IMT – 70: MARKETING OF SERVICE INDUSTRY

PART – A

Q1. What is service? What is so distinctive about services marketing that it requires special approach, set of concepts, and body of knowledge? Explain the growing importance of services today.

Q2. Classify different services? How would you explain the usefulness of each of these classifications to managers? Explain by referring to Health Service, Automobile Repair Service, Education Service, and Retail Banking Service. Describe the services marketing mix.

Q3. What you understand by service encounter. Discuss various methods for managing encounters between customers? What shapes consumer behavior?

Q4. How are customers’ expectations formed? Explain the difference between desired service and adequate service with reference to a service experience you have had recently while travelling in the Indian Railways. What is the process by which customers evaluate the total service offering? 

Q5. a) Service location decisions.

b) Issues and role expectations of intermediaries in services.

PART – B

Q1. Discuss various demand situations in services. What are the problems associated with irregular demand? How can these be managed? 

Q2. Discuss the various pricing strategies that may be employed for a new service. Enumerate factors that determine pricing decisions. What are the advantages and disadvantages of cost based pricing?

Q3. ‘ Is marketing, operations and human resources have to be more closely linked in services than in manufacturing ’ Discuss. How can a service firm its people to attain sustainable service excellence and productivity.

Q4. What are the distinctive objectives of services communications? Which elements of services communication mix would you use for the following scenarios.

a) A newly established Gym in your area.

b) An established restaurant facing declining patronage because of new competitors.

Q5. a) Techniques to manage the waiting line.

b) Strategies used for making service supply more responsive in service industries.

PART – C

Q1. Why are service employees critical to the success of any service organization? Explain various strategies for delivering service quality through people. Is empowerment always the best approach for effective service delivery? 

Q2. In what specific ways does the distribution of services differ from the distribution of goods? Discuss the benefits and challenges of franchising method of service delivery.

Q3. Why relationship marketing is more important in case of services industries? What are some of the key measures that can be used by Kingfisher Airlines to create customer bonds and encourage long-term relationships with customers?

Q4. ‘Quality is produced locally in the moments of truth of the buyer-seller interactions’ Explain. What gaps can occur in service quality, and what steps can service marketers take to prevent them?

Q5. Write short notes on the following.

a) Peak-load pricing.

b) Should service marketers delight their customers?

c) How is technology changing the nature of service?

CASE STUDY – I

RELIANCE INFOCOMM

In the first-class compartment of a Mumbai suburban train, a middle-aged Gujarati businessman screams into his Reliance phone. “ I don’t want free services. Charge me anything you like, but let me send messages.”

At the Reliance customer service centre in Lower Parel, nerves are frayed and tempers run short. Hordes of disgruntled customers land up from morning to evening to decry the Reliance service. Some can barely be stopped from getting into fisticuffs with customer services executives.

Hundreds of Reliance Infocomm dealers, a k.a. Dhirubhai Ambani Enterpreneurs (DAE), around the country want out and are demanding their deposits. They say that the business is a lot less attractive than Reliance had led them to believe.

By offering unparalleled basket of goodies, Reliance expected to sweep the mobile telephony market. Mukesh Ambani was confident of enlisting 3 million subscribers by 28 February 2003. Instead, in the first four months, Reliance has seen one thing after another go wrong with the Infocomm rollout. First, it failed to tie up interconnect agreements with other players as quickly as it had hoped to. As a result, the commercial rollout across the country had to be postponed twice. Second, the lack of interconnects agreements saw early adopters of the Reliance phone unable to connect or send SMS to anyone other than Reliance subscribers. And the internet content that Reliance subscribers could access also proved fairly limited. Meanwhile, the cellular operators fought back with a ferocity Reliance had not expected. Led by Bharti and Hutchison, the cellular operators forced the telecom regulator to reexamine interconnect changes, slashed tariffs and launched an aggressive communication campaign pointing out the hidden traps in the Reliance pricing.

As a result, four months into the Infocomm rollout, Reliance officials admitted that they had not been able to meet the subscriber targets. Reliance officially put the number of subscribers it had managed to sign up at 1 million, or a third of what Mukesh Ambani had said he expected by 28th February 2003.

Reliance decided to involve the existing partners and the network Reliance had built over the years dealers and distributors of Reliance Industries who had been dealing with ‘commodities’. These Reliance ‘family’ members would, in turn, help form the Reliance Infocomm dealer network.

The company further decided that the pricing strategy should be built around the principle of capital recovery and accordingly it was decided to charge a high upfront price to lock the customer in for three years.

While the technical problems that had not been sorted out meant that Reliance subscribers were getting barely a fraction of the services promised to them by the Reliance advertisements, they could not cancel their subscriptions either because they had paid upfront for three years.

Questions :

1. Based on your understanding of services marketing concepts, identify the underlying reasons of the dismal failure of the mobile telephony launching of Reliance Infocomm.

2. How differently you would have done it ?

CASE STUDY – II

HEALTH TRAVELLERS

There’s been a huge surge in medical travel globally in recent years. The British citizens are being forced to seek medical treatment in other countries by the sheer waiting lists caused by the National Health Service (NHS). Patients from rich countries in the Middle East travel to the US when they need top notch medical care. Residents of poor developing nations such as Nigeria or Bangladesh travel to their more developed neighbours for medical treatment because there aren’t enough good facilities available in their own countries. Thousands of Japanese citizens seeking medical treatment fly abroad because of the prohibitive costs of treatment in their home country. Americans seeking cosmetic surgery often fly to South Africa for face tucks and breast augmentation because their insurance coverage doesn’t pay for those – and it is cheaper to get them done in South Africa than back home.

A Saudi Arabian report pointed out that in 2000, medical travelers from the Gulf region alone spent over $27 billion seeking treatment in vario9us nations around the world. If the medical travelers from around the world spent even half as much that year, the total business in 2000 alone would have been in excess of $40 billion. And even that could be an underestimate. According to one estimate the healthcare market in the Organization of Economic Cooperation and Development countries alone is worth about $3 trillion, and expected to go up to $4 trillion in 2005. More importantly, it is growing rapidly and turning out to be an immense business opportunity for nations that are positioning themselves correctly. Last year, just five countries in Asia-Thailand, Malaysia, Jordan, Singapore and India – pulled in over 1.3 million medical travelers and earned over $1 billion (in treatment costs alone). In each of these nations, medical travel spends are growing at 20%-plus year-on-year. Elsewhere around the world, Hong Kong, Lithuania and South Africa are emerging as big medical / healthcare destinations.

A handful of developing countries like Thailand and Malaysia that have good doctors and excellent facilities, are positioning themselves as medical destinations in order to boost their economies. Both Thailand and Malaysia see this developing into a multi-billion dollars – a – year business. There is also the other factor – like people from the least developed countries who find affordable sophisticated medical care facilities in developing countries like India and Malaysia. In some places the governments have taken a lead. In others, like South Africa and Lithuania, travel agents specializing in medical tourism are driving the trend. In India, private hospitals like Apollo and Escorts Heart Institute and Research Centre are trying to attract patients on their own.

You could divide the world’s medical travelers into four distinct geographical groups who travel for distinctly different reasons. The first is made up of the Americans. The US healthcare system is predominantly insurance- driven. But health insurance covers critical care-not cosmetic care. And there are vast numbers of Americans today who are looking for cosmetic surgery – whether it involves a facelift, a liposuction or dental treatment for a brighter smile. They were the biggest chunk of foreign customers for cosmetic surgeons in Thailand, Malaysia and South Africa. These three countries, between them, pulled in over 100,000 Americans seeking cosmetic surgery.

The second major group – the British – was being forced to seek medical treatment in other countries by the sheer waiting lists caused by the National Health Service (NHS). Unlike in the US, the British healthcare systems ensures free treatment to all its citizens. The only problem is that the NHS, which was set up in 1948, is struggling to cope because of a shortage of both doctors and hospital beds.

The third big group of medical travelers comes from the Middle East. These are citizens of the oil rich nations flying abroad to seek medical facilities that are either unavailable or in short supply in their own countries. They travel everywhere – to Jordan, Saudi Arabia and Bahrain; to the US; to India, Thailand and Malaysia. By some estimates, India itself attracted 70,000- plus medical travelers from the Middle East last year.

Finally, the last group of medical travelers forms a motley lot. They are from the least developed countries and countries with generally poor medical infrastructure, who usually seek treatment facilities at some neighbouring country with better infrastructure. Last years, it was estimated that at least 50,000 people from Bangladesh and Nepal came for medical treatment to India. A significant majority of the 126,000 medical travelers to Jordan came from neighbours with poor medical infrastructure facilities.

A $40-billion-plus market growing at over 20% a year throws up huge opportunities for anyone smart enough to tap into it. The business opportunities cover a big spectrum-from retirement homes and spas, to cosmetic and dental surgery, to critical but non-emergency surgery needs like hip replacements, organ transplants, angioplasty and vision correction. Even alternative healthcare, like Indian ayurvedic system, could be a significant niche opportunity. The comparative treatment costs in few countries, including India, has been provided in the figure below :

Treatment Costs (S)

Questions :

1. Identify the healthcare segments that can be targeted by Indian healthcare companies. You should give your reasons for such selection.

2. Suggest ways by which Indian health care companies can attract and retain health care customers from the target group.