K.S.

SCHOOL OF ENGINEERING AND MANAGEMENT, BANGALORE - 560109

DEPARTMENT OF MANAGEMENT STUDIES
ASSIGNMENT-SCHEME & SOLUTION-1
Academic Year 2019

Batch 2018-2020

Year/Semester/Secti 2019/SEMESTER/A Dept MBA

on

Course Code/Title 18MBAMM303/SERVICE MARKETING

Name of the
PRADEEP
Instructor

Blooms: K1: Remembering K2: Understanding K3: Applying

Assignment No: 3 Total marks:15

Date of Issue: Date of Submission:

K
Sl. No. Assignment Questions with Scheme & Solution CO Marks
Level
What is Key Factors Related to gap-4/ key reasons for service
1. K1 CO5 3
communication challenges.
1. Inadequate management of service promises
2. Overpromising in advertising ad personal selling
3. Insufficient customer education
Sol 4. Inadequate horizontal communication
5. Differences in policies and procedures across branches or
units
6. External communications to customers
Identify the Four Categories of Strategies to Match Service
2. K3 CO5 10
Promises with Delivery.
Four Categories of Strategies to Match Service Promises with
Delivery.
1. Manage Service promises
2. Reset customer expectations
Sol 3. Improve customer education
4. Manage Horizontal communications

Manage Service promises :The expectations of customers about

the service affect their evaluations of its quality, the higher the
expectation, the higher the delivered service must be to be
perceived as high quality. Therefore, promising reliability in
advertising is appropriate only when reliability is actually
delivered. Promising no surprises at a hotel is disastrous if what
actually happens in the delivery process includes many surprises. It
is essential for the marketing or sales department to understand the
actual levels of service delivery. (I.e. percentage of times the
service is provided correctly, percentage and number of problems
that arise) before making promises about reliability. To be
appropriate and effective, communications about services quality
must accurately show what the customer will actually receive in the
service encounter.

Reset customer expectations

Its , a more dramatic strategy that tells customers, that the firm can
no longer provide the level of service that it has provided in the
past and the customer expectation must be lowered due to
significant changes in the environment.

1. Offer Service Guarantee: Service guarantees are formal

promises made to customers about aspects of the service they
will receive. While many services carry implicit service
satisfaction guarantees, the true benefits from them an increase
in the likelihood of a customer choosing or remaining with the
company come only when the customer knows the guarantees
exist and trusts that the company will stand behind them.

2. Keep Customers informed about Provider availability:

Responsiveness and access are important aspects of service
quality. Being able to reach a person who can help immediately
or who can confirm a time by which help will arrive can be
comforting to customers, particularly when they are
experiencing service interruptions.
E.g.: Cable Operators

3. Keep customers informed about changes to schedules and

offerings:
More than anything, service quality means keeping promises.
We all know this is true and yet we also realize that situations
do arise when promises can’t be met. In airline service, the
weather sometimes prohibits takeoffs. In software service,
problems in the program are discovered after the introduction
 of the software. In professional services such as medical
services, a delayed test from lab makes the doctor’s diagnosis
late. The reasons for unmet promises may involve the
company, the customer, or the other parties. In case the
question arises, how soon do we let the customer to know
about the delay? Do we wait until we are sure there are no
further delays/problems/issues or do we inform the customer
quickly? This approach is particularly relevant to business to
business services that are customized, such as marketing
research, consulting and computer programming services. In
Industries that perform project work for other companies,
schedules often slip because of their unpredictability.
This happens because customer himself sometimes changes
the requirement of his project half way through. In these cases
service provider need to inform clients of departures from
schedule as soon as possible and as often as the changes are
made.

Managing Horizontal Communications

Coordination between marketing and operations can result in
communication that accurately reflects service delivery, thus
reducing the gap between customer expectations and actual service
delivery. Integration of effort between marketing and human
resources can improve the ability of each employee to become a
better marketer. Coordination between finance and marketing can
create prices that accurately reflect the customer’s evaluation of a
service. In service firms, the functions need to be integrated to
produce consistent message and to narrow the service quality.

Improving Customer Education:

Customer must perform their roles properly for many services to be
effective. If customer forgets to perform this role, or performs it
improperly, disappointment may result for this reason
communication to customers can take the form of customer
education.
Customers of management consulting services, purchase intangible
benefits, such as finding out marketing effectiveness, schemes for
motivating work forces or downsizing the organization. The very
fact that companies purchase these services usually indicates that
they do not know how to perform these functions. Many customers
will also not know what to look for. A similar approach is
sometimes necessary and effective with individual service
 customers.

3. Identify the Role of Nonmonetary Costs. K3 CO5 7

Economists have long recognized that monetary price is not the
only sacrifice consumers make to obtain products and services.
Demand, therefore, is not just a function of monetary price but is
influenced by other costs as well. Nonmonetary costs represent
other sources of sacrifice perceived by consumers when buying and
using a service. Time costs, search costs, and psychological costs
often enter into the evaluation of whether to buy or rebuy a service
and may at times be more important concerns than monetary price.
Consumers will trade money for these other costs.
Various Non Monetary cost
1. Time cost
2. Search cost
3. Convenience cost
4. Psychological costs

Time costs
Most services require direct participation of the consumer and thus
consumer real time: time waiting as well as time when the
customer interacts with the service provider. Consider the
Sol investment you make to exercise, see a physician, or get through
the crowds to watch a concert or baseball game. Not only are you
paying money to receive these services, but you are also expending
time. Time becomes a sacrifice made to receive service in multiple
ways. First, because service providers cannot completely control
the number of customers or the length of time it will take for each
customer to be served, customers are likely to expend time waiting
to receive the service

Search costs: Search costs-the effort invested to identify and

select among services you desire- are often higher for services than
for physical goods. Prices for services rarely displayed on shelves
of service establishments for customers to examine as they shop, so
these prices are often known only when a customer has decided to
experience the service. As an example, how well did you estimate
the costs of an hour of housecleaning in the price quiz? As a
student, it is unlikely that you regularly purchase housecleaning,
and you probably have not seen the price of an hour of cleaning
displayed in any retail store. Another factor that increases search
costs is that each service establishment typically offers only one
 ―brand‖ of a service (with the exception of brokers in insurance or
financial services), so a customer must initiate services (e.g. travel
& hotels) are now facilitated through the internet, reducing search
costs.
Convenience Costs
There are also convenience (or, perhaps more accurately,
inconvenience) costs of services. If customers have to travel to
receive a service, they incur a cost, and the cost becomes greater
when travel is difficult, as it is for elderly person. Further, if a
service provider‘s hours do not coincide with customers‘available
time, they must arrange their schedules to correspond to the
company‘s schedule. And if consumers have to expend effort and
time to prepare to receive a service (such as removing all food from
kitchen cabinets in preparation for an exterminator‘s spraying),
they make additional sacrifice.

Psychological costs
Often most painful nonmonetary costs are the psychological costs
incurred in receiving some services. Fear of not understanding
(insurance), fear of rejection (bank loans), and fear of outcomes
(medical treatment or surgery), for example, all constitute
psychological costs that customers experience as sacrifices when
purchasing and using services. New services, even those that create
positive change, bring about psychological costs that consumers
factor into the purchase of services. When banks first introduced
ATMs, customer resistance was significant, particularly to the idea
of putting money into a machine: customers felt uncomfortable
with the idea of letting go of their checks and bank cards. Direct
deposit, a clear improvement in banking service for the elderly with
limited mobility, was viewed with suspicion until the level of
comfort improved. And most customers rejected voice mail when it
was first developed.
4. Explain the roles of the servicescape. K2 CO6 7
Definition of Servicescape: The actual physical environment
where the service is performed, delivered, and consumed.
or
Servicescape as "the environment in which the service is assembled
Sol
and in which the seller and customer interact, combined with
tangible commodities that facilitate performance or communication
of the service
Roles of the servicescape.
1.Package
Similar to a tangible product‘s package, the servicescape and other
elements of physical evidence essentially ―wrap‖ the service and
convey to consumers an external image of what is ―inside‖.
Product packages are designed to portray a particular image as well
as to evoke a particular sensory or emotional reaction. The physical
surroundings offer an organization the opportunity to convey an
image in a way not unlike the way an individual chooses to ―dress
for success.

Facilitator
The servicescape can also serve as a facilitator in aiding the
performances of persons in the environment. How the setting is
designed can enhance or inhibit the efficient flow of activities in
the service setting, making it easier or harder for customers and
employees to accomplish their goals. A well-designed, functional
facility can make the service a pleasure to experience from the
customer‘s point of view and a pleasure to perform from the
employee‘s. On the other hand, poor and inefficient design may
frustrate both customers and employees. Ex: an international Air
traveler who finds himself in a poorly designed airport with few
signs, poor ventilation, and few places to sit or eat will find the
experience quite dissatisfying, and employees who work there will
probably be unmotivated as well.

Socialize
The design of the servicescape aids in the socialization of both
employees and customers in the sense that it helps convey expected
roles, behaviors, and relationships. For example, a new employee
in a professional services firm would come to understand her
location relative to others in the organization.

Differentiator
The design of the physical facility can differentiate a firm from its
competitors and signal the market segment that the service is
intended for. Given its power as a differentiator, changes in the
physical environment can be used to reposition a firm and/or to
attract new market segments. In shopping malls the signage, colors
used in decors and displays, and type of music wafting from a store
signal the intended market segment
 In other Words
Package: convey an external image of what is inside.
i.e. its outside appearance of organization thus critical in forming
initial impression & creating expectation

Facilitator: aids the performance of customers and employees; can

facilitate or inhibit efficient flow of activities in service setting,
making it easier or harder for customer or employees to accomplish
their goals.Ex: ENTRANCE and EXIT signs.

Socialize: It helps convey expected roles, behaviors, and

relationships of customers and employees; where you can/cannot
be; how should you act?
Differentiator: differentiate firm from competitors and
communicate intended market segment
6
Explain the various types of Servicescapes with neat examples. K2 CO6 7

Various types of Servicescapes with neat examples

1. Self-service environment:
2. Interpersonal services:
3. Remote service:
Self-service environment: customer performs most of the
activities and few if any employees are involved.
Movie theatre, ATM, Fast food.
Sol
Interpersonal services: both customer and employee must be
present in the servicescape
Restaurant, hotels ,educational institute

Remote service: Employee only performs with little or no

customer involvement with the servicescape.
Mail order ,telecommunication utilities
Explain the framework for understanding servicescape effects in
7 K2 CO6 7
Behaviors in the servicescape
1. Individual behavior
2. Internal responses to the servicescape
Sol
3. Environmental Dimensions of the servicescape
Individual behavior
Environmental psychologists suggest that individual react to places
with two general, and opposite, forms of behavior: approach &
avoidance. Approach behaviors include all positive behaviors that
might be directed at a particular place, such as desire to stay,
explore, work and affiliate. Avoidance behaviors reflect the
opposite-a desire not to stay, to explore, to work, or to affiliate.

Social interactions
In addition to its effects on their individual behaviors, the
servicescape influences the nature and quality of customer and
employee interactions, most directly in interpersonal services. It
has been stated that ―all social interaction is affected by the
physical container in which it occurs‖. The ―physical container‖
can affect the nature of social interaction in terms of the duration of
interaction and the actual progression of events.

Internal responses to the servicescape

1. Environment and Cognition
2. Environment and Emotion
3. Environment and Physiology
4. Variations in individual responses
Environment and Cognition
The perceived servicescape can have an effect on people‘s beliefs
about a place and their beliefs about the people and products found
in that place. In a sense, the servicescape can be viewed as a form
of nonverbal communication, imparting meaning through what is
called ―object language. For example, particular environmental
cues such as the type of office furniture and décor and the apparel
worn by the lawyer may influence a potential client‘s beliefs about
whether the lawyer is successful, expensive, and trustworthy.

Environment and Emotion

In addition to influencing belief, the perceived scapes can directly
elicit emotional responses that, in turn, influencing behaviors. Just
being in a particular place can make a person feel happy,
lighthearted, and relaxed, whereas being in another place may
make that person feels sad, depressed and gloomy. The colors,
décor, music and other elements of the atmosphere can have an
unexplainable and sometimes very sub consciousness effect on the
moods of people in the place.

Environment and Physiology

The perceived servicescape may also affect people in purely
physiological ways. Noise that is too loud may cause physical
discomfort, the temperature of a room may cause people to shiver
or perspire, the air quality may make it difficult to breathe, and the
glare of lighting may decrease ability to see and may cause
physical pain. All these physical responses may, in turn, directly
influence whether people stay in and enjoy a particular
environment. It is well known that the comfort of seating in a
restaurant influences how long people stay. The hard seats in fast
food restaurant cause most people to leave within a predictable
period of time.

Variations in individual responses

In general, people respond to the environment in the ways just
described-cognitively, emotionally, physiologically-and their
responses influence how they behave in the environment. However,
the response will not be the same for every individual, every time.
Personality differences as well as temporary conditions such as
moods or the purpose for being there can cause variations in how
people respond to the servicescape.
Environmental Dimensions of the servicescape
 1. Ambient Conditions
2. Spatial layout & functionality
3. Signs, Symbols, and Artifacts

Ambient Conditions
Ambient conditions include background characteristics of the
environment such as temperature, lighting, noise, music, scent, and
color. As a general rule, ambient conditions affect the five senses.
Sometimes such dimensions may be totally imperceptible (gases,
chemicals, infrasound) yet have profound effects, particularly on
employees who spend long hours in the environment.

Spatial layout & functionality

Because service environments generally exist to fulfill specific
purposes or needs of customers, spatial layout and functionality of
the physical surroundings are particularly important. Spatial layout
refers to the ways in which machinery, equipment, and furnishings
are arranged; the size and shape of those items; and the spatial
relationships among them. Functionality refers to the ability of the
same items to facilitate the accomplishment of customer and
employee goals.

Signs, Symbols, and Artifacts

Many items in the physical environment serve as explicit signals
that communicate about the place to its users. Signs displayed on
the exterior and interior of a structure are examples of explicit
communicators. They can be used as labels (name of company,
name of department, and so on), for directional purposes
(entrances, exits), and to communicate rules of behavior (no
smoking, children must be accompanied by an adult). Adequate
signs have been shown to reduce perceived crowding and stress.
Other environmental symbols and artificial may communicate less
directly than signs, giving implicit cues to users about the meaning
of the place and norms and expectations for behavior in the place.
Quality construction materials, artwork, certificates and
photographs, floor coverings, and personal objects displayed in the
environment can all communicate symbolic meaning and create an
overall aesthetic impression.

8 Explain the various pricing strategies. K3 CO5 10

Sol Odd Pricing

This is the practice of pricing services just below the exact Rupee
amount to make buyers perceive that they are getting a lower price
Rs.199.90.

Penetration Pricing:
Penetration pricing is a strategy in which new services are
introduced at low prices to stimulate trial and widespread use. The
strategy is appropriate when (1) sales volume of the service is very
sensitive to price, even in early stages of introduction (2) a service
faces threats of strong potential competition very soon after
introduction; and (3) there is no class of buying willing to pay a
higher price to obtain the service. (2) pricing strategies when the
customer means .

Skimming Pricing
This is a strategy in which new services are introduced at high
prices with large promotional expenditures. In this situation many
customers are more concerned about obtaining the service than
about the cost of the service allowing service providers to skim the
customers most willing to pay the highest prices. The task of the
marketer is to understand what quality means to the customers (or
segments of customers and then to match quality level with price
level.

“Value Pricing”
This widely used term has come to mean ―giving more for less in
current usage it involves assembling a bundle of services that are
desirable to a wide group of customers and then pricing them lower
than they would cost alone.

Price Bundling
Some services are consumed more effectively in conjunction with
other services; other services accompany the products they support
(e.g. extended service warranties, training, and expedited delivery).
When customers find value in a package of services that are
interrelated, price bundling is an appropriate strategy. Bundling,
this means pricing and selling services as a group rather than
individually, has benefits to both customers and service companies.
Customers find that bundling simplifies their purchase and
payment, and companies find that the approach stimulates demand
for the firm’s service line, there by achieving cost economics for
 the operations as a whole while increasing net contributions.
Bundling also allows the customers to pay less than she would in
purchasing each of the services individually, which contributes to
perceptions of value.
Discounting pricing
Service providers offer discounts or price cuts to communicate to
price-sensitive buyers that they are receiving value. Colleges are
now providing many forms of discounting to attract students.
Discount pricing has become a creative art at other educational
institutions.
List the key reasons for service communication challenges? (10
9. K1 CO5 3
marks)
1. Inadequate management of service promises :
2. Inadequate management of customer Expectation:
Sol 3. Inadequate Customer Education:
4. Inadequate Internal Marketing Communication

10 What is yield management? List the benefits and the risks of it. K1 CO5 7
Yield Management: The goal of the yield management is to
produce the best financial return from a limited available capacity.
Specifically, yield management has been defined as ‗The process
of allocating the right type of capacity to the right kind of
customer at the right price so as to maximize revenue or yield.
Benefits:
By adopting yield management principle, revenue or yield can be
maximized since this is the ultimate goal of any organization. Yield
management is nothing but the ratio of actual revenue to potential
revenue for a particular measurement period.

Risks or challenges in using yield management:

Sol
a. Loss of Competitive focus: Service quality might suffer.
b. Customer alienation: If customers learn that they are paid hire
price for service than someone else, they may perceive that the
organization is unfair, particularly if they do not understand the
reasons. Customer education is therefore essential for effective
implementation of yield management.
c. Employee morale problems: While some employees may agree
to implement as per guideline given by the management, others
might resent the rules and restrictions placed on their decision
making ability.
d. Incentive and reward system: Employees may be unhappy
with yield management system, if it does not match with incentive
 structure. For eg. Many managers are rewarded on the basis of
capacity utilization or on the average rate charged, whereas yield
management balances the two factors.
e. Lack of employee training: Employee need to understand the
purpose, how it works, how he should make decisions and how the
system will affect their jobs.
f. Inappropriate organization: To be most effective with yield
management, an organization must have a centralized reservation.
While airlines and large hotel chains have this other small
organizations do not have this. They have decentralized reservation
system and thus find it difficult to operate yield management
system effectively

Course in charge Head - Dept