SERVICES MARKETING Innovation : The Key to Success in the Services Sector -- Pooja D Kunwar Junior Faculty Member, Indigrow

Institute of Professional Studies, Ahmedabad. The author can be reached at pooja_dkunwar@yahoo.co.in This article throws light on some recent innovative strategies adopted by successful services marketers to face and overcome competition. It covers significant marketing issues like managing services differentiation, services quality, customer segmentation, customer loyalty and distribution. The services sector has emerged as the main engine of economic growth. The services sector includes an array of industries such as hotels, tourism, airlines, banking, insurance, telecom, courier, media, healthcare, consultancy, information technology, advertising, retailing and education. Increasing competition in the services sector is driving marketers to differentiate themselves from their competitors. Introduction Earlier, services were only viewed as supporting elements to the promotion and distribution of products. Service firms had not paid much attention to marketing elements such as customer segmentation, differentiation, service quality, customer relationship management, etc. Slowly, with the growth of competition, services marketers have come to realize that if they don't make special efforts to meet customers' expectations, they would lose their market share to competitors. Increasing contribution of the services sector to India's GDP is driving the marketers to differentiate themselves from competitors. In spite of the global economic slowdown, the services sector in India contributed 56% to the country's GDP during 2008-09. This shows that there is immense growth and development that is taking place in this sector. The famous quote from Tom Hopkins, "Listen quite as much as you talk and you will succeed in persuading others nearly every time," clearly goes to say that services marketers, rather than assuming the expectations of customers, should first attempt to listen and understand their needs and wants, and serve them accordingly. The unique characteristics of services include inseparability, intangibility, heterogeneity and perishability, which separate services from goods. These characteristics pose challenges for services marketers, which are not faced by the marketers of products. Delivery and consumption of most services are inseparable from each other, which means that service can only be delivered through interaction between the service provider and the customer. Thus, the people engaged in providing services become important. As service is intangible, it becomes difficult for marketers to show the services or provide samples. This poses a challenge for the service provider, as the service cannot be inspected before being offered to the customer, and if there are any deficiencies during service delivery, it becomes difficult to rectify them. We can expect a machine to work consistently and uniformly, but a human being cannot be consistent in his/her performance. The services offered by employees of the same organization may differ, and even the services offered by the same employee can differ at different times. Services are therefore heterogenous. To quote an example of perishability as a characteristic of services, hotels remain vacant during the off season, and thus the mismatch between demand and supply results in underutilization of capacity leading to huge losses for the services firms.

The above discussed characteristics call for special attention of services marketers and also necessitate innovative strategies, different from those traditionally used in manufacturing concerns. Thus, to respond to these issues, there is an addition of 3 Ps for marketing services namely People, Process and Physical Evidence. Managing Services Differentiation Whenever a marketer introduces a new service, within a short span of time, the strategies are copied by competitors with improved versions. This is done by analyzing the plus and minus points of the first mover in the market. Thus, in order to be a leader in the service sector, one of the major tasks is to have competitive differentiation with innovations. As services are intangible, it becomes relatively difficult for the service providers to differentiate themselves. Various researchers have pointed out that the objective of competitive strategy is to achieve sustainable competitive advantage (SCA) and thereby enhance a business's performance (Sundar G Bharadwaj et.al, 1993). Thus, factors like personalized services, service personnel and service location could provide differential advantage for services marketers. Personalized Services With increasing competition, services providers have started to differentiate themselves by providing personalized services to customers. The primary objective of any hospital is to provide medical care to its patients. But in addition to medical care, there are a wide range of personalized services provided by Apollo Hospitals which leads to hassle-free and pleasant stay for its international patients and their attendants. It offers special accommodation facility, which includes deluxe rooms with 4-star hotel like ambience. The rooms have computers with Internet facility, satellite TV, room food service, laundry service, etc. The hospital ensures that the international patient doesn't have to wait in a queue for the admission process; arrangement for direct admission is therefore made in the patient's room itself. To avoid language becoming a barrier in the medical care process, Apollo Hospitals provides language interpreters on demand to those international patients who find it difficult to communicate in English. It also offers help in availing insurance services. Further, the hospital helps in booking travel tickets and makes necessary travel arrangements for the patients. Personalized services are also provided by the airlines industry. SpiceJet provides special facility to unaccompanied minors aged between 5 to 12 years, free of charge. Children are accompanied by the airline staff all through the airport processes, and special care is taken once they are seated in the aircraft. These examples reveal the kind of personalized attention provided by services marketers in order to differentiate themselves from their competitors. Service Personnel With the increase in technological advancements, services organizations have started using the latest technology to make the service- delivery process more efficient. However, they have realized that man cannot be completely replaced with machines. Therefore, a lot of importance has been given to service personnel, as they are the ones who are in direct touch with the customer. Their attitude, behavior and appearance would help the service firms to differentiate themselves. All the services personnel engaged in the delivery of a service provide cues to the customers regarding the nature of the service. In the services industry, it is therefore not only important to select the right personnel, but also to train and motivate them, so that they deliver consistent service to the diverse group of customers. McDonald's, being an international player in the fast food industry, never compromises on the quality of services offered to its customers. Hamburger University, McDonald's worldwide management

training center, is situated in Oak Brook, Illinois. The center trains the staff working in McDonald's Corporation and also those employed by its franchisees. It offers various modules of training programs, starting with the training for part-time hands working in McDonald's restaurants and going on up to an advanced course in restaurant operations. Through electronic equipment and translators, professors at the University can teach in 22 languages at a time. Many service firms have standards to be followed in the appearance and grooming of employees. For instance, Air India served termination notices to nine of its air hostesses in the northern region in January 2009, for their failure to reduce weight to the standards specified in the employment contract. Research has found that the relational factors of social comfort and social regard play indirect roles through their influence on customers' evaluation of satisfaction and quality (Ken Butcher et. al., 2001). Frontline employees play an important role in the service delivery process as they are the ones who deliver the service promised to the customer. Thus, to build a customer-oriented and serviceminded workforce, an organization must hire the right people, develop them to deliver service quality, provide the needed support systems and retain the best people (Zeithaml et al., 2008). Service Location Service location is an important aspect in services like hotels, hospitals, banks, etc., where the customers directly approach the service provider at their premise. Atmospheric elements such as lighting, music, furniture, pleasant smell and the general ambience of a service system play an important role in customers' quality/satisfaction evaluations. Service providers use such elements to differentiate themselves from competitors and also try to create a unique image in the minds of the customers. Services firms such as hospitals, restaurants and shopping centers play soft music to give a pleasant feeling to the customers. Research has proved that music in a hospital has the capability to lessen pain, alleviate anxiety and stress, lower heart rates and blood pressure, and help reduce cardiac complications after an operation. For premature babies, some hospitals in India have even started playing soft music in anticipation that this will comfort the babies and regulate their body processes. Lighting is also a significant element in creating the right store ambience in retailing. Proper lighting not only creates the right mood, but it also helps customers to evaluate products and take purchase decisions. As a rule of thumb, display lights in a retail outlet need to be two to five times stronger than the lights in other parts of the store. Also, lighting should not distort the color of the merchandize. A green color sari should look the same both inside and outside the store. Shoppers' Stop uses halogen and compact fluorescent lamps to highlight its merchandise display areas and visual merchandising sections. Smell has the most influential effect on the memory cue; much more than sight and sound. Use of aromas was an underutilized marketing tool. But now, the practice is becoming more popular as competition in the service industry is increasing and marketers have to put in efforts to make the customers spend a longer time in their outlets. The more the time for which people hang around in the store, the more they are likely to buy. Many services firms, predominantly stores and restaurants, have found out that the right smells can attract customers. They have also started using fresh flowers or artificial perfumes and room fresheners, so that unpleasant odors do not drive away the customers. Axis Bank's Priority Banking Branch in Pune was opened with the objective of catering to high net worth customers. It has large decorated spaces, soft sunken sofas, wall mounted widescreen flat TV with business channel news, soothing piped music, and hot freshly brewed coffee. With such facilities, the bank is able to differentiate itself by making its service location very unique (Zeithaml Valarie et. al., 2008). Managing Service Quality

Service quality has become an important differentiator and the most powerful competitive weapon, which all services organizations want to excel at. To achieve this, service design has to match with customer expectations. One should not only take into consideration the current expectations but also future requirements. Research has suggested that service quality can be measured on five dimensions which include Reliability (ability to perform the promised service dependably and accurately), Tangibles (appearance of physical and communication materials), Responsiveness (willingness to help customers and provide prompt service), Assurance (knowledge and courtesy of employees and their ability to convey trust and confidence) and Empathy (caring, individualized attention provided to the customer). (Shanker Ravi, 2002). Since services are perishable and intangible, the quality of services will have a different connotation from the quality of goods. Customer perception of service quality is generally subjective. Nonetheless, it does provide valuable information and serves as a useful tool for market monitoring and development (Toh, 2002). Understanding customer expectations is a pre-condition for delivering superior service, since customers evaluate service quality by comparing their perceptions of the service with their expectations. Apollo Hospitals' boutique birthing center (maternity center) branded as "The Cradle" is one such example of understanding the changing customer expectations and providing service accordingly. Apollo Hospitals has brought the most excellent of global trends in healthcare to India by building new facilities to serve the specific needs of consumers. It has begun with the main aim of removing the fears of would-be mothers and providing them modern and complete facility specifically dedicated to serving the physical and emotional needs of mother and child. The company hired the services of a famous architect, Alfa Miller, to design the building and interiors to give a unique look to the Cradle and differentiate it from other maternity hospitals. This maternity center is a place where mothers can experience the joy of childbirth in a non-clinical environment and where every baby can arrive in a unique fashion. The hospital conducts special sessions to educate expecting mothers about the care they should take pre- and post-delivery, and also counsel them regarding the diet and nutritional needs of themselves and the newborn baby. It also has professionals and necessary equipment to help the would-be mothers to do prescribed exercises. In the courier industry, in order to stay competitive, the services provider needs to be professional, customer-oriented and capable of delivering the shipments to various destinations safely and quickly. First Flight Courier helps its customers to be emotionally attached to their loved ones. The innovative service provided by First Flight is known as "emotional bond". This service helps in delivering items like greeting cards, sweets, cakes or dry fruits on behalf of the senders to their loved ones in any part of the country on special occasions like birthday, anniversary, festivals, etc. Timing is an important factor when it comes to consignments to be delivered on special occasions, and First Flight gives importance to this dimension of the service. Research has proved that service quality has an impact on trust, differentiation and relationship outcomes. Trust was found to drive service differentiation. Differentiation, in turn, drove commitment, which ultimately had an impact on both satisfaction and word-of-mouth publicity. Importantly, it was found that service differentiation acts as a mediator in the impact that service quality and trust have on clients' commitment towards the firm (Don O'Sullivan, 2009). Thus, delivering the best service quality is important for the services marketer. Customer Segmentation Earlier, customers rarely had any issues about the homogenous products and services offered by marketers. But today's customers are different, and are more demanding in their needs and expectations. They look for customized products/services that satisfy their specific needs. For a services firm to be successful, it is important to segment the market by grouping customers on the basis of their similarities. Such segmentation helps service providers to select and target those segments which can be served successfully and profitably.

For instance, the hotel industry has identified women as an exclusive segment. Due to increase in the number of women business travelers, many hotels have now started providing free pick-up and drop services from the airport to their women customers. Their rooms are located near the elevators, where it is usually well lit and a guard is present. Now, the trend is also of complete floors being devoted for the single woman traveler. Well-known hotels like Maurya Sheraton Towers and several ITC hotels have Eva floors exclusively for women. An interesting feature of this service is that one cannot open rooms on this floor without the room key card. One cannot even stop at the Eva floor as the card needs to be swiped in the elevator to direct it to the Eva floor. Such services are very focused for specific market segments. Of course, customers often have to pay a premium price for what they want and need. The reason for segmenting a market is to design programs to focus on the segments that are "most likely" to pay for the offering. It helps to focus on the positioning, apportion company resources among customer segments, and achieve the maximum return for marketing expenditures. Building Customer Loyalty Loyalty refers to trust on a particular brand or company even though several satisfactory alternatives may exist. It depends on building relations. This requires that companies view customers as people first and consumers second. Trust, commitment, ethical practices, fulfillment of promises, mutual exchange, emotional bonding, personalization and customer orientation have been reported to be the key elements in the relationship building process (Levitt, 1986). Researchers also suggest that loyalty evolves and that there are stages of loyalty. Loyalty is the key to the longevity of any brand and one type of loyalty, namely word-of-mouth has been correlated with company growth (Reichheld, 2003). Customer loyalty provides the foundation for a company's sustained competitive edge. Developing and increasing loyalty is a crucial factor in a company's growth and performance (Reichheld, 1996 and Lee & Cunningham, 2001). Customer loyalty program is a strategic initiative taken up by marketers to offer incentives to their customers so that they remain loyal. This is basically a win-win situation for both marketers and customers. It allows customers to buy products at a discount on the current purchase or they are allotted points that can be used to avail discount on future purchases. Such benefits decrease customers' propensity to switch over to other competitors, which ultimately leads to an increase in sales volume for the marketers. It also helps the marketers to build a large database on the shoppers' profiles, their buying behavior and consumption patterns, which is helpful for future customer relationship management. Loyalty programs are crucial, where service levels and products are not well-differentiated. "Perishable inventory" is common in the majority of services industries. To quote some examples, empty airline seats, unoccupied hotel rooms, and unused telecommunication capacity create no revenue. Loyalty programs help use such idle capacity through incremental purchases or as part of the reward offering (Sahoo Debajani & Vyas Preeta, 2007). For maintaining stable revenues and profits when the market has reached a saturation point and competition is fierce, a defensive strategy which strives to retain existing customers is more effective than an aggressive one (Fornell, 1992; Ahmad & Buttle, 2002). Thus, loyalty programs are useful for the survival of companies and even for future growth. Before liberalization, the Indian civil aviation industry was a monopoly of the government, which operated two airlines - Air India and Indian Airlines. Now, the scenario has completely changed and a number of private players have entered the industry. Survival has now become a big question for the airlines, as each one is trying to provide maximum benefits to attract and retain customers. For instance, Jet Airways provides special services on ticketing and check-in facilities. It also uses coalition loyalty programs with partners in other industries so that customers get maximum benefit out of these programs. The JetPrivilege Programme partners include some of the leading names in airlines, hospitality, finance, lifestyle, car rental, entertainment, publishing, retail and telecom industries.

The petroleum companies have also come up with unique means to retain and attract customers. Bharat Petroleum Corporation Limited (BPCL) offers a customer loyalty plan known as "Petro Cards". These cards are prepaid smart cards which can be used to pay for purchasing petrol and other products at BPCL outlets. A one-time fee has to be paid to purchase this card, and it can then be loaded with amounts from Rs. 500 upwards. Based on purchases made using the Petro Card, the customer earns "Petro miles," which can be exchanged against an extensive choice of exciting rewards. This initiative has helped BPCL to build long-term relationship with its customers and the company is celebrating 10 years of successful journey of this loyalty program, which was initiated in the year 2000. Research has proved that a loyalty reward program can overlook or discount the negative evaluations of a company vis--vis competition. One possible reason could be that members of the loyalty rewards program perceive that they are getting better quality and service for their price or, in other words, "good value" (Ruth N. Bolton, et.al. 2000). Companies that put forward loyalty reward programs consider that their programs have a long-run positive effect on customer evaluations and behavior. Loyalty is thus an emotion or an attitude of dedicated attachment and affection. This implies that a person feels an obligation to stay with a brand in both good and bad times. Service Distribution In order to achieve significant market share, the services of the firms should be distributed in many locations. Services marketers have thought of several innovative distribution channels to reach customers who have hectic schedules and time constraints. Doorstep banking is a concept which is becoming very popular among banks and their customers. This facility was initially offered by multinational banks to only a selected group of their customers in India. Some private and public sector banks also used to provide this facility, but purely on an informal basis. But with the increase in competition, now almost all banks have joined the bandwagon with their unique offerings. For instance, Axis Bank's Premium Current Account with a minimum monthly average balance requirement of Rs. 10 lakhs gets services like free cheque and demand draft/pay order pick-up, and cash pick-up or delivery at nominal cost. Doorstep banking is not only limited to high net worth customers in urban areas, but is also available to rural customers. The Reserve Bank of India (RBI) had allowed banks in January 2006 to utilize the services of correspondents to enlarge their banking services in unbanked areas. "Correspondents" are people who serve as extensions of branches, in an attempt to get in touch with people who do not have access to banks and banking services. These correspondents provide various services like providing small loans, gathering small deposits, and selling micro-insurance and mutual fund products. Doorstep banking is an innovative step initiated to get in touch with the rural population by Union Bank of India. The bank pays correspondents a nominal salary and an additional commission depending on the number of transactions conducted, customers acquired or deposits collected. The rural customers are given biometric smart cards which would permit even those who cannot read or write to open and operate a bank account. These cards are introduced to make the transactions easier and comfortable. The objective of using the card is to store data of all transactions and hence the card also serves as an e-passbook. The correspondent carries a hand-held device that helps in recognizing the thumb impressions of customers which serves as a bio-password. The device also produces a receipt for the customer. The bank has taken the help of Financial Information Network & Operations Ltd. (Fino), a company set up by a consortium of banks in 2006, to discover various technological solutions that would be used to provide banking services to the rural market. Due to geographical constraints, marketers were able to attract customers only from a particular region. But now, electronic retailing has made it possible to sell online, and products can also be ordered on telephone and delivered by courier. Conclusion

Services marketing is highly competitive, and one can thrive in this field only by differentiating oneself from competitors with unique offerings. Marketers need to pay special attention to those customers who give them the greatest value, by offering loyalty programs. Loyalty programs also help to track the buying behavior of customers and establish long-term relationships with them. Intensive distribution helps service organizations to increase their customer base by making the services more easily accessible and available. Marketers also need to segment the market and serve the ones, which are more profitable.