MODULE-1

INTRODUCTION TO SERVICES

INTRODUCTION TO SERVICES�

WHAT ARE SERVICES?

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• Services are deeds, processes and performance
• Intangible, but may have a tangible component

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WHAT ARE SERVICES?

• Some times when people think of service, they think only of customer service, but service can be divided into four distinct categories.
• Service industries and company
• Services as products
• Customer service
• Derived service

SERVICES;

• “Services are activities, benefits or satisfaction which are offered for sale or provided in connection with sale of goods”. - The American Marketing Association
• “Services are those separately identifiable essentially intangible activities, which provide want satisfaction when marketed to consumers and/or industrial uses and which are not necessarily tied to the sale of a product or another service”. - Stanton

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SERVICES MARKETING

• The promotion of economic activities offered by a business to its clients. Service marketing might include the process of selling telecommunications, health treatment, financial, hospitality, car rental, air travel, and professional services.��

Examples of Service Industries

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• Health Care
• hospital, medical practice, dentistry, eye care
• Professional Services
• accounting, legal, architectural
• Financial Services
• banking, investment advising, insurance
• Hospitality
• restaurant, hotel/motel, bed & breakfast,
• ski resort, rafting
• Travel
• airlines, travel agencies, theme park
• Others:
• hair styling, pest control, plumbing, lawn maintenance, counseling services, health club

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CONTIBUTION AND REASONS FOR THE GROWTH OF SERVICES SECTOR

1. Economic affluence: the size of the middle income consumer is raising fast and the percentage of the very poor household’s declining. 
2. Changing Role of Women: Traditionally the Indian woman was confined to household activities. But with the changing time there has been a change in the traditional way of thinking in the society. Women are now allowed to work. They are employed in defence services, police services, postal services, software services, health services, hospital services, entertainment industries, Business Process Outsourcing and so on.

3.Cultural Changes: Change is the underlying philosophy of culture place of change in Indian culture is not uniform.

• Educational institutions:

• Health care:

• Entertainment,

4. Development of Markets: During the last few decades the wholesaler and the retailer population has grown in the country.

5. Export potential:  India is considered to be a Potential source for services. There are a number of services that India offers to various parts of the world like banking, insurance, transportation co data services, accounting services, construction labour, designing, entertainment, education, health services, software services and tourism.

Tourism and software services are among the major foreign exchange earners of the country and that the growth rate is also very high as compared to the other sectors.

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MYTHS ABOUT SERVICES

Myth #1:  The customer is a single thing or entity easy to target.

Myth #2:  The customer is always right.

Myth #3:  The customer is always wrong.

Myth #4:  Good customer service is about having high-quality products.

Myth #5:  Good customer service is just plain common sense.

Myth #6: The term “good customer service” means the same thing to everyone.

Myth #7:  Ethics, pride, and altruism are all reasons for providing excellent customer service.

Myth #8:  If you learn how to “put up with customers,” business can be great!

Myth #9:  Taking care of the customers you have is more important than getting new customers.

Myth #10:  Unhappy customers tell their stories to more people than happy customers do.

Myth # 11:  Unhappy customers are a part of doing business. If you handle a customer complaint well, the offended customer will be even a  more loyal customer.

Myth #12:  Customers don’t care about great service; they just want the lowest price possible.

Myth #13:  Customers need to be patient. They can’t expect a company to fix all complaints overnight.

Myth #14:  Forget about good customer service; people buy from those they like.

Myth #15:  Some people are naturally good at customer service.

Myth #16:  Comment cards and customer surveys accurately measure customer service.

Myth #17:  Customer service systems should focus on troubleshooting. If it isn’t broken, don’t fix it.

Myth #18:  Companies achieve good customer service by under-promising and over-delivering.

Myth # 19:  You can satisfy all of the customers all of the time.

Myth #20: Roll Your Own!  What is the myth that guides your view of customer service? What is your belief and what is the reality?

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DIFFERENCE BETWEEN PHYSICAL GOODS AND SERVICES

CHARACTERISTICS OF SERVICES

1. Intangibility

2. Inseparability

3. Heterogeneity (Individuality or Variability)

4. Perishability

5. Lack of Ownership

6. Absence of Quantitative measurement

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Service marketing triangle

Service marketing triangle a dynamic model where there are three interlinked groups that work together to develop, promote, and deliver services.

These key players are labeled on the points of the triangle – Company, Customer and Providers(employees).

Between these three points on the triangle, there are three types of marketing that must be successfully carried out for a service to succeed –external marketing, internal marketing and interactive marketing.

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• External Marketing: Company and customers
• Internal Marketing: Company and employees
• Interactive Marketing: Customer and employees

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PROMISE

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Here, "promise” means to assure the customer about the services that are being offered which will be provided to them in time and with same quality and quantity as mentioned.

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External Marketing:(setting the promise)

• Marketers directly interact with the end users in order to know their needs
• Set price, create awareness, design the promotional strategies
• Performed to capture the attention of the market and interest of the customer towards the company’s services.

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Internal Marketing:(enabling the promise)

• Internal processes which enables service marketers to deliver promises to customers
• Marketing to employees
• Company view its employees as its internal customers and jobs and other programs as internal products
• It involves training the employees, motivating them, teamwork programs, teaching them customer satisfaction techniques, etc.
• The company shares its goals with its employees and communicate with them on a regular basis

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Interactive marketing:(delivering the promise)

• Moment of Truth, Service Encounter
• This refers to the significant moment of interaction between the front-office employees and customers
• This is the most important part of the service triangle, if the employee fails to deliver at this level then all the efforts made towards establishing a relationship with the customer would be wasted.
• Interactive marketing is the most important part of the service marketing triangle because it establishes a long term or short term relations with customers.

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Strategic Implications of the services marketing triangle:

• Company should more concentrate on customer satisfaction rather than its own convenience.
• Good ambience and culture should be developed and maintained in the organization.
• Service personnel should be very good at knowledge, skills and empowered in performing the task.
• Good delivery associated activities should be developed.

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Conclusion

• Now a days market leaders are aware of the external threats and opportunities that affects their business. They also know how to communicate with their clients and employees in order to achieve organizational goals.
• Service triangle has great importance and its components are essential in the success of any business. A well established business always follows the strategies of service marketing triangle.

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CONCEPT OF SERVICE MARKETING TRIANGLE

• The service marketing triangle emphasizes three different coinciding elements.
• It includes internal marketing, external marketing and interactive marketing.
• The premise is that when companies take care of their employees, their employees are more likely to work diligently to take care of customers who were attracted to the company by external marketing.

CONCEPT OF SERVICE MARKETING TRIANGLE

There are 3 steps of Service Marketing Triangle-

1. EXTERNAL MARKETING� 2. INTERNAL MARKETING� 3. INTERACTIVE MARKETING

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1. External Marketing : “Setting the Promise”�· Marketing to END-USERS.�· Involves pricing strategy, promotional activities, and all communication with customers.�· Performed to capture the attention of the market, and arouse interest in the service.��

2. Internal Marketing : “Enabling the Promise”�· Marketing to EMPLOYEES.�· Involves training, motivational, and teamwork programs, and all communication with employees.�· Performed to enable employees to perform the service effectively, and keep up the promise made to the customer.

3. Interactive Marketing : (Moment of Truth, Service Encounter)�· This refers to the decisive moment of interaction between the front-office employees and customers, i.e. delivery of service.�· This step is of utmost importance, because if the employee falters at this level, all prior efforts made towards establishing a relationship with the customer, would be wasted

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SERVICE MARKETING MIX

• Service marketing mix defined as the elements an organizations controls that can be used to satisfy or communicate with customers.
• The service marketing mix is also known as an extended marketing mix and is an integral part of a service blueprint design.

SERVICE MARKETING MIX

• Product
• Price Traditional
• Place Marketing Mix
• Promotion
• People
• Process Expanded Mix for
• Physical Evidence Services

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PEOPLE

• All human actors who play a part in service delivery and thus influence the buyer’s perceptions; namely, the firm’s personnel, the customer, and other customers in the service environment.

PROCESS

• The actual procedures, mechanisms, and flow of activities by which the service is delivered – the service delivery and operating systems.

PHYSICAL EVIDENCE

• The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.
• The main problem with a service is that a purchaser cannot test it out before buying. It may not even be produced until it is needed. It is, therefore, important to offer some other means by which a potential customer can make an objective evaluation of the value and quality of your service without committing to buy. Testimonials from previous customers can be useful when used on brochures, as can photographs of completed work. If you have a showroom, office or workshop where customers visit, make sure it shows a professional outlook compatible with the nature of your business.

Gaps Model of Service Quality

• Service quality is an approach to manage business processes in order to ensure full satisfaction of the customers & quality in service provided. It works as an antecedent of customer satisfaction.
• If expectations are greater than performance, then perceived quality is less than satisfactory and hence customer dissatisfaction occurs.
• SERVQUAL is a service quality framework, developed in the eighties by Zeithaml, Parasuraman & Berry, aiming at measuring the scale of Quality in the service sectors.
• SERVQUAL was originally measured on 10 aspects of service quality: reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding the customer, and tangibles, to measure the gap between customer expectations and experience.

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Gaps Model of Service Quality

WHAT IS SERVICE QUALITY?

• Service quality measures how well a service is delivered, compared to customer expectations.
• The gaps model of service quality serves a framework for service organization’s attempting to improve quality service and services marketing.

Gaps Model of Service Quality

THE CUSTOMER GAP

THE CUSTOMER GAP

(Difference between customer expectations and perceptions)

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THE PROVIDER GAP

• To close the all-important customer gap, the gaps model suggests that four other gaps-the provider gaps-need to be closed.
• Gap 1:The Listening Gap

(Not knowing what customers expect)

• Gap 2:The Service Design and Standards Gap

(Not selecting the right service quality designs and standards)

• Gap 3:The Service Performance Gap

(Not delivering to service standards)

• Gap 4:The Communication Gap

( Not matching performance to promises)

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CUSTOMER EXPECTATIONS

COMPANY PERCEPTIONS OF CUSTOMER EXPECTATIONS

GAP 1

Customer driven service designs and standards

Company perceptions of customer expectations

• Poor Service design
• Unsystematic new service development process
• Vague, undefined service designs
• Failure to connect service design to service positioning

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• Absence of customer defined standards
• Lack of customer-defined standards
• Absence of process management to focus on customer requirements
• Absence of formal process for setting goals

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• Inappropriate physical evidence and scope for services

GAP 2

Service delivery

Customer-driven service designs and standards

GAP 3

Service delivery

External communication to customers

GAP 4

CLOSING THE GAPS

• Gap 1: Learn what customers expect
• Gap 2: Establish the right service quality standards
• Gap 3: Ensure that service performance meets standards
• Gap 4: Ensure that delivery matches promises

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• Managing, growing, and profiting with both product and service businesses are challenging tasks. But the challenges are different from one to the other. Listed below are some of the most common and difficult challenges of growing and .managing consulting, professional, or technology service businesses that don’t necessary apply to product businesses.
• Clients can’t see or touch services before they purchase them: This makes services difficult to conceptualize and evaluate from the client perspective, creating increased uncertainty and perception of risk. From the firm’s perspective, service intangibility can make services difficult to promote, control quality, and set price.
• Services are often produced and consumed simultaneously: This creates special challenges in service quality management that product companies do not even consider. Products are tested before they go out the door. If a product has quality problems while in production the company can fix them and customers are none the wiser. Service production happens with the customer present, creating a very different and challenging dynamic.

• Trust is necessary: Some level of trust in the service organization and its people must be established before clients will engage services. This is as important, sometimes more important, than the service offerings and their value proposition.
• Competition is often not who you think: Competition for product companies are other product companies. Competition for service companies are often the clients themselves: Sure, sometimes you find yourself in a competitive shootout (some firms more than others), but often the client is asking ‘should we engage this service; at all’ and ‘if so, should we just do it in-house’.
• Brand extends beyond marketing: Brand in service businesses is about who you are as much as what you say about yourself. And internal brand management and communications can be equally as vital to marketing success as are external communication.

• Proactive lead generation is difficult: Many service companies have tried, and failed, at using lead generation tactics that work wonders for product companies. Implemented correctly, traditional product techniques, such as direct marketing and selling, can work for services, but the special dynamics of how clients buy services must be carefully woven into your strategy.
• Service deliverers often do the selling : Many product companies have dedicated sales forces. For services, the selling is often split between sales, marketing, professional, and management staff.
• Marketing and sales lose momentum:  Most product companies have dedicated marketers and sellers. They market and sell continuously, regardless of the revenue levels they generate. In many services companies the marketers and sellers also must manage and deliver. This can often lead to the Services Revenue Rollercoaster-wide swings between revenue and work overflow, and revenue and work drought.
• Passion is necessary yet elusive: The more passion, spirit, hustle, and desire your staff brings to the organization every day, the more revenue and success you will have. The correlation between staff passion and financial success is direct and measurable

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CONSUMER BEHAVIOR IN SERVICES

Clothing

Jewelry

Furniture

Houses

Automobiles

Restaurant meals

Vacations

Haircuts

Child care

Television repair

Legal services

Root canals

Auto repair

Medical diagnosis

Difficult to evaluate

Easy to evaluate

{

High in search

qualities

High in experience

qualities

High in credence

qualities

{

{

Most

Goods

Most

Services

CONTINUUM OF EVALUATION FOR DIFFERENT TYPES OF PRODUCTS

MOST

GOODS

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Most

Services

Clothing

Jewelry

Furniture

Houses

Automobiles

Restaurantmeas

Vacations

Haircuts

Child care

Television repair

Legal services

Root canals

Auto repair

Medicaldiagnos

Easy to evaluate

Difficult to evaluate

High in search

qualities

High in experience

qualities

High in credence

qualities

SEARCH

• Economists first distinguished between two categories of properties of consumer products: search qualities,

experience qualities..

Search qualities, attributes that a consumer can determine before purchasing a product;

EXPERIENCE

• Experience qualities, attributes that can be discerned only after purchase or during consumption;
• EX.., hair cut, restaurant meals etc…,

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CREDENCE PROPERTIES

• A third category, credence qualities, includes characteristics that the consumer may find impossible to evaluate even after purchase and consumption.
• Ex’s; high in credence qualities are appendix operations, and
• Brake relinings on automobiles

STAGES IN CONSUMER DECISION MAKING AND EVALUATION OF SERVICES

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NEED RECOGNITION

INFORMATION SEARCH

EVALUATION OF ALTERNATIVES

PURCHASES

CONSUMER EXPERIENCE

POST EXPERIENCE EVALUATION

CONSUMER CHOICE

NEED RECOGNITION

• The process of buying a service begins with the recognition that a need or want exists.

MASLOW’S HIERARCHY

• PHYSIOLOGICAL NEEDS are biological needs such as food, water, and sleep.
• SAFETY AND SECURITY NEEDS include shelter, protection(safety), and security.
• SOCIAL NEEDS are affection, friendship, and acceptance.
• EGO NEEDS are for prestige, success, accomplishment, and self-esteem.
• SELF-ACTUALIZATION involves self-fullfillment and enriching experiences.(for thrill experience, skydiving, jungle safaries etc..)

INFORMATION SEARCH

• Once consumers recognize a need, consumers obtain information about goods and services that might satisfy this need.

PERSONAL SOURCES, NONPERSONAL SOURCES AND PERCEIVED RISK

Consumers use both personal and nonpersonal sources to gain information about goods and services.

• PERSONAL SOURCES such as friends or experts.
• NONPERSONAL SOURCES such as mass or selective media and websites
• PERCEVIED RISK can come in the form of financial risk, time risk, performance risk, social risk, or psychological risk.

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EVALUATION OF ALTERNATIVES

• The evoked set of alternatives –that set of products a consumer considers acceptable options in a given product category.
• One reason involves differences in retailing between goods and services, to purchase goods, consumers shop in retail stores for valid reasons. To purchase services, the consumers visits an establishment.
• Second reason is that consumers are unlikely to find more than one or two businesses providing the same services in a given geographic area, whereas they may find numerous retail stores.
• A third reason is the relative difficulty of obtaining adequate prepurchase information abt services.

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SERVICE PURCHASES

• One of the most interesting differences between goods and services is that most goods are fully produced prior to being purchased by consumers.
• For services, the services is purchased, produced, experienced, and evaluated almost simultaneously.

CONSUMER EXPERIENCE

• Customer experience experts have stated that;

“the experience is the marketing”

• All services are experiences- some are long in duration and some are short; some are complex and some others are simple; some are mundane, whereas others are unique.
• Services as processes-actions or performances done for and with customers, they typically involve a sequence of steps, actions, and activities.
• Ex.., following the doctor’s orders, taking medications, going to a lab for blood work.

cont..,

• Service Roles and Scripts roles are combinations of social cues that guide and direct behavior in a given setting.
• Ex.., the role of a hostess in a restaurant is to acknowledge and greet customers.
• Customer coproduction counseling, personal training, or educational services have little value without the full participation of the client.
• Emotion and Mood emotions and mood are feeling states that influence people’s perceptions and evaluations of their experiences.
• Ex.., bank employee mood in evening, and customer service provider interact with customers.

POST EXPERIENCE EVALUATION

• The service experience, customers form an evaluation that determines to a large degree whether they will return or continue to patronize the service organization. It involves;
• Word-of-Mouth Communication
• Attribution of Dissatisfaction
• Positive or Negative Biases
• Brand Loyalty

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CONSUMER EXPECTATION OF SERVICES

• Customers have different expectations of services – or expected service
• Desired service – customer hopes to receive
• Adequate service – the level of service the customer may accept

TWO LEVELS OF EXPECTATION

1. DESIRED SERVICE: the level of service the customer hopes to receive-the “wished for” level of performance.

DESIRED SERVICE is a blend of what the customers believes “can be” and “should be.”

2. ADEQUATE SERVICE the level of service the customer may accept

• Ex.. College’s placement office when students are ready to graduate.

(what are students expectations of the service?)

• The right job in the right place for the right salary-because that is what students hope and wish for.
• Some graduates accepted any job for which they could earn a salary, and others agreed to nonpaying, short –term positions as interns to gain experience.
• Adequate service represents the “minimum tolerable expectation,” the bottom level of performance acceptable to the customer.

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DESIRED SERVICE

ADEQUATE SERVICE

DUAL CUSTOMER EXPECTATION LEVELS

THE ZONE OF TOLERANCE

• Services are heterogeneous in that performance may vary across providers, across employee from the same provider, and even with the same service employee.
• The extent to which customers recognize and are willing to accept this variation is called the zone of tolerance.

ZONE OF TOLERANCE

DESIRED SERVICE

ADEQUATE SERVICE

• If service drops below adequate service –the minimum level considered acceptable-customers will be frustrated and most likely dissatisfied with the company.
• If service performance is above the zone of tolerance at the top end-where performance exceeds desired service-customer will be very pleased and probably quite surprised as well.
• Ex.., the service at a checkout line in a retail store.

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ZONE OF TOLERANCE

DESIRED SERVICE

ADEQUATE SERVICE

FACTORS INFLUENCING CUSTOMER EXPECTATION OF SERVICE

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• Sources of Desired Service Expectations
• Sources of Adequate Service Expectations
• Sources of Both Desired and Predicted Service Expectations

Factors That Influence Desired Service

• Personal needs including physical, social, psychological, and functional. (Ex.., a fan who regularly goes to baseball games right from work, and is therefore thirsty and hungry).
• Lasting service intensifiers, individual stable factors that lead customer to a heightened sensitivity to service. This can further divided into Derived Service Expectations and Personal service Philosophies. (Ex..,birthday parties in restaurant.)

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Factors That Influence Adequate Service

5 factors

• Temporary service intensifiers, consists of short-term, individual factors that make a customer more aware of the need & service.
• Perceived service alternatives, are other providers from whom the customer can obtain service.
• Self-perceived service role, customers expectations are partly shaped by how well they believe they are performing their own roles in service delivery.
• Situational factors, defined as service performance conditions that customers view as beyond the control of the service provider.
• Predicted service, is typically an estimate or calculation of the service. Service expectations can be viewed as predictions made by customers about what is likely to happen during an impending transaction or exchange.

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Factors That Influence Desired & Predicted Service

1 internal & 3 external factors

• Explicit service promises, are personal & nonpersonal(webpages,advertising,&brochures) statement abt the service made by the org’n to customers.
• Implicit service promises, are service related cues(dominated by price & tangibles) other than explicit promises that lead to inferences abt what the service should & will be like.
• The importance of word-of-mouth communication in shaping expectations of service is well documented.
• Past experience, the customer’s previous exposure to service that is relevant to the focal service, is another force in shaping predictions & desires.

CUSTOMER PERCEPTION OF SERVICE

• A marketing concept that encompasses a customer's impression, awareness and/or consciousness about a company or its offerings. Customer perception is typically affected by advertising, reviews, public relations, social media, personal experiences and other channels.

FACTORS INFLUENCE �CUSTOMER PERCEPTION OF SERVICE

THE FIVE DIMENSIONS OF �SERVICE QUALITY

Ability to perform the promised service dependably and accurately.

Knowledge and courtesy of employees and their ability to convey trust and confidence.

Physical facilities, equipment, and appearance of personnel.

Caring, individualized attention the firm provides its customers.

Willingness to help customers and provide prompt service.

Tangibles

Reliability

Responsiveness

Assurance

Empathy

CUSTOMER SATISFACTION

• Satisfaction is the customer’s fulfillment response. It is a judgment that a product or service feature, or the product or service it self, provides a pleasurable level of consumption-related fulfillment

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FACTORS INFLUENCING �CUSTOMER SATISFACTION

• Product/service quality
• Product/service attributes or features
• Consumer Emotions

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OUTCOMES OF �CUSTOMER SATISFACTION

• Increased customer retention
• Positive word-of-mouth communications
• Increased revenues

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SERVICE ENCOUNTERS

• It is the foundation or building blocks for satisfaction and service quality.
• Sometimes called as real time marketing.
• It is on the basis of the service encounters that customers build perceptions. Every encounter is an opportunity to build satisfaction & quality.
• Also called as moments of truth – where promises are kept or broken.

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TYPES OF SERVICE ENCOUNTERS

1) Remote Encounters

2) Phone Encounters

3) Face-To Face Encounters

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TYPES OF SERVICE ENCOUNTERS

1) Remote Encounters

There is no direct human contact

e.g. ATM, mail order, internet website etc

2) Phone Encounters

Almost all firms rely on phone encounters in the forms of customer service, general inquiry or order taking functions

3) Face-to-Face Encounters

It occurs between customer and salespeople, delivery personnel, maintenance rep, professional consultant

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A SERVICE ENCOUNTER �CASCADE FOR A HOTEL VISIT

STRATEGIES FOR INFLUENCING CUSTOMER PERCEPTION

• Measure and manage customer satisfaction and service quality
• Track the trends, diagnose problems, and link to other customer focused strategies.

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• Aim for customer quality and satisfaction in every service encounters
• Every service encounter is critical to customer retention. Thus many firms aim for zero defects or 100% satisfaction. 
• Clear documentation of all the points of contact between the organization and its customers. Development of understanding of customer expectation by developing appropriate strategy.

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• Manage the evidence of service to reinforce perception

ONE CRITICAL ENCOUNTER DESTROYS 30-YEAR RELATIONSHIP

MODULE-2

UNDERSTANDING CUSTOMER EXPECTATION THROUGH MARKET RESEARCH

KEY REASONS FOR GAP 1

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• Inadequate marketing research orientation
• Insufficient marketing research
• Research not focused on service quality
• Inadequate use of marketing research
• Lack of upward communication
• Lack of interaction between management and customers
• Insufficient communication between contact employees and managers
• Too many layers between contact personnel and top management
• Insufficient relationship focus
• Lack of market segmentation
• Focus on transactions rather than relationships
• Focus on new customers rather than relationship customers
• Inadequate service recovery
• Lack of encouragement to listen to customer complaints
• Failure to make and no appropriate mechanisms in place for service failures

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CUSTOMER EXPECTATIONS

COMPANY PERCEPTIONS OF CUSTOMER EXPECTATIONS

GAP 1

• Gap 1:The Listening Gap

(Not knowing what customers expect)

USING MARKETING RESEARCH TO UNDERSTAND CUSTOMER EXPECTATION

RESEARCH OBJECTIVES FOR SERVICES

• To identify dissatisfied customers.
• To discover customer requirements or expectations for service.
• To monitor and track service performance.
• To assess overall company performance compared to competition.
• To assess gaps between customer expectations and perceptions.
• To gauge effectiveness of changes in service.
• To appraise service performance of individuals and teams for evaluation, recognition, and rewards.
• To determine expectations for a new service.
• To monitor changing expectations in an industry.
• To forecast future expectations of customers.

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CRITERIA FOR AN EFFECTIVE SERVICES RESEARCH PROGRAM

• Include qualitative & quantitative research:
• Qualitative research, are exploratory and preliminary and are conducted to clarify problem definition, prepare for more formal research, or gain more insight when more formal research is not necessary.
• Quantitative research in marketing is designed to describe the nature, attitudes, or behaviours of customers empirically and to test specific hypotheses that a services marketer wants to examine.
• Finally studies can highlight specific service deficiencies can be deeply probed through follow-up qualitative research

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• Include both perceptions & expectations of customer
• In evaluating service quality, customers compare what they get in a service encounter with their expectations of that encounter.
• Measurement of expectations can be included in a research program in multiple ways. Research that relates to customers requirements-that identifies the service features or attributes that matter to customers.
• Balances the cost of research & the value of the information
• One cost is monetary, including direct costs to marketing research companies, payments to respondents, and internal company cost incurred by employees collecting the information.

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• Includes statistical validity when necessary
• The objective of this type of research is to allow contact people to identify specific action items that will gain the maximum return in customer satisfaction for individual customers. And research used to track overall service quality that will used for bonuses & salary increases of salespeople.
• Measure priorities or importance
• Direct importance measures ask customers to prioritize items or dimensions of service. Several alternatives are available for measuring importance directly, among them asking respondents to rank-order service dimensions or attributes.

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• Occurs with appropriate frequency
• Without a pattern of studies repeated with appropriate frequency, just what does “ongoing research” mean in terms of frequency?
• Includes measures of loyalty, behavioral intentions, or behavior
• Research involves measuring the positive and negative consequences of service quality. Important generic behavioral intensions are willingness to recommend the service to others.

ELEMENTS IN AN EFFECTIVE SERVICES MARKETING RESEARCH PROGRAM

• Complaint solicitation
• Critical incidence studies
• Requirements research
• Relationship & SERVQUAL surveys
• process checkpoint evaluations
• Market oriented ethnography
• Customer panels
• Lost customer research
• “mystery” shopping
• Future expectations research

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Complaint solicitation

• To identify and attend to dissatisfied customers
• To identify common service failure points

Critical incident studies

• To identify “best” practices” at transaction level
• To identify customer requirements as input for quantitative studies
• To identify common service failure points
• To identify systemic strengths and weaknesses in customer-contact services

Relationship surveys

• To monitor and track service performance
• To assess overall company performance compared with that of competition
• To determine links between satisfaction and behavioral intentions
• To assess gaps between customer expectations and perceptions

Post transaction surveys

• To obtain immediate feedback on performance of service transactions
• To measure effectiveness of changes in service delivery
• To assess service performance of individuals and teams
• To use as input for process improvements; to identify common service failure points

Social media

• To identify/attend to dissatisfied customers
• To encourage word of mouth
• To measure the impact of other advertising

Market-oriented ethnography

• To research customers in natural settings
• To study customers from other cultures in an unbiased way

Mystery shopping

• To measure individual employee performance for evaluation, recognition, or rewards
• To identify systemic strengths and weaknesses in customer-contact services

Customer panels

• To monitor changing customer expectations
• To provide a forum for customers to suggest and evaluate new service ideas

Lost customer research

• To identify reasons for customer defection
• To assess gaps between customer expectations and perceptions

Future expectations research

• To forecast future expectations of customers
• To develop and test new service ideas

STAGES IN THE RESEARCH PROCESS

Stage 1 : Define Problem

Stage 2 : Develop Measurement Strategy

Stage 3 : Implement Research Program

Stage 4 : Collect and Tabulate Data

Stage 5 : Interpret and Analyze Findings

Stage 6 : Report Findings

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TYPES OF SERVICE RESEARCH

• PRIMARY RESEARCH
• Exploratory research
• Descriptive research
• Causal research

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• Experimental Design
• True experimental design
• Quasi-experimental design

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OBJECTIVES FOR UPWARD COMMUNICATION

• Executive visits to customers
• Executive or Management listening to customers
• Research on intermediate customers(dealers, distributors, agents, brokers..)
• Research on internal customers
• Executive or management listening approaches to employees
• Employee suggestions

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RELATIONSHIP MARKETING

• Relationship marketing is a philosophy of doing business, a strategic orientation that focuses on keeping and improving current customer rather than on acquiring new customer.

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• Relationship marketing is focus on cooperative and collaborative relationship between the firm and its customers.

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THE EVOLUTION OF CUSTOMER RELATIONSHIPS

• Customers as strangers
• Strangers are those customers who have not yet had any transactions with a firm and not even be aware of the firm. The firm’s primary goal with these potential customers is to initiate communication with them in order to attract and acquire their business.
• Customers as Acquaintances
• Once customer awareness and trail are achieved, familiarity is established and the customer and the firm become acquaintances. A primary goal for the firm at this stage of the relationship is satisfying the customers.

• Customers as Friends
• As a customers continues to make purchases from a firm and to receive value in the exchange relationship, the firm begins to acquire specific knowledge of the customer’s needs. A primary goal for firms at the friendship stage of the relationship is customer retention.
• Customers as Partners
• As a customers continues to interact with a firm, the level of trust often deepens and the customer receive more customized product offerings and interactions. At the partnership stage, the firm concerned with enhancing the relationship.

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Goals of Relationship Marketing

CUSTOMER RELATIONSHIP THROUGH RETENTION STRATEGIES

• Customer inertia: one reason that customers commit to developing relationships with firms is that a certain amount of effort required to change firms.
• Switching cost: customers develop loyalty to an organization in part because of costs involved in changing to and purchasing from a different firm. Switching costs include investments of time, money, or effort.

LEVELS OF RETENTION STRATEGY

• LEVEL 1 – Financial Bonds
• VOLUME & FREQUENCY REWARDS
• BUNDLING & CROSS SELLING
• STABLE PRICING
• LEVEL 2 – Social Bonds
• CONTINUOUS RELATIONSHIP
• PERSONAL RELATIONSHIP
• SOCIAL BONDS AMONG CUSTOMERS
• LEVEL 3 – Customization Bonds
• CUSTOMER INTIMACY
• MASS CUSTOMIZATION
• ANTICIPATION / INNOVATION
• LEVEL 4 – Structural Bonds
• INTEGRATED INFORMATION SYSTEM
• JOINT INSVESTMENTS
• SHARED PROCESSES & EQUIPMENTS

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Market segmentation

• Market segmentation is the process of dividing an entire market up into different customer segments
• Targeting or target marketing then entails deciding which potential customer segments the company will focus on.

• Demographic segmentation divides people based on their age, income, education level, and occupation. Some examples of companies that use demographic segmentation include insurance providers, healthcare companies, and banks. 
• Psychographic segmentation divides people based on their values, attitudes, and interests. Some examples of companies that use psychographic segmentation include car manufacturers, clothing retailers, and political campaigners. 
• Behavioral segmentation divides people based on their buying habits and brand loyalty. Some examples of companies that use behavioral segmentation include supermarkets, hotels, and fast-food restaurants.

Importance of segmentation of services

1. Focus of the Company
2. Increase in competitiveness
3. Market Expansion
4. Customer retention
5. Have better communication
6. Increase profitability

Importance of segmentation of services

• 1) Focus of the Company – It is an effective method to enhance the focus of a firm on market segments. If a marketer have better focus, obviously he will have better returns. A number of automobile companies have started focusing on small car segments. This is nothing else but a company changing its focus for better returns. Thus companies develop their strategy based on a new segment which increases its profitability.
• 2) Increase in competitiveness – Once marketer’s focus increases, their competitiveness in that market segment will increase. Segmentation increases the competitiveness of companies. For example, if you are focusing on youngsters, your brand recall and equity with youngsters will be very high. Your market share might increase and the chances of a new competitor entering might decreases. The brand loyalty will definitely increase. Thus market segmentation also increases competitiveness of a firm from a holistic view.

• 3) Market expansion- In segmentation expansion is immediately possible. Suppose you have your market strategy on the basis of geography, then once you are catering to a particular territory, you can immediately expand to a nearby territory. In the same way, if you are targeting customers based on their demography (Ex – Reebok targets fitness enthusiasts) then you can expand in similar products (Ex – Reebok expanding with its fitness range of clothes and accessories). Segmentation plays a vital role in expansion.
• 4) Customer retention – By using segmentation, customer retention can be cheered through the life cycle of a customer. You can take an example of Hospitality segmentwhether thereare hotels, airlines, or hospitals. Hospitality services is the growing sector in India, where a customer have an ample number of choices starting from a local Dhaba to a luxurious hotel catering services on the basis of customer demands.

• 5) Have better communication – One of the Ps of marketing mix which is absolutely dependent on STP is Promotion or communication. The communications of a company needs to be spot on for its target market. Thus if you need a target market, you need segmentation. Communication cannot be possible without knowing your target market. Imagine if you had to make someone across a curtain understand what politics is. You would go on about ruling parties, states, countries and politicians. And when the curtain is taken aside, you find that the person across the curtain is a 5 year old kid. Is there any use talking to him about politics? This shows why communication needs segmentation. If you don’t know your market segment, what is their demography, what is their psychology, where they are from, then how can you form a communication message.
• 6) Increases profitability – Segmentation increases competitiveness, brand recall, brand equity, customer retention, and communications. Thus if it is affecting so many factors of your business, then definitely it affects the profitability of the firm. We never see people negotiating in a Nike, Gucci or BMW showrooms. One of the USP’s of this brand is their segmentation. They are in fact targeting segments which have no need of bargaining or negotiation. Thus their profitability is high.

Focus Strategies

• The company's focus can be described on two different dimensions i.e. market focus and service focus.
• Market focus stands to which a firm serves few or many markets, while service focus describes the extent to which a firm offers few or many services

• A fully focused organization provides a very limited range of services (perhaps just a single core product) to a narrow and specific market segment. It means companies put all its best efforts to a selected segment.
• For example, Aspen Travel serves the specific needs of the film production industry. A market-focused company concentrates on a narrow market segment but has a wide range of services. Each Travel fest store serves a limited geographic market; appealing to families and individuals planning vacation trips rather than to business travelers, but offers a broad array of services.
• A company which is Service-focused offers a narrow range of services to a fairly broad market. Thus, Capital Prestige Travel specializes in the narrow field of discount cruise sailings, but reaches customers across a broad geographic market through a telephone-based delivery system. Finally, many service providers fall into the unfocused category because they try to serve broad markets and provide a wide range of services.
• As you can see from Figure, focusing requires a company to identify the market segments that it can serve best with the services it offers. Effective market segmentation should group customers in ways that result in similarity within each segment and dissimilarity between each segment on relevant characteristics.

Targeting of services

• A target market is that selected market (customers), that a company wants to sell its products and services to, and to whom it directs its marketing efforts.
• Firstly marketer needs to identify the target market and thereafter develops its marketing plan. A target market can be separated from the market as a whole by geography, buying power and psychographics

Bases of segmentation

• Psychographic
• Demographic
• Geographic
• Firmographic
• Behavioural

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• Psychographic

This segmentation strategy focuses on an individual's psychological and emotional needs and motivators. It may sound complicated to uncover, but tools are available to help you learn what customers use your solution for. Techniques like market research, focus groups, and surveys can help you better understand your target audience.

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• Demographic

If you focus on demographics, you can divide customers in many ways, including by age, income, occupation, gender, or race. Each category is a segment. Marketers target these groups with their own messaging and tactics to appeal specifically to them.

Demographic segmentation enhances product value by allowing a product to mean something more to customers. Demographic segmentation can make a product more personal to the target group.

Geographic

• If you're an international company or plan to expand someday, understanding different customer habits and preferences related to specific geographic regions is a crucial part of your role.
• Customers in Western Europe might respond differently to campaigns than people who live in Asia. No two geographic regions, even two that are side by side, are exactly alike.
• People living on opposite sides of a national border might have vastly different cultures and habits. This is why it's important to know where your customers are coming from.

Firmographic

• Firmographic segmentation is data that describes a business, including where it's located, its legal structure, whether it's privately or publicly owned, how many employees it has, and so on.
• Firmographic segments are typically stable unless there's a significant change within a company (like a merger, acquisition, or bankruptcy).

Behavioral

• One of the most widely used types of segmentation is behavioral. In behavioral segmentation, marketers focus on consumers' behaviors and characteristics — how they spend their time, hobbies, personality types, etc. 
• Marketers who follow a behavioral-based segmentation strategy use existing data to create profiles of groups that exhibit commonalities within specific markets. Marketers then target these groups with products and services that appeal to their interests and needs.

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MODULE-5 �ROLE OF SERVIE MARKETING COMMUNICATION

Role of Marketing Communications

• Position and differentiate the service
• Helps Customers to evaluate Service Offerings
• Promote the Contribution of the Service Personnel
• Add Value through Communication Content
• Facilitate Customer Involvement in Production
• Stimulate Demand to match Capacity

• Position and differentiate the service: Position and differentiate service Help customer evaluate offerings and highlight differences that matter( Promote contribution of personnel and backstage operations () Add value through communication content ( Facilitate customer involvement in production ( Stimulate or dampen demand to match capacity)
• Helps Customers to evaluate Service Offerings: Customers may have difficulty distinguishing one firm from another Provide tangible clues related to service performance Some performance attributes lend themselves better to advertising than others e.g., Airlines Firm’s expertise is hidden in low-contact services Need to illustrate equipment, procedures, employee activities that take place backstage qualification, experience, commitment, professionalism

• Promote Contributions of Service Personnel (highlighting expertise and commitment what employees performs behind the scene) : Frontline personnel are central to service delivery in high-contact services Make the service more tangible and personalized Show customers work performed behind the scenes to ensure good delivery To enhance trust, highlight expertise and commitment of employees Advertisements must be realistic Messages help set customers’ expectations Service personnel should be informed about the content of new advertising campaigns or brochures before launch

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• Facilitate Customer Involvement in Production: Customers are actively involved in service production; they need training to perform well Show service delivery in action Television and videos engage viewer e.g., Dentists showing patients videos of surgical procedures before surgery Streaming videos on web and podcasts are new channels to reach active customers

• Facilitate Customer Involvement in Production: Customers are actively involved in service production; they need training to perform well Show service delivery in action Television and videos engage viewer e.g., Dentists showing patients videos of surgical procedures before surgery Streaming videos on web and podcasts are new channels to reach active customers hospital shows the artificial demo of operation, what is going to happen with the body area.)
• Stimulate or Dampen Demand to Match Capacity: Live service performances are time-specific and can’t be stored for resale at a later date Advertising and sales promotions can change timing of customer use Examples of demand management strategies: Reducing usage during peak demand periods Stimulating demand during off-peak period

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• Lack of integrated services marketing communication
• Tendency to view each external communication as being independent
• Not including interactive marketing in communication plans
• Absence of strong internal marketing programme

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• Ineffective management of customer expectations
• Not managing customer expectations through all forms of communication
• Not adequate educating customers

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• Overpromising
• Over-promising in adverting
• Over-promising in personal selling
• Over-promising through physical evidence cues

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• Inadequate horizontal communication
• Insufficient communication between advertising and operations
• Differences in policies and procedures across branches or units

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GAP 4

Service delivery

External communication to customers

Communications and the Services Marketing Triangle

Four Categories of Strategies to Match Service Promises with Delivery

• Manage Service Promises

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• Manage customer Expectations

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• Manage Customer Education

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• Manage Internal Marketing Communication

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• Address Service Intangibility

Manage Service Promises;

-In service, sales and marketing make promises about what other employees in the organization will fulfill.�

-Greater coordination and management of promise are required.�

-Successful services advertising and personal selling become responsibility of both marketing and operations;

Approaches for Managing Service Promises

Manage customer Expectations;

Approaches-

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• Make realistic promises

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• Offer service guarantees

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• Offer choices

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• Communicate the criteria and levels of service effectiveness

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Manage Customer Education

Approaches-

• Prepare customers for the service process

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• Confirm performance to standards and expectations

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• Clarify expectations after the sale

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• Customers must perform their roles properly for many service to be effective

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• Thus, communication to customers must sometimes take the form of customer education.

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Manage Internal Marketing Communication;�

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• Service firms must match service delivery with promises 

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• Thus, they must accomplish this through successful management of internal marketing communications.

Approaches for Managing Internal Marketing Communication

• Create effective vertical communications
• Create effective horizontal communications
• Sell the brand inside the company
• Create effective upward communication
• Align back-office and support personnel with external customers through interaction or measurement
• Create cross-functional teams

Pricing of Services

Three Key Ways that Service Prices Are Different

• Customer Knowledge of Service Prices
• Service variability limits knowledge
• Providers are unwilling to estimate prices
• Individual customer needs vary
• Collection of price information is overwhelming in services
• Prices are not visible

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• Role of Non-Monetary Costs
• Time costs
• Search costs
• Convenience costs
• Psychological costs
• Reducing nonmonetary costs

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• Price as an Indicator of Service Quality

Role of Non-Monetary Costs

• Time costs

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• Search costs

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• Convenience costs

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• Psychological costs

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• Reducing nonmonetary costs

Approaches To Pricing Strategies

• Cost-Based Pricing
• Special challenges in Cost-Based pricing for services
• Examples of cost-based pricing strategies used in services
• Competition-Based Pricing
• Special challenges in competition-based for services
• Examples of competition-based pricing in services industries
• Demand-Based Pricing
• Special challenges in demand-based for services
• Examples of demand-based pricing in services industries

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Four Customer Definitions of Value

Four Meanings of Perceived Value

Pricing Strategies

• Pricing strategies when the customer means “Value is Low Price”

Pricing Strategies

• Pricing strategies when the customer means “Value is Everything I Want in a Service

Pricing Strategies

• Pricing strategies when the customer means “Value is the Quality I Get for the Price I Pay”

Pricing Strategies

• Pricing strategies when the customer means “Value is All That I Get for All That I Give”