TYBMS SEM 5 : Marketing: Services Marketing (Q.P. November 2018 with Solution)

 Paper/Subject Code: 46004/Marketing: Services Marketing

TYBMS SEM 5 : 

Marketing:

Services Marketing

(Q.P. November 2018 with Solution)

N.B. 1. All questions are compulsory

2. Figures to the right indicate marks.

Q1 A) Match the columns (any eight)                                08

Column A	Column B
1) Responsiveness	a) Parasuraman
2) Physical Evidence	b) Line of visibility
3) GAP model	c) People based services
4) Service Encounter	d) Willingness to help
5) Blueprinting	e) Distribution of service
6) High contact	f) Moment of Truth
7) Agents and brokers	g) Accept Variance
8) GAP I	h) Communication gap
9) Zone of Tolerance	i) Tangibles
10) GAP IV	j) Knowledge gap

Ans:

Column A	Column B
1) Responsiveness	d) Willingness to help
2) Physical Evidence	i) Tangibles
3) GAP model	a) Parasuraman
4) Service Encounter	f) Moment of Truth
5) Blueprinting	b) Line of visibility
6) High contact	c) People based services
7) Agents and brokers	e) Distribution of service
8) GAP I	j) Knowledge gap
9) Zone of Tolerance	g) Accept Variance
10) GAP IV	h) Communication gap

Q.1 . (B)State where the following statements are true or false (any seven)    (07)

1. A service is performed but not manufactured.

Ans: True

2. Penetration pricing strategy begins with low price and tend to increase with growth stage.

Ans: True

3. Price-plays no role in the marketing mix of a service.

Ans: False

4. Services can be stored.

Ans: False

5. Intangibility means several marketing challenges.

Ans: True

6. No customers are looking for value when they are buying a good or services.

Ans: False

7. Services can be distributed to the final consumers through electronic channels only.

Ans: False

8. Human resource is important for providing quality services to the service customers.

Ans: True

Q.2. (A) Discuss the role of services in modern economy.

Services play a pivotal role in shaping the structure, growth, and functioning of modern economies. As economies evolve, there's a noticeable shift from agriculture and manufacturing toward service-driven models. Services contribute to the modern economy:

1. Major Contributor to GDP

In most developed and developing countries, the service sector contributes the largest share to the Gross Domestic Product (GDP). Industries such as finance, healthcare, education, tourism, IT, and professional services are central to economic activity.

2. Employment Generation

Services create extensive employment opportunities, especially in areas like retail, hospitality, healthcare, IT, customer support, logistics, and education. As automation affects manufacturing jobs, the service sector becomes an increasingly vital source of employment.

3. Support for Other Sectors

Services such as logistics, banking, insurance, legal support, and marketing are essential for the smooth operation of agriculture and manufacturing. This interdependence strengthens overall economic productivity.

4. Innovation and Digital Transformation

The service sector is a driver of innovation, especially in technology and digital services. Cloud computing, digital payments, e-learning, and telemedicine are reshaping consumer behavior and business models.

5. Improved Quality of Life

Services such as healthcare, education, public transport, and recreation enhance living standards. The availability and quality of these services reflect the level of development in a society.

6. Global Competitiveness

Countries that offer high-quality services (e.g., IT services in India, financial services in the UK and Singapore, tourism in Thailand) enjoy competitive advantages in global markets, contributing to foreign exchange earnings and soft power.

7. Entrepreneurship and Startups

The service sector provides a fertile ground for startups and entrepreneurial ventures, especially in areas like fintech, edtech, healthtech, consulting, and creative industries.

8. Sustainability and Urban Development

Service-based economies tend to have lower environmental impact than heavy industries. Urban development is increasingly aligned with service-sector growth—think of smart cities and knowledge hubs.

(B) Explain the Service Marketing Triangle with the help of a diagram. (07)

OR

(C) Explain the distinct characteristics of services with an example. (08)

1. Intangibility

Definition: Services cannot be seen, touched, or stored like physical products before they are purchased or consumed.

Example: You can't see a medical consultation before it happens—you only experience the outcome based on the doctor's advice and interaction.

2. Inseparability

Definition: Services are often produced and consumed simultaneously—you can’t separate the service provider from the service.

Example: A haircut is given by a stylist and consumed by the customer at the same time. You can’t store the haircut for later use.

3. Variability (Heterogeneity)

Definition: The quality of services may vary each time, depending on who provides them, when, where, and how.

Example: A waiter might be friendly and prompt during one visit to a restaurant, but slow and inattentive on another day.

4. Perishability

Definition: Services cannot be stored for future use—they perish if not used in time.

Example: An empty seat on a flight is revenue lost forever once the plane takes off.

5. Lack of Ownership

Definition: When you buy a service, you don’t own it—you only gain access or experience it for a limited time.

Example: When you buy a movie ticket, you're paying for the experience of watching, not owning the movie.

(D) Discuss customer involvement and state its types.        (07)

Customer involvement refers to the degree to which customers participate in the production and delivery of a service. Unlike products, services often require the active presence or interaction of the customer, which significantly influences the quality, efficiency, and satisfaction of the service experience.

In service industries, the customer is not just a recipient but often a co-producer of value.

Importance of Customer Involvement

• Enhances personalization and satisfaction

• Increases efficiency by sharing responsibilities

• Strengthens customer loyalty and trust

• Helps in innovation through feedback and engagement

Types of Customer Involvement

1. Low Involvement

• Definition: Minimal or passive customer participation in the service process.

• Examples:

  • Watching TV or streaming content

  • Automatic car washes

• Characteristics:

  • Standardized service

  • Customer plays a passive role

  • Less customization

2. Medium Involvement

• Definition: Customers are moderately involved; their input or presence is required at some stages.

• Examples:

  • Visiting a restaurant (customer chooses meal, but staff prepares and serves)

  • Bank transactions at a teller or ATM

• Characteristics:

  • Some customization

  • Shared responsibilities between service provider and customer

3. High Involvement

• Definition: Customers are actively engaged in the entire service process, often co-creating the outcome.

• Examples:

  • Educational services (students learn through active participation)

  • Medical treatments (patients cooperate with doctors for diagnosis and recovery)

  • Fitness training (customers actively follow personalized routines)

• Characteristics:

  • High personalization

  • Direct impact on service quality and outcome

  • Often emotional or personal engagement

Q.3 (A) Explain the importance of People Mix with reference to Banking sector.    (08)

In services marketing, the People Mix refers to all individuals involved in the delivery of a service — including employees, management, and even customers. In the banking sector, where services are intangible, variable, and often personalized, people play a critical role in shaping the customer experience.

The importance People Mix Matters in Banking:

1. First Impressions and Relationship Building

• Bank employees are often the first point of contact for customers.

• Courteous, professional, and knowledgeable staff help build trust and confidence.

• In services like personal loans or investment advice, relationship management is key.

Example: A friendly and well-informed bank officer can make a customer feel valued and more likely to return or recommend the bank to others.

2. Service Quality and Customer Satisfaction

• Human interaction directly influences the perceived quality of service.

• Prompt assistance, clear communication, and problem-solving abilities can increase satisfaction and reduce customer churn.

Example: Quick resolution of an issue with a credit card by a helpful service rep enhances loyalty.

3. Handling Complex and Personalized Services

• Many banking products (e.g., mortgages, business loans) are complex and customized.

• Skilled personnel are required to assess needs, explain options, and tailor solutions.

Example: Relationship managers in corporate banking provide expert guidance, which can't be replaced by automation alone.

4. Trust and Compliance

• Banking involves sensitive information and high financial stakes.

• Well-trained staff ensure confidentiality, regulatory compliance, and ethical conduct — all of which build long-term trust.

5. Emotional Engagement

• In high-involvement services like wealth management or loan approvals, customers often go through emotional stress.

• Empathetic and supportive staff create a positive emotional experience, increasing loyalty.

6. Digital Integration and Human Support

• Even in digital banking, people matter — especially when customers need help navigating online services or troubleshooting.

• A good mix of tech and human support ensures smoother transitions and better customer retention.

(B) What is service blueprinting? state the advantage of service blueprinting.      (07)

Service blueprinting is a visual planning tool used to design, analyze, and manage service processes. It maps out the entire service delivery journey — from the customer's interactions to the internal steps taken by employees and systems behind the scenes.

A service blueprint is like a flowchart, but it is specifically designed for services. It shows how a service is delivered, what roles people play, what systems are used, and how the customer experiences each stage.

Components of a Service Blueprint:

1. Customer Actions – Steps taken by the customer (e.g., visiting a website, making a call).

2. Frontstage (Visible) Employee Actions – Interactions that are directly visible to the customer (e.g., bank teller interaction).

3. Backstage (Invisible) Employee Actions – Behind-the-scenes activities that support the service (e.g., data processing).

4. Support Processes – Internal systems and functions that help deliver the service (e.g., IT systems, logistics).

5. Physical Evidence – Tangible elements the customer encounters (e.g., receipts, emails, service counters).

6. Lines –

• Line of Interaction: Where customer and service provider meet

• Line of Visibility: Separates frontstage from backstage activities

• Line of Internal Interaction: Separates support processes from employee actions

Advantages of Service Blueprinting

1. Clear Visualization : It provides a step-by-step view of the service, helping businesses understand how the service works in real-time.

2. Improves Customer Experience : Helps identify and eliminate pain points, delays, or confusing steps in the customer journey.

3. Aligns Teams and Roles : Everyone from front-end to back-end knows their responsibilities, leading to better coordination and accountability.

4. Identifies Fail Points: Helps in spotting where errors are most likely to occur and prepares proactive solutions.

5. Enhances Training : New employees can learn the entire service process quickly with a visual representation.

6. Promotes Consistency : Ensures the service is delivered the same way every time, improving reliability and quality.

7. Supports Innovation : By making the full process visible, businesses can redesign or innovate better and more efficient service models.

Example (Banking Sector):

Imagine a customer visiting a bank to apply for a loan. A service blueprint would show:

• Customer Action: Walks in, fills out a loan form

• Frontstage: Staff assists the customer with documentation

• Backstage: Credit team verifies details and processes the loan

• Support: IT system checks credit scores, generates alerts

• Physical Evidence: Loan documents, application receipt

The blueprint helps the bank identify where the customer might face delays and improve those touchpoints.

OR

Q.3 (C) Explain the objectives and strategies of pricing with reference to service industry.         (08)

Pricing in the service sector goes beyond just covering costs—it plays a crucial role in positioning, customer perception, and profitability. Here are the main objectives:

1. Profit Maximization

• One of the primary goals is to ensure that pricing contributes to maximizing profit over time.

• Especially in professional services (e.g., legal, consulting), prices reflect the value of expertise.

2. Survival

• In highly competitive markets or during economic downturns, pricing is set low just to survive and cover basic costs.

• Common in startups or during service launches.

3. Market Penetration

• Prices are kept low initially to attract a large customer base quickly and gain market share.

• Example: A new internet service provider offering discounted plans for 6 months.

4. Market Skimming

• Prices are set high at launch to target early adopters, then reduced later.

• Common in tech-based services like new software subscriptions.

5. Customer Retention and Loyalty

• Pricing is used to build long-term relationships, offering discounts or value-based packages for loyal customers.

6. Matching Competitors

• Sometimes services are priced to align with or slightly undercut competitors to remain relevant in the market.

7. Perceived Value

• Prices are set based on the value perceived by the customer, not just cost.

• Example: Luxury spa or five-star hotel charges premium prices for ambiance and service experience.

Strategies of Pricing in the Service Industry

Services have unique characteristics like intangibility, perishability, and variability, which influence pricing strategies. Here are the most common ones:

1. Cost-Based Pricing

• Price is calculated based on the cost of delivering the service plus a markup for profit.

• Works well in transportation, repair, or utility services.

2. Value-Based Pricing

• Price is based on the value delivered to the customer, not the cost.

• Often used in consulting, healthcare, or creative industries.

3. Competition-Based Pricing

• Prices are set considering what competitors are charging.

• Common in industries like telecom, salons, or fitness centers.

4. Penetration Pricing

• Set low prices to enter the market quickly and attract customers.

• Gradually increase once customer base is established.

5. Price Bundling

• Combine multiple services into a single package at a lower price.

• Example: Hotel offering stay + breakfast + airport pickup as a bundle.

6. Dynamic Pricing

• Prices change in real-time based on demand, time, or availability.

• Example: Airlines and ride-sharing apps charge more during peak hours.

7. Psychological Pricing

• Use of pricing tactics like setting the price at ₹999 instead of ₹1000 to create a perception of affordability.

(D) Explain the problems and solution of branding of services.        (07) 

Branding in the service industry is both essential and challenging due to the intangible and variable nature of services. Here's a structured explanation of the problems and their solutions:

Problems of Branding in Services

1. Intangibility

• Problem: Services can't be seen, touched, or stored. This makes it hard for customers to evaluate them before purchase, making branding more abstract.

• Example: You can't "see" the quality of legal advice before experiencing it.

2. Inconsistency / Variability

• Problem: Service quality may vary depending on who provides it, when, and how.

• Example: A customer may get excellent service at a hotel one day, and poor service the next, damaging the brand's consistency.

3. Inseparability of Production and Consumption

• Problem: The service is often delivered and consumed at the same time, making it heavily reliant on the interaction between customer and employee.

• Example: The behavior of a rude staff member may harm the brand image.

4. Perishability

• Problem: Services cannot be stored or inventoried. If a service is not sold today, the opportunity is lost.

• Example: An empty airline seat or unsold spa appointment cannot be recovered.

5. Customer Participation

• Problem: Customers are often part of the service delivery process. Their mood, behavior, or expectations can affect the service experience and, therefore, the brand perception.

• Example: A customer who misunderstands banking procedures may blame the brand unfairly.

6. Difficulty in Differentiation

• Problem: Many services appear similar (e.g., insurance companies, internet providers), making it hard to create a unique brand identity.

Solutions to Branding Problems in Services

1. Create Tangible Elements

• Solution: Use physical evidence such as logos, uniforms, brochures, ambiance, websites, and service environments to represent the brand.

• Example: A well-designed bank branch or mobile app gives a sense of reliability and professionalism.

2. Standardize Service Quality

• Solution: Implement strict training programs, standard operating procedures (SOPs), and use technology to reduce variation in service delivery.

• Example: Fast food chains like McDonald’s offer a consistent experience worldwide through standardization.

3. Empower Employees

• Solution: Employees should be brand ambassadors. Investing in employee motivation, training, and service culture enhances brand experience.

• Example: Hotels like the Ritz-Carlton are known for empowering staff to go the extra mile for guests.

4. Customer Education and Communication

• Solution: Use branding and marketing to educate customers about what to expect and how to interact with the service.

• Example: Telecom brands guide customers through self-service apps and FAQs to reduce confusion.

5. Strong Brand Promise and Consistency

• Solution: Ensure your brand promise (what you stand for) is clear, authentic, and consistently delivered.

• Example: FedEx’s branding revolves around reliability and timely delivery—and they build operations to match that promise.

6. Create Emotional Connection

• Solution: Build emotional appeal by focusing on customer values, empathy, and personalized experiences.

• Example: Airbnb connects with users by promoting “belonging” and “living like a local.”

Q.4 (A) Explain the Gap Model of service quality and state in brief the ways to overcome each gap.         (08)

GAP Model of Service Quality (Parasuraman, Zeithaml & Berry)

The GAP Model identifies gaps that can occur in service delivery, which lead to poor service quality and customer dissatisfaction. It helps organizations understand where service shortfalls happen and how to correct them.

🔹 Gaps in the Model:

GAP 1: Knowledge Gap

Definition: The difference between customer expectations and management’s perception of those expectations.

• Cause: Lack of proper market research or communication between frontline employees and management.

• Example: A bank assumes customers want faster service, but customers really value personalized attention.

Solution:

• Conduct regular customer feedback and surveys

• Improve internal communication

• Use customer analytics to understand real needs

GAP 2: Policy Gap (Design Gap)

Definition: The difference between management’s perception of customer expectations and the service quality specifications set.

• Cause: Poor service design, unrealistic standards, or failure to translate understanding into action.

• Example: A hotel knows guests want quick check-ins but hasn’t streamlined the check-in process.

Solution:

• Set realistic and customer-focused service standards

• Involve frontline staff in service design

• Benchmark with industry best practices

GAP 3: Delivery Gap

Definition: The difference between service quality specifications and the service actually delivered.

• Cause: Lack of training, poor employee performance, or resource constraints.

• Example: A restaurant promises 10-minute delivery but consistently delivers late due to staff shortages.

Solution:

• Provide proper training and tools to employees

• Improve recruitment and staffing

• Set up performance monitoring systems

GAP 4: Communication Gap

Definition: The difference between what is promised in external communications and what is actually delivered.

• Cause: Over-promising in ads or miscommunication between marketing and operations.

• Example: A gym advertises 24/7 access, but certain branches close early.

Solution:

• Ensure realistic advertising and clear communication

• Align marketing with operations

• Monitor and update promotional content regularly

GAP 5: Customer Gap

Definition: The difference between customer expectations and their perception of the service received.

• Cause: Arises from one or more of the above four gaps.

• Example: A customer expects a helpful support call but receives a robotic, unhelpful response.

Solution:

• Close Gaps 1–4 to minimize the customer gap

• Deliver consistent service experiences

• Manage customer expectations through clear, honest communication

(B) What is Service Productivity and evaluate the ways to improve the productivity.        (07)

Service Productivity refers to the efficiency and effectiveness with which a service organization uses its resources (people, time, technology, etc.) to produce and deliver services that meet customer expectations.

In simple terms, it’s about delivering high-quality service with minimum input and maximum output — without compromising customer satisfaction.

🔹 Formula (Conceptually):

Service Productivity = Output (Service Delivered) / Input (Resources Used)

Challenges in Measuring Service Productivity

• Intangibility: Services can’t be seen or measured like physical products.

• Variability: Different staff or times can affect quality.

• Customer Involvement: Customer behavior influences service delivery.

• Quality vs. Quantity: Increasing speed may reduce service quality.

Ways to Improve Service Productivity

Here’s how service organizations can boost productivity without sacrificing quality:

1. Standardization of Processes

• Develop Standard Operating Procedures (SOPs) for routine tasks.

• Ensures consistency and speed in service delivery.

• Example: Fast food chains like McDonald’s use strict process flows to increase efficiency.

2. Use of Technology

• Automate repetitive or manual tasks using self-service kiosks, mobile apps, CRM software, etc.

• Enhances speed, reduces errors, and lowers labor costs.

• Example: Banks using ATMs and online banking to handle routine transactions.

3. Employee Training & Empowerment

• Skilled employees perform tasks faster and more accurately.

• Empowered employees can solve problems without escalating them.

• Example: A trained hotel receptionist checks in guests faster while delivering a pleasant experience.

4. Capacity Management

• Match staffing and resources with customer demand patterns.

• Use tools like demand forecasting and shift scheduling.

• Example: Airlines and call centers use software to plan for peak and off-peak periods.

5. Outsourcing and Specialization

• Outsource non-core activities (like housekeeping, IT support).

• Let employees focus on core service areas where they add the most value.

6. Customer Involvement

• Let customers handle parts of the service process through self-service options.

• Reduces dependency on staff.

• Example: Customers booking flights or hotel rooms online.

7. Eliminating Waste & Bottlenecks

• Identify steps in the process that don’t add value.

• Use Lean Management or Six Sigma to streamline operations.

8. Encouraging Teamwork and Communication

• Well-coordinated teams reduce delays and rework.

• Promotes a culture of efficiency and continuous improvement.

OR

Q.4 (C) Explain SERVQUAL Model with reference to Airline industry        (08)

The SERVQUAL Model was developed by Parasuraman, Zeithaml, and Berry to measure service quality by comparing customer expectations with their perceptions of the actual service received.

It is based on five key dimensions of service quality, known as RATER:

1. Reliability

2. Assurance

3. Tangibles

4. Empathy

5. Responsiveness

✈️ SERVQUAL Dimensions in the Airline Industry

Let’s break down each SERVQUAL dimension using examples from an airline's customer service experience:

1. Reliability

Definition: The ability to perform the promised service dependably and accurately.

In Airlines:

• Flights departing and arriving on time.

• Baggage handling with minimal loss or damage.

• Consistent check-in and boarding processes.

Example: An airline consistently delivers flights on time and handles luggage efficiently — this boosts reliability in the customer’s mind.

2. Assurance

Definition: The knowledge and courtesy of employees and their ability to inspire trust and confidence.

In Airlines:

• Pilot and crew professionalism.

• Cabin crew explaining safety procedures clearly.

• Ground staff providing accurate information confidently.

Example: A well-trained crew confidently handles emergencies or questions, giving passengers peace of mind.

3. Tangibles

Definition: The physical facilities, equipment, appearance of personnel, and other visible cues.

In Airlines:

• Cleanliness of aircraft and airport lounges.

• Appearance of uniforms, tickets, boarding passes.

• In-flight amenities (screens, meals, headphones).

Example: A modern aircraft interior and neatly dressed crew improve customer perception of quality.

4. Empathy

Definition: Providing caring, individualized attention to customers.

In Airlines:

• Attending to special requests (e.g., wheelchair assistance, children’s meals).

• Addressing personal needs during flight delays.

• Staff showing patience and understanding.

Example: A flight attendant helps an elderly passenger with seating and meal options — this reflects high empathy.

5. Responsiveness

Definition: Willingness to help customers and provide prompt service.

In Airlines:

• Fast check-in and boarding assistance.

• Quick handling of passenger complaints or inquiries.

• Real-time updates about flight changes or cancellations.

Example: Prompt rebooking after a flight cancellation shows the airline is responsive to customer needs.

Benefits of Using SERVQUAL in Airlines

• Helps identify service gaps between customer expectations and perceptions.

• Guides training programs for frontline staff.

• Improves customer satisfaction and loyalty.

• Supports continuous improvement in service design and delivery.

(D) What is Transnational Strategy? What are the factors favouring Transnational? Strategy? (07)

A Transnational Strategy is a type of international business strategy that combines global efficiency with local responsiveness. It allows a company to standardize certain core elements of its operations across countries (for cost and efficiency) while also adapting to local markets to meet cultural, legal, and consumer needs.

Features of a Transnational Strategy:

1. Global Integration: Economies of scale through centralized operations, R&D, and production.

2. Local Responsiveness: Tailoring products/services to meet local customer preferences.

3. Knowledge Sharing: Best practices and innovations flow between units in different countries.

4. Balanced Structure: Neither fully centralized nor fully decentralized — decisions are shared.

Example:

McDonald’s uses a transnational strategy. It maintains a global brand image and core menu, but also adapts its offerings (like the McAloo Tikki in India) to local tastes.

Factors Favouring a Transnational Strategy

1. High Pressure for Cost Reduction

• Companies need to standardize production or sourcing to reduce costs.

• Example: Using a global supply chain for components.

2. High Pressure for Local Responsiveness

• Different countries have different laws, tastes, cultural norms, and competitors.

• Example: Adapting food menus, marketing campaigns, or packaging to local languages and preferences.

3. Global Competition

• Competitors are operating in many markets, and companies must do the same to stay competitive.

4. Access to Global Talent and Innovation

• Encourages cross-border collaboration, sharing of R&D, and leveraging diverse talent.

• Example: Tech companies sourcing ideas from teams in the U.S., India, and Germany.

5. Economies of Scale

• Centralizing certain operations like IT, finance, or procurement allows the company to reduce duplication and improve efficiency.

6. Advances in Technology

• Cloud computing, digital communication, and data sharing make it easier to coordinate global operations.

7. Emerging Markets

• Growth in emerging economies increases the need for locally adapted products while maintaining global control over brand and operations.

Q.5 (A) Read the case and answer the following questions

Mr. Shaw and Mr. Moti started an Indian cuisine vegetarian restaurant named Shudh restaurant at Kings Circle. Serving wide variety of regional and traditional cuisines. Many such kind of restaurant were already existing in this place. The Shudh restaurant became very popular soon and people started thronging to it. The restaurant started getting positive reviews on social media. The capacity of the restaurant is 75 people at times and it is observed that around 25 people are waiting outside at a time. During the weekend and peak hours, the number of people waiting outside are even more. The working hours of the restaurant are 12:30 pm to 3:00 pm and & 7:00pm to 11:00pm. It is observed that some of the customers who were in waiting slipped to nearby restaurants.

The management took a serious note of this and decided to acquire adjacent premises for expansion, however this is not possible at this point of time. The management is now thinking of extending the working hours of the restaurant and also seek advice from services marketing scholars on these issues. Questions:

As a service marketing scholar explain the strategies to match demand with supply. (08)

When demand exceeds supply, especially in services like restaurants (which are perishable and time-bound), businesses must adopt demand and capacity management strategies. Here are the key strategies for Shudh Restaurant:

1. Modify Operating Hours

• Extend working hours during lunch and dinner, especially on weekends.

• Add an early lunch slot (11:30 AM) and late-night dining (till 12 AM) during weekends.

2. Reservation and Booking System

• Introduce an online/table reservation system to spread customer visits evenly.

• Accept advance bookings to reduce walk-ins and manage crowding.

3. Use of Technology

• Implement a mobile app or SMS-based waiting system to notify customers when their table is ready.

• Partner with food delivery platforms to divert dine-in load to delivery orders.

4. Optimize Seating Capacity

• Reconfigure table layout to seat more customers without compromising comfort.

• Introduce communal/shared tables during rush hours for faster turnaround.

5. Segment and Target

• Offer special discounts or combo deals during non-peak hours to encourage off-peak visits.

• Attract corporate lunch orders or student meals during weekdays.

6. Reduce Service Time

• Simplify menu items during peak hours for faster preparation.

• Train staff for quick table turnaround without compromising service.

7. Promote Takeaway and Delivery

• Set up a dedicated takeaway counter to serve customers who prefer not to wait.

• Promote loyalty rewards for delivery orders to ease dine-in demand.

8. Demand Forecasting and Staff Planning

• Use historical data to predict busy days and times.

• Ensure sufficient staff availability during weekends and holidays to serve faster.

As a loyal customer give your suggestion to improve and enhance service quality. (07)

1. Improve Communication with Customers

• Use digital displays or a mobile app to show live wait times.

• Provide clear communication about estimated waiting time.

2. Comfortable Waiting Experience

• Create a comfortable, shaded waiting area with seating, fans, and water dispensers.

• Offer snack samples or drinks to waiting customers as a goodwill gesture.

3. Introduce Loyalty Programs

• Introduce a loyalty card or app offering discounts or freebies after frequent visits.

• Give priority access or reserved seating to loyal customers.

4. Maintain Cleanliness and Ambience

• Ensure clean restrooms, well-maintained interiors, and good hygiene at all times.

• Keep the atmosphere calm, well-lit, and traditional to reflect Indian culture.

5. Customer Flow Management

• Appoint a floor manager to manage seating and address customer concerns.

• Keep staff trained in courtesy, speed, and handling crowd professionally.

6. Collect Feedback Regularly

• Use digital feedback forms or table-top cards to gather real-time suggestions.

• Act on feedback quickly and acknowledge regular customers.

7. Offer Special Services

• Introduce special themed nights, regional food festivals, or live music to enhance customer experience.

• Provide small kids' meals or games to engage families with children.

OR

Q.5. (B) Write a short note on:( any three)        (15)

1. Physical evidence as service mix

In the service industry, the traditional 4Ps (Product, Price, Place, Promotion) are extended to include People, Process, and Physical Evidence, due to the intangible nature of services.

🔹 What is Physical Evidence in Services?

Physical Evidence refers to the tangible elements that support or accompany a service — helping customers to evaluate, experience, and trust the service being offered.

Since services are intangible, physical evidence provides visible cues that influence customer perception and build confidence in the service quality.

Examples of Physical Evidence

• Hotels: Lobby design, room layout, staff uniforms, brochures
• Airlines : Aircraft interiors, boarding passes, in-flight meals
• Hospitals : Cleanliness, signage, staff ID badges, medical equipment
• Banks : Branch design, ATM interface, stationery, website
• Restaurants : Menu design, table setup, ambiance, uniforms

Importance of Physical Evidence in Service Marketing

1. Makes the Intangible Tangible

• Helps customers visualize and judge service quality before and during the experience.

2. Builds Trust and Credibility

• A professional and clean physical environment increases customer confidence.

3. Supports Brand Image

• Consistent design and appearance (e.g., logos, colors, employee uniforms) reinforce the brand identity.

4. Influences Customer Experience

• Well-designed physical environments can make the experience more comfortable, enjoyable, and memorable.

5. Differentiates the Service

• In competitive markets, tangible cues can set a brand apart (e.g., a modern gym with high-end equipment vs. an outdated one).

2. Benchmarking

Benchmarking is the process of comparing your business processes, performance, or strategies against the best practices of industry leaders or competitors. The goal is to identify gaps, improve performance, and gain a competitive advantage.

Definition:

“Benchmarking is a continuous process of measuring products, services, and practices against the toughest competitors or those companies recognized as industry leaders.” – Robert C. Camp

Types of Benchmarking

1. Internal Benchmarking : Comparing performance between departments or units within the same organization.

Example : Comparing customer service performance across branches of a bank.

2. Competitive Benchmarking : Comparing with direct competitors.

Example: Airline A compares its baggage handling efficiency with Airline B.

3. Functional/Industry Benchmarking : Comparing with similar functions in other industries.

Example : A hotel chain studying hospital check-in procedures to improve its own.

4. Generic Benchmarking : Comparing business processes regardless of the industry.

Example: Studying Amazon’s logistics model to improve e-commerce delivery.

Steps in the Benchmarking Process

1. Identify what to benchmark (e.g., customer service, delivery time, cost).

2. Choose benchmarking partners (competitors or best-in-class companies).

3. Collect data (via research, site visits, interviews).

4. Analyze the gap between your performance and the benchmark.

5. Set goals and action plans to close the performance gap.

6. Implement improvements and monitor progress.

Benefits of Benchmarking

• Improves performance and efficiency

• Encourages continuous improvement

• Enhances customer satisfaction

• Identifies industry trends and innovations

• Promotes learning from others’ successes and failures

Challenges in Benchmarking

• Difficulties in obtaining accurate data from competitors

• Resistance to change within the organization

• Misinterpreting data without proper context

3. Zone of Tolerance

The Zone of Tolerance (ZOT) is a service quality concept that describes the range of acceptable service performance levels a customer is willing to accept. It lies between two thresholds:

1. Desired Service – the level of service the customer hopes to receive.

2. Adequate Service – the minimum level of service the customer is willing to tolerate.

If service falls within this range, customers are satisfied. If it falls below, they feel disappointed. If it exceeds, they are delighted.

Definition:

“The Zone of Tolerance is the range between the service level customers desire and the level they consider acceptable.”
– Parasuraman, Zeithaml, and Berry

Why Does the Zone of Tolerance Matter?

Because service is intangible and variable, customers don't always expect perfection — but they expect consistency within a certain range. Knowing that range helps businesses:

• Design better service experiences

• Manage customer expectations

• Reduce dissatisfaction and complaints

Components

Desired Service : Ideal service standard

Example : Fast seating, polite staff, delicious food

Adequate Service : Minimum acceptable service

Example : Wait 10 mins, food is okay, staff is neutral

Zone of Tolerance : Range of acceptable variation

Example : Slightly late service is still okay if food is good

Example in the Airline Industry:

• Desired Service: On-time flight, courteous staff, good in-flight meals.

• Adequate Service: 15-minute delay, limited food, but basic courtesy.

• If the flight is 10 minutes late but staff is helpful, it remains within the zone.

• If the flight is 2 hours late with no updates, it's below the ZOT, leading to dissatisfaction.

Factors Influencing the Zone of Tolerance:

1. Customer Type: Business travelers may have narrower ZOTs than tourists.

2. Service Importance: Critical services (e.g., hospitals) have low tolerance for error.

3. Past Experience: Previous good or bad experiences shape expectations.

4. Situational Factors: A customer in a rush may have a lower tolerance for delay.

Implications for Businesses:

• Monitor customer expectations regularly.

• Train employees to consistently perform at or above the adequate level.

• Use service recovery strategies to fix problems when service drops below the ZOT.

• Aim to exceed the desired level to create customer delight and loyalty.

4. Ethics in Service Marketing

Ethics in service marketing refers to the practice of conducting honest, fair, and responsible marketing of services. Since services are intangible, consumers heavily rely on trust and perception, making ethical behavior even more critical.

• Services involve close human interaction (e.g., healthcare, education, banking).

• Customers often cannot fully evaluate the service before purchase.

• A single unethical act can damage brand reputation and customer trust.

Ethical Issues in Service Marketing

1. Misleading Advertising: Overpromising or false claims

Example: "100% guaranteed results" in a fitness service

2. Hidden Charges : Not disclosing full costs upfront

Example : Airlines charging extra for baggage or seat selection

3. Unethical Upselling : Pushing unnecessary services

Example: Banks selling insurance products without full explanation

4. Customer Data Misuse : Using personal information without consent

Example: Sharing client data with third parties without approval

5. Poor Complaint Handling : Ignoring or mishandling customer grievances

Example : Telecom companies making it hard to reach support

6. Discrimination : Unequal service based on gender, race, or age

Example: A hotel providing better service to foreign guests only

Principles of Ethical Service Marketing

1. Honesty
   Be truthful in communication, pricing, and offerings.

2. Transparency
   Clearly disclose all terms, conditions, and fees.

3. Fairness
   Provide equal treatment to all customers.

4. Respect for Customer Privacy
   Handle personal data with confidentiality.

5. Responsibility
   Be accountable for service failures and resolve issues fairly.

Example – Healthcare Services

In the healthcare sector:

• Ethical marketing includes accurate diagnosis info, no fake testimonials, and respecting patient confidentiality.

• Unethical marketing might involve false treatment claims or targeting vulnerable patients with fear tactics.

How to Ensure Ethical Marketing in Services

• Create and follow a code of ethics for employees.

• Train staff on ethical behavior and customer rights.

• Use truthful and clear messaging in ads and promotions.

• Handle feedback and complaints openly and constructively.

• Conduct regular audits of marketing and customer service practices.

5. Recent trends in insurance industry

The insurance industry is undergoing significant transformations driven by technological advancements, evolving consumer expectations, and emerging global challenges. recent trends include:

1. Technological Advancements

• Artificial Intelligence (AI) Integration: Insurers are increasingly adopting AI for data analysis, risk assessment, and personalized customer interactions, enhancing efficiency and decision-making processes.

• Internet of Things (IoT) Utilization: The integration of IoT devices allows insurers to collect real-time data, leading to more accurate risk assessments and the development of usage-based insurance models. ​

• Blockchain for Fraud Prevention: Blockchain technology is being employed to enhance transparency and security in claim processing, reducing fraud through immutable record-keeping and smart contracts. ​

2. Evolving Consumer Expectations

• Demand for Trust and Transparency: Consumers are seeking more transparent and trustworthy interactions with insurers, prompting companies to focus on clear communication and ethical practices. ​

• Personalized Insurance Products: There is a growing expectation for insurance products tailored to individual needs, leading to the development of customizable policies and flexible coverage options. ​

3. Market Dynamics

• Consolidation Trends: The insurance industry is experiencing consolidation, with mergers and acquisitions aimed at achieving scale and operational efficiency, though at a slower pace compared to the banking sector. 

• Increased Demand for Cyber Insurance: As cyber threats escalate, there is a heightened demand for cyber insurance policies to protect businesses and individuals from digital risks. ​

4. Climate Change Impacts

• Rising Catastrophe Losses: The increasing frequency and severity of natural disasters, driven by climate change, are leading to higher insured losses and prompting insurers to reassess risk models.

• Sustainability Initiatives: Insurers are integrating sustainability into their operations, recognizing the long-term financial risks posed by climate change and the need for proactive measures. ​

5. Regulatory and Economic Factors

• Tariff Implications on Auto Insurance: Recent tariffs on imported vehicles are contributing to increased car prices, subsequently driving up auto insurance premiums. ​

• Economic Growth Influencing Premiums: Global economic conditions are influencing insurance premium growth, with advanced markets contributing significantly to the expansion in premium volumes. ​