CU-SEM-III-MBA-Marketing of Services- Second Draft-converted

MASTER OF BUSINESS ADMINISTRATION SEMESTER-III MARKETING OF SERVICES MBA512

CHANDIGARH UNIVERSITY Institute of Distance and Online Learning Course Development Committee Prof. (Dr.) R.S.Bawa Pro Chancellor, Chandigarh University, Gharuan, Punjab Advisors Prof. (Dr.) Bharat Bhushan, Director – IGNOU Prof. (Dr.) Majulika Srivastava, Director – CIQA, IGNOU Programme Coordinators & Editing Team Master of Business Administration (MBA) Bachelor of Business Administration (BBA) Coordinator – Dr. Rupali Arora Coordinator – Dr. Simran Jewandah Master of Computer Applications (MCA) Bachelor of Computer Applications (BCA) Coordinator – Dr. Raju Kumar Coordinator – Dr. Manisha Malhotra Master of Commerce (M.Com.) Bachelor of Commerce (B.Com.) Coordinator – Dr. Aman Jindal Coordinator – Dr. Minakshi Garg Master of Arts (Psychology) Bachelor of Science (Travel &Tourism Management) Coordinator – Dr. Samerjeet Kaur Coordinator – Dr. Shikha Sharma Master of Arts (English) Bachelor of Arts (General) Coordinator – Dr. Ashita Chadha Coordinator – Ms. Neeraj Gohlan Academic and Administrative Management Prof. (Dr.) R. M. Bhagat Prof. (Dr.) S.S. Sehgal Executive Director – Sciences Registrar Prof. (Dr.) Manaswini Acharya Prof. (Dr.) Gurpreet Singh Executive Director – Liberal Arts Director – IDOL © No part of this publication should be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording and/or otherwise without the prior written permission of the authors and the publisher. SLM SPECIALLY PREPARED FOR CU IDOL STUDENTS Printed and Published by: TeamLease Edtech Limited www.teamleaseedtech.com CONTACT NO:- 01133002345 For: CHANDIGARH UNIVERSITY 2 Institute of Distance and Online Learning CU IDOL SELF LEARNING MATERIAL (SLM)

First Published in 2021 All rights reserved. No Part of this book may be reproduced or transmitted, in any form or by any means, without permission in writing from Chandigarh University. Any person who does any unauthorized act in relation to this book may be liable to criminal prosecution and civil claims for damages. This book is meant for educational and learning purpose. The authors of the book has/have taken all reasonable care to ensure that the contents of the book do not violate any existing copyright or other intellectual property rights of any person in any manner whatsoever. In the event the Authors has/ have been unable to track any source and if any copyright has been inadvertently infringed, please notify the publisher in writing for corrective action. 3 CU IDOL SELF LEARNING MATERIAL (SLM)

CONTENT Unit 1: Introduction And Scope Of Services ___________________________ 5 Unit 2: Service Marketing_________________________________________ 23 Unit 3: Services Marketing Mix And Gaps Model _____________________ 35 Unit 4: Service Design And Service Delivery _________________________ 49 Unit 5 : Stp Strategy For Services __________________________________ 72 Unit 6: Consumer Behavior In Services Marketing____________________ 100 Unit 7: Service Development And Quality Improvement _______________ 124 Unit 8: Service Development And Quality Improvement _______________ 145 Unit 9: Customer Defined Service Standards ________________________ 164 Unit 10: Customer Defined Service Standards _______________________ 179 Unit 11: Integrated Services Marketing _____________________________ 198 Unit 12: Integrated Services Marketing _____________________________ 213 Unit 13: Marketing Of Services ___________________________________ 228 Unit 14: Marketing Of Services ___________________________________ 240 Unit 15: Emerging Issues In Service Marketing ______________________ 256 4 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 1: INTRODUCTION AND SCOPE OF SERVICES Structure 1.0 Learning Objectives 1.1 Introduction 1.2 Meaning of Services 1.3 Unique Characteristics 1.4 Difference between services and tangible products, 1.5 Service sector 1.6 Classification of services 1.7 Growth of service sectors and service industries 1.8 Summary 1.9 Keywords 1.10 Learning Activity 1.11 Unit End Questions 1.12 References 1.0 LEARNING OBJECTIVES After studying this unit, you will be able to: • Examine the nature of services, and distinguish between products and services. • To identify the major elements needed to improve the marketing of services. • Develop an understanding of the roles of relationship marketing and customer service in adding value to the customer's perception of a service • Appraise the nature and development of a services marketing strategy 1.1 INTRODUCTION The global economy is increasingly being described as a service economy. This is primarily due to the growing importance and share of the service sector in the economies of both developed and developing countries. Indeed, the growth of the service sector has long been regarded as a good indicator of a country's economic progress. All developing countries have inevitably seen a shift from agriculture to manufacturing, and then to the service sector, as the mainstay of their economies. This transformation has also resulted in a change in the way 5 CU IDOL SELF LEARNING MATERIAL (SLM)

goods and services are perceived. Goods that were once thought to be distinct from services are no longer so. Instead, services are gradually becoming an integral part of the product, and the spectrum of goods and services reflects this interconnectedness of products and services. Agriculture Industry Service sector 1.2 MEANING OF SERVICES The act of doing something for others is known as service. It's basically immaterial (that is, it's not made of material). A commodity is tangible so you can touch it and own it (i.e., material). A service is typically an activity that is accessed at the time it is purchased, and it cannot be owned because it is consumed too quickly. An individual can visit a café one day and receive excellent service, only to return the next day and have a negative experience. “Activities, rewards, and pleasures offered for sale or given in conjunction with the sale of goods” (American Marketing Association, CommitteeofDefinitions1960). “Services” are described as “all economic activities whose output is not a physical product or construction, is generally consumed at the time of production, and provides added value in the form of (for example, convenience, amusement, timeliness, comfort, or health) that are essentially intangible concerns of the first purchaser” (Quinn, Baruch and Paquette,1987). 1.3 UNIQUE CHARACTERISTICS • Intangibility • Inseparability of production and consumption • Heterogeneity • Perishability Intangibility: - Services, unlike physical products, are supplier-performed activities that cannot be seen, ingested, felt, heard, or smelled before they are consumed. Since services are not tangible and lack functionality that cater to consumers' senses, they cannot be evaluated prior to actual purchase and use, unlike goods. In alternative assessment, the service marketer does not rely on product-based hints that the consumer usually uses prior to purchase. As a consequence, when they pick them up, the customer is unaware of the services. To gain the client's confidence, the service provider must follow those guidelines. The service provider would make an effort to make the services more concrete. A plastic or clay model, for example, may be used to show patients how they will look following plastic surgery. 6 CU IDOL SELF LEARNING MATERIAL (SLM)

Rather than simply describing how the service works, the provider should emphasize the benefits. Not all service objects have the same level of intangibility. Certain services are very intangible, while others are very tangible, i.e., the goods in the service package (or tangible component) can range from low to high. Teaching, consulting, and legal advice, for example, are programmes with virtually no tangible components, while restaurants, fast food centres, hotels, and hospitals offer services that incorporate their services with tangible goals, such as restaurant food or hospital medicine. Inseparability of production and consumption: - Typically, resources are created and consumed at the same time. Physical goods are manufactured into products, marketed, and then consumed by a variety of resellers. In the case of services, though, it cannot be separated from the service provider. As a result, the service provider will become a component of a service. The taxi driver, for example, operates the taxi, which is then used by the passenger. The presence of a taxi driver is needed in order to provide the service. The services cannot be generated now for use at a later time / date. This adds a new dimension to service marketing. The user's physical presence is important in utilities. To use the facilities of an airline, hotel, or doctor, for example, a customer must be physically present. Heterogeneity: - Services are highly variable since they are dependent on the service provider, as well as where and when they are provided. Service marketers face a challenge in standardizing their service because it varies depending on an experienced hand, client, time, and business. System purchasers are aware of this uncertainty. As a result, service businesses should aim for high and reliable service quality. Perishability: - This is accomplished by employing competent and well-trained personnel to provide the service. Services are actions, performances, or acts that are consumed at the same time; the lack of consumption kills me. As a result, services cannot be saved. The services are wasted if they are not used at the same time, implying that service value exists only when it is needed. The perishable nature of services contributes to service marketers' problems. The failure of the service sector to control supply in response to changing demand creates a slew of quality management issues. As a result, during peak hours, service quality in restaurants, banks, and public transportation deteriorates. This is a difficult task for a service marketer. To meet demand, a marketer should make efficient use of capacity without compromising efficiency. 7 CU IDOL SELF LEARNING MATERIAL (SLM)

1.4 DIFFERENCE BETWEEN SERVICES AND TANGIBLE PRODUCTS People need a wide range of services and products to satisfy their various needs and desires. In this regard, it is clear that advertisers play a critical role in marketing a variety of products and services to a variety of target consumers. Some people, on the other hand, often mix up the two terms and use them to refer to the same thing, but a closer look shows that they are distinct. The key distinction between the two concepts is that a product is tangible, while a service is intangible. Key Differences Between Services and Products Products are Tangible - Since they are real, they can be touched, smelled, sensed, and even seen. Goods are observable. Services are intangible, and you can sense them but not see them. Need vs. Relationship - A commodity is specifically designed and can be carried away to satisfy the needs and preferences of customers. An activity, on the other hand, brings gratification, but nothing is taken away. In essence, the establishment of a customer relationship is at the heart of service marketing. Perishability - Services cannot be stored or sold for later use since they can only be accessed at the time they are offered. In the other side, it can be shown that products are perishable. Fresh farm products and other food items, for example, are perishable but can be processed and sold later. Quantity - Products can be numerically quantified and come in a variety of shapes, sizes, and forms. Services, on the other hand, are impossible to quantify numerically. While you can choose from a variety of service providers, the concept remains the same. Inseparability - Services can not be separated from their vendors, and they should be consumed at the same time as they are sold. An asset, on the other hand, may be separated from its owner after a transaction has been completed. Quality - Since these are physical features that can be maintained, product quality can be compared. However, comparing the quality of services offered by different service providers can be challenging. Return ability - It is easier to refund a product to the retailer if the customer is unhappy with it. In addition, the consumer will receive a replacement for the returned item. A commodity, on the other hand, cannot be returned to the service provider because it is intangible. Price perspective- The value of a service is provided by the service provider, while the value of a product is derived by the customer's use of it. A service's value is indistinguishable from 8 CU IDOL SELF LEARNING MATERIAL (SLM)

that of its provider, while a product's value can be obtained or generated by the end user of a product sold on the market. Shelf line - A service has a shorter shelf life than a product. If a product does not sell within a certain amount of time, it may be resold. This is different in terms of a service with a limited shelf life which should be delivered earlier. Table showing the differences between a Product and Services Product Service A product is tangible, it is physical and can A service is intangible, can only be felt and be held, seen and movable not touched Product value is derived by the customer Value of service is offered by the service provider Customer care of the product is limited Customer care forms critical component of marketing a service A product can be stored for future use A service is perishable and cannot be stored for later use or sale A Product can be owned A service cannot be owned by the consumer once payment has been made The quality of a product depends its nature Quality of a service depends on the service provider who shapes it A product can be returned to the seller A service cannot be returned to the seller The billing process of a service is a once Billing process can be continuous in the off transaction form of subscriptions for services rendered It is easy to compare quality of products It is difficult to compare the quality of services offered Products can be quantified numerically Services cannot be quantified in terms of numbers Conclusion: - 9 CU IDOL SELF LEARNING MATERIAL (SLM)

Although the terms product and service are often used interchangeably, it is important to note that they are not synonymous. The most significant difference between the two is that a product is tangible and visible in nature. On the other side, it can be seen that a service is intangible and can't be maintained, so it can't be taken away from the supplier. The quality of the product is determined by the consumer, while the quality of the service is determined by the supplier. A product may be retained for future use or sale, and then returned to the customer if the need arises. As a result, once a service is offered, it will be used and cannot be saved for later use. A service could not be returned to the service provider for any reason because it is not tangible. 1.5 SERVICE SECTOR The service sector is the economy's sector that generates and provides services. According to tri-sector macroeconomic theory, there are three major economic industries: primary, secondary, and tertiary. Important economic sectors 1. Primary Sector Industries involved in the collection of raw materials make up the primary market. It includes mining companies, forestry companies, and oil exploration companies, in addition to farming and fishing. 2. Secondary Sector The secondary sector includes all businesses that produce and sell goods, such as car dealers, furniture stores, and clothing retailers. 3. Tertiary Sector The tertiary sector is made up of the service industry. This applies to industries such as financial services, information technology (IT), entertainment, and healthcare. Some economists consider a fourth sector, the quaternary sector, to which research, information technology, education, consultancy, and other aspects of what has become known as the knowledge-based economy are assigned. The knowledge-based economy emphasizes the use of information and communications (such as social media) to provide specifically tailored goods and services to specific clients' or customers' needs and desires. A store like Amazon or Walmart is an example of the knowledge-based economy in action, providing you with tailored ads for goods or services based on your previous purchases or searches. Economists who do not use the term \"fourth economic sector\" refer to the quaternary sector's industries as \"tertiary.\" 10 CU IDOL SELF LEARNING MATERIAL (SLM)

Economic Development According to the tri-sector economic theory, the three economic sectors also reflect how economies develop over time, in addition to delineating different fields of economic activity. The most primitive economies are based on economic activities such as raw material processing, cultivation, and fishing. As economies develop and evolve, the manufacture and sale of finished goods account for the majority of economic activity. The service sector is the most recent major change in the economy, and it is a sign of both emerging and developed economies. The Primacy of the Service Sector The fact that the service sector is classified as a tertiary sector does not imply that it is in third place in terms of economic importance. Over the last century, the service sector has grown steadily. By the turn of the century, it had surpassed manufacturing and retail products as the main segment of the economy in most industrialized countries. Whereas the United States became the dominant world economy in the early part of the twentieth century due to its strong manufacturing industry, its worldwide economic dominance in the early part of the twenty-first century was based on its vast service sector. Between 1919 and 2019, the service sector in the United States grew from less than 50% of the country's GDP to about 85% of the GDP. The exponential growth of information, the rapid growth of technology, and the advent of instantaneous, global connectivity through internet connections and cell phones have all contributed to the service sector's boom over the last 50 to 70 years. Increased automation is also a key factor in the transition from a manufacturing to a service- based economy, as it reduces the number of people required for manufacturing processes. The massive expansion of government services in developed countries is another significant contributor to the service sector's increasing dominance. Examples of sectors in operation Most citizens are unaware of the vast number of businesses and industries that make up the service sector. However, if you take a moment to consider all of the various service-related businesses, it's easy to see why the service sector is by far the largest sector of the economy in developed countries like the United States, the United Kingdom, Canada, Australia, Germany, and Japan. The following are only a selection of the many businesses in the service sector that make up some of the most important industries. 11 CU IDOL SELF LEARNING MATERIAL (SLM)

1. Travel Industry The travel industry encompasses far more than travel agencies and major airlines. It also includes subways and city buses, which are becoming increasingly common modes of public transportation. Uber, Lyft, and Airbnb are now part of the travel industry, despite the fact that they were not yet invented 20 years ago. In addition, the travel industry involves tens of thousands of local tourist destinations scattered throughout the country, such as museums, recreation parks, national parks such as Yellowstone and the Grand Canyon, concert halls, and art galleries. Hotels, motels, and the whole hospitality industry are often considered part of the travel and tourism industry. 2. Information Technology Industry The IT industry encompasses practically anything and everything related to computers, information, communication technology, and software, with the exception of the production of necessary hardware, such as computers themselves. The broad scope of social media, from Facebook and Twitter to Instagram and YouTube, encompasses literally millions of individual businesses. Did you know that, as of 2019, the United States had more than 30 million YouTube channels? One of the world's fastest growing markets, online education, falls under the umbrella of the information technology industry. 3. Media and Entertainment Industry Technological advancements and inventions have also resulted in a huge expansion of the media and entertainment industry. Radio stations, newspapers, and television network stations used to broadcast news. With the introduction of cable and satellite television, a world of television with hundreds of different news channels was born. For example, Fox, CNN, and NBC not only have 24-hour news services, but they also have separate business news channels. There are far too many websites for online news and information to count. Every year, the number of \"made-for-television\" films released exceeds the total number of films produced by all of the major studios and production companies combined. People can spend the entire day on their computers watching online entertainment. Playing video games on an Xbox or PlayStation supported by YouTube or Pinterest. Among the more lucrative younger careers are video game and software developers, social media consultants, and graphic website designers. 12 CU IDOL SELF LEARNING MATERIAL (SLM)

1.6 CLASSIFICATION OF SERVICES To be able to make a clear and accurate classification of services, we must first understand the concept of the term itself. Facilities are usually used to describe processes rather than individual goods. Individuals may be included in some programmes, while objects run by individuals may be included in others (such as online services). A hair salon, a school, a theatre, restaurants, and public transportation are all examples of places where people congregate. Repairs and maintenance, dry cleaning, banking, legal services, insurance, and other services, on the other hand, include goods. Service operations may be automated, manual, or a combination of both. A classification of services based on two general dimensions, such as what is being processed, whether an individual or an entity, and how is it being processed, may be carried out. To put it another way, the method's nature is what (tangible or intangible actions). Individuals' levels of involvement in processing activities can vary significantly. Managers must consider processes/outputs when it comes to what happens to clients and what is created. For pricing this category of services, non-financial costs, time mental effort, as well as fear and pain levels must be identified. Having your computer disabled and taking it to a repair facility is one example of service included in this category. Consumers are less physically involved in this form of service, and there is usually no need for them to enter the facility until they have requested the service, explained the problem, and been charged for the service. There are two points that can be used to classify a service. These two points, or variables, are subdivided further into two more variables. Service classification considers four types of individuals or objects in total. Figure 1.1 – Tangible Actions 13 CU IDOL SELF LEARNING MATERIAL (SLM)

Classification of Service based on Tangible action Wherever people or things are directly involved, the service classification may be dependent on tangibility. a) Services for people – Health care, restaurants, and saloons are examples of places where service is provided by people to people. b) Services for goods – Transportation, repair, and maintenance are only a few examples. People provide services in exchange for items or products. Figure 1.2– In Tangible Actions • Classification of services based on intangibility There are certain things in this universe that cannot be quantified in any way. Consider the number of algorithms needed to properly execute your banking order or the estimated value of your life predicted by insurance brokers. The intangibility of such programmes is used to classify them. a) Services Directed at people’s mind - The intangibility of services promoted by manipulating people's imaginations is classified. b) Services Directed at Intangible Assets - Banking, legal services, and insurance services are among the most challenging services to price and quantify. The processing of information is the most intangible type of service output. The client's participation in this type of service is not needed. Clients have a personal urge to meet face to face in general, but there is no particular need in the organisational process. Consultancy services are an example of this type of service where confidence or phone contact may be used to establish or maintain a partnership. A face-to-face partnership, on the other hand, is more appropriate for better understanding the client's needs. The following may be a more general classification of services based on the form of role that is offered by them: 14 CU IDOL SELF LEARNING MATERIAL (SLM)

1. Business services. 2. Communication services. 3. Construction and related engineering services. 4. Distribution services. 5. Educational services. 6. Environmental services. 7. Financial services. 8. Health-related and social services. 9. Tourism and travel-related services. 10. Recreational, cultural, and sporting services. 11. Transport services. 12. Other services not included elsewhere. 1.7 GROWTH OF SERVICE SECTORS AND SERVICE INDUSTRIES The service industry, also known as the tertiary sector, encompasses a broad range of activities, including services provided by various industries. These include advanced industries like telecommunications, satellite imaging, and computer software; basic services provided by unqualified menial workers like barbers, plumbers, and carpenters; highly capital-intensive activities like civil aviation and shipping; employment-oriented activities like tourism, real estate, and housing; and infrastructure-related activities. Service Sector in India India has the second fastest growing service sector in the world, with a compound annual growth rate of 9%, only behind China's 10.9 percent growth rate between 2001 and 2012. One could argue that the secondary sector's share of GDP increased moderately in the post- independence period. On the other hand, the primary sector's share of GDP has been steadily declining. The service sector, on the other hand, has grown dramatically in that period, accounting for more than half of GDP. Table 1.1: Sectoral Compound Growth Rate Sector Wise Years Primary Secondary Tertiary 1951-60 3.2 7.60 6.40 1961-70 11.80 10.9 10.20 15 CU IDOL SELF LEARNING MATERIAL (SLM)

1971-80 9.20 14.00 12.80 1981-90 11.70 14.50 15.30 1991-2000 13.10 15.30 16.60 2001-2011 8.3 15.00 14.8 Figure 1.3 The graph shows the trends in the three sectors very clearly. Except for the periods 1961-70 and 1991-2000, the primary sector's share has steadily decreased. The secondary sector grew more slowly until 1991-2000, after which it continued to grow at a steady pace. For the Indian tertiary sectoral compound growth rate, a steep slope peaked between 1991 and 2000. In the 1950s, the service sector accounted for 30% of total GDP, rising to 38% in the 1980s, 43% in the 1990s, and about 56.5% in 2012-13. The table given below should explain this: Table 1.2: Percentage Share of Service Sector in Gross Domestic Product Components Years 1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2010-11 1)Trade Hotels 6.35 7.61 8.29 11.6 12.69 14.59 17.80 and Restaurants 16 CU IDOL SELF LEARNING MATERIAL (SLM)

2) Transport, Storage and 3.84 4.56 4.41 5.47 6.21 7.68 8.30 Communicatio 12.00 10.57 11.62 13.23 16.90 12.02 11.43 12.32 14.49 14.90 n 3) Finance, Insurance, Real Estate and 12.34 13.56 Business Services 4) Community, 11.96 Social and 10.43 Personal Services Figure 1.4 Trade, hotels, and restaurants, followed by community, social, and personal services, and banking, insurance, real estate, and business services, made the largest contributions after the liberalisation period, according to this table and the graph below. The contribution made by trade, hotels, and restaurants after 1990-91, i.e., after reforms were implemented. Though transportation, storage, and communication have steadily increased, community, social, and personal services peaked in 1960-61, dropped in 1980-81, and have since made a steady contribution to India's GDP. Finance, insurance, real estate, and business services contributed the most in 1960-61, then dropped sharply in 1980-81 before rising again. 17 CU IDOL SELF LEARNING MATERIAL (SLM)

Foreign direct investment inflows into the services sector fell sharply by 37.6% to US 6.4 billion, despite a 6.1 percent increase in total FDI inflows. Across the board, the Indian services sector received the most foreign direct investment equity inflows, totalling US$40, 684, 98 million, or around 18 percent of total capital inflows. India's share of global service exports rose at a faster rate than its share of global merchandise exports, from 0.6 percent in 1990 to 1.1 percent in 2000 and 3.3 percent in 2013. Computer services exports account for 46% of India's total service exports. They went down from 5.9% in 2012-2013 to 5.4 percent in 2013-2014. Travels, which account for nearly 12% of all trips, had a negative share. CAUSES OF GROWTH OF SERVICE SECTOR IN INDIA India's service industry is the world's 12th largest by nominal GDP and the fourth largest when purchasing power is factored in. Jobs are available in the service sector for 27% of the population. Let's take a look at the factors that have contributed to India's service sector's growth: Economic Prosperity - The Indian community has a growing middle class. In addition, the liberalisation of the Indian economy has had a positive effect on Indian households. Revenue and investment were increased in order to boost demand for goods and services. Women's Roles Changing - Previously, women were treated as second-class citizens with only domestic responsibilities. Nonetheless, there has been a shift in philosophy over time. Females are taught how to act and are given permission to do so. They work in a variety of previously male-dominated fields, including defence, police, postal, software, and health services, to name a few. The increase in the number of working women has created a demand for a variety of products and services. Changing Culture - The traditional joint family relationship is slowly disintegrating and making way for a nuclear family way of life. Following this, there was a rise in demand for a variety of services, including education, health care, culture, tourism, and so on. There has also been a pronounced change in a person's way of thinking in terms of investment, leisure, and time perception, leading to increased demand for services. IT sector expansion - Information technology and business outsourcing are among India's fastest-growing industries, with a combined revenue growth rate of over 20%. The growth of the IT industry can be attributed to a number of factors, including increased specialisation and the availability of a large pool of low-cost, highly educated, and fluent English-speaking employees. Increased demand from foreign customers interested in India's service exports or those looking to outsource their operations balances this supply. 18 CU IDOL SELF LEARNING MATERIAL (SLM)

Market Development - In both urban and rural areas, there has been extensive retailing and overall sales. Retailing has now spread to even the most isolated rural areas. Consciousness about health care - Today's generations are becoming more conscious of diet and wellbeing. They improve their physical and mental health by using gym equipment and joining fitness clubs. Economic Liberalization - In 1991, the Indian economy was opened up after a policy of disinvestment. This prompted multinational corporations to enter the market, resulting in an increase in demand. This acted as a catalyst for the service sector's expansion. Migration from Rural to Urban Areas - In this era of globalisation, rapid industrialization and other changes have resulted in widespread migration from rural to urban areas. It alters people's lifestyles and expands the demand for services. India's export potential includes banking, insurance, transportation, data services for companies, education, software services, tourism, and other services. Tourism and software development are two of the country's top foreign exchange earners right now. Service Tax - This levy's scope has been broadened. The tax net protects hotels and restaurants, transportation, storage, and marketing, financial services, real estate, business services, and social/personal services. 1.8 SUMMARY • Services account for a large portion of global trade and are rising at a rapid pace. The factors that contribute to the growth of the service sector are also discussed in this chapter. • Services marketing differs from conventional product marketing in a variety of respects, which makes it difficult for management to sell services. This chapter discusses some of the tactics marketers may use to address these issues. • It makes valuable recommendations to the service industry and serves as a foundation for more research into service management. • The steps taken to facilitate trade in the services sector, as well as different aspects of the marketing mix that apply to services, are highlighted in this chapter. • It aids in the development of a basic understanding of service marketing before moving on to the finer points of service management. • This chapter delves into the definition of product in service management, as well as an overview of the essence of services and the various levels of service product. 19 CU IDOL SELF LEARNING MATERIAL (SLM)

1.9KEYWORDS • Service Economy: with the decline of heavy engineering and rise the knowledge – based economy, the services industry constitutes an ever-increasing proportion of the national income in nearly all the developed countries. • Liberalization: To remove or loosen restrictions on an economic or political system • Marketing Mix: The factors controlled by a company that can influence consumers’ buying of its products. It also describe product, price, promotion and place are the four components of the marketing mix. • Gross Domestic Product (GDP):GDP is the final value of the goods and services produced within the geographic boundaries of a country during a specified period of time, normally a year. GDP growth rate is an important indicator of the economic performance of a country. • Product : Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a need. It includes physical objects and services. • Service: A Type of economic activity that is intangible, is not stored and does not result in ownership. • Promotion: An activity designed to boost the sales of a product or service. It may include an advertising campaign, increase PR activity, a free sample campaign, offering free gifts or trading stamps, arranging demonstration with attractive prizes. 1.10 LEARNING ACTIVITY 1. Discuss how services are increasingly forming an important component in the marketing of trading of traditional products. 2. Identify any services you are using the most in your daily life. Discuss the levels of their intangibility. ___________________________________________________________________________ _________________________________________________________________________ 1.11 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What are the unique characteristics of services? 2. Discuss the evolution and growth of service sector in India. 20 CU IDOL SELF LEARNING MATERIAL (SLM)

3. How does the corporate is designing service delivery system? Explain with suitable case. 4. Discuss how the service strategies vary sector wise? Why there is variation? 5. Compare and Contrast service and product marketing. Give examples. Long Questions 1. Discuss the major issues and challenges of service marketing in India. 2. How do you evaluate the growth of service sector marketing vs goods marketing? 3. “Classification of services into various categories will provide an insight to managers to deal with diversity of services. “Write about the various ways in which services can be Classified? 4. What are the strategic responses to the inseparability of Service performances? 5. “Physical evidence management is important for success in a service business. “Briefly write about the elements of physical evidence? B. Multiple Choice Questions 1. A ______________________ is a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. a. Service b. Demand c. Need d. Physical object 2. Services marketing become difficult because of a. Intangibility. b. no demand c. More complex market d. Difficult to enter the market 3. The services a customer expects are called the ______service package. 21 a. Expected CU IDOL SELF LEARNING MATERIAL (SLM)

b. Augmented c. Primary d. Secondary 4. Services are characterized by all of the following characteristics except for a. Intangibility. b. Homogeneity c. Perishability. d. Inseparability 5. Which of the following Service Industry has a greatest share in GDP a. Tourism, Travel and Hotel b. Hospital c. Education d. Catering Answers 1 – a, 2 – a, 3 – c, 4 – b, 5-a 1.12 REFERENCE Text Books • Zeithaml V. A. ,Bitner M. J. and Pandit, A., Services Marketing, 5th Edition, Tata McGraw Hill Publishing Co. Ltd. New Delhi. • Lovelock C. H., Wirtz, J. and Chatterjee, J., Service Marketing: People, Technology, Strategy, 6thEdition, Pearson Education, New Delhi. Reference Books: • Hoffman, K. D. & Bateson, J. E.G., Marketing of Services, Cengage Learning, • Kurtz D. L. and Clow K. E., Services Marketing. Biztantra, New Delhi. • Nargundkar, Rajendra, Services Marketing Text and Cases, 3rd Edition, Tata McGraw Hill Publishing Co. Ltd. New Delhi 22 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 2: SERVICE MARKETING Structure 2.0 Learning Objectives 2.1 Introduction 2.2 Concept and evolution of services marketing 2.3 Meaning of service marketing 2.4 Myths encountered in services 2.5 Need for service marketing 2.6 Growth in Services Marketing 2.7 Summary 2.8 Keywords 2.9 Learning Activity 2.10 Unit End Questions 2.11 References 2.0 LEARNING OBJECTIVES After studying this unit, you will be able to: • Explain the unique challenges of services marketing, including the elements of product, price, place, promotion, processes, physical evidence, and people. • Design service quality measurements to build customer loyalty and evaluate the effectiveness and efficiency of customer service offerings. • To learn the service blueprinting, the integration of new technologies, and other key issues facing today's customer service providers and service managers. • Conduct a services audit plan for a service firm. 2.1 INTRODUCTION Relationship-based and value-based marketing are the hallmarks of service marketing. It can be used to promote a good or a service. Marketing a service vs. marketing a product vs. marketing a service vs. marketing a product vs. marketing a service vs. marketing a product vs Marketing of services is a sub-field of marketing that is divided into two main areas: marketing of products (which involves the marketing of FMCG and durables) and marketing of services. Business-to-consumer (B2C) and business-to-business (B2B) marketing services 23 CU IDOL SELF LEARNING MATERIAL (SLM)

provide telecommunications, financial services, all forms of hospitality, car rental, air transport, fitness, and professional services. 2.2CONCEPT AND EVOLUTION OF SERVICE MARKETING Evolution of Service Marketing For many decades, service marketing has existed. Fisk, Brown, and Bitner (1993) reviewed service marketing literature from its infancy in 1953 to its maturity in 1993. Crawling Out (1953-1979), Scurrying About (1980-1985), and Walking Erect (1986-1990) were the three phases they identified (1986-1993). In the first point, researchers debated and investigated whether this area warranted its own section of the literature (Swartz, Bowen & Brown., 1992). During this process, the researchers started debating the differences between goods and services. The emphasis later in the 'Scurrying Around' stage was on the implications of the distinction between goods and services. Lovelock (1983) observed that there is \"too much focus on distinguishing between the selling of products and the marketing of services, and not enough on developing good insights into the service sector's marketing practises\" in his attempt to categorise services into different categories. The 'Walking Erect' stage founded the nature of service marketing as a distinct discipline. Over the last decade of the twentieth century, the literature has shifted its focus to various aspects of services, including service quality, service experience, demand and supply gap management in services, increasing tangibility of intangible service processes, technology's role in service processes, and so on. Concept of Service Marketing Quinn, Baruch, and Paquette (1987) described this term as \"all economic activities whose output is not a physical product or construction, which is typically consumed at the time of manufacture, and which provide added value in forms (such as convenience, entertainment, timeliness, comfort, or health) that are essentially intangible concerns of the first buyer.\" Berry defines services as \"actions and outcomes\" (1980). Services are intangible in nature and may not result in the transfer of ownership to customers. Gummeson (1987) described services as something that can be purchased and sold but not \"dropped on your foot,\" referring to their intangibility. Lovelock created a comprehensive taxonomy for utilities (1983). The classification attempted to discuss one of these aspects: \"type of the service act, type of relationship that the service company has with its customers, scope for customization and decision in service delivery, nature of demand and supply for the service, and method of service delivery\" (Lovelock, 1983). The literature on service marketing establishes the distinction between services and products, as well as the consequences for service marketers. Market decision-making for services differs from consumer decision-making for goods (Zeithaml, 1981). 24 CU IDOL SELF LEARNING MATERIAL (SLM)

2.3 MEANING OF SERVICE MARKETING \"An integrated system of business activities\" is how services marketing is represented. Built to achieve organisational goals by scheduling, pricing, promoting, and delivering appropriate services for current and prospective clients. The understanding of service marketing is that it focuses on the sale of services in the best interests of customers. The systematic and coordinated effort of a service organisation is to expand the market by offering the best possible services. By providing excellent services, service marketing seeks to achieve organisational objectives such as benefit, leadership development, long-term survival and growth, and customer satisfaction. The feasibility of selling services to customers and the possibility of providing complete customer satisfaction are both included in the concept of marketing services, as is the service company's market positioning. As a result, marketing is a critical aspect of service management. Management decisions are not found to be effective in the absence of time-bound application of marketing principles. Customer loyalty is later discovered to be a focal point of the marketing decision-making service-can assist in providing the right services to the right customers at the right time. Marketing makes the process of turning consumers into existing service customers much easier. 2.4 MYTHS ENCOUNTERED IN SERVICES Larger companies can easily slip into bad habits and stagnant processes over time, but smaller companies should be mindful of these common traps from the start and take the appropriate steps to prevent them. • ‘So long as Customer needs are met, we’ve done our job well’ It's one thing to provide the customer with what they requested, but in fact, that's only half of the operation. It's all about how you make the consumer feel, from the moment they learn about your company to the last contact you have with them, to create a true customer experience. This includes their surroundings and atmosphere, the employees' tone of voice, additional equipment, availability, service speed, and so on. All in the customer experience should be as close to ideal as possible (and yes, if something goes wrong, you can indeed still achieve this). It's not enough to actually fulfil a client's primary need. The customer experience is made up of a slew of micro-interactions that all have an impact on how the individual perceives your brand. In a nutshell... It's the little things that count. • ‘Few Customer complaints means our service is satisfactory’ A low number of complaints can be risky for a business. If customers do not express their dissatisfaction with your service, they will most certainly tell others about it. By encouraging your customers to complain, you can guide and monitor negative feedback, not only capturing it at the source but also using it to improve your company. Customer complaints are 25 CU IDOL SELF LEARNING MATERIAL (SLM)

the best way to really strengthen and extend your offerings while still propelling the company forward. Otherwise, you're operating in the shadows. According to a blog post by Amanda Nelson, former content manager for Salesforce, less than 25% of consumers complain when they have an issue, and 70-90 percent don't bother. As a result, let your customers know that you appreciate their feedback by contacting them after they make a purchase to learn about their experience, and then contacting them again a month or so later to ensure the product is still performing well. Don't wait for hashtags or negative mentions to connect with new customers via social media. • ‘Marketing and Advertising is most important when trying to increase our customer base’ Taking care of the clients you already have is undeniably the cheapest and fastest way to develop any company, rather than spending vast sums of money on acquiring new ones. According to the Spoken Communications site, it costs 6 to 7 times more to attract a new customer than it does to keep a current one. Continually adding new customers to replace those that have left holes in the business is not a sustainable growth strategy. Positive customer feedback can spread rapidly, attracting more like-minded customers to call your own. Take extra measures to make your current customers feel appreciated and supported by your business. Don't gush about potential customers by providing exclusive deals; instead, give the same benefits to your entire client base. Reward long-term customers with add-ons and discounts that increase in value the longer they've been a customer, or give them a free gift after they've made a certain number of transactions. While it is unavoidable for a company to lose customers, instead of taking the 'out with the old, in with the new' strategy, try approaching those who have not returned in the last six months or so to find out why they have not returned. Avoid any heavy ads and make it a fun, non-intrusive inquiry (you might even use a quick multiple-choice survey) (though a welcome-back discount is a nice touch). • ‘Our Company must have a presence on every Social Media channel for the best effect’ In an ideal world, every prominent social media platform will have a presence for each brand, and this would generate significant levels of interaction. However, in the real world, it's unlikely that you'll be able to tackle them all at once. Having a social media \"presence\" entails sharing complex, two-way, ongoing interaction... Not sparse, unreliable, automatic, or one-dimensional updates sent out whenever your team has a spare minute. If you use too many social media sites in your customer service plan at once, you'll have a hard time getting good results. To begin, concentrate on two platforms. After that, if you've built up a following, you can start introducing others. While Facebook and Twitter appear to be the most common, you should go where your customers are. As and of your profiles matures, you’re following and social feedback will evolve more naturally. 26 CU IDOL SELF LEARNING MATERIAL (SLM)

• Our customer service should be built and governed by Policies and Procedures’ Policies and procedures are important for a business to operate safely and efficiently, but following them to the letter can be the reason a customer is dissatisfied. This could include your available hours, your return policy, or a simple customer mistake caused by human error. Rather than strictly following the law, the workers should be empowered to make unilateral, on-the-spot decisions in favour of the client without consulting a more senior employee first. Employee empowerment does not imply breaking or ignoring the law; rather, it entails bending the rules in order to keep clients happy. If employees are afraid of negative consequences such as losing pay, losing their job, or being dismissed, the customer service may easily become slow and unresponsive to customer needs. Instead, as new ideas are discovered on a daily basis, it must be creative, free-flowing, responsive, and adaptable. Going above and beyond to make customers happy shows them that you value their tradition. It's naive to be concerned about the consequences of breaking laws and policies. It's likely that these same clients will return more often and tell others about their positive experience, making this a worthwhile investment. 2.5 NEED FOR SERVICE MARKETING Until recently, most service organisations did not offer the definition of marketing much thought. Some service providers, such as educational institutions and hospitals, used to have so much demand that they didn't need ads until recently. Others (legal, medical, and accounting firms) argued that using advertisements was unethical. With the passage of time, the service economy has gained traction and is now growing faster than the industrial economy, particularly in developed countries. As a result, concepts and strategies for services marketing have grown in tandem with the growth of the service economy. Service companies, like manufacturing companies, gradually realised that they needed to use marketing principles to firmly establish themselves in their chosen target markets. The service sector's multi-faceted advances, as well as the increasing strength of competition, have created a strong foundation for the introduction of modern marketing concepts in service organisations. The following facts demonstrate that service generation organisations will be able to achieve qualitative and quantitative change by implementing modern. - marketing principles. An increase in disposable income is a good thing. Citizens' disposable income has been steadily increasing in recent years. This trend can also be seen in developing countries such as India. As a result of the increase in wages, there is a greater demand for a range of services, resulting in new opportunities in the service sector. Positive developments in the service sector have opened up new avenues for increased disposable income. As disposable income rises, the demand generation process accelerates, creating more opportunities for the 27 CU IDOL SELF LEARNING MATERIAL (SLM)

services sector to expand. The level of competition is at an all-time high, necessitating the application of marketing concepts. Specialization is becoming more prevalent. Organizations now have no choice but to promote specialisation because it helps them to save money. Almost all of the businesses' needs are met by bringing in experts. Consultants, legal advisors, accounting analysts, technocrats, and other experts and specialists play a critical role in managing an organisation. In virtually all areas, greater specialisation in management entails the use of experts and consultants. It is right to note that, as service generation organisations become more specialised, they may need a new organisational culture, which marketing activities will help shape. Changing Ways of Life There will be a fundamental change in lifestyles as business culture develops and a well-developed services sector emerges. The hectic working environment, as well as increased personal stress and pressure, would pave the way for the creation of creative personal services such as healthcare, fashion design, leisure centres, and beauty salons, among other things. Changes in lifestyles result in new waves of demand for specialised services, and marketing will be crucial in meeting consumers' new expectations. Competence on the job Business culture advocates for a success-oriented mindset. All organisations, whether they manufacture goods or provide services, must prioritise the development of human resources. As a result, educational achievement will be given a new emphasis, and the general public would be enticed to pursue professional education. For almost all fields, excellence and professionalism in experience necessitate the establishment of world-class educational institutions. The services sector would become more professionalised, with only world-class human resources being hired. This will help service organisations become more efficient. It would be easier to accomplish the business goals if marketing principles were combined with professionalism. Explosion of knowledge the knowledge explosion has been found to be fuelled by communications technology and advances. Almost all sectors, especially service industries such as entertainment, advertising, and fashion design, will be influenced by the tremendous opportunities provided by communications. In this sense, it is important to put modern marketing principles into practise so that the marketing information system can help improve the quality of decisions. Sophistication in Industry; In today's market, where customer preferences are greater and more nuanced, there is more sophistication. There will be periodic shifts in the hierarchy of consumer demands and requirements, resulting in adjustments in demand design in terms of products or services required for that market. The application of modern marketing principles is needed in light of the market's multi-dimensional developments. Expanding Governmental Activities; The expansion of government activities in almost every sector of the economy would provide opportunities for the service sector to develop. The most recent changes in trade and cultural exchange policies, as well as global partnerships, will pave the way for the service sector to expand more efficiently. This would also result in more positive and 28 CU IDOL SELF LEARNING MATERIAL (SLM)

sophisticated qualitative shifts in the service sector, necessitating the application of creative marketing concepts to a greater extent. 2.6 GROWTH IN SERVICE MARKETING The growth process is greatly aided by effective resource marketing. If innovative marketing concepts are followed in service marketing, socioeconomic change can occur at a much faster rate. In the future, the service sector will operate in an environment that is both favourable and promising. If the service sector takes advantage of its opportunities, the economy will expand to its full potential. The position of the service economy can be addressed under the following headings: • Generation of Employment opportunities. • Optimum utilisation of resources. • Capital formation. • Increased Standard of living • Use of environment – friendly technology Generation of Employment opportunities The service sector's components are numerous and diverse. Personal care services, education services, medicare services, correspondence services, tourism services, hospitality services, banking services, insurance services, transportation services, advisory services, and so on are all part of the service sector. The growth of the service sector in a planned and systematic manner would result in a massive increase in job opportunities. The application of marketing concepts to the I service sector is critical to the economy's development. However, it is important to note that India has not been successful in fully exploiting the service sector's potential. As shown in Table 1.1, the service sector provides about 80% of job opportunities in the United States, compared to 60% in India. As a result, the service sector's importance is based on its ability to generate work opportunities. If the service sector is properly established, it will significantly reduce India's unemployment rate. The service sector in India has emerged as a dominant component of the economy following liberalisation policies. Optimum Utilisation of Resources India is blessed with abundant natural resources. The human resources available in India, in particular, favour the growth of the service sector. Although the labour content of most manufacturing activities is slowly decreasing due to technological advancements, the service sector's labour content is relatively high. The service sector in India will expand steadily due to the country's abundant human capital. Furthermore, the service sector provides excellent export opportunities. Indeed, the World Trade Organisation's (WTO) major agenda item is the liberalisation of the services sector. As a result, India will increase its services exports by utilising these factors. Though its success in the export of computer software is already 29 CU IDOL SELF LEARNING MATERIAL (SLM)

commendable, it should also focus on other areas. Personal care services, entertainment services, tourism services, and hotel services all contribute to the economy's development without depleting natural resources. In certain ways, the expansion of these types of service businesses conserves natural resources. As a result, services marketing contributes to the conservation of vital resources for future generations. Capital Formation There are signs that Services will expand at a faster rate in the near future. The service sector is expanding due to economic, social, and political factors. When opposed to manufacturing, the service sector has much more investments and job creation. In the coming years, it is expected that telecom will attract Rs. 150,000 crores in investment. Capital generation is aided by investment. The flow of capital should be directed towards the most efficient uses for the growth of an economy. Investments in the service sector will aid in the process of nation-building. Increased construction activities result in higher per capita income, which encourages capital formation. Profitable services can absorb higher investments, resulting in a faster rate of capital formation. Increasing the Standard of living The quality and standard of goods consumed or services provided in day-to-day life will determine the people's standard of living in any country. Only when the living standards of the masses change is some improvement visible. India's standard of living is far from adequate as compared to developed countries. More prospects for earning cannot increase one's standard of living. The standard of living, on the other hand, is dictated by the availability of goods and services for residents, as well as prudent spending on them. The growth of the services sector would undoubtedly raise people's living standards. Use of eco- friendly materials Almost all utilities nowadays are technology-driven. When providing services, developed countries make extensive use of cutting-edge technology. Service- generating organisations such as banks, insurance firms, tourism, hotel services, networking services, and education services use technologies that are not harmful to the environment in any way. Technologies used in manufacturing organisations, on the other hand, may have negative environmental consequences. As a result, the service sector does not pollute the atmosphere, which is commendable. Use of Environment – friendly technology Eco-friendly technology, also known as renewable technology, green technology, and sustainable technology, can help protect the environment by conserving resources and eliminating harmful waste. Green technology pioneers apply modern environmental science and green chemistry to mitigate the negative impact of human activity on the environment. While green technology is still in its infancy, many ground breaking innovations have already been made in fields such as renewable energy, water purification, and waste management, as well as in everyday consumer goods such as electronics and automobiles. It can be as small 30 CU IDOL SELF LEARNING MATERIAL (SLM)

as a smartphone or as large as a modern method of removing greenhouse gases from the atmosphere. 2.7 SUMMARY • The word \"services\" is often used to refer to personal services such as maintenance, health care, legal services, and counselling. Marketing experts have a different perspective on the problem. They believe that the scope of services is far broader. • Services have distinct characteristics that necessitate a new perspective, a distinct approach, and world-class professional excellence in order to efficiently and profitably deal with the various aspects of the services. • Internal clients are an important part of a service company's climate. • Direct Sales Agents, staff, channel partners, providers, and so on. They can be controlled. and have a direct impact on the service firm's business. • Consumption habits, age composition, beliefs and values, gender structure, and family structures are all social factors that influence the service sector. 2.8 KEYWORDS • Empowerment: Authorizing employees to find solutions to service problems and make appropriate decisions about responding to customer concerns without having to obtain a supervisor’s approval. • Service operations system: That part of the total service system in which inputs are processed and the elements of the service product are created • Service delivery system: That part of the total service system during which final “assembly” of the elements takes place and the product is delivered to the customer; it includes the visible elements of the service • Creative Marketing: is the process of selling things using creative talent in areas such as art, design, music, interior design and architecture. It evolved with industrialization as early as the 1820s as a way to wrap commoditized products in an inspiring experience. • Service Environment: It includes all aspects of the organization's physical facility (services cape) as well as other tangible aspects of tangible communication. 2.9 LEARNING ACTIVITY 1. Describe the service module and its focuses on theoretical foundations and practical application of marketing of services. 31 CU IDOL SELF LEARNING MATERIAL (SLM)

___________________________________________________________________________ _________________________________________________________________________ 2. Elucidate the nature of services, service quality and satisfaction, application of the SERVQUAL-model, developing services strategies, the marketing mix for services, managing customer service. ___________________________________________________________________________ _________________________________________________________________________ 2.10 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. A service is defined as any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. 2. What could possibly constitute the external environment factors for HSBC for its foray into the insurance business in India? Explain your answer. 3. Service companies try to demonstrate their service qualities through physical evidence and presentation. 4. Application of marketing concepts to the service sector is critical to the economy's development. Comment. 5. Explain briefly about Evolution of Service Marketing. Long Questions 1. Services have five distinctive characteristics, one of these five being “pure service.” 2. Marketing of services draw the attention on decisions related to the level of the product. In the light of statement discuss various environment factors in level of product. 3. Why is it important for a fast-food chain like McDonalds to study the social factors before entering a new geography? 4. Explain in detail about growth in Services Marketing. 5. Elaborate in detail about Myths encountered in Services 32 CU IDOL SELF LEARNING MATERIAL (SLM)

B. Multi-Choice Questions 1. Services that occur without interruption, confusion, or hassle to the customer is called a. Seamless service b. Service audit. c. Functional service d. Departmental service 2. Solutions used to minimize the marketing problems attributed to heterogeneity include a. Standardizing or customizing the service b. Using multi-site locations c. Stressing tangible clues d. Appealing to different market segments with different demand patterns 3. Which of the following strategies increases the supply of service available to consumers? a. The use of creative pricing strategies b. The use of reservation systems c. Capacity sharing d. Developing complementary services 4. The __________ dimension is an assessment of the firm’s consistency and dependability in service performance a. Empathy. b. Responsiveness. c. Assurance d. Reliability. 5. Eco friendly technology is also called as a. Green Technology b. Renewable Technology c. Sustainable Technology 33 CU IDOL SELF LEARNING MATERIAL (SLM)

d. All of these Answers 1 – a, 2 – a, 3 – b, 4 – d, 5-d 2.11 REFERENCE Text Books: • Zeithaml V. A. ,Bitner M. J. and Pandit, A., Services Marketing, 5th Edition, Tata McGraw Hill Publishing Co. Ltd. New Delhi. • Lovelock C. H., Wirtz, J. and Chatterjee, J., Service Marketing: People, Technology, Strategy, 6thEdition, Pearson Education, New Delhi. Reference Books: • Hoffman, K. D. & Bateson, J. E.G., Marketing of Services, Cengage Learning, • Kurtz D. L. and Clow K. E., Services Marketing. Biztantra, New Delhi. • Nargundkar, Rajendra, Services Marketing Text and Cases, 3rd Edition, Tata McGraw Hill Publishing Co. Ltd. New Delhi 34 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 3: SERVICES MARKETING MIX AND GAPS MODEL Structure 3.0 Learning Objectives 3.1 Introduction 3.2 7Ps of service marketing 3.3 Service gaps framework 3.4 Perceived service quality 3.5 Models of service marketing 3.6 Summary 3.7 Keywords 3.8Learning Activity 3.9 Unit End Questions 3.10References 3.0 LEARNING OBJECTIVES After studying this unit, you will be able to: • Explain the role of marketing mix in the marketing program of a service firm • Know the sub-elements that comprise each of the marketing mix elements • Learn how the 7 Ps combine to create effective marketing programs • Process of Services Marketing Mix and Gaps Model 3.1 INTRODUCTION The Services Marketing Mix is the combination of marketing tactics used by a business to advertise and sell intangible services rather than tangible goods. The services marketing mix includes the three Ps of service marketing—people, method, and physical proof—in addition to the four Ps of traditional product marketing—product, price, location, and promotion. The Extended Marketing Mix is a term used to describe the Services Marketing Mix. These practises are commonly referred to as the 7 Ps in the context of services marketing – product, price, place, promotion, people, physical proof, and process. Segmenting the market, targeting one or more segments, and positioning the product/service towards the targeted segments are all part of a marketing plan. Following the selection of a target audience, marketers direct their efforts toward profitably satisfying that segment. Marketing decision- 35 CU IDOL SELF LEARNING MATERIAL (SLM)

making can be divided into four areas: product, price, place (distribution), and promotion (marketing communication) despite the fact that they must manipulate multiple variables to achieve this goal (marketing communication). The marketing mix is the combination of the four elements to meet the needs and preferences of a specific target market. These are the four variables that a marketer may use to produce value for customers in different combinations. When it comes to programmes, however, the four Ps strategies take some tweaking. The characteristics of services (namely intangibility, perishability, heterogeneity, and simultaneous output and consumption) necessitate changes to the traditional marketing mix. Service delivery people (front desk workers, manuals, phone personnel, and so on) are involved in real-time promotion of the service since services are generated and consumed simultaneously, even though their functions are normally defined in terms of the operational function they perform. Consumers are present in the firm's warehouse, engage directly with the firm's employees, and are actually part of the service production process because services are usually produced and consumed at the same time. Booms and Bitner popularised the enhanced marketing mix. 3.2 7PS OF SERVICE MARKETING The first four components of the services marketing mix are identical to those found in the traditional marketing mix. However, the results of these are very different in the case of utilities due to their unique presence. • Product The ‘product' in the case of services is intangible, heterogeneous, and perishable. Its production and consumption are also inextricably linked. As a result, there is room to tailor the service to the needs of the consumer, and the real customer experience becomes much more important. However, excessive customization would jeopardise the service's standard delivery and reduce its performance. As a result, careful attention must be paid to the creation of the service offering. • Pricing Pricing services is more difficult than pricing goods. While the latter can be priced solely on the basis of raw material prices, in the case of facilities, additional costs such as labour and overhead must frequently be considered. As a result, a restaurant must not only decide a price for the food served, but also a price for the ambiance provided. After that, a markup for a reasonable profit margin is added to the final price of the service. • Place Since service delivery happens at the same time as its production and cannot be stored or transported, the location of the service product is essential. Where the service would be provided must be carefully considered by service providers. As a result, a fine dining restaurant should be located in a bustling, upscale market rather than on the outskirts of town. 36 CU IDOL SELF LEARNING MATERIAL (SLM)

A holiday resort, likewise, is best situated in the countryside, away from the hustle and bustle of a city. • Promotion Promotion becomes important in differentiating a service offering in the view of the consumer since a service offering can be quickly replicated. As a result, businesses that offer similar services, such as airlines, banks, and insurance firms, invest heavily in marketing their products. This is crucial in attracting customers in a market where utility companies provide almost identical services. • People Since a service is inextricably linked to the person who delivers it, people are a determining factor in the distribution process. As a result, a restaurant is known for both its food and the service provided by its employees. Banks and department stores are in the same boat. As a result, customer service training for workers is now a top priority for many businesses. • Process The method of service delivery is critical because it ensures that consumers receive the same high-quality service every time. As a result, most companies have a service blue print that specifies the details of the service delivery process, including the service script and greeting phrases to be used by the service workers. • Physical evidence Since services are intangible, most service providers strive to incorporate tangible elements into their offering to enhance the customer experience. As a result, some hair salons have well-designed waiting areas with magazines and plush sofas for customers to read and relax while they wait for their appointment. Similarly, restaurants spend a lot of money on their interior design and decorations to give their customers a unique and memorable experience. 3.3 SERVICE GAPS FRAMEWORK The Customer Satisfaction Distance Model of Service Quality helps a company to understand customer satisfaction. The Distance Model is widely used in the service industry to describe various anomalies that arise during the process of providing service to potential customers. The GAP Model serves as a template for the overall service delivery process, defining the gaps between processes so that the entire model runs smoothly. This helps service providers to keep track of inefficiencies in the service delivery process. The GAP Model of Service Quality aids in the identification of gaps between the perceived and projected service. In the Service Delivery Method, there are five distinct differences. They are as follows: 1. The misalignment of customer expectations with management perceptions 2. The misalignment of service quality expectations and management perceptions 37 CU IDOL SELF LEARNING MATERIAL (SLM)

3. The misalignment of service quality specifications and delivery 4. The Disconnect Between Service Provision and External Communication 5. The discrepancy between expected and actual service. Gap Model of service quality Figure 3.1 Gap Model GAP 1 - Gap between Management Perception and Customer Expectation When management or a service provider fails to adequately analyse what the customer wants or needs, a gap exists. It may also happen as a result of a lack of communication between touch staff and managers. A lack of market segmentation exists. This disparity persists as a result of insufficient market analysis. For example, a café owner may believe that the customer desires a more pleasant environment in the café, but the customer is more concerned with the quality of the coffee and food served. GAP 2 - Gap between Service Quality Specification and Management Perception 38 CU IDOL SELF LEARNING MATERIAL (SLM)

This discrepancy arises when management or a service provider correctly understands the needs of the customer but fails to set a performance standard. It may be due to a lack of service design, insufficient physical evidence, or an inefficient new service creation method. Restaurant managers, for example, may instruct waiters to deliver the customer's order quickly without specifying \"How Fast.\" GAP 3 - Gap between Service Quality Specification and Service Delivery This distinction may occur in circumstances that are familiar to service members. It may happen as a result of a lack of planning, incapability, or failure to meet service requirements. Inadequate appraisal and compensation procedures may be to blame. The main cause of this vacuum is ineffective recruiting. This gap would be created if supply and demand are not balanced. Empowerment, Perceived Influence, and a structure are also lacking. For example, a restaurant may have very strict food communication requirements, but the restaurant staff may not be given enough instructions on how to follow these standards. GAP 4 - Gap between External Communication and Service Delivery The remarks made by business executives and ads have a significant impact on consumer preferences. When these assumed conditions are not met at the time-of-service delivery, there is a gap. An example would be a restaurant that claims to serve 100% vegetarian food on its menu but actually serves non-vegetarian food as well. Customers' expectations are not being addressed in this situation. GAP 5 - Gap between Experienced Service and Expected Service When a consumer misunderstands the service quality, this inconsistency arises. For example, a restaurant manager may continue to visit a customer to ensure quality control and customer satisfaction, but the customer may perceive this as a sign that something is wrong with the restaurant staff's service. 3.4 PERCEIVED SERVICE QUALITY What is Service Quality? Service quality is a challenging word to define and measure since it is a nebulous and abstract concept. Academics and practitioners alike are concerned about this subject. The efficiency of education and government services is notoriously difficult to quantify due to the difficulties inherent in estimating service quality changes. A long-term, overall evaluation of a performance creates a service quality attitude. Customer satisfaction and service reliability are two interconnected concepts. The relationship between these two concepts, however, is unclear. Some argue that perceived service quality influences customer satisfaction, while 39 CU IDOL SELF LEARNING MATERIAL (SLM)

others argue that service quality influences customer satisfaction. Furthermore, the relationship between customer satisfaction and service quality, as well as how these two concepts influence purchasing behaviour, is largely unknown. The Five Dimensions of Service Quality • Reliability-refers to the ability to provide the specified service consistently and accurately. It focuses on getting the job done right the first time and keeping accurate records. • Assurance- Employees' ability to express trust and confidence is based on their knowledge and courtesy. Employees that instil consumer trust and make them feel secure in their transactions. • Tangibles: This category includes physical facilities, modern equipment, staff appearance, and visually pleasing materials related to operation. • Empathy- A company's consumers receive caring, individual attention. Convenient working hours, and a commitment to the customer's best interests. • Responsiveness—willingness to assist customers and provide quick service. Preparedness to respond to inquiries from customers. Diagnosing Failure Gaps in Service Quality: - It's difficult to implement and evaluate service efficiency. The service quality mechanism can be analyzed in terms of five gaps between standards and attitudes on the part of management, staff, and customers in the hopes of better understanding how a company can increase its overall service quality. The first disparity is the information gap, which is the contrast between what customers want from a service and what management believes customers expect. The second gap is the expectations gap, which is the contrast between what management believes customers expect and the quality requirements set for service delivery. The delivery gap is the difference between the quality requirements defined for service delivery and the actual quality of the service delivered. Do workers, for example, provide service in the manner in which they were trained? The fourth gap is the communications gap, which is the disparity between the real quality of service provided and the quality of service defined in the firm's external communications (e.g., advertising, point-of-purchase materials, and personal selling efforts). The service gap (also known as Gap 5) is the most significant gap, describing the distance between consumers' perceptions of service and their experience of the service actually provided. The service firm's ultimate aim is to close the service gap, or at the very least narrow it as much as possible. However, keep in mind that service quality is determined by the customer's overall satisfaction with the company, which is based on a variety of positive 40 CU IDOL SELF LEARNING MATERIAL (SLM)

or negative service interactions. As a result, the information gap, requirements gap, delivery gap, and communications gap all contribute to the service gap. To put it another way, Gap 5 (Gap 1 Gap 2 Gap 3 Gap 4). The service gap reacts in a similar way when each of these gaps widens or closes. The SERVQUAL Measurement Scale: - It's a multi-dimensional analysis tool for capturing customer preferences and perceptions of a service along five dimensions thought to reflect service quality. SERVQUAL is based on the expectancy-disconfirmation model, which states that service quality is described as the degree to which consumers' pre-purchase quality expectations are verified or disproved by their actual service experience perceptions. When a group of academic researchers, A. Parasuraman, Valarie Zeithaml, and Leonard L. Berry, first published the SERVQUAL questionnaire to quantify quality in the service sector in 1985, it marked a breakthrough in the measurement methods used for service quality research. The model of service quality that served as the conceptual basis for the scale's production supports the instrument's diagnostic value (i.e., instrument or questionnaire). The instrument has been tested in a wide range of contexts and cultural environments and has proven to be fairly reliable. It has been the most widely used scale for assessing service quality. Despite the fact that SERVQUAL has a long history of interest and a wide range of context-specific applications, it has received some criticism from researchers. Dimensions of SERVQUAL • The Tangibles Dimension – In the absence of a physical product, customers often base their evaluations on the tangible evidence that accompanies the service. • The Reliability Factor – In general, the reliability dimension represents a firm's output quality and dependability. • The Responsiveness Dimension – The willingness of a service company to deliver its services in a timely manner is reflected in responsiveness. • The Assurance Factor - the assurance dimension is concerned with the firm's integrity, courtesy to its clients, and operational protection. Competence refers to a company's experience and ability to perform its business. • The Empathy Dimension - Empathy is the ability to consider or sense what another person is going through from their point of view, or the ability to put oneself in their shoes. 1st Empathy can be described as a wide range of emotional states. Cognitive empathy, emotional (or affective) empathy, and somatic empathy are all examples of empathy. 3.5 MODELS OF SERVICE MARKETING There are three kinds of service marketing triangle that includes: 41 CU IDOL SELF LEARNING MATERIAL (SLM)

1. External Marketing - External marketing is the action or business of promoting and selling services or goods to clients and prospective clients, including market research and advertisement. 2. Internal Marketing - Internal marketing is the promotion of a company's goals, processes, culture, brands, goods, and services to its employees and personnel. When businesses advertise internally, their priorities and purposes are usually different than when they market externally. Internal marketing's mission is to keep workers involved, spread awareness about the company's operations, and ensure that employees have a positive perception of the company's culture and brand. External marketing, on the other hand, typically aims to raise brand awareness, which leads to more leads, prospects, and sales for the company. 3. Interactive Marketing - Interactive marketing entails the distribution of goods or services to clients as well as company front-office staff. Since it builds long or short term relationships with clients, it is the most significant aspect of the service marketing triangle. Customers who are very pleased with the goods or services they have received. Customers will become frequent customers of theirs. Marketers who refuse to compromise on quality and consistently offer high-quality goods to their consumers have a devoted following. When it comes to purchasing goods, their loyal customers still want them. The role of the service marketing triangle and its components in the performance of any company cannot be overstated. As a well-established business, we always stick to our strategies. The service marketing triangle: Companies, suppliers (employees), and consumers are the three main players in services marketing, and it determines their relationships, promises, and marketing efforts. Internal marketing occurs between a company and its suppliers, external marketing occurs between businesses and their clients, and digital marketing occurs between customers and suppliers. In the service industry, the marketing service triangle is extremely relevant. 42 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 3.2 Service marketing Triangle The service marketing triangle, as its name implies, can be used to advertise a service to customers. The relationship between the consumer and the service provider is entirely dependent on marketing. We'll take a closer look at each of these experiences, as well as read about how to sell to your customer based on the interaction. The Service triangle has six core relationships. There are three ways to implement marketing campaigns based on these relationships. a) Company to Customers– One of the critical things is to communicate the service features along with the strategies to the customers. b) Nowadays, the majority of E-commerce firms are focused on persuading consumers to purchase exclusively from their portal. They are communicating different service advantages that customers have with this purchase. It is critical to communicate the service strategy to customers in order to gain their interest and, as a result, turn them into loyal customers. c) Company to employees– The relationship between the company and its staff is also crucial in the service triangle. Consider an airline where the flight attendants are dissatisfied with the business. As a client, you will get the worst services. As a result, the company will make their workers a positive influencing force for the customers by educating them, creating value and confidence, and inspiring them. d) Company to systems– Customers must be satisfied, which necessitates the creation of effective and productive systems. Consider a 1960s bank where all was done on paper. If you wanted to send money, you'd have to fill out a lot of forms, and the recipient would have to fill out a lot of forms as well. It was a long and arduous process in the end. However, thanks to advanced systems, you can now not only send money to others from your home, but you can also do nearly all of your banking work from your laptop. The role of structures in the service marketing triangle cannot be overstated. e) Customers to systems– While building systems are essential, customers can benefit 43 CU IDOL SELF LEARNING MATERIAL (SLM)

the most from them. Using the same banking system as before, it is shocking that there is always a line when you go to the bank today. Take a look at the department shops. When it's time to check out, there's still a long queue. The relationship between the customer and the system is crucial in the development of the service brand. It is critical for an organisation to not only develop systems, but also to ensure that the systems meet with consumers and have an outstanding experience. f) Employees to system– Not only do programmes frustrate consumers, but they also frustrate workers. Consider a McDonald's where orders placed at the counter do not make it to the kitchen. Consider a service centre where, despite the fact that you have filed a report, the employee does not receive it and therefore does not contact you. Finally, it will be the employee who will make you mad! The systems in one of the well- known consumer durables companies were cutting-edge, but there were so many processes related to outstanding and inventory that a simple order processing took 20 minutes. At least 1 lakh dealers and distributors worked for the same business. Imagine the constant delays in order processing and the stress this puts on workers as a result of the system failure. Although the system was performing admirably, it was causing confusion between employees and the system. Employee morale and empowerment are also affected by the type of system you hand over to your workers. You would have very happy and pleased customers if the systems are very good and your staff are able to make good use of them. Model of Service: g) The service experience model is used to explain variables that affect service experience, both visible and invisible to the customer. It is made up of the following components: Services cape, Other Customers, Contact Personnel/Service Providers, and Invisible Organizations and Systems. 3.6 SUMMARY • Describe the distinctive challenges of services marketing, including product, price, location, promotion, processes, physical evidence, and people. • Features that marketers must incorporate in order to achieve and maintain quality excellence and deliver value to customers. While the module gives an overview of service marketing and its significance. • Using the Scenario Building Approach to analyse the environment is a smart idea. This is a futuristic operation, and the decision-maker must consider his choices in light of his potential marketing mix. • For a variety of purposes, service pricing differs significantly from that of products. • For example, services may be differentiated based on their price, with a higher price usually indicating higher quality. Another aspect that distinguishes services from products in terms of pricing is the cost variable involved. 44 CU IDOL SELF LEARNING MATERIAL (SLM)

3.7 KEYWORDS • Marketing strategy: They direct their activities towards profitably satisfying that segment. Although they must manipulate many variables to reach this goal, marketing decision making can be divided into four areas: product, price, place (distribution) and promotion • Marketing Program: A marketing program is made up of the various elements of the marketing mix and the relationships among them. • Marketing Mix: emphasizes the fit of the various pieces and the quality and size of their interactions. There are three degrees of interaction – consistency, integration and leverage. Consistency is the lack of a poor fit between two or more elements of the marketing mix. • Facilitating product – It is the service/good that must be present for the customer to use the core product • Drive: physical stimulus that arouses a need. 3.8 LEARNING ACTIVITY 1. Consider any one national and one private bank. Notice the differences in their promotions, people and process. 2. Identify any three major courier service providers and evaluate them based on following parameters: (a) Delivery time (b) Customer service (c) Price (d) Areas covered (e) Ease of process ___________________________________________________________________________ ___________________________________________________________________________ 3.9 UNIT END QUESTIONS A. Descriptive Questions Short Questions 45 CU IDOL SELF LEARNING MATERIAL (SLM)

1. Describe elements of marketing mix and its applications in Automobile sector. 2. Enumerate the role marketing mix in online tourism and hotel industry. 3. Why a service marketer should prevent customers form making comparisons? Explain with examples. 4. Elucidate the demand strategy in which service providers utilize their downtime by marketing to different segments with different demand patterns is associated services – explain. 5. Explain the concept of cognitive dissonance. What you can do to reduce it? Long Questions 1 Service consumers tend to be more brand loyal than goods consumers because – discuss. 2. How can quality services are used in a manufacturing context for competitive Advantage. 3. Promotion of service offers cannot be carried out in isolation without promoting the service provider. Comment 4. Explain the importance of service personnel in the entire service process. 5. Suppose you are the marketing head of a banking firm. What steps will you take to minimise customer’s perceived risk? B. Multiple Choice Questions 1. Services cannot be stored. This describes the ___________characteristic of services. a. Intangibility b. Variability c. Inseparability d. Inconsistency 2. Examples of pure tangible goods include all of the following EXCEPT: a. Soap. b. Tax preparation. c. Toothpaste. d. Salt. 46 CU IDOL SELF LEARNING MATERIAL (SLM)

3. Top firms audit service performance by collecting _________measurements to probe customer satisfiers and dissatisfies. a. Customer satisfier b. Customer complaint c. Voice of the customer d. Psychological 4. According to Zeithaml & Berry, the most important determinant of service quality is: a. Responsiveness b. Reliability c. Assurance d. Empathy 5. Which of the following is not an element of physical evidence? a. Employee Dress b. Employee Training c. Equipment d. Facility Design Answers 1 – d, 2 – b, 3 – c, 4 – b, 5 – b, 3.10 REFERENCES Text Books: • Zeithaml V. A. ,Bitner M. J. and Pandit, A., Services Marketing, 5th Edition, Tata McGraw Hill Publishing Co. Ltd. New Delhi. • Lovelock C. H., Wirtz, J. and Chatterjee, J., Service Marketing: People, Technology, Strategy, 6thEdition, Pearson Education, New Delhi. Reference Books: • Hoffman, K. D. & Bateson, J. E.G., Marketing of Services, Cengage Learning, • Kurtz D. L. and Clow K. E., Services Marketing. Biztantra, New Delhi. 47 CU IDOL SELF LEARNING MATERIAL (SLM)

• Nargundkar, Rajendra, Services Marketing Text and Cases, 3rd Edition, Tata McGraw Hill Publishing Co. Ltd. New Delhi 48 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 4: SERVICE DESIGN AND SERVICE DELIVERY Structure 4.0 Learning Objectives 4.1 Introduction 4.2Service delivery process 4.3Service encounters and Moments of Truth 4.4 Employee role in service delivery 4.5 Service employee criteria 4.6 Importance and emotional approach 4.7 Role of service provider 4.8 Intermediaries involved in in Service Process and Service Delivery 4.9 Summary 4.10 Keywords 4.11Learning Activity 4.12Unit End Questions 4.13 References 4.0 LEARNING OBJECTIVES After studying this unit, you will be able to: • Enumerate various service design concepts for marketing the services • Describe the Service Design aims to create services that are Useful, Useable, Desirable, Efficient & Effective • To know various Benefits of Service Design and Service Delivery • To identify the Process involved in Service Design in delivery process. 4.1 INTRODUCTION Service Design The goal of service design is to create structures that best address the needs of the service's users and customers. It assesses all aspects of the service, including operations, equipment, communication, people, and materials, in order to improve both the quality of the service and the relationships between the service provider and its customers. 49 CU IDOL SELF LEARNING MATERIAL (SLM)

The aim of service design is to create front-end and back-end solutions that best meet the needs of consumers while remaining cost-effective (or sustainable) for the service provider. Users consider ideal services to be user-friendly and competitive in their industry. Service architecture is made up of many different areas. Ethnography, information and management sciences, interaction design, and process design are the most common. System design is used to create new systems as well as improve the performance of existing ones. A Short History of Service Design Lynn Shostack coined the term \"service design\" in 1982. They discovered that service design is a marketing and management obligation. It was proposed that a company develop a \"service blueprint\" that explains the processes inside the company and how they communicate with one another. While this blueprint was originally intended only for service design, it has since evolved into a tool for monitoring and managing operational performance. The relationship between each part of the process is clearly articulated in the service design blueprint. Prof. Dr. Michael Erlhoff (of the Kohn International School of Design – KSID) proposed that service design be considered a design discipline in 1991. He went on to found a global conglomerate of universities that provided service design education as well as a network of academics and practitioners involved in the field. This network then suggested some framework for the discipline: \"[Service Design] is an evolving discipline and an established body of expertise, which can significantly increase the effectiveness and efficiency of services. Service Architecture offers a comprehensive and innovative approach to: • meeting service organisations’ need to be successful • meeting customers’ rising standards of option and quality • making use of the technologies’ revolution, that multiplies the possibilities for developing, delivering and consuming services • answering the pressing natural, social and economic threats to sustainability • fostering new social models and behaviours • sharing awareness & learning” “The Service Designer can: • visualise, articulate and choreograph what other people can’t see, envisage ideas that do not yet exist • observe and analyse needs and behaviours and turn them into potential service futures • express and assess, in the language of encounters, the consistency of design” 50 CU IDOL SELF LEARNING MATERIAL (SLM)