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Designing and

Managing Services

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Contents.

1. The Nature of Services

2. Marketing Strategies for Services Firms

3. Managing Services Quality4. Managing Services Brands

5. Managing Product Support Services

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1. The Nature of Services

What is a Service?

A service is any act of performancethat one party can offer another that is

essentially intangible and does notresult in the ownership of anything; its

production may or may not be tied to aphysical product.

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Service Sectors

Government

Private nonprofit Business

Manufacturing

Retail

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% of U.S. GDP by Industry

0

10

20

30

40

50

60

70

80

1948 1959 1967 1977 1987 1999

PercentofGDP

Year

Servic es

Manufacturing

Mining & Agriculture

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100.006,149,432

3.66225,360Import duty

50.829.41578,778COMMUNITY, SOCIAL AND PERSONAL SERVICES

2.20135,079HEALTH AND SOCIAL WORKS

2.53155,871EDUCATION2.67164,203PUBLIC ADMINISTRATION AND DEFENCE

6.77416,038REAL ESTATE, RENTING AND BU SINESS ACTIVITIES

1.65101,721FINANCIAL INTERMEDIATIONS

10.61652,500TRANSPORT, STORAGE & COMMUNICATION

0.7244,372HOTEL AND RESTAURANTS

14.26876,766WHOLESALE AND RETAIL TRADE

8.14500,849CONSTRUCTION

1.0564,520ELECTRICITY, GAS AND W ATER SUPPLY

17.221,058,902MANUFACTURING

1.1470,320MINING AND QUARRYING

3.55218,138FISHING

14.41886,015AGRICULTURE AND FORESTRY

%2008-2009

(Million Tk.)Gross Domestic Product of Bangladesh at Current Prices

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Categories of Service Mix

Pure tangible good

Good with accompanying services

Hybrid

Service with accompany goods Pure service

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Tangibility Spectrum

Tangible

Dominant

IntangibleDominant

Salt

Soft Drinks

DetergentsAu to mo bi les

Cosmetics

Ad ver ti si ngAg enc ies

Air l in esInvestment

Management

ConsultingTeaching

Fast-foodOutlets

Fast-foodOutlets

Slider/Track Control

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Service Distinctions

Equipment-based or people-based

Service processes (Restaurants: caf,fast-food, Buffet)

Clients presence required or not Personal needs or business needs

Objectives (Profit/Non-profit) &ownership (Private/Public)

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Distinctive Characteristicsof Services

Intangibility

Inseparability

Variability

Perishability

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Physical Evidence & Presentation

Place

People

Equipment

Communication material Symbols

Price

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Variability

How to Increase Quality Control

Invest in good hiring & training procedures

Standardize the service-performance process

Monitor customer satisfaction

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Perishability

Matching Demand & Supply

Demand side

Differential pricing

Nonpeak demand

Complementary

services

Reservation

systems

Supply side

Part-time employees

Peak-time efficiency

Increased consumer

participation

Shared services

Facilities for future

expansion

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Inseparability

?

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2. Marketing Strategies for Services Firms

A Shifting Customer Relationship

BusinessWeek, Oct 23, 2000, issues over story called"Why Service Stinks ," based in part on the fact that from1994 to 2000, customer satisfaction in USA dropped

12.5 % for airlines,8.1 % for banks,

6.5 % for stores, &

4 % for hotels.

Rachet/ Ratchet Effect

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Factors Leading to CustomerSwitching Behavior

Pricing

Inconvenience

Core Service Failure

Service Encounter Failures

Response to Service Failure

Competition

Ethical Problems

Involuntary Switching

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Holistic Marketing for Services

The Services Marketing Triangle

Internal Marketing

Interactive Marketing

External Marketing

Company(Management)

CustomersEmployees

Enab ling the promise

Delivering the promise

Making the promise

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3. Managing Services Quality

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Determinants of Service Quality

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Determinants of Service Quality

Reliability

Responsiveness

Assurance

Empathy Tangibles

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1.Reliability: Ability to perform the promisedservice dependably and accurately.

Examples of Customers Questions:

Did Pizza Hut deliver the pizza within 30minutes?

2.Responsiveness: Willingness to help customersand provide prompt service.

Example of Customers Question:

Is my stockbroker willing to answer myquestions?

Determinants of Service Quality

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3.Assurance: Employees knowledge and courtesy andtheir ability to inspire trust and confidence.

Examples of Customers Questions:

Does the Dentist appear competent?

Does the flight attendant have a pleasant manner?4.Empathy: Caring and Individualized attention to thecustomers.

Examples of Customers Questions:

Is the Bank manager listening to my financialobjectives?

Determinants of Service Quality (Contd.)

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5.Tangibles: The appearance of physicalfacilities, equipment, personnel and

communication materials like reports, letters.

Examples of Customers Questions:

Is my accountant dressed appropriately?

Is my bank statement easy to understand?

Are the hotels facilities attractive?

Determinants of Service Quality

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Improving Service Quality

Listening

Reliability

Basic service

Service design

Recovery

Surprising customers

Fair play

Teamwork

Employee research

Servant leadership

(Jesus urged his

followers to be

servants first.)

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Best Practices of Service QualityManagement

Strategic Concept

Top-Management Commitment

High Standards

Self-Service Technologies (SSTs)

Monitoring Systems

Satisfying Customer Complaints

Satisfying Employees

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A) Identifying & Satisfying Customer

Needs Failure frequency

Downtime

Out-of-pocket costs

B) Postsale Service Strategy

Product take back

4. Managing Product Support Services