ASSIGNMENT-1

Q.1

Mention the bases for segmentation of services with examples.

Ans. We can segment the service markets based on some strategies. Figure below depicts the some strategies by which a service market can be segmented.

Figure : Segmentation Strategies for Service Market Let us get a brief description about each of these segmentations. Geographic segmentation Geographic segmentation means the segmentation based on the location. It is believed that people who live in the same location share common needs and wants. These needs and wants differ from the people who are living in the other location. For example, there is greater demand for internet service in cities than in rural areas. So services vary from region to region. It is also noted that popularity of a brand depends on the geographical location. Some marketing professionals believe that internet and globalisation have reduced the geographic boundaries of various services. We can notice that even ordinary people watch MTV, and eat McDonald's Pizza. Internet has provided the power to customers to make purchases online by sitting in any part of the world. The segmentation of service market can be done by considering the region, city size, density of the region, and climate. Now let us discuss some examples of geographic variables that are frequently used in segmentation of services. The different variables used are: region, size of metropolitan area, density of the region, and climate. Demographic segmentation: Market segmentation can be done by considering differences in demographic factors of different groups of customers.

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The variables that are used in demographic segmentation are: age, gender, number of family members, generation, income, occupation, education, traditions, nationality, religion, and social class. Psychographic segmentation: Psychographic segmentation divides customers based on their lifestyle. Usually marketers gauge the lifestyle of customers by surveying the activities, interests, and opinions of the customers. The variables used in this segmentation are: Activities. Interests. Views. Attitudes. Values. Behaviouristic segmentation: Service markets can also be segmented based on the actual behaviour of customers towards services. The variables used in this segmentation are: Benefits sought by offering these benefits. Usage rate depending on the rate at which the users seek the service. Brand loyalty depending on the customers who select it. This is considered by regular customer for a particular service. User status depends on whether the customer is financially potential to seek the service offered the first-time. This is also considered for regular customer. Readiness to buy depends on the customers. If the customers are convinced with the quality and rate of the services offered they will be ready to seek the service. Occasions depends on holidays and events that stimulate the customers to go for a particular service.

"Benefit segmentation is the ultimate base for segmentation". Consider all industries that provide consumer good. It is very difficult to satisfy all the needs of all consumers knowing that no two individuals tend to share the same like and dislikes. For (an industry that would want to satisfy the desire of each and every one of it consumers, who would like to entail in making customized products, would basically think the method to be a waste of resources. This situation arises because we are in a heterogeneous market and the only way to satisfy everyone is by offering tailor made or bespoke products. Though two separate individuals may purchase the same branded products, but their reasons for purchasing it varies. For this reason market segmentation is needed. Market segmentation is used to divide customers' ingroups under similar needs and wants, purchasing power, buying habits, and buying attitudes, trying to increase their satisfaction.

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Bases for segmentation in industrial markets When compared to ordinary customers, industrial customers are likely to be fewer in number and buy larger quantities. They appreciate the offerings in more detail, and the decision process usually involves more than one person. These characteristics apply not only to service providers but also to manufacturers. The variables, which are used for service segmentation, can also be applied to industrial markets. Industrial markets might be segmented on characteristics such as: Location. Type of company. Behavioural characteristics. Let us get a brief description about the same. Location Customer location is critical for industrial markets. If a client company is located far away, then it costs more to provide those services they desire. In this case, the service provider has to bear the transportation cost also. For example, if a client company has purchased thousands of chairs and if it is located far away from the chair manufacturing company, then the manufacturer has to spend money for transporting those chairs to client's place. Type of company Business customers can be grouped according to type as follows: Company size. Industry. Decision making unit. Purchase criteria.

Behavioural characteristics The industrial markets can also behavioural characteristics such as: Usage rate of particular service. Buying status. Purchase procedure: How the companies purchase the s,ervices it may be in form of sealed bids, negotiations and so forth.

Q.2 Explain service quality concept. Evaluate the growth of services marketing. Ans. Service marketing is applied in various ways by the marketing experts in various organisations. The concepts of services marketing include service quality, servicescape, internal marketing and augmented service offering. Now, let us get a study and interpret each of these concepts in detail: Service quality: This is the most important concept of services marketing and is regarded as vague and difficult to measure. It can be referred to as external quality and is a client-oriented concept. It indicates RANJAN PAL, 511110942 Page 3

the customer satisfaction, which is again associated with success, productivity, and efficiency of the organisation. Thus, providing service quality is regarded as an important tool. As per studies conducted by experts like Gronroos, there is technical quality and functional quality. Technical quality is the result of an interaction within an organisation. For example, it can be the result of having a meal. Functional quality includes characteristics such as accessibility, reliability, empathy and responsiveness. It is based on the achievement or excellence of the service processes. Service quality also includes perceived service quality, which is not only based on the actual experiences, but also as one that makes an impact on the perception of quality. Servicecape: The second concept of service quality is the servicecape. This is the environment where the services take place. It also includes the characteristics, which are present during the entire service process. The studies have shown that the retail environment influences the customers in a substantial manner. Physical environment is an indication for the customers to assess the quality of service. This indicates the role of the environment in assessing the service quality of the customers. Certain features of services cape such as internal layout create a sense of spaciousness in the customer, which in turn leads to a positive impression.

Internal marketing: As per the experts, one of the pre-conditions to provide external quality is internal
quality, which leads to the third concept, internal, marketing. According to Gronroos, internal marketing means considering the employees as if they are customers and the tasks as services to improve external service quality. We can say that welfare, satisfaction, motivation, and efficiency of the staff are the central concepts of internal marketing. This involves processes such as rewarding the staff to create clientoriented support in the organisation. As per this, employees must be regarded as the part of an organisations' strategy. The organisations make their investment in the employees and consider them and their knowledge as the most essential resource. Thus, internal marketing is regarded as a prerequisite to achieve external quality and financial success.

Augmented service offering: This discusses service quality from the perspective of an employee.
This concept defines the practises and processes that should be taken by an organisation, to improve the offering in such a way that it adds' to the value for the external customers. The augmented service offering include several features such as convenience of the service, quality of the client's communication with the organisation and its employees, and the client's contribution in the service process. In addition to the various features that constitute the augmented services, you need to meet certain requirements. These requirements and management practises will make an impact on the way customers perceive the service.

Evolution of services marketing: The evolution of services marketing from its initial period to the
present phase witnessed plenty of changes. Indian economy is advancing fast from the product dominated economy to the services concentrated economy, The share of services in the Gross Domestic Product has been very quick in the last seven years. Now let us go through a brief explanation of the evolution of services marketing, which can be traced back to the late 70s. It was only after the strong emergence of interest in customer behaviour in 1960's that a specific marketing discipline emerged with a growing passion and determination for services marketing. The evolution of services marketing occurred in two different eras. The first era covered three stages namely crawling out, Scurrying about and Walking erect. The second era observed the speedy development of services beyond its origins in services marketing. RANJAN PAL, 511110942 Page 4

Now let us see each of these eras in the following section. First era: services marketing According to Brown and Bitner, the materialisation of services marketing in the first included three evolutionary stages namely Crawling out, Scurrying about, and Walking erect. The crawling out stage happened in the pre 1980's, when experts and service scholars defended the service marketing. The next stage is scurrying about occurred from a time from 1980 to 1985, when some enthusiastic scholars built the basic structure of services marketing, The walking erect stage occurred from 1986 to 1992, when the services marketing sector attained a measure of respect and legitimacy within the marketing industry. Figure shows the different phases in the first era of services marketing.

Figure : Evolution of Services Marketing Second era: the emergence of multidisciplinary field The second era witnessed remarkable changes in the service marketing industry. After services marketing earned a respectable place in the marketing sector, the next stage was the creation and sharing of memes. Memes include cultural information, which is learnt and sent out through generations. The changes that occurred in memes in the second era influenced the marketing discipline too. As per experts, the evolution of services in the second era can be explained in three different stages, They are making tools, creating language, and building community. In the making tools phase, services marketing sector produced several tools that helped in the advancement of technical sophistication of the field. The advent of internet and the other web based services are some of the examples. The phase also marked the advancement of new methodological research tools such as measurement scales and data analysis techniques. In the creating language phase, the technical phrases related to services marketing began spreading on a large basis. These words include service encounters, service quality, service theatre, service experience, service recovery, and servicescapes.

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In the building community phase, social structures began to emerge to support the work of service scholars. The academic study of service phenomena widened the reach of the services marketing. There is a rapid increase in the number of people involved in the services sector, which will only lead to it being one of the most popular marketing disciplines. Figure explains the various stages of evolution of services in the recent second era.

Figure : Evolution of Services in the Recent Era 2

The figure explains the various stages of the evolution of services such as making tools stage from 1992
to 2000, creating language stage that started in the year of 2000 to the present stage and building community that explains the bright future of services.

Growth in Services Marketing

As you all know, in services marketing, services are described by features such as intangibility, heterogeneity and inseparability. It is impossible to separate it from the production and consumption and stock it for future usage. Though critics of services marketing have argued that marketing of goods and services are not different, people who do research on services marketing have defended its existence with its argument regarding the uniqueness of services. Services marketing have also carved a place for itself as sub field of marketing. It is also said that services marketing has played a prominent role in the development of marketing and have left some concepts that can be implemented in the conventional marketing. The differences between the goods and services are getting vanished and the perspective of services is becoming dominant. As a result, services are becoming the main focus of mainstream marketing. The focus on services introduces a new viewpoint that changes the fundamental rules of marketing. The process nature of services is the most important characteristics in services marketing. They are developed in a process where the consumers cooperate with the production resources of the service firm. RANJAN PAL, 511110942 Page 6

As the basis for the production and consumption of the physical products are changing rapidly, the fundamental rules for services marketing is also changing. The entire production process is done in the presence of the customers with the advent of mass customisation and modular production. The consumption process changes into process consumption and the focal area of marketing becomes balancing the gap between consumption and production process. The significance of services marketing has gone far beyond the traditional service sector or service industries. The relationship marketing has also developed emphasising the role of services, manufacturers and service firms alike.

Q.3 Briefly explain the five factors that influence the level of adequate

service. Ans. Factors that influence the level of adequate service:

The expectation levels of the customers vary based on the reference point the customer holds. Although everyone in the organisation will have an idea of what the expectations are, service marketers must have a clear and thorough definition of the expectations. There are two types of or levels of expectations. One type is the desired service, which is the highest level of service the customer hope to receive. This level is a perfect blend of "can be" and "should be" as per the belief of the customer. For example, those people who sign up for a computer dating service have several expectations of finding attractive and compatible people whom they want to date and marry. These expectations reflect the hopes and perceptions of the consumers. The other level is the adequate level of service. This is the service level that is accepted by the customer. This stand for the minimum tolerable expectation or the bottom level of expectation that is acceptable to the customer.

Customers will have similar expectations for various categories of services, but it will be dissimilar to the industries. For example, the desired expectation of a customer for a fast food restaurant will be quick, convenient, and tasty food in a cleanly setting. But, the desired expectation for an expensive restaurant is graceful surroundings, elegant employees, candle light, and excellent food. The adequate service expectation level will differ based on the category or sub category of the service. A customer will have higher consideration within the various fast food restaurants. For example, a customer will have higher regard for McDonalds than for some other fast food restaurants. As a result, he gets more disappointed if the level of service is not as high as he expected from McDonalds as for the other Restaurant. Factors that influence customer expectations Now, let us go through the various factors that influence customer expectations. As client expectations play a bigger role in the assessment of services, services marketers need to realise the factors that shape them. Marketers will also want to have a control over these factors. So, let us try to understand the factors that influence the customer expectations. RANJAN PAL, 511110942 Page 7

The factors that influence the desired level are personal requirements and philosophies regarding service. Personal requirements are the state or a condition that is necessary for the psychological wellbeing of the customer. It has several categories such as physical, social, psychological, and functional. There are other stable factors such as lasting service intensifiers that lead the customers to a heightened sensitivity of service. They occur when an individual or a group drives the customer expectations. The examples for this are a parent choosing a vacation spot for the family and a staff choosing an office for the organisation. All these clients' individual expectations get intensified as they represent a group and are answerable to those parties who receive the service. There are five factors that influence adequate service. They are: Temporary service intensifiers. Perceived service alternatives. Customer self perceived service role. Situational factors. Predicted service.

Temporary service intensifiers are individual factors that create awareness in the customer regarding the need for service. Emergency situations in which there is an urgent need for service raise the adequate level of expectation. For example, 'a mail order company that depends more on toll free lines to receive the customer orders will be more demanding during the peak periods of the month and the year. Perceived services alternatives are providers from whom the customers obtain the service. If the clients have multiple customers to choose from or are capable of providing services to themselves, their adequate service level will be higher than those customers who have lesser options. For example, an airline customer who lives in a small town with a small airport has very less options. He will be tolerant to the performance of the carriers as he has very few options. If the customer realises that service alternatives exist, then they raise the adequate service level and narrow the zone of tolerance. The third factor that influences the level of adequate service is the self perceived service role of the customer. To an extent, this can be described as customer perceptions, to which clients exercise an influence on the service which they receive. Here, the customer too has a responsibility to specify the service level, which he expects. The active participation of the customer plays an important role in delivering the service successfully. If the customer realises that they have specified their role well, but the services personal are not playing their part, level of adequate service will get heightened and narrows the zone of tolerance. Level of adequate service is also influenced by situational factors. They are conditions, which the customer view the performance or service quality as beyond the control of the service provider. For example, tragic incidents such as automobile accidents will increase the customer' expectations regarding insurance companies. The tragic incidents that affect a large number of people might lower the client expectations as they realise that insurers will have greater demand for their services. Another factor that influences the level of adequate service is the predicted service. This is the prediction made by the customers about the things that are likely to happen during a transaction or a service. If the customers predict good service, their level of adequate service will be higher than when they predict bad service. For example, the residents in a college predict restaurant service during the months of summer RANJAN PAL, 511110942 Page 8

when the number of students will be less. This leads to higher level of adequate service during summer. As predictions are mostly about individual service encounters, they will be concrete and specific than the other types of expectation levels for desired service and adequate service.

Q.4 Discuss service quality measurement and service mapping.

Ans.

Service Quality Measurement and Service Mapping

Service quality is evaluated by customers based on the five service dimensions as mentioned in the previous section. In this section we will study how SERVQUAL is used to measure service quality and the benefits of service mapping.

Service quality measurement

The service quality and customer satisfaction is measured by comparing expectations and perceptions. Service quality is the comparison of perception with the expectations of customers from an organisation that delivers high quality services. The SERVQUAL scale is used to measure service quality. The SERVQUAL is a diagnostic tool, and this is based on the five service quality dimensions. The five dimensions are tangibles, reliability, responsiveness, assurance and empathy. The SERVQUAL is a 44 item scale that measures customer expectations and perceptions regarding five service quality dimensions. The SERVQUAL instrument consists of two sections, a 22 item section that records customer expectations of excellent firms and a second 22 item section that measures customer perception of a particular company in that service industry. Results from the two sections are compared to arrive at the gap scores for each of the five dimensions. The larger the gap, the further consumer perceptions are from expectations and lower the service quality evaluation. Customer perceptions are measured on a seven point scale with anchor labels of "strongly agree" and "strongly disagree". Hence SERVQUAL is a 44 item scale that measures customer expectations and perceptions regarding the five service quality dimensions.

Service mapping
A service map links services providers to the types of service they deliver. Once the mapping process is completed, workflows need to be created for the mapped services. The maps need to be discussed, to identify any key steps that are missing or if there are differences of opinion about how the workflow occurs. The process of service mapping will involve the listing of the problems in the workflow. These problems can be grouped together and discussed. Service mapping employed by IT is designed to help their business unit groups to define and evaluate IT services for their organisation. The main benefit of service mapping is that it covers to capture all dependencies and cross functional areas such that accountability is identified. RANJAN PAL, 511110942 Page 9

The key roles and responsibilities in the IT infrastructure environment is defined by Service Map processes and tools. On-going improvements are developed and supported by this continual feedback loop. Let us consider a service map that links service providers with the type of service that they provide. The service map shown in figure is for healthcare services. The service map clearly indicates that the sick, aged, and disabled are treated by onsite health workers and nurses with the support of general practitioners and visiting specialists. The map indicates that to receive specialist's care, the patient should belong to a hospital in that region. Key Service delivered on site ---Refer to on site services ---Limited frame to deliver Services ----

Figure: Service Map for Healthcare Services

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Beneficial elements of service maps Let us now discuss some of the beneficial elements of service maps. They are:

Service relationships and dependencies: this helps to fully understand the supporting services needed to keep key services running and available for customers. Service Level Agreement (SLA) planning: this defined service requirements with key
business units. Operating level Agreement (OlA) dependencies between key IT groups. planning: this defines service requirements and

Service mapping tools: The Service Map Designer enables an end-to-end mapping of services to help identify critical dependencies to enable better decision making around Service Management areas such as change management and availability management. Service mapping tools enable organisations to create outstanding customer experiences. Communication: this provides structured guidance to support effective service review meetings and define key service level management roles.

Q.5 Explain hard and soft customer defined standards. Compare flexible services and standard services.

Ans.

Customer Defined Service Standards - Hard and Soft:

We shall first start out learning by understanding the meaning of service standards and then learn about customer defined services. "Standards of service" are shortened to form service standards. Service standards are not only concerned with service delivery and waiting times. It is also associated with customer expectations of service, cost of service, and remedial action when the service is not up to the mark. The five essential elements of service standards that service providers must follow are: Describe the service and the benefits that the customers are entitled to. Explain the quality of service based on the principles of the company. Set delivery targets that help in maintaining timelines. Calculate costs involved in service delivery. Form complaints and service recovery mechanisms that the company can use when the service delivered is not up to the standards.

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Service standards can be of two types, company defined service standards and customer defined service standards. Productivity implication, cost implication, company process blueprint and company view of quality are the basis for company defined service standards. Customer defined service standards are the ones that are based on customer expectation and reflect the view point of customers. The sources of customer service defined standards are customer expectations, customer process blueprint, customer experience and observations. Customer defined standards are the standards that close the provider gap. Company defined service standards are internal and based on productivity, efficiency, costs, and technical quality. Customer defined service standards are based on the requirements that are assessed and measured by customers. There are two types of customer defined standards namely hard and soft. These two types will be discussed in the next two sections. Hard customer defined standard The services that can be counted, timed or observed through audits are known as hard customer defined standards. Customers emphasise on reliability and fulfilment of promises. In order to provide reliable service, the firms adopt the policy of do it right the first time and honour your promises. An example for do it right the first time would be that a customer receives exactly what he ordered for without any damage. Right on time would refer to a delivery that would take place on time. Hard customer defined standards need to be adapted according to the different countries. This is because what is considered a prompt service in one country may not be the same in another country. For hard customer defined standards, let us consider the example of a service station for vehicles. The following can be considered as hard customer defined services: Appointment for servicing available within a single day of customer placing request. Within a minute of inquiry service status is provided. The vehicle is serviced at the first visit. The serviced vehicle is delivered exactly on the mentioned delivery date.

Soft customer defined standard Opinion based measures that cannot be observed and must be collected by talking to customer. This is purely based on the input obtained from customers. Soft customer defined standards are known as second category of customer defined standards. These standards are opinion based and cannot be measured. 'Soft standards are established by talking to customer, employees and so on. Direction guidance and feedback are obtained by soft customer defined standards. Customer perceptions and beliefs are measured in defining soft standards. Soft standards are important for person to person selling of processes. For soft customer defined standards let us consider the example of a service station for vehicles. The following can be considered as soft customer defined services. Customers are asked about the service requirements and they are recorded on a repair form. Explaining clearly to customers about the work done and the costs involved.

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Service Flexibility Versus Standards As we have seen how we can meet the customer defined service standards in the previous section, now we shall understand the difference between service flexibility and service standards. Services need to be flexible to meet the needs of a heterogeneous market. Service providing firms cannot have a standard service process or procedures for all customers as the requirements of customers are varied. Heterogeneous markets are the ones which have different market maturity levels, demand patterns, local skills available, and differences in human attitudes. In simple terms we can say that one size does not fit all and this can be applied in the context of services also. A standard model for delivering services is not practical. Firms prefer to have some form of standardization in order to achieve some form of consistency and profitability. Highly individualised services are not cost effective for the service companies to provide flexibility and standardisation needs to be maintained at optimum levels. The level of flexibility of service must be determined by the firm that provides the services. For example, consider the case of a beauty salon; here, it is important for the service provider to provide unique and individualized attention to each of the customers.

Q.6 Define service sector in India and classify the major service sectors.
Ans.

Overview of Different Service Sectors:

Services sector is constantly growing and it accounts for more than 60 percent of world Gross Domestic Product (GDP). Growth in economy results in the growth of public income. In an underdeveloped economy, expenses are more on agricultural sector in order to satisfy the primary needs of people. As the economy starts growing, expenditure starts shifting to the industry. The shift from agricultural economy to industrial economy has increased incomes, which has eventually increased the standard of living of people. When income increases and people are able to meet their basic needs and expenses on the services start to grow. This marks the transaction of the economy from developing economy to developed economy. The analysis of developed economies show that the expense on services witness more growth as economy turns from developing to developed. This breakage refers to the activity where firms start focusing on core functions and subcontract non-core functions to the services sector. Growth of the service sector marks the importance of the Indian economy in the world economy. Let us now see the classifications of service sector.

Service sector classification

Service sector consists of many verticals. All the sectors, which provide the support service in a way or other, belong to service sector. It could be the service provided by banking institutions or the service provided to you by your local retailer. They all form a part of the service sector. The figure shows different sectors of the service sector domain.

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Figure : Service Economy

The service sector constitutes various sectors that provide different services and each sector may have its own set of allied services. Let us outline major sectors: Education and health service sectors provide services like education for students and healthcare services for sick people in the economy. For example, university and colleges, hospitals, medical diagnostic centre, research labs, and medical shops. Financial services sector deal with financial aspects and provide services related to finance. For example banks, insurance agencies and so on. Government service sector provide services like transportation services, post office services, ration card and free education for poor and underdeveloped people, and various other services offered by the government for the economy or for public interest. Information service sectors provide you with some information like newspapers, news channels, radio, magazines, and so on. Leisure and hospitality service sector provide services related to tourism. It constitutes of all those resorts, restaurants, hotels and so on which provide you food and lodging services.

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Professional and business service sector provide support services to various industries. It could be either the services from an IT company or the services from a charted accountant, lawyers, architect, and so on. Transportation and utilities sector provide the transportation facilities. Airlines, railways and travel agencies, belong to this service sectors. This includes services like packers and movers services, goods transportation or the transportation service for public. Wholesale and retail trade sector provide services that are concerned with the selling of commodities that could be sold loose. It could be either in organised way like the big retails brand chain or an unorganised way like those general merchant shops. Other service sectors my include customers in their activities like entertainment services, Hair styling, pest control, plumbing, lawn maintenance, counselling services, health club, child care services, and so on.

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