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CHAPTER 3
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CONCEPTS AND ROLE OF SERVICE MARKETING
3.1
Definition of Service
The American Marketing Association (AMA) defined services in 1960 as "Activities,
benefits or satisfactions which are offered for sale, or are provided in connection with
the sale of goods. For a number of years this seems to have been the one most widely
accepted and used. Its chief weakness though is that it does not discriminate
sufficiently between goods and services; goods too are offered for sale because they
provide 'benefits' and 'satisfactions'.
A refinement of the AMA definition:
"Services are those separately identifiable, essentially intangible activities which
provide want-satisfaction and that are not necessarily tied to the sale of a product or
another service. To produce a service may or may not require the use of tangible
goods. However when such use is required, there is no transfer of title (Permanent
ownership) to these tangible goods."
In using this definition Stanten (Ref: Cowell, Donald W., The Marketing of Services,
Heinemann Professional Publishing PP.22-23) makes clear that activities like medical
care, entertainment and repair services are included but credit, delivery and other
services which exist only when there is the sale of a product or another service are
excluded. He also recognizes that the consumer may take temporary possession or
make temporary use of any goods that may be required in the production of a service
(e.g. a hotel room). Also by suggesting that service organizations are those which do
not have as their principal aim to produce tangible products which buyers will possess
permanently, he is close to the idea of Gronroos that the service is the object of
marketing i.e. the company is selling the service as the core of its market offering.
Another similar definition is that of Kotler "A service is any activity or benefit that
one party can offer to another that is essentially intangible and does not result in the
ownership of anything. Its production may or may not be tied to a physical product".
What these and other definitional approaches share in common is their emphasis,
directly or by implication, on the essentially intangible nature of a service. This
quality of intangibility is central to another approach to service definition which
focuses on the distinctive characteristics of services i.e. inseparability, heterogeneity,
perishability, lack of ownership etc.
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3.2 Characteristics of Services
3.2.1 Characteristics of General Services
A number of characteristics have been suggested to help distinguish goods and
services. It is the combination of these characteristics which create the specific context
in which a service organization must develop its marketing policies. The more
commonly stated characteristics of services are:
(a)
intangibility;
(b)
inseparability;
(c)
heterogeneity;
(d)
perishability;
(e)
lack of ownership.
Intangibility
Services are essentially intangible. It is often not possible to taste, feel, see, hear or
smell services before they are purchased. Opinions and attitudes may be sought
beforehand, a repeat purchase may rely upon previous experience, the customer may
be given something tangible to represent the service, but ultimately the purchase of a
service is the purchase of something intangible.
Inseparability
Services often cannot be separated from the person of the seller. A corollary of this is
that creating or performing the service may occur at the same time as full or partial
consumption of it. Goods are produced, sold and consumed whereas services are sold
and then produced and consumed.
Heterogeneity
It is often difficult to achieve standardization of output in services. Even though
standard systems may be used, for example to handle a flight reservation, to book in a
customer's car for service or to quote for insurance on his life. Each 'unit' of a service
may differ from other 'units'. Franchise operations, like Wimpy Bars, attempt to
ensure a standard of conformity; but ultimately it is difficult to ensure the same level
of output in terms of quality. From the customers' viewpoint too it is difficult to judge
quality in advance of purchase; although this element also applies to some product
marketing.
Perishability
Services are perishable and cannot be stored. Spare seats on a package tour or an
empty hotel room represent capacity lost forever. In addition, with some services,
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there is fluctuating demand which may aggravate the perishability feature. Key
decisions have to be taken on what maximum capacity level should be available to
cope with surges in demand before service levels suffer. Equally, attention has to be
given in times of low levels of usage on whether spare capacity will lie idle or whether
short-term policies (e.g. differential pricing, special promotions), will be adopted to
even out fluctuations in demand.
Lack of Ownership
Lack of ownership is a basic difference between a service industry and a product
industry because a customer may only have access to or use of a facility (e.g. a hotel
room, a credit card). Payment is for the use of, access to or hire of items. With the sale
of a tangible good, barring restrictions imposed say by a hire purchase scheme, the
buyer has full use of the product.
3.2.2 Characteristics of Banking Services
1.
Intangibility:
Banking services, except in particular instances, meet a general rather than a specific
need. Particular benefits are not readily apparent, and therefore banks are dependent
on getting their message over to the public effectively and ensuring their image and
service are attractive.
2.
Lack of identity:
To the public, one bank's service is like another. The reason, a particular bank or
branch is used is often due to family tradition or convenience. Each bank must find a
way of establishing its identity and implanting this in the mind of the public. As is
found in other areas, where the competing products are similar, the emphasis is on the
'package' rather than the product. The 'package' consists of branch location, staff,
services, reputation, advertising and from time to time new services which will be
quickly copied by competitors. Every product or service has certain qualities designed
to meet customers needs; these qualities can be described as offering 'benefits' to the
customers, such as security, convenience and advice.These qualities can be inherent to
the service itself, such as no charges on accounts in credit, or of a 'promotional' nature
- how the message is got across to customers. These promotional qualities are also
important as they meet the customer's need for information make him aware of what is
available and the 'inherent' qualities of the service. However, if as in banking, the
major competitors offer, or are thought to offer, similar services, the emphasis will be
laid on the 'promotional' aspects, rather than on the 'inherent' uniqueness of a
particular bank's service. This is one of the reasons that, now-a-days, banks do very
little positive selling but mainly rely on indirect methods.
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3.
In-built inertia:
Once a customer is with a bank he is unlikely to be persuaded to change. It is only if
he or the company move to a new area, or there is an exceptional degree of
inefficiency or discourtesy, is it likely to happen. This is way banks put emphasis on
getting young people to start their first account with them.
4.
Wide range of need:
Banks have to offer a very wide range of services to meet up a variety of needs of
different customers in different areas: at one end of the scale, to provide a special oneoff arrangement for an industrial customer at the other, a retail service covering
money receipt, storage, supply and transmission. This makes it difficult even to keep
staff fully informed to all the services offered, and alert to opportunities to offer these
to new or existing customers. This can be offset by making specialists available, but
this is only effective after the need has been recognized, and if there is no conflict of
interests between the 'general practitioner' and the 'specialist'.
5.
Geographic dispersion:
There has to be a branch network in any bank of size and scope in order to provide
benefits of convenience and to meet both national and local needs; therefore all
services or promotions have to have a general appeal and wide application as possible.
6.
Wide indirect competition:
Although banks have little direct competition except from each other, there is
considerable indirect competition for savings. For example Competitors, like building
societies, offer a more tangible end result.
7.
Growth must be balanced with risk:
When selling loans, one is buying risk. There has to be a well controlled balance
between expansion and prudence. At present, banks largely get business because they
and their highly efficient services are there. It is difficult to create and promote a
unique product, so the emphasis is on service, reputation and location.
Beyond this the bank is dependent on a large number of staff, in a large number of
branches, doing their work effectively being courteous and well informed with
customers and being alert to how the bank can meet customers needs. The best
recommendation is the satisfied customer who says 'X' bank has always looked after
me, or introduces his student, son to the bank manager or suggests to a friend "I
should have a word with X bank".
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3.3 Definition of Service Marketing
Marketing is described as "the way in which an organisation matches its own human,
financial and physical resources with the want of its customers" and is defined by the
institute of Marketing as "the management process responsible for identifying,
anticipating and satisfying customer requirements profitably".
Marketing thinking developed initially in connection with selling physical products
such as toothpaste, cars, steel and equipment. Yet one of the major mega trends has
been the phenomenal growth of services. Today, service industries account for almost
3/4th of the GNP of the developed countries of the world. (Ref. Kotler, Philep, The
Marketing Management Analysis, Planning Implementation and Control,prentic-Hall
of India, 8th Edition,1995). This has led to a growing interest in the special problems
of marketing services. Concepts and strategies of services marketing have developed
in response to the tremendous growth of service industries resulting in their increased
importance to the U.S. and world economics. Service industries are quite numerous
and varied. Among the keys to competing effectively in this new and challenging
environment are skills in marketing strategy and execution-areas in which most
service firms have traditionally been weak.
Marketing can be described in several ways. It can be seen as a strategic thrust
pursued by top management, as a set of functional activities performed by line
management or as a customer driven orientation for the entire organization. Services
Marketing seeks to integrate all three perspectives. It also recognizes that services
marketing function is much broader than just the activities and output of the
traditional marketing department.
3.4
Services Marketing Mix
Marketing mix is the set of marketing tools that the firm uses to pursue its marketing
objectives in the target market. Marketing mix is one of the key concepts in modern
marketing theory. McCarthy popularized a four-factor classification of these tools
called the four Ps: product, Price, Place and Promotion. But this was basically
developed for manufacturing companies. To meet wider needs of services marketers, a
modified marketing mix was presented by Booms and Bitner. (Ref: Booms, B.H. and
Bitner, M.J. "Marketing Strategies and Organisation Structures for service firms", in
Donnelly, J. and George W.R. (eds) Marketing of Services, American Marketing
Association, Chicago, 1981, PP.47-51.) Their modified and expanded marketing mix
for services consists of seven elements like - (a) Product , (b) Price, (c) Place , (d)
Promotion, (e) People, (f) Physical evidence , (g) Process.
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a)
Product:
The service product requires consideration of the range of services provided, the
quality of services provided and the level of services provided. Attention will also
need to be given to matters like the use of branding, warranties and after-sale service.
The service product mix of such elements can vary considerably and may be seen in
comparisons of service range between a small local building society and one of the
largest building society in the country; or between a steak bar offering a limited
menurange and a four star hotel offering a wide range of meals.
b)
Price:
Price considerations include levels of prices, discounts, allowances and commissions,
terms of payment and credit. Price may also play a part in differentiating one service
from another and therefore the customers' perceptions of value obtained from a service
and the interaction of price and quality are important considerations in many service
price sub mixes.
c)
Place:
The location of the service providers and their accessibility are important factors in
services marketing. Accessibility relates not just to physical accessibility but to other
means of communication and contact. Thus the types of distribution channels used
and their coverage are linked to the crucial issue of service accessibility.
d)
Promotion:
Promotion includes the various methods of communicating with markets whether
through advertising, personal selling activities, sales promotion activities and other
direct forms of publicity, and indirect forms of communication like public relations.
e)
People:
All human actors who play a part in service delivery and thus influence the buyers'
perceptions; namely, the firms's personnel, the customer and other customers in the
service environment.
All of the human actors participating in the delivery of a service provide cues to the
customers regarding the nature of the service itself. How these people are dressed,
their personal appearance and their attitudes and behaviors all influence the customer's
perceptions of the service. The service provider or contact person can be very
important.
f)
Physical Evidence:
The environment in which the services is delivered and where the firm and customer
interact and any tangible components that facilitate performance or communication of
the service. The physical evidence of service includes all of the tangible
representations of the service such as brochures, letterhead, business cards, report
formats, signage and equipment. In some cases, it includes the physical facility where
the services are offered, for example, the retail branch facility. In connection with
telecommunication services, the physical facility may be irrelevant. In this case other
tangibles such as billing statements and appearance of the repair truck may be
important indicators of quality. Physical evidence cues provide excellent opportunities
for the firm to send consistent and strong messages regarding the organizational purpose, the intended
market segments and the nature of the service.
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g)
Process:
The actual procedures, mechanisms and flow of activities by which the service is
delivered - the service delivery and operating systems. The behaviour of people in
service organizations is critical. So too is the process-the how-of service delivery.
Cheerful, attentive and concerned staff can help alleviate the customers' problems of
having to queue for service or soften the blow of the breakdown of technology
involved in service production. They cannot however compensate entirely for such
problems. How the overall system operates-the policies and procedures adopted, the
degree of mechanization used in service provision, the amount of discretion
employees have, the customers' involvement with the process of service performance,
the flows of information and service, the appointments and waiting system, the
capacity levels available-these are typically operational management concerns.
However the importance of these aspects of service to customers' perceptions of
satisfaction with the services offered make them also areas of interest to marketing
management.
3.5 Methods of Service (Specially Banking Services) Marketing
There are a number of logical steps which make marketing effective; some of them
may fall directly under the marketing activity; others, depending on the organization,
may be providing input and assistance to other functions.
Market intelligence- The Collection, analysis and interpretation of relevant
information.
Setting business objectives and strategies- Marketing contributes to the
development of business objectives and strategies which provide the framework for
subsidiary objectives and strategies.
Market objectives and strategies- The business's objectives enable marketing
objectives and strategies to be formulated. These must take account of constraints e.g.
external rules, for instance, established by government and policies, e.g. internal rules
established by the company.
Marketing plans- Plans designed to meet marketing objectives must meet both
strategic and operational needs. They must decide how resources, mainly time and
money are the best allocated to the different methods available to marketing. This is
often referred to as determining the optimum marketing mix. The ingredients to be
mixed in the rift quantities include advertising, branch location and development,
pricing, public and press relations, display material, service development and
promotion, staffing and training. In addition there need to be detailed and agreed plans
for regions, service, and customer groups, spelling out the What, Where, When by
Whom and How reported.
Marketing action and control- Marketing will have direct responsibility for certain
actions and provide input into other departments who also contribute to achieving
marketing objectives. marketing will also be involved in monitoring and advising on
what is actually achieved against plan.
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There is an on-going continuing cycle from information-analysis-objectivesstrategies-plans-action-control-review-information, as demonstrated in Figure below ( Fig. C-6)
External
Analysis
Internal
facts
facts
Objectives
Strategies
Other
activities
Plans
Marketing
Objectives
Objectives
Plans
Plans
Action
Control
Review
External
Further facts
Internal
Fig. C-6 : Framework for marketing planning
3.5.1 Market Intelligence and Analysis
Sound business, marketing objectives and plans are based on sound information,
analysis and presentation at all levels.
Market intelligence as compared with market research implies a continuing activity.
Specific problems may be the subject of research from time to time, but a business
defines and reviews its information needs and arranges that these are met
satisfactorily.
Needs at each level will vary from time to time. In many businesses, the value of
internal information is overlooked and the appropriate systems and training in its
collection and use are not established.
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3.5.2 Business Objectives and Strategies
A business, to see its way clearly in an increasingly complex world, needs information
to obtain an overall understanding of how it stands both internally and externally. This
information is likely to includei)
National economic developments and the effects of international movements.
ii)
An estimate of the input of known or possible government intervention;
iii) Development and location of industry;
iv) Changes in population, age distribution, location and expenditure;
v) Competitors' activities etc.
Comparative achievements in these areas begin to indicate where changes are taking
place, provide an understanding of what is happening in the market place and so a
basis for action.
In marketing, the position at any time on a particular issue is often not clear-cut, black
and white, but a judgement based on comparative data:
one's own achievements against the best national and international
achievements;
this year's results against last year;
this region's results against another;
actual compared with planned results;
trends and relationships with other factors.
Comparisons and trends clarify the situation and raise questions, leading to further
analysis in order to understand the complete picture and formulate plans.
In a business such as banking where the influences are wide and varied a larger
number of indicators may be identified, all of which may relate to alternations in
levels of activity. The effect of these different indicators can be studied by statisticians
who can develop computerized econometrics models, in order to determine what the
combined effect of a number of factors has in relation to the bank's business. Less
complex techniques can be used to 'smooth' past results in order, having allowed for
new factors, to assist in forecasting. Findings arising from these statistical sources
have to be interpreted with common sense, treated as a guide and in a volatile
situation, up-dated regularly.
3.5.3 Sales and Service
In order to develop an effective sales strategy, the bank needs to know and its records
to show-its present and potential customers' needs and attitudes - from both internal
and external sources with the object of getting a better understanding of what
motivates customers to use a particular bank and service.
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Research is directed to identifying customers with similar needs and attitudes, as these
can be treated as a segment of the market. These 'segments' can be further analysed
and evaluated so that services are designed to meet particular needs.
Additional understanding of customers' and potential customers' attitudes assists in
designing the marketing message in the most appealing way.
The marketing of new services may be used; launching first in a selected,
representative part of the country. The enables alternations to be made, if necessary,
before the expense and exposure of a nationwide launch.
3.5.4 Branch Network
Additions or alterations to the branch network are expensive and not easily reversed
once a decision is made.A bank therefore must know how best to adapt its network to
changes in demand and have a sound evaluation of the likely return on investment.
This needs a combination of both national and local knowledge. The national
contribution has been referred to earlier. The local situation is best surveyed in depth
to determine the best location in relation to population, industry, commerce, shopping
and employment, and likely future growth and competition. Similar surveys will also,
if updated, provide a continuing guide to the potential business available in a
particular area, against which actual performance can be measured. This will act as a
guide to such questions as, how many branches ? What is saturation point ? should
certain services be centralized with satellite branches limited to cash facilities only ?
3.5.5 Advertising and Promotion
Having provided an assessment of what is needed and where, then the question is.
How is it presented ? both to existing customers, who may visit the bank, and to the
public at large. Expenditures on specific services can be related to additional sales,
though even here other factors, such as the enthusiasm of a local manager, can
intervene. General advertising designed to obtain awareness and acceptance can only
be measured by interviewing programmes designed to measure reaction and the recall
of names and messages, both before and after a particular campaign. Market
intelligence, when properly analysed and combined with business knowledge,
provides an information base without which we have to rely on judgements, which
may well be based on experiences gained when things were different.
3.5.6 Establishing Market Objectives and Strategies
One of the most effective ways of establishing both overall business objectives and in
turn marketing objectives is by means of SWOT analysis. These analysis, which
obviously can react together (i.e. we cannot exploit an opportunity because of an
internal weakness), assist in determining objectives in each key area of the business.
Once business objectives and strategies are established, then it is easy to clarify
marketing's contribution in such areas as increasing market share, increasing sales of
profitable services, innovation, training and improving the use of resources.
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Marketing objectives are set for existing and new services, promotion and advertising,
the branch network, training staff in marketing and product knowledge, new product
launches, developments in organization and systems, public relations and provision of
information.
Clearly spelt-out objectives are very effective in coordinating activities, concentrating
attention, ensuring action and measuring achievements.
For instance, it is helpful to be clear for each region, service or segment whether the
object is to sell:
more of existing services to existing customers;
more of existing services to new customers;
new services to existing customers;
new services to new customers;
and if, as is likely, the answer is a bit of each, then questions can be asked as to how it
is best done, is there a priority, and are we dispersing our efforts.
The bank's operations must be seen as a total system and care must be taken to ensure
that:
1. Resources are available, and staff trained to undertake the tasks required: it is
better to achieve a limited number of successes than a large number of part
failures.
2. Over-emphasis on one aspect, this year's war-cry, does not detract from
other activities.
A realistic appreciation of the total situation with the need for maintenance as well as
innovation, enables balance to be maintained.
3.5.7 Planning - Marketing Input
The marketing plan provides an integrated picture of the banks marketing effort,
making clear where responsibilities have been accepted, the results to be expected and
how they will be known. Marketing must submit a plan for the activities under its
direct control, such as research, promotion, launching of new services and input into
training. This is not enough, a comprehensive plan is needed to bring together the total
marketing effort of the business, produce an overall view of the allocation of
resources, the composition of the marketing mix, and to show clearly where
promotional emphasis is being applied. As much of the action will be undertaken
elsewhere in the business, it is essential that the plan is not developed in isolation but
in close cooperation with the operating units that will have to put the plan into effect.
Many aspects will be incorporated into various divisional or regional plans, which
reemphasizes this need for coordination and cooperation. There is, on the one side, a
wide variety of customers whose needs, particularly in volatile economic conditions,
change. These needs may be individual one or related to market segments of either
private, industrial or commercial customers. On the other side, the bank has its array
of services, each at different stages of development are showing levels of contribution
to profit.
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Marketing effort brings the two together and the marketing plan ensures that time,
effort and money are applied in the most effective way to meet the bank's business
objectives.How far plans should project into the future depends on how long it takes
to get new resources into action. If it takes three years, for instance, to make a major
extension to the branch network, then we have to begin doing something about it this
year so that it comes on stream in the third year. However, if it takes four years to
have the staff trained and available to man and manage the new offices, then the
planning horizon must be at least four years ahead.
The distance a business plans ahead is determined by the resource that takes the
longest to become effective. Therefore, in the overall business plans and in the
marketing plans, there will be elements which are continued from previous years,
elements that will be started and completed in the same year and elements that will be
started now for completion in future years.
The overall plans will include:
1. a description of the objectives to be achieved.
2. a description of the resources allocated for this purpose
3. background information essential to the planning process.
4. any assumptions that have been made.
5. plans for marketing in all aspects of the bank by services and by regions
including development of existing services and the launch of new
services, promotional material, press and public relations, pricing if
appropriate, research, advertising, training, branch development, local
strategies, special audits or projects.
6. agreed dates for starting and completions, standards of performance and
means of reporting and reviewing progress.
7. agreed budgets of expenditure and methods of control.
The plan for marketing's direct contribution will be developed in the same way and
will include support to be provided to other parts of the business. If a bank has a
somewhat different activity, such as a credit card operation, it is likely to be more
appropriate for that particular division to have its own marketing department, which,
with some assistance from central marketing, develops its own plans. The role of
central marketing would be to provide information, advise, ensure the credit card
marketing plan relates to the bank's overall marketing plan, and adds to the bank's
overall message and image.
Planning certainly must not be allowed to lead to inflexibility; we have recently seen
how quickly conditions can alter. Many companies who plan successfully have found
that real benefits lie in the discipline of planning which makes management consider
and understand the factors affecting their business or the part to which they contribute.
Second, benefit it found in having a system which can be used to adapt to changes as
they arise and indicate what the effect to these will be.
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3.5.8 Marketing Action and Control
Action consists of either doing things, assisting in doing things or ensuring that things
are done. Marketing will undoubtedly have, as indicated earlier, a doing role, an
assisting role and an ensuring role, appropriate to the situation and the plans of the
different parts of the business. It could be directly responsible for the advertising and
public relations programmes or undertaking a particular survey.
It could be assisting in developing marketing or sales skills, contributing to a
particular project or providing information on particular trends.
Elsewhere, marketing could have the overall responsibility to programme, coordinates
and brings the launch of a new service to a successful conclusion.
Sound action will arise from sound planning, in particular, if:
1.
Each part's contribution is defined, agreed and linked together.
2.
Responsibility for inputs and preferably, results is also clarified and agreed.
Once responsibilities are established, information needs will become apparent, as
authority cannot be exercised if the appropriate information is not available.
Some information will be needed regularly, contributing to the business information
base and should be incorporated into the total information system. Other information,
relating perhaps to a particular project, will be required for a limited time and be
designed to meet temporary needs.
3.6
Criterion
Successful marketing efforts exhibit three basic features: they are customer-focused;
they achieve customers' satisfaction that is profitable to the bank; and they involve the
entire organization.
1. Customer Orientation:
When asked, many bankers describe the nature of the burning business in terms of the
products and services offered. They focus on the types of deposits and loans available.
In fact, however, products and services are merely a means for a bank to meet
customer needs. Consider, for example, different products that have declined in
popularity because improved products replaced them. Can any one remember
passenger trains, or hair rollers, or wooden baseball bats ? Customer needs change,
and a bank's ability to meet those needs must also change.
Bank customer surveys typically reveal four basic wants: faster service, convenient
business hours, feeling wanted, and prompt and fair resolution of problems. Who
wants to wait in long lines? Most banks recognize the customers have little patience
and try to increase their teller staff or open all drive-up teller windows at peak times.
Several banks have offered customers a small cash payment if they wait in a line
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beyond some minimum amount of time. Banks have similarly modified the design of
automatic teller machines to allow customers to handle all transactions from their cars,
Customer-focused bank recognizes these wants and takes steps to accommodate its
customers.
2. Long-Term Profitability:
Without customers, banks would have no revenues. Marketing is directed at protecting
and expanding this stream of revenue. It does so by keeping existing customers,
broadening their banking relationships by cross-selling services and attracting new
customers. Again, without a customer orientation, other institutions will entice
customers away by offering the relationship they desire.
It is important to recognize that all customers are not equal, however They generally
fit into one of three categories: key customers, normal customers and problem
customers. Key customers are the most profitable. They purchase the highest volume
of services and maintain the largest deposit balances. Bankers often refer to the 80/20
rule, in which 80 percent of deposit Takas are generated by just 20 percent of all
customers. Most of a bank's customers consist of normal customers. They maintain
average account activity and slowly progress through the financial life cycle from
wealth creators (transactions oriented) to wealth preservers (savings oriented). The
smallest group is problem
customers, who cause the majority of problems. They are slow to pay on loans, often
overdraw their transactions accounts and are chronic complainers. Which customers
do you suppose receive the greatest attention at most banks ? Who should ?
3. Organizational Commitment:
Marketing is the responsibility of every bank employee. Whether at work or in their
leisure time, every employee who comes into contact with a potential or existing
customer is marketing the bank. Banks thus have a responsibility to train employees in
terms of how to interact with the public. This focus starts with senior management
and the Board of Directors and is equally important for tellers and other line
personnel.
3.7
Implication
3.7.1 Intangibility:
Services are intangible. To reduce uncertainly, buyers will look for signs or evidence
of the service quality. They will draw inferences about service quality from the place,
people, equipment, communication materials, symbols and price that they see.
Therefore, the service provider's task is to "manage the evidence" to "tangibilize the
intangible". Whereas product marketers are challenged to add abstract ideas, service
marketers are challenged to put physical evidence and imagery on their abstract offers.
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Suppose a bank wants to position itself as the "fast" bank. It could "tangibilize" this
positioning strategy through a number of tools:
(a) Place: The bank's physical setting must connote quick service. The
banks exterior and interior should have clean lines. The layout
of the
desks and the traffic flow should be planned carefully.
Queues should
not get overly long.
(b) People: The bank's personnel should be busy. There should be a
sufficient number of employees to manage the work load.
(c) Equipment: The bank's equipment - Computers, copying machines, desks should
be and look "state of the art". A customer would think twice if all the type writers
were 1940-vintage Remingtons.
(d) Communication:
The
bank's
Communication
photos- should suggest efficiency and speed.
material-text
and
(e) Symbols: The bank should choose a name and symbol suggesting its fast
service.
(f) Price: The bank could advertise that it will deposit Tk.100/- in the account of any
customer who waits in line for more than five minutes.
3.7.2 Inseparability:
Because services often are produced and consumed at the same time, mass production
is difficult if not impossible. The quality of service and customers' satisfaction will be
highly dependent on what happens in "real time" including actions of employees and
the interactions between employees and customers. Similarly, it is not usually possible
to gain significant economics of scale through centralization. usually, operations need
to be relatively decentralized so that the service can be delivered directly to the
consumers in convenient locations and also because of simultaneous production and
consumption, the customer is involved in and observes the production process and
thus may affect (Positively or negatively) the outcome of the service transaction.
3.7.3 Variability:
Because services are heterogeneous across time, organizations and people, ensuring
consistent service quality is challenging, service firms can take three steps toward
quality control (a) investing in good personnel selection and training,
(b) standardizing the service-performance process throughout the organization,
(c) monitoring customers' satisfaction through suggestion and complaint
systems, customer surveys and comparison shopping, so that poor
service can be detected and corrected.
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3.7.4 Perishability:
A primary issue that marketers face in relation to service perishability is the inability
to inventory. Demand forecasting and creative planning for capacity utilization are
therefore important and challenging decision areas. The fact that services cannot
typically be returned or resold also implies a need for strong recovery strategies when
things do go wrong.
3.7.5 Internal and Interactive Marketing:
Bank's service marketing requires not only external marketing (to prepare, price,
distribute and promote the service to customers) but also internal marketing (to train
and motivate its employees to serve customers well) and interactive marketing (the
employees skill in serving the client).
3.7.6 Competitive Differentiation:
The Bank has to develop a differentiated offer, delivery and image. A bank has a
differentiated image i.e. Islamic image. The offer can include innovative features to
distinguish it from competitor offers. Bank can differentiate its service delivery in
three ways, namely through people, through physical environment and through
process. A bank can distinguish itself by having more able and reliable customer contact people than its competitors. A bank can develop a more attractive physical
environment in which the service is delivered. Finally, a bank can design a superior
delivery process, such as home banking.
3.7.7 Providing Quality Service:
One of the major ways to differentiate a bank is to deliver consistently higher quality
service than competitors. Five determinants of service quality are -
1. Reliability-The ability to perform promised service dependably and accurately.
2. Responsiveness-The willingness to help customers and to provide customers with
prompt service.
3. Assurance-The knowledge and courtesy of employees and their ability to convey
trust and confidence.
4. Empathy-The provision of caring individualized attention to customers.
5. Tangibles-The appearance of physical facilities, equipment, personnel and
communication materials.
By adapting above elements a bank can easily differentiate its services.
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3.7.8 Increasing productivity:
A bank can choose one or more of following approaches to improve service
productivity 1. to have service providers work harder or more skillfully.
2. to increase the quantity of service by surrendering some quality.
3. to "industrialize the service" by adding equipment and standardizing
production.
4. to reduce or make obsolete the need for a service by inventing a product
solution.
5. to design more effective service.
6. to present customers with incentives to substitute their own labor for bank labor.
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