Introduction to Service Management Long Answer Type Questions

Question 1.
Explain the role of services in economic development.
Answer:
As we all know that services lie at the very center of economic activity in any society, it is an indispensable sector of our economy. Growth in the service sector can be seen in nearly all developing, and developed countries of the world. The rapid growth of the service sector in India is due to growth in industrial services and consumer services.

Today the role played by the service sector in our economy is so important that they are no longer considered ancillary activities supporting manufacturing sector. Rather they have become a separate sector and the dominant drivers in our economy. The increasing importance of service in the economic development of our country can be understood from the following table which depicts the contribution of the Various sectors to GDP in India.

Sectorial contribution to GDP in India:

Sectors 1980-81 1990-91 1997-98 1998-99 1999-2000 2003-04
Agriculture & allied sector 38.1 30.9 26.79 26.82 25.5 24.5
Industry 25.9 30.0 27.76 27.01 27. 4 23.5
Services 36.0 39.1 45.5 46.17 47.1 52.0
Total 100 100 100 100 100 100

Thus from the above table it can be conduced that the role of service concluded Service sector is very much essential for the economic development of any economy. There has been a continuous growth in service sector because of the various benefits it provides to the society.

→ In expansion activities of each country demanded for more services in the field of transportation, infrastructure facilities, financial services and crated more employment opportunities.

→ The expansion activities also given score for the development many other services like legal services, project management, accounting information which helped in improving economic condition.

→ Educational services personal services, health care services, specialized services contribution to the country increased GDP in all advanced countries. Indian economy has started increasing only after the fast growth of IT and educational service sector.

Because of the so many benefits of the service sectors to the society, it has become indispensable which in turn has led to the growth of the service sectors in an economy.

Question 2.
Explain the characteristic features of service.
Answer:
In the words of Kotler and Armstrong – A service w an activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product”.

The features of services are as follows:
(i) Intangibility:
Services cannot be examined before it Is purchased. In case of goods, we can examine taste, smell, physical integrity etc. But services donot have tangible properties. Reliability, personal care, attentiveness of staff etc., can only be verified after purchasing services measuring quality of services are also different compared with goods. The lack of physical evidence increases the level of uncertainty. So service marketers try to add tangible evidence to their product and goods marketers are trying to add intangible services to their product.

(ii) inseparability:
In case of goods companies manufactures goods in one central location and then transport them to the place where customers want to buy them. Producers can make goods at a time convenient to itself. Production and consumption are separable. But consumption of service to inseparable from its production. Productions and consumer must interact each other.

For example:
in personal care services customers must be present during entire production process. A surgeon cannot provide service without a patient. In case of goods, generally first product, offered for sale and finally sold and consumed. Where as in services they are sold first then produced and consumed simultaneously.

(ii) Variability:
In goods before purchasing inspection can be done and gives opportunities for rejection. But in services customers is involved, in production process. It is difficult to control to ensure standard. This is true of many labour intensive personal services provided in a one-to-one situation. Such as personal health care. Some services allow scope for quality control during the production process ex. Telecommunication services can operate with very low failure

(iv) Perishability:
Goods which are unsold can be carried forward for future sales. But the produces of a service cannot sell in the future days.
Example: A train operators which offers seats on the 8.10 am train from Mangalore-Mysore cannot sell any empty seats once the train has departed.

(v) Immobility to own services:
when a person buys a goods, the ownership will be transferred from seller to buyer. When a service is performed no ownership is transferred from seller to buyer. Buyer just buys right to a service process such as use of car part or an account’s time.

(vi) Nature of demand:
The demand for services also not constant. In some situations the demand for services will be more. For Example: During marriage seasons, there will be more demand travelling and hence demand for travelling facilities will be more. Similarity during summer season Hill stations services are also increases. So the demand for services will be diferring from one situation to other.

(vii) Heterogeneity:
It means that every type of service is different from another.

(viii) Quality standardisation:
The services doesnot have a reliable and universal tool for evalvating its quality. It cannot be measured and quantified.

(ix) Simultaneity:
It means that the services are not transferred from the hands of the distributor to the customer but either the service provider goes to the customer or vice versa.

(x) Fluctuating Demand:
The service sector has to face fluctuating demands. There are peak periods when the demand for the services is maximum.

(xi) Ownership:
In the case of services, the users of the services are given an access to the services and cannot own the services. The user merely get opportunity to use the services and the ownership doesnot goes to him.

Question 3.
Define service management. Explain the marketing mix in service management.
Answer:
The application of accepted principles of management like planning, staffing, controlling, organizing etc. in service industry is known as service management. The following are the marketing mix components in service marketing.
(a) Product:
It refers to service offering. There are certain physical characteristics in services which consumers asses in purchasing them. They are –

  • Attractiveness of the offering in terms of physical features suitability of climate etc.
  • Facilities available and associated level of quality.
  • Accessibility

Service products are updating in response to new development and are trying to make their offer more tangible. For example tangible gifts like toiletries flight bags, drink in airiness services.

(b) Pricing:
Price discounts, mode of payment, price discrimination are similar to product marketing. Main factor is quality of service determines the price of that service. The sen/ices are perishable in nature and cannot be stored and it is difficult to determine price prices are determined on the basis of cost, completion and demand basis. Many pricing policies like discounts allowances, skimming and penetration, one price and flexible price are applicable to services. While determing the price government regulations are to be considered.

(c) Promotion:
Promotion mix is used to build the image and reputation to differentiate each from their competition to raise interest and knowledge to attract new customers and to increase consumers loyalty. The promotion divisions are taken on the basis of the nature of the service product, competitive scenario and the buyer behavior. Service provides need to follow these steps to design promotion policy.

  • Identification of segments.
  • An unique selling proposition.
  • Well defined target audience.
  • Use of media and media scheduling to reach audience.
  • Monitoring.

They use tools like advertising, personal selling sates promotion publicity, public relation.

(d) Place:
This marketing mix decides about how service reach consumer. Place concept refer to the accessibility to service provided. It involves physical location decision.

For example: A education centre, where it has to be located? How the customers avail the services? What is the level of demand. By considering there factors they need to establish on education centre.

(e) People:
Represents individual providing services to customers. Intangibility of services make consumer to make purchase division by the degree of trust and influenced by the individual who makes initial contact with the customer. Indeed the people component of a service marketing more is most commonly associated with personal selling. People constitute an important dimension in the management of services both as performances of services and as customers.

(f) Physical evidence:
Intangibility nature of service needs physical entities which describe service product and its distinguishing qualities. The customers form impressions about the service organizations on the basis of physical evidence like brochures, stationery equipment, furniture, building.

Example:
Tourism provide brochure about the place to be visited college prospectus gives profile of the college operations infrastructural facilities provided by hotel, hospitals are considered to be physical evidence.

(g) Process:
The system by which the Target audience receive delivery of the services reference as process. It consist of converting input into output. Bun in services there is no clear cut input or output. Rather it is the process of adding value or utility to system inputs to create output which are useful to be customers.

Question 4.
Describe the methods to enhance value by Improving quality and productivity of services.
Answer:
The methods used to enhance value by improving quality and productivity of service are –
(a) Value enhancement:
Value enhancement requires quality improvement programme to deliver and continuously enhance the benefits desired by customers. And also productivity improvements reduces associated cost productivity and quality form a powerful component of the Ps.

(b) Role of marketing:
Creating customers value is not possible only with marketing research activities. Perceived value of customers of trained in marketing research shows that values are highly personal and may differ from customer of customer. Therefore service marketers has to create services when offers value to target customers. They need to formulate service design. Providing supplementary system etc. There are key elements in value creation. Re-engineering of existing production and delivery system are needed to improve service value either by adding new benefits or by reducing associated cost as the result of greater productivity.

(c) Service pricing decisions and value improvement:
Pricing decisions are relate to value for the customer. Reducing prices will increase perceived value. A marketing inputs is important to advise operation expert whether the customers are willing to make to trade off like paying higher price to oftain more benefits or avoid unwanted time and effort. Advertising and other communication efforts are need to clarify service benefits and to give education for customer about oftaining the best value from the service.

(d) Marketing and service quality:
Every industry has to maintain best quality which puts them in competitive advantage. If quality is unsatisfactory customer may shift to other services. So it is established that value is simply quality price.

(e) Marketing and services productivity:
Increasing productivity helps the firm to reduce the cost, higher profit make the firm the price leader. Firm can also spend is advertising promotion, sales efforts, improved customer service etc. It can also secure long term future through investment in new service technologies. Increasing productivity has impart as customers. So negative aspects should be avoided and new procedures are carefully presented to customers. The industry must improve productivity by involving customers actively in service production and delivery process.

(f) Manufacturing – based components of quality:
Gravis developed 8 components of manufactures of based quality that could be useful for analysis arid strategic planning. They are performance, features, reliability anformance, durability serviceability, aesthetics and perceived quality.