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Classification of services. Classification based on the nature of service act. Tangible actions towards customers Passenger transportation Health care Beauty saloon Restaurants Tangible actions towards customers’ possessions Freight transportation Industrial equipment repairs

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classification based on the nature of service act
Classification based on the nature of service act
  • Tangible actions towards customers
    • Passenger transportation
    • Health care
    • Beauty saloon
    • Restaurants
  • Tangible actions towards customers’ possessions
    • Freight transportation
    • Industrial equipment repairs
    • Laundry and dry cleaning
    • Lawn care
    • Veterinary care
classification based on the nature of service act contd
Classification based on the nature of service act (contd..)
  • Intangible actions towards customers’ intellect
    • Education
    • Broadcasting
    • Theaters
    • Museum
  • Intangible actions towards customers’ assets
    • Banking
    • Legal services
    • Accounting
    • Security
    • insurance
classification based on the nature of service act contd1
Classification based on the nature of service act (contd..)
  • Key questions:
    • Does the customer need to be present physically throughout the services?
    • Does the customer have to be present only to initiate or terminate the transaction?
    • Is customer’s presence not required at all?
    • Is a customer changed as a result of the service?
classification based on the type of relationship the customer has with the service provider
Classification based on the type of relationship the customer has with the service provider
  • Continuous delivery/Membership related
    • Insurance
    • Telephone subscription
    • College enrollment
    • Banking
    • Trade associations
  • Continuous delivery/Without formal relationship
    • Radio station
    • Police protection
    • Public highway
classification based on the type of relationship the customer has with the service provider contd
Classification based on the type of relationship the customer has with the service provider (contd..)
  • Discrete transaction/ Membership related
    • Long distance phone calls
    • Theater series subscriptions
    • Commuter ticket or pass
  • Discrete transaction/ without formal relationship
    • Car rental
    • Mail service
    • Toll highway
    • Pay phone
    • Movie theater
    • Public transportation
classification based on the type of relationship the customer has with the service provider contd1
Classification based on the type of relationship the customer has with the service provider (contd..)
  • Key questions:
    • Can anything be done to move informal to member relationship?
    • Where can there be tradeoff between pricing and usage rates?
classification based on the scope for customization and judgment in service delivery
Classification based on the scope for customization and judgment in service delivery
  • High judgment/ High customization
    • Professional services
    • Surgery
    • Beautician
    • Plumber
  • High judgment/Low customization
    • Education
    • Preventive health care programs
    • College food services
classification based on the scope for customization and judgment in service delivery1
Classification based on the scope for customization and judgment in service delivery
  • Low judgment/High customization
    • Telephone services
    • Hotel services
    • Retail banking
  • Low judgment/Low customization
    • Public transportation
    • Routine appliance repair
    • Movie theater
    • Spectator sports
classification based on the scope for customization and judgment in service delivery2
Classification based on the scope for customization and judgment in service delivery
  • Key questions:
    • Is it desirable to limit customization and get benefited by standardization and economies of scale?
    • Should customization be increased to reach wide range of customers?
    • Should service be simplified so that less judgment is required by the contact person?
    • Should service be updated in order to capitalize on the expertise of the staff?
classification based on the nature of demand and supply for the service
Classification based on the nature of demand and supply for the service
  • Peak demand met without major delay/Wide fluctuation
    • Electricity
    • Natural gas
    • Telephone
    • Hospital maternity services
    • Police and fire emergencies
  • Peak demand met without major delay/Narrow fluctuations
    • Insurance
    • Legal services
    • Banking
    • Laundry and dry cleaning
classification based on the nature of demand and supply for the service1
Classification based on the nature of demand and supply for the service
  • Peak demand met with delay/ wide fluctuations
    • Accounting and tax preparations
    • Passenger transport
    • Hotel, Motel
    • Restaurant
    • Theater
  • Peak demand met with delay/ narrow fluctuations
    • Similar to without delay but where the scale of operations is very small comparitively
classification based on the nature of demand and supply for the service2
Classification based on the nature of demand and supply for the service
  • Key questions:
    • What is the nature of demand fluctuation? Does it have a predictable cycle?
    • What are the underlying causes for these fluctuations? Could marketing effect a change?
    • What opportunities exists to change the level of supply?
    • Should alternative strategies be adapted for adopting differential pricing?
    • Should a new mix of strategies be experimented with, involving both capacity and price?
classification based on the method of service delivery
Classification based on the method of service delivery
  • Customer to organization/ Single site
    • Theater
    • Saloon
  • Customer to organization/Multiple sites
    • Bus services
    • Fast food chain
  • Organization to customers/Single site
    • Lawn care service
    • Pest control
    • Taxi
classification based on the method of service delivery1
Classification based on the method of service delivery
  • Organization to customers/Multiple site
    • Mail delivery
    • Emergency repairs
  • At an arm distance/Single site
    • Credit card company
    • Local TV station
  • At an arm distance/Multiple site
    • Broadcast network
    • Telephone company
classification based on the method of service delivery2
Classification based on the method of service delivery
  • Key questions:
    • Should the service be delivered at a single site or multiple sites?
    • What is the most convenient type of transaction for the customers?
    • Would the service quality improve or deteriorate with the type of change in interaction?
    • Can suitable intermediaries be used in order to establish multiple outlets?
elements of the service marketing mix
Elements of the service marketing mix
  • Product
  • Price
  • Promotion
  • Place
  • People
  • Process
  • Physical evidence
product service package
Product ( Service package)
  • Services are products. Even though intangible, they are things
  • Consumer services:
    • Shoe repair, dry cleaning and clothing alterations
  • Shopping services:
    • Insurance, banking, airline travel and automotive repairs
  • Specialty services:
    • Legal services, medical care, hair styling
conceptualization of the service concept
Conceptualization of the service concept
  • Customer benefit concept:
    • Customers are not buying goods. They are buying specific benefits and values
    • Purchase bundle comprises of:
      • Physical items- tangible elements that come with services
      • Sensual benefits- those experiences which hits one or more of customer’s senses ex: aroma, taste, ambiance.
      • Psychological benefits- which are determined by the customer subjectively.
slide21

Service concept

    • The general benefits the service provider will offer
    • Core benefits
    • Expected benefits
    • Augmented services
    • Potential services
slide22

Service offer and service package

    • It spells out in more detail those services to be provided, how they will be provided and to whom
    • It is the elements that make up the total service package, including both the tangible and intangible components of the service.
slide23

Service delivery system

    • How the service is provided to the consumer.
    • This speaks about the interaction between the customer and the service provider and the interaction between the customer and the service facility.
    • It is a carefully designed blueprint that describes how the service is rendered to the customers.
analysis of the service
Analysis of the service
  • Basic framework, services are classified into:
    • Core services
    • Secondary services
  • But, the managerial perspective classifies it as:
    • Core service: is the reason for being in the business
    • Facilitating services: they are the support services which are used to add value to the core service. Reception, check-in service etc
    • Supporting service: are used as a means of competition only. Without them, the core service can be used but the total service package may be less attractive.
price
Price
  • A customer pays for some product or service because of its ability to satisfy some specific need or want.
  • Price is the value attached to the product by the service provider and it must compliment with the value attached by the consumer
managerial tasks in pricing involves
Managerial tasks in pricing involves
  • Establishing pricing objectives
  • Identifying the factors governing the price
  • Determining the methods of pricing
  • Formulation of pricing strategies and policies
price is service is also called as
Price is service is also called as
  • Professional service- fees or retention charges
  • Transport- fare
  • Insurance- premium
  • Clubs- subscription, membership
  • Hotel- tariff, rent etc
special issues to be considered
Special issues to be considered
  • Since service is intangible, many service firms portray their quality as the value for the customers’ money
  • A service provider always uses price as a tool to manage the demand
  • In certain cases, a customer may have to spend time, exert physical efforts or bear psychic cost. So the marketer has to include these intangible aspects of the cost related factors while fixing the price
  • In some service industries especially public sector, price cannot be used as a tactical tool as the Govt. determines the price
pricing strategies
Pricing strategies
  • Most marketers use competitive pricing
  • Some firms who like to ration the supply would charge a higher price than the market price
  • Higher price can also serve as an indication about the higher perceived quality
pricing strategies1
Pricing strategies
  • Flexible pricing is more prevalent in service sector than in other fields
  • Some service firms either do not have a fixed price list or do not follow it in making price quotations
  • Some firms mainly try to meet competition, some firms attempts to use tables of standard costs and a few even attempt to bargain with the customers.
  • Most service marketers appear to have a definite profit margin in mind when quoting prices
a pricing decision maker should consider
A Pricing decision maker should consider:
  • Set annual profit and sales margin
  • Target a definite price margin while quoting prices for each job
  • Determine and understand their cost structure
  • Review and update their price schedules regularly
  • Work to secure higher rather than lower average price
  • Strive for greater price flexibility
promotion
Promotion
  • It is a combination of strategies that an organization uses to communicate the service benefits to customers and influence them to buy their services
  • They don’t sell any of their products. Instead, they sell the dreams and experience that the customer would want to have by availing a service
  • McDonald’s, makemytrip.com, axis bank etc
promotion mix
Promotion mix
  • Advertising
  • Personal selling
  • Direst mails
  • Sales promotion
  • Publicity
  • Word of mouth
  • Corporate identity
advertising
Advertising
  • Experience
  • Beliefs
  • Values
  • Policies
  • Process
  • Customer oriented aspects
personal selling
Personal selling
  • The service provider has to be utmost knowledgeable
  • Telephone orders
  • Outbound tele-marketing
  • Sales support staff
  • Delivery personnel
direct mails
Direct mails
  • Medicines
  • Medical insurance
  • These direct mails also play the role of follow-ups to track the response of the customers to the promotional activities of the company
sales promotion
Sales promotion
  • Sampling, display, demonstration becomes difficult
  • Premiums
  • Contests
  • Sign-up rebates
publicity
Publicity
  • News release
  • Stage activities
  • Press conferences
  • Sponsorship
word of mouth
Word of mouth
  • Customers are closely involved in service delivery and they tend to talk about their service experience to the potential customers
  • An outsider promoting a company without any monetary gains can add more value and trust in the minds of the prospective customers
corporate identity
Corporate identity
  • Refers to the use of distinctive colours, symbols
  • Lettering in prominent visible elements such as:
    • Signage
    • Vehicle
    • Uniform
    • Stationary

To provide a unifying and recognizable theme linking all the firm’s operations

place
Place
  • Place no more means a geographical location where buyers and sellers meet.
  • But in services, service being intangible, the service provider has to be present at the time of the delivery of services.
  • At the same time, certain services like mail and ATM do not require the presence of the service provider
  • Distribution is he provision of personal service and information to the customer. It adds value to the service
slide42

The strategies involved in making the services available and accessible to the customer, will focus on two major factors:

    • Where should he service be made available- the choice of location?
    • Who should deliver the service- the choice of channel?
importance of location in pricing
Importance of location in pricing
  • Who the target customers are?
  • What is the degree of interaction required between the provider and customer in the delivery of the service?
  • To what extent convenience of accessibility will affect customer decision making regarding use of the service?
  • Is the service technology-based or people-based?
  • How do competitors operate their service?
  • Can new system and technology be used to improve existing location decision?
modes of selling
Modes of selling
  • Directly to the customers
  • Use an intermediary who act on behalf of the buyer or seller- the intermediary may be an agent or a contracted franchise
people
People
  • The problem lies in the inseparability of the production consumption interface
  • The satisfaction of not only the recipient of the service, that is the customer, but also the providers of the service, that is the company’s own personnel becomes extremely important
different roles of the service personnel
Different roles of the service personnel
  • Primary- where the service is actually carried out by the service provider Ex: Teachers, Consultants, Doctors, Lawyers etc
  • Facilitating- where employees facilitate the service transaction and participate in it. Ex: Bank counter staff, Waiter at a hotel, Front office personnel, compounder etc
  • Ancillary- where the employees helps to create the service exchange but is not part of it. Ex: travel agent, insurance agent etc
level of presence of the service personnel
Level of presence of the service personnel
  • Customer contact employees-
    • These come in contact with the customers in the process of the service delivery
    • They are also called as the frontline staff or “boundary spanners”
    • These have a great influence on the customers’ perception about the service as the customers try to find tangibility of service in them
    • As they influence the customers a lot, they are marketers too
    • There might be either high contact or low contact
slide48

Support personnel or non-contact personnel-

    • These do not come in contact with the customers
    • Chefs in the hotel, laundry staff in the hotel etc
    • They possess high technical skill and have high competency level
    • They may be management support or technical support
    • Without these people the customer contact employees cannot perform
human resource planning in service involves
Human resource planning in service involves:
  • Hire the right people
  • Develop people to deliver service quality
  • Provide needed support system
  • Retain best people
  • Internal marketing
  • The key element of healthy business, is the individual contribution of every employee, both contact and support to the ultimate result of increase in company value
process
Process
  • It is concerned with the way in which the service is delivered
    • How the personnel delivers the service
    • Added value of the service becomes an important competitive weapon in differentiating the service
  • Ex: Banks. Storing money is the basic activity but they introduced so many added services like ATMs, Debit Cards, Over drafts etc
  • Many benefits from service occur not so much as a result of what is offered, but, in the way in which it is offered
designing a service process
Designing a service process
  • Location
  • Facility design and layout for effective customer and work flow
  • Procedure and job definitions for service providers
  • Measures to ensure service quality
  • Extent of customer involvement in the service delivery
  • Equipment selection if it is equipment based service delivery
physical evidence
Physical evidence
  • Since the service is intangible, it is important for the client to search for tangible or physical clues which enable them to evaluate the service
  • Physical evidence verifies either the existence or the completion of a service
categorization
Categorization
  • Peripheral evidence-
    • Is usually possessed as part of the purchase of a service
    • It has little or no independent value
    • Ex: a Cheque book, an ATM card, Napkins etc
slide54

Essential evidence-

    • It cannot be possessed by the consumer
    • It may be so dominant in its impact on service purchase and use that it must be considered virtually an element in its own right
    • Ex: transport vehicle, office premise, staff uniform etc
introduction
Introduction
  • Consumer purchased goods/services based on their mental and economic forces.
  • The mental forces creates desires and wants to satisfy pride, fear, love, fashion etc
  • Economic forces included the purchasing power
fundamentals of marketing concept
Fundamentals of marketing concept:
  • The service provider should first determine the needs and expectations of the target group of customers
  • Organize the input to deliver the service
  • Achieve customer satisfaction to earn profits
  • Managing customer relationship and building loyalty
service firms problems
Service firms’ problems:
  • How to create and deliver superior service?
  • How to sustain service improvement efforts- in short, how to build “customized” organization?
buyer characteristics
Buyer characteristics
  • Cultural factors
    • Values, practices, customs, social class etc
  • Social factors
    • Family, friends, relatives, colleagues, reference groups etc
  • Personal factors
    • Age, life cycle stage, occupation, economic circumstances, life style etc
  • Psychological factors
    • Motive, perception, learning etc
      • How do customers learn about the services offered for sale?
      • How do they learn to recognize and recall these products and services?
      • What process they develop in buying and consuming habits?
problem recognition
Problem recognition
  • The need may be triggered by internal or external stimuli
  • The intensity of the need will indicate the speed with which the buyer will try to fulfill the want
  • The buyer should identify the stimuli, which induces interest in the service and develop marketing programs based on the stimuli
  • This close knowledge of customers can be found through marketing research, in its various forms
information search
Information search
  • When the consumers are not aware of the type of service that can best satisfy the need, how and where it an be secured, they will have to search for the relevant information
  • The consumer gets these info from family, friends, reference groups, their past experience with the service firms etc and also from marketers in the form of advertisements, sales promotions etc
  • This increases the awareness of the availability of the services and its attributes
  • In services, the customer relies most on the personal sources
evaluation of alternatives
Evaluation of alternatives
  • The basic elements in the process of evaluation are
    • Distinct service features
    • Image of the service provider,
    • Quality and price
  • The major challenge of the service provider is to research customer expectations and demands in such a situations and offer more personalized services to these customers.
  • Ex: Hotel:- food quality, menu variety, price, atmosphere and convenience etc
purchase of service
Purchase of service
  • The purchase of a service is an experience which, lead to the satisfaction of customer needs.
  • The success of the service delivery depends on the service encounter
  • The service encounter involves the interaction between the customer and the service provider
  • Therefore, apart from motivating the staff, the service provider must also consider the moods and emotions of the customer and should attempt to influence those moods and emotions in a positive way
purchase of service contd
Purchase of service (contd.)
  • The service provider must anticipate, acknowledge and deal with the heterogeneous customers who have the potential to be incompatible.
  • The service provider can also bring the homogeneous customers together and solidify relationship between them
post purchase evaluation
Post purchase evaluation
  • Only after experiencing the service, the customer will be able to judge the service quality, in relation to his expectation and actual service delivered
  • In some cases like medical diagnosis, legal services, the customers may find it difficult to judge the service rendered even after going through the service experience
  • Customer complain less frequently about those services which requires their participation too
comparison of consumer and organizational buying behaviour
Comparison of consumer and organizational buying behaviour
  • Organizations buy services for profit maximization, reducing costs, meeting employee needs, and satisfying legal obligations. While, individuals buy services for their own need satisfaction.
  • More people involved in organizational buying. There might be several influencers. The degree of influence is relatively less in case of individual buying even though there might be several influencers involved
  • Organizational purchase in based on more formal routine like purchase policies, constraints and requirements by the organization. This does not apply to individual customers
comparison of consumer and organizational buying behaviour1
Comparison of consumer and organizational buying behaviour
  • Poor service to individual may lead to dissatisfaction but, for the business, it may lead to losses
  • To retain organizational customers, the service firms believe in long term relationship building, whereas, it prefers service bundling to retain individual customers
degree of customer involvement in service process
Degree of customer involvement in service process
  • Low level participation: only physical presence. Ex: Airline travel, entertainment concert. There are standardized services
  • Medium level participation: customer needs to give information to customize the service. Ex: hair cut, full service restaurants, some consultancies.
  • High level participation: here the customer has to participate in the generation of the service. Ex: personal training, weight loss programs.
effects of other customers in service process and delivery system
Effects of other customers in service process and delivery system
  • The customer may sometimes interact with the other customers in the service delivery as they may receive the service simultaneously
  • Or even as they may have wait at the service premise for their turn to come
  • They may impact the service positively or negatively
  • Positive: knowledgeable co-customer, health clubs, holiday resorts where they may support each other
  • Negative: crying babies in the restaurant, smoking co-customers, noisy or unruly groups
role played by the customers in the service delivery
Role played by the customers in the service delivery
  • Customer as co-producer Ex: Consultancy
  • Customers as contributor to service quality, value and satisfaction Ex: Education
  • Customers as competitors Ex: Child Care, Catering for staff, Business legal service etc.
management of service encounter for customer satisfaction
Management of service encounter for customer satisfaction

Internal Marketing

“Enabling the Promise”

External Marketing

“Setting the promise”

Interactive Marketing

“Delivering the promise”

customer evaluation of service delivery
Customer evaluation of service delivery
  • The customer perception of the service quality can be judged in two aspects:
    • technical quality-
      • The service product, competence of the service provider in the form of skill, production facilities and equipment in the delivery of the service
      • Refers to what the customers receive in heir interaction with the firm.
      • These are quantifiable hence can be measured to some extent
      • Hence more attention is given to this aspect
      • Ex: food in the restaurant, transportation in the airlines
      • But customers are not interested in what is just what is being delivered but also how it is delivered. This leads us to the next dimension of quality- functional quality
customer evaluation of service delivery1
Customer evaluation of service delivery
  • The customer perception of the service quality can be judged in two aspects:
    • Functional quality
      • Relates to the behaviour of the employees and the manner in which the production facilities are used.
      • It portrays the credibility of the service provider to serve the customer better.
      • Thus, functional quality refers to how the service is delivered.
      • It includes attitude, appearance of the personnel and approachability.
      • Rude behaviour of receptionist, sloppy of the waiter can reverse the impression.
      • Functional quality can be judged only on relative basis
      • Both technical and functional qualities have a strong influence on the overall impression of the quality of the service
expected service quality
Expected service quality
  • Factors influencing:
    • Personal needs
    • External communication of the service provider
    • Word of mouth
    • Past experience
perceived service quality
Perceived service quality
  • Five criteria:
    • Tangibles
    • Responsiveness
    • Empathy (Human Touch)
    • Assurance
    • Reliability

Responsiveness shows willingness to meet customer needs and empathy indicates willingness to go beyond customer needs.

customer satisfaction and service quality leads to
Customer satisfaction and service quality leads to:
  • It is linked to customer loyalty and relationship commitment
  • Highly satisfied customers promote positive word of mouth
  • Hence, this lowers the cost of attracting new customers
  • Satisfied customers are less susceptible to competitive offerings
market segmentation and targeting
Market segmentation and targeting
  • Basis for segmentation:
    • Demographic
    • Psychological
    • Behavioural
  • Criteria to evaluate choice of target market:
    • Profit projection, size and growth options in the market
    • The accessibility of the market for communication and service delivery
    • Availability of substitute products and the strength of competitors
    • Compatibility with the firm’s objectives and resources
alternative strategies
Alternative strategies
  • Undifferentiated marketing: it ignores segmentation and attempts to appeal to the whole market with a single strategy and brand.
  • Differentiated marketing: concentrating on multiple segments with tailor made strategies for each segment
  • Concentrated marketing: it caters to the specific needs of one well defined market segment only
expanded service pyramid
Expanded service pyramid

Loyal and Profitable Customers

Least Profitable Customers

relationship marketing and customer loyalty
Relationship marketing and customer loyalty

Transaction marketing

Relationship marketing

  • Focus is on a single transaction of sale
  • Limited customer commitment
  • Short term orientation
  • Salesperson is the main interface between seller and customer
  • Quality is the responsibility of the production team
  • Focus is on retention of customers
  • High customer commitment
  • Long term orientation
  • Multiple levels of relationship between seller and customer
  • Quality is the responsibility o the departments
customer relationship management crm
Customer Relationship Management (CRM)
  • With an effective CRM, a business can increase revenues by:
    • Providing services and products that are exactly what customer wants
    • Offering better customer service
    • Cross selling products more effectively
    • Helping sales staff close deals faster
    • Retaining existing customers and discovering new ones
customer service can be improved by
Customer service can be improved by
  • Providing online access to product information and technical assistance around the clock
  • Identifying what customers value and devising appropriate service strategies for each customer
  • Providing the mechanisms for managing and follow-up sales calls
  • Tracking all contacts with a customer
customer service can be improved by1
Customer service can be improved by
  • Identifying potential problems before they occur
  • Providing a user-friendly mechanism for registering customer complaints
  • Providing a mechanism for handling problems and complaints
  • Providing a mechanism for correcting service deficiency
  • Storing customer interest in order to target customers selectively
  • Providing mechanisms for managing and scheduling maintenance, repairs and on-going support
the increased profitability associated with customer retention efforts occur because
The increased profitability associated with customer retention efforts occur because:
  • The cost of acquisition occurs only at the beginning of a relationship
  • Account maintenance costs decline as a percentage of total cost
  • Long term customers may be less inclined to switch
  • They may initiate free word of mouth
  • They are more likely to purchase ancillary products
  • They make it difficult for the competitors to enter the market and establish themselves
  • Leads to ease in servicing as they are familiar with the service
  • Makes the employees’ job easier
the various stages that take place before the relationship is developed
The various stages that take place before the relationship is developed
  • It begins with buyers and sellers being aware of each other
  • On entering into a relationship, the buyer and seller makes series of promises, which gives rise to expectations
  • The information of the customers is usually recorded to assess future needs
  • The firm would offer incentives to customers for maintaining relationship
retention strategies
Retention strategies
  • Financial bonds:
    • These are monetary benefits
    • Lower price for greater volume of purchase
    • Lower price for loyal customers
    • Volume and frequency rewards
  • Non-Financial or social bonds:
    • Customization.
    • Continuous touch with customers
    • These bonds may even be formed amongst the customers. Ex: Alumni meets

Service firms may adopt different versions of the above retention programmes or move on to higher levels of customer intimacy.

introduction1
Introduction
  • Designing a service delivery process is a creative task
  • The rapid growth of internet means that the service strategy must address issues like space, cyber space, and time paying at least as much attention to speed, scheduling and electronic access.
service design elements
Service design elements
  • Structural-
    • Delivery system
      • Front and back office, automation, customer participation
    • Location-
      • Size, aesthetics, layout
    • Capacity planning
      • Managing queues, number of servers, accommodating average or peak demand
service design elements1
Service design elements
  • Managerial-
    • Service encounter
      • Service culture, motivation, selection and training, employee empowerment
    • Quality
      • Measurement, monitoring, methods, expectations versus perceptions, service guarantee
    • Managing capacity and demand
      • Strategies for altering demand and controlling supply, queue management
    • Information
      • Competitive resources, data collection
considerations in the design of the service delivery system
Considerations in the design of the service delivery system
  • Nature of contract between the service provider and the customer
  • Sequencing of the various steps in the service delivery process
  • Where (location) and when (scheduling) should delivery take place?
  • Imagery, atmosphere and experience to be created and delivered
  • Nature of the service process
  • Service protocol
generic approaches to service system delivery
Generic approaches to service system delivery
  • Production-line approach
    • Limited discretionary action of personnel
    • Division of labour
    • Substitution of technology for people
    • Service standardization
  • Customer as co-producer
    • Self service
    • Smoothing service demand
generic approaches to service system delivery1
Generic approaches to service system delivery
  • Customer contact approach
    • Degree of customer contact
    • Separation of High and Low-contact operations
delivery channel decision
Delivery channel decision
  • Factors to be considered:
    • It should ensure easy accessibility and convenience for the customers to interact
    • These distribution channel should add some value to the customers
    • The channels chosen should not eat away the margins of the service provider
    • The channel chosen should cover all the target markets
    • The channels chosen should be reliable
types without intermediaries
Types: without intermediaries
  • Direct distribution:
    • Advantages
      • Control
      • Healthy customer relationship
      • Flexibility and confidentiality
    • Disadvantages
      • Financial risk
      • Lack of knowledge
types of intermediaries for service delivery
Types of intermediaries for service delivery
  • Franchising:
    • Advantages
      • Business expansion
      • Improved revenues
      • Reduced risk
      • Consistency in service offering
      • Local presence through global franchising
      • Increased working capital and minimized financial risk
    • Disadvantages
      • Trouble in motivating franchisees
      • Conflict between the two parties
      • Quality maintenance
      • Relationship with the customers
types of intermediaries for service delivery1
Types of intermediaries for service delivery
  • Agents and brokers
  • Electronic channels
    • Advantages
      • Lower costs
      • Increased customer convenience
      • Increasing bargaining power of the customers
      • Extensive distribution
      • Ability to customize services and gain quick feedback
place decision in service delivery
Place decision in service delivery
  • Multi-site strategy
    • Ministores
    • Locating in multipurpose facilities
  • Multi-service strategy
  • Multi-segment strategy
time decision in service delivery
Time decision in service delivery
  • Economic pressure form consumers
  • Economic incentives to improve asset utilization
  • Availability of workers to work during unsocial hours
  • Automated self service facilities
  • Use of call centers
promoting and delivering services in cyberspace
Promoting and delivering services in cyberspace
  • Development of smart mobile phones
  • Voice recognition technology
  • Creation of web sites
  • Commercialization of smart cards
service productivity
Service productivity
  • Efficiency
  • Effectiveness
  • Economy
  • Production function
  • Capacity utilization
reasons for low productivity
Reasons for low productivity
  • Small size of most of the service firms
  • Difficulty of using machine technology
consumer participation and productivity
Consumer participation and productivity
  • Consumer predisposition
  • Consumer potential/commitment/ willingness to become involved
  • Consumer knowledge and skills, how easily can they be developed if needed to be?
technology and service productivity
Technology and service productivity
  • Hard technology
  • Soft technology
  • Hybrid technology
role of technology and physical aids in service process
Role of technology and physical aids in service process
  • Cost rationalization
  • More effective quality
  • Making higher quality possible
  • Closer link up with the customers
  • Technology as a factor affecting behaviour
introduction2
Introduction
  • Tourism is a very complicated operation due to its multiple activities, which satisfy the need of the tourist.
  • Tourism embraces transportation, accommodation, food catering, tourist attraction, as well as organizers like tour operators and agents.
  • The main problem lies in maintaining standards of these components
the peculiarities of tourism
The peculiarities of tourism:
  • It cannot be provided by a single enterprise; each component of tourism- hotel, transport etc is highly specialized and together makes the final product
  • The sales intermediaries play a dominant role
  • Tourism has diverse motivation to travel
  • The demand for tourism is highly unstable due to seasonal, economic and political factors
  • Marketing of tourism is complicated dichotomy as supply is inelastic but demand is
changes in lifestyle
Changes in lifestyle
  • The old sun, sea and sand mass market has fragmented. People want more specialized versions of it such as CLUBS, quieter resort with select hotels, self catering etc
changes in lifestyle1
Changes in lifestyle
  • People are taking second holiday in the form of in the form of short breaks/city breaks, ranging from British and European cities to country hotels
changes in lifestyle2
Changes in lifestyle
  • There has been a growth of niche markets catering for special interest or activities
development of technology ahs lead to
Development of technology ahs lead to
  • The development of mass cruise holiday market
  • The advent of affordable holidays to long-haul destinations such as New Zealand or Kenya
  • The phenomenon of low budget airlines, utilizing private carriers and a new generation of small regional airports
forms and types of tourism
Forms and types of tourism
  • Domestic/international
  • Holiday/professional or business
  • Individual/group
factors driving the growth of tourism
Factors driving the growth of tourism
  • Leisure and life style
  • Business needs
  • The rise of free independent travelers
  • Expanding channels and networking
  • Professional approach
  • Leveraging technology
  • Innovative partnership and promotions
7 ps of tourism industry
7 Ps of tourism industry
  • Tourism is a high-involvement, high-risk products to its consumers
    • Involves committing large sum of money to something reasonably unknown
  • Tourism is a product partly constituted by the dreams and fancies of its customers
    • Unlike banking and car repair, tourism is not consumer for rational or functional purposes
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Tourism is a fragile industry susceptible to external forces which are beyond the control of its suppliers

    • Tourism organizations sometimes have to make rapid responses to crisis in the form of product redesign, price reduction or promotional damage limitation
7ps of tourism market
7Ps of tourism market
  • Product
  • Price
  • Place promotion
  • People
  • Process
  • Physical evidence
product
Product
  • Defining and communicating the distinguishing characteristics of the product to consumers is the key to successful marketing. A tourism product consists of two components:
    • Attributes:
    • Benefits:
people1
People
  • Know who your target market is.
    • Travelers or
    • Tourists?
    • What do they expect?
people employees
People- (Employees)
  • A tourism organization’s most valuable resource
    • Physical appearance, behaviour, knowledge and attitude, has a powerful impact on customers’ perception of the tourism product
    • Ensure uniform, grooming etc, conform to branding and target market
people employees1
People- (Employees)
  • Ensure staff are trained to ensure the product is delivered in accordance with the marketing strategic plan
  • Employees physically embody the product and are walking billboards from a promotional point of view
process1
Process
  • Process is inseparable product
    • If any part of the process is found to be unsuitable by the customer, it could result in the negative evaluation of the whole product
physical evidence1
Physical evidence
  • Defined as the built environment owned and controlled by a tourist organization
  • The tangible aspect of the tourism product
  • May be used to facilitate the service delivery process. Ex: layout and signage
  • Communicates message about quality, positioning and differentiation
marketing tourism
Marketing tourism
  • Product and service
  • Tangible and intangible
  • People led and operated
  • Market oriented
growth of hotel industry
Growth of hotel industry
  • Leisure and pleasure concept
  • Discretionary income
  • Family size/household size
  • Business travel
classification of hotels
Classification of hotels
  • On the basis of standards:
    • One star: a low budget hotel with limited facilities, offering accommodation and food and characterized by informal standards of service
    • Two stars: an economy market hotel offering moderate services along with accommodation and food
    • Three stars: a mid-market hotel with extensive facilities offering full range of dining with bar services, with professional standard services, to residents and non-residents, may have dry-cleaning, internet access and a swimming pool
classification of hotels1
Classification of hotels
  • Four star: first class hotel or an upscale hotel offering formal standards of services, with extensive facilities to residents and non-residents. (massage or a health spa)
  • Five star: most expensive hotels/resorts in the world. Often located in large cities or places of tourist attraction. Offering flawless services with multi-lingual staff etc
classification on the basis of purpose
Classification on the basis of purpose
  • Motels
  • Extended stay properties/ service apartments
classification on the basis of service rendered
Classification on the basis of service rendered
  • All-suites
  • Limited service hotels
classification on the basis of nature
Classification on the basis of nature
  • Heritage hotel
  • Resort hotel
  • Floating hotels (Floaters)
  • Airport hotels
hospitality ownership and affiliation
Hospitality ownership and affiliation
  • Owned
  • Leased
  • Management contract, with an equity stake
  • Equity free management contract
  • Franchise
  • Consortium
need for marketing in the hotel industry
Need for marketing in the hotel industry
  • The need to understand the drivers of demand
  • To understand consumers and device products that appeal to them
  • To increase the volume of transactions
  • To increase the value of transactions
  • Shift demand from period where there is too much of demand to periods of low demand
hospitality segmentation variables
Hospitality segmentation variables
  • Gender
  • Family size and structure
  • Ethnic origin, religious and nationality
  • Socio-economic class
  • Buyers needs and benefits
    • Convenience, luxury, children, improved health care facilities
  • Usage status
  • Frequency
hospitality marketing mix
Hospitality marketing mix
  • Product/service offer:
    • Designed primarily to satisfy the needs of the business and leisure travelers
    • The product is a complex combination of goods and services
      • Accommodation, food and beverages, business services, leisure
product1
Product
  • Core product:
    • The fundamental functional benefit that the customer is seeking in an hospitality industry
      • Ex: a safe and clean place to sleep and eat.
  • Tangible product:
    • The physical elements that are necessary for the core product to be delivered
      • Ex: product features, design, food, quality.
  • Extended/Augmented Product:
    • Intangible elements of the product that can add value, differentiate the offer and provide customers with additional benefits
      • Ex: courtesy and contact with customers
      • Location characteristics and opening timing etc
price1
Price
  • Only element in the marketing mix that is not cost but generates revenue.
  • It presents the image of the hospitality firm that it wants to project to the customers and other stake holders
    • Pricing decisions here include:
      • Setting the tariff or rack rates
      • Agreeing the level of discounts for key accounts
      • Pricing all-inclusive packages for groups ( conferences, functions and leisure breaks)
      • Developing special prices promotions to increase sales during low season periods
price2
Price
  • The price strategy of a hotel is influenced by:
    • Cost
    • Competition
    • Demand
place distribution location
Place – Distribution/Location
  • Where the hospitality business should build, buy, franchise or rent the sites
  • It gives accessibility and convenience to the target market
    • the various choice of channels of distribution available for hotel markets:
      • Directly to customers through telephone or online reservations
      • Use of travel agents
      • Use of tour operators
      • Use of cooperative distribution
      • Franchising is common in restaurant business
promotion marketing communication
Promotion- Marketing Communication
  • The key elements of marketing communication in hospitality are:
    • Brand/Corporate Identity
    • Personal selling
    • Word-of-mouth
    • Print and publicity material
    • Advertisement
    • Direct mails
    • Sales promotions
    • Public relations (Thomas cook, Sita Online Tourism Corp.)
    • Sponsorship
    • Website design
    • Merchandising
people2
People
  • It includes both CUSTOMERS AND EMPLOYEES
  • Good rapport between the customer and employees and even customer with customer is important
  • Contact personnel:
    • Front office and facility area
  • Support personnel:
    • Kitchen, house keeping, accounting etc

Ritz Carlton’s motto, “ we are ladies and gentlemen serving ladies and gentlemen.”

process2
Process
  • Because of the simultaneous production and consumption prevalent in hospitality services, the process becomes crucial.
  • TQM
  • The guest service cycle
    • On the arrival of the guest
    • Room occupancy
    • Guest check out
physical evidence2
Physical evidence
  • The external appearance of the premises
    • building’s exterior design, landscaping, lighting and signage
  • Internal layout
    • Access to facilities, appropriate décor, furniture, furnishings etc
  • Others
    • Appearance of the staff
    • Level of professionalism demonstrated
physical evidence3
Physical evidence
  • A large part of the layout is planned with the guest in mind
  • At the same time it should allow free movement of the employees to carry out their activities
  • Thus, in a hotel, the servicescape must be planned to attract, satisfy and facilitate the activities of both the customers and employees simultaneously.
what is banking
What is banking?
  • Accepting, for the purpose of lending or investment of deposits of the money from the public, repayable on demand or otherwise and withdrawable by cheques, drafts, order or otherwise
the primary and secondary operations of banks include
The primary and secondary operations of banks include:
  • Keeping money safe while also allowing withdrawals when needed
  • Issuance of cheque books so that the bills can be paid and other kinds of payments can be delivered by posts
  • Provision of loans and mortgages
  • Issuance of credit cards
  • Allowing financial transactions at branches or through ATMs
the primary and secondary operations of banks include1
The primary and secondary operations of banks include:
  • Facilitation of standing orders and direct debits, so payment for bills can be made automatically
  • Safe custody of valuables
  • Payment and collection of dividends, pensions
  • Purchase and sale of securities
  • Acting as trustee/agent/attorney/consultant
  • Issue of travellerscheques
  • Merchant banking
  • Lease financing and factoring
life insurance benefits
Life insurance (benefits)
  • It provides protection to the family members or dependents against untimely death of an insured person
  • It facilitates savings for old age to enjoy secured and peaceful life as the earning capacity of a person is reduced after retirement
  • It encourages people to save money by making them obliged to pay premium regularly when a life policy is taken
  • It helps to mobilize savings of the public to channelize it for investment and thus promote economic development of the country
  • It can be used as a security to raise loans
  • It also has tax benifits
benefits to the business concerns
Benefits to the business concerns
  • Protection against risk, loss and sense of security to the businessmen
  • Diffusion of risk over large number of people
  • Credit standing is enhanced
  • Continuity and certainty of business
  • Better utilization of the capital of the firm
essentials of an insurance contract
Essentials of an insurance contract
  • Utmost good faith
  • Indemnity
  • Insurable interest
  • Cause proxima
  • Risk
  • Mitigation of loss
  • Subrogation
  • Contribution
insurers business model
Insurers business model
  • Profit= earned premium + investment income – incurred loss – underwriting expenses
role of life insurance
Role of life insurance
  • Insurance and an investment
  • Insurance as life cover
  • Insurance s tax planning
types of insurance
Types of insurance

Types

Commercially available insurance

  • Life insurance
  • Fire insurance
  • Marine insurance
  • Health insurance
  • Travel insurance
  • Miscellaneous insurance
  • Automobile insurance
  • Aviation insurance
  • Boiler insurance
  • Builder’s risk insurance
  • Casualty insurance
  • Credit insurance
  • Crime insurance
  • Crop insurance
  • Director’s and officer’s liability insurance
  • Financial loss insurance
  • Health insurance
life insurance
Life insurance
  • Term insurance policy
  • Endowment policy
  • Annuities or pension policies
  • Group insurance policies
  • Whole life policy
  • Money back policy
  • Joint life policy
fire insurance
Fire insurance
  • Types of losses covered:
    • Goods spoilt or property damaged by water used to extinguish the fire
    • Pulling down of adjacent premises by the fire brigade in order to prevent the progress of flame
    • Breakage of goods in the process of their removal from the building where fire is raging
    • Wages paid to persons employed for extinguishing fire
types of fire insurance
Types of fire insurance
  • Specific policy
  • Comprehensive policy
  • Valued policy
  • Floating policy
  • Replacement or re-instatement policy
marine insurance
Marine insurance
  • Hull insurance
  • Cargo insurance
  • Freight insurance
  • Liability insurance
types of marine insurance policies
Types of marine insurance policies
  • Voyage policy
  • Time policy
  • Mixed policy
  • Valued policy
  • Open or un-valued policy
  • Floating policy
  • Wagering or honour policy
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Building insurance

  • Motor insurance
miscellaneous insurance
Miscellaneous insurance
  • Personal accident insurance
  • Motor vehicle insurance
  • Fidelity insurance
  • Credit insurance
  • Workmen’s compensation insurance