THE SERVICE INDUSTRY TRIANGLE - September 28th, 2006 THE SERVICE INDUSTRY TRIANGLE

COMPANY

INTERNAL EXTERNAL MARKETING MARKETING Enabling Promises Making Promises

PROVIDERS CUSTOMERS

INTERACTIVE MARKETING Keeping Promises Services Marketing can be explained with the help of the Service Industry Triangle. There are three entities in the whole transaction process. They are explained as below: CUSTOMERS Customers refer to the persons who have certain needs, wants and desires. For the Insurance sector, the customers refer to those persons who feel the need to secure their life and assets from any unanticipated calamities. The customers are further classified as Individual and Institutional. COMPANY The company is the dreamer and the offerer. The company dreams up an idea of service offering which will satisfy the customers expectation. In the case of the Insurance Industry, the company refers to a player in the industry that dreams up an idea of an Insurance Policy. These are service offerings are designed to satisfy the consumers need for safety and assurance from a wide range of unforeseen calamities. The company first designs the Insurance Policy and then communicates to the customers about the benefits and the features of the new policy. PROVIDERS These are finally the persons who interact with the customer. They are the ones who carry out the final transaction. In the Insurance Industry, the providers are the agents that interact with the prospective customers and communicate to them the attributes and features of a new policy. The agents reach out to the wide spread of customers and their job is to convince them to buy the policy. Hence, the agents are in the last chain in the distribution of the Insurance service. MARKETING THE SERVICE The company does External Marketing directed at the customers talking about the benefits, utility, of the Insurance product and services. It tries to understand the customer needs and tries to satisfy these needs

by offering the service product (Insurance Policy). The company Makes Promises about what its service product will achieve. The external marketing is carried out through promotions using relevant mass media. The company also does Internal Marketing directed at the providers. Internal marketing includes internal customer education. This is done in the Insurance Industry by training the providers (Insurance Agents). It is carried out to facilitate and enable the agents to provide the services required. The company Enables Promises by enabling the provider. The training imparted is carried along the following lines. As per Section 42 of the Insurance Act, 1938, one of the conditions for issuing of license to an Agent is practical training for a period not exceeding 12 months. However, the Authority has made Agents Regulations and defined approved institution and also prescribed the qualification required for a candidate to become an Insurance Agent. At present, any candidate desirous to become an Insurance Agent shall be required to have, from an approved institution, a practical training of minimum of 100 hours for the first time and 25 hours before renewal of license. 1. The Authority has constituted some Committees. Each committee has officers of the Authority, who will be authorized to inspect the training institutions. 2. The Committee shall inform the applicant (desirous of being called an approved institution) before visiting the place of institution to inspect the requirements etc., and those, which are mentioned in the application, submitted to the Authority. As such the applicants are requested to cooperate with the officers of the Authority when they make such visits for this purpose. 3. The Committee (officers) also may make surprise visits afterwards to inspect the quality of practical training that is being imparted to the trainees. 4. After inspection of the applicant, the Committee shall report to the Authority for the purpose of an approval to the training institution so that such institution can be called an approved institution in terms of the Agents Regulations, 2000. 5. The Authority shall grant an approval on the basis of the report given by the Committee and as such the decision will be communicated to the applicant accordingly. 6. An approved institution shall use the syllabus recommended by the Authority for the purpose of imparting training to the trainees. The institution may also use the test books/ material prepared by Insurance Institute of India in this regard. 7. It is also clarified that the training may be imparted in Hindi, English, or regional language prevalent in the State in which the institution is located. 8. Each approved institution shall be required to furnish certain information to the Authority in the prescribed format, which shall be made available to the approved institution, from time to time. The providers do the all-important Interactive Marketing directed at the customers and redirected at itself. The agents carry out the policy to the prospective customers; explain to them the features and attributes of the policy; and they also convince the customers to purchase the Insurance policy. It is through these interactions that the transaction takes place. Thus the providers are the ones who Keep Promises.

http://www.slideshare.net/ch_paki/services-marketing

Service marketing involves 3 types of marketing: 1. EXTERNAL MARKETING 2. INTERNAL MARKETING 3. INTERACTIVE MARKETING

1. External Marketing : "Setting the Promise"

 Marketing to END-USERS. Involves pricing strategy, promotional activities, and all communication with customers. Performed to capture the attention of the market, and arouse interest in the service. 2. Internal Marketing : "Enabling the Promise" Marketing to EMPLOYEES. Involves training, motivational, and teamwork programs, and all communication with employees. Performed to enable employees to perform the service effectively, and keep up the promise made to the customer. 3. Interactive Marketing : (Moment of Truth, Service Encounter) This refers to the decisive moment of interaction between the front-office employees and customers, i.e. delivery of service. This step is of utmost importance, because if the employee falters at this level, all prior efforts made towards establishing a relationship with the customer, would be wasted. Read more: http://wiki.answers.com/Q/What_is_service_triangle_in_service_marketing#ixzz1XNYH8M8a

The difference is quite real because of the characteristics of services: Intangibility -- it's not physical, cannot be "possessed," can't be seen, felt, etc. the ability to reduce consumer uncertainty through tangible signals is diminished. Consequently service marketers must determine how to effectively communicate the service process and final outcome the consumer will receive -- and the quality. (And By the way, quality is ultimately determined by the consumer, not you. They determine what quality they value, and you won't know unless you ask them. It's not about "zero defects" but client expectations.) Inseparability -- that is, the production of the services can't be separated from its consumption. For example, the production and consumption of a medical exam happen together. This means that the consumer often expects the service to be provided in a specific way or by a specific individual -- and that means a bigger burden on the image, knowledge, attititude, appearance, etc. of the person delivering the service. Perishability -- you can't store services for future use. When a client misses an appointment with his attorney, that time can never be recaptured. Empty hotel rooms, unsold theater tickets -- the value has vanished. It's supply and demand. Another issue has to do with performance -- which is what service marketers are really selling. When the demand fluctuates, it may be difficult to maintain the same consistency. For example, a CPA at tax time has difficulty giving the same level of attention/performance as at other times of the year. Variability -- sometimes called "heterogeneity," services quality and consistency is subject to great variability because they are delivered by people and human behavior is difficult to control. Because services are people based, quality can vary of time of day (people get tired), experience, attitude, knowledge, style, etc. Maintaining client trust during lapses (which will happen) is critical. And this is why it can be very dangerous to a client relationship to have one person make the sale and establish the relationship, and another person deliver the service. The original personal contact reduced risk in the mind of the consumer and they may become agitated when someone else must deliver the service. There are two other factors that separate services from hard goods. First, the satisfaction criterion is different. With a hard good, the consumer can access the product (a car, washing machine, etc.) and see/test it. A consumer will never know how good the service is until AFTER he gets it! This can be unsettling for the consumer.

Second, with a service, the consumer is, essentially, "in the factory," watching production all along the way. It is VERY important for a service provider or consultant to carefully manage the "production process" as the client is able to observe it and make judgments about quality and value. So you see, there is a BIG difference just in characteristics between the products and services. For further information, I suggest you read Philip Kotler's book Marketing Professional Services. It's excellent. In it he describes ten distinctive problems faced by marketers of services: 1. Third-party accountability 2. Client uncertainty 3. Demonstrating experience 4. Limited differentiability 5. Maintaining quality control 6. Making the "do-ers" the sellers 7. Allocating time to marketing 8. Pressure to react rather than be proactive 9. Conflicting views about advertising 10. A limited marketing knowledge base While Kotler's focus is on professional services (lawyers, architects, doctors, CPAs), it is invaluable for technology and other service sectors as well. Good luck! Read more: http://www.marketingprofs.com/ea/qst_question.asp?qstID=8976#ixzz1XNZ7hAua

Lovely answer from ccoldren one of the best definitions of a service Ive read. Perhaps I could venture a reason why services are referred to as a Product as in The product we are promoting is an emergency valve replacement and maintenance service It used to be used almost entirely, but sadly not exclusively, in internal sales and marketing documents and discussions. Sadly because the product may be comprehensible to those in the know within the company or its agencies, but it rarely conveys much meaning in the world of the customer. This is down to a need to hang marketing projects onto something tangible within the context of a corporation. As a service needs to be accompanied by endless descriptions, justifications and a raison detre for its existence within a company, it becomes a lot easier to package it as a product. A service you are going to sell does not yet exist. It consists of a series of rules, protocols, procedures and actions which once put in place, will deliver a benefit to a customer. As a putative service consumes resources (leaflets, marketing materials, advertising budgets, management time, meeting space and lots of coffee and biscuits) without producing any revenue (Or even the immediate physical presence which hints at future revenue such as stock-in hand you cant store service on a shelf as inventory) it became more acceptable to the financial arm of most corporations to let Marketing define their service offering as a product. As such it could be explained more easily to the company stakeholders. It was easier to package for playing passthe-parcel through endless committees and meetings. In short, calling it a product saved a lot of people a lot of time, having to justify and re-hash as lot of arguments. The product was really the project to launce the service, but inevitably it became inexorably mixed up with the service itself. The product became something which was easier to

hang a sales plan and a projected P&L account on to. Hopefully, once the Product is launched on an unsuspecting public, it should lose all the trappings of being a product but it is noticeable in 2005 that many pure services are starting to be described in advertising as One our products or spoken of as in, Our products are backed by 200 years of auditing experience In short, I think that the service as a product will not go away as it allows marketers to package many intangible benefits into something that they can at least allude to as being concrete. Here endeth the lesson! Steve Alker Unimax Solutions Read more: http://www.marketingprofs.com/ea/qst_question.asp?qstID=8976#ixzz1XNZFdsmA

There are differences between service and a product from marketing point of view. I would like to stay that when it comes to issues like brand identity (brand positioning and other associations) i.e. the brand management aspect, one should not hink of service brands and product brands as any different. Starbucks coffee in retail shops and Starbucks coffee in the cafe are all about the same brand. The principles of brand management (refer David Aaker, Kapferer, Keller) all remain the same whether you are marketing a service or marketing a product. The organisation of marketing will be different, the marketing mix will be different but the way you think of the brand and what it can mean to the consumer will remain the same. Read more: http://www.marketingprofs.com/ea/qst_question.asp?qstID=8976#ixzz1XNZIyeiT

Essentially, they are one in the same. However, the tangibility of the item is the biggest determinant. For example, you go to Best Buy to purchase PRODUCTS such as televisions,laptops, cameras, and DVDs. However, you can also go to Best Buy to enlist the SERVICE of the company's Geek Squad to come and set up electronics in your home.

Differences Between Products And Services

What are some of the main differences between products and services? And when are these relevant? Tangibility versus Intangibility Products are tangible. You can buy pork as a tangible product. You buy it, you ship it and sell it. In the same way as you buy stamps, cigarettes and cars.

Financial service companies however, make it possible to exchange pork bellies Futures, on the Chicago Mercantile Exchange (CME). A future is (not the most simple example of) a service with which you can hedge your risk. In this last case, most of the people trading on the CME will never see or smell the pork bellies. The ownership between products and services is different. A stock could be called a financial product that you own. You can place a stock order which might result in a transaction later on. Your bank services a depot fee for saving you a lot of work. You cannot own a service. Where the product is much more standardized, the service is tailor-made. Companies differentiate in offering products and services, but the variations between similar products of different producers are less prominent than the variations between services. You can count products in the same way as you can count your money (or have your bank service you this information). A service is not countable, but is "leveled;" better than the best service is not possible. There is a limit in what a service can offer. A product is produced by a manufacturing process. A service is offered by the utility element of companies; you subscribe to a service in the same way as you subscribe to your gas and electricity supplier. And this brings us to the essential of these differences; changing from one (product approach) to the other (service offering) is very complex, because of the last mentioned differences. Not only the process is different but the style change you need to support this change... Good Luck.

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