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Classification of services

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  1. Classification of services

  2. 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

  3. 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

  4. 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?

  5. 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

  6. 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

  7. 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?

  8. 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

  9. 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

  10. 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?

  11. 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

  12. 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

  13. 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?

  14. 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

  15. 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

  16. 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?

  17. Marketing Mix

  18. Elements of the service marketing mix • Product • Price • Promotion • Place • People • Process • Physical evidence

  19. 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

  20. 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.

  21. Service concept • The general benefits the service provider will offer • Core benefits • Expected benefits • Augmented services • Potential services

  22. 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.

  23. 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.

  24. 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.

  25. 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

  26. 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

  27. Price is service is also called as • Professional service- fees or retention charges • Transport- fare • Insurance- premium • Clubs- subscription, membership • Hotel- tariff, rent etc

  28. 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

  29. 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

  30. 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

  31. 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

  32. 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

  33. Promotion mix • Advertising • Personal selling • Direst mails • Sales promotion • Publicity • Word of mouth • Corporate identity

  34. Advertising • Experience • Beliefs • Values • Policies • Process • Customer oriented aspects

  35. Personal selling • The service provider has to be utmost knowledgeable • Telephone orders • Outbound tele-marketing • Sales support staff • Delivery personnel

  36. 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

  37. Sales promotion • Sampling, display, demonstration becomes difficult • Premiums • Contests • Sign-up rebates

  38. Publicity • News release • Stage activities • Press conferences • Sponsorship

  39. 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

  40. 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

  41. 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

  42. 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?

  43. 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?

  44. 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

  45. 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

  46. 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

  47. 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

  48. 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

  49. 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

  50. 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