19 Concepts/Short Notes You Need to Know about Service Sector Management

1.      Procedural Justice (March 11) : Procedural justice is concerned with making and implementing decisions according to fair processes.

          A fair process should be :

i)       Consistent in applying standards across people and over time;

ii)      Unbiased by self-interest;

iii)     Accurate, with decisions based on reliable information;

iv)     Correctable, in terms of allowing challenge or appeal against decisions;

v)      Representative of the concerns of all involved; and

vi)     Ethical

People feel affirmed in the procedures that are adopted treat them with respect and dignity, making it easier to accept even outcomes they do not like.

 

2.      Buying Roles (Oct. 2010) : In the buying decision process, different people play different roles. At times, other people also influence the buying decision and these people have a definite role to play. It could be that all the roles are played by an individual once every few seconds. But generally for services, both individual or organisation, the roles are played by more than one person. For marketing person, it is important to know who plays what role in the purchasing decision so as to adapt the service format and promotional efforts around these key players. In the purchase of any particular service, six distinct roles are played. These are : Initiator, Influencer, Gatekeeper, Decider, Buyer, and User.

 

3.      Micro Environment : The micro environment consists of all the factors in the company’s immediate environment that affects the performance of the company. These include the suppliers, marketing intermediaries, competitors, customers and the publics. The micro-environmental factors are more intimately linked with the company than the macro factors.

 

4.      Technological Environment : Technological environment relates to the technology used in the production and other business activities. It includes the techniques of production, innovations and inventions which affect the quality and quantity of production. A business firm has to continuously study the technological environment and adjust itself according to the changes taking place in it.

 

5.      Service Failure  (March 2011) : A customer service failure, simply defined, is customer service performance that fails to meet an individuals expectations when a service failure occurs, a customer will expect to be compensated for the inconvenience in the form of any combination of refunds, credits, discounts or apologies. The success of such customer service recovery efforts is determined by the individual’s expectations and perceptions of the organization. Two key elements impact any efforts to restore customers satisfaction : the strength of customer relationships and the severity of service failure. The strength of customer relationship with the organisation prior to a customer service failure has a buffering effect in the event of failure. Research suggest that  the customers who expect the relationship to continue actually have lower service recovery expectations, and in turn, are more satisfied with customer service performance after recovery.

 

6.      Service Marketing Mix : The service marketing mix consist of the following variables.

i)       Product

ii)      Price

iii)     Promotion

iv)     Place

v)      People

vi)     Process and

vii)    Physical Evidence

Philip Kolter has defined a brand as “a name, term, symbol or design or a combination of them which is intended to identify the goods and services of one seller or a group of sellers and to differentiate them from those of competitors. In case of services, branding is still in to infancy. Customers give more importance very often to the service provider rather then the individual service products that the provider offers. This leads to branding the service providers Corporate Image.

 

7.      Service Blue Print : Zeithamel Bitner define service blueprinting as a tool for simultaneously depicting the service process, the points of customer contact, and the evidence of the service from the customer’s point of view.

          In simple words, a service blueprint is a graphical or visual representation of the process involved in providing a service.

The blueprint allows for a quantitative description of critical service elements, such as time, logical sequences of actions and processes, also specifying both actions/events that happen in the time and place of (the interaction (front office) and actions/events that are out of the line of visibility for the users.

Service blueprinting involves the description of all the activities for designing and managing services, including schedule, project plans, detailed representations etc.

Layers of interaction in service blue print (Source Zeithamel & Bitner, Services marketing : integrating  customer focus across the firm.)

According to Bitner, blueprints are information-laden documents made up of five components that, when drawn up together, can help make customer-company relationship and the customer experience crystal clear.

1.      Customer actions include “all of the steps that customers take as part of the service delivery process.”

2.      Onstage/visible contact employee actions are the actions of frontline contact employees that occur as part of a face-to-face encounter with customers.

3.      Backstage/visible contact employees actions are non-visible interactions with customers, such as telephone calls, as well as other activities employees undertake in order to prepare to serve customers or that are part of their role responsibilities.

4.      Support processes are all activities carried out by individuals in a company who are not contact employees, but whose functions are crucial to the carrying out of services processes.

5.      Physical evidence represents all of the tangibles that customers are exposed or collect to during their contact with a company.

 

8.      Explain ‘Benchmarking’. (Nov. 2003, 04, 08)

An Benchmarking is the process of comparing one’s business processes and performance metrics to industry bests and/or best practices from other industries. For e.g.. one can benchmark -quality, time, and cost.

In simple words, it means identifying the best firms in the industry, or any other industry where similar processes exist, and comparing the results and processes of those to one’s own and to learn from them.

Benchmarking should be treated as a continuous process in which organizations continually seek to improve their practices.

Common challenges associated with benchmarking-according to Robert Camp, these difficulties included:

• finding suitable partners
• difficulties in comparing data
• resource constraints (time, finance and expertise)
• staff resistance

Benefits of Benchmarking :

• provides realistic and achievable targets
• challenges operational complacency
• creates an atmosphere conducive to continuous improvement
• allows employees to visualize the improvement which can be a strong motivator for change
• creates a sense of urgency for improvement
• confirms the belief that there is a need for change
• helps to identify weak areas and indicates what needs to be done to improve.

9.      Yield Management (May 08) : Yield management is the umbrella term for a set of strategies or techniques that are used to allocate limited cm restricted degree of resources in capacity-constrained service industries to realize optimum revenue.

(a)     Core concept of yield management: to provide the right service to the right customer at the right time for the right price.

(b)     Ideal outcome of yield management: to make certain that the customer acquires the desired service at the desired time at a satisfactory price, while the organization gains the most favorable outcome (revenue).

(c)     Four Cs of yield management: calendar, clock, capacity, and cost. They are bound together by a fifth C: the customer.

(d)     There are three essential conditions for yield management to be applicable :

•         That there is a limited amount of resources available for sale.
•         That the resources sold are perishable.
•         That different customers are willing to pay a different price for using the same amount of resources.

For e.g. In the Airline industry, capacity (in terms of number of seats) is regarded fixed. When the aircraft departs, the unsold seats cannot generate any revenue and thus can be said to have perished. Airlines therefore use special software to monitor how seats are being reserved and react accordingly, for example by offering discounts when it appears that seats will remain unsold.

To summarize, Yield = actual revenue + potential revenue. It is to find the best balance at any time amongst the prices charged, the target segment, the capacity and the resources used to get the best possible financial returns.

 

10.    ADVANTAGES OF BRANDING SERVICES :

1.      It provides corporate identity in recognition.

2.      It offers a powerful tool for relationship building.

3.      It helps to create an image of quality and consistency. ,

4.      It reduces price comparison.

5.      It keeps the current customer satisfied by developing in sustaining a unique service advantage.

6.      It encourages repeat useage using sales promotion.

7.      It supports positioning strategy.

8.      New service offers get quick response.

9.      Market penetration becomes easy.

10.    It helps the customers to develop value perceptions.

 

11.    CHARACTERISTICS OF A GOOD BRAND NAME :

A good brand name should have the following characteristics :

1.      Distinctive : A unique and distinctive symbol is not only easy to remember but also a distinguish feature.

2.      Suggestive : A chosen name or symbol should be suggestive of quantity, or may be associated with superiority or a great personality. PROMISE is suggestive of an assurance of tooth health.

4.      Appropriate : Many of the products are surrounded by a certain mystique in the minds of the customers. The name CAREFREE is an appropriate brand name of a sanitary towel.

4.      Adaptable : It should be adaptable to new products. L.G. is a good brand name for TVs and VCRs, but when it is extended to refrigerators and washing machines some of the sales appeal is lost.

5.      Easy to Remember : A brand should be easy to remember. It should be easy to read, spell & pronounce. GOLD SPOT & SURF are examples of good brand names.

6.      Registrable : A brand should be registrable under the laws of trademarks & copyrights.

 

12.    TYPES OF BRANDING : In case of goods, we have three types of branding – Manufacturer branding, Licensed branding and Distributor branding. In services we only have manufacturer branding and licensed branding. Distributor branding is not possible in services because the service manufacturer cannot be different from its distributors. An example of licensed branding is the Franchised Computer Institutes of Aptech. Generally, manufacturer branding can be done by using the following four strategies :

1.      Individual brand names : Each of the product is branded with a distinct brand name. For Eg. Life Insurance Corporation of India brands each of its schemes separately such as Jeevan Sarita, Jeevan Sukanya, Jeevan Suraksha etc.

2.      Blanket family name : Here a single family name is used as brand name for all the products. ITC brands all its different hotel services under a single brand name – Welcome Group of Hotels.

3.      Separate family name for all the products : The service provider gives different family names for different categories of products. For example, Industrial Development Bank of India has introduced four types of bonds – Recurring bonds, Money back bond, Deep discount bond and branded them together as highlight.

4.      Company name along with the individual names : Some service providers use different names for different products, but precede these names by the company’s name. For example, Standard Chartered Bank brands each of its credit card products first with its family name followed by separate names. Standard Chartered Classic, Standard Chartered Gold and Standard Chartered Executive.

5.      Brand Attributes : Brand attributes are the functional and emotional associations which are assigned to a brand by its customers and prospects. Brand attributes can be either negative or positive, and can have different degrees of relevance and importance to different customer segments, markets and cultures. Brand attributes are the basic elements for establishing a brand identity.

6.      Brand Identity : A unique set of functional and mental associations the brand aspires to create or maintain. These associations represent What the brand should ideally stand for in the minds of customers, and imply a potential promise to customers.

13.    PRE-REQUISITES FOR ACHIEVING SERVICE QUALITY :

Quality is not an event, it is an ongoing process. As far as service organisations are concerned, quality is not the responsibility of the quality control department only, rather it is a matter to be taken care of by the entire business system. The following are the pre-requisites for achieving service quality.

1.      Visionary Leader : Presence of a Visionary leader at the top is a necessary element for achieving quality. The vision of the leader guides the organizational effort into achieving high standard of service quality.

2.      Setting High Performance Standards : Champion of high quality always emphasise 100% quality, thereby ruling out possibility of defects and shortfalls. Everything right the first time and always is a typical expression of this psych.

3.      Management’s Commitment and Support : The process of quality improvement has to be taken as an integrated management process. Only Top management has the position and clout to design a Value System that has at its core the total customer satisfaction.

4.      Preparing the Employees : The organisation needs to prepare their employees first so that they are capable of and feel like delivering quality services. Organising Employee Training Programs to cultivate and have their technical and inter-personal relations and communication skills need to be undertaken as and when the need arises.

5.      System for Addressing Customer Complaints : The major problem today is that unsatisfied customers hardly complain, they simply stop buying such goods and services without testing the marketer know even a shred as to what went wrong and where.

6.      System for Monitoring Service Quality : Commitment to quality also means that services delivered must be continuously monitored to assess as to what extent the customers are satisfied with the service offering of the firm.

 

14.    Relevance of Quality in Service : Quality improvement is a prerequisite for competing successfully in the highly competitive market. We don’t find a limit to quality upgrading.

          The service generating organisation makes a promise for certain specific quality or standard which they have to provide.

In the present business world where we find the intensity of competition moving upward, it is pertinent that policy decision makers assign due weight age to the different elements of quality.

The following are some of the benefits of service quality.

i)       Improves image in the eyes of customer.

ii)      Increases productivity and improves profitability.

iii)     Brings about continuous improvement.

iv)     Encourages employee participation.

v)      Minimises price sensitivities.

 

 

15.    Dimensions of Service Leadership : (OCT.-2010) :

The Six Dimensions of Service Leadership :

1.      Vision & Values : Service Leaders have a clearly defined vision for their team’s success. They know what they want to accomplish and each team member’s role. They keep up to date on current events in their field.

2.      Direction : Service Leaders set goals for the team. People work more productively when they have clearly defined goals to achieve. They are able to delegate to capable team members and they ensure that the tasks and priorities are sufficiently explained.

3.      Persuasion : Service leaders are able to persuade others to believe in their vision. When the whole team believes in the leader’s vision, they are more likely to commit to achieving that vision. Leaders convey self-confidence in themselves and in their abilities. They are able to communicate effectively with their team to ensure that each member is clear on the team’s direction and priorities.

4.      Support : Leaders ensure that everyone functions well as a team; and provides the team with the tools and resources required to achieve  the desired outcome.

5.      Development : Service leaders are aware of the needs and goals of the team members and are able to provide opportunities for team members to accomplish these goals.

6.      Appreciation : One of the deepest human needs is the need for appreciation. Service leaders give respect and recognition where it is due. They show team members that they care by showing respect and appreciation for their efforts.

 

16.    Vision-Mission Statement  (Oct. 2010) : A vision statement is sometimes called a picture of your company in the future but it is so much more than that. Your vision statement is your inspiration, the framework for all your strategic planning. A vision statement may apply to an entire company or to a single division of that company.

          A mission statement is a brief description of a company’s fundamental purpose. A mission statement answers the question, “why do we exist? The mission statement articulates the company’s purpose both for those in the organization and for the public.

17.    Moment of Truth (Now 02, 03, 04; May 08) : Lovelock states that ‘moment of truth’ is “a point in service delivery where customers interact with service employees or self-service equipment and the outcome may affect perceptions of service quality”

          A Moment of Truth is an episode in which the customer comes into contact with any aspect of the company (a product, sales force, or visit), and thereby has an opportunity to form (or change) an impression about the same.

It is a crucial moment for the organization, because the customer is evaluating the interaction. This evaluation will determine his satisfaction and retention.

There are several moments of truth right through the chain of customer service. Recognizing these and responding appropriately can benefit the company.

For e.g.: Hospitality industry has relatively high level of customer contact. Higher levels of customer contact results in more number of moment of truth.

A hotel guest may experience several service encounters as explained in the diagram below.

Each encounter contributes to the guest’s overall experience. As for the hotel, each encounter is an opportunity to deliver quality service to the guests.

 

18.    Service Marketing Trinity Triangle : According to Philip Kotler, service marketing requires three types of marketing-internal, external and interactive. The services marketing triangle shows the three interlinked groups that work together to enable, set and deliver the promise.

          Internal marketing (enabling the promise) : This is from management to employees. Engaged employees help enable the promises made to the customer. Employees must be trained, skilled, motivated, provided with the right tools and culture for them to do their best. Internal marketing is based on the assumption that employee satisfaction and customer satisfaction are inextricably linked.

External marketing (setting the promise) : This is from management to customer. The marketing actions directed towards the customer is a promise of how and what would be delivered to them. Tools used for external marketing include promotion, advertising, building corporate image etc.

          Interactive marketing (delivering the promise) : This is the encounter between employees and customer. The process of keeping promises in real time is called interactive marketing. This is the moment of truth where the efforts of internal and external marketing culminate. It is during this service encounter that the firm either makes (satisfied customer) or breaks the promise (dissatisfied the customer).

 

19.    OBJECTIVES OF INTERNAL MARKETING :

          Gronroos suggested two internal marketing objectives. They are :

1.      To ensure that the employees are motivated for customer oriented and service minded performance and thus successfully fulfil the duties as part-time marketers in their interactive marketing tasks.

2.      To attract and “employees.

          Role of Internal Marketing : The internal market is best motivated for service minded and customer oriented behaviour by an active marketing like approach. The internal marketing views employees as internal customers and jobs as internal products. Job products must attract, develop and motivate employees thereby satisfying the needs and wants of these internal customers while addressing the overall objectives of the organisation. The following points justify the role of internal market in a service organisation:

1.      Internal marketing focuses on customer satisfaction thereby reducing customer turnover and ill-will.

2.      It helps in creating awareness about the company’s aims and strengths.

3.      Internal marketing effectively promotes your business without adding advertising risk. The employees are the best ambassadors of the company and its services etc.

4.      Internal marketing helped the service firms to compete aggressively giving the organisation of competitive edge and advantage.

5.      Internal marketing can help to establish an important framework of legitimacy of new directions and transformation.

6.      In internet marketing Hilton is building corporate image.

7.      It can help to improve the company’s performance since it concentrates an effective feedback systems.

8.      Internal marketing help the process of knowledge development, Intellectual capital will be one of the main sources of growth in the future.

9.      It can help to enhance customer loyalty. The customer builds a bond of trust and expectations with the-employees.

10.    Internal marketing enhances employee motivation. Only motivated employee can bring about customer satisfaction.