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PRESENTATION BY:
•Dr. Nishikant Jha
Introduction to Services
Most organisations provide a service of some sort or other. For
organisations such as Banking, Insurance, Hospitals, Tourism,
Airlines, Infrastructure , Education, etc. service represents a major part
of what they have to offer. They are known as service organisations.
Others who are in manufacture of products service is of lesser
importance albeit significant importance. There are particular
problems in services industries namely – tangibility, inseparability,
variability, and perishability.
1 Tangible Intangible
2. Homogenous Heterogeneous
3. Production & Distribution ≠ Production, Distribution &
Consumption Consumption are simultaneous.
4. A thing An activity or process
5. Core Value Product In Factory Core Value Product In Interactions.
6. Customer does not participate in Customer actively participates in
production production
7. Can be STOCKED Cannot be STOCKED
8. Transfer of OWNERSHIP No Transfer of OWNERSHIP 6
Activities or benefits that can be offered and are essentially INTANGIBLE.
They do not result into any ownership of anything.
They are activities
Intangibles capable of providing satisfaction
They may be non economic and voluntary.
They provide valuable benefits.
They are independent to physical product.
Requires Customer PARTICIPATION
7
A Goods-Service Continuum /
Tangibility Spectrum
8
MYTHS
Services sector thrives at the expense of other
sectors.
Services sector is labour intensive.
Services industries are “Cottage and Low
Paying Industries”.
People require products before service.
In service sector services are only offered by
the government sector. 9
How Important is the Service Sector in Our Economy?
The size of the service sector is increasing in almost all economies
around the world
Services make up the bulk of today’s economy and also account for
most of the growth in new jobs
Even in emerging economies, service output is growing rapidly and
often accounts for half or more of GDP [55% in 2007 fm 18% in
1950s]
Jobs range from high-paid professionals and technicians to minimum-
wage positions
Service organizations can be any size –
from huge global corporations to local
small businesses [Page No. 13]
[Page No. 8]
Services
Industry
GOVERNMENT NON-GOVERNMENT
For Profit Public Sector Banks, Hotels, Airlines
Non- Profit Police, Fire Dept., Old Age Homes, Charities
Postal
13
Classification ….contd.….
A. End-user
Consumer: hairdressing, personal finance, packaged holidays.
Business to business: advertising agencies, printing, accountancy, consultancy.
Industrial: plant maintenance and repair, work-wear and hygiene, installation, project
management.
B. Service tangibility
Highly tangible: vending machines, telecommunications.
Service linked to tangible goods: domestic appliance repair, car service.
Highly intangible: psychotherapy, consultancy, legal services.
C. Contact
High contact (People-based services): education, dental care, restaurants, medical
services.
Low contact (Equipment- based services ): automatic car wash, launderette, vending
machine, cinema.
14
Classification ….contd.….
D. Expertise
Professional: medical services, legal services, accountancy, tutoring.
Non-professional: baby sitting, care-taking, casual labor.
E. Profit orientation
Not-for-profit: NGO’s, charities, public sector leisure facilities.
Commercial: banks, airlines, tour operators, hotel and catering services.
F. Service Provided
Producer services (Intermediate markets) / Financial Services: Banking, insurance, leasing
Shipping and Distribution: Ocean, rail / trucking, air-freight, wholesaling, warehousing, distribution
Professional and Technical: Technical licensing and sales engineering design services, architectural design,
construction management and contracting, other management services, legal services, accounting
Other Intermediate Services: Computer, data processing, communication services (including software),
franchising, advertising, other (commercial real estate, business travel, security, postal services, contract
maintenance, etc)
Consumer Services (Final Markets to Private Citizens): Retailing health care travel, recreation, entertainment
education
Other social services, including Government Other personal services (restaurants, home repair, laundry, etc
15
Major Trends in Service Sector
Government Policies (e.g., regulations, trade agreements)
Social Changes (e.g., affluence, lack of time, desire for experiences)
Business Trends
– Manufacturers offer service
– Growth of chains and franchising
– Pressures to improve productivity and quality
– More strategic alliances
– Marketing emphasis by nonprofits
– Innovative hiring practices
Advances in IT (e.g., speed, digitization,
wireless, Internet)
Internationalization (travel, transnational
companies) [Page No. 8]
Defining the Essence of a Service
An act or performance offered by one party to another
An economic activity that does not result in ownership
A process that creates benefits by facilitating a desired
change in:
– customers themselves
– physical possessions
Operations Marketing
Management Management
Customers
Human Resource
Management
Key Elements in Service Marketing
People Strategies:
Attracting the Best Talent
Motivating
Trainin
g Retaining
Training
Right Person at Right Time for Right Work with Right Cost & Right pace…….
PHYSICAL EVIDENCE IN SERVICES
Services are intangible by nature. However, we rarely come across a service
organisation that does not offer any tangibles to its customers. We cannot imagine a
bank without a single chair to sit down on, a coffee shop with dowdy interiors or a star
hotel without well-dressed service personnel. It is but natural for people to judge the
quality of service at a service provider based on the look of the office. Well-furnished
lawyer’s rooms, in a snazzy building, located at the city centre suggest that the lawyer is
successful, efficient and offers quality service. A new client, in the absence of the lawyer
having any reputation to go by, would prefer the services of this lawyer to one who
has a dingy office in an out of the way place. These illustrations clearly establish the
importance of tangibles or physical evidence in the services sector. [Page No. 102,103]
MARKET
SEGMENTATION
BALANCING OF DEMAND AND CAPACITY IN SERVICES
The demand for airline services can be high in two instances. One is during a period of
economic growth when there is a lot of business activity in the country and the number
of business travellers increases. The second instance is during a festive or holiday
season when the number of leisure travellers increases. On the other hand, the demand
for the airline services reduces when the economy is hit by recession as corporate
enforce budget cuts in the area of travel. The demand also reduces when schools and
colleges have exams or during the off-season. How does the airline manage its capacity
to suit these fluctuations in demand? How should it optimize its services to get maximum
benefits? [Page No. 137, 145, 148]
Perspectives on Service
Quality
Quality = excellence. Recognized only through
Transcendental:
experience
Productivity
Helps to keep costs down
Quality
- Gain competitive advantage, maintain loyalty
- Increase value (may permit higher margins)
- Improve profits
1. Knowledge Gap
Management definition
of these needs
MANAGEMENT
2. Standards Gap
Translation into
design/delivery specs
3. Delivery Gap
Execution of 4. I.C.Gap Advertising and
design/delivery specs sales promises
7. Service Gap
Customer experience
relative to expectations
[Page No. 189]
Prescriptions for Closing
Service Quality Gaps
Knowledge: Learn what customers Expect--conduct research,
dialogue, feedback
Standards: Specify SQ standards that reflect expectations
Delivery: Ensure service performance matches specs--consider
roles of employees, equipment, customers
Internal communications: Ensure performance levels match
marketing promises
Perceptions: Educate customers to see reality of service
delivery
Interpretation: Pretest communications to make sure message is
clear and unambiguous.
[Page No. 204]
Measuring Service
Productivity
Traditional measures of service output tend to ignore variations in
quality or value of service
– That is, they focus on outputs rather than outcomes, and stress
efficiency but not effectiveness.
Firms that are more effective in consistently delivering outcomes
desired by customers can command higher prices. Furthermore,
loyal customers are more profitable.
Measures with customers as denominator include:
– profitability by customer
– capital employed per customer
– shareholder equity per customer
60 Marks 40 Marks
External Internal Examination
examination
20 M 20 M
Projects, Presentations, Behavior, Class Test
Attendance etc.
THANK YOU