Unit 1

Definition – Service Economy – Evolution and growth of service sector – Nature and Scope of Services – Unique characteristics of services - Challenges and issues in Services Marketing.

1. Unit 1 Services Marketing Definition – Service Economy – Evolution and growth of service sector – Nature and Scope of Services – Unique characteristics of services - Challenges and issues in Services Marketing.

2. Sectors of Indian Economy Three sectors – Primary, Secondary and Tertiary. Primary = Agriculture related; Secondary = Industry related; Tertiary = Service related. Sector share towards GDP : Tertiary (60%)> Secondary (28%)> Primary(12 %) Sector share by working force : Primary (51%)> Tertiary (27%) > Secondary (22 %) The tertiary sectors includes insurance, banking and transport. Indian economy

3. Services A re economic activities offered by one party to another M ost commonly employing time-based performances to bring about desired results I n recipients themselves or In objects of other assets for which purchasers have responsibility Customers expect to obtain value from their service purchases in exchange for their money, time and effort, this value comes from Access to a variety of value-creating elements (goods, labour, professional skills, facilities, networks and systems) Do not take ownership of any of the physical elements involved Services - definition

4. Information Technology Trade Education Media Hospitality, Accommodation and Food services Entertainment, Culture and Recreation Transportation and Warehousing Communication Healthcare Tourism Public Utilities Real Estate and Leasing Business Support Services Professional, Scientific and Technical Services Segments of service industry in India

5. Services marketing typically refers to both business to consumer (B2C) and business-to-business (B2B) services, and includes marketing of services such as telecommunications services, financial services, all types of hospitality, tourism leisure and entertainment services, car rental services, health care services and professional services and trade services. Services Marketing

6. Changes in Regulations Privatization New rules to protect customers, employees and the environment New agreements on trade in services Government policies

7. Rising consumer expectations More affluence More people short of time Increased desire for buying experiences vs. things Rising consumer ownership of computers, mobile phones and high-tech equipment Easier access to more information Immigration Growing but aging population Social changes

8. Push to increase shareholder value Emphasis on productivity and cost savings Manufacturers add value through service and sell services More strategic alliances and outsourcing Focus on quality and customer satisfaction Growth of franchising Marketing emphasis by non-profits Business trends

9. Growth of internet Greater bandwidth Compact mobile equipment Wireless networking Faster, more powerful software Digitization of text, graphics, audio and video Advances in IT

10. More companies operating on transnational basis Increased international travel International mergers and alliances ‘Offshoring’ of customer service Foreign competitors invade domestic markets globalization

11. The Powerful forces are reshaping these in the Services Sector Demand Supply Competitive Landscape Customers’ choices, power and decision making Tertiary sector

12. Customer Affluence Leisure time Product innovation Product complexity Resource Scarcity Low cost of operation and tax advantages Rapid industrialization and growth of IT parks in the country Supportive Government Policies Rapid introduction of IT in major sectors Strong growth in export demand Use of new technologies like cloud computing Government established SEZs Evolution & Growth of service sector

13. According to Fisk, Brown and Bitner (1993) First Era – Biological evolution Crawling Out (Pre 1980) – when early services scholars created and defended the services marketing field; Scurrying About (1980 to 1985) – when a rapidly growing and enthusiastic community of scholars quickly built the basic structure of   services marketing; Walking Erect (1986 to 1992) – when the services marketing field achieved a measure of respect and legitimacy within the marketing discipline and beyond. Evolution of service marketing

14. According to Fisk, Brown and Bitner (1993) Second Era – Emergence of a Multi-disciplinary field Making Tools (1992 to 2000) – A tremendous technology infusion, especially of information technology made it possible for most service industries to rapidly increase the technological sophistication of the service they provide customers Evolution of service marketing

15. According to Fisk, Brown and Bitner (1993) Second Era – Emergence of a Multi-disciplinary field Creating Language (2000 to 2010) - the technical language rooted in the service marketing field was widely disseminated within the marketing discipline and the business field in general. Terms such as service encounters, service quality, service scapes and service recovery were widely adopted. Evolution of service marketing

16. According to Fisk, Brown and Bitner (1993) Second Era – Emergence of a Multi-disciplinary field Building Community ( 2010 to Future) - collaboration among service researchers across academic disciplines. Campbell’s (1969) “fish-scale” metaphor for disciplines. Campbell believed that disciplines should overlap like the scales of fish. These overlapping areas facilitate communication and collaboration among scholars Evolution of service marketing

17. Explains what can be expected from the service organization. A scope of services of a company may: List the fullest range of services that may be provided, and then not being provided. Provide options, such as; to ‘carry out’ services or to ‘organise’ them; to provide cost consultancy services or not and so on. Indicate the basis on which the services will be charged, for example, ‘T’ indicating time-based, or ‘LS’ indicating a lump sum fee. Scope of services

18. Intangibility Inseparability from the person / firm providing it Heterogeneity – Standardization very difficult Perishability – cannot be stored, saved, resold or returned No transfer of ownership – pay for its use but can’t own nature & Characteristics of services

19. Consumer Services Food services Entertainment services Banking and financial services Industrial Services Financial services Transport and Warehousing services Insurance services Engineering and Technical services Office services Advertising and sales promotion services Types of services

20. Diversity of services

21. Generation of employment opportunities Customer Satisfaction Higher growth in Income Advancement of Technological facilities Changes in tastes and preferences of customers Scope of services

22. Managerial Process Organized effort Social Process Adds value to customers Nature of services marketing

23. Most service products cannot be inventoried (involves actions/performances which are transitory and perishable; unused – wasted; system for providing service can be ready, but service itself cannot be) Intangible elements usually dominate value creation (At restaurants, the cost of food may account for as little as 20-30% of the price of the meal. The value added comes from food preparation & cooking, table service, the restaurant environment and facilities (parking, restroom, etc ). Challenges & Issues

24. Distinguishing goods and services – Lynn Shostack : tangible-dominant and intangible-dominant Economic test : more than half the value comes from tangible or intangible elements Example : Flight service (intangible) From safety briefing, to serving drinks and food, first aid to final cabin check, flight attendants or cabin crew must be thoroughly trained to graciously handle customers’ requests. Challenges & Issues

25. Model used to illustrate factors that influence service experience including those that are visible and invisible to consumer SERVuction model

26. Services are often difficult to visualize and understand (mentally intangible – difficult to visualize the experience in advance; Documenting performance, offer guarantees and explaining what & why reduces anxiety and builds trust) Customers may be involved in Co-Production ( Eg . Cooperating with service personnel, doing some of the work; working out at the gym under the direction of a personal trainer) Challenges & Issues

27. People may be part of the service experience (employees need technical, interpersonal skills and positive attitude; other customers should also enhance the experience eg . Restaurant, lodge) Operational inputs and outputs tend to vary more widely (Service is delivered and consumed in real time; attitudes, transaction speed, quality of performance may vary; Organisation reduces variability by adopting standardized procedures, implementing rigorous management of quality, training employees carefully and automating tasks) Challenges & Issues

28. Time factor often assumes great importance (Services are delivered in real time [customers physically present]; Customers are in a hurry and willing to pay extra to save time; time taken between making a request and receiving the output) Distribution may take place through Non-Physical channels (core products and supplementary services; Eg . Banking transaction on the internet, check timings of flight, online educational programs (CP), reserve a seat in bus/train (SS; delivery of core product happens through physical channels), etc.) Challenges & Issues