UNIT 4.

SERVICE ENVIRONMENT
The Service Environment includes all aspects of the organization’s physical facility
(servicescape) as well as other tangible aspects of tangible communication .The Service
Environment is used as a criteria in evaluating services by consumers.

Purpose of Service Environment

It helps companies to create distinctive image and unique positioning. And relate
to the style and appearance of the physical surroundings and other experimental
elements encountered by the customers at service delivery site.

Service environment affects buyer behavior in three ways:-

I. Message-creating medium: symbolic cues to communicate the

distinctive nature and quality of the service experience.

II. Attention-creating medium: make service environment stand out from

competition and attract customers from target segments.

III. Effect-creating medium: use colours, textures, sounds, scents and spatial
design to enhance desired service experience
Delivering Service Through Intermediaries
Nowadays, many services are delivered by intermediaries. Two service marketers are involved
in indirect distribution; the service principal and the service deliverer. The service principal is
the originator and the service deliverer is the intermediary. The service principal is the entity
which creates the service concept. The service deliverer is the entity which deals with the
customers during the execution of the service. Thus, in the indirect channel, both the service
supplier and the intermediaries play an important role.
Role of service intermediaries in Indirect distribution
Service intermediaries discharge many important functions for the service principal.

1. Service intermediaries co-produce the service and make the service available to
customers at a place and time of their choice, thus fulfilling the promises made by the
service firms to customers.

2. The Franchisee uses the process developed by the service principal and renders
satisfying service to customers.

3. Service intermediaries also make service locally available.

4. Intermediaries act as multiple service principals. Intermediaries such as travel agents

and insurance agents provide retailing function to customers.

5. In many financial or professional services, intermediaries build a relationship based

on trust which is essential in a complex service offering.

6.Services are intangibles and perishables and inventories do not exist. Therefore, service
distribution focuses on identifying ways to bring the customer and principal together.
Service intermediaries such as franchisees agents, brokers, etc., act as a connecting link
between the service firm and customers.
7.Service intermediaries deliver services according to the specifications of the principals.
8.Service intermediaries are in direct contact with the customers. So, they are in a position to
determine the way customers perceive the quality of the service.

9. Service intermediaries advise the customers on the choice of the service which satisfies their
needs.

10. Intermediaries provide after sales support to the customers. For example, an insurance
agent guides the policy holder in making a claim and goes through the procedural formalities in
connection with that claim.
11. An intermediary, as a co-producer of a service shares the risks of providing services by
contributing their own capital to acquire the equipment needed for the delivery of service.

12. A service provider sells only his own services. But consumers prefer to buy service from an
intermediary who offers a wide variety of services including these offered by competing service
principals. The advantage of intermediaries is that they offer different services at one location.
13. Intermediaries relieve the service principal from the botheration of making huge investment
on his own. As intermediaries operate at different places, a service principal can invest his
funds in core services.

Complaint Management System

Customer complaint management is a system that allows customers to register
their dissatisfaction with the organization. It allows organizations to obtain
feedback on how to improve their services and to decrease the likelihood of
problems with the customer base.1

PURPOSE & LINK TO INTEGRITY

An effective customer complaint mechanism can improve accountability, make

sure that customers’ expectations are met and ensure that the goods or services
that the organization provides are continuously being improved.

A customer complaint system is an effective tool to enhance good governance.

Without effective complaint mechanisms, and where awareness about the rights
and responsibilities of organizations and consumers is lacking, customers are
unable to seek redress. By unveiling quality problems, customer complaints might
help to detect illicit practices as these are often resulting in low quality and
efficiency.
Addressing every employee complaint shows that you care about your staff. You
want to emphasize that their safety and well-being is your top priority. Having a
complaint management system can help you manage issues with:
1.Harassment
2.Discrimination
3.Health and safety
4.Violence
5.Theft
6.Ethics and compliance

Showing that you can resolve complaints in a timely, effective manner will give
your employees more confidence in their workplace. It can also save your
company from hefty legal fees. Employees who feel that their concerns were not
properly addressed may take legal action, which could lead to reputation damage
and fines.
SERVICE GUARANTEE
A service guarantee is a marketing tool service firms have increasingly been using
to reduce consumer risk perceptions, signal quality, differentiate a service
offering, and to institutionalize and professionalize their internal management of
customer complaint and service recovery.[1] By delivering service guarantees,
companies entitle customers with one or more forms of compensation, namely
easy-to-claim replacement, refund or credit, under the circumstances of service
delivery failure. Conditions are often put on these compensations; however, some
companies provide them unconditionally.
BENEFITS
According to Christopher Hart,service guarantees provide the following powerful
platforms for promoting and accomplish service quality:
By delivering service guarantees, firms are forced to focus on customers’ want
and expectation in every aspect of the service.
Guarantees establish clear standards which create a common image of what the
company stands for in both customers and employees’ mind. Managers are
motivated to seriously concern service guarantees, because they emphasize the
financial expenditure of quality failures.
With service guarantees, firms are required to build effective systems to generate
meaningful customer feedback and develop corresponding courses of action.
Guarantees require service organizations to understand reasons of failure and
motivate them to identify and manage potential fail points
Guarantees help customers to reduce risk in making purchase decisions and to
reinforce their long-term loyalty.
For customers, service guarantees play an important role in alleviating perceived
risks of the purchase. The guarantees also facilitate more ease and more
likelihood for customers to complain, since they expect the front-line staff to be
ready with resolutions and appropriate compensations. From companies’
perspectives, according to the vice President of Hampton Inn, “Designing the
guarantee made us understand what made guests satisfied, rather than what we
thought made them satisfied.”
4 Types of Service Guarantees for You to Consider
If you’re a Canadian and are old enough to remember Eaton’s, Canada’s one-time
retail giant, then you might recall the phrase, “Goods Satisfactory or Money
Refunded.”
Receiving satisfactory goods or your money back is a policy that has been
embraced by many businesses for years. What store have you been to that
doesn’t allow for merchandise to be returned for a refund, an exchange, or at
least a credit granted?
With few exceptions all retailers offer refunds, but what about the selling of
services?
It is much easier to return merchandise that is mass produced and can be resold.
Service solutions can’t be rewrapped and returned in their original packaging. By
their very nature services tend to be customized to meets the needs of each and
every buyer. Money back guarantees for the service seller are a tricky thing.
So if you do offer service guarantees what then are your options?
In their article, “Designing Service Guarantees – Is Full Satisfaction the Best You
Can Guarantee? (Journal of Services Marketing),” Jochen Wirtz and Doreen Kum
consider four distinct categories of service guarantees:

1.Single-attribute specific guarantee – one key attribute of the service is covered

by the guarantee.
Example: “Any pizza will be delivered to your door within 30 minutes of ordering
or it’s free.

2.Multi-attribute specific guarantee – A few important attributes of the service

are covered by the guarantee.
Example:A hotel: “Our quality commitment to you is to provide:a friendly,
efficient check-in; a clean, comfortable room, where everything works; a friendly,
efficient check-out. If this commitment isn’t met, we will give you $20 in cash.”

3.Full-satisfaction guarantee – All aspects of the service are covered by the

guarantee. There are no exceptions.
Example: Lands’ End’s guarantee: “ If you are not completely satisfied with any
item you buy from us, at any time during your use of it, return it and we will
refund your full purchase price. We mean every word of it. Whatever. Whenever.
Always. But to make sure this is perfectly clear, we’ve decided to simplify it
further.GUARANTEED. Period.”
4.Combined Guarantee – All aspects of the service are covered by the full-
satisfaction promise of the guarantee. Explicit minimum performance standards
on important attributes are included in the guarantee to reduce uncertainty.
Example: Datapro Information Services guarantees: “to deliver the report on time,
to high quality standards, and to the contents outlined in this proposal. Should we
fail to deliver according to this guarantee, or should you be dissatisfied with any
aspect of our work, you can deduct any amount from the final payment which is
deemed as fair.”
Distribution Growth Options
Every small business wants to sell more. Rather than simply thinking of ways to get more
customers into your store, however, start thinking of ways to get your products or services out
to more consumers. One of the best strategies for gaining more buyers and increasing revenue
is to sell through additional venues. Your small business can choose from a variety of
distribution channels, all of which can affect your target market, product, price and reputation.
You may need to experiment with a mix of distribution options to determine the best strategy
for your company to be successful.

What is a distribution channel?

At its most basic level, a distribution channel is the means of getting the product to the
customer. It is part of a business’s marketing strategy and includes the product, promotion and
price.

Distribution channels are part of the downstream process, as opposed to the upstream
components (supply chain). A distribution channel can be short or long, and simple or complex,
depending on whether it leads directly from the company to the consumer or has several
intermediaries.

Intermediaries are other companies, such as a retailer or distributor that sells products to
consumers on a company’s behalf. The number of parties involved in the channel can affect the
ultimate price to the consumer and/or the profit to the selling entity.
What is included in a distribution channel?
Distribution channels can include the elements of producer, wholesaler, retailer and consumer.
Only the producer and consumer are required, though, as a producer can sell directly to a
consumer with no intermediary in a short, direct distribution channel. This would be the case if
you sold your product in a small storefront that you ran yourself or via a mail order business.

What are the benefits of having a distribution mix?

Expanding your distribution channels can be an effective way to increase

your business. These are some advantages of broader distribution channels:

Selling to more customers can

Bigger
raise revenue, cut per-unit costs
profits
and boost the bottom line.

If you're selling through one

channel, you're putting all your
eggs in one basket. Selling
Less risk through multiple channels
distributes the risk and gives you
the flexibility to experiment with
new channels.

Making products available in

Brand more locations raises consumer
building awareness of your offerings and
expands your brand.

Types of distribution channels

Retail

Take advantage of the marketing and advertising power of existing retailers

by selling your product through them. Depending on your product, the best
option for this type of distribution channel may be specialty stores or
department stores so consumers can see and test the product in person
before they buy it.
Wholesale

If you manufacture your own products, wholesalers may be an ideal choice to

broaden your product base. There are advantages of this distribution method:
Wholesalers buy in bulk, which increases your bottom line and reduces your
storage needs, and they often have transportation networks in place, which
relieves you of the cost and hassles of moving your products.

Sales reps

Consider hiring sales representatives to widen your reach. Sales reps can
reach out to consumers and businesses directly, conducting outreach on
behalf of a business. By choosing reps who work independently, you can
avoid the costs associated with opening additional offices in targeted areas.

Direct marketing

Marketing directly to customers can open up your products and services to a

local, regional, national or even global audience. You can use common tools
– such as flyers, brochures and postcards – to open up direct mail channels,
or you can try to get your product placed in a big-name catalog.

Telemarketing

Opening up a telemarketing distribution channel can give you access to

consumers nationwide without the expense of opening retail locations.
Telemarketing requires trained staff, however, which can raise costs

Internet

E-commerce is a rapidly growing channel, with countless businesses selling

online through well-known marketplaces and up-and-coming comparison-
shopping sites. E-commerce allows businesses to sell to consumers globally
and offer products that brick-and-mortar stores may not have the capacity
to sell to consumers.
International

International markets can offer higher profit margins and big growth.
However, they can come with significant cultural barriers and bureaucratic
hassles, according to the International Trade Administration. Consider the
following tips if you use international distribution channels:

Prepared by

Amar Ragi M.S