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

Consumer Behaviour’s Importance Understanding customer behaviour is critical for a company's existing products as well as new product releases to succeed. Every customer has a unique thought process and mindset when it comes to purchasing a product. There are high risks of product failure if a business fails to consider a consumer's reaction to a product. Consumer behaviour shifts as fashion, technology, patterns, living styles, disposable income, and other related factors shift. A marketer must be aware of the variables that are evolving in order to coordinate marketing efforts accordingly. What is the importance of consumer buying behaviour? • Consumer Differentiation: In marketing, consumer differentiation refers to the process of distinguishing one customer from a group of similar customers. This aids in the formation of a target community of customers that have similar or identical behaviours. Even if the company caters to a specific consumer group, there can be differences between individual customers. Each customer group is distinct, and their needs and desires vary from those of other groups. When a marketer understands the differences between each group of customers, he may create unique marketing campaigns. Differentiating your customers will allow you to adapt your strategy to their specific needs. You will broaden the scope and depth of your offerings once you've achieved market differentiation. You'll be able to represent a larger community of people more efficiently. • Retention of Consumers: “Consumer behaviour is of most importance to marketers in business studies as the main aim is to create and retain customers” says Professor Theodore Levitt (Kumar, 2004). Consumer behaviour is critical not just for attracting new customers, but also for retaining current customers. When a customer is pleased with a product, he or she will buy it again. As a result, selling the product should be done in such a way that consumers would want to purchase it again and again. As a result, it is clear that attracting and keeping customers is critical. Only through knowing and paying attention to the consumer's purchasing behaviour can this be accomplished. • Design Relevant Marketing Programme: You can develop successful marketing strategies by understanding customer behaviour. Each advertisement will target a particular group of customers based on their purchasing habits. For example, if you're targeting the children's market, you might want to keep an eye out for TV commercials, school programmes, and blogs aimed at young mothers. For different target segments, you'll need to use different messaging strategies. 101 CU IDOL SELF LEARNING MATERIAL (SLM)

Marketers will learn what motivates customers to make purchases by studying consumer behaviour. The same motive can also be used in advertisements to pique a consumer's interest in making a purchase. Furthermore, advertisers should base decisions on customer behaviour when it comes to brand logos, discounts, packaging, and gifts. • Predicting Market Trend: The first sign of a market pattern change would be consumer behaviour research. Consumers, for example, are increasingly concerned about environmental issues and eating healthier foods. Many brands, like McDonalds, have seen this shifting market pattern. McDonald's introduced healthier food choices based on customer behaviour. A business can save a lot of time by performing a customer behaviour analysis instead of producing a product that would not sell in the market. In the summer, for example, a brand will not spend money on a product that will not sell in the summer. The business agrees on a production plan based on customer behaviour in order to save on warehouse and marketing costs. • Competition: One of the most important reasons to study consumer behaviour is to find out answers to some of the questions: • Is the customer buying from your competitor? • Why is a consumer buying from your competitor? • What features attracts a consumer to your competitor products? • What gaps are your consumers identifying in your products when compared to your competitors? Studying consumer behaviour facilitates in understanding and facing competition. Based on consumers’ expectations, your brand can offer competitive advantages. • Innovate New Products: New Coke, Crystal Pepsi, Colgate Kitchen Entrées, Earring Magic Ken Doll, and Wheaties Dunk-a-Balls Cereal are only a few of the well-known brands. Are you able to see the parallels between these two products? Yes, they were all doomed!! The unfortunate reality is that new products and innovations always fail. New product failure rates are estimated to range from 33 percent to 90 percent, depending on the sector. Companies are constantly working to increase the success rate of their new goods or ideas. Conducting a thorough and thoughtful consumer behaviour analysis is one of the most critical methods. 102 CU IDOL SELF LEARNING MATERIAL (SLM)

Nike discovered through customer behaviour research that while the majority of its target audience is not professional athletes, many of them aspire to be like them. So, during the 2012 London Olympics, Nike launched a campaign called \"Find Your Greatness\" to inspire people to participate in athletics. It aimed to encourage people to pursue their dreams of being athletes, not only high-performing athletes, but anyone regardless of physical capacity. The campaign was well-thought-out, data-driven, and, of course, thoroughly scrutinised before taking action. This message influenced a lot of people and had a lot of interest for the target audience. • Maintain Market Relevance When the environment changes as quickly as it does today, remaining important to our target market is the most difficult challenge we all face. Do you know what the key cause of the sudden changes is? It is our customers' ever-changing behaviour. Consumers now have more options and options, which means they can easily turn to a business that provides quality goods and services. “The pre-eminent skill required to shift ahead in the twenty-first century is the ability to see and seize.” -Adamson and Steckel, authors of Shift Ahead. The company's market share will be lost if it loses relevance. Haven't we seen Sony Walkman's failure to stay important in the digital music age, as well as the taxi industry's doom due to its lack of preparedness to combat the rise of UBER?? • Improve Customer Service Different levels of customer service are required by different customers, and knowing the variations within your customer base can help you deliver the most suitable service for each customer's needs. If you own an electronics shop, for example, high school or college students purchasing a new laptop are more likely to know what features they want than those buying their first device. Your service target with the first demographic will be to include information about the latest technological developments, while with the second demographic, you'll need to spend more time educating the consumer, determining his individual needs, and even showing him how to use the features of his new electronic device. 6.2 CUSTOMER EXPECTATIONS IN SERVICES Customer Service Expectations The term \"customer expectation\" refers to everything a customer expects from a product, service, or company. Customer preferences are formed in the minds of consumers based on their personal experiences and lessons learned, as well as their prior knowledge and experience. 103 CU IDOL SELF LEARNING MATERIAL (SLM)

Customers will have both overt and implied preferences when it comes to the product or service they've ordered. They may have performance standards that are complex in nature due to anticipated product or service adjustments over time. They may also have behavioural and service-level preferences, all of which are directly related to the customer relationship and engagement with a company or organisation. Customer Expectations and the Factors That Influence Them A variety of factors influence consumer expectations, but there are a few core elements that are recognised as significant influences on customer expectations. • Previous Customer Service Experience Customer perceptions are influenced by a number of factors, one of which is their previous experience with your business. If they are extremely satisfied current clients, they would have high expectations, which must be met. However, if their previous experience has been poor, they may lack faith in your company and have low expectations. • Communication with customers Your customers' perceptions may have been affected by any piece of outbound communication from your company. Blog posts, tweets, web sites, newsletters, print advertisements, radio and television advertisements all lead to the consumers' desires. All of your correspondence must be truthful, consistent, concise, and unambiguous. • Testimonials and word-of-mouth Since the internet is such a powerful research tool, you should expect your customers to do their homework before making a purchase. They've probably read reviews of your product or service, and they've also probably read reviews of your business. They may have even read what's being said in forums and on social media. What they learn from these sources will shape their perceptions, so pay attention to what they say. • Previous Work Experience with Other Organizations People's perceptions are heavily influenced by their previous interactions with other businesses and organisations. Customers nowadays demand the same high standards of excellent customer support from all businesses and organisations, regardless of whether they are in the same niche as you. Management of Customer Expectations Understanding how consumer expectations are shaped and how they evolve over time is a great place to start when it comes to managing customer expectations. It should go without saying that understanding your customers' needs is critical to your company's success. It's also important to understand how standards differ. Customer preferences of hotels, for example, vary significantly from those of an insurance company. 104 CU IDOL SELF LEARNING MATERIAL (SLM)

Here are a few pointers to help you not only meet but also greatly surpass their consumer standards. • Be open and honest with your communication. As previously said, what the customers have read and probably seen would have affected their perceptions. You should ensure that the information you provide is straightforward, reliable, complete, and truthful because you have complete control over how you interact with your customers. Customer experience has been widely cited as being adversely impacted by a lack of transparency in communications. Here are a few basic guidelines: • Ensure that the information on your website is correct, full, reliable, and up to date at all times. • Your website and other correspondence must use terminology that is suitable for your customers. Don't use technological terms to confuse them. Use the appropriate vocabulary and tone of voice to engage them. • Your social media messages must be timely and sensitive. What is said must be factual, truthful, and upbeat. • Advertising and marketing cannot be deceptive or deceptive. • All printed materials, such as brochures, pamphlets, and flyers, must be reliable, truthful, and easy to understand. • The organization's video and visual advertising must be consistent with other communications. • All service agents and employees who interact directly with customers must be well qualified and professional. Their knowledge must be compatible with other channels of communication, and their style and demeanour must be acceptable. • Tell the clients how long they'll have to wait. People nowadays expect near-instant responses, but this is not always possible, particularly when dealing with a global customer base. Customers' standards can be easily set and dissatisfaction avoided by clearly reminding them of how long they will have to wait. Loyalty should be nurtured. All companies benefit greatly from cultivating customer loyalty. Retaining a current customer is much less expensive than acquiring a new one. Furthermore, loyal customers can be extremely useful in understanding and describing evolving consumer needs. The following are some basic strategies for increasing consumer loyalty: • Often personalise messages by referring to them by their first and last names. • Assuring that each customer is treated with respect. 105 CU IDOL SELF LEARNING MATERIAL (SLM)

• Always thanking them for their patronage and devotion. • Speaking with them on a regular basis. • Pay attention to the little things that can have a big impact on consumer preferences. • Keep an eye on your market and beyond What your clients and consumers have heard from other companies in your field and elsewhere would have a big impact on their perceptions. If a customer has used an online ‘chat' facility on another website to get customer service and got a response in less than 30 seconds, they are likely to demand the same from you when you introduce an online chat tool. Similarly, if a customer has previously received a quick response via social media from an unrelated company or organisation, they are likely to expect the same from your social media channels. You should be mindful of these standards and, preferably, try to meet or exceed them. If this is not feasible, you must interact clearly with your customers in order to set reasonable standards. • Possess Expertise Your employees must be recognised as specialists in the work they do and the services they provide. Every member of staff who interacts directly with customers, from front-line service representatives to switchboard operators and sales representatives, must be properly qualified and confident in their abilities to meet even the most challenging customer demands. • Always make a follow-up call Whether or not a company follows through after a first touch can have a big impact on the customer experience. For example, if a customer contacts a service desk by phone or online chat and receives a resolution to their problem, the customer should be contacted again, preferably by email, to confirm the advice and that the solution was effective. Similarly, it's a good idea to follow up with consumers once they've made a purchase to make sure they're happy. Simple, easy-to-complete customer satisfaction surveys are a perfect way to follow up and get some potentially useful input from your customers. • Explore and Exceed You'll be in a better place to learn about your customers' needs if you build a rapport with them. What do they hope to achieve in the future? What do they expect from the goods or services that your industry provides? What else are they going through that is affecting their expectations of you? With this invaluable perspective, the company will be able to not only reach, but also far surpass, their standards. 106 CU IDOL SELF LEARNING MATERIAL (SLM)

6.3 SERVICE COSTS EXPERIENCED BY CONSUMER The cash price paid by the supplier could be only the first of several costs associated with the procurement and distribution of a service from the customer's perspective. Customers' experiences in various service contexts are described below. • Purchase price and other service-related financial costs: Over and beyond the purchase price, customers also incur additional financial costs. Travel to the service location, parking, and the purchasing of other facilitating products or services, such as meals or babysitting, are all examples of necessary incidental expenses. The sum of all of these costs (including the price of the service itself) would be referred to as the financial costs of service. However, there's more to come, as service costs extend beyond monetary expenditures. • Non-financial costs of customer service: Customers are likely to incur a number of non-financial service costs, which reflect the time, effort, and discomfort associated with quest, purchase, and use in most cases. Customer participation in production (which is especially necessary in people-processing services and self-service) entails mental and physical effort, as well as sensitivity to unpleasant sensory experiences such as noise, heat, and odours. Services with a high level of experience and credibility can have psychological costs, such as anxiety. The non-monetary costs of operation can be divided into four categories: • The cost-of-service delivery is inextricably linked to the amount of time it takes to complete a task. Customers pay an opportunity cost for the time they spend participating in the service delivery process when they may be doing something else. They may also be employed to supplement their income. Internet users are sometimes irritated by the amount of time they spend attempting to access a website (it's no coincidence that the World Wide Web is referred to as the World-Wide Wait!) • Physical costs of service (such as exhaustion, pain, and, on rare occasions, injury) can be incurred in obtaining services, especially if consumers must visit the service factory and distribution is self-service. • Psychological costs of service, such as mental effort, feelings of inadequacy, or anxiety, are often associated with assessing service alternatives, selecting a service, and then using it. • Uncomfortable stimuli affecting any of the five senses are referred to as sensory costs of operation. Noise, unpleasant odours, draughts, excessive heat or cold, uncomfortable seating (especially in high-density aircraft seating configurations), visually unappealing environments, and even unpleasant tastes can be endured in a service setting. 107 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 6.1 Figure 6.2 - The pricing Tripod The three legs of the underlying pricing strategy can be represented as a tripod, with costs, competition, and consumer value as the three legs. The costs to be recovered set a floor for the price that can be paid for a particular product; the value of the product to the consumer sets a ceiling; and the price charged by rivals for similar or replacement goods may decide where the price level should be set within the ceiling-to- floor range. Companies who want to make a profit must first recover all of the costs of manufacturing and selling a service, then add a reasonable margin to make a profit. Loss leaders, who are built to draw consumers who will also purchase profitable goods from the same company, are an exception. Also, for such loss leaders, though, administrators must be aware of the full costs associated with these goods in order to fully comprehend the promotional subsidy. The cost of a service may also be used to communicate its efficiency. Customers can equate higher prices with higher levels of performance on service attributes in the absence of tangible clues. 6.4 THE ROLE OF CUSTOMER IN SERVICE DELIVERY Customers perform a unique variety of roles in service delivery and co-creation. Services customers are also present in the \"factory,\" communicating with staff and other customers. In a classroom or training case, for example, students (the customer) sit in the factory (classroom) engaging with the teacher and other students while consuming and co-creating educational services. Customers may contribute to or subtract from the effective delivery of the service and their own satisfaction because they are present during the service output. Customers may contribute to the widening of gap 3, the service efficiency gap, because they are participants in service development and distribution. That is, customers will have a say in whether or not the service meets their requirements. Customers may contribute to gap 3 when they are unclear about their positions and what they should or should do in a given situation. 108 CU IDOL SELF LEARNING MATERIAL (SLM)

Customers may contribute to or subtract from the effective delivery of the service and their own satisfaction because they are present during the service output. Customers' role in service co-creation and delivery In order to provide services, customers must participate in some way. Services are acts or performances that are usually produced and consumed at the same time. Employees, clients, and even those in the service community collaborate in multiple situations to achieve the final service result. Customers who receive services are involved in the service delivery process. Via acceptable or inappropriate, successful or inefficient, productive or unproductive conduct, he or she may contribute to the distance. Customers who are unsure about what they want to order will eat up the time of the customer service representative when seeking advice. Similarly, customers who do not have their credit cards with them can \"put the representative on hold.\" When they look for their credit cards, they can go to another room or even get out of their cars. Other customers and calls are left unattended in the meantime, resulting in longer wait times and possible frustration. Since the customer is involved in the distribution process, he or she may contribute to the narrowing or widening of gap 3 by engaging in acceptable or inappropriate, successful or inefficient, productive or unproductive conduct. Customers receive and/or concrete the service concurrently with other customers in certain service cases, or they must wait their turn as other customers are served. In both cases, there are \"fellow customers\" in the service community who may influence the quality of the service outcome process. Roles of customers The parts that follow go into three main roles that customers play in service co-creation and distribution in greater depth: • Customers as a source of revenue Customers that use the service are referred to as \"partial employees\" of the company. They are human capital that contribute to the productive potential of the company. In other words, consumers should be considered members of the company if they devote effort, time, or other resources to the service development process. Customer inputs can affect the organization’s productivity through both quality and quantity of output. E.g., research suggests that in an IT consulting context: • Clients who clearly articulate the solution they desire. • Provide needed information in a timely manner. • Communicate openly. • Gain the commitment of key internal stakeholders. 109 CU IDOL SELF LEARNING MATERIAL (SLM)

• And raise the issues during the process before it is too late will get better service. Customers as quality contributors to service delivery and satisfaction Another role that customers play in service delivery is that of a contributor to their own happiness and the overall quality of the services they offer. Customers may be unconcerned that their involvement has improved the organization's efficiency. However, they are likely to be concerned with whether or not their needs are met. Effective customer engagement will increase the probability that their needs will be met and that the benefits they seek will be realised. Health care, education, personal wellbeing, and weight loss are examples of services where the customer's involvement is critical to the service's success. The desired service results cannot be achieved in such facilities unless the customers perform their roles effectively. In education, research has shown that active participation by students, rather than passive listening, greatly improves learning the desired service quality. Customers as adversaries Finally, service customers may play the part of a potential competitor. If self-service customers are treated as tools or \"partial workers\" by the company, self-service customers may be viewed as such in some cases. They do not need the provider at all if they can provide part or all of the service themselves. Customers are also rivalling of the companies that provide the service in that context. Whether or not they should provide a service for themselves (internal exchange). Consumers often face dilemmas such as child care and home maintenance, i.e., having someone else provide home services for them (external exchange). Organizations make similar judgments about internal and external exchange. Payroll, data processing, testing, accounting, maintenance, and facilities management are all common service operations that companies prefer to outsource. They also discovered that it is more beneficial to concentrate on their core businesses and delegate these critical support services to those with more experience. Alternatively, a company may decide to avoid buying services from outside vendors and bring the service creation process in-house. Enhancing customer participation strategies The degree and extent of customer involvement in the service process are strategic decisions that can affect an organization's competitiveness, competitive positioning, service quality, and customer engagement. • Define the position of the customer: In order to establish strategies for addressing customer engagement in service co-creation and delivery, the company must first decide what form of participation is desired from customers and how they wish to participate. 110 CU IDOL SELF LEARNING MATERIAL (SLM)

• Self-Help: In many instances, a company can decide to increase consumer engagement in service delivery by encouraging active participation. In such cases, the customer becomes a useful resource, performing tasks that were previously handled by staff or others. • Assisting others: In many instances, a company can decide to increase consumer engagement in service delivery by encouraging active participation. In such cases, the customer becomes a valuable resource, performing tasks that were previously handled by staff or others. • Promoting the company: The customer's job can involve a sales or promotional component in some cases. When it comes to determining which service provider to pursue, consumers depend heavily on word-of-mouth recommendations. They would rather get a recommendation from a friend who has used the service than rely on advertisements or other types of non-personal communication. • Individual differences: When describing a customer's position, keep in mind that not everyone will want to take part. Self-service appeals to certain clients, although others prefer to have the service done entirely for them. • Recruit, inform, and reward customers: Once the customer's position has been established, the company should consider how to make that role easier to perform. In certain ways, the customer becomes a partial employee of the company, and customer behaviour management techniques in service development and distribution can resemble initiatives directed at service employees to some extent. • Attract the right customers: Before the organisation can begin the process of educating and socialising customers for their positions, it must first attract the right customers. 6.5 CONFLICT HANDLING IN SERVICES Following are the steps that can lead to quicker and longer-lasting customer service conflict resolution. • Maintain your composure The most professional way to deal with an angry customer is to stay calm yourself. This can be a difficult job, especially if the customer is highly dysregulated and the insults become personal. The best way to reach your irritated customer where they are without worsening the situation is to remain calm, but staying calm isn't always easy. Here are some suggestions for staying cool in these situations: • Take a few deep breaths: It can seem ridiculous, but calming down to take a few deep breaths can make a huge difference in how you respond. 111 CU IDOL SELF LEARNING MATERIAL (SLM)

• Clear some physical room: If the irate customer approaches your personal space in person, take a few steps back. If you feel physically threatened, you won't be able to stay calm, so give yourself some room. • Recognize your own emotions: Pay attention to how you're feeling right now. You don't have to act on it, but naming fear, anxiety, or anger will help you deal with the overwhelm of these feelings and prevent them from speaking for you. • Bring in a backup: If you're a boss, it's possibly your responsibility to de-escalate situations. However, if you can find a colleague to cover for you temporarily while you gather yourself, it can be beneficial in the long run. This should be someone who hasn't been trying to resolve the issue from the beginning; that way, s/he would be only far enough removed from the situation to avoid being overwhelmed. So, take a few minutes to think about it and come up with some new ideas. • Verify the Client's Identity It doesn't matter whether you agree with an agitated customer or not. You must be kind and compassionate of someone who is ineffectively voicing indignation in order to de-escalate the situation. Tell them you hear what they're saying, even though you don't understand it. Remember that if they're emotional, they're probably not thinking clearly at the time. It's easy to come across as dismissive, particularly if you're rushing through this section to get to your side of the storey. Any positive results may be reversed as a result of this. Instead, take the time to listen to your customers' concerns and assure them that you are paying attention. Demonstrating that what they say matters can not only de-escalate a situation, but it can also serve as the basis for a long-term customer relationship after the issue has been resolved. • Don't take it too seriously Making sure you're not taking it personally is one of the easiest ways to resolve a customer service dispute. It can be difficult not to take things personally, whether or not the disgruntled customer is attempting to do so. It's your job to remain above it, and it's a tall one. One of the reasons it's important to keep yourself apart from the customer's remarks is that if you feel compelled to defend yourself, any soothing, validating cool-headedness that may help you overcome the dispute vanishes. You could lash out in return, but that won't help you reach a satisfactory conclusion. • Try to avoid arguing. Avoiding resistance is one of the most significant dispute resolution tips for customer service representatives. Against all odds, fight the temptation to prove a wrong customer wrong. Fact-checking feelings is a sure-fire way to transform a minor rift into a full-fledged conflict. 112 CU IDOL SELF LEARNING MATERIAL (SLM)

If you need to use proof against them at all, wait until tensions have subsided and feelings have stabilised. You respond impulsively when you take their attacks personally and become defensive. Similarly, if the consumer feels belittled by your attempt to correct them. Instead of resisting them to make a case, be flexible, let go of your rightness, and work for a collaborative solution. • Be gentle with yourself. GIVE is a skill in Dialectical Behaviour Therapy. It refers to a gentle, interested, validating, and simple manner. GIVE is a skill that can help you boost your interpersonal effectiveness by reminding you that it's not just our words that can make or break an argument. The way we say those words has a big impact on the interaction. Customer service representatives must use this skill on a much more regular basis, and they can use it to prevent conflict from arising in the first place. It's a simple concept that's made even easier when you consider how you prefer to be addressed, particularly when you're upset. You're being careful of the tone of voice, body language, and vocabulary by being gentle and using an easy manner. Try being more accessible, polite, and kind instead of hurling swear words at a disgruntled customer, posturing against them to claim your authority, or using a short tone. Even if you aren't feeling especially motivated, smile. Using these abilities can persuade the customer to have confidence in you. • Be Self-Assured Validating feelings is crucial, and it should be one of the first steps in de-escalating an angry person. Setting containment, on the other hand, is crucial. This means not allowing the customer's anger and frustration to spill all over you. As a corporate representative and a human being, assert your limits. Take note of the distinction between assertive and aggressive behaviour. Avoid being obnoxious in your boundary-setting, but make sure you uphold your dignity. Be kind but strong, and use compassion to establish a boundary. • Assume Accountability Whether or not an apology is enough, it's a good idea to accept responsibility for the inconvenience when you can. And if it was due to inadequate communication, misleading advertising, or poor customer service, the corporation is almost certainly to blame for every aspect of the ordeal. Accept responsibility for your actions and don't let pride get in the way of making amends. Put yourself in the shoes of the consumer and consider what you'd like to hear if you were them. After all, we are all consumers of different brands in some way. 113 CU IDOL SELF LEARNING MATERIAL (SLM)

Taking responsibility entails not only acknowledging where you might have contributed to the problem, but also determining how you will address the issue. Allow your customer to have confidence in your ability to manage the situation so they don't feel so alone. • Concentrate on a solution It's time to move on after the feelings have been validated and discussed. Collaboration with a customer to decide the best approach can be the boost in efficiency that everyone has been looking for. Build on what you've just learned from your customer's complaints. Offer whatever assistance you can in bridging the distance between them and the organisation and preventing potential annoyances. 6.6 CUSTOMER RESPONSES IN SERVICES The organization's response to the customer's questions and actions is known as customer response. It's critical to respond to these questions intelligently because minor misunderstandings can lead to misperceptions. Understanding and interpreting these questions is critical to success, as is figuring out how to have the best answer. If the supplier is successful in satisfying the customer by correctly answering his questions, he is successful in establishing a professional and emotional relationship with him. Responses come with a wide range of features and aspects, making questionnaires simple to create. After receiving responses, a customer can find themselves in the following situations. • Customers can be fully pleased with the form of response and have a favourable impression of the respondent. • They may be fully pleased but have no deep feelings for the respondent. • Slightly pleased with the responses, but with or without feelings against the respondent, depending on the respondent's efforts and nature of responses. • They may be completely disappointed with the answers, but have no animosity against the respondent because the respondent may have delivered the items accurately and efficiently. • They may be completely disappointed with the responses and harbour negative feelings toward the respondent because the respondent may have made a mistake. The customer can be in all of these situations, and based on the quality and types of responses he receives from the respondent, he forms an opinion about the business. If the company succeeds in pleasing the customer, it would have an easier time building and sustaining a relationship with that customer. Customers, on the other hand, who perceive the consistency of responses as poor and unsatisfactory, as well as the supplier's attitude as unfamiliar and negative, would undoubtedly seek better alternatives from other organisations. As a result, the company will eventually lose the customer's business. As a result, customer response is a 114 CU IDOL SELF LEARNING MATERIAL (SLM)

critical factor for all businesses to establish business relationships and achieve high levels of customer satisfaction and loyalty. Similarly, for consumers, it's a critical way to assess their suppliers and decide whether or not they'll be successful partners. A good customer response is a valuable asset for any company, and it often helps them grow significantly in business, whether directly or indirectly. A consumer, for example, purchases toothpaste from a store. After opening it, he discovers that the tube is half empty on the inside. He promptly notifies the manufacturer by filing a formal complaint. In response, the company sends an apology letter along with a fresh tube of toothpaste. The customer would undoubtedly be pleased and delighted with the manufacturer's timely response and beneficial service. This pleased customer would tell all of his friends and family about the manufacturer's consideration for even this minor transaction. Through providing such a prompt and constructive response, the manufacturer was able to convert the customer into a company ambassador, resulting in increased sales and productivity. Before designing customer response plans, it's crucial to consider the master plan, which outlines how responses should be modelled based on the customer's personality, which varies depending on the situation. Giving the right answer at the right time is the best way to effectively develop customer relationships and persuade them to enter into long-term business agreements. 6.7 CONCEPT OF CUSTOMER DELIGHT Attract, engage, and delight are the three major principles of the inbound methodology. The inbound experience is, at its heart, a customer-centric way of doing business centred on assisting people in successfully solving their issues and challenges. The attract level, which attracts customers to your company, is driven by marketing and services. The lead is then engaged and motivated to convert by marketing and sales. Finally, Sales and Service bring the flywheel to a close by delighting the customer with a great purchase and outstanding customer service. 115 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 6.3 – Customer Support Strategy • Customer Delight Definition Customer delight is the process of fulfilling a customer's needs in order to generate a meaningful customer experience and increase loyalty to your product or brand. You can promote an emotional bond and sense of goodwill among consumers by going above and beyond to build a memorable customer experience — with items like deals, gifts, promotions, or spontaneous outreach — and making them more likely to be loyal to your brand in the long run. Delight is all about giving consumers a memorable experience by concentrating on their wants, needs, and desires. The aim of delight is to make these people so happy and fulfilled that they go out and sing your brand's praises. Who is in charge of making prospects and clients happy? The most popular inbound businesses have teams that work together to delight existing and future customers. Of course, the customer care and support teams are essential, but so are all other customer-facing departments including marketing, sales, and product development. That's because delighting customers entails exceeding their standards in any interaction with your company (for example, visiting your blog, looking at your website's pricing page, chatting with a sales rep, or asking for help using your product). You'll establish a positive bond with your consumers if you do this, and they'll continue to stay loyal brand supporters and promoters. • What is the difference between customer delight and customer satisfaction? Customer delight is the process of exceeding consumers' expectations in order to create a meaningful, long-term relationship with your product or service. When you simply fulfil your customers' needs, you will achieve customer loyalty. Although happy customers are beneficial to your company, pleased customers are more likely to become loyal customers and brand advocates. Successful inbound businesses concentrate on more than just attracting potential travellers, turning them into leads, closing them as clients, and meeting their needs. Instead, they want to offer future and current customers an all-encompassing remarkable inbound experience. Creating and determining your customer delight index is a perfect way to get a sense of your current degree of customer delight. In today's dynamic business climate, delighting rather than merely pleasing your customers is key to your long-term success. • Customer Satisfaction Index The customer delight index is a way of determining how happy your customers are with the company and its goods or services. 116 CU IDOL SELF LEARNING MATERIAL (SLM)

Your customer delight index is calculated using a variety of customer feedback methods and applications (e.g., surveys, focus groups, interviews, etc.) that your company finds useful. Ask customers about their feelings about the quality of your product or service, contact and friendliness, and ability to get the help they need using these tools. From here, you will decide what needs to be changed and what doesn't in order to determine your delight index (as you would with a customer satisfaction index). How to Make Your Customers Happy • Resolve issues with (potential and current) customers The first — and perhaps most critical — task for your company is to address the issues that your future and existing customers are facing. Customers come to you for a solution to a problem they're having or a way to reach a target they're working toward, so don't leave them hanging. Provide your customers with solutions that are tailored to their specific wants, needs, and desires. Prospects and future buyers are in the same boat. Potential customers expect you to fix their issues as well, even though they aren't paying customers yet. • Be punctual Responding to customer issues as soon as possible is crucial — ensuring that being available and attentive if your customers contact you is a huge part of customer delight. Show your customers that they are still a priority by reacting quickly, regardless of how big or small the problem is. And if you can't fix the problem right away, let them know you're working on it or escalating it — this shows you care for them. Adopting customer relationship management software, or CRM, is an excellent way to begin handling all of the customer interactions. You may use a CRM to monitor and log all emails and other means of communication, as well as set up reminders to contact specific clients about specific issues. Conversational marketing tools can also sync your customer service cases to your CRM, helping you to stay on top of all conversations and have a better customer experience. • Think of the present and the future while solving problems. Although providing quick solutions to your customers' problems is beneficial in the short term, it does not guarantee that their problems will be resolved in the long run. You will solve for the future by going beyond the immediate solution by providing information and opportunities to help the customers handle their problems — and teaching them to do so on their own, if and when possible. To improve your brand's inbound experience, provide educational resources, recommendations, and tools for success to your future and current customers. Write 117 CU IDOL SELF LEARNING MATERIAL (SLM)

informative blog posts, share tips on social media, and build a self-service knowledge base to accomplish this. • Assist consumers in achieving their goals Make sure you know why customers buy your product or service so you can figure out how to help them succeed. You'll be able to target those pain points and solve for them to meet consumer standards if you really understand what customers need from a product or service like yours. Develop buyer personas or a consumer journey map to accomplish this. Additionally, assist consumers in succeeding by supplying them with the appropriate educational services so that they understand how to contact your service and support staff, receive the assistance they need, or search for answers to their questions on their own. • Pay attention to consumer reviews. It can be difficult to accept critical feedback, but it can mean the difference between the company rising and failing. Remember to listen if a customer has a problem, no matter how minor, and don't take it personally. Customers pay for the privilege of using your product or service. As a result, when things go wrong or break, they expect to be heard and remembered with empathy (and maybe with a discount or kind note thanking them for their patience, too). • Have a positive attitude Ensure that your staff maintain an enthusiastic, encouraging, and friendly tone in any interaction your company has with potential and current customers. What this sounds like (or looks like) for your company can vary depending on the brand, market, and image. However, if you want to build an inbound experience that truly delights, don't be a dictionary — instead, have a genuine, wet, personalised, human interaction that respects your users' time and leaves them content, fulfilled, and informed. • Surprise people If you want to set your business apart from the competition, you must leave a lasting impression on your customers. Although your primary objective is to solve the customer's dilemma, you will make a lasting impression by providing more than they anticipated. Customers expect their needs to be met, but they are blown away when the team goes above and beyond in providing an exceptional customer experience. This can be accomplished by personalising each customer interaction and instilling a customer-centric culture in your organisation. Personalization software, for example, can be used in emails and on web pages to make content feel as if it was created specifically for the users and visitors. Your company would 118 CU IDOL SELF LEARNING MATERIAL (SLM)

have a greater chance of increasing overall customer satisfaction if you create one-of-a-kind customer experiences. • Build a community The feeling of belonging to a community or association is appealing to many people. This positive feeling can be augmented by group management or the development of a user community that benefits your customers. Your group may be used as a forum for users to post customer feedback or as a resource for sharing useful information. Creating a place where consumers can engage with one another and with your employees adds value to your customer experience and continues to delight these people, no matter what your community's purpose is. For example, if a consumer is thinking about making a purchase, they may ask a question in the community or read past feedback in the forum to shape their opinions based on other people's experiences. An example of customer delight • HubSpot is a web-based marketing platform. To accelerate development and delight consumers, HubSpot switched from a funnel to a flywheel model. By aligning the entire company around providing a remarkable customer experience, HubSpot is able to cultivate meaningful relationships with customers at all stages of the buyer's journey. This results in satisfied customers who refer others and buy from you again. Figure 6.4 Customer support representatives, sales representatives, development specialists, advertisers, and all other HubSpot teams are qualified to meet customers' needs and solve for their pain points and challenges. Customers may also use the HubSpot Community, HubSpot Knowledge Base, HubSpot Academy, and HubSpot Blog to connect with one another, learn from different tools in their own time, and get immediate answers. 119 CU IDOL SELF LEARNING MATERIAL (SLM)

Finally, all HubSpot products are designed to change with customers' businesses. Engineers make sure that the goods are up to date and that they meet the needs of both consumers and buyer personas. 6.8SUMMARY • They will fill in the void in the market and recognise the goods that are required and those that are outdated through recognising how customers choose products. • Consumer behaviour helps businesses understand how customers make purchasing decisions and how they look for products. These data assist businesses and business managers in understanding the reasons for a customer's purchase or rejection of a product or service. • Intangibility, perishability, variability, and inseparability are four distinct characteristics of utilities. • Customer loyalty is critical to the company's success. It is not only the leading indicator for determining consumer loyalty, identifying dissatisfied customers, reducing churn, and increasing sales, but it is also the leading indicator for determining customer loyalty, identifying unhappy customers, and reducing churn. 6.9KEYWORDS • customer satisfaction: the product performance match with buyer expectations • High Contact Services: Service providers have high degree of contact with the customers. • Low Contact Services: Services characterized by very low contact with people. • Permissibility: Goods are perishable in nature , store for long period of time. • Customer delight: Customer delight is surprising a customer by exceeding his or her expectation 6.10 LEARNING ACTIVITY 1. Explain the modern few service companies how to maintain customer service retention strategies. ___________________________________________________________________________ ___________________________________________________________________________ 120 CU IDOL SELF LEARNING MATERIAL (SLM)

6.11 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Why a service marketer should maintain customers satisfaction? Explain key Notes with examples. 2. Do you think brand image, patronage and positioning has something to do with brand selection? Why or why not? 3. Explain the concept of dissonance reducing behaviour. What you can do to reduce it? 4. Suppose you want to take a decision of purchasing of industrial products. on what basis your decision-making process likely to be prefer /? 5. Why a marketer wants that consumers should not follow the eight-step sequence for purchase? What all he can do to ensure this? Long Questions 1. Suppose you are the marketing head of a chain of discotheques. What measures will you take to add an element of tangibility to your service? 2. The customer’s service encounters are different in every time at hospital industry. Comment? 3. Suggest ways to overcome the problem of customer standardization of services in a multi- cuisine restaurant? 5. Compare and Contrast key points in service provider and product expectations. Give examples? B. Multiple choice Questions 1.. Any individual who purchases goods and services from the market for his/her end-use is called a.................. a. Customer b. Purchaser c. Consumer d. All of these 121 CU IDOL SELF LEARNING MATERIAL (SLM)

2. ------------ is nothing but willingness of consumers to purchase products and services as per their taste, need and of course pocket. a. Consumer behaviour b. Consumer interest c. Consumer attitude d. Consumer perception 3. ------------- is a branch which deals with the various stages a consumer goes through before purchasing products or services for his end use a. Consumer behaviour b. Consumer interest c. Consumer attitude d. Consumer perception 4. Customer relationship analytics is sometimes also called ………… a. Analytics CRM b. Analytical CRM c. CRM Analysis d. Advanced CRM 5. Which of these statements is not true about Customer Relationship Analytics? a. It helps distinguish whether customers are part of high-profit or high-maintenance segments. b. It takes on the role of a highly sophisticated marketing department. c. It need not be shared at all levels of the organization. d. It can impact the company’s overall bottom line. Answers 1 – A, 2 – B, 3 – A, 4 – b, 5 - c 122 CU IDOL SELF LEARNING MATERIAL (SLM)

6.12 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. • Nargundkar, Rajendra, Services Marketing Text and Cases, 3rd Edition, Tata 123 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 7: SERVICE DEVELOPMENT AND QUALITY IMPROVEMENT Structure 7.0 Learning Objectives 7.1 Introduction 7.2 Types of New Service Development and its Stages 7.3 Types of new services 7.4 Stages in New service development 7.5 Service Costs Incurred by the Service Provider 7.6 Service Blue Printing 7.7 Summary 7.8 Keywords 7.9Learning Activity 7.10 Unit End Questions 7.11 References 7.0 LEARNING OBJECTIVES After studying this unit, you will be able to: • State the learning as multidimensional, integrated, and revealed in quality performance over time. • It measures the quality improvements, assessing service development, including those that call for actual performance, • It identifies using them over time so as to reveal change, growth, and increasing degrees of integrationnature of Service Development and Quality Improvement • It suggests the Process of Service Development and Quality Improvement 7.1 INTRODUCTION Service Development The end-to-end process of creating and releasing a new service to be offered to customers is known as service creation. Market analysis, service strategy, customer engagement, 124 CU IDOL SELF LEARNING MATERIAL (SLM)

marketing, operations, and the introduction of a new service are common examples. The following are some of the most popular aspects of service production. • Market research • Competitive Analysis • Customer needs • Customer preferences • Customer Motivations • Market fit • Target Market • Service Positioning • Customer expectations • Test Marketing • Service Strategy • Service objectives • Service Strategy • Service requirements • Customer Experience • Design • Usability • Touchpoints • Quality • Customer convenience • Environments • Information and Communication • Empathy and Tailoring • Image and Identity • Voice of the customer • Marketing • Branding 125 CU IDOL SELF LEARNING MATERIAL (SLM)

• Distribution • Promotion • Pricing • Sales • Operations • Customer service • Processes • Technology and Infrastructure • Knowledge • Training • Controls • Measurement • Launch • Go to Market • Moment of truth • Improvement Quality Improvement Quality management is a systematic approach to assessing the performance of systems and processes and identifying changes that are required in both functional and operational areas. Data collection and review are important for successful efforts. A quality management plan is a continuous, ongoing process that allows stakeholders in an organisation to track and review projects and outcomes. QI principles were established in manufacturing in the 1940s, based on the thinking of experts like W. Edward Deming. QI processes have become increasingly common in healthcare and education over the last two decades. While organisations use a variety of methods, process management is at the heart of QI. Organizations that work according to multiple processes can change their whole system more quickly and progressively by analysing and enhancing one process at a time and leveraging the Pareto principle. Quality improvement processes share these characteristics: • Quality improvement is data driven and regards the quantitative approach as the only reliable means to influence the qualitative elements. This principle is expressed in the 126 CU IDOL SELF LEARNING MATERIAL (SLM)

following saying of quality improvement guru W. Edwards Deming: “The right data in the right format in the right hands at the right time.” • QI focuses on processes, not people. In other words, the individual is never at fault. • QI involves people as part of the improvement solution and looks for what is attributed to Deming as “the smart cogs,” the employees who are directly involved in and best understand the processes in an organization. The Main Purpose of Quality Improvement Quality management helps to increase efficiency and meet consumer needs. The primary goal of quality assurance in healthcare is to improve results. Quality management can be linked to continuous quality improvement in healthcare environments, which is a tool for identifying issues and implementing, monitoring, and providing corrective action. The Benefits of a Quality Improvement Process • The following are some of the advantages that a quality assurance method can provide to an organisation: • Process defects, not personality flaws, are the subject of solutions. • A focus on empirical, data-driven solutions to detect inefficiencies, preventable errors, and ineffective processes rather than subjective opinions. • Enhancements that result in improved customer support, increased performance, increased protection, and increased revenue • A regional emphasis on small, gradual improvements that is less risky than making big changes all at once • Data collection to track progress activities, which can serve as the foundation for reimbursement and certification programmes, particularly in healthcare. 7.2 TYPES OF NEW SERVICE DEVELOPMENT AND ITS STAGES Since services are intangible, it has to have 4 basic characteristics: 127 • It must be objective, not subjective • It must be precise, not vague. • It must be fact driven, not opinion driven. • It must be methodological, not philosophical. Following are the types of new service: • Major or radical innovations • Start-up businesses CU IDOL SELF LEARNING MATERIAL (SLM)

• New services for the new current Market • Service line extensions • Change in Services NEW SERVICE DEVELOPMENT PROCESS/ STAGES: Front End Planning: • Business Strategy Development: The first step is to revisit the company's vision and mission. • New Service Strategy Development: The foundation of success is built on a product portfolio strategy and an established organisational framework for new product/service growth. (Feasibility in terms of economies, service forms, time horizon, and benefit criteria.) • The structure enables a company to define potential growth paths. • Offerings are one of the most common methods. • There should be a systematic structure in place to ensure a steady stream of new service options. • The process could involve a formal new service development department in charge of creating new ideas, employee suggestion boxes, customer suggestion boxes, and new service development teams to find new services. • Idea Generation: Formal brainstorming, eliciting ideas from employees and clients, conducting lead-user analysis, and learning about rivals are all part of the process. • Service Concept development and evaluation: Following a consistent definition of the concept, it's critical to write an overview of the service that captures its unique characteristics, and then to gauge initial customer and employee reactions to the concept. • Business Analysis: • Assuming that the service model was well received by customers and employees during 128 CU IDOL SELF LEARNING MATERIAL (SLM)

the concept creation stage, the next step is to assess its viability and future profitability. • This stage would provide estimates for the costs of recruiting and training employees, as well as improvements to the distribution system and facility adjustments. • The findings of the market review will be run through the organization's viability and feasibility screen to see if the new service concept meets the minimum requirements. Implementation • Service development and testing: It entails the development of a product prototype and customer acceptance testing. The idea is refined to the point that a comprehensive service blueprint representing the service's implementation plan can be created during this process. Market testing: For a limited time, the new service may be made available to company employees and their families to see how they respond to changes in marketing mix. At this stage, a pilot study for the service is required to ensure that all operational details are in order. Commercialization: The service goes live and is introduced to the market at this stage. The first step is to gain and sustain acceptance of the new service among a significant number of service delivery staff who will be responsible for service quality on a day-to-day basis. To keep track of all facets of the service throughout the launch and during the service period. Post introduction evaluation: At this stage, the data collected during the service's commercialization can be analysed, and adjustments to the delivery process, personnel, or marketing-mix variables can be made based on the actual offering and market response. 7.3 TYPES OF NEW SERVICES Nature of Services The definition of service is “any intangible product, which is essentially a transaction and is transferred from the buyer to the seller in exchange for some consideration (or no consideration). The characteristics of a service are as follows: - 129 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 7.1 – Types of New Services • Intangibility: A service is not a tangible item that can be touched or seen. The buyer or the recipient of a service will also profit from it. Furthermore, you cannot assess the service's efficiency prior to use. • Inconsistency: There is no such thing as flawless service standardisation. Even if the service provider remains the same, the service quality can fluctuate from time to time. • Inseparability: One distinguishing feature of services is that the service and the service provider are inextricably linked. The manufacturing and use of services, unlike goods/products, cannot be segregated by storage. • Storage: Since storage of resources is not feasible, the output and consumption of services are not inseparable. There can never be an inventory of resources since it is an intangible purchase. Types of Services • Business Services Business services are the first form of operation. The most basic concept would be resources that sustain a business's everyday operations and activities but are not commodities. Take, for example, information technology services. Every business, in this day and age, will require technological setup. People who provide IT support to a company are doing a service in return for payment. Other similar services may be required by any business enterprise for the smooth operation and management of its operations. Banking, warehousing, insurance, networking, and transportation are examples of such facilities. • Individualized Services Personal services are commercial operations that are offered to people based on their unique requirements. The service is highly tailored to the needs of the client. As a result, there can be 130 CU IDOL SELF LEARNING MATERIAL (SLM)

no consistency in the facilities. The service provider will tailor his services to each customer's specific requirements. Catering, hotel and lodging, medicine, and some kinds of creative endeavour are examples of personal services (like painting, sculpting etc). As you can see, both of these programmes cater to the customers' individual needs. • Social Assistance When it comes to programme forms, we come to social services. They are critical government facilities. The government or other non-profit organisations are responsible for providing them. These programmes seek to promote social equity in society by providing the assistance that the underprivileged need. The service is given for a social cause rather than for profit. Education, sanitation, medical care, and housing are all examples of social services. 7.4 STAGES IN NEW SERVICE DEVELOPMENT • Inspiration/concept During the design and ideation stage, a product's functional and performance specifications, as well as buyer personas or \"the voice of the consumer,\" can be described. Customer needs and novel functionality design concepts are freely discussed and explored in order to uncover compelling possible solutions that address a consumer need. • Feasibility analysis and design considerations The feasibility process allows management to assess a project's likelihood of success by evaluating and improving the business case from different perspectives. The project team evaluates product design ideas during this process. They then choose the design that best meets the user requirements that were previously established. The comprehensive, exhaustive project specifications that will direct the design and development process have now been compiled. • Development and design Formal engineering requirements are developed during this process. Plans for future verification and validation are being created. These are the final quality tests, which will ensure that all agreed-upon deliverables are present and functional in the final product. The product is then built-in accordance with the plans, with frequent checks made along the way to evaluate and minimize the risk of failure for both the end-user and the project. • Verification and testing The final product is thoroughly tested to determine the design's robustness as well as its ability to fulfil consumer and performance specifications. The design specifications defined in stage 2 are checked during verification. 131 CU IDOL SELF LEARNING MATERIAL (SLM)

• Validation and collateral design Validation takes place in relation to the consumer needs found during the ideation stage. The collateral has been finalized and is ready for the manufacturing and launch phases. • Production/deployment Plans, specifications, and other pertinent documents are sent to the manufacturer for assembly, or software products and improvements are issued to customers. The marketing and launch strategies have been finalized and implemented. Customers receive software updates or downloads in the form of updates or downloads. • Enhancement The new product is added to the company's lineup. Ongoing quality management ensures that the product is updated and improved on a regular basis. To feed into these actions, CAPA processes are in place. 7.5 SERVICE COSTS INCURRED BY THE SERVICE PROVIDER The direct costs associated with services provided to customers for businesses are referred to as cost of goods sold, cost of sales, cost of revenue, or cost of services. It covers all direct costs associated with operating or providing services. The cost of materials, labour, or wages in a service sector, and any other costs that can be directly attributed to the production of goods or rendering of services are common expenses included in the category of direct costs. Materials, on the other hand, are generally insignificant in comparison to direct labour costs, but we must also factor in all of the materials used in the cost of services. Such charges that are not specifically related to the provision of services should not be included in the cost of services when reporting the income statement. The cost of services, like the cost of revenue for a manufacturing or trading firm, is reported in the corporation income statement. The costs are reported in accordance with the accrual basis as well as the matching theory. Cost of Goods Sold (COGS) vs. Cost of Services Sold (COS): The word cost of products sold is most often associated with the manufacturing industry, while cost of revenue is used to express the cost of services in the services or skill-based industries. The measurement and management of inventory is another distinction between the two. When calculating COGS, the cost of inventory is a significant factor, while there is none when calculating the cost of sales or services. 132 CU IDOL SELF LEARNING MATERIAL (SLM)

Accounting for Cost of Services: In a broader view, the cost of services includes all the direct costs involved in performing the task or activity and excluding all the indirect costs. Cost of Services/Revenue = Sum of All Direct Costs Or Raw material + Direct labor + Shipping cost + Other Direct Costs The cost of services or revenue is charged to the company’s income statement to calculate the gross profit. Cost of services includes: • Raw Material: Since the services sector does not produce any products, there is usually no raw material. However, companies must factor in the cost of any materials used in their services. • Direct Labor or Wages Expense: When determining the cost of facilities, direct labour or expert salaries should be factored in. For instance, suppose a repair company accepts a contract to repair a house in three days. The job was completed with the assistance of one labourer who worked for 30 hours at a rate of 375 Rs per hour. As a result, the cost of labour would be added to the cost of services. 30 multiplied by 375 equals 11250. • Storage or Shipping Costs: All transportation costs for skilled labourers or professionals for the job would be included in the price of services. Assume a law firm dispatches a team of specialists to represent a client from one city or state to another. The cost of a train, bus, or plane fare would be charged to the company's income statement as a cost of services. Costs that are not included in the estimate Cost of Services: The cost of revenue excludes all indirect costs that are not directly related to the results of an operation. Salaries of marketing workers • Rent of premises or workplace • Utility bills • Phone bills • Some other overhead expenditures are typical examples of indirect costs for a services company. 133 CU IDOL SELF LEARNING MATERIAL (SLM)

7.6 SERVICE BLUE PRINTING The relationships between various service components — individuals, props (physical or digital evidence), and processes — that are specifically linked to touch points in a particular customer journey are visualised in a service blueprinting diagram. Consider operation blueprints to be the follow-up to consumer journey charts. Blueprints, including consumer path charts, are useful in dynamic situations involving a variety of service offerings. Blueprinting is a great way to build Omni channel, multi-touchpoint interactions that require a cross-functional effort (that is, coordination of multiple departments). A service blueprint is linked to a particular customer experience and the consumer goals that go along with it. The length of this journey is up to you. If there are several different situations that the service may handle, you can have several blueprints for the same service. For example, if you run a restaurant, you may have different service blueprints for ordering food for takeout versus dining in the restaurant. Service blueprints should always have a business purpose in mind, such as reducing redundancies, improving employee satisfaction, or bringing siloed processes together. Service Advantages Creating blueprints Service blueprints provide a company with a detailed understanding of its service, as well as the underlying tools and processes that enable it — both visible and invisible to the user. Focusing on this greater picture (along with more traditional usability considerations and individual touchpoint design) has strategic implications for the company. Blueprints are treasure maps that assist companies in identifying flaws. Poor user experiences are often caused by a flaw in the ecosystem's internal organisation. Although we can easily recognise what's wrong with a user interface (bad design or a broken button), figuring out what's causing a structural problem (corrupted data or long wait times) is far more difficult. Blueprinting reveals the big picture and provides a dependency chart, enabling a company to identify a weak leak at its source. Similarly, blueprints aid in the identification of optimization opportunities. The visualisation of relationships in blueprints reveals areas where changes can be made and duplication can be eliminated. Knowledge obtained early in the consumer experience, for example, could be repurposed later backstage. This strategy has three advantages: • Customers are ecstatic when they are remembered a second time because the experience is more personalised and they save time and effort. • There's no need for employees to spend time collecting information, and there's no chance of inconsistent data when the same question isn't asked twice. 134 CU IDOL SELF LEARNING MATERIAL (SLM)

Since it connects cross-departmental efforts, blueprinting is most useful when organising complex services. A department's effectiveness is often calculated by the number of touchpoints it controls. Users, on the other hand, experience several touch points during a single journey and have no idea (or care) which department owns each one. If a department can achieve its goals, the organization's overall objectives may not be met. Blueprinting forces companies to document what happens internally through the entire consumer experience, revealing overlaps and dependencies that departments alone would miss. Figure 7.2 Key Elements of a Service Blueprint Service blueprints come in a variety of visual styles, with some being more graphic than others. Every service blueprint, regardless of its visual appearance or scope, contains the following main elements: • Customer behaviour Customers go through a series of steps, decisions, events, and experiences when engaging with a service to achieve a specific objective. Research or a consumer journey map are used to determine customer behaviour. 135 CU IDOL SELF LEARNING MATERIAL (SLM)

Customer activities include visiting the website, visiting the store and shopping for appliances, reviewing choices and features with a sales assistant, purchasing the appliance, receiving a delivery date notice, and eventually receiving the appliance, according to the blueprint for an appliance retailer. • Actions in the foreground Actions that take place right in front of the customer's eyes. Human-to-human or human-to- computer interactions are possible. The measures and behaviours that the contact employee (the individual who communicates with the customer) conducts are known as human-to- human behaviour. When a customer communicates with self-service technology, human-to- computer activities are performed (for example, a mobile app or an ATM). The front stage activities in the appliance company example are directly related to customer actions: a store employee welcomes customers, a website chat assistant tells them which units have which features, and a trader partner contacts customers to arrange delivery. It's worth noting that not every consumer touchpoint has a parallel front-stage action. Customers can communicate directly with a service without having to deal with a front-stage actor, as in our example blueprint's appliance delivery. A moment of truth exists every time a customer communicates with a service (either through an employee or through technology). Customers judge the service and make choices about potential purchases at these critical moments. • Behind-the-scenes activities Steps and events that take place behind the scenes to help what's going on onstage. These acts could be carried out by a backstage employee (for example, a kitchen cook) or a frontstage employee who performs a task that is not apparent to the customer (e.g., a waiter entering an order into the kitchen display system). Several backstage acts occur in the appliance company example: Employees maintain and update the company's website with the newest units; a shipping employee inspects the unit's condition and quality; a chat assistant calls the factory to validate lead times; employees maintain and update the company's website with the newest units; and the marketing team produces promotional content. • Procedures Internal processes and experiences that assist employees in providing service. This aspect encompasses everything that must occur in order for the preceding to occur. Credit card authentication, pricing, distribution of units from the manufacturer to the store, writing quality checks, and other processes are used by the appliance company. In a service blueprint, main elements are grouped together and separated by lines. The following are the three main lines: • The line of contact represents the customer's direct encounters with the organisation. 136 CU IDOL SELF LEARNING MATERIAL (SLM)

• The line of visibility divides all visible operation operations from those that are not visible to the customer. Anything visible on stage appears above this line, while everything hidden behind the scenes appears below it. • The internal relationship line distinguishes communication workers from those who do not actively endorse customer/user experiences. The final layer of a service blueprint is proof, which consists of the props and locations in which everyone in the blueprint interacts. Evidence can be used in front-end and back-end processes and actions. The products themselves, signs, physical shops, websites, instructional videos, and email inboxes are all examples of facts in the appliance case. Figure 7.3 137 Secondary Elements to Include in a Service Blueprint CU IDOL SELF LEARNING MATERIAL (SLM)

Additional elements may be added to blueprints when required to fit them to the context and business goals: • There are arrows Arrows are an essential part of the service blueprinting process. They represent connections and, more importantly, dependencies. A single arrow denotes a one-way, linear exchange, while a double arrow denotes the need for cooperation and agreement. • The passage of time If time is a key variable in your service, you should include an approximate timeframe for and customer activity in your blueprint. • Policies or Regulations Any policies or regulations governing how a process is carried out (food regulations, protection policies, and so on) can be included in your blueprint. When we refine, this data will help us understand what can and cannot be modified. • Emotion Employees' emotions can be reflected in the blueprint in the same way that a user's emotion is represented in a consumer journey diagram. (In the illustration below, emotion is represented by the green and red faces.) Where do workers get irritated? Where do you find workers who are satisfied and motivated? If you already have some qualitative data on sources of dissatisfaction (from internal surveys or other sources), you can incorporate it into the roadmap to better focus the design process and find pain points more quickly. • Measurables Any success metric that can provide meaning to your blueprint is a plus, particularly if the blueprint's aim is to gain buy-in. Time spent on different procedures, or the financial costs associated with them, are two examples. These figures will assist the company in determining where time or money is being spent as a result of miscommunication or other inefficiencies. 138 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 7.4 7.7 SUMMARY • The degree of conformity between specified expectations and achieved objectives is the measure of service quality. As a result, measuring and adhering to a benchmark norm is relatively easy. 139 CU IDOL SELF LEARNING MATERIAL (SLM)

• During In order to increase productivity and effectiveness in all fields, quality improvement is a necessary process. It aids in monitoring and providing input on where changes and improvements can be made. • Quality management methodologies are processes for identifying, analyzing, and improving an organization's existing processes in order to maximize results, and they are applicable to quality improvement services. • A design blueprint is a high-level strategy that guides partners through the process of planning and developing an open course. Its goal is to visually represent the course's overall \"architecture\" in order to direct the design, production, and collaboration process. • The standard of service A gap model will help a company that wants to improve service quality concentrate more on its strategies and processes. This model can be used to not only find and recognize areas of concern in service delivery and design, but also to assess and track service quality. There are two kinds of gaps: user gaps and supplier gaps. • Blueprints, which are typically professional models, have long been a part of disciplines such as architecture and engineering. The blueprint has been modified and popularized (primarily by Service Designers) to assist teams in visualizing all of the processes and touch points involved in service delivery. 7.8 KEYWORDS • Customer Gap: Gap between customer expectations and customer perceptions • SERVQUAL: Service quality • The line of interaction: depicts interactions between the organization and the customer. • The line of visibility: depicts everything the organization does that a user can see (even if they do not directly interact with it). • The line of internal interaction: depicts interactions within the organization that the customer does not see or interact with. • External Marketing: communication between company and customers • Interactive Marketing: communication between providers and customers • Internal Marketing: communication between company and providers • Blueprinting: A blueprint is a high-level plan that guides collaborators through the process maps the process of service delivery. 140 CU IDOL SELF LEARNING MATERIAL (SLM)

7.9 LEARNING ACTIVITY 1. What is service quality ? Explain SERVQUAL model with examples. Give examples of some quality issues with some major service firms based on product, user and value. ___________________________________________________________________________ ___________________________________________________________________________ 2. Discuss the significance of GAP’S model of service quality in service design and development. Give some examples of major external and interactive marketing campaigns run by services firms. ___________________________________________________________________________ ___________________________________________________________________________ 7.10 UNIT END QUESTIONS A. DESCRIPTIVE QUESTIONS Short Questions 1. “Services marketing is a game of ‘promises’ played amongst three entities”. Comment 2. Discuss the significance of GAP’S model of service quality in service design and development process with examples. How can you use the gap model for service quality? Suggest ways to close each gap? 3. Describe with diagrammatic presentation of of service blueprinting and its role in strategic positioning with an example. 4. Explain the important stages in new service development process (SDP) and SQD with internal and External customer choice of preference and loyalty. 5. What are the stages in service life cycle (SLC) and explain it with examples 6. Positioning is battle for the consumer’s mindshare. Discuss the relevance of positioning in modern marketplace. What are the options available for a firm to position a service? If you want to position healthcare services, how would you do it? Long Questions 1. Explain the major problems in measurement of service quality gap. How a customer quality gap model accessed? Give examples. 141 CU IDOL SELF LEARNING MATERIAL (SLM)

2. “Marketing myopia might creep in and make management blind”. How does it relate to service quality? 3. In services, perceptions are everything. Do you agree? Support your answer with valid proofs. 4. Suppose you are the marketing manager of an aircraft manufacture company. How will you prepare the service blueprint and differentiate between the factors that provide satisfaction and those that imply service quality to customer? Are there any differences? 5. Explain the zone of tolerance in service quality and how the researcher helps in new service product and development. Take example of any two major services and explain the customer perception towards service quality B. Multi Choice questions 1. The zone of tolerance is defined by the difference between a. Expected service and desired service. b. Predicted service and desired service c. Desired service and adequate service. d. Predicted service and perceived service 2. Customers ultimately determine the services by……………. a. The type of competitors. b. The levels of marketing effectiveness and operational efficiency c. The cycle of fluctuations d. The price of the competitors. 3. During a service recovery effort, the employee promptly refunded the customers money but threw the money at the customer. As a result, the recovery effort violated the customers ___________ justice need a. Interactional 142 CU IDOL SELF LEARNING MATERIAL (SLM)

b. Ethical. c. Social. d. Procedural 4. Compared with low-contact services, customers of high-contact services are more likely to judge service quality on the basis of: a. Price of the service b. Processes used in carrying out the service c. Intangible outcomes e.g. The performance of an investment portfolio d. Tangible outcomes 5. SERVQUAL refers to a. Service Quality b. Collective Services c. Bundling of Services d. None of these Answers 1 – b, 2 – b, 3 – b, 4-b, 5-a 7.11 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. 143 CU IDOL SELF LEARNING MATERIAL (SLM)

• Nargundkar, Rajendra, Services Marketing Text and Cases, 3rd Edition, Tata 144 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 8: SERVICE DEVELOPMENT AND QUALITY IMPROVEMENT Structure 8.0 Learning Objectives 8.1 Service Development – Need Importance and as a Measure of Competitive Advantage 8.2 Service Quality Dimensions 8.3 Service Quality Measurement and Service Mapping 8.4 Improving Service Quality and Service Delivery 8.5 Service Failure and Recovery 8.6 Summary 8.7 Keywords 8.8 Learning Activity 8.9 Unit End Questions 8.10 References 8.0 LEARNING OBJECTIVES After studying this unit, you will be able to: • Discuss about the management of service encounters • Critically evaluate service quality models and know how service quality can be measured; • Identify and measure to be be familiar with the concepts of satisfaction and loyalty; be able to understand the importance of complaint handling. • Generates greater loyalty with customers with their benefits of Service Development process and Quality Improvement strategies 8.1 SERVICE DEVELOPMENT NEED, IMPORTANCE AND AS A MEASURE OF COMPETITIVE ADVANTAGE Service Development Need All of the activities involved in realising new service opportunities, including product or service design, business model design, and marketing, are referred to as new service growth. 145 CU IDOL SELF LEARNING MATERIAL (SLM)

We have “service” and “growth” when we divide service development into two sections. When it comes to service, the first topics that come to mind are economics, finance, administrative operations, competitiveness, costs, and marketing. All of these terms are associated with risk and entrepreneurship, indicating that the term \"service growth\" has a broad definition. Development is a broad term that can be associated with terms like technical advancement, cost savings, general welfare, better relationships, and progress in a positive direction. The majority of people think of service creation as a way to expand a business using a variety of methods. Although the strategies listed vary, they are all related to conventional marketing. The following are the two key questions that must be answered in order to implement this strategy: How do we locate, contact, and approach customers? How will we keep these customers happy with new offerings in the future? When providing a solution, it's necessary to concentrate on the whole package rather than just the product or service. A package containing various proportions of a physical product, operation, guidance, distribution, and costs is known as an offering. An idea central to new service growth, based on contingency theory, is that different service, market, and technology combinations which require different marketing strategies and business models to be successful. New service creation heavily relies on the fields of technology and business networks to map the factors involved and establish synergy between them. In a rapidly evolving technological climate, the new service creation process entails considering opportunities and risks. Automobile manufacturers, for example, should see rising gas prices as an incentive to develop more fuel-efficient vehicles. The Importance of Developing and Improving Services Creation of services Innovation can be used to create offerings that meet previously unmet consumer needs and open up new market opportunities, as well as to distinguish the company from the competition and boost customer loyalty. • Customers deserve to be inspired by their service experiences. The importance of emotional customer interactions is growing. Because of the expanding possibilities and fast-moving product and service cycles, customers' expectations for the consumer experience of services are rising. According to a 2014 Gartner report, 89 percent of businesses understand the value of customer service as a competitive advantage. In the report \"Closing the Delivery Gap,\" Bain & Company discovered a \"80/8 Delivery Gap\": They discovered that while 80 percent of the businesses surveyed believe they have an above- average customer experience, only 8% of customers agree. As a result, many businesses still have room to develop and reinvent their services. 146 CU IDOL SELF LEARNING MATERIAL (SLM)

Fig 8.1 • Set yourself apart from the competition In today's world, goods are often interchangeable. Markets are oversaturated. For businesses today, defining and creating unique selling propositions is more critical than ever. Service Design Innovation enables businesses to create superior service products, distinguish themselves from the competition over time, and reach out to new customer segments. To give you an example, consider the following: Customers choose one of two shops if they are next to each other and both sell the same items at the same price. Customers choose one of the two shops because of the nature of the service. • Improved consumer retention Customer retention is heavily influenced by a service's perceived experience, which includes availability, usability, and service quality. In all sectors, service is the only consistent loyalty engine. Customers will return to a brand if the service is good, but if the service is bad, customers will go to the competition. Service Design aims to identify areas where businesses have customer service issues and how services can benefit both consumers and businesses, and then create solutions that add tangible value. 147 CU IDOL SELF LEARNING MATERIAL (SLM)

When people use a company's services, they want to be motivated and expect a smooth operation. Collaboration with innovative agencies and brand ambassadors isn't enough to develop customer-oriented service design ideas and get a sense of the demand. Companies must understand the customer's perspective of their service offerings and provide their staff with the tools they need to function effectively. Companies will accomplish this aim by implementing service creation principles. 8.2 SERVICE QUALITY DIMENSIONS Figure 8.2 The SERVQUAL Instrument assesses each of the five service quality dimensions. Tangibility, durability, responsiveness, assurance, and empathy are the five dimensions. In general, service quality refers to a customer's assessment of service expectations in relation to the company's results. • Sensitivity Since services are tangible, consumers' perceptions of service quality are based on a comparison of the tangibles associated with the services offered. It refers to the physical appearance of the buildings, equipment, staff, and communication materials. Customers refer to questions about the physical layout and services that FFR provides to its customers in this survey, which is conducted using a questionnaire. • Dependability It's the ability to deliver on a pledge with consistency and accuracy. The term \"reliability\" refers to a company's ability to keep its promises, such as those about delivery, service provision, problem resolution, and pricing. Customers prefer to do business with companies that follow through on their commitments, especially those about service results and core service characteristics. Customer expectations of dependability must be understood by all 148 CU IDOL SELF LEARNING MATERIAL (SLM)

businesses. Customers are most directly harmed by companies that do not offer the key service that they believe they are purchasing. • Adaptability It's a desire to assist consumers and provide quick service. In coping with customer demands, inquiries, grievances, and issues, this dimension emphasises attentiveness and promptness. Customers can tell how responsive a company is by how long they have to wait for help, responses to inquiries, or attention to issues. Responsiveness often encompasses the idea of adaptability and the ability to tailor a service to the needs of the consumer. • Consistency It entails instilling faith and belief in others. Assurance is described as an employee's understanding of courtesy and the firm's and its employees' ability to inspire trust and confidence. This dimension is likely to be especially significant for programmes that consumers consider to be high-risk and/or for which they are unsure of their ability to assess. The individual who connects the customer to the business, such as the marketing department, can embody trust and confidence. As a result, workers understand the value of gaining customer trust and confidence in order to achieve a competitive edge and maintain customer loyalty. • Compassion It refers to the firm's commitment to providing compassionate, personalised service to its customers. Individual attention is needed in certain countries to demonstrate to the consumer that the organisation is doing everything possible to meet his needs. Empathy is a bonus that increases consumer trust and loyalty while also increasing trust and confidence. Customers' demands are the day by day in this competitive environment, and it is the responsibility of businesses to do everything possible to satisfy those demands; otherwise, customers who do not offer personalised service would go elsewhere. 8.3 SERVICE QUALITY MEASUREMENT AND SERVICE MAPPING Almost every company is concerned with providing high-quality service. When consumers are deciding which company to use to meet their needs, the quality of service may be a major factor. Customers have some preferences about the quality of service they would get from the companies they frequent. Businesses that make it a practise to meet these standards can count on repeat business and a loyal following. However, if you don't have any feedback from your clients on how to improve, it's difficult to improve your service level. As a result, collecting customer input and using it to assess service quality should be an important part of almost every company's strategy. • Use surveys to get customer feedback - Simply asking for input from your customers is perhaps the easiest and most straightforward way to obtain it. A survey — a list of questions 149 CU IDOL SELF LEARNING MATERIAL (SLM)

about their experience — is a simple way to do this. Surveys with multiple-choice questions are particularly useful for companies because the responses can easily be quantified, making it simple to express results from the data in the form of graphs, scatter plots, and other visual representations. Typically, surveys are administered at the conclusion of a customer's experience (such as after dinner or as they are checking out of a hotel). You may want to provide a survey with the paperwork that completes the transaction, such as a bill from a restaurant or a receipt from a store purchase. Keep it short and sweet — almost no one enjoys taking lengthy, in-depth surveys. The more straightforward and to-the-point your survey is, the more likely it is to be completed. • Follow up with consumers after they've received service - Another standard method for companies to obtain input from consumers is to contact them after the service has been rendered. This is normally achieved by using the contact information given by the customer as part of getting their service — if you've ever received a follow-up call from your cable provider after having a receiver activated, for example, you might have engaged in this type of feedback. This type of feedback has the benefit of allowing consumers to use your company's service before asking for their feedback. Unfortunately, this form of feedback has the potential to be perceived as rude or cloying. If a family receives a follow-up call during their nightly meal, for example, it will have a negative impact on their opinion of your business. One way to mitigate this is to use less intrusive methods of communicating with your clients, such as email, social media, and other forms of electronic communication. Electronic approaches, on the other hand, have been shown to favour data from various demographic groups over phone surveys. • Conduct usability checks - In each of the customer reviews examples above, data on service quality was collected from consumers after they had used the service. Usability checks, on the other hand, enable you to obtain input from your customers when they are using your product or service. A usability test usually involves giving a few participants samples of the product or service while observers observe and take notes. Participants are typically expected to complete specific tasks or solve problems with the product or service; if they are unable to do so, it may indicate that the product or service has design flaws. • Usability tests may provide a wealth of information about how to change a product or service. For example, if you're evaluating the usability of your new cloud-based writing platform and discover that the majority of your participants struggle to change the font size, you'll know that this feature should be made more intuitive in the final version. • Make the most of the tools at your disposal to keep usability testing costs down — run the tests in your workplaces, during working hours, and, if possible, use your company's own recording equipment. Renting these items can be very costly. 150 CU IDOL SELF LEARNING MATERIAL (SLM)