal Communication

Refers to personalised messages that establish a two-way communication betweenthe co and the customer.

Personal selling,

Tele-marketing

E- mailing

Word-of mouth

Customer Training

Customer services


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COMMUNICATION MIX contd/-

IMPERSONAL COMMUNICATION

Impersonal communication refers to a one way message that is directed towards alarge mass of prospects and customers rather than specific individuals.

Advertising

Sales promotion

Publicity

Public relations

Instructional materials-web sites/Manuals/Brochures

Corporate design


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Message Transmission

MESSAGES TRANSMITTED THRU PRODUCTION CHANNEL

Customer Service from Front-line staff

Customer trainingB-2-B

Service Outlets

MESSAGES TRANSMITTED THRU MARKETING CHANNELS

Personal Selling

Trade Shows

Advertising

Direct Marketing


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Message Transmission

contd/- Sales Promotion

Public Relations

MESSAGE TRANSMISSION FROM OUTSIDE THE ORGANISATION

Word-of-mouth

Customers holding strong views are likely to talk more than the customers havingmilder views.

Extremely dissatisfied customers are likely to complain much more than highly satisfied

customers.

Editorial/Media

Leading service providers may initiate their own media effort.


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BRANDING AND COMMUNICATION

Branding of services is important because strong brands increase the trust of thecustomers.

Service branding is a blend of

a) The presented brandhow the co presents itself thru controlled communications

b) External brand- thru non-marketer controlled channels ieWOM/media/editorials

c) Brand meaningthe dominant perception of the customer and the associations thatcome to himnot necessarily from personal experiences.


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Branding contd/-

Sub-Branding Many service organisations resort to sub-branding to differentiate their offerings

Air India-J Class/Y class

Std/chartered /Kotak/--Platinum/Gold/ Credit Cards

Bajaj Allianz -Silver Health/ Gold Policy


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PLACE

To understand the role of distribution in services, we must remember the basic

characteristics of services that differentiate services from products

INSEPARABILITY

Due to inseparability of services it is necessary for the service provider and the

consumer to meet for the exchange. Unlike goods, services cannot be produced in

one place and consumed in another place.

INTANGIBILITY & PERISHABILITY

Intangibility and perishability demand that the consumption and production of the

services has to be simultaneous.

Hence, to understand Place in services we must ask

1 How to deliver services to the customer?

2 Where and when should the delivery take place?

3 Role of intermediaries in delivery of service

4 How to balance the tangible/intangible components of the service?


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CORE & SUPPLEMENTARY SERVICES

CORE SERVICES

Core services require physical locations which tend to restrict distribution

Mahindra Club Holidays can be had only on some locations

A major surgery can take place only at a well equipped hospital

Major plays/drama are held at Lalit Kala Academy/Kamani

Auditorium/Prithvi Theater

SUPPLEMENTARY SERVICES

Information/pricing/timings/ticketing booking/billing/payments are of

supplementary nature and tend to be widely distributed.

The delivery of supplementary services has reached a very intricate and

sophisticated level

Internet/Widespread agents/Toll-free numbers/ Customer Care Centers etc


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TYPE OF CONTACT

The interaction between the service provider & consumer may involve the following

variable

i) The consumer may go to the co

ii) The Co goes to the consumer

iii) The co offers service at a single site

iv) The co offers service at multiple sites

TYPE OF CONTACT SINGLE SITE MULTIPLE SITE

Consumer goes to co Salon/Theatre Fast Food/DTDC

Co goes to consumer TV repairs/Gas delivery Maruti-On -Road

Co & consumer transact TV Broadcasting Stn Web mkt/Tel co

from an arms length

LOCATIONS BECOME IRRELEVANT WHEN THE SERVICE PROVIDER AND

THE CONSUMER NEED NOT INTERACT WITH EACH OTHER PHYSICALLY.


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CONSUMER BEHAVIOR

The location of service provider also depends on the consumers behavior

INVOLVEMENT

a) High Involvement-Buying an LCD TV/Washing Machine with dryer

b) Low Involvement

c) Impulse purchase

DEMOGRAPHIC PROFILE

Age

SERVICE DIRECTED TO

TYPE OF SERVICE

C di l i t/

service mktng PROCESS-

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