Page 112 - DMGT522_SERVICES MANAGEMENT

Unit 4: Service Strategies

4.5 Summary Notes

A service firm has to take business decisions at three levels: corporate level, business unit
level and functional level. Firm’s decision on the marketing strategy is based on BCG
Model, GE matrix Model, Porter’s Model and Ansoff’s Grid.
A service firm uses BCG Matrix to categorize its SBUs or its products as Stars, Cash Cows,
Problem Children (or Question Marks) and Cash Crunch (or Dogs). The parameters of
classification are market share relative to its competitors and the growth rate of the
industry of the respective SBUs.

GE model is also used for allocating limited resources amongst a service firm’s SBUs or
service products, and then developing marketing and corporate level strategies for them.

For strategies at the SBU level, Michael Porter urges service firms to first assess scope of
target market and differential advantage(s) and then choose the appropriate strategies.

The basis of the Ansoff Grid is that growth becomes an objective for the service firms as it
will garner revenues make it competitive and strong – and get profits. Growth can be
achieved only with greater understanding of the service firm’s markets and its offers – and
deliberately and methodically utilising them as growth drivers.
Strategy for a marketer would imply a plan of action that is the prerogative of top marketing
management, is usually long term and comprehensive in concept, and affects the whole
organisation and the firm’s whole market.

Service recovery is a process that identifies service failures, effectively resolves customer
problems, classifies their root cause, and yields data that can be integrated with other
measures of performance to assess and improve the service system.

An organisation has to track and sketch the demand level for its services at specific time
periods. If an organisation maintains a customer database and a record of varying demand
levels over a period of time, this can be done with ease and accuracy.

To match its demand and capacity, there are two options for an organisation. It can either
opt to shift the demand to meet the capacity or to increase or decrease the capacity to
match the demand fluctuations.
In order to alter capacity to match demand the firm can employ part time workers,
outsource, share facilities, rent equipments, schedule maintenance during downtime, cross
train employees, etc.
The queuing system consists primarily of the waiting line(s) and the available number of
servers. Factors to consider with waiting lines include the line length, number of lines,
and queue discipline.

Managing waiting lines is important aspect of service management and it can be done by
diverting customers attention while waiting, informing customers about waiting time,
encouraging them to visit during off peak period, segmenting customers, training servers
to be more user friendly, etc.

4.6 Keywords

Cash Cows: Low growth or mature industries having relatively high market shares.
Cash Crunch: SBUs not doing well vis-à-vis competitors nor is their industry growing.

Cost Leadership: Competitive strategy where service firm seeks to be a low cost producer.

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