Teaching you Service: PGDM Services Marketing Course 13-14 blog

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MODULE 1
SeEVALUATION AND SCORING
ssion 1 on Dec 28
Session 2 on Jan 1
Theme : Marketing as Value Creation
Case : Dushyant Corporate Trainers

Case : Dushyant Corporate Trainers. Learning : Just because the problem was stated in financial language (not being able to make a profit) the class began thinking that there was a financial problem to be solved and, naturally, simplistic solutions came to their mind like reducing compensation of the CEO and of Business Developers and of changing the basis of pricing etc. More often than not, the financial report is a mere dashboard - an indicator of an underlying issue - but not the underlying issue itself ! The learning was that a marketing person should first check if two major outputs are being generated in the business simultaneously (1) satisfaction to the customer (2) profit for the business. The aim of all marketing is to generate both these at the same time and in the same transaction / contact. Even if one of these two not being generated; it is a proof of poor or no marketing. On the other hand, a consistent generation of both the profit and the customer satisfaction is a proof of good marketing being done by the business.

How to generate profit and customer satisfaction? The simple answer is undertaking the right value creation activities. There are 4 basic value creating activities in any business

Discovering, Diagnosing the market situation ( market research followed by 5Cs type work)
Designing the right marketing strategy
Activities to acquire customers
Activities to fulfill the needs of such acquired customers

A typical company spends its money on these activities as follows

Value creation planning activities : about 3% of sales

Discovering, Diagnosing the market situation : Not even 1%
Designing the right marketing strategy : Not even another 2%.

Value execution activities : rest 97%

Activities to acquire customers : About 30% - 40%
Activities to fulfill the needs of such acquired customers : 60% - 70%

So how does a company improve its profit ? By cutting value execution activities which account for 95%+ of customer acquisition and fulfillment activities or by doing better value creation planning activities like strategization and situation assessment? Well, it can be done both ways but the latter is a more sustainable and lasting way. It is called as the marketing process and is as below:

The tools used are

Market sensing : Market Research, 5 Cs, Segmentation and Target Market selection
Strategy formulation : The essence of strategy is MVG.
Click here

Extracted from class summary by Group 3

I am thankful to the Group 3

A few shortcomings were observed by us. The chairman is questioning only the financials of the company but the “VALUE GENERATION” aspect was not touched either by the Chairman or the CEO. In a service organization, or for that matter even in product organizations, ultimately it is the value that gets transformed in revenues. Reducing or cutting costs can only so far and many times only as a temporary measure.

Keeping ‘Cost’ low is just the necessary condition to keep bottom line of business healthy.

Creating ‘Value’ is the sufficient condition for businesses to attain Sustainability. This is “Cost Management” today. The following are the 2 golden rules to run businesses today:

Better before cheaper—in other words, compete on differentiators other than price.
Revenue before cost—that is, prioritize increasing revenue over reducing costs.

Unless the businesses measure the value they are creating for their customers, they will have no clue as to how they are performing and whether they are attainin
g the ultimate goal of customer satisfaction.

Please refer to the product development model model developed in the 1980s by Professor Noriaki Kano, which classifies customer preferences into five categories – Attractive quality, One dimensional quality, Must-be quality, Indifferent quality and reverse quality.Click here

Extracted from class summary by Group 4

I am thankful to the group 4

A complicated problem can be broken down into its most granular forms by asking the right set of probing questions.

The Profit and Loss Statement (and the Balance sheet for that matter) is only numerical figures on a dashboard. It may not be the proverbial crystal ball that helps find the root cause of problems, let alone solving them

DCT lacked any form of metrics to gauge the value created. There are many metrics

that can help track whether value is being created (and how effective the creation of

that value is. A few examples are (1) Customer Satisfaction Form (2) Number of repeat customers (3) Number of complaints received (4) Attendance of customers etc (5)

Feedback mechanism including Customer satisfaction (6) Trainer productivity, satisfaction and retention. Also, trainer satisfaction needs to be gauged, for which the following aspects can be taken (7) Trainer satisfaction evidence (8) Trainers selection process (9) Evaluation of trainee’s learning (10) Do trainers receive training and feedback?

Service is the business of dealing with people and more often than not, one comes across the classic Moment of Truth in this. In customer service, instance of contact or interaction between a customer and a firm (through a product, sales force, or visit) that gives the customer an opportunity to form (or change) an impression about the firm.

-------------------------------------------------------------------------------

MODULE 2
Session 3 and 4 on January 7
7Ps of Marketing Mix in Services
Difference between products and services
Classification of services

The Chairman of DCT should have actually asked questions like these relating to value creation :

who are your target customers - how did you select them?
Is this "ideal customer profile" known to the business developer?
For a proposed training program, what is your mechanism to assess their needs?
How do you ensure that your trainers know what the trainees need?
How do you ensure that he trainees actually deliver what they are supposed to?
Do you have a mechanism for measuring trainee's satisfaction ?
What actions, if any, you have taken based on the satisfaction measurement ?
Do you have a mechanism for gathering complaints ?
Show me the ABC analysis of complaints ?
What actions, if any, you have taken based on the complaints collected ?
Do you ask the trainers for a feedback after the training ?
What do they suggest ? Has that been done ?
How do you select the teachers ? Is there any matching process ?

What is common ? PEOPLE, PROCESS, PROOF

Concept : Marketing Mix in Services

Concept : 7 Ps is just a template. "Marketing Mix" really is about things that matter to the customer.

Concept : But there is never one thing that matters : hence need for segmentation and choosing customer

Concept : There is no BOM, no specs, no QC, no lab, no inspection in services . Hence introduce service management traingle

Concept : Nature of services

PRE-CREATED VS CO-CREATED : Products are pre-created and hence the value embedded into the product can be pre-planned to a great extent with inputs from experts and the senior managers. But the service is co-created in real time by the front line employees who face the customers and use the DDDD process to meet each customer's unique needs to the extent possible. (Discover, Diagnose, Design and Deliver). The outcome of service is far more variable (than in case of products where the outcome of the machines can be standardized) because it depends on the the customer's expectations and behavior and the servicescape. Because it is in real time and happens in front of all the people, it can be positively or negatively impacted by others. For example : a teacher (service giver) teaching fresh MBA students (service customers) in a classroom (location) under circumstances of the LCD projector not working (servicescape).
DELIBERATE VS SPONTANEOUS : It is possible in product business to spend a lot of time in getting a product right before it is shipped but service has to be created and rendered in real time when demanded by the customer. Many services have to be rendered in real time when the customer is physically or tele-present. Thinking, deciding and acting in real time to the customer is important in services. In product business the making and consumption is separate and you can take more time and be deliberate.
MACHINES VS PEOPLE : Product quality depends on materials and machines whereas service quality depends on men and methods. In products business the men help machines produce standardized products. In service business the machines help men produce customized service.
PEOPLE DEPENDENCE IS A DOUBLE EDGED SWORD : Machines are suited for repetitive work and men are suited for customized work. Customers pay more for personal attention and personalized products or services. On the other hand, dependence on men created its own problems. People have personal traits and likes and dislikes resulting into inconsistent outcomes. People have moods. Since service business is intangible and people dependent, every service business must expect a far higher level of misunderstandings, wrong expectations, complaints and dis-satisfactions. In fact a complaint handling / escalation / foreseeing process is a must in almost every service business.
ADMISSION / FENCING PROCESS TO DEAL WITH MULTIPLE CUSTOMERS / TASKS : In low end services like retail banking, training employees to do multi-tasking is possible in order to make a service giver cater to different customers /needs but for high end services like teaching, it is not possible to train the professor in multiple subjects. This problem is solved by creating a filtration / admission / selection / fencing process to segregate the customers as they come in. This enables a line/group of service specialists to be set up so that they deal only with those customers who are trained and equipped to cater to their needs. Hence there is more variation and specialization among doctors, lawyers, professors, musicians etc
YOU CAN OWN A PRODUCT BUT A SERVICE CAN ONLY BE LEASED. The products are priced "per material unit" but services are priced on "per rendering or per time period". For example, a book is a product and is priced per copy. But borrowing it for reading from a library is service because the library charges you "per book per week".
PRODUCT QUALITY IS IMPROVED THROUGH MATERIALS AND MACHINES PROCESSES WHEREAS SERVICE QUALITY IS IMPROVED THROUGH EMPLOYEE AND WORK PROCESSES.

BASIS FOR ANALYZING DIFFERENT SERVICES

Service giver quality

Carpentry, anesthetist...
Low end, mid end, high end

If the customer is present and how much access he has to back end

sit down restaurant or take away

Based on where the service is rendered

pre-arranged location, customer's location, other location

Service Scape (People, Process, Location, Equipment, Environment)

our own, the customer's, someone else's

Inward and outward condition of the customer

trauma center, recovery room, nursing home

Employee role and condition

to what extent the employee can influence the outcomes

TYPES OF SERVICES

AUTOMATABLE SERVICES : Simple services which can be automated

shoe shine, vending, ticketing, ATMs, portals

LOW END SERVICES : can be performed by anyone with little training

cleaning, guarding, door keeping

MID-END SERVICES : requires deliberate training effort but not much

Technical : Nursing, tailoring, repairing, polishing
Customer care : air hostess, handling complaints, salespersons, reception

HIGH-END SERVICES: needs specialized education and experience

architects, doctors, professors, lawyers, pilots

Value created is measured in service encounters

where the following is present

Service scape (customer, technical, employee)
Service location and being "open to business" and schedule
Service customer (with a script and expectation and personality )
Service Provider (with a script and expectation and personality )

------------------------------------------------------------------------------------------------------------------------------------------------------------------

MODULE 3
Session 5 on January 8
Forbes Facility Case
Only half the case could be completed
Session 6 on January 10
was cancelled due to students going for the conclave
Session 6 was therefore held on January 11
the case was completed
-------------------------------------------------------------------------------------------------------------------
Session 7 consisted of Quiz on January 11
A quiz was administered and the answers were discussed in the class
-------------------------------------------------------------------------------------------------------------------
Session 8 planned for January 13 cancelled by me
As I had to visit the doctor
Coverage planned (1) Service as a series of encounters (2) Each encounter as a theater (3) why complaints are to be expected (4) Importance of expectations (5) Service Gap Model and Serve Qual model
---------------------------------------------------------------------------------------------------------------
Also planned Coimbtore Financial Corporation and the Service Profit Chain model
------------------------------------------------------------------------------------------------------------
session 9 and 10 planned for January 14

Coimbtore fin corporation case
Group 5 and Group 6 presented.

Difference between products and services. The "unit" in products is the product itself and VCP analysis is conducted for each SKU ( National, state and channel wise) and a profitable "Product Mix" is created by improving product profitability and by eliminating unprofitable products. product portfolio is subdivided into HML buckets of profitability.

In services the "unit" is an employee and the VCP analysis is needed to be carried out for each employee ( location wise, leader wise) and a profitable mix of trained (profitable) and untrained (not yet profitable) employees is constructed. Employee portfolio is subdivided into LOS (Length of service) and productivity buckets. The buckets could be rookies, under training, income protection, regional clubs, national clubs, ready for promotion etc.

Compensation : Profitability link

What should the curve be? S curve ? It depends you need to find out how the curve works.

As I had to visit the doctor
Coverage planned (1) Service as a series of encounters (2) Each encounter as a theater (3) why complaints are to be expected (4) Importance of expectations (5) Service Gap Model and Serve Qual model-

MODULE 3
Session 5 on January 8
Forbes Facility Case

-------------------------------------------------------------------------------------------------------------------'

On January 14 took the Coimbtore Finance Case.

How to make a product (service) company profitable?

Unit of costing to calculate added value is unit of production but in services it is an employee.

In product business you calculate unit / state / channel wise. In service business you calculate employee / location / leader wise.

You classify products, states and channels into HML buckers based on profitability and try and increase H and reduce L. You do the same in services but you analyze by employee, location and leaders into HML buckets.

1) Difference between products and services.

a) Products

i) The "unit" = SKU / State / Channel

ii) VCP analysis for each SKU à Profitable "Product Mix

iii) Actions : Eliminate unprofitable products, cost reduction, add features

iv) Analysis : Put SKUs into HML buckets of profitability.

b) Services

i) The "unit" = an employee / location / Leader

ii) Analysis of Productivity, KPI, LOS à Profitable employee mix

iii) Dynamics of how it varies depending inputs vary with output

iv) Actions : recruitment, training, compensation, appraisal

v) Put employees into buckets of profitability

'
Breakup of your class of 43 :

40% OPS ( Would like B2B focus )
30% MKTG ( Would like 50/50 focus on B2B and B2C)
20% FIN ( Same as MKTG)
20% IM ( Would like B2B focus )

hence : 60% B2B, 40% B2C

Page

Course Outline:

MKG211

Services Marketing

How does this course contribute to my

earning

The specific

learning

outcomes

that

you

will

achieve by successful

completion of this course:

You will be assessed on the

learning outcome in t

ask/s:

Completing these tasks successfully

will contribute to you becoming:

Demonstrate knowledge of

the principles and concepts

underlying services marketing

1, 2 and 3

Knowledgeable.

Determine the optimal

pathway for a service to

achieve

competitive

advantage and communicate

this i

a compelling manner.

Empowered.

Use critical thinking to

recognise, evaluate

and

solve

services marketing problems.

and 3

Creative and critical thinkers.

Am I eligible to enrol in this

course?

Refer to the

Undergraduate

Coursework Programs and Awards

Academic

Course

ontent



Marketing in the service economy



Developing service products: Core and supplementary elements



Customer behaviour in a services conte



Positioning services in competitive markets



Setting prices and implementing revenue management



Distributing service through physical and electronic channels



Crafting the service environment



Promoting services and educating customers



Managing

relationships and building loyalty



Managing people for service advantage



Striving for se

rvice leadership



Designing and managing service processes



Balancing demand against productive capacity



Improving service quality and productivity



Complaint

handling and service recovery

-----------------------------------------------------------------------------
Module 1 (Sessions 1 & 2) : Introduction to Services

Case : Forbes Facility Services

Concept : Front line is the key to services à Service Management Traingle

Module 2 (Sessions 3 and 4 ) : Difference between product and services marketing

Case : Still using the Forbes Facility Services as a background

Concept : How and why service consumption improves when people get prosperous

Concept : Differences and significance

Module 3 : (Sessions 5 and 6 ) : Classification of Services

Case : Various types of services classification

Concept :

Nature of Services

Levitt, T. "Marketing Intangible Products and Product Intangibles", in

The Marketing Imagination

by Theodore Levitt , 2

Editio

n, (New York, The Free Press, 1986), pp. 94

110

Case Analysis

: Shouldice Hospital Limited (Case 8, Pages 700

–

712 of text book)

Additional Recommended Readings

Henkoff, R. "Service is Everybody's Business",

Fortune

, June 27, 1994, pp. 48

60.

Quinn, J

. B. and Gagnon C. E., "Will Services Follow Manufacturing into Decline?"

Harvard

Business Review ,

November

December 1986, pp. 95

103.

Lovelock, C. "Classifying Services to Gain Strategic Insights",

Journal of Marketing

, Vol. 47,

(Summer 1983), pp. 9

Sessions 3 & 4

Consumer Behavior in Services

Pre Readings

Textbook

Chapter 3

Shainesh, G. (2004), ‘Understanding Buyer Behavior in Software Services

–

Strategies for

Indian Firms’,

International Journal of Technology Management

, Vol. 28, No. 1, pp.

118

127.

Case Analysis

–

TiVO in 2002 : Consumer Behavior

Additional Recommended Readings

Burton, S. " The Framing of Purchase for Services",

The Journal of Services Marketing

, Vol. 4, No.

4, Fall 1990, pp. 55

67.

Session 5 & 6

Understanding Service Q

uality & Establishing Service Standards

Pre Readings

Textbook

–

Chapter 4 & 5

Carlzon, J. "Putting the Customer First: The Key to Service Strategy"

The McKinsey Quarterly,

Summer 1997.

Case Analysis

Scandinavian Airline System

Additional Recommended R

eadings

Malhotra,N.K. Ulgado, F.M, Agarwal, J., Shainesh, G. and Wu, L. (2005), ‘Dimensions of

Service Quality in Developed and Developing Economies: Multi

Country Cross

Cultural

Comparisons’,

International Marketing Review

, Vol. 22, No. 3, pp. 256

278.

afford, M. B. "How Customers Perceive Service Quality",

Journal of Retail Banking

, pp. 29

37.

Session 7

Listening to Customer Requirements through Marketing Research

Pre Readings

Textbook

Chapter 6

Additional Recommended Readings

Shostack, L. "Break

ing Free from Product Marketing",

Journal of Marketing

, April 1977, pp. 72

80.

Fryar, C. R. "What's Different about Services Marketing",

The Journal of Services Marketing

, Vol.

5, No. 4, Fall 1991, pp. 53

58.

Session 8 & 9

Building Customer Relationshi

ps & Service Recovery

Pre Readings

Textbook

–

Chapter 7

–

Case Analysis

Starbucks: Delivering Customer Service (Case 7, Pages 682

–

699 of text book)

Session 10

Service Design & Standards

Pre Readings

Textbook

Chapter 9 & 10

Additional Recomme

nded Readings

Shostack, G. L. "Designing Services that Deliver",

Harvard Business Review

, January

February

1984, pp. 133

139.

Kingman

Brundae, J. " The ABCs of Service System Blueprinting", in

Designing a Winning Service

Strategy,

M.J. Bitner and L. A.

Crosby (eds.), (Chicago, American Marketing Association, 1989).

Session 11

Physical Evidence & the Servicescape

Pre Readings

Textbook

–

Chapter 11

Session 12

Internal Marketing

Pre Readings

Textbook

Chapter 12

Case Analysis:

Store24 (A): Managing E

mployee Retention

Additional Recommended Readings

Mahesh, V. S. , "Effective Human Resources Management : Key to Excellence in Service

Organisations",

Vikalpa

, Vol. 13, No. 4, October

November 1988, pp. 9

15.

Session 13 &14

Service delivery through In

termediaries and Managing Demand & Capacity

Pre Readings

Textbook

Chapter 14 & 15

Session 15

Services Marketing Communication

Pre Readings

Textbook

Chapter 16

Case Analysis

: Marketing at Bain & Company

Indian Institute of Management Bangalore

SERVICES MARKETING

PGP 2007

09 Term IV

Course Instructor

G. Shainesh

Background

One of the outcomes o

f the growing importance of services in the global

economy has been the realization among marketers that managing a service requires a

fundamentally different way of operating the business when compared to producing and selling

goods. This uniqueness come

s from the very intangible nature of services, which impacts their

conception, design, communication, delivery, purchase and consumption. Other characteristics of

services like heterogeneity, perishability and simultaneity also increase the complexities of

management and require greater integration of the traditionally distinct organizational functions

of marketing, human resources and operations.

Course Objectives

The course has been designed to familiarize students with the

characteristics of servi

ces, their implications on design and delivery, and highlight the role of

coordinated organizational effort through marketing, human resources and operations in gaining

sustainable competitive advantage.

The course aims at providing insights to

Nature o

f services and its impact on marketing

Consumer behavior in services

Marketing mix for services

Understanding service quality, its measurement and management

Service design through marketing research and blueprinting for efficient delivery

Internal market

ing

Using technology to enhance services

Pedagogy

The course will help students develop an appreciation of select businesses in the

service sector like financial services, hospitality, healthcare, travel, consultancy services,

telecom, etc through disc

ussions, case analysis and LINKS Simulation.

Evaluation

Quizzes

20%

Case Assignments / Class Particpation

20%

LINKS Simulation

40%

End

Term Exam

20%

Textbook

Valarie A Zeithaml, Mary Jo Bitner, Dwayne D Gr

emler and Ajay Pandit

Services Marketing

–

Integrating Customer Focus Across the Firm

(4th Edition)

Tata McGraw Hill Publishing

Company Ltd., New Delhi, 2008.

Services Marketing

Course Outline

Session 1&2

Course Overview & Introduction to Services

Role and Importance of Services in the Global Economy

Evolution of Services Marketing

Pre Readings

Textbook

Chapters 1 & 2

Levitt, T. "Marketing Intangible Products and Product Intangibles", in

The Marketing Imagination

by Theodore Levitt , 2

Editio

n, (New York, The Free Press, 1986), pp. 94

110

Case Analysis

: Shouldice Hospital Limited (Case 8, Pages 700

–

712 of text book)

Additional Recommended Readings

Henkoff, R. "Service is Everybody's Business",

Fortune

, June 27, 1994, pp. 48

60.

Quinn, J

. B. and Gagnon C. E., "Will Services Follow Manufacturing into Decline?"

Harvard

Business Review ,

November

December 1986, pp. 95

103.

Lovelock, C. "Classifying Services to Gain Strategic Insights",

Journal of Marketing

, Vol. 47,

(Summer 1983), pp. 9

Sessions 3 & 4

Consumer Behavior in Services

Pre Readings

Textbook

Chapter 3

Shainesh, G. (2004), ‘Understanding Buyer Behavior in Software Services

–

Strategies for

Indian Firms’,

International Journal of Technology Management

, Vol. 28, No. 1, pp.

118

127.

Case Analysis

–

TiVO in 2002 : Consumer Behavior

Additional Recommended Readings

Burton, S. " The Framing of Purchase for Services",

The Journal of Services Marketing

, Vol. 4, No.

4, Fall 1990, pp. 55

67.

Session 5 & 6

Understanding Service Q

uality & Establishing Service Standards

Pre Readings

Textbook

–

Chapter 4 & 5

Carlzon, J. "Putting the Customer First: The Key to Service Strategy"

The McKinsey Quarterly,

Summer 1997.

Case Analysis

Scandinavian Airline System

Additional Recommended R

eadings

Malhotra,N.K. Ulgado, F.M, Agarwal, J., Shainesh, G. and Wu, L. (2005), ‘Dimensions of

Service Quality in Developed and Developing Economies: Multi

Country Cross

Cultural

Comparisons’,

International Marketing Review

, Vol. 22, No. 3, pp. 256

278.

afford, M. B. "How Customers Perceive Service Quality",

Journal of Retail Banking

, pp. 29

37.

Session 7

Listening to Customer Requirements through Marketing Research

Pre Readings

Textbook

Chapter 6

Additional Recommended Readings

Shostack, L. "Break

ing Free from Product Marketing",

Journal of Marketing

, April 1977, pp. 72

80.

Fryar, C. R. "What's Different about Services Marketing",

The Journal of Services Marketing

, Vol.

5, No. 4, Fall 1991, pp. 53

58.

Session 8 & 9

Building Customer Relationshi

ps & Service Recovery

Pre Readings

Textbook

–

Chapter 7

–

Case Analysis

Starbucks: Delivering Customer Service (Case 7, Pages 682

–

699 of text book)

Session 10

Service Design & Standards

Pre Readings

Textbook

Chapter 9 & 10

Additional Recomme

nded Readings

Shostack, G. L. "Designing Services that Deliver",

Harvard Business Review

, January

February

1984, pp. 133

139.

Kingman

Brundae, J. " The ABCs of Service System Blueprinting", in

Designing a Winning Service

Strategy,

M.J. Bitner and L. A.

Crosby (eds.), (Chicago, American Marketing Association, 1989).

Session 11

Physical Evidence & the Servicescape

Pre Readings

Textbook

–

Chapter 11

Session 12

Internal Marketing

Pre Readings

Textbook

Chapter 12

Case Analysis:

Store24 (A): Managing E

mployee Retention

Additional Recommended Readings

Mahesh, V. S. , "Effective Human Resources Management : Key to Excellence in Service

Organisations",

Vikalpa

, Vol. 13, No. 4, October

November 1988, pp. 9

15.

Session 13 &14

Service delivery through In

termediaries and Managing Demand & Capacity

Pre Readings

Textbook

Chapter 14 & 15

Session 15

Services Marketing Communication

Pre Readings

Textbook

Chapter 16

Case Analysis

: Marketing at Bain & Company

http://marketing-list.blogspot.in/2011/05/5-differences-between-products-and.html

Teaching you Service

Wednesday, July 16, 2014

PGDM Services Marketing Course 13-14 blog

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