Download Classification of services

CLASSIFICATION OF SERVICES
Classification based on the
nature of service act
 Tangible actions towards customers




Passenger transportation
Health care
Beauty saloon
Restaurants
 Tangible actions towards customers’ possessions





Freight transportation
Industrial equipment repairs
Laundry and dry cleaning
Lawn care
Veterinary care
Classification based on the
nature of service act (contd..)
 Intangible actions towards customers’ intellect




Education
Broadcasting
Theaters
Museum
 Intangible actions towards customers’ assets





Banking
Legal services
Accounting
Security
insurance
Classification based on the
nature of service act (contd..)
 Key questions:
 Does the customer need to be present physically
throughout the services?
 Does the customer have to be present only to
initiate or terminate the transaction?
 Is customer’s presence not required at all?
 Is a customer changed as a result of the service?
Classification based on the type of relationship
the customer has with the service provider
 Continuous delivery/Membership related
 Insurance
 Telephone subscription
 College enrollment
 Banking
 Trade associations
 Continuous delivery/Without formal relationship
 Radio station
 Police protection
 Public highway
Classification based on the type of
relationship the customer has with
the
service
provider
(contd..)
 Discrete transaction/ Membership related
 Long distance phone calls
 Theater series subscriptions
 Commuter ticket or pass
 Discrete transaction/ without formal relationship






Car rental
Mail service
Toll highway
Pay phone
Movie theater
Public transportation
Classification based on the type of
relationship the customer has with
the service provider (contd..)
 Key questions:
 Can anything be done to move informal to
member relationship?
 Where can there be tradeoff between pricing and
usage rates?
Classification based on the scope
for customization and judgment in
service delivery
 High judgment/ High customization
 Professional services
 Surgery
 Beautician
 Plumber
 High judgment/Low customization
 Education
 Preventive health care programs
 College food services
Classification based on the scope
for customization and judgment in
service delivery
 Low judgment/High customization
 Telephone services
 Hotel services
 Retail banking
 Low judgment/Low customization
 Public transportation
 Routine appliance repair
 Movie theater
 Spectator sports
Classification based on the scope
for customization and judgment in
service delivery
 Key questions:
 Is it desirable to limit customization and get
benefited by standardization and economies of
scale?
 Should customization be increased to reach wide
range of customers?
 Should service be simplified so that less judgment
is required by the contact person?
 Should service be updated in order to capitalize on
the expertise of the staff?
Classification based on the nature of
demand and supply for the service
 Peak demand met without major delay/Wide
fluctuation





Electricity
Natural gas
Telephone
Hospital maternity services
Police and fire emergencies
 Peak demand met without major delay/Narrow
fluctuations




Insurance
Legal services
Banking
Laundry and dry cleaning
Classification based on the
nature of demand and supply for
the
service
 Peak
demand met with delay/ wide fluctuations
 Accounting and tax preparations
 Passenger transport
 Hotel, Motel
 Restaurant
 Theater
 Peak demand met with delay/ narrow
fluctuations
 Similar to without delay but where the scale of
operations is very small comparitively
Classification based on the
nature of demand and supply for
the
 Keyservice
questions:
 What is the nature of demand fluctuation? Does it




have a predictable cycle?
What are the underlying causes for these
fluctuations? Could marketing effect a change?
What opportunities exists to change the level of
supply?
Should alternative strategies be adapted for
adopting differential pricing?
Should a new mix of strategies be experimented
with, involving both capacity and price?
Classification based on the
method of service delivery
 Customer to organization/ Single site
 Theater
 Saloon
 Customer to organization/Multiple sites
 Bus services
 Fast food chain
 Organization to customers/Single site
 Lawn care service
 Pest control
 Taxi
Classification based on the
method of service delivery
 Organization to customers/Multiple site
 Mail delivery
 Emergency repairs
 At an arm distance/Single site
 Credit card company
 Local TV station
 At an arm distance/Multiple site
 Broadcast network
 Telephone company
Classification based on the
method of service delivery
 Key questions:
 Should the service be delivered at a single site or
multiple sites?
 What is the most convenient type of transaction
for the customers?
 Would the service quality improve or deteriorate
with the type of change in interaction?
 Can suitable intermediaries be used in order to
establish multiple outlets?
MARKETING MIX
Elements of the service
marketing mix
 Product
 Price
 Promotion
 Place
 People
 Process
 Physical evidence
Product ( Service package)
 Services are products. Even though
intangible, they are things
 Consumer services:
 Shoe repair, dry cleaning and clothing alterations
 Shopping services:
 Insurance, banking, airline travel and automotive
repairs
 Specialty services:
 Legal services, medical care, hair styling
Conceptualization of the
service concept
 Customer benefit concept:
 Customers are not buying goods. They are buying
specific benefits and values
 Purchase bundle comprises of:
 Physical items- tangible elements that come with
services
 Sensual benefits- those experiences which hits one
or more of customer’s senses ex: aroma, taste,
ambiance.
 Psychological benefits- which are determined by the
customer subjectively.
 Service concept
 The general benefits the service provider will offer
 Core benefits
 Expected benefits
 Augmented services
 Potential services
 Service offer and service package
 It spells out in more detail those services to be
provided, how they will be provided and to whom
 It is the elements that make up the total service
package, including both the tangible and
intangible components of the service.
 Service delivery system
 How the service is provided to the consumer.
 This speaks about the interaction between the
customer and the service provider and the
interaction between the customer and the service
facility.
 It is a carefully designed blueprint that describes
how the service is rendered to the customers.
Analysis of the service
 Basic framework, services are classified into:
 Core services
 Secondary services
 But, the managerial perspective classifies it as:
 Core service: is the reason for being in the business
 Facilitating services: they are the support services
which are used to add value to the core service.
Reception, check-in service etc
 Supporting service: are used as a means of
competition only. Without them, the core service can
be used but the total service package may be less
attractive.
Price
 A customer pays for some product or service
because of its ability to satisfy some specific
need or want.
 Price is the value attached to the product by
the service provider and it must compliment
with the value attached by the consumer
Managerial tasks in pricing
involves
 Establishing pricing objectives
 Identifying the factors governing the price
 Determining the methods of pricing
 Formulation of pricing strategies and policies
Price is service is also
called as
 Professional service- fees or retention




charges
Transport- fare
Insurance- premium
Clubs- subscription, membership
Hotel- tariff, rent etc
Special issues to be
considered
 Since service is intangible, many service firms
portray their quality as the value for the customers’
money
 A service provider always uses price as a tool to
manage the demand
 In certain cases, a customer may have to spend time,
exert physical efforts or bear psychic cost. So the
marketer has to include these intangible aspects of
the cost related factors while fixing the price
 In some service industries especially public sector,
price cannot be used as a tactical tool as the Govt.
determines the price
Pricing strategies
 Most marketers use competitive pricing
 Some firms who like to ration the supply
would charge a higher price than the market
price
 Higher price can also serve as an indication
about the higher perceived quality
Pricing strategies
 Flexible pricing is more prevalent in service
sector than in other fields
 Some service firms either do not have a fixed
price list or do not follow it in making price
quotations
 Some firms mainly try to meet competition,
some firms attempts to use tables of standard
costs and a few even attempt to bargain with the
customers.
 Most service marketers appear to have a definite
profit margin in mind when quoting prices
A Pricing decision maker
should consider:
 Set annual profit and sales margin
 Target a definite price margin while quoting
prices for each job
 Determine and understand their cost structure
 Review and update their price schedules
regularly
 Work to secure higher rather than lower average
price
 Strive for greater price flexibility
Promotion
 It is a combination of strategies that an
organization uses to communicate the
service benefits to customers and influence
them to buy their services
 They don’t sell any of their products. Instead,
they sell the dreams and experience that the
customer would want to have by availing a
service
 McDonald’s, makemytrip.com, axis bank etc
Promotion mix
 Advertising
 Personal selling
 Direst mails
 Sales promotion
 Publicity
 Word of mouth
 Corporate identity
Advertising
 Experience
 Beliefs
 Values
 Policies
 Process
 Customer oriented aspects
Personal selling
 The service provider has to be utmost




knowledgeable
Telephone orders
Outbound tele-marketing
Sales support staff
Delivery personnel
Direct mails
 Medicines
 Medical insurance
 These direct mails also play the role of follow-
ups to track the response of the customers to
the promotional activities of the company
Sales promotion
 Sampling, display, demonstration becomes
difficult
 Premiums
 Contests
 Sign-up rebates
Publicity
 News release
 Stage activities
 Press conferences
 Sponsorship
Word of mouth
 Customers are closely involved in service
delivery and they tend to talk about their
service experience to the potential customers
 An outsider promoting a company without
any monetary gains can add more value and
trust in the minds of the prospective
customers
Corporate identity
 Refers to the use of distinctive colours,
symbols
 Lettering in prominent visible elements such
as:




Signage
Vehicle
Uniform
Stationary
To provide a unifying and recognizable theme
linking all the firm’s operations
Place
 Place no more means a geographical location
where buyers and sellers meet.
 But in services, service being intangible, the
service provider has to be present at the time of
the delivery of services.
 At the same time, certain services like mail and
ATM do not require the presence of the service
provider
 Distribution is he provision of personal service
and information to the customer. It adds value to
the service
 The strategies involved in making the
services available and accessible to the
customer, will focus on two major factors:
 Where should he service be made available- the
choice of location?
 Who should deliver the service- the choice of
channel?
Importance of location in
pricing
 Who the target customers are?
 What is the degree of interaction required between




the provider and customer in the delivery of the
service?
To what extent convenience of accessibility will
affect customer decision making regarding use of
the service?
Is the service technology-based or people-based?
How do competitors operate their service?
Can new system and technology be used to improve
existing location decision?
Modes of selling
 Directly to the customers
 Use an intermediary who act on behalf of the
buyer or seller- the intermediary may be an
agent or a contracted franchise
People
 The problem lies in the inseparability of the
production consumption interface
 The satisfaction of not only the recipient of
the service, that is the customer, but also the
providers of the service, that is the company’s
own personnel becomes extremely important
Different roles of the
service personnel
 Primary- where the service is actually carried
out by the service provider Ex: Teachers,
Consultants, Doctors, Lawyers etc
 Facilitating- where employees facilitate the
service transaction and participate in it. Ex:
Bank counter staff, Waiter at a hotel, Front
office personnel, compounder etc
 Ancillary- where the employees helps to
create the service exchange but is not part of
it. Ex: travel agent, insurance agent etc
Level of presence of the
service personnel
 Customer contact employees These come in contact with the customers in the




process of the service delivery
They are also called as the frontline staff or
“boundary spanners”
These have a great influence on the customers’
perception about the service as the customers try
to find tangibility of service in them
As they influence the customers a lot, they are
marketers too
There might be either high contact or low contact
 Support personnel or non-contact personnel These do not come in contact with the customers
 Chefs in the hotel, laundry staff in the hotel etc
 They possess high technical skill and have high
competency level
 They may be management support or technical
support
 Without these people the customer contact
employees cannot perform
Human resource planning in
service involves:




Hire the right people
Develop people to deliver service quality
Provide needed support system
Retain best people
 Internal marketing
 The key element of healthy business, is the
individual contribution of every employee, both
contact and support to the ultimate result of
increase in company value
Process
 It is concerned with the way in which the service
is delivered
 How the personnel delivers the service
 Added value of the service becomes an important
competitive weapon in differentiating the service
 Ex: Banks. Storing money is the basic activity but
they introduced so many added services like
ATMs, Debit Cards, Over drafts etc
 Many benefits from service occur not so much as
a result of what is offered, but, in the way in
which it is offered
Designing a service process
 Location
 Facility design and layout for effective customer
and work flow
 Procedure and job definitions for service
providers
 Measures to ensure service quality
 Extent of customer involvement in the service
delivery
 Equipment selection if it is equipment based
service delivery
Physical evidence
 Since the service is intangible, it is important
for the client to search for tangible or physical
clues which enable them to evaluate the
service
 Physical evidence verifies either the existence
or the completion of a service
Categorization
 Peripheral evidence Is usually possessed as part of the purchase of a
service
 It has little or no independent value
 Ex: a Cheque book, an ATM card, Napkins etc
 Essential evidence It cannot be possessed by the consumer
 It may be so dominant in its impact on service
purchase and use that it must be considered
virtually an element in its own right
 Ex: transport vehicle, office premise, staff uniform
etc
product
place
promotion
Price
people
Process
Physical evidence
Physical attributes
Channel type
Promotion blend
Flexibility
Employee research
Flow of activitiescustomized/standa
rdized
Facility design
Quality level
Outlet location
Sales people:
number, selection,
training, incentives
Price level
Training
No. of stepssimple/complex
Aesthetics
Product lines
Intermediaries
Advertising:
targets, media
types, types of ads
Terms
Motivation
Level of customer
involvement
Functionality
Branding
Segmentation
Sales promotion
Differentiation
Rewards
Ambient
conditions
Positioning
Franchising
Publicity
Discounts
Teamwork
Equipment
New services
Managing channels
Direct marketing
allowances
Communicating
culture and values
Signage
Motivating channel
members
Employee uniform
and appearance
Business card
Statement
guarentees
CONSUMERS IN SERVICE
INDUSTRY
Introduction
 Consumer purchased goods/services based
on their mental and economic forces.
 The mental forces creates desires and wants
to satisfy pride, fear, love, fashion etc
 Economic forces included the purchasing
power
Fundamentals of marketing
concept:
 The service provider should first determine
the needs and expectations of the target
group of customers
 Organize the input to deliver the service
 Achieve customer satisfaction to earn profits
 Managing customer relationship and building
loyalty
Service firms’ problems:
 How to create and deliver superior service?
 How to sustain service improvement effortsin short, how to build “customized”
organization?
Model of buyer behaviour
marketing
stimuli
other stimuli
product
economic
price
technology
place
cultural
promotion
political
buyer's black box
buyer
characteristics
buyer's response
product choice
buyer's
decision
making
process
dealer choice
purchase timing
buyer's response
Buyer characteristics
 Cultural factors
 Values, practices, customs, social class etc
 Social factors
 Family, friends, relatives, colleagues, reference groups etc
 Personal factors
 Age, life cycle stage, occupation, economic circumstances,
life style etc
 Psychological factors
 Motive, perception, learning etc
 How do customers learn about the services offered for sale?
 How do they learn to recognize and recall these products and
services?
 What process they develop in buying and consuming habits?
Related needs at a hotel
Self
actualization
The pride of being
at the right place
A place to feel wanted,
loved a warm and friendly
greeting
Need for room or shelter (relieving
concern & anxiety)
Guests looking for restaurant, bar and room
service
Buyer decision making
process
Problem
recognition
Information
search
Evaluation of
alternatives
Purchase of
service
Post-purchase
decision
Problem recognition
 The need may be triggered by internal or
external stimuli
 The intensity of the need will indicate the speed
with which the buyer will try to fulfill the want
 The buyer should identify the stimuli, which
induces interest in the service and develop
marketing programs based on the stimuli
 This close knowledge of customers can be found
through marketing research, in its various forms
Information search
 When the consumers are not aware of the type of
service that can best satisfy the need, how and
where it an be secured, they will have to search for
the relevant information
 The consumer gets these info from family, friends,
reference groups, their past experience with the
service firms etc and also from marketers in the form
of advertisements, sales promotions etc
 This increases the awareness of the availability of
the services and its attributes
 In services, the customer relies most on the personal
sources
Evaluation of alternatives
 The basic elements in the process of evaluation
are
 Distinct service features
 Image of the service provider,
 Quality and price
 The major challenge of the service provider is to
research customer expectations and demands in
such a situations and offer more personalized
services to these customers.
 Ex: Hotel:- food quality, menu variety, price,
atmosphere and convenience etc
Purchase of service
 The purchase of a service is an experience which,
lead to the satisfaction of customer needs.
 The success of the service delivery depends on
the service encounter
 The service encounter involves the interaction
between the customer and the service provider
 Therefore, apart from motivating the staff, the
service provider must also consider the moods
and emotions of the customer and should
attempt to influence those moods and emotions
in a positive way
Purchase of service (contd.)
 The service provider must anticipate,
acknowledge and deal with the
heterogeneous customers who have the
potential to be incompatible.
 The service provider can also bring the
homogeneous customers together and
solidify relationship between them
Post purchase evaluation
 Only after experiencing the service, the
customer will be able to judge the service
quality, in relation to his expectation and actual
service delivered
 In some cases like medical diagnosis, legal
services, the customers may find it difficult to
judge the service rendered even after going
through the service experience
 Customer complain less frequently about those
services which requires their participation too
Comparison of consumer and
organizational buying
behaviour
 Organizations buy services for profit maximization,
reducing costs, meeting employee needs, and satisfying
legal obligations. While, individuals buy services for their
own need satisfaction.
 More people involved in organizational buying. There
might be several influencers. The degree of influence is
relatively less in case of individual buying even though
there might be several influencers involved
 Organizational purchase in based on more formal routine
like purchase policies, constraints and requirements by
the organization. This does not apply to individual
customers
Comparison of consumer and
organizational buying
behaviour
 Poor service to individual may lead to
dissatisfaction but, for the business, it may
lead to losses
 To retain organizational customers, the
service firms believe in long term relationship
building, whereas, it prefers service bundling
to retain individual customers
Customer involvement in
service process
customer
Service
delivery
Employees of
the service
firm
Other
customers
Degree of customer
involvement in service
process
 Low level participation: only physical presence.
Ex: Airline travel, entertainment concert. There
are standardized services
 Medium level participation: customer needs to
give information to customize the service. Ex:
hair cut, full service restaurants, some
consultancies.
 High level participation: here the customer has
to participate in the generation of the service.
Ex: personal training, weight loss programs.
Effects of other customers in
service process and delivery system
 The customer may sometimes interact with the
other customers in the service delivery as they




may receive the service simultaneously
Or even as they may have wait at the service
premise for their turn to come
They may impact the service positively or
negatively
Positive: knowledgeable co-customer, health
clubs, holiday resorts where they may support
each other
Negative: crying babies in the restaurant,
smoking co-customers, noisy or unruly groups
Role played by the customers
in the service delivery
 Customer as co-producer Ex: Consultancy
 Customers as contributor to service quality,
value and satisfaction Ex: Education
 Customers as competitors Ex: Child Care,
Catering for staff, Business legal service etc.
Management of service encounter for
customer satisfaction
Service Firm
Internal Marketing
“Enabling the Promise”
Employees of
the service firm
External Marketing
“Setting the promise”
Interactive Marketing
“Delivering the promise”
Customers
Customer evaluation of
service delivery
 The customer perception of the service quality can
be judged in two aspects:
 technical quality The service product, competence of the service provider in the
form of skill, production facilities and equipment in the
delivery of the service
 Refers to what the customers receive in heir interaction with
the firm.
 These are quantifiable hence can be measured to some extent
 Hence more attention is given to this aspect
 Ex: food in the restaurant, transportation in the airlines
 But customers are not interested in what is just what is being
delivered but also how it is delivered. This leads us to the next
dimension of quality- functional quality
Customer evaluation of
service delivery
 The customer perception of the service quality can
be judged in two aspects:
 Functional quality
 Relates to the behaviour of the employees and the manner in
which the production facilities are used.
 It portrays the credibility of the service provider to serve the
customer better.
 Thus, functional quality refers to how the service is delivered.
 It includes attitude, appearance of the personnel and
approachability.
 Rude behaviour of receptionist, sloppy of the waiter can
reverse the impression.
 Functional quality can be judged only on relative basis
 Both technical and functional qualities have a strong influence
on the overall impression of the quality of the service
Expected service quality
 Factors influencing:
 Personal needs
 External communication of the service provider
 Word of mouth
 Past experience
Perceived service quality
 Five criteria:





Tangibles
Responsiveness
Empathy (Human Touch)
Assurance
Reliability
Responsiveness shows willingness to meet customer
needs and empathy indicates willingness to go
beyond customer needs.
Customer satisfaction and
service quality leads to:
 It is linked to customer loyalty and
relationship commitment
 Highly satisfied customers promote positive
word of mouth
 Hence, this lowers the cost of attracting new
customers
 Satisfied customers are less susceptible to
competitive offerings
Market segmentation and
targeting
 Basis for segmentation:
 Demographic
 Psychological
 Behavioural
 Criteria to evaluate choice of target market:
 Profit projection, size and growth options in the
market
 The accessibility of the market for communication and
service delivery
 Availability of substitute products and the strength of
competitors
 Compatibility with the firm’s objectives and resources
Alternative strategies
 Undifferentiated marketing: it ignores
segmentation and attempts to appeal to the whole
market with a single strategy and brand.
 Differentiated marketing: concentrating on
multiple segments with tailor made strategies for each
segment
 Concentrated marketing: it caters to the specific
needs of one well defined market segment only
Expanded service pyramid
Platinum
Loyal and Profitable
Customers
Gold
Iron
Lead
Least Profitable Customers
Relationship marketing and
customer loyalty
Transaction marketing
Relationship marketing
 Focus is on a single
 Focus is on retention of




transaction of sale
Limited customer
commitment
Short term orientation
Salesperson is the main
interface between seller
and customer
Quality is the responsibility
of the production team




customers
High customer
commitment
Long term orientation
Multiple levels of
relationship between seller
and customer
Quality is the responsibility
o the departments
Customer Relationship
Management (CRM)
 With an effective CRM, a business can
increase revenues by:
 Providing services and products that are exactly




what customer wants
Offering better customer service
Cross selling products more effectively
Helping sales staff close deals faster
Retaining existing customers and discovering new
ones
Customer service can be
improved by
 Providing online access to product
information and technical assistance around
the clock
 Identifying what customers value and
devising appropriate service strategies for
each customer
 Providing the mechanisms for managing and
follow-up sales calls
 Tracking all contacts with a customer
Customer service can be
improved by
 Identifying potential problems before they occur
 Providing a user-friendly mechanism for registering




customer complaints
Providing a mechanism for handling problems and
complaints
Providing a mechanism for correcting service
deficiency
Storing customer interest in order to target
customers selectively
Providing mechanisms for managing and scheduling
maintenance, repairs and on-going support
The increased profitability associated with
customer retention efforts occur because:
 The cost of acquisition occurs only at the beginning







of a relationship
Account maintenance costs decline as a percentage
of total cost
Long term customers may be less inclined to switch
They may initiate free word of mouth
They are more likely to purchase ancillary products
They make it difficult for the competitors to enter
the market and establish themselves
Leads to ease in servicing as they are familiar with
the service
Makes the employees’ job easier
Virtuous circle
Training
and
empower
ment of
employee
s
High sales
and profit
margins
Employee
satisfacti
on and
competen
ce
Customer
loyalty
Superior
service
delivery
Customer
satisfacti
on
The various stages that take place before
the relationship is developed
 It begins with buyers and sellers being aware
of each other
 On entering into a relationship, the buyer and
seller makes series of promises, which gives
rise to expectations
 The information of the customers is usually
recorded to assess future needs
 The firm would offer incentives to customers
for maintaining relationship
Retention strategies
 Financial bonds:




These are monetary benefits
Lower price for greater volume of purchase
Lower price for loyal customers
Volume and frequency rewards
 Non-Financial or social bonds:
 Customization.
 Continuous touch with customers
 These bonds may even be formed amongst the customers.
Ex: Alumni meets
Service firms may adopt different versions of the above
retention programmes or move on to higher levels of
customer intimacy.
PLANNING AND MANAGING
SERVICE DELIVERY
Introduction
 Designing a service delivery process is a
creative task
 The rapid growth of internet means that the
service strategy must address issues like
space, cyber space, and time paying at least
as much attention to speed, scheduling and
electronic access.
Service design elements
 Structural Delivery system
 Front and back office, automation, customer
participation
 Location Size, aesthetics, layout
 Capacity planning
 Managing queues, number of servers,
accommodating average or peak demand
Service design elements
 Managerial Service encounter
 Service culture, motivation, selection and training,
employee empowerment
 Quality
 Measurement, monitoring, methods, expectations versus
perceptions, service guarantee
 Managing capacity and demand
 Strategies for altering demand and controlling supply,
queue management
 Information
 Competitive resources, data collection
Considerations in the design of the
service delivery system
 Nature of contract between the service provider
and the customer
 Sequencing of the various steps in the service
delivery process
 Where (location) and when (scheduling) should
delivery take place?
 Imagery, atmosphere and experience to be
created and delivered
 Nature of the service process
 Service protocol
Generic approaches to
service system delivery
 Production-line approach
 Limited discretionary action of personnel
 Division of labour
 Substitution of technology for people
 Service standardization
 Customer as co-producer
 Self service
 Smoothing service demand
Generic approaches to
service system delivery
 Customer contact approach
 Degree of customer contact
 Separation of High and Low-contact operations
Delivery channel decision
 Factors to be considered:
 It should ensure easy accessibility and




convenience for the customers to interact
These distribution channel should add some value
to the customers
The channels chosen should not eat away the
margins of the service provider
The channel chosen should cover all the target
markets
The channels chosen should be reliable
Types: without
intermediaries
 Direct distribution:
 Advantages
 Control
 Healthy customer relationship
 Flexibility and confidentiality
 Disadvantages
 Financial risk
 Lack of knowledge
Types of intermediaries for
service delivery
 Franchising:
 Advantages
 Business expansion
 Improved revenues
 Reduced risk
 Consistency in service offering
 Local presence through global franchising
 Increased working capital and minimized financial risk
 Disadvantages
 Trouble in motivating franchisees
 Conflict between the two parties
 Quality maintenance
 Relationship with the customers
Types of intermediaries for
service delivery
 Agents and brokers
 Electronic channels
 Advantages





Lower costs
Increased customer convenience
Increasing bargaining power of the customers
Extensive distribution
Ability to customize services and gain quick
feedback
Place decision in service
delivery
 Multi-site strategy
 Ministores
 Locating in multipurpose facilities
 Multi-service strategy
 Multi-segment strategy
Time decision in service
delivery
 Economic pressure form consumers
 Economic incentives to improve asset
utilization
 Availability of workers to work during
unsocial hours
 Automated self service facilities
 Use of call centers
Promoting and delivering
services in cyberspace
 Development of smart mobile phones
 Voice recognition technology
 Creation of web sites
 Commercialization of smart cards
Service productivity
 Efficiency
 Effectiveness
 Economy
 Production function
 Capacity utilization
Reasons for low productivity
 Small size of most of the service firms
 Difficulty of using machine technology
Improving service productivity
methods
Benefits
Improve quality of labour force
Higher service quality
Fewer customer complaints
Lower employee turnover
Improvement in capital equipment
Reduce labour cost
Increased no. of customers can be served
Improve consistency of services
Automate tasks
Reduce cost
Improve consistence of service
Increased no. of customers can be served
Change customer/service interaction
Speed up transactions
Increased no. of customers can be served
Separate the customer contact and support functions
Increase quality of service
Enhance quality of customer/employee interaction
Increase self service options
Reduces cost
Increased no. of customers can be served
Use outsourcing
Reduce cost
Increased no. of customers can be served
Reduces the strain on service organization
Consumer participation and
productivity
 Consumer predisposition
 Consumer potential/commitment/
willingness to become involved
 Consumer knowledge and skills, how easily
can they be developed if needed to be?
Technology and service
productivity
 Hard technology
 Soft technology
 Hybrid technology
Role of technology and physical
aids in service process
 Cost rationalization
 More effective quality
 Making higher quality possible
 Closer link up with the customers
 Technology as a factor affecting behaviour
TOURISM & TRAVEL SERVICES
Introduction
 Tourism is a very complicated operation due
to its multiple activities, which satisfy the
need of the tourist.
 Tourism embraces transportation,
accommodation, food catering, tourist
attraction, as well as organizers like tour
operators and agents.
 The main problem lies in maintaining
standards of these components
The peculiarities of
tourism:
 It cannot be provided by a single enterprise; each
component of tourism- hotel, transport etc is




highly specialized and together makes the final
product
The sales intermediaries play a dominant role
Tourism has diverse motivation to travel
The demand for tourism is highly unstable due to
seasonal, economic and political factors
Marketing of tourism is complicated dichotomy
as supply is inelastic but demand is
Changes in lifestyle
 The old sun, sea and sand mass market has
fragmented. People want more specialized
versions of it such as CLUBS, quieter resort
with select hotels, self catering etc
Changes in lifestyle
 People are taking second holiday in the form
of in the form of short breaks/city breaks,
ranging from British and European cities to
country hotels
Changes in lifestyle
 There has been a growth of niche markets
catering for special interest or activities
Development of technology
ahs lead to
 The development of mass cruise holiday
market
 The advent of affordable holidays to longhaul destinations such as New Zealand or
Kenya
 The phenomenon of low budget airlines,
utilizing private carriers and a new generation
of small regional airports
Forms and types of tourism
 Domestic/international
 Holiday/professional or business
 Individual/group
Factors driving the growth
of tourism
 Leisure and life style
 Business needs
 The rise of free independent travelers
 Expanding channels and networking
 Professional approach
 Leveraging technology
 Innovative partnership and promotions
Market segmentation
Eco, Cultural
and spiritual
for self
discovery
Pride of being at
exotic location
Provide excellent packages
for fun, excitement and
make new friends
Need to reassure visitors safety, of
their destination, travel comfort,
etc
Attraction of locations for recovery, rest and
relaxation
7 Ps of tourism industry
 Tourism is a high-involvement, high-risk
products to its consumers
 Involves committing large sum of money to
something reasonably unknown
 Tourism is a product partly constituted by the
dreams and fancies of its customers
 Unlike banking and car repair, tourism is not
consumer for rational or functional purposes
 Tourism is a fragile industry susceptible to
external forces which are beyond the control
of its suppliers
 Tourism organizations sometimes have to make
rapid responses to crisis in the form of product
redesign, price reduction or promotional damage
limitation
7Ps of tourism market
 Product
 Price
 Place promotion
 People
 Process
 Physical evidence
Product
 Defining and communicating the
distinguishing characteristics of the product
to consumers is the key too successful
marketing. A tourism product consists of two
components:
 Attributes:
 Benefits:
People
 Know who your target market is.
 Travelers or
 Tourists?
 What do they expect?
People- (Employees)
 A tourism organization’s most valuable
resource
 Physical appearance, behaviour, knowledge and
attitude, has a powerful impact on customers’
perception of the tourism product
 Ensure uniform, grooming etc, conform to
branding and target market
People- (Employees)
 Ensure staff are trained to ensure the product
is delivered in accordance with the marketing
strategic plan
 Employees physically embody the product
and are walking billboards from a
promotional point of view
Process
 Process is inseparable product
 If any part of the process is found to be unsuitable
by the customer, it could result in the negative
evaluation of the whole product
Physical evidence
 Defined as the built environment owned and
controlled by a tourist organization
 The tangible aspect of the tourism product
 May be used to facilitate the service delivery
process. Ex: layout and signage
 Communicates message about quality,
positioning and differentiation
Marketing tourism
 Product and service
 Tangible and intangible
 People led and operated
 Market oriented