Spring / Feb 2013 Master of Business Administration- MBA Semester 4 MK0015 Services Marketing and Customer Relationship Management

t 4 Assignment Set -1 (60 marks)

Question1. Discuss briefly about customer retention strategies in Customer relationship management. Answer:- As 3Lowenstein highlighted what customer loyalty is all about. It is all about driving perceived value, whether rational values like functional, quality, cost, etc., or emotional trust, service, communication, information, brand equity, etc. or a combination of these two dimensions. Many customer retention strategies have been formulated, applied, and reviewed to get a high customer retention rate. Here to retain a customer, what a company does in order keep customers coming back is to build strategies. Customer retention rate is the number of clients that a company has lost in a predefined time span. This is calculated by existing customers times the rate of customers lost in a certain period, be it annual or quarterly, without including the newly acquired customers. Many companies are struggling over retaining the customers, they always try to find the best customer retention strategies to keep their sales up. Customer retention ideas are thought of, customer retention programs are made, customer relationship tips are followed, but some how the problem still remains the same. They invest in new technologies, exerting much effort and labor in measuring the return of investment in the expenditures. The puzzle stands, the solutions are brought in, but still the problem remains. Out of all these efforts, there is one thing that seems so obvious and may be considered as the only answer to this entire situation. And that is, doing a good job. When a company and its employees do a good job, then everything else follows. There will be good service, good products, and naturally, customers will see and feel this, and will ultimately, keep coming back. Well, this may not be an easy solution as it sounds. First of all, we should know the meaning of good job. For many companies, a good job varies according to the customers wants and needs. Companies invest its money and hundreds of man hours trying to implement a customer tracking system which tells the customer about their companies. So this is what companies should do; use the available data to define what a good job in their company is. The marketing team of each company would be perfect for filtering through the customer tracking data to define what a "good job" does. 1

Question2. Explain briefly the 7Ps of marketing mix Answer:- The 7Ps of service marketing mix are: Product: This should provide value to the customer though it need not be a tangible product. Every good is associated with a service component as is every service with a physical good. However, the degree of association may vary. Price: In service marketing, price is fixed for services and depends on the service provider and service delivery. Pricing needs to o be competitive and must necessitate profit. The cost strategy includes discounts and offers. Service rates are often variable and depend on the nature and type of service as well as on customers who may either not entirely use the service or pay only for the service rendered to him/her. Place: This means where and when the customer buys and consumes the product or service. It is the place where the customer purchases the product and the manner in which product reaches out to the particular place. This happens through various channels like internet, wholesale, and retail traders. In service marketing, it depends on where and how service is delivered to the customer. Mot often, customer goes to the service provider or service provider delivers service to customers location. Promotion: This includes adopting various ways to communicate to the customer regarding the product offers of the company. This also includes communicating about the advantages of a product or a service than speaking about its features. People: People include the customers, employees, and management. An essential ingredient to any service provision is the use of appropriate staff and people. In service marketing, customers also have an active role in the service delivery. A good service provider should ensure that the service as well as its experience delights the customers and not just satisfies him/her. Process: Process refers to the systems used to assist the organization in delivering the service. Any process whether it is electronic, mechanical or manual, service providers should ensure that it helps in providing efficient service to the customers without causing any disturbance or delays. Physical evidence: In service marketing, physical evidence serves as a proof of service experienced. Since services are basically intangible, certain things can add to the experience of service such as complimentary items offered during service, Pamphlets and brochures that create product awareness. Consumers will make perceptions based on their sensory abilities of the service provision, which will have an impact on the organisations perceptual plan of the service.

Question3. Explain the stages in new service development and its implementation. Stages in new service development Answer:- Figure shows the stages involved in new service development.

Figure : Stages in New Service Development

1. Business strategy development or review: Every organisation has aunique vision and mission. A new service can be developed by first reviewing this vision and mission. 2. New service strategy development: A product portfolio strategy and defined organisational structure for a new product or service development is critical for the success of an organisation. The goals, vision, capabilities, and growth plans of the organisation need to be considered while developing new types of services. 3. Idea generation: Generation of new ideas is the next step in the process. The new service strategy screen screens the idea developed at this phase. Brainstorming, ideas from employees and customers, lead user research, learning about competitors are the methods used for idea generation. 4. Service concept development and evaluation: The development phase begins once the idea is regarded to fit both the business and new service strategies. For a tangible product, forming the product description and drawings and presenting it to customers would be the next step.

5. Business analysis: Estimating the economic feasibility and potential profit implications form a part of the next step after development. Demand analysis, revenue projections, cost analyses and operational feasibility are assessed at this stage.

Implementation We shall now learn the different development stages involved in implementation, which include: 1. Service development and testing: This is the step where product prototypes are constructed and customer acceptance is tested. This step presents unique challenges due to the intangible nature of service and the fact that the production and consumption is simultaneous. These challenges can be addressed by involving all those who are involved in the new service in this step of the process. It is in this step that the service is refined and service blueprint is drawn out. 2. Market testing: This is the stage where market acceptance is evaluated by introducing the new service in a test market. 3. Commercialisation: The service goes live and is introduced in the marketplace in this stage of the process. This step involves the building and maintaining acceptance of the new service in the market. 4. Post introduction evaluation: At this point, the information gathered during commercialisation of the service can be reviewed and changes made to the delivery process, staffing, or marketing mix variables on the basis of actual market response to the offering.

Question4. Discuss the GAP Model briefly. The GAP model Answer:- This model offers an incorporated view of the relationship between the customer and the company. This model is based on a substantial research performed by several service providers. As in the Gronroos model, it shows the perception gap and summarise the contributory elements. The provider gaps are those that happen within the organisation. It is the difference between the expectations of the customer and the understanding; the firm has regarding those expectations. Most of the organisations fail to meet the client expectations due to their lack of understanding of those aspirations. The provider gaps include GAP 1, GAP 2, GAP 3, GAP 4 and GAP 5. Each GAP occurs due to the inconsistencies and discrepancies in the quality management process. GAP 1: This is known as the management perception gap. This occurs mainly due to the difference between the service expected by the customers and the perception the management have regarding the customer expectations. 4

GAP 2: This is known as the quality specification gap. This occurs due to the difference between the management perception of client expectation, designs, and the standards of customer driven service. The precise perception of the service providers regarding the customer expectations will not be sufficient to deliver better quality service. GAP 3: This means service delivery gap and occurs due to the difference between the client driven service designs and service delivery and standards. Even if you formulate guidelines to perform services, it will not assure quality service performance. GAP 4: This is the Market Communication gap and refers to the service delivery and external communications to the customers. Service firms assure their efficiency through external marketing process to the existing as well as the potential clients. These promises do make an impact on the customer expectations. These expectations will serve as standards against which the client assesses the quality of the delivered service or product. Gap 5: This means perceived quality gap and occurs due to the difference between organisations perceived service and the expected service. It is difficult to evaluate the reasons for this gap, but the organisations need to expect some negative results when such a gap occurs. But you can see that this GAP also creates a positive impact. If the perceived quality surpass the accepted quality, the clients will be happy, which in turn will be beneficial for the organisation. Question5. Discuss about the marketing of services in Banking sector, Airline industry, Hospitality sector. Answer:- 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 can be broadly divided into the following main categories: Scheduled air transport service includes domestic and international flights. For example Indian Airlines, Kingfisher airlines, GoIndigo airlines.

Non scheduled transport service includes charter operators and air taxi operators. For example Pawan Hans, Air Charters India. Cargo service includes air transportation of cargo and mail. For example QuickJet, 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. Question6. Write a short notes on: A. Pricing strategies of service. B. Roles played by the customers during service delivery Answer:- The different strategies that are used for pricing of a service: Mark-up pricing: The mark-up pricing strategy can be employed for services that cannot be differentiated. For example, it is not possible to differentiate the service provided by BESCOM for Bangalore. Value for money pricing: In India, the retailer Big Bazaar uses the positioning line Is se sasta aur achha kahin nahin, which means nowhere else you will get such better and cheaper offers. Obviously, the idea of savings convinces huge segment of customers, but the consideration for this strategy is the competence of the retailer to continue being a cost leader. If any other retailer competes this by offering the same products at lower prices owing to the price sensitivity of the customers, they would make quick exits to go and buy from the new cost leader. Image value pricing: This is a very popular method of pricing the products. This method enables to charge premium price for the product.

The Role of Customer in Service Delivery If the customers are present during the production of the service, they can play an active role in delivering the product successfully. If we talk in the manufacturing context, the production facilities will not have the presence of the customer. The manufacturers of a product will not take the real-time inputs of the customers into consideration. Customer receiving the service Services are actions that are produced and consumed at the same time. The role of the customer is important in the production and delivery of a service. Roles played by the customers As productive resources: The customers of the services are referred to as partial employees of the services organisation. They are the effective human resources who contribute to the productive efficiency of the organisation. Customers as contributors to service quality and satisfaction: Another major role played by the customers is that of a contributor to their own satisfaction and the quality of the service which they receive. In services such as education and personal fitness, desired outcomes cannot be achieved without the active contribution from the part of the customer. Customers as competitors: Another major role played by the service customers is that of a competitor. There are organisations that outsource certain service activities such as data processing, pay roll, accounting,maintenance, and facilities management.