Category: Management Notes

Marketing of education is a subject with very wide coverage if one considers that formal education begins at the school age and depending upon the choice, vocation and circumstance of the persuants, matures into intermediate and higher levels of learning including professional and specialised fields. Apparently, benefits sought from higher and professional or vocational courses are more tangible or measurable in terms of entry qualifications to a chosen profession, certification to enable practicing a profession or relative ease of access to a suitable form of livelihood. Not attempting to cover the marketing of education per se, the scope of this unit is limited to the post school or higher education.

Without making specific commends about any particular discipline, the unit deliberately seeks to keep the treatment of the subject general, as the objective is to develop a basic understanding of the concepts involved in the marketing of education as a special case of marketing of services.

Interestingly, the need to ‘market’ their services has not really been felt by the education sector, as educational institutions, be they colleges or Universities or institutions catering to specific fields like ours, have faced more demand than they could cope with. For specialised fields like management and computer education, where attractive market potential has increasingly caused more and more institutions to be set up, competitive situation is changing. Even the institutions facing heavy demand have been confronted with the question of being able to choose the desired target customers, and therefore face issues like product differentiation, product extention, diversification and service integration. There is a basic concern with building and retaining organizational reputation for creating a ‘pull’ in the market. All this has activated some interest in the hitherto neglected area of marketing of education services. Let us try to understand some of the basic services marketing concepts, relevant to marketing of education. Before going into the subject of education services marketing it is important to understand the concept of education as a service. Going by the AMA definition “services are those separately identifiable, essentially intangible activities, which provide want satisfaction and are not necessarily tied to the sale of a product or another service”1. Providing a service may or may not require the use of tangible goods. However, when such use is required, there is no ownership transfer of these tangible goods in service buying transaction. Education as a service, then, can be said to be fulfilling the need for learning, acquiring knowledge-providing an intangible benefit (increment in knowledge, professional expertise, skills) produced with the help of a set of tangible (infrastructure) and intangible components (faculty expertise and learning), where the buyer of the service does not get any ownership. He may have tangible physical evidence to show for the service exchange transaction but the actual benefit accrued is purely intangible in nature.

Service characteristics and implications for marketing of education

1. Intangibility

Education like most ‘pure’ services is an intangible dominant service, impossible to touch, see or feel. Evaluation of this service however can be obtained by judging service content (curricula, course material, student workload, constituent faculty) and the service delivery system. The consumer, based on these evaluations, has a number of alternative choices before him and may make selection on the basis of his own evaluation referrals, opinions sought from others and of course a brand or corporate image of the organisation providing education. At the end of the service experience, the consumer gets something tangible to show for his efforts i.e. a certificate or a grade card denoting his level of proficiency at the given course/programme. According to Bateson, finer distinction of intangibility into palpable and mental intangibility, has implications for the marketing of the educational services.6 For reasons of both mental and palpable intangibility:

• Education cannot be seen or touched and is often difficult to evaluate: It is therefore, imperative to build in “service differentaition” in the basic product to enable competitive positioning.
• Precise standardisation is difficult: For educational packages of same levels and bearing similar certification (e.g. B.A., B.Sc., and B.Com. degree programmes, postgraduate commerce and science programmes, management diploma and degree programmes) across universities and colleges, it is often difficult to bring about standardisation of course design as resources/needs/objectives of different institutions may differ. Institutions like Universities, though, try to manage equivalence in standards through Boards of Studies which are generally inter-university bodies. Technical education is sought to be standardised through bodies like the All India Council for Technical Education. Interestingly, the lack of standardization also opens up the marketing opportunity of creating highly differentiated, need based course packages, suited to chosen target groups of customers or serving specialised/localised needs.
• Education as a service cannot be patented: This feature implies that courses designed or developed at one institution can be replicated and offered at other institutions. It also implies that as far as the service product features are concerned, all advantages of a given competitor have an essentially perishable character. Only those discernible strengths which have their basis in the people resource, cannot be easily replicated. Hence, the added importance of faculty selection and motivation for educational institutions.

As these implications of intangibility become apparent to the service product designers and providers in the field of education, the following pointers to marketing planning emerge:

i) Focus on account of intangibility should increasingly be on benefits delivered by the service system and the uniqueness of the package that is being offered. The benefit accruing to the student may emanate from the service product-its depth, width, level or variety or from the uniqueness of the delivery system, the evaluation system or the extremely high goodwill enjoyed by the institution.

ii) Education, like most other pure services, should be tangibalised so that the beneficiary has some physical evidence to show for his achievements. Certifications for various levels of attainment, citations and separate certificates for any special achievements or activities should be duly prepared and delivered in time to be meaningful.

iii) Branding through effective use of Institute/University acronym, to aid instant identification and recognition should be practiced. Concerted efforts at building up organisation’s reputation through performance as well as through skillful use of communication tools would need to be carried out to associate this ‘brand name’ with a desired ‘brand image’.

2. Perishability

Services are perishable and cannot be stored. To an extent, education displays this characteristic which results in certain features.

• Production and consumption are simultaneous activities: This is true of most conventional teaching institutions where face to face teaching necessitates simultaneous production and consumption. Open and distance learning systems which make substantial use of technology, however, have made it possible for production and consumption of the service to be carried out at different times-the use of audio-video units and preparation of course materials sent to the students across the consumer population, are designed to meet the challenge posed by the perishability character of services.
• No inventories can be build up: This is true of most services, as well as education, as an unutilised service like a course on offer, or a lecture scheduled to be delivered, cannot be stored, if there are no students enrolling for the course or to attend the lecture. This factor opens up the challenge of managing the service in the face of fluctuating demand. Nearly all universities at one time or the other have faced the problem of overstaffing, when certain disciplines went out of vogue, like pure sciences and post graduate courses in languages. The marketing implications of perishability necessitate that a better match between supply and demand for educational packages would need to be made. Course design and course offers need to be preceded by a need analysis of the target population before the decision to launch them is made. This points towards the use of marketing research techniques for service development (designing the course concept) and planning, but more than that it necessitates a shift from ‘institution orientation’ to a student or ‘customer orientation’. Courses need not be offered because the institutions have available expertise in an area or it is something that the institution has been traditionally doing. In consonance with the marketing concept, the capability of finding a better fit between the needs of the society and the design of the offering, would define the difference between an effective and a non-effective institution.

3. Inseparability

Services are also characterised by the factor of inseparability in the sense that it is usually impossible to separate a service from the person of the provider. In the context of education, this translates into the need for the presence of the performer (the instructor) when the service is to be performed and consumed. This necessarily limits the scale of operations to the number of instructors available, it also means that the distribution mode is more often than not direct in the sense that no intermediaries are involved; the transfer of knowledge is directly from the provider to the learner. As noted before, open learning systems have overcome the characteristic of inseparability by incorporating the teacher into the material and bringing about a separation between the producer and the service. A direct marketing implication of this inseparability is the need for obtaining/training more service providers as well as the need for more effective scheduling of operations.

4. Heterogeneity

Heterogenity in the context of services means that unlike product manufacturing situations where design specifications can be minutely standardised and followed, the standards of services, educational services included, would depend upon who provides the service and how. This heterogenity of performance renders service offers for the same basic “service product” from different institutes vastly different from each other. Even though standardisation of courses according to some prescribed norms may be attained, it is difficult to ‘standardise’ individual performance i.e. that of the faculty resource person. That, perhaps, is not even a desirable goal in education, but maintenance of a certain quality standard across ‘performers’ certainly is. In the absence of accepted quality standardisation mechanisms in this context, it is the market forces alone, which would force quality standards on education. Dwindling registrations in institutions, snatching away of “market shares” by more effective competitors is what is making institutions take a renewed look at quality of service delivery and mechanisms for maintenance of standards. In terms of marketing implications, the hetrogenity characteristic of educational services, necessitates careful personnel selection and planning, constant and careful monitoring of standards which can provide cues to the prospective customers to aid choice of institutions. Examples of these cues could be success rates of the placement programme, the absorption of the institutions product in the job market, or the performance of the pass-outs at other competitive examinations.

5. Ownership

Ownership or the lack of it also characterises service. In the context of education, the customer only buys access to education, or derives the learning benefit from the services provided. There is no transfer of the ownership of tangibles and intangibles which have gone into creation of the service product. Payment of fees (price for the service) is just the consideration for access to knowledge and for the use of facilities for a given tenure.

The growth of the Services Sector in India is a unique example of leap-frogging traditional models of economic growth. Within a short span of 50 years since independence, the contribution of the service sector in India to the country’s GDP is a lion’s share of over 60%. However, it still employs only 25% of the labour force. Consequently, agriculture (which is stagnant) and manufacturing (which has not yet risen to its full potential) continue to sustain the majority of our employed population. This presents a unique challenge to future economic growth in India and requires out of the box solutions that will help rapidly harness the potential of the service industry in India. Invest India takes a look at the contribution of the services sector in the Indian economy, its successes and also explores potential enablers for future equitable economic growth.

Service Sector in India: Sectors and Growth potential

Let us now look at the list of service sectors in India that perform, as well as demonstrate strong potential for future growth.

1. IT-BPM/ Fintech

The IT/ITeS & Fintech segments provide over $ 155 bn in gross value add and have the potential to grow between 10 -15% p.a. Exports form its largest component. So far, our key advantage has been low – cost labour arbitrage in a predominantly English – speaking country. Going forward, the IT and ITeS segments require significant upskilling to move beyond a ‘low – cost low value add service provider’ to a ‘high value add partner’.

Indian IT companies can also leverage their skill sets to provide fintech solutions to global financial customers. Financial risk management services, insurance, natural disaster modelling and underwriting are examples of high value add services performed within India for a global audience.

2. Healthcare & Tourism

The current contribution of the healthcare industry is over $ 110 bn and is expected to touch $ 280 bn by 2020. Availability of world – class medical facilities, skilled doctors, technicians and pharmaceuticals are some of our advantages. With digital communication and interfaces, diagnostic medicine can also be tapped into as a service for global customers.

Similarly, for tourism, India is renowned for its places of natural beauty and historical significance. Tourism presently contributes $ 47 bn to the country’s GD, compared with $ 115 bn for China. Thus, tourism has exponential possibilities to boost the Indian services sector in the next decade.

To attract significant revenues, improved customer experience (medical or tourism) is the key factor that will determine its future growth. In this context, government initiatives such as e – Visas, better infrastructure facilities, safety, connectivity etc. are enablers in the right direction.

3. Space

India captured the world’s attention last February when it broke the record for launching the most number of satellites into space. Moreover, this was done at a fraction of the cost incurred by other space powers.

Indian services in the space domain, with proven expertise in multiple launch technologies, provide it with a significant advantage over its peers in the global space transportation industry. Our launch capabilities have a near 100% track record. Many countries are actively looking to piggyback on India’s launch facilities. This demonstrates great potential. The government is actively proving its ability, but more can be done to build capacity in military and non – military space applications. In this context, public – private participation is key to ensure the flow of capital, as well as to strengthen competencies in this area.

4. Logistics & Transportation

India’s natural coastline and vast river network give it a competitive edge in providing transportation and logistics services, both domestically and internationally. These can be classified into ports and ports services, warehousing, trans – shipment services, e – logistics, inland waterways for freight and passengers, expressways and dedicated freight corridors. India’s logistics service sector itself is expected to grow from $ 115 bn to $ 360 bn by 2032.

India should closely look into the development of the service industry, given the potential and need for sustained large scale investment. Investments typically have a long gestation period. However, once the infrastructure is created, linkages to the rest of the economy provide significant multiplier effects. For example, the Mumbai – Pune expressway and the development of service industries in Pune.

5. Other services

Media & Entertainment (animation, gaming, dubbing), Education (online platforms such as MOOC), and Sports (IPL, IFL, Sports Management), Legal/ Paralegal services, Risk management and advisory functions, etc. are areas that can lead to an immense contribution of service industry in the Indian economy.

Top 10 service sector companies in India:

1. Reliance Industries
2. HDFC Bank
3. ICICI Bank
4. HDFC
5. Tata Consultancy Services
6. Larsen & Toubro
7. State Bank of India
8. NTPC
9. Kotak Mahindra Bank
10. Axis Bank

Recent Investments in the service sector

Of late, the government’s efforts in improving ease of doing business and relaxing regulatory norms have resulted in increasing FDI into the country. The following examples demonstrate the strong linkages that FDI has in unleashing the potential, as well as propelling the growth of the services sector in India:

• Connecting Gujarat and Maharashtra, India’s first bullet train has potential similar to that of the Mumbai – Pune expressway, but on a larger scale.
• Manufacturing of Rafale jets in India.
• Building large highway systems in India (expressways and freight corridors), inland waterways (Jalmarg Vikas project), port modernisation and new port development (Sagarmala project)
• Amazon India expanding its logistics footprint
• Creation of a Taiwanese tech park in Karnataka
• A dedicated fund of $ 693 mn, which will be utilised to support sectoral undertakings under the Champion Services Sectors Initiative. These include IT and ITeS, Tourism and Hospitality Services, Medical Value Travel, Transport and Logistics Services, Accounting and Finance Services, Audio Visual Services, Legal Services, Communication Services, Construction and Related Engineering Services, Environmental Services, Financial Services and Education Services.

Future Prospects of the Service Sector in India

The service sector in India has the highest employment elasticity among all sectors. Thus, it has the potential for huge growth as well as the capability to deliver highly productive jobs leading to revenue generation. To address the challenge of job creation, the Skill India program aims to achieve its target of skilling/ upskilling 400 million people by 2022. It aims to do this mainly by fostering private sector initiatives in skill development programs, and by providing them with the necessary funding.

Similarly, the Make in India program while attempting to bolster the manufacturing sector will cause a multiplier effect in adding to the portfolio of the Service Sector. In this context, the Startup India initiative is a key enabler for both the manufacturing as well as service industry in India – by offering to support innovative startups.

When manufacturing goods, the process involved takes place in the factory’s premises, keeping the customers at bay. The customer rarely comes in contact with the manufacturing process, as those processes that lie with the factory premises, lie in the sole domain of operations.

Interaction of the customers with the system should be a part of the service creation and hence this makes the customer be a part of the service process. The service failures often are the result of inadequately and inappropriately designed service processes.

Services which depend on customer contact or customers are the recipient of service actions, the customer side of the process can be mapped by identifying service delivery process. A chart that draws and lists the various contact points when the system and the customer come in contact to create a value is known as a flow chart.

Service production and consumption are inseparable, and therefore the customer acts as a co-producer of many services. The service delivery is the outcome of the service process. The process constitutes the service itself. The service characteristics of inseparability and par­ticipation often make the customer, interact and become a part of the process.

Despite such importance of the service process, sometimes service organizations pay very little systematic attention to this aspect of business. As a result, service processes evolve on their own with internal bias or no focus at all. Therefore, it is not surprising that many service organizations are not adequately equipped to serve the customer well and such processes limit the efficiency of the operations.

It is a process to deliver requested service to the end user. Let us take an example of a company which is known for its service processes DTDC begin its operations in the year 1990 and since then, year by year they have achieved various milestones based on their service quality.

This company thrives on its quick service and the reason it is able to do so is its confidence in its processes. To top it, the demand of these services is such that they have to deliver optimally without a loss in quality or in quantity. Thus, the process of a service company in delivering its product is of utmost importance.

Quality of a service is defined by the way it is been processed thus detailing the service process becomes very important for all service provider. Service processes intensely interact with the customer. Production processes differ from service processes. The customer only perceives the output of a production process he selects it and pays for it.

Process is an element of the extended marketing-mix of services marketing. A process outlines the procedures and methods to be followed to produce and deliver a service. It also determines the extent of customer involvement and participation required in service creation and delivery. Therefore, process explains a series of activities, their sequence and the role to be played by the service provider, the intermediaries and the customer. It plays an important role in determining the quality of service design, production and delivery.

It is not possible to differentiate production from delivery in services as they are inseparable in nature. Therefore, process includes all the activities related to production as well as delivery of the service. Further, processes need complete dedication and commitment of the service personnel in order to be completed successfully.

Companies, not only in the manufacturing sector, but in the service sector as well, gain competitive advantage over other players with improved processes. A well-designed and well-executed process increases operational efficiency, offers convenience to customers, reduces the cost of offering services, and improves the efficiency of service delivery. Effectively, it helps in achieving the goal of customer

Characteristics of Service Process

1. Divergence

Often, service providers adapt their services to match customer needs, as a single service might not cater to all. The degree, to which a service provider can vary services, deviating from the standard service, is known as divergence. Divergence provides an opportunity for the service provider to customise services for his customers, and serve them better. For example, many tourism companies customise their holiday packages according to customer needs.

2. Complexity

The process of creating and delivering a service involves many activities. While some activities might be quite simple, others can be quite complex. The complexity of a process should take into consideration the contribution of the different activities to service quality.

The activities that contribute to service quality in an interaction between a banker and a customer may include the friendliness shown by the banker, his knowledge about the products, the speed at which the service is offered to the customer, etc. At the same time, the number of activities in the production and delivery of a service increase with the increase in divergence, i.e., complexity increases with divergence.

3. Service Location

The nature of the service being offered largely determines the service location. Services can be delivered at the service provider’s location, at the customer’s location, at a neutral location or virtually, depending on their nature. For example, customers can either visit a hotel to have dinner or they can order home delivery.

In the former case, the service location is the hotel, and in the latter, the customer’s home is the service location. A tourist operator offers his services at the tourist spot, which is a neutral location. A banker offers his services virtually when he provides internet-banking facilities to customers. Therefore, service location depends on the alternatives available to the service provider and the customer.

4. Customer Participation and Interaction

Service processes should be designed depending on the extent of interaction with the customer and his participation in service production and delivery. The level of customer interaction and participation differs from service-to-service. For example, the level of interaction between a banker and a customer is negligible in mobile banking transactions while the level of customer participation is high in deciding and ordering a menu for a wedding.

It can also differ from channel-to-channel for the same service. The perceived quality of a service is enhanced if a customer has prior knowledge of the service process. For example, a customer who has an idea about the check-in process at an airport will be more comfortable and can appreciate the improvements made by the airline in the process, when compared to a customer who has no knowledge of the check-in process.

5. The Service Itself

Services can be either process-based or technology-based. Process-based services involve many activities that a customer has to go through before obtaining the service. For example, a student aspiring to join an IIM (Indian Institute of Management) course or any other business institution has to fill-up an application form, take the entrance test and appear for an interview, group discussion, etc., before gaining admission. Process-based services involve many people, with high levels of interaction between them.

The service provider has an opportunity to improve the quality of service at every step and in each interaction. On the other hand, equipment or technology-based services require very little inter-personal communication between a service provider and his customer.

For example, internet banking, offered by many banks like ICICI, HDFC, GTB, etc., has almost eliminated the need for personal interaction between a service provider and his customer. Through technology-based services are efficient and convenient for customers, service providers lose an opportunity to enhance the quality of service through personal interaction. Further, any problem in the teleological systems of the service provider affects the quality of service production and delivery too.

Designing a service process system involves a careful consideration of factors related to services. Various issues such as location, facility design, and layout for effective work flow procedures and job definitions for service providers, customer involvement, equipment selection, etc., should be decided while designing service process. Apart from these, the following factors should be considered in the process design and implementation.

1. The Service itself

The importance of the actual process in service delivery is being recognized of late. By employing some principles, the service and delivery process can be designed, implemented and monitored. The service itself is dependent upon its process. Even intangible services such as legal representation, equipment-based services (services through vending machines, ATM) etc., are dependent upon their process. While designing a service, it is necessary for the service provider to carefully understand the process on which the service is dependent.

2. Customer Participation in the Process

The presence of the customer is a must when some services are being performed. The consumer is a part of the production process and there is a close interaction between the service provider and the consumer.

For example, services in a self service restaurant, hair dressing saloon, beauty parlours, etc., necessitate the participation of customers in the production process.

Sometimes, the customer instead of being a passive bystander acts as productive labour if needed. Customer participation enhances the degree of customization.

For example, the education service rendered by a college would depend upon the quality of student participation in the programmes offered by the college. Through customer participation, the service provider identifies the impact the receiver of the benefit has on the service.

3. Location of Service Delivery

The issues related to accessibility and availability of services are crucial. Priority must be given in decisions about location of premises and services distribution. Provision of service may take place at the service provider’s premises or at the customer’s home.

For example, air conditioning and plumbing services should be provided at the customer’s home, while dry cleaning of clothes is carried out at service provider’s outlet.

Public services such as telephone, banking, insurance etc., should be easily accessible to the customers. Generally, the service provider should choose to provide a location convenient to the customers.

4. Level of Customer Contact

The physical presence of the customer in the system is called customer contact. The level of customer contact can be calculated from the amount of time a customer spends in the system compared to the total system.

The level of contact with customers largely depends upon the type of service received. From this point of view, a service may be high-contact service or low-contact service. Where performance of a service is fully based on equipment (automatic weighing machines, ATM, public telephone), the level of contact between the customer and service provider is nil.

In case of professional and medical services, the level of contact is very high. The service system should be planned according to high contact and low contact operations in order to achieve overall service quality.

5. Degree of Standardization

The services may be standardized services or customized services. In case of standardized services, services are delivered in a very standard format. A standardized service is generally, designed for high volumes with a focused service.

For example, pre recorded messages provided by telephone companies.

The tasks involved in standardized services require a workforce with relatively low levels of technical skill. Service providers deviate from the standard to meet the needs of different customers. This is called divergence. Customized services involve high divergence where flexibility and judgement are called for on the part of the service provider. He interacts with the customers in order to identify the needs of latter.

The interaction between the service provider and customer may be in terms of resources facility such as expertise, skill, attention, attitudes, personnel, space, cleanliness etc. In other words, interaction is more between the customer and the employees of the service provider. Provision of customized services requires high levels of technical skill. Generally, customized services are unprogrammed and not well defined before they are provided.

For example, counseling of students, house decoration, tailoring etc.

6. Complexity of the service

Complexity refers to the amount of steps involved in delivering services to customers. So, the degree of complexity can be measured on the basis of the number of activities which contribute towards the service delivery. Some services are high in complexity as well as high in divergence.

For example, a doctor’s service is highly complex and highly divergent. Every case history of the patient is so different, yet they always diagnose correctly. But catering services are high in complexity and low in divergence.