Sales Management (MBA 333) Module 1 Amity

AMITY GLOBAL
BUSINESS SCHOOL

ashishpillai@gmail.com

AMITY GLOBAL
BUSINESS SCHOOL

Before We Discuss Mkt. of Services
We shall discuss the following questions

1. What is the dominant logic of business
and has it changed over the years?

2. What is marketing and has the meaning
and role of marketing changed?


AMITY GLOBAL
BUSINESS SCHOOL

Let Us First Answer…..


AMITY GLOBAL
BUSINESS SCHOOL

What is the Logic of Business?


AMITY GLOBAL
BUSINESS SCHOOL

What is Business?
An organization engaged in
the trade of goods, services, or both to consumers
(Sullivan & Sheffrin, 2003).

An economic system in which goods and services are
exchanged for one another or money, on the basis of
their perceived worth. Every business requires
some form of investment and a sufficient number
of customers to whom its output can be sold at profit on
a consistent basis
(http://www.businessdictionary.com/definition/business.html)

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BUSINESS SCHOOL

Some of Those Changes…
Evolution of human needs…
Transaction to Selling to Marketing
And now from Marketing to Relationships and
Partnerships!
The emergence of institutions of business…
Increased complexity and competitiveness…
Technology…… Movement of goods and people….
Movement of Information!

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BUSINESS SCHOOL

One Such Change
The encounter with the customer

The focus was on The product & money
―exchange‖ and the are still important. But
―tangibles‖… like marketing battles are
―money‖, ―product‖, ―qu won on ―intangibles‖ like
antity‖…. how a customer feels &
how long he stays….

AMITY GLOBAL
BUSINESS SCHOOL

With Such Changes…
The way business is done changed… The
reasons of success and failure of companies
changed…

It was no longer enough to have a “good
product”…. “a good brand”…. “be rich”….
“be an old and respected company”….


AMITY GLOBAL
BUSINESS SCHOOL

These changes are driven by changes in
primarily two constituencies

Ability & Know The
How of Companies Consumer


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BUSINESS SCHOOL

Ability & Know How of Companies
Technology: Increased ability to understand
customers, manufacture, deliver, service, maintain
relations

New Markets: Local, Global and Glocal

Orientation: Inward to Outward, Selling to Marketing

Human Resources: More people who are able to
plan, innovate and deliver


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BUSINESS SCHOOL

The Consumer
Income Levels: More people in cities and villages are
earning more, so have more money to spend, thus
have more power.
Consumerism: The Indian customer is becoming
―consumption‖ oriented rather than ―save money‖
oriented
Media: Satellite TV, Internet, FM… More information to
customers…. ―Information Symmetry‖
More Choice: More companies offering more products
means much more choice!

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BUSINESS SCHOOL

Implications For Marketing
The way we define marketing had to be adjusted to
accommodate the changes and the way we market…..
So the definition of marketing had to change!

Marketing had to grow beyond its foundations on
―products‖ and acknowledge the need for a dedicated
science of marketing of the intangibles… The
Services.


AMITY GLOBAL
BUSINESS SCHOOL

For a discussion on evolution of how we
define marketing, please visit:

http://www.slideshare.net/AshishPillai1/what-is-
marketing-13513619


AMITY GLOBAL
BUSINESS SCHOOL

Why Discuss Services?
Services sector accounts for more than 55% of the
GDP of India. (GDP of India = 1.85 Trillion $)


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Emergence of Services Marketing
Emergence of a stand alone field of Services Marketing
occurred in three distinct stages
The Crawling Out
Stage
(Pre 1980s)

The Scurrying
About Stage
(1980 - 1985)

The Walking Erect
Stage
Tracking the Evolution of the Services Marketing Literature (Post 1986)
Fisk, Raymond P; Brown, Stephen W; Bitner, Mary Jo, Journal of Retailing; Spring 1993; 69, 1

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What We Used to Think of Services?
A technical after-sale function that is provided by
the service department
The old view of explaining the meaning of services
was rooted in the traditional 4Ps school of
marketing
That relegated services to a support function to be
undertaken by the company independent of and
post culmination of the marketing effort


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BUSINESS SCHOOL

What are Services?
“Deeds, processes and performances provided or
co-produced by one entity or person for another
entity or person”

―All economic activities whose output is not a physical
product or construction, is generally consumed at the time it
is produced, and provides added value in forms that are
essentially intangible concerns of its first purchaser‖

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BUSINESS SCHOOL

Goods Vs. Services


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Terms Clarified
Service Companies: Whose core product is a service.

Services as Products: Intangible product offerings
which customers value and will pay for.

Customer Service: Service provided in support of the
company’s core products which do not necessarily
have to be services themselves.

Derived Service: The service derived from the
purchase and use of a tangible product.


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BUSINESS SCHOOL

IHSP – The Characteristics of Services
Intangibility Heterogeneity

Nature of
Services

Simultaneity Persishability


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Intangibility
Incapable of being perceived by the sense of
touch, as incorporeal or immaterial things
Services cannot be inventoried
Services cannot be easily patented
Services cannot be readily displayed or
communicated
Pricing is difficult


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Heterogeneity
Service delivery and customer satisfaction depend
on employee and customer actions

Service quality depends on many uncontrollable
factors

There is no sure knowledge that the service
delivered matches what was planned and promoted


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Spontaneity
Customers participate in and affect the transaction

Customers affect each other

Employees affect the service outcome

Decentralization may be essential

Mass production is difficult


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Perishability
It is difficult to synchronize supply and demand with
services

Services cannot be returned or resold


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Self Service Technologies
Self-Service Technologies are technological
interfaces that enable customers to produce a
service independent of direct service
employee involvement

Phone based (interactive voice response systems)
Internet or online based
Free standing kiosks
Combination

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Benefits of SST
Increased speed, efficiency and accuracy

Expanding sales through more information and choice

Lower costs for sellers and the buyer

Higher customer loyalty and retention


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SSTs Fail!
44% of SST users recall dissatisfying experience (Journal
of Marketing)

None of top 50 retail web sites rated as ―excellent‖
(Gartner)

Just 25% of kiosk triers think it’s valuable, will use again
(WSJ)

Only 12% of online inquiries to top 150 financial cos.
answered and satisfactorily (Microsoft)
10 of 12 reasons for online dissatisfaction is poor
customer service (Resource Marketing)

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BUSINESS SCHOOL

Why Do SSTs Fail?
Most frequent dissatisfaction is technical failure (43%)

Next is process failure (36%)

Third is technical design (17%)

Only 4% is customer’s fault


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SSTs offer opportunity to magnify the customer
experience. If it works, it will magnify the positive
experience and if it fails, it will magnify customer
negativity.
In the current competitive business environment, you
need the benefits SSTs offer but just imagine what can
happen if it fails!!


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BUSINESS SCHOOL

The Tangibility Spectrum


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Simultaneity
Customers participate in and affect the transaction

Customers affect each other

Employees affect the service outcome

Decentralization may be essential

Mass production is difficult


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BUSINESS SCHOOL

Perishability

It is difficult to synchronize supply and demand with
services

Services cannot be returned or resold


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Money is in Services!!
Even in the Manufacturing Sector!
Personal Computers Locomotives Automobiles
annual cost of total annual cost of rail average annual household
PC use: $6,259 operations: $29 billion expenditure: $6,064
The sale of a
product accounts 100% network administration yard operations, other
for only a small railroad administration,
network finance
portion of overall other
80% technical support
revenues. repair
network equipment
Providing nonproductive operations insurance
60% train operations
services to by end user (downtime,
customers is gas
file management, etc.)
where the real Infrastructure
40%
money is. used car purchase
administration freight car services
technical support
20%
locomotive services new car purchase
desktop hardware

0% locomotives

Total expenditure: Total expenditure: Total expenditure:
5X product costs 21X product costs 5X product costs


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Service Marketing Challenges
Defining and improving quality

Ensuring the delivery of consistent quality

Designing and testing new services

Communicating and maintaining a consistent image

Accommodating fluctuating demand

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Service Marketing Challenges
Motivating and sustaining employee commitment

Coordinating marketing, operations, and human
resource efforts

Setting prices

Finding a balance between standardization versus
customization


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7 Ps of Service Marketing
The 4 Ps – Product, Price, Place, Promotion
People
All human actors who play a part in service delivery and thus
influence the buyer’s perceptions: namely, the firm’s personnel, the
customer, and other customers in the service environment.
Physical Evidence
The environment in which the service is delivered and where the
firm and customer interact, and any tangible components that
facilitate performance or communication of the service.
Process
The actual procedures, mechanisms, and flow of activities by
which the service is delivered—the service delivery and operating
systems.


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The Flower of Service


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Core service surrounded by a cluster of facilitating and
value enhancing services

Eight petals; 4 Facilitating Supplementary Services
and 4 Value Enhancing Supplementary Services

Facilitating: Information, Order Taking, Billing and
Payment

Value Enhancing: Consultation, Hospitality,
Safekeeping and Exceptions


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Facilitating
Information: Customer needs information about various
elements and aspects of the service to evaluate it and
make decisions
Order Taking: As services cannot be stored, the customer
needs to place the order as the first step in the whole
transaction. Order taking can also be facilitated
Billing: Accuracy in billing and the customer friendliness of
the bill is now a major decision point for the customer
Payment: Credit period, accepted methods, payment
points… Don’t all these influence our judgment of services?

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Value Enhancing
Consultation: Interaction with the customer to understand
their needs with an aim to design a tailor made customer
solution (service)
Hospitality: Customers may need to be at your premises,
for brief durations or for longer periods. When they are at
your place, how are they treated?
Safekeeping: Sometimes your customers may be required
to part with their belongings to co-produce the service.
Keep their stuff safe!
Exceptions: Non routine services as special
considerations granted on request or on judgment

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The producer and the marketing intermediaries add the
petals to achieve desired customer experience

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The Flower of Service clarifies the issues a service
provider should focus upon to develop a complete
customer solution in the form of a service and ensure
that the customer’s experience while purchasing and
consuming the service is exceptional


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Search, Experience & Credence
Economics of Information: Symmetric information
concerning product ―quality‖ is needed to ensure
efficiency in markets

Consumers must know what it is they are buying so they can
determine and then pay their actual willingness to pay for an
item of that quality.
Asymmetric or incomplete information lowers quality in a
market and may even completely drive out higher quality
goods & services.


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Informational Quality of Goods and Services

Search Experience Credence


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All goods possess physical properties called search
attributes that customers can feel, taste, and see prior
to their purchase decision.

Services are, in contrast, characterised by their
experience and credence attributes.
Experience attributes can be evaluated only during and after
consumption ……Theatre, Beauty , Hotel etc
Credence attributes cannot be evaluated confidently even
immediately after consumption Car Servicing – Did you get ripped
off?


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BUSINESS SCHOOL

The Service Encounter
The ―moment of truth‖

Occurs any time the customer interacts with the firm

Critical in determining customer satisfaction and loyalty

Types of encounters: Remote encounters, Phone
encounters, Face-to-Face encounters

An opportunity to build trust, reinforce quality, build
brand identity, increase loyalty


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The Service Encounter Triad


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A B2C Service Encounter Cascade
A Hotel


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A B2C Service Encounter Cascade
AGBS Buying New Printers


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Managing Service Encounters
The principle of ―thirds‖
About one-third of service problems employee based
(failure to follow policies and procedures)
Another third company based: e.g. marketing over-
promises and products and services not meeting
specifications
Final third customer based: incorrect expectations or
customer incompetence
About 20% of service encounters cause 80% of
complaints!

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Contemporary Issues in Service Encounters

Service Failure &
Adaptability Coping
Recovery
Employee response to Employee response
Employee response
service delivery system to customer needs
to problem customers
failure and requests

Spontaneity

Unprompted and
unsolicited employee
actions and attitudes

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Service Encounters - Recovery
DOs DONTs
Acknowledge problem Ignore customer
Blame customer
Explain causes
Leave customer to fend for
Apologize him/herself
Compensate/upgrade Downgrade
Lay out options Act as if nothing is wrong

Take responsibility ―Pass the buck‖


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BUSINESS SCHOOL

Service Encounters - Adaptability
DOs DONTs
Recognize the seriousness Ignore
of the need Promise, but fail to follow
Acknowledge through
Anticipate Show unwillingness to try
Attempt to accommodate Embarrass the customer
Adjust the system Laugh at the customer
Explain rules/policies Avoid responsibility
Take responsibility ―Pass the buck‖

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Service Encounters - Spontaneity
DOs DONTs
Take time Exhibit impatience

Be attentive Ignore
Anticipate needs
Yell / laugh / swear
Listen
Steal from customers
Provide information

Show empathy Discriminate


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BUSINESS SCHOOL

Service Encounters - Coping
DOs DONTs
Take customer’s
Listen dissatisfaction personally

Try to accommodate

Let customer’s
Explain
dissatisfaction affect others

Let go of the customer


Sales Management (MBA 333) Module 1 Amity

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Sales Management (MBA 333) Module 1 Amity