SERVICES MANAGEMENT

BBM IIIrd sem

CH-2 SERVICES CLASSIFICATION

Service sector covers a diverse range of activities ranging from simple beauty care to a complex international banking facility.

Classification of services:1. Based on ultimate user- classified intoa. Consumer- directly provided to consumer to

leisure, hair dressing, package holidays, dry cleaning, laundry.

b. Business to business- advertising agencies, printing, accountancy, consultancy which provide service to business operations.

c. Industrial- plant maintance and repair, installation, project management.2. Based on Level of Tangibility:a. Highly tangible- eg: car rentals, vending machines,

telecommunication.b. Service linked to tangible goods-eg: domestic appliance

repair, automobile service to enhance consumer appeal.c. Highly intangible- consultancy, legal service, massaging

etc.d. Major services linked with minor tangible goods

services- eg: Airline passengers buying transportation service without anything tangible to show for their expenditure.

3. Based on service options- labour –intensive ( people based) and equipment based services.a. People based services: high contact with

people.eg: education, dental care, restaurants, medical services, tourism, insurance.

b. Equipment-based-low contact- eg: cinema, vending machine, ATM.

4. Based on Specialization: expertise and skill.c. Professional services: for eg: medical

services, legal services.

5. Based on profit orientation: a. Non-profit orientation: Educational institutions like

government schools and colleges, universities, cultural organisations.

b. Commercial/profit orientation: banks, airlines, tour operators, hotel and catering services.

6.Based on External-Internal Service to manufacturers:c. External servicesd. Internal services.

7. Based on customer employee presence- during service:a. Self serviceb. Interpersonal servicesc. Remote service.

Services Management-Demand-Supply approach

1. Predicting demand- reasons for fluctuations in demand.

a. Historical sales data- to understand consumers. b. Desk research-reveals lot of information which

are published by the competitor about their strategies and performance.

c. Customer surveys- necessary information may be collected.

Majority of demand fluctuation can be identified by two short-term capacity matching strategies:1. Customer choice2. Short-term capacity elasticity- predict as much as

demand variation as possible and incorporate an element of short – term capacity stretch to cope with the rest.2 .STRATEGIES FOR MANAGEMENT OF

DEMAND3. Shaping demand-- Product or service:

- price: changing prices lead to uncertainty.- Lower prices can change type of purchaser.c. Place- location and timing of delivery. i.e pick up and delivery service opening offices in tourist locations during peak season.d. Promotion (communication)- creative use of off-season capacity results from seeking out different sources of demand.2. Inventory Demand- to fill demand for a service, service provider can use reservation system and a complementary service.

a. Reservation system- reservation of seat in a theatre or table in a restaurant.

- Reservations benefit consumers by reducing waiting time and guaranteeing service availability.

b. Complementary services- queuing i.e the time that customers spend in waiting can be made productive and enjoyable.

3. Strategies for Managing Supply- managing capacity to follow demand.i. Changing the number and hours of Personnel-

service provider has to employ full time staff and allow flexible time ( hours of work).

2. Customer Participation- super markets, fast food restaurants, ATM’S etc.3. Resource transfer4. Sub- contracting5. Share capacity6. Scheduling work shift.

Unit-1 chapter-3 service marketing mix

Definition of Service Marketing Mix- role is to ensure that the service offer meets the needs of the target as closely as possible and is consistent with identified strategy.- Marketing mix is concerned with communicating an overall offer to the target market and it is therefore essential that each element of the mix is giving the same signal to consumers.

Unit-1 Chapter-3 Marketing Mix of ServicesService marketing mix components

Customer Relationship Management in Services

Service processes are classified into 4 main groups:1. People processing- restaurants, salons,

loading, healthcare etc.2. Possessions processing- repair and

maintenance, warehousing and storage.3. Mental stimulus processing- entertainment,

education etc.4. Information processing- insurance, banking. √

Classification of services based on end user:a. Consumer: hair dressing, personal finance, package tour.b. Business to business: Advertising agencies, printing.c. industrial: plant &machinery repair and services.

Recovery strategies and building customer relationship- service failures are common in service organizations.- Services promised but not delivered, slow delivery, behavior of service employee.- Recovery strategies are the actions taken to nullify the failure in most appropriate way so that the customer will not loose faith in service provider.

RECOVERY PARADOX

- If the customer is dissatisfied in first place and experience a high level of service recovery they are ultimately more satisfied and

- loyal to repurchase than those who are satisfied in the first place.

- Firms in the first place disappoint the customer and then adopt recovery strategy which can obtain greater loyalty from them.- recovery paradox.

- Increased satisfaction and loyalty of the customer is observed only at the highest level of service recovery ratings.

Outcome fairness

- Customer expects outcome or compensations and this should match their level of satisfaction.

- Compensation in the form of monetary benefits, apology or future free service, reduced charges, repairs or replacements.

Procedural Fairness: fairness in terms of rules and regulations and policies.- easy access to complaint procedure.Interaction Fairness: customers expect to treat them politely with care and honesty.

Switching v/s staying following service recovery

- Switching of customer is decided by how the service failure is handled and how customer reacts.

- Switching depends on attitude of the customer.- Service providers can interact with the

customers to know about their intention regarding switching.

Service recovery strategiesDo it right the first time- reliability is

important in service quality.To achieve durability TQM or Zero

defects should be practiced.Encourage customers to complain• Customer research helps to encourage and

track complaints through feedback.

Empower employees- front line employees need to be trained in service recovery.

- Employees need to be trained in hearing customer problems, taking initiative, identifying solutions and improvising the services.

• Treat customer fairly• Service guarantee- assurance of quality.

Unit-2 Planning and Managing Service Delivery

Options for service delivery:- Speed plays an important role in service

delivery process.- Availability of electronic channels has made

service delivery more effective. Eg- order booking, mode of payment.

- Time & place plays an important factor in delivering of a service.

Service delivery through internetGoods and services are extensively sold through

internet in recent times- amazon.com, flipkart, ebay, jabong.

Convenience of shopping, information search, prices & choice of selection.

Time of Service Delivery• service operators such as hospitals, fire fighting

agencies, ambulances, hotels work 24 hours a day.

Service delivery through use of technologiesInnovation in service delivery are in fast phase

telecommunication or computer technology.ATM, Mobile banking.Delivery services in cyberspace • Mobile phones, website to do business, smart

cards & voice recognition technology systems.

Service delivery through intermediaries

Electronic channels do not require human interaction.

Requirement for establishing electronic channel are pre- designed service such as education

Electronic vehicle to deliver designed service website, networking, video conferencing.

Benefits are consistency in delivery of standard services, economy, customer convenience & wide distribution and also customer choice & quick feedback.

Disadvantages are: lack of control over electronic environment, change in customer behavior, security concerns, competition.

Some of electronic channels in India - Interactive television- ATM’s- Online travels- information on travels- Online trading for investment.

Strategies for effective service delivery through intermediaries1. Control strategy- standard set for

performances & revenues.2. Empowerment strategy- service firms allow

greater flexibility for intermediaries to recognize talents.

3. Penetrating strategy- firm treat intermediaries as partners, co-operate each other in decision making & business matters.

Enhancing value by improving quality & productions:Manufacturing industries are struggling hard to

improve associated services to their core product. Sales advice, consultation, delivery schedules.

Key issue is whether customer notices differences in quality of services provided b/w competitors.

Marketing & productivityImproving productivity helps in low price.Higher revenue Innovations, providing improved features &

innovative delivery systems.Service quality dimensions:• Reliability- providing service as promised accurately.• Responsiveness- how employees help customers in

service delivery process.• Assurance- build trust & inspire customer.• Empathy- caring & attending individual customer.

Customer expectation, perception & satisfactionInteractions with customers while providing

service is also called service encounters.Foundations for satisfaction & service quality.Three types of service encounters:- Remote encounters- atm, automatic ticketing

machine, internet.- Phone encounters- telephone transactions.- Face to face encounters- bus conductor issuing

tickets. Over…. 1/3/14.

Balancing Demand and Capacity

• Demand for services fluctuate, lack of inventory capacity & fluctuation in demand leads to variety of potential outcome.

• Four basic situations that results in different combinations of capacity & demand:

1. Excess demand- level of demand exceeds maximum capacity. – some customers turns away.

• quality of service is not as promised- limited facilities.

2. Demand exceeds optimum capacity-- no one is sent back but quality of service suffers due to

crowding.- Employees are made to work beyond capacity.3. Demand is same as supply at the level of optimum capacity- Customers are served as promised without any delay.- no one is over worked.4. Excess capacity- demand is below capacity- low productivity at lower profit. - Customers get excellent services due to full utilization

of capacity.

Strategies for matching capacity & demand.1. Shifting demand to match capacity- companies modify the service often & target new segments.- Modifying focus of operation the firm can create

demand for services.- Loyal customers r given first preferences in

providing services.- Discounts on services are not allowed during high

demand period.2. Altering capacity to match demand.- Adjust capacity to meet demand.- During peak period demand is high & capacity has

to be stretched.

Waiting Time StrategiesIncreased demand of time for social &

professional purposes, people would like to get quick services without waiting.

Managing Reservation & Waiting Lists.• Modify operations- suitable systems are

designed to avoid least minimizing waiting period.

• Develop reservation system- guarantee that services are available.

Waiting timePrinciples of waiting:1. Unoccupied time feels longer than occupied2. Preprocess wait feel longer than in process wait.3. Customer feels that anxiety may make them feel

that the waiting time is longer.4. Uncertain waits are longer than known waits5. Unexplained waits are longer than explained

waits.6. Unfair waits are longer than equitable waits-

queue.

Tourism Management

Several reasons for a tourist to visit a place of interest.

Due to historical place, landscape, shopping or tourist attraction.

Idea of visiting tourist destination is sold to tourists-every one involved transporters, hotel, tourist agents.

Tourism has emerged as one of the largest foreign exchange earning industry in India.