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2019 - 20

I YEAR BBA - II SEMESTER

LECTURE NOTES

MANAGEMENT OF SERVICES

By

Ms. AYESHA AMREEN

Topic

Unit 1 : Management of Services


Management of Services Lecture Notes

UNIT 1: Management of Services

Meaning and Definition :


Service is an intangible product that brings utility or value to the customer. Service Management is
thus a managerial discipline focused on a customer and service. Services must be managed throughout their
lifecycle. ITIL (Information Technology Infrastructure Library) - IT services.

According to Peter F Drucker, “Service Management is a customer-focused approach to delivering


information technology. Service Management focuses on providing value to the customer and also
on the customer relationship. A group of people that manages services to fulfill the needs of users
and customers”.

Concept of MOS : Management of Services: Concepts, Design, and Delivery explores the use of operations
tools and perspectives in the service sector, including both for-profit and not-for-profit organizations.

1. The service concept defines the how and the what of service design, and helps mediate between
customer needs and an organization’s strategic intent.

2. We define the  service concept  and describe how it can be used to enhance a variety of
service design processes.

3. Service marketing is defined by the American Marketing Association (AMA) as “the activities,


benefits or satisfactions which are offered for sale are provided in connection with the sale of
good.

4. The service concept is the perception and expectations of the service itself in the minds of the
customers, employers, shareholders, and lenders.

5. The service system is the equipment, layout, and procedures used to provide the service and


maintain quality and delivery standards.

6. Service marketing is marketing based on relationship and value. It may be used


to market a service or a product. Marketing services is different from marketing goods because
of the unique characteristics of services namely, intangibility, heterogeneity, perishability and
inseparability.

Vidhyaashram 2 I Year BBA - II Sem


Management of Services Lecture Notes

Characteristics of MOS :
The most important  characteristics  of  services  are:
1. Perishability :
Service is highly perishable and time element has great significance in service marketing. Service
if not used in time is lost forever. Service cannot store.

2. Fluctuating Demand :
Service demand has high degree of fluctuations. The changes in demand can be seasonal or
by weeks, days or even hours. Most of the services have peak demand in peak hours, normal
demand and low demand on off-period time.

3. Intangibility :
Unlike product, service cannot be touched or sensed, tested or felt before they are availed. A
service is an abstract phenomenon.

4. Inseparability :
Personal service cannot be separated from the individual and some personalised services are
created and consumed simultaneously. For example hair cut is not possible without the presence
of an individual. A doctor can only treat when his patient is present.

5. Heterogeneity :
The features of service by a provider cannot be uniform or standardised. A Doctor can charge
much higher fee to a rich client and take much low from a poor patient.

6. Pricing of Services :
Pricing decision about services are influenced by perishability, fluctuation in demand and
inseparability. Quality of a service cannot be carefully standardised. Pricing of services is
dependent on demand and competition where variable pricing may be used.

7. Service quality is not statistically measurable :


It is defined in form of reliability, responsiveness, empathy and assurance all of which are in
control of employee’s direction interacting with customers. For service, customer’s satisfaction and
delight are very important. Employees directly interacting with customers are to be very special
and important. People include internal marketing, external marketing and interactive marketing.

Vidhyaashram 3 I Year BBA - II Sem


Management of Services Lecture Notes

I. Classification of Services :
Classification Based On Ultimate User.

Classification Based On Levels Of Tangibility.

Classification Based On Service Operartion.

Classification Based On Specialization.

Classification Based On Profit Orientation.

Classification Based On External – Internal Services.

Classification Based On Customer Employee Presence.

II. Classification Based On Ultimate User :


Consumer : Services which are directly provided to the consumer.

Business to Business : Services are provided to business operations. E.g. Ad agency

Industrial : Services are provided to the industries’e .g. Repair services, Maintenance

 
III. Classification Based On Levels Of Tangibility :
 Highly tangible – Car rentals
 Services linked to tangible goods E.g. Domestic appliances, radio, T.V.
 Highly intangible – Consultancy, Legal service
 Major Service link with minor tangibles E.g. Air lines

IV. Classification Based On Service Operartion :


 a. People Based Services :
High contact with people –Bank, Restaurant, Education.Equipment based low contact –
ATM, Cinema.

V. Classification Based On Specialization :


Professional Services E.g. Medical Services, Legal Services.

Non Professional Services E.g. Baby Sittings.

VI. Classification Based on Profit Orientation :


Banks, Hotel and catering services.

Based on Non Profit –Church, Temples.

Vidhyaashram 4 I Year BBA - II Sem


Management of Services Lecture Notes

VII. Classification Based On External – Internal Services :


External Services E.g. A/c repairs, computer installation.

Internal Services E.g. Recruitment, internal office clean liness.

 
VIII. Classification Based On Customer Employee Presence :
Self service – Only customer presence is required E.g. ATM.

Inter Personal service – Presence of both customer and employee. E.g. Educational institutions.

Remote services – Presence of only Employees E.g. Insurance Companies.

Marketing mix in service industry :


The marketing concept dictates that marketing decisions should be based upon customer needs and
wants. Buyers purchase goods and services to satisfy their needs and wants. Thus when a buyer engages in
a market transaction he perceives a bundle of benefits and satisfactions to be derived from that transaction.
However he does not usually divide the market offering into its component parts.

From the sellers’ view point however the market offering can be divided into its component parts.
The marketing mix is the convenient means of organizing all the variables controlled by the marketer that
influence transactions in the marketplace. It is a ‘checklist approach’ where marketer’s attempt to list and
organize the variables under their control which may be important in influencing transactions in the market
place.
There are seven elements used in marketing mix for service are as follows :
1. Product
2. Price
3. Place
4. Promotion
5. People
6. Physical evidence
7. Process.

1. Product :
The service product requires consideration of the range of services provided, the quality of
services provided and the level of services provided. Attention will also need to be given to
matters like the use of branding, warranties and after-sale service. The service product mix of
such elements can vary considerably and may be seen in comparisons of service range between
a small local building society and one of the largest in the country; or between a small hotel
offering a limited menu range and a four star hotel offering a wide range of meals.

Vidhyaashram 5 I Year BBA - II Sem


Management of Services Lecture Notes

2. Price :
Price considerations include levels of prices, discounts allowances and commissions, terms of
payment and credit. Price may also pay a part in differentiating one service from another and
therefore the customers perceptions of value obtained from a service and the interaction of price
and quality are important considerations in many service price sub mixes.

3. Place :
The location of the service providers and their accessibility are important factors in services
marketing. Accessibility relates not just to physical accessibility but to other means of communication
and contact. Thus the types of distribution channels used (e.g. travel agents) and their coverage
is linked to the crucial issue of service accessibility.

4. Promotion :
Promotion includes the various methods of communicating with markets whether through advertising,
personal selling activities, sales promotion activities and other direct forms of publicity, and
indirect forms of communication like public relations.

Expanded mix for services :


Because services are usually produced and consumed simultaneously, customers are often present
in the firm’s factory, interact directly with the firm’s personnel, and are actually part of the
service production process. Also, because services are intangible customers will often be looking
for any tangible cue to help them understand the nature of the service experience.

These facts have led services marketers to conclude that they can use additional variables to
communicate with and satisfy their customers. For example, in the hotel industry the design and
decor of the hotel as well as the appearance and attitudes of its employees will influence
customer perceptions and experience.

Acknowledgment of the importance of these additional communication variables has led services
marketers to adopt the concept of an expanded marketing mix for services shown in the three
remaining columns in Table 2.1. In addition to the traditional four Ps, the services marketing mix
includes people, physical evidence, and process.

5. People :
All human actors who play a part in service delivery and thus influence the buyer’s perceptions:
namely, the firm’s personnel, the customer, and other customers in the service environment. All of
the human actors participating in the delivery of a service provide cues to the customer regarding
the nature of the service itself. How these people are dressed, their personal appearance their
attitudes and behaviors all influence the costumers perceptions of the service.

Vidhyaashram 6 I Year BBA - II Sem


Management of Services Lecture Notes

The service provider or contact person can be very important. In fact, for some services, such
as consulting, counselling, teaching, and other professional relationship – based services, the
provider is the services. In other cases the contact person may play what appears to be a
relatively small part in service delivery, for instance, a telephone installer, an airline baggage
handler, or an equipment delivery dispatcher. Yet research suggests that even these providers
may be the focal point of service encounters that can prove critical for the organization.

6. Physical Evidence :
The environment in which the service is delivered and where the firm and customer interact,
and any tangible components that facilitate performance or communication of the service. The
physical evidence of service includes all of the tangible representations of the services – such
as brochures, letterhead, business cards, report formats, signage, and equipment. In some cases
it includes the physical facility where the service is offered, for example, the retail bank branch
facility.

In other cases, such as telecommunication services, the physical facility maybe irrelevant..In this
case other tangibles such as billing statements and appearance of the repair truck may be
important indicators of quality. Especially when consumers have little on which to judge the actual
quality of service they will rely on these cues just as they rely on the cues provided by the people
and the service process. Physical evidence cues provide excellent opportunities for the firm to
send consistent and strong messages regarding the organization’s purpose, the intended market
segments, and the nature of the service.

7. Process :
The actual procedures, mechanism and flow of activities by which, the service is delivered the
service delivery and operating systems. The actual delivery steps the customer experiences, or
the operational flow of the service, will also provide customers with evidence on which to judge
the service.

Growth of Service Sector :


The Service Sector, also called tertiary sector, is the third of the three traditional economic sectors.
• Activities in the service sector include retail, banks, hotels, real estate, education, health, social
work, computer services, recreation, media, communications, electricity, gas and water supply.
• Demand for services is on the rise with a stable middle class and growth in upper-income families.
A sector of the economy becoming less concerned about material needs.
• In the consumer sector, this leads to increasing demand for services such as health, education and
entertainment.
• The development in agriculture and industrial sector has increased the need of services such as
transportation, storage and trade.  

Vidhyaashram 7 I Year BBA - II Sem


Management of Services Lecture Notes

• Growing service sector is a sign of increasing standard of living. It enables the consumers to


enjoy more with leisure based services such as restaurants, tourism and sports etc.
• Service economy is growing. As a national economy develops, the relative share of employment
between agriculture, industry (including manufacturing and mining).
• The service economy in developing countries like India is mostly concentrated in financial services,
health, and education.

Service Process :
1. Service of process is the procedure by which a party to a lawsuit gives an appropriate notice
of initial legal action to another party (such as a defendant), court, or administrative body in
an effort to exercise jurisdiction over that person so as to enable that person to respond to the
proceeding before the court.

2. We can define the service process as the way in which a company works so that a customer
receives service.

3. To standardize this in line with the company’s identity and aims, managers will work on: Determining
procedures which contribute to the process.

4. Allocating tasks and responsibilities.

5. The service management is the craft of implementing, managing, and delivering IT services to


meet the needs of an organization.

6. It ensures that the appropriate mix of people, processes, and technology are in place to provide
value. In other words: ITSM is the art of making a business run.

7. The service process. refers to how a service is provided or delivered to a customer. 

8. Processes involve the procedures, tasks, schedules, mechanisms, activities and routines by which
a service is delivered to the customer. Factors in designing service process.

9. Some of the most common types of service processing is the one involve people.

10. Examples : Health care, lodging, Passenger transportation, Fitness centres, Haircutting salon are
all examples of service processing involving directly the end customer.

Building Customer Loyalty


There are 8 Ways to Create Real Customer Loyalty
1. Set up ways to communicate with your customers.
2. Provide extra perks for your most loyal customers.

Vidhyaashram 8 I Year BBA - II Sem


Management of Services Lecture Notes

3. Consider different payment plans.


4. Provide great customer service.
5. Don’t rely too much on technology.
6. Offer a head start.
7. Don’t forget to smile.
8. Give customers a reason to be loyal.

Service Sector Mangement :


Services include all economic activities whose output is not a physical product or construction, is
generally consumed at the time it is produced and provides added value in forms (such as convenience, time
liness, comfort or health.

Components of Service Sector: Economic Service and Social Service


1. Transport, Storage and Communication : There are various types of transport, such as rail
transport, road transport, water transport, air transport. Indian railway system is first in Asia
and fourth in the world after USA, Russia and Canada. Storage service is provided by both
government and private. Central Warehousing Corporation (CWC), the Food Corporation of
India (FCI) etc. are the government units which provide storage facilities.

2. Trade, Hotels and Tourisms : Trade service comprises both domestic and foreign trades. Domestic
trade means trade between the different states and cities within the country. On the other hand,
foreign trade means trade between different countries. It includes both exports and imports.

3. Banking and Insurance Services : Development of banking service is the major indicator of
economic growth. In India, banking network is spread all over the country. For the flourishment of
other service sectors, banking sector plays a very vital role.

4. Education : General education facilities have increases in good number. There are sharp
increase in the number of primary, middle, high and higher secondary schools. A decent number
of students have enrolled in the schools. 

5. Health : It is an important service sector of India. The health service includes number of hospitals,
dispensaries, community health services, primary health centres, number of doctors, nurses, beds
in hospitals along with the number of doctors per 1000 population. Both private and public
sectors are working together to improve the health services in urban and rural parts of India.

6. Administration : In India administrative service has also increased at a rapid pace.

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Vidhyaashram 9 I Year BBA - II Sem

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