MODULE 1 SERVICE MARKETING &CUSTOMER .pptx

service marketing is crucial in today’s economy due to the significant role services play in various industries.Basic introduction about service marketing and the characteristics of the service marketing.Awareness: Effective service marketing educates customers about the features, benefits, and proper use of services, helping them make informed decisions.
Empowerment: By providing information and support, service marketing empowers customers to use services effectively and derive maximum value from them.
Overall, service marketing plays a pivotal role in shaping customer perceptions, driving business growth, and ensuring the success of service-oriented businesses in a competitive landscape.Long-Term Relationships: Service marketing emphasizes building and maintaining long-term relationships with customers rather than focusing on one-time transactions.
Feedback Utilization: Understanding and responding to customer feedback helps in refining services and addressing customer needs, thereby strengthening relationships.ricing Strategies: Service marketing helps in developing effective pricing strategies based on perceived value, competitive positioning, and customer expectations.
Cross-Selling and Up selling: Effective marketing strategies can drive additional revenue through cross-selling and up selling services, increasing the overall lifetime value of customers.

1. SERVICES MARKETING

2. SERVICES “Services are activities, benefits or which are offered for sale or provided in with sale of goods” . - The American Association s a t i s f a c t i on c o n nect i on Marketing ide n t i f ia b l e “ S e r v i c e s a r e tho s e s e p a r a t e l y essentially i n t ang i bl e ac t i vit i es, w hich p r o vide w a n t s a t i s f a ct i o n w he n m a r k e t e d to c onsume r s n ece ss ar i l y service” . - and/or industrial uses and which are not tied to the sale of a product or another Stanton

3. COMPONENTS OF SERVICE P h y si c al P r o du ct

4. 1. The Physical Product The various products marketed by a firm involve the physical transfer of ownership of those products. They are tangible and their quality is standardised. For Example, physical products include T.V., Radio, Refrigerators, Computers, Hair oil, Vacuum Cleaner, Washing Machine, etc.

5. 2. Service Product A service is an activity or benefit that one party can offer to another which is essentially intangible in nature. Service involve some interaction with customers without effecting transfer of ownership. For example, people visiting exhibitions, trade fairs are allowed to inspect the consumer durables without being approached by sales representatives. Salesmen are trained in making proper approach to the customer visiting their showrooms.

6. 3. Service Environment The potential customers form an impression about the service on the basis of service environment. The service environment represents the physical back drop that surrounds the service. For example, providing hygienic food is the core service in a hotel or restaurant. Customers expect the restaurants to be maintained clean, offer flexible dining hours prompt service, soft music, décor, exotic menu etc.

7. 4. Service Delivery Th e Servic e d e l i v e r y i s on e of the i m p o r t a n t components of service. Service delivery is of great importance to the customer’s overall perception about the quality of service. The service provider should give due consideration to the way service is rendered to customers. Services are created as they are consumed.

8. SERVICES

9. CHARACTERISTICS OF SERVICES Intangibility Inseparability Heterogeneity (Individuality or Variability) Perishability Ownership Absence of Quantitative measurement

10. CLASSIFICATION OF SERVICES Classification of Services by Adrian Payne Communications and information services Public utilities, government and defence Health care Bu s i nes s , P r o f es s i on a l a n d P e r s onal Services Recreational and hospitality services Education; and (i) Other non-profit organisations

11. CLASSIFICATION OF SERVICES Cl assi f i c a t i o n o f S e r vi c e s b y Christopher Lovelock Nature of Service Act T yp e o f r e la t ionsh i p t ha t t h e service organisation has with its customers S c o p e f o r C u s t o m i sat i o n and Judgement in DeliverySystem  N at u r e o f de m a n d and s u pp l y f or the service (a) Methods of Service Delivery

12. CLASSIFICATION OF SERVICES Consumer Service: Food Services Hotels and Motels Personal care services Car services firms E n t e r t a i n m e n t se r vices Transport services Comm u ni ca t i o n S e r vices I nsu r a n c e se r vi c es Finan c i a l se r vices Industrial Service: Financial Services Insurance services Transport & warehousing Engin eering se r vices and Advertising p r o m o ti o n se r vices Office services, Management consultancy services.

13. CLASSIFICATION OF SERVICES – Philip Kotler Pure Tangible Goods Tangible Goods with accompanying services Hybrid mi n or g o o ds Ma j or se r vice w i t h ac c omp a n ying and services Pure service

14. SERVICES DESIGN A service involves creation and delivery of core benefits in order to satisfy an identified need of the customer. As a process, it refers as to how a service is provided or delivered to a customer. In a competitive market, the importance of the actual process in service delivery has been recognised.

15. P r o d uc t Design Facilitie s Design Service O pe r a ti ons P r ocess Design C u s t om er Service P r ocess Design Service Encounter E n v i r on m e n t Provider be h a vi ou r Customer Provider i n t e r ac t i on Service Requirements Service P e r f o rma n c e Standards Customer Expectations Customer Experience Wit h s er vi ce Service Design Se r vice Q u a lity

16. Factors Influence Designing Service Process The Service Itself Customer Participation in the process Location of Service Delivery Level of Customer Contact Degree of Standardisation Complexity of the service

17. Mgt model for Service Design / Stages / Process D e v elopi n g design attributes Specifying design pe r f orm a nce standards G e n e r a ti n g & evaluating design concepts Developing design de t a i ls Improving performance Assessing satisfaction Measuring performance Implementing the design

18. BLUEPRINTING A service blueprint is a flow chart of the service process. It conveys the service concept by showing all the elements or activities and their sequencing and i n t e r a ct i o n . I t i s pic t o r ial descr ip tion of the system showing the service at an overview s e r vi c e l e v e l . It fu n ct i o n s in Blue p ri n t i ng explains how each job or department relationship to the service as a whole. was developed by Shostak in 1987.

19. STAGES IN PREPARATION OF BLUEPRINTING Put t h e se r v i ce i n th e f or m of i t s molec u l ar structure Divide the process into logical steps Recognise the variability in the process Identify the backstage actions in the process

20. Technology & Service Productivity Service organisations can improve their productivity by introducing systems and technology in their operations. Under the systems approach to services marketing technology, engineering and management i mp l e me n t ed i n t o se r v ic e in d u s t r i e s . a p p r o a c h l o o k s a t the t a s k a s a w h o l e . sciences are The systems The systems approach identifies the key operations performed, devises new ways of performing to be each operation, eliminates superfluous practices t h r o u gh n e w m e t hod s a n d i mp r o v e s the c oo r din a t i on of processes within the system.

21. Application of technology to service Activities Hard Technology S o f t T ec hn o l o g y Hybrid Technology

22. 1. Hard Technology H a r d t e c hno lo g i e s su b s t i tu t e ma c h i n e r y , t ool s and per f o r ma n c e of se r vice w o r k . ot h er e ngineer i n g d e v i c e s f o r labour The i n t en s i v e f o l l o wi n g e x a mp le s c an b e o f f e r e d f o r the a p pli c a t i o n of h a r d technologies in the service sector. Example: Automatic car washes, airport x-ray eq u i pm e n t , a u t om a t i c c ar v endi n g equipment, audio a n d b a n k c ompu t e r s , t h e c onsu m e r c r edit c a r d balance checking machine.

23. 2. Soft Technology Soft technology means substituting pre-planned systems for individual service operations. Though the systems involve some technology, the basic characteristic is the system itself. Example: Fast food restaurants such as MC Donald, Wendy, Pizza hut, Kentucky Fried Chicken follow rationale division of labour. Use of soft technologies in these organistions ensures the benefits in the forms of high quality, cost control, speed and efficiency, cleanliness and low prices.

24. 3. Hybrid Technology h a r d w a r e w i t h H y b ri d technologies combine carefully engineered systems to bring greater efficiency, order and speed to the service process. E x amp l e : Th e c o s t of e n e r gy c an b e su b s t a n t i al l y saved by careful programming for types and grades of roads, location of stops, congestion of roads, toll road costs and mixing point access.

25. Role of Technology in Service process Easy accessibility of service New ways to deliver service Close link with customers Higher level of service Global reach of service Cost Rationalisation

26. Building Service Aspirations The service generating organisations building service aspirations in the process of generating demand for the services. The aspirations may be generated in two ways, namely, generating aspirations to serve the users and generating aspirations to use the services. Service aspirations of organisation engaged in generating services focus on offering quality services. Quality is generally conceptualised as an attitude towards service.

27. Building Service Aspirations

28. Service Marketing Mix The traditional marketing mix is considered in the context of services. Since a different marketing mix is needed for services some have expanded the traditional four Ps. Product Pricing Promotion Place People Process Physical evidence

29. Service Marketing Mix CUSTOMER Product P ri c e Promotion Physical E vidence

30. Service Marketing Mix - Definition “The marketing mix concept is a well established tool used as a structure by marketers. It consists of the various elements of a marketing programme which need to be considered in order to successfully implement the marketing strategy and positioning in the company’s market. It is important internal elements or ingredients that make up an organisation’s marketing programme ” . – Adrian Payne

31. Product (Service Product) According to Adrian Payne, a product is an overall concept of objects or processes which provide some values to customers. Goods and services are sub- categories of product. The term produce is used in a broad sense to denote either a manufactured good or product and a service. Strictly speaking, customers are not buying goods or services but specific benefits and value from the total offering. This total offering to the customer is termed as “offer” .

32. Product (Service Product) Co r e Potential A u gme n t ed Expected Total P r od u ct

33. 1. The core or generic product The core product represents the basic services of a product. This product is at its basic level. For example, food served in a restaurant a bed in a hotel room for the night safety of deposits and loanable funds in a bank.

34. 2. The expected product Th e e x p ec t e d p r o d u ct c onsi s ts of the c o r e p r o du ct t o g e th er with the mi n imal p u r ch a s e c on d itions w h i c h addition to n e ed t o b e m e t . F o r e x a mp l e i n a r e st a u r a n t in as cleanliness, basi c f o o d s e r v ed , asp e cts such timely s e r v ic e polite and courteous service of bearer, availability of menu a n d background music are expected.

35. 3. The augmented product ben e fi t or s e r vi c es in Augmented product refers to offerings to hat (p r oduct cu s t o m e r s addition expect). This concept enables a product to be differentiated from another. For example, though IBM has not got technologically advanced core product they are praised for excellent customer service. This adds value to their core product in terms of reliability and responsiveness.

36. 4. The Potential product product f easible r e f e r s to to doing everything hol d a n d a t t r act the Potential potentially cu s t om e r s . Th e c once p t of p o t e n t i al p r o d u ct of a restaurant is viewed in terms of a pleasing flower arrangement, manager’s word of thanks, readiness to go out of the way to serve, etc.

37. PRICE Price plays a significant role in the marketing mix by attracting revenue to the marketer. Pricing decisions are important for determining the value of the service as perceived by the customer and building of an image for the service. Price serves as a basis for perception of quality. The pricing strategy should be in tune with the marketing strategy. Pricing strategy should gain competitive advantage for the firm.

38. PRICE Decisions - Reasons Pricing decisions have an impact on marketing channels. Suppliers, sales people, distributors, competitors and customers all are affected by the pricing system. Since services are intangible in nature, pricing of services is highly important. The price is indicative of the quality of service that customers receive. Customers, by going through the menu of a restaurant can perceive the quality of food and the restaurant’s service level.

39. PRICE Decisions - Reasons 3. Pricing gives information customers d e l i v e r y a nd importance about the of immediacy of a v a il a b i l i t y . P r em i u m pricing the is followed du r ing pric i ng maximum demand period and discounted when the demand for the service is low. 4. Pricing allows homogeneous services to be differentiated and facilitates the adoption of a premium pricing strategy.

40. PRICING Objective The price policies for service marketers should be on the lines of those used throughout the general field of marketing. The pricing policy to be followed should be based on pricing objectives. The important pricing objectives are survival, profit maximisation, sales maximisation, prestige and ROI. competition. I n q uotin g pri c e s , s o me f ir ms try t o m e e t W h e r e a d v e r s e m a r k e t c onditions prevail, marketers quote lower prices in order to ensure survival in the market, even foregoing profitability.

41. PROMOTION Promotion is an important part of the marketing mix for many marketers. The promotion element of the service marketing mix communicates the positioning t angibility and helps the customer evaluate s e r v ic e o f f e r . T h e p r o mo t ion mi x i ncl u d e s of the se r vice t o cu st o m e r s . P r o m o t i o n ad d s the six elements, namely (a) Advertising (b) Personal Selling Word of (c) Sa l es P r o m o t i o n ( d ) Public R el a t i o n s (e) mouth and (f) Direct mail.

42. PROMOTION P e r s on al Selling PROMOTION

43. (a) Advertising for services Advertising is the impersonal communication used by service firms. Advertising in service marketing adds to the customer’s knowledge of the service, persuades the customer to buy and differentiates the service from other service offerings. Persistent advertising is, therefore, a must for the success of the marketing of the service.

44. (b) Personal Selling Personal Selling has assumed much importance in service firms owing to the following reasons. a) The r e i s a pe r s ona l i n t e r ac ti on b e t w een the service provider and the customer b ) Th e s e r vice i s p r o v i de d b y a person not a of t h e s e r vice machine. c) “People” product. a r e be c omi ng par t

45. (c) Sales Promotion Those sellin g , m a r k e t i n g a c t i v i t i e s o th er advertising and pub l ici t y pe r s o n al s t i mu l a t e customers and dealers effectively than that such as display shows, exhibitions, demonstrations and various n o n - r o u t i n e r e c u r r e n t sel l ing e f f ort s no t i n the o r d i n ary are the sales promotional measures.

46. (c) Sales Promotion TOOLS OF SALES PROMOTION Free Offers Contests Discount and Commission Fairs and Shows Coup o n s , P r i z e s Cash Refunds Warranties

47. (d) Publicity or Public Relations Publicity c ons i s ts of no n - p e r s o n al s t i m u l a t i o n of deman d f o r a p r o d u c t o r s e r v i c e b y w a y o f ar r a n g i n g appeared in the sponsor). mass media c o m m e r c i a l l y s i g n i f i c a n t n e w s t o h a v e mass media free of cost (not paid for Publicity is a free news appearing in about a company and its products.

48. (e) Word of Mouth Promotion Customers who are already exposed to the delivery of a service, share their experiences with other potential customers. They offer advice on service providers and businesses who are established already. Personal recommendations through word c on s t i t u t e information source. buying come from friends, associates collegues or experts.

49. 4. PLACE Place mix of services marketing involves the location and channels which are the two key decision areas. The service provider should decide as to how to deliver the service to the customer and where this should take place. The service provider should ensure that the promised services reach the ultimate users without any distortion. With regard to location, a service firm decides where its operations and staff are situated.

50. 5. PEOPLE In all the organisations, people play a decisive role. Employees working in the service organisations are the contact people with the customers. Employees working in a bank, hotel, hair-cutting saloon etc., are all f r o n t l i n e people . T h e y a r e in the customers who visit their these frontline people decides service organisation. A service d i r ec t c o n t act wi t h s e r vices. T h e r o l e of the success of the organisation can be only as good as its people. The strength and success of the service organisation lies in the quality of the service personnel working in the organisation.

51. 6. PHYSICAL EVIDENCE Physical evidence is another important variable to be considered in the context of services marketing. Since a service is intangible, it is important for the client to s e a r ch f o r e v iden c e s w h i c h en a ble s hi m to the service. Physical evidences are those e v a l u a t e t angib l e clues w h i ch cu st om e r s m a y r ec e i v e du r ing the process of receiving the service. The customers evaluate the worthiness of the service with the physical evidences they receive.

52. 7. PROCESSES The processes by which services are created and delivered to the customers are an important element of marketing mix. Customers perceive the delivery system as a part of the service itself. The decisions on process management are of great importance to the success of the marketing of the service. The processes involve the procedures, tasks, schedules, mechanisms, activities and routines by which a service is delivered to the customer.

53. Managing Demand & Supply chal l en g es of marketers encounter s u pp l y and d e m a n d i n Service m a t ching a dynamic and consumption transported from one place to another t r a n s f e r r ed f r o m on e pe r s o n t o an o t h e r . S o , s e r v i c e firm s a r e no t able t o bui l d i n v e n t o r i e s dur i n g per i ods of s l o w de m and t o us e l a t e r w h e n t h e de m and increases.

54. Managing Demand & Supply Outcome of lack of Inventory-Capability Excess Demand Demand exceeds o p t i mum capacity Balanced demand & s u p p ly a t the level of optimum capacity Excess C a pacity

55. 1. Excess demand Every service firm has a maximum capacity to serve customers. Maximum capacity represents the absolute limit of service availability. When demand f o r the s e r v ic e of a part i cul a r maximum capacity, it results f irm e x ce ed s its i n un d e s i r a ble c onsequence s . Fi r s t, the e x i s t i n g cu st o m e r s of the fir m m a y c r o s s o v e r t o the c o mp e t i t o r , selli n g s i mi l ar se r vice. A s a r e sult , the se r vice f i rm m a y lose c on s id e ra b l e bus i ne s s . S e c ond , i n c ase of e x c e s s deman d f o r s e r vi c e s , t h e w o r k in g h ou r s of s t a f f m a y be stretched.

56. 2. Demand exceeds optimum capacity Both optimum and maximum capacity may not be the same. At optimum capacity level, resources are fully employed but not over-used. As a result, customers will receive quality service on time. But when demand exceeds optimum capacity, the staff and facilities are stretched, resulting in poor service.

57. the level of optimum capacity Optimum capacity refers to the efficient use of the capacity from the point of view of both the customers and the company. When demand and supply are balanced at the level of optimum capacity, staff and facilities are regarded to be occupied at an ideal level. No employee is over- stretched and facilities are maintained well. As a result, customers stand to benefit. Moreover, ut i l i s a t i o n of o p t i mum c a p ac i ty g i v e s a psychological satisfaction to customers too.

58. 4. Excess capacity E x c e s s c apaci t y means t h e d e m and i s be lo w the be under- optimum capacity. Staff and facilities will utilised. Under-utilisation of facilities like equipment results in loss of profit to However, customers may prefer such a labour and the firm. s i tu a t i o n as they can avail full facilities at will. On the other hand, customers may be disappointed by low demand too in the long run. They may even worry that they have chosen an inferior service provider.

59. Strategies for Managing Demand & Supply Understanding capacity constraints Understanding demand patterns Capacity planning Managing capacity to match demand Managing demand to match capacity S t r a t eg i es t o b e use d w he n dem a n d and capacity cannot be matched.

60. 1. Understanding capacity constraints Time Labour Equipment Infrastructure

61. 2. Understanding demand patterns Charting Demand pattern Predicting cycles c . I d e n ti f y i n g r a n d o m demand p a t t e r n b y fluctuations d . D i s a g g r e g a t i n g de m a n d market segment

62. 3. Capacity Planning Types of Capacity Planning: Long term capacity planning Short term capacity planning

63. 4. Managing capacity to match demand The strategic approach to matching supply and demand focuses on adjusting capacity. So, the service firm should build into its capacity some degree of flexibility. The extent of flexibility depends upon the type of service offered, cost, labour availability and other factors.

64. 5. Managing demand to match capacity Th i s s t r a t e g y i n v o l v e s s hif t i n g d e mand t o m a t c h capacity when demand exceeds t h e o r g a n i s a t i o n t r i es t o sh i ft capacity. Then, c u s t o m e r s to periods of slow demand. This is just convincing the customers to use the service during periods of slow demand. So, people who cannot shift their demand represent lost business for the firm.

65. 5. Managing demand to match capacity Shift De ma n d De m and t o o high De ma n d t o o l o w U s e si g n a g e t o co mm unica t e busy days and times. Offer incentives cus t ome r s f o r us a ge to d u ri ng non-peak times T ak e ca r e of lo y a l or r e gula r customers first. Ad v e r t i s e pea k u s age t i m e s and benefits of nonpeak use. Charge full price for the service – no discounts . Use sales and advertising to increase business from current market segments. Modify the service offering to appeal to new market segments. Offer discounts or price reductions. Modify hours of operation B r i n g t h e se r vice t o t h e customer

66. 6. Strategies to follow when demand & capacity cannot be matched Sometimes, it may not be possible for the service organisations to manage capacity to match demand or vice versa. For example, in a health clinic patients wait longer to be examined by the mo n so o n/i n cle m e n t w e a t h e r wh e n d o c t o r during m o r e peop l e c a t ch ‘f l u ’ . T h e de m and i s fl e x ib l e but the service capacity is inflexible and it is not economical for health clinics to add additional facilities or physician to handle peaks in demands.

67. Internal Marketing - Definition “The means of applying m a r k e t i n g t o p e op l e w h o the ph i l o s op h y and s e r v e the e x t ern a l customers so that: Th e b e s t possib l e p eo p l e c a n b e e m p l o y ed a n d retained; and They do the best possible work”. - Berry

68. Internal Marketing - Definition “Treating with equal importance the needs of the internal market (the employees) and the external market (customers) through proactive programmes and planning to bring about organisational objective by delivering employee and customer satisfaction” . -Helen Woodruffe

69. Objectives of Internal Marketing Objectives of Internal Marketing S t r a t eg i c l e v e l objectives S upp o r t i v e methods Personnel Policy T ac ti c a l l e v e l objectives Sale of Services Supporting Services Campaigns Sin gl e M a r k e t i ng efforts Overall ob j e c t i v es m g t I n t ernal Policy P l an n i ng P r o c edu r e T r a di ng & Control

70. Role of Internal Marketing Internal marketing motivates the personnel to work better and satisfy customers . E v e r y em p l o y e e n ee d s i n f o r m a t i o n f o r h i s e f f e c ti v e fun c tio n i n g i n an o r g an i s a t i o n. I n t e rnal m a r k e t i ng builds a good communication network p r o vid es in f or m a t ion t o al l e m p l o y e e s w h i c h t h e r e b y supporting the service environment. I n t ern al m a r k e t i n g en a ble s the servic e o r g a n i s a t i on to gain additional market share . It signifies the role of every employee and r e d u c e s c onf l ict b e t w ee n the func t ional a r e a s of business.

71. Role of Internal Marketing Customer service gets a high priority and the entire organisation focuses on a customer-oriented approach. Internal marketing helps to develop committed personnel who can provide best possible service to customers. Internal marketing equips people with technical skill and knowledge required for their effective functioning. It builds the corporate image by creating awareness and appreciation of the company’s aims and strength.

72. Components of Internal Marketing Latest methods of training Continuous interaction with the management Internal Communication Marketing research Other human resource management activities

73. Steps in developing Internal Marketing Market Definition Market Research Market Segmentation Selection of Techniques Marketing Communication Marketing Orientation

74. External Marketing External marketing is directed at those individuals and groups that buy goods and services organization. External marketing t r ad i t i o n al m a r k e t i n g e f f ort s suc h as from an involves market research, personal selling, advertising, direct mail, sales promotion, pricing and public relations. The organization makes promises which correspond with the personal needs and wishes

75. Internal & External Marketing External Marketing Internal Marketing 1 . T h e r e i s i n t e r a c t i o n b e t w e e n the organization and customers T h e r e i s i n t e r a c t i o n b e t w e e n t h e organization and its employees. 2. Customers influence the operations of the organization. M a n a ge m e n t p l a y s a c ruc i al r ol e i n finalising tasks and directingemployees. 3. Organisation makes promises to its customers. Internal marketing enables the employees to fulfil the promises made during external marketing 4 . C u s t o me r s de r i v e be n e f i ts f r o m t he service offering. Employees c o mpe n s at i on company. derive plan benefits adopted by from the 5. External Marketing aims at achieving customer satisfaction I n t e r n a l m a r k e t i n g i n c r eas e s job satisfaction among employees. 6 . M a r ke t r e s e a r c h i s co n d u ct e d on c usto m er t r e nd s , co m p e t i to rs ’ s t r a te g y etc., in the market. Feedback is obtained from employees. T r a i n i n g a n d a pp r a i s al o f e m p l o y ee s a r e suitably adopted.

76. Quality of Service The quality of service (QOS) is crucial both to the customer and to the service firm. Service firms maintain competitive edge by rendering quality service. The concept of quality seems to refer to several diverse areas, namely, quality of the output, quality of the process, quality of the delivery system and quality as a general philosophy of the organization.

77. Quality of Service The following are some important ways of judging quality of service: Fitness for purpose. Th e t o t al i t y o f f eat u r e s o f s e r v i c e t ha t mee t t he customer needs. The difference between customer expectations and performance delivery. Meeting or exceeding the customer expectations .

78. Dimensions of Quality of Service Dimensions of Service Quality Reliability Responsiveness Assurance Empathy Tangibles

79. Gap Analysis There is always bound to be a gap between the QOS which is expected and the QOS that is rendered. Customer service is based on perceptions. While one customer appreciates, the other may narrate it as harrowing experience. P a r a s u r a m and qualit y mo d el Berry have to indicate consumer d e v el o p e d a servi c e quality p e r ce p t i o n s . Vi e wing s e r v ic es i n a s t r u ct u r e d , integrated way is called the gap model of QOS.

80. Gap model of Service Quality Expected Service Perceived Service Service Delivery Compa n y pe r ce p ti o n s of consumer e xpe c ta tions External communication to customers C u s t om e r C u s t om e r Company Gap 1 Gap 3 Cu s t o me r d ri v e n service design & standards Gap 2 Gap 4

81. Key factors leading to the customer gap Gap 1: Not knowing what customers expect Gap 2 : Not s e lect i n g t h e rig h t s e r v i c e d e sign s and standards Gap 3: Not delivering to service standards Gap 4: Not matching performance to promises Customer Expectations Customer Perceptions

82. 1. Provider Gap 1: Not knowing what customers expect Ina de q u a t e ma r k e t i ng r e sea r c h o r ie n ta ti o n Insufficient marketing research Research n o t f oc used o n se r vice quality I n a dequ a t e use o f m a r k e tin g r ese a r c h 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 Insuffici e n t r e l a ti o nship f o c us Lack of market segmentation F oc u s o n t r a ns a cti o n s r a the r than r e l a t i o n s hi p s Focus on new customers rather than relationship customers Inadequate service recovery Customer Expectations Company perceptions of customer expectations

83. 2. Provider gap 2: Not selecting the right service quality designs and standards Poor Service design Unsystematic new service development process Vague, undefined service designs F ail u r e to co n nec t se r v i ce des i gn to se r v i ce posit i oni n g Abse n c e of c us to m e r defined stand a r d s Lac k o f c u sto m e r-d e fi n ed sta n dards Absence of process management to focus on customer requirements A b senc e o f forma l proces s fo r sett i n g goals Inappropriate physical evidence and scope for services Customer driven service designs and standards Company perceptions of customer expectations

84. 3. Provider gap 3: Not delivering to service s t and a r ds Deficiencies in human resource policies Ineffective recruitment Role ambiguity and role conflict Poor employee-technology job fit Inappropriate evaluation and compensation systems Lack of empowerment, perceived control and team work F ail u r e t o m a t c h supp l y and dema n d F ailu r e t o align pea k s and valleys of demand Inappropriate customer mix Over reliance on price to smoothen demand Customer’s unfulfilling roles Customer ignorance of roles and responsibilities Customer negatively affecting each other Problems with service intermediaries Channel conflict over objectives and performance Channel conflict over costs and rewards Difficulty in controlling quality and consistency Tension between empowerment and control Service delivery Customer-driven service designs and standards

85. 4. Provider gap 4: When promises do not match performance 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 Ineffective management of customer expectations Not managing customer expectations through all forms of communication Not adequate educating customers Overpromising Over-promising in adversting Over-promising in personal selling Over-promising through physical evidence cues Inadequate horizontal communication Insufficient communication between advertising and operations Differences in policies and procedures across branches or units Service de livery External communication to customers

86. Marketing of Services Finan c i a l Services He a l thc a r e T our i sm P r o f essional o r Consultancy Services Telecommunication Banking Insurance

87. Financial Services - Banking The financial services such as banking and insurance are an inevitable part of an economy. This is the area which really needs to be strengthened. Financial services like banking and insurance require a focus on e f f i c i ency a n d c o s t s . and p e r f o r m a n c e th ro u gh The f i nanc i al s y st e m h a s improving op e ra t i o n s improved in terms of number of financial instruments and the number of active participants in the market.

88. Characteristics of Financial Service Fi n anci a l Se r vices Intangibility Inseparability Variability Perishability High i n v ol v eme n t and long-time purchase B r a n d l o y a lt y