Marketing in 2020- 81 Hours HD Video

Welcome to this course on Services Marketing, I am the Zillur Rahman, professor in the

Department of Management Studies at IIT, Roorkee. Across this course, we will give a

special emphasis on Integrating People, Technology and Strategy. Let me explain you why

this is important? As you know that competition is changing every day it is becoming more

intense and your competitors are coming with newer technologies.

Now, companies they have to skill their employees in this new technologies. The employees

have to unlearn the older skills and learn new skills. Companies at the same time have to

educate the customers in using those technology and to educate and make them aware of how

these new technologies are going to benefit them.

Now, with all these changes, changes happening in the environment, companies also have to

then, take these changes into consideration and incorporate them in their strategy. So, that

they remain relevant to the customers as well as employees. So, this is the uniqueness of this

course that also this course we will be talking about how to go about integrating technologies

people and a strategy.

This course is divided into five sections and it has 40 modules. These are those 40 modules

the five sections are. In the first section that is ended understanding service products,

consumers and market is spread across 8 modules. The second section that is on applying the

4 Ps of marketing to services, it spread from module 9 to 19. The third section is on managing

the customer interface that will that will cover module 20 to 29.

The fourth module has will, will be talking about developing customer relationship that

spreads from the module 30 to 35 and in the last we will be talking about, in the fifth section

is striving for service excellence, this covers module 36 to 40. Now, let us start with the first

section that is understanding service products, consumers and market. In the first three

module, that is Module 1, 2 and through 3, we will be talking about new perspective on

marketing in the service economy.

Let us start with module 1. So, we are not talking on New Perspectives on Marketing in the

service economy. So, we will be talking about understanding how services contribute to a

country’s economy and the principal industries in the service sector. We will then identify the

powerful forces that are transforming service markets.

This is the overview of this course, we will talk about why should why we should study

services marketing? And then we will talk about the various definitions of services, we will

then move on to the service sector, what are the industries in the service sector?

The categories of service by the types of processing then we will move on to the key trends

and then, we will also talk about services for what are the distinct challenges that services for

opposes for marketing? And then we will talk about the functions and the service profit chain

and how we should put services strategy into action? So, this is this is what we are we will be

talking about through these modules.

Now, why we should study services? So, the first important point is that services dominate

the global economy. There is an increasing size of service sector across the globe, across the

globe across all the countries the size of service sector is increasing and the relative share of

employment between agriculture and industry and services is changing dramatically.

The, this proportion of employment that comes from agriculture or manufacturing or services

it is changing and even in emerging economies, the service output is growing rapidly and

often represents at least half of the gross domestic product. So, it is about 50 percent of the

GDP that comes from services and the rest 50 percent comes from agriculture and industry.

So, that is why it is important that we should study services.

Now look at this, this slide it shows the evolution of service dominated economy. On the x

axis we have time and per capita income. So, it moves from left to right and from lower to

higher and then on the y axis we have share of employment again it moves from, bottom to

the top as we go up. So, now you see that, these services, the contribution of services in the

GDP and per capita income has increased tremendously.

This slide shows the contribution of service industries to the GDP globally. So globally,

services account for 63 percent of the global GDP, 31 percent comes from manufacturing,

and 6 percent comes from agriculture. So, it is more than 50 percent of the GDP across of the

globe that services contribute to.

This slide shows the size of service sector in various economies. So, you see that on the top

we have countries like Bermuda and Hong Kong and Bahamas and at the bottom, we have

countries like Indonesia, Laos, and Saudi Arabia.

So, this shows the service as percentage of GDP. So in Bermuda is 94 percent of the GDP

while in Saudi Arabia it is 36 percent of the GDP and there are lots of, in India the World

Factbook, 2015 shows that it is 57 percent and now it has increased to more than 60 percent.(Refer Slide Time: 06:13)

The second important point that makes studying of services in important is that most new

jobs are generated by services. So, it is not only about the contribution of services in the

GDP, but also the more amount of job that it generates. So, in most countries around the

world, new job creation comes mainly from services. There are knowledge based industries

such as professional and business services, education and health care. They generate high

paid jobs. In fact, this shift in employment to the service sector has been seen as one of the

longest and the most stable of the economic trends.

Many manufacturing firm too have moved from just bundling supplementary services with

their physical products to marketing certain elements as standalone services. For example,

IBM that was primarily known as a manufacturer has now transformed into a service provider

and has become the world’s largest business and technology service provider offering

management consulting, systems integration and application management services as part of

IBM Global Services. So, you see that the manufacturing pure manufacturing firms they are

moving towards services as and several of them including IBM have now become a pure

service company.

Now, this slide shows the share of service sector in GDP and employment. So, in India, it is

the gross value added by services is 53.2 percent and the employment it generates is 28.6

percent, while in U.S they are about the same. The gross value added is 79.3 percent while

the employment is 80 percent.

(Refer Slide Time: 08:03)

The third important point for us to study services marketing is that understanding of services

will offer personal competitive advantage. So, the distinct characteristics of services and how

they affect both customer behavior and marketing strategy will give important insights and

perhaps create a competitive advantage for us as not only a customer but also as an employee.

This is the distribution of principal industries of the service sector. So, agriculture, so, this is

agriculture, forestry, fishing and mining that contributes to 77, 7.7 percent then there are

government services that contributes to the highest and that is 30, 13.2 percent.

(Refer Slide Time: 08:56)

Now, let us look at some of the powerful forces that are transforming services markets,

government policies, business trends, advances in IT etcetera, are among the powerful forces

transforming today’s service markets. Collectively these forces they reshape demand, supply,

competitive landscape and even the way customer buy and use services.

Of these forces the dramatic development of IT and communications is perhaps the most

important at the moment. So these powerful forces, they are transforming service markets and

the service markets are no longer what they used to be. Because they are reshaping the

demand and supply and the competition and therefore, they have all they have also brought

about a change in how we as customers buy and use services.

Then innovation in big data, the user generated content, mobile communications and network

technology, Artificial Intelligence and app based self service technologies bring their own

service revolution. These technologies they enable firms to deepen the relationship with their

customers, offer multiple ways information flow, and more personalized services. They

improve analytics and improve productivity and therefore improves profitability.

These technologies also lead to an array of innovative business models. Because of these new

technologies. There are different kind of, innovative business models that are coming and the

first is peer to peer services. For example, which is also called us P2P, for example, Airbnb

for short term accommodation and lending clubs for personal loans. Another important

business that has come up is the integrators. For example, Uber connects passengers with

independent drivers through their app. Then there are crowd based, crowd based services for

crowd, crowd based services. For example, crowdSPRING, a leading provider of logo and

graphic design services. So, they source ideas from the crowd and then they provide services

based on those ideas.

These are the factors that stimulate transformation of service economies, these factors,

government policies, the social changes, business trends, advances in IT and globalization,

these are the things that have that are there in the external environment and these, the and the

keep on changing all the time. So the government there is no control and the government

keeps on changing the policies.

The society keeps on changing. The trends in businesses keeps on changing. Then there are

advances in information technology and all you also know that globalization is happening

across the world. So, now this leads to new markets and productive development of new

markets and product categories, increasing demand for services and more intense

competition. We will talk about each one of these changes in detail in a moment.

Now, this leads to innovation in service products and delivery system is stimulated by better

technology, which leads to customers are now having more choices and they exercise more

power. Now, the success hinges on understanding customers and competitors, viable business

models and creation of value for customer and firms.

Now look at the changes in regulation. For example, ban on smoking in restaurants and

limitation of transfats in food preparation. The impact of this and service economy is that

there is improved customer comfort. Healthy measures in restaurants will encourage people

to dine out more often. Then privatization for example, privatization of infrastructure services

like utilities and transportation, the potential retrenchment of existing suppliers in a more

competitive environment, but job creation and investments by new player entering the

markets.

Now let us look at what are the social changes that are happening for example, rising

customer expectation because the competition is changing more number of competitors are

coming therefore, the customer expectations are rising, more affluent customers, people

running short on time, increased desire for buying experiences versus buying of things.

Rising consumer ownership of high tech equipment, Easier access to information,

Immigration people moving from one place to and growing but aging population.

Now let us look at look at the examples for these and what are the impact of these on service

economy. So, rising customer expectations base that higher expectations of service quality

and convenience for the customer. Therefore, that requires training or services staff to deliver

good service extended hours often offer more part time job opportunities.

So, people may be working full time somewhere and then they also work part time at another

place. More affluence means people have more money. So, there, there the impact of this on

service economy is that there is a possibility of creation of wide variety of offerings,

development of new services in new locations and that will boost local economies not only in

terms of money but also in terms of employment.

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The third factor that is stimulate the transformational service economy are the business

trends. That includes push to increase shareholder value. Emphasize on productivity and cost

savings, manufacturer should add value through service and sell services there is a need for

more strategic alliances and outsourcing. Also there is a need for focus on quality and

customer satisfaction, growth of franchising and marketing emphasis by nonprofits. So, now

you see that nonprofits are also going into marketing. So marketing is is not only for profits,

but also for nonprofits.

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Now, let us look at what are the examples related to these business trends and how each of

this business trend is affecting is impacting the service economy. So, let us look at how

emphasis on productivity and cost savings affect the service economy. So, there is a move to

move towards self service technologies where people use technology or consumer use

technology to do things. For example, when we are using an ATM that is a self service

technology.

So, therefore, the service companies will have to rethink service delivery system they have to

invest in new technologies that replace employees and then you also keep in mind that the

technology keeps on changing therefore, there will also be a need to replace these existing

technologies with new technologies and that requires lots of money.

Another business trend is the growth of franchising the fast food chain are expanding around

the world and that is basically a generally because of the growth in franchising. These fast

food companies they normally adopt a franchising model. So, the challenge there is a

challenge for maintaining consistent services standard worldwide, while adopting a local food

preference and cultures, so the challenges that services standards should remain the same

across the world, but at the same time we should be adopting or they should be adopt

adopting to the local preferences and culture.

Another factor that is stimulate the transformation or service economy is the advances in

information technology like growth of internet one, then there now we have greater

bandwidth. We have now compact mobile equipments that we carry all the time. Then there

are wireless networking. So, we have Wans and Bluetooth, etcetera, LAN, wireless

networking, faster more powerful softwares then we have now moved to digitization of text,

graphics, audio and video.

Now let us look at how they affect the service companies and what are examples for each one

of them. So, the growth of internet, the example is the information is there on the fingerprint

at the fingertips of customers, making them more knowledgeable and informed. So, they can

they can within seconds, they can search and learn lots of things about lots of things about

what they want to search for, what they are searching for.

Now, the impact of this on service economy is that it has lead to creation of new services that

gather the various sources of information and repackage them to provide value to the

customers digitization of text, graphics, audio and video. So, now example is on line

downloadable service providers. There is a need for service providers to invest in maintaining

a secure and credible website and guarantee virus free files for downloading and many a

times all these downloads are free of cost.

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Yet another force that is transforming the service economy is globalization. Globalization, for

example, more and more companies are now operating on a global basis or transnational

basis or international basis. The international travel has increased tremendously. International

mergers and mergers and acquisitions and alliances are now a normal thing.

It is possible to offshore customer services earlier we would we were into offshoring,

offshoring of manufacturing now with, with globalization, offshoring of customer services

also possible then there are foreign competitors that invade domestic markets. So, when we

are looking at the business environment, it is not only the domestic competitors that we

should be worried about, but also foreign competitors because of globalization it is not

possible for any company to go into any country. So, that has increased the competition

tremendously.

Now, let us look at look at the examples for this. So, more companies are now operating on a

global basis. So, there are MNCs such as banks and the Big 4 accounting firms. They have

numerous operations around the world and there are various advertising agencies and

consulting agencies that have operations across the world.

So, what is the impact of this on service economy. So, this has lead to increasing the scope of

services that can be provided. This also needs training of a staff in local markets to upgrade

their skills, capabilities and services standards. What happens when foreign competitors

invade domestic markets? So, there are international banks such as HSBC and American

Express doing business in India.

Now, what does that that means for Indian banks. So, these, these banks they build network

by purchasing one or more regional banks. So, they do not have to set up shop from scratch

they just acquire or purchase one of the regional banks and then they rebrand them and make

them International Bank.

So, they invest heavily in new and improved branches and in electronic delivery channels

because they because these banks, they have lots of money and they have lots of experience

of operating across the world. So, they invest heavily in new and improved branches and

electronic delivery channels.

Now, let us look at B2B services as core engine of economic development. So, we are

looking at B2B services and then we will understand how they lead to economic

development. So, there are provisions of assets and processes that is ranging from the

provisions and operations of machine to entire manufacturing lines.

So, there are various service industries for example communication, transportation, utilities,

banking and insurance etcetera. Now, the service industries they give rise to manufacturing

logistics and distribution services post sale service. So, service for manufacturing means

service provider inside firm services provided inside the manufacturing firm. For example,

accounting, designing, legal and advertising.

So, there are R and D services and product design, services, then there is a need for logistics

and distribution services for example supply chain management, transportation, wholesale

and retail. So, you keep in mind that even if we are talking of manufacturing there are lots of

services involved.

Then there are post sale service for example, maintenance of machineries and parts and

repairs and upgrades recycling and disposal and then these services can be for commercial

use or for consumers to cons or for the end consumers. Then there are certain government

support services, for example infrastructure is to be provided by the government, education,

public safety and regulations.

In the first section, we have started talking about understanding service products, consumers

and markets. This section is divided into seven modules and the first three modules are

dedicated to new perspective on marketing in the service economy. We have talked about

module one and two and now, we will talk about the module three.

And in module three, we will talk about things like first, to understand the component of the

traditional marketing mix as applied to services. Second is to describe the components of the

extended marketing mix for managing the customer interface. The third is appreciate that the

marketing operations and human resource management functions need to be closely

integrated for service businesses.

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Fourth is to understand the implications of the service profit chain for service management

and the fifth is know the framework for developing effective service marketing strategies.

So, let us start with the 7 ‘P’s of services marketing we have all of us are well aware that

there are 4 traditional pieces of marketing that is product, price, place or distribution and

promotion or communication. In services marketing, this marketing mix is extended to

include three more piece. So, it makes 7 ‘P’s of services marketing. The three more ‘P’s are

the 3 additional ‘P’s are process, physical environment and people. So, these are the 7 P’s of

services marketing.

Let us look at the place and time. So, service distribution may take place through physical or

electronic channels or both of them depending upon the nature of the service. Banks offer a

wide range of distribution channels, including visiting a bank branch, using a network of

ATMs, online banking on desktop and using apps on your smartphone et cetera.

For the same, so you see that for the same kind of services banks are offering different

channels to the customers. In particular, many information based services can be delivered

almost instantaneously to any location in the world that has internet access. So, the only thing

that is required for delivery of service is the internet access.

Next important thing that, we should be looking at is the distribution of core versus

supplementary services. So, internet is reshaping distribution strategy for numerous

industries. But, we need to distinguish between its potential for delivering information based

core products, those that respond to customer’s primary requirement and simply providing

supplementary services that facilitated purchase and use of physical goods.

So, there are two things that worry us, one is the information based core product. So, those

products that respond to customer primary requirements and then the second is a

supplementary services that facilitate, purchase and use of this physical goods. Example of

information based core products include online education programs offered by NPTEL.

In contrast, if you book a flight online, the delivery of the core product itself must take place

through physical channels and you will have to go to the airport in person to board your

flight.

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Another important component of this traditional marketing mix as applied to services is the

importance of the time factor. Speed and convenience of place and time has become

important determinant of effective distribution and delivery of services. Many services are

delivered in real time while customers are physically present. Today, customers are highly

time sensitive mostly in a hurry and see wasted time as a cost which should be avoided.

Increasingly, busy customer expects service to be available when it suits them. So, when they

want then the service should be made available to them rather than when it suits the supplier.

Earlier version is that when the supplier wanted them, he used to supply services. But now, it

is the other way wrong customer expect the service to be delivered when they are free when

they wanted.

So, if one firm responds by offering extended hours, its competitors often feel obliged to

follow suit. Because all the customers will shift to the earlier company which is offering

extended hours. So, nowadays, a growing number of services are available 24 by 7 and via

many more delivery channels.

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The third important, the next important component here is that of promotion and education.

Few marketing programs can succeed without effective communication. So, this component

plays three vital role. So, this promotional education this plays three vital roles. The first is to

provide needed information and advice persuade target customers to buy the service products

and encourage them to take action at specific times.

(

In services marketing, much of the communication is educational in nature, especially for

new customers because these new customers are to be educated. So, this communication is

more of educational in nature. Suppliers need to teach their customers about the benefits of

the service, where and when to obtain the service and how to participate in service process to

get the best results. So now, what a supplier have to teach customers is where and when to

obtain the service, how to participate in that service. So, that the customers can get the best

results from that service.

(

Now, the next problem is that services are often difficult to visualize and understand as

intangible elements tend to dominate value creation. So, now you keep in mind that the

problem with services is that they are dominated by intangible elements and that is why it

becomes difficult for customers to visualize the service.

So, intangibility can consist of both mental and physical dimension. Now, what is this mental

and physical dimension? So, mental intangibility means that it is difficult for customers to

visualize the experience in advance of purchase and to understand the value and benefit that

they will be getting. So, the customers have to first purchase a service and then experience a

service to understand what will be the benefits of the service. Another is physical

intangibility which is that which cannot be touched or experienced by other senses. So, these

are the two types of the intangibility that we are talking about mental and physical.

(

Intangible elements are such as processes, internet based transactions and expertise and

attitude of service personnel. These often create the most value in the service performance.

Therefore, an important role of the service firm’s communication is to create confidence in

the firms experience, credentials and expertise of its employees.

Now, you see that there are some intangible elements which are very important for

customers. For example, the processes of service delivery, then there are internet based

transactions, expertise and attitude of service personnel. So, firms can use physical images

and metaphors to promote service benefits and demonstrate the firm’s competence in these

four areas, in these four intangible elements.

Then there is always a customer-customer interaction that affect the service experience

because there may be more than one customer present at the time of service delivery. So, that

customer-customer interaction there it also affects the service experience. So, other customers

have the service facility to can affect your satisfaction as a customer.

How they are dressed, who they are and how they behave. So, this can reinforce or negate the

image of the firm is trying to project and experience it is trying to create. So, the firm is

trying to create certain kind of image and experience. But because there are other customers

around in the facility where the service is being delivered and how they are dressed who they

are and how they behave. So, that can affect the experience of all the customers.

Marketing communication needs to be careful to attract the right segment to the service

facility and wells there it needs to educate them on the proper behavior. So, the first

important thing here is to attract the right kind of segment and then to educate those

customers for proper behavior. So, that the experience of everyone is fulfilling.

(

Another issue here, the next issue here is that of the process. Creating and delivering product

elements requires design and implementation of effective processes and processes are the

sequence of steps taken to deliver a service. So, badly designed service process can lead to

slow bureaucratic and ineffective service delivery.

Wasted time, wasted time for the employees, service delivery employees as well as the

customers are disappointing experience for all the customers, low productivity with respect to

the service delivery employees and increased likelihood of a service failure. So, when the

service processes are not properly designed, then there are lots of problems and this will lead

to service failure.

Operational input and output can vary widely, vary more widely for services and can make

customer service process management a challenge. So, in services, the input and output can

vary. So, best firms reduce variability by carefully designing customer service process. So,

each process is well defined.

Each activity to complete a process is well defined. So, that this variability comes down.

Adopting a standardized procedures and using technology or equipment, training employees

to be more careful and deliver the same kind of service to everyone and automate tasks

previously performed by humans. So, humans are may replaced by technology or equipment,

so that the service become standardized.

Now, customers are also often involved in co-production of the service. Some services

require customers to participate actively in co-producing the service product. For example,

you are expected to help the investment banker understand what your needs are, how much

you want to invest financially and the kind of risk you are willing to take.

So, the customers have to give all this kind of information to the investment banker and only

then the investment banker will be able to make a proper investment strategy for that

customer. So, this will enable the banker to advise you on what to invest in, when to invest

and what may be the best investment options available to you. In fact, services scholars argue

that customers often function as partial employees. So, partial employees means doing some

activities that the company’s employees are supposed to do. So, in services, customer are

often doing several functions that employee does. So, therefore, they are also termed as

partial employees.

Yet another problem with services that of balancing the demand and capacity. Manufacturing

firms can ensure a smooth process flow by having an inventory of material and parts ready

for us. So, in manufacturing lots of inventory can be maintained of the raw material and semi-

finished goods and parts.

But in services such buffering means having customer waiting service process. So, the basic

problem is to make the customer wait and because customers are running shorten time, they

may not like to wait, so balancing of demand and capacity, design of a waiting and queuing

system and management of the impact of waiting on customer psychology.

Then important concept is that of the physical environment, physical environment it is also

called as servicescape. It plays an important role where customers are required to enter the

service factory. So, now service customers buying services they enter a service factory. Now,

obviously the surrounding the physical environment or the servicescape becomes important.

Appearance of a building, landscaping, interior furnishings, equipment, staff members’

uniforms, signs, printed materials and other visible cues, provide tangible evidence of firms’

service quality. So, this firms’ service quality is made tangible by way of these things which

are called as the physical environment or the servicescape which is a place where service is

delivered, where the employees and the customers they come together and they interact.

So, the servicescape also facilitates service delivery and guides customer through the service

process. Now, this have a profound impact on customer satisfaction and service productivity.

So, it will affect the customers as well as the employees, it will affect the satisfaction of the

customer and the productivity of the employee. So, this makes physical environment and

servicescape an important element of extended marketing makes for services.

(Refer Slide Time: 15:02)

Another problem area in services that of people, service firms need to devote special care in

selecting, training and motivating their service employees, the difference between one service

supplier and another often lies in the attitude and skill of the employees. So now, one

company has one group of employees, another company has another group of employees.

What differentiates these two companies, is the attitude and skill of their employees. In

addition to possessing the technical skills, individuals also need good interpersonal skills and

positive attitude. So, we are not only talking about the technical skills that is required for

delivery of the service, but also good interpersonal skills and the positive attitude of the

service personnel.

Loyal, skilled and motivated employees represent a key competitive advantage. So, these are

the three sources of key competitive advantage and services, loyal, skilled and motivated

employees. So, you may have, you may have or you may not have all those kinds of

equipment and technology. But if you have loyal, skilled and motivated employees, then you

can have a competitive advantage.

Now, look at this picture, hospitality is shown through employees wearing a ready smile and

being ready to serve customers. So, that will distinguish one company from another and this

will be a source of competitive advantage for this company.

Now, let us look at the integration of marketing with other management functions. So, we are

talking of integration of marketing with human resources management with operations

management and is all these micro management functions, they are then interrelated, they are

then integrated and in between is the customer.

So, customer gets a holistic picture of the company and not individualistic picture. So, these

function must collaborate to serve the customers they for a great kind of customer

satisfaction, integration of the, of all these functions is necessary.

So, marketers working in a service business cannot expect to operate successfully in isolation

from managers and other functions. In products it may be possible that managers working in

different functions may be working in isolation. But in service businesses, marketers and

operation managers and human resource managers they have to work in close collaboration

with each other.

In fact, four management functions play central and interrelated roles in meeting the needs of

service customers. So, these are the four management functions they have to come together to

meet the needs of the service customers. So, marketing operation, HR and IT, they will be

integrated in order to satisfy the customer needs. So, top management should ensure that each

of these functions do not operate in departmental silos and they should and they are working

on a team in a whole rather than in silos.

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So, operations is the primary line function in a service business, responsible for managing

service delivery through equipment facilities, systems and many tasks performed by customer

contact employees. Operation managers are actively involved in the product and process

design, many aspect of the physical environment and implementation of productivity and

quality improvement programs.

Human Resource Manager is responsible for job definition, recruitment, training, reward

systems, the quality of work life, all of which are central to the people element. So, you see

the HR is so important in services, because they look after the service employees and these

service employees they deliver the service to the customer.

So, service organization cannot afford to have HR specialist who do not understand

customers. So, all those kinds of training and reward system, etc has to be, has to go

backward from what customers wants and what are their needs and how their need to be

satisfied and then these kind of reward systems and training programs etc and recruitment

policies et cetera have to be then defined accordingly.

Marketing and operation activities are easier to manage and are more likely to be successful.

When employees have the skills and training needed to succeed in their jobs and recognize

the importance of creating and maintaining customer satisfaction. So, if the employees are

well trained and have the right kind of attitude. Then the job of the marketing and operations

becomes so much more easier.

IT is a key function as service process or information heavy at almost every customer touch

point real time information is needed. So, that is what makes IT although it is a backend

function, but it becomes very important. Operations, HR and marketing are critically

dependent on IT to manage their functions and create value for the organization’s customer.

So, when IT help in managing the operations, HR and marketing, then it creates value for the

organization’s customers.

)

As a service manager, you need to be concerned about satisfying your customer on a daily

basis, every time you need to be concerned about satisfying your customers. The operational

systems running smoothly and efficiently only then you will be in a position to satisfy the

customers.

Employees are not only working productively, but also delivering good service. So, it is not

only about productivity serving X number of customers in an hour. So, that is not the only

important criteria and services, it is also about delivering good service. So, that the customers

become satisfied.

Problem in any one of these areas can negatively affect the execution of task in the other

functions and may result in dissatisfied customers. So, if all the systems and processes are not

functioning in an integrated manner. So, that may result in the dissatisfied customers. In

short, integration of activities between these functions is the name of the game in services.

So, that is why we started with the title that integration of services, integration of a strategy

employees and IT. So, we started with that. So, this integration is the name of the game.

Now look at the service profit chain. So, there are some internal factors and there are some

external considerations. Internal means operating strategy and service delivery system.

Operating strategy and service delivery systems, so we start with product and output quality

that leads to loyalty, satisfaction, capability and service quality that is on the employees then

it creates service value.

Now, this is then transferred to the target market. So the, your customers become more

satisfied and more loyal and obviously when customers are all loyal they will give you more

profitability and more revenue growth. So, we are talking about the internal processes that is

an operating strategy and service delivery systems like workplace design, job design and

decision making, latitude, selection and development, rewards and recognition, information

and communication and adequate tools to serve customers.

Service concept means quality and productivity improvements yield higher service quality

and lower cost. So, this is what this service concept related to service value is that it leads to

quality and productivity improvements and higher service quality at a lower cost at the same

time.

Now satisfaction and loyalty to the customers, attractive value service designed and delivered

to meet target customers needs and loyalty can be then translated into lifetime value, loyal

customers may have a higher lifetime value, retention of customers becomes easier they will

come with repeat businesses and they will refer your company to other customers and that

will lead to revenue growth in the long term and profitability in the short term.

So, it is the service profit chain works in this manner that customer loyalty drives profitability

and growth, customer satisfaction drives customer loyalty and value drives customer

satisfaction and what drives value is the quality and productivity. Employee loyalty, drive

service quality and productivity and from how does employee loyalty comes?

Satisfied employee drive, employee loyalty, internal quality as delivered by operations and IT

drives employee satisfaction and top management leadership underlies the success chain. So,

all this chain will become a profit chain when the top management leadership is driving this

profit chain. So, these are the links in the service profit chain.

Let us look at the framework for developing effective service marketing strategies. So, the

first is to understand service products, consumers and markets, applying the four ‘P’s of

marketing to services, designing and managing the customer interface, the additional three

‘P’s of services marketing.

For, so therefore, for designing and managing of this customer interface, meeting the

customers delivering the service to the customers. So, for this the important thing is the

additional 3 ‘P’s of service marketing, then developing customer relationships and is striving

for service excellence.

To conclude in this module we have started with the components of the traditional place and

promotion and extended marketing mix as apply to services. Next week moved on and

emphasized on how integrating various functional areas can help in catering to the needs of

service customers in a better way. Then we learned about the concept of service profit chain.

Finally, we touched upon how to develop effective services marketing strategies.