Master of Business Administration- MBA Semester 4MK0015 – Services Marketing and Customer Relationship Management - 4 Credits

Q1. Explain the concept of Service mapping with example.

Answer: Concept of service mapping:A service map is a graphical display of a service that illustrates the various components upon which successful delivery of that service relies. These components generally include hardware, software, and configurable settings or roles, as well as customers and other services. A Microsoft-developed best practice, a service map is a communications tool that illLustrates the “what” of a service (its components and their relationships) as a basis for managing the “how” of a service (how the service is delivered andControlled to ensure expected availability, capacity, security, and manageability).Service maps are useful in documenting an environment because:•They present a service-cantered view of the environment, organizing technical capability in business-oriented terms.•They more readily facilitate understanding of complex systems and component dependencies than text-based documents for both technical staff and customers.

Explanation with example:To illustrate the potential uses of a service map, consider the example of a collaboration service built with Microsoft SharePoint. In this example, the SharePoint collaboration service is critical because it supports several key business processes. As a result, within its service level agreement (SLA), the service delivery organization has committed to a minimum level of availability for the service with the customers of theservice.To effectively manage this service requires adequate knowledge and understanding of the components of that service. Consider these scenarios:•You are a Service Level Manager being asked by the business for higher availability. Will the existing components support this level of service?•You are a Configuration Administrator trying to assess the impact of a change to a hardware component within the service. How will you predict the upstream and downstream impact?•You are a Problem Analyst attempting to diagnose the root cause of a problem related to the service. How do you efficiently trace the cause downstream?•You are a Test Manager developing a testing plan for a new release of the service. How do you identify all the components you need to test? To help answer these questions, you could potentially reference component-level technical documents, but they might not clearly illustrate interrelationships. Or you could probably get good information from the service delivery teams responsible for the relevant components, assuming you know the correctteams.A service map of the SharePoint collaboration service would be valuable in all these scenarios. With a well-defined service map, you would be able to quickly plot the major components underpinning theSharePoint collaboration service to help users answer the above questions. The map might not answer every question, but it should help point you to relevant component-level technical documentation and to right times

Q2. Write short notes on:

A. Factors that influence customer expectations

Ans: (A) FACTORS THAT INFLUENCE CUSTOMER EXPECTATIONS OFSERVICE

Because expectations play such a critical role in customer evaluation of services, marketers need and want to understand the factors that shape them. Marketers would also like to have control over theseFactors as well. But many of the forces that influence customer expectations are uncontrollable. In thisSection of the chapter we try to separate the many influences on customer expectations.

Sources of Desired Service Expectations The two largest influences on desired service level are personal needs and philosophies about service. Personal needs those states or conditions essential to the physical or psychological well-being of the customer, are pivotal factors that shape what we desire in-service. Personal needs can fall into many categories, including physical, social, psychological, and functional. A fan who regularly goes to baseball games right from work, and is therefore thirsty and hungry hopes and desires that the food and drink vendors will pass by his section frequently, where as a fan who regularly has dinner elsewhere has a low or zero level of desired service from the vendors. A customer with high social and dependency needs may have relatively high expectations for a hotel's ancillary services, hoping for example, that the hotel has a bar with live music and dancing. The effect of personal needs on desired service is illustrated by the different expectations held by two business insurance customers: Some customers are more demanding than others, having greater sensitivity to, and higher expectations of, service. Enduring service intensifiers are individual, stable factors that lead the customer to a heightened sensitivity to service. One of the most important of these factors can be called derived service expectations, which occur when customer expectations are driven by another person or group of people. A niece from a big family who is planning a 90th birthday party for a favorite aunt is representing the entire family in selecting a restaurant for a successful celebration. Her needs are driven in part by the derived expectations from the other family members. A parent choosing avocation for the family, a spouse selecting a home-cleaning service

(B). Pricing strategies followed in service organizations based on customer perceptions.

Ans: Pricing strategies for products or services encompass three main ways to improve profits. These are that the business owner can cut costs or sell more, or find more profit with a better pricing strategy. When costs are already at their lowest and sales are hard to find, adopting a better pricing strategy is a key option to stay viable. Merely raising prices is not always the answer, especially in a poor economy. Many businesses have been lost because they priced themselves out of the marketplace. On the other hand, many business and sales staff leave "money on the table". One strategy does not fit all, so adopting a pricing strategy is a learning curve when studying the needs and behaviours of customers and clients Cost-plus pricing[edit source Main article: Cost-plus pricing Cost-plus pricing is the simplest pricing method. The firm calculates the cost of producing the product and adds on a percentage (profit) to that price to give the selling price. This method although simple has two flaws; it takes no account of demand and there is no way of determining if potential customers will purchase the product at the calculated price. This appears in two forms, full cost pricing which takes into consideration both variable and fixed costs and adds a percentage as mark-up. The other is direct cost pricing which is variable costs plus a percentage as mark-up. The latter is only used in periods of high competition as this method usually leads to a loss in the long run. Creaming or skimming [edit source

In most skimming, goods are sold at higher prices so that fewer sales are needed to break even. Selling a product at a high price, sacrificing high sales to gain a high profit is therefore "skimming" the market. Skimming is usually employed to reimburse the cost of investment of the original research into the product: commonly used in electronic markets when a new range, such as DVD players, are firstly

dispatched into the market at a high price. This strategy is often used to target "early adopters" of a product or service. Early adopters generally have a relatively lower price-sensitivity -This can be attributed to: their need for the product outweighing their need to economise; a greater understanding of the product's value; or simply having a higher disposable income.

This strategy is employed only for a limited duration to recover most of the investment made to build the product. To gain further market share, a seller must use other pricing tactics such as economy or penetration. This method can have some setbacks as it could leave the product at a high price against the competition

Limit pricing: A limit price is the price set by a monopolist to discourage economic entry into a market, and is illegal in many countries. The limit price is the price that the entrant would face upon entering as long as the incumbent firm did not decrease output. The limit price is often lower than the average cost of production or just low enough to make entering not profitable. The quantity produced by the incumbent firm to act as a deterrent to entry is usually larger than would be optimal for a monopolist, but might still produce higher economic profits than would be earned under perfect competition. The problem with limit pricing as a strategy is that once the entrant has entered the market, the quantity used as a threat to deter entry is no longer the incumbent firm's best response. This means that for limit pricing to be an effective deterrent to entry, the threat must in some way be made credible. A way to achieve this is for the incumbent firm to constrain itself to produce a certain quantity whether entry occurs or not. An example of this would be if the firm signed a union contract to employ a certain (high) level of labour for a long period of time. In this strategy price of the product becomes the limit according to budget.

Penetration pricing: Penetration pricing includes setting the price low with the goals of attracting customers and gaining market share. The price will be raised later once this market share is gained. [3]

Price discrimination: Price discrimination is the practice of setting a different price for the same product in different segments to the market. For example, this can be for different classes, such as ages, or for different opening times.

Dynamic pricing: A flexible pricing mechanism made possible by advances in information technology, and employed mostly by Internet based companies. By responding to market fluctuations or large amounts of data gathered from customers - ranging from where they live to what they buy to how much they have spent on past purchases - dynamic pricing allows online companies to adjust the prices of identical goods to correspond to a customer’s willingness to pay. The airline industry is often cited as a dynamic pricing success story. In fact, it employs the technique so artfully that most of the passengers on any given airplane have paid different ticket prices for the same flight. [4]

Value-based pricing: Pricing a product based on the value the product has for the customer and not on its costs of production or any other factor. This pricing strategy is frequently used where the value to the customer is many times the cost of producing the item or service. For instance, the cost of producing a software CD is about the same independent of the software on it, but the prices vary with the perceived value the customers are expected to have. The perceived value will depend on the alternatives open to the customer. In business these alternatives are using competitor’s software, using a manual work around, or not doing an activity. In order to employ value-based pricing you have to know your customer's business, his business costs, and his perceived alternatives.

Decoy pricing: Method of pricing where the seller offers at least three products, and where two of them have a similar or equal price. The two products with the similar prices should be the most expensive ones, and one of the two should be less attractive than the other. This strategy will make people compare the options with similar prices, and as a result sales of the most attractive choice will increase.

Q3. Explain the concept of Service Blueprinting with an example.

Ans: Service blueprint:

A service blueprint is an operational planning tool that provides guidance on how a service will be provided, specifying the physical evidence, staff actions, and support systems / infrastructure needed to deliver the service across its different channels. For example, to plan how you will loan devices to users, eservice blueprint would help determine how this would happen at a service desk, what kinds of maintenance and support activities were needed behind the scenes, how users would learn about what’s available, how it would be checked in and out, and by what means users would be trained on how to use the device. Service blueprint: The service blueprint is a technique used for service innovation. The technique was first described by Lynn Shoptalk, a bank executive, in the Harvard Business Review in 1984. The blueprint shows processes within the company, divided into different components which are separated by lines.

Contents: The service blueprint defines:

Customer Actions: The steps that customers take as part of the service delivery process.

Front stage (Visible Contact Employee) Actions: This element is separated from the customer actions by a ‘line of interaction’. These actions are face-to-face actions between employees and customers. Backstage (Invisible Contact Employee) Actions: The ‘line of visibility’ separates the onstage from the Backstage actions. Everything that appears above the line of visibility can be seen by the customers, while everything under the line of visibility is invisible for the customers. A very good example of an action in this element is a telephone call; this is an action between an employee and a customer, but they don’t see each other. Support Processes: The ‘internal line of interaction’ separates the contact employees from the support processes. These are all the activities carried out by individuals and units within the company who are not contact employees. These activities need to happen in order for the service to be delivered. Physical Evidence: For each customer action, and every moment of truth, the physical evidence that customers come in contact with is described at the very top of the service blueprint. These are all the tangibles that customers are exposed to that can influence their quality perceptions. Building a blueprint [edit source

The process of structuring a blueprint involves six steps: The identification of the service process that is supposed to be blueprinted, the identification of the customer segment or the customers that are supposed to experience the service. Picturing the service from the customer’s perspective Picturing the actions of the contact employee (onstage and backstage), and/or technology actions Linking the contact activities to the needed support functions Adding the evidence of service for every customer action step

Traditionally, service blueprints have been depicted with lines and text boxes to depict anything from user actions to support processes. Explanation using example: Service Blueprint:

The service blueprint is a technique used for service innovation. The service blueprint consists of 5 components:

1. Customer Actions

2. Onstage / Visible Contact Employee Actions

3. Backstage / Invisible Contact Employee Actions

4. Support Processes

5. Physical Evidence

Q4. Explain the positioning strategies of services.

Ans: Positioning of services:

Positioning is the very crux of marketing strategy and proper positioning is the right potion for successful marketing management. Product positioning is a crucial decision that a marketer needs to implement to establish a distinctive and strong image of its product/brand as against its competitors, in the mind of the target consumer. Very often, a product fails because of wrong positioning.

How to Create a Strong Positioning Strategy

It is important for a marketer to bear in mind the following essentials before formulating and executing his positioning strategy. Gather from the market, the current position of the brand or product or service, in the target consumer's mind.

Clear thoughts on the achievement of the desired position in the market the competitors to be dealt with while establishing that position Availability of adequate resources to occupy and sustain that position.

Relevance of sticking with a particular positioning strategy perfect matching of the creative approach with the chosen positioning strategy,

Different Types of Positioning Strategies

Leveraging on Existing Brands' Strategy: It is a common tactic employed by marketers to leverage on the names of the firm's existing and established brands for extending the product line or venturing into another product category. This kind of brand marketing helps the firm to indirectly clarify queries in the consumer's mind like the identity of the new product and its credibility in the market. An established brand automatically helps the firm in its brand positioning strategy of new products or services.

Corporate Brand Positioning Strategy: Here the marketer uses his company name/identity for brand extensions. Product Features and Benefits Positioning Strategy: A consumer buys a product when he/she perceives some promised benefit that would satisfy the need and that the offer is better or enticing as against other competing brands. This positioning strategy is implemented by differentiating the brand from its competitors on the basis of its features and benefits offered. This is known as Unique Selling Proposition or USP. Often brands cluster two to three related benefits for positioning their product.

Price-Quality Positioning Strategy: Often the price of the product is kept high owing to its high quality and the product is positioned in a way that the super quality of the product justifies its high price. This is very true in the case of designer perfumes, watches, fancy cars and designer clothes. Here positioning is done by focusing on the affordable/low price of the product and its superior quality. Here the consumer experiences a feel good factor since he's obtaining a quality product at an economical price.

Competitive Positioning Strategy: This is a very effective offensive strategy where the marketer seeks to persuade the consumer that his product/brand is superior or at par with an established competitor.

Product Category Positioning Strategy: This strategy is used when an existing product category is too congested and the new brand is positioned as belonging to another product category.

User Positioning Strategy: Products can be positioned according to their user bases. For instance, beer marketers often position their products as light and strong beers. Again Kellogg's has cornflakes for cereal users, weight- watchers and kids. This is a smart way of doing niche marketing.

Positioning is all about finding the right path to create a significant and unique place amidst a crowd of different competing brands. A marketer can adopt from different strategies like leveraging on existing brands, leveraging on corporate name, product features and benefits, price-quality positioning, competitive positioning, product category positioning and user positioning.

Q5. Discuss about the marketing of services in Banking sector, Airline industry, Hospitality sector.

Ans: Marketing of Banking Services

Marketing banks is a combination of functions for providing services to

Satisfy customers ‘financial needs and wants, more effectively and efficiently keeping in view the objectives of the bank. Banking services is the creation and delivery of financial services appropriate to meet customer’s needs. Marketing these services play an important role as they provide revenue to the bank. The Reserve Bank of India (RBI) is the apex body in the banking sector. It controls all banking institutions within the country and frames the policies.

Airlines marketing

The Indian Aviation sector is one of the fastest growing aviation industries in the world. It cane broadly divided into the following main categories:

Scheduled air transport service includes domestic and international flights. For example Indian Airlines, Kingfisher airlines, Go Indigo airlines on scheduled transport service includes charter operators and air taxi operators. For example Pawn Hans, Air Charters India.

Cargo service includes air transportation of cargo and mail. For example Quick Jet, Air Cargo Express, Aryan Air.

Marketing of the Hospitality Services: Hospitality sector includes all those services related to hotels, restaurants, lodges, and bars. The growing economy of India is also helping the hospitality sector to grow at rapid pace. The main reasons for the growth of the Indian hospitality sector are due to:

Increase in foreign direct investment Increase in numbers of foreign visitors. Increase in the income of the Indian family.

Emergence of the brand Incredible India. As the numbers of players in the field of hospitality sector are increasing, marketing strategies are also changing. Earlier, hospitality sectors were keener on building brand recognition that attracted those customers who were willing to pay. Now, the hospitality sector is working on new marketing strategies. They are using marketing media very effectively. They are tying up with leading corporate houses to provide them the hospitality services to them.

Q6. Write short notes on:

A. Service Delivery Process

B. service Design (Definition- 2 marks; explanation – 3 marks

(A) A. Service delivery process: Service Delivery is one of two disciplines that comprise ITIL Service Management. Service Delivery defines the business of IT. Through Service Delivery processes, IT can:

Clearly define the content of services Clearly define the roles and responsibilities of customers (those who pay for the services), users

(those who use the services) and Service Providers Set expectations of service quality, availability and timeliness

Explanation: Service Delivery processes assist staff in tailoring services to meet the specific business needs at a price the business can afford. Service Delivery processes help define services so that they maybe provisioned with internal staff and resources or via external vendors with equal ease and results. Service Delivery processes assist in defining how to measure service results with meaningful metrics and using the metrics to drive continuous service improvement.

Service delivery: The delivery of a service typically involves six factors:

The accountable service provider and his service suppliers (e.g. the people) Equipment used to provide the service (e.g. vehicles, cash registers, technical systems, computer systems) the physical facilities (e.g. buildings, parking, waiting rooms) the requesting service consumer

Other customers at the service delivery location

Customer contact: The service encounter is defined as all activities involved in the service delivery process. Some service managers use the term "moment of truth" to indicate that defining point in a specific service encounter where interactions are most intense.

B) SERVICE DESIGN

Service design is the activity of planning and organizing people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between service provider and customers. The purpose of service design methodologies is to design according to the needs of customers or participants, so that the service is user-friendly, competitive and relevant to the customers. The backbone of this process is to understand the behaviour of the customers, their needs and motivations. [Citation needed] Service designers draw on the methodologies of fields such as ethnography and journalism to gather customer insights through interviews and by shadowing service users. Many observations are synthesized to generate concepts and ideas that are typically portrayed visually, for example in sketches or service prototypes. Service design may inform changes to an existing service or creation of new services.

Service design is the specification and construction of technologically networked social practices that deliver valuable capacities for action to a particular customer. Capacity for action in Information Services has the basic form of assertions. In Health Services, it has the basic form of diagnostic assessments and prescriptions (commands). In Educational Services, it has the form of a promise to produce a new capacity for the customer to make new promises. In a fundamental way, services are unambiguously tangible. Companies such as eBay or collectives such as Wikipedia or Source forge are rich and sophisticated combinations of basic linguistic deliverables that expand customers' capacities to act and produce value for themselves and for others. In an abstract sense, services are networked intelligence. Service design can be both tangible and intangible. It can involve artefacts and other things including communication, environment and behaviours. Several authors (Earlier 1979; Norman 2000; Morella 2002), though, emphasize that, unlike products, which are created and “exist” before being purchased and used, service come to existence at the same moment they are being provided and used. While a designer can prescribe the exact configuration of a product, s/he cannot prescribe in the same way the result of the interaction between customers and service providers, nor can s/he prescribe the form and characteristics of any emotional value produced by the service Consequently service design is an activity that suggests behavioural patterns or “scripts” to the actors interacting in the service, leaving a higher level of freedom to the customers’ behaviour.