5 dimensions of services quality in transportation industry

SERVQUAL in transportation industry

Roles of the servicescape

Servicescapes of a fast food restaurant

Levels of Customer Participation across Different Services

How Customers Widen the Service Performance Gap

Importance of Other Customers in Service Delivery

Services marketing

 

Case study: Reliance Jio and Facebook deal: A death bell to competitors?

 

Reliance Jio  and Facebook deal: A death bell to competitors? 

 On April 17 2020, Reliance head office is in a celebration mood when Mr. Mukesh Ambani announced the plan of Facebook buying 9.96% largest minority stake in Jio for Rs 43, s74 crores. This was the largest investment in the It sector in India. The entire deal is cash based. 

Jio Platforms

Jio platforms is the part of Indian conglomerate reliance industry. It started offering services in 2019. During this time $15 billion debt of Jio Platform to the reliance industry to have control over the Jio Platform.  In march 2020 Silver like and Mubadala invested money in the jio platforms. In june 2020 PIF and Intel also acquired a minority stake in the Reliance Jio platforms. Google acquired 7.7% of stake in teh Jio Platforms. 

Jio platform is the parent body of Jio phones, jio mart, Jio Cinema, and  Jio saavn. The deal will give an observer role  and Board seat on Jio  platform to Facebook. Jio Mobiles is having reach of 38 crore people in India

Jio apps included MyJio, JioTV, live TV streaming app, launched on 5 September 2016,  JioCinema, video-on-demand app, JioSaavn, an online music streaming service, JioChat, messaging app, JioMeet, video-conferencing platform, JioBrowser, web browser, JioSwitch, file sharing app, JioNews, newspaper and magazine app, JioHome, mobile remote control for Jio set-top box, JioGate, apartment security app, JioCloud, cloud storage services, JioSecurity, security app, JioHealthHub, health companion, JioPOS Lite, Jio recharge commission earning app, JioGameslite, online gaming, JioMoney, digital currency and payments services and JioMart, online grocery delivery services. Jio valuation has touched 5.5 trillion dollars in May 2020 making it the largest business houses of reliance industries. 

( Source: Company annual reports)

Reliance retail

Reliance  retail is the sixth largest retailer in the world. The retail company added 10 stores every day in the last two years and it has 10000 stores. The company has more stores than any other competitor in india. The company has seen 5 crore Indians visiting its stores in 2019 and registered a mind blowing 44% growth. The reliance retail physical presence is now expanded to 6700 cities in india. This resulted in a huge employment generation. In 2020 the company employed 1,13,000 employees. Further the company revenue touched 1,30,566 crores in 2018-19 fiscal year. 

(Source: Reliance annual reports)

The reliance retail company revenue comes from five different categories. The connectivity(33%) is the largest contributor to the revenue followed by consumer electronics(30%), Grocery(17%), Petro retail(10%) and fashion (8%)

Facebook and WhatsApp

Facebook idea generated when Mark Zukerberg was studying at Harvard University in 2003. The earlier name of Facebook was facemash. This site attracted 450 visitors  and 22000 photoviews in the first 4 hours of the launch. Harvard University expelled Mark zukerberg for the violation of privacy data breach.   After finishing the expulsion, Zukerberg convinced Harvard university to come out with a digital version of student directory and launched The facebook site.

In 2004 the company moved its headquarters to california.  Further, in May 2006 facebook was open for public view. The year 2007 gave impetus for the growth of facebook where Microsoft invested in facebook and facebook developer platform started. Facebook saw exponential growth and could achieve 500 million visitors by 2010. The year 2013 turned facebook into the search world. It launched facebook graph search. Unlike earlier versions wherein a customer used to get search links, The facebook graph search gave precise answers.The growth of facebook also led to false message proliferation. In 2015 the company came out with a Facebook algorithm that detects Fake messages. Facebook faced the backlash when major advertising companies like Adidas, Coca-cola , Ford etc.. backed out of Facebook advertisements for not acting hatred messages. 

WhatsApp started by Brian Action, former employee of Yahoo in 2019. The app became a buzzword on the Apple store and the same vibes continued on Google Play store. By 2010 the company crossed the 200 million subscriber mark. In 2014 facebook acquired WhatsApp for a whopping US $19 billion. The year 2016 made WhatsApp absolutely free for the consumption from changing $1 subscription mode. 

Facebook is having 33 crore Indian subscribers making this as the largest market for the company. Similarly WhatsApp is having 400 million customers in India. 

Indian telecom Sector:

The Indian telecom industry is the second largest telecom sector in the world. India today has 117 crore telecom subscribers and 67 crore internet users. Teledensity in India grew to 87%. India’s data usage over the period grew exponentially. Today, every indian consumes 9GB of data per month. This made India as the country of largest data users in the world. 

(Source: IBEF.org)

The Indian rural consumers using telephone service grew exponentially. In 2011 the rural contribution was at 33% and it grew up to 44% in 2020. 

(Source: IBEF)

This sector is expected to grow further with the IoT industry emerging faster. The 5G technology may increase data usage and companies will get better revenue in the future.  The Indian telecom competitive landscape is given below: 

(Source; IBEF India)

Indian Retail sector

India’s retail market is one of the fastest growing retail markets in the world. It is expected to touch $1200 billion market size by 2021. 

(Source: IBEF)

The fast moving consumer goods and online consumer market in India witnessing a healthy growth

FMCG business is expected to reach US$ 103 billion  by 2020 and Online retail business is expected to reach US$ 60 billion in the same year.  However,India’s organized retail market is in a nascent stage. The organized retail contributes to 9% of the total market. 88% of the market is in the unorganized sector that reliance group and Facebook both are eyeing for their pie. 

Cross leveraging

Jio Mart and Whatsapp will cross leverage their ecommerce platform to grow their businesses. 

The deal will help many small businesses to sell their merchandise on JioMart using WhatsApp.The deal is having the target of reaching 6 crore SMEs, 12 crore farmers, 3 crore small retailers. Online grocery demand was 1% of 80000 crore rupees market before the lockdown and during the covid-19 lockdown it surged to 50%. JioMart competitors' Bigbasket business has seen tremendous demand in the lockdown but they lacked agricultural resources to supply.  This facebook and Jio deal is expected to provide technology platform for small kirana stores. Further , initially the deal was thought to have obstacles from the competition commission of India. However, the commission  allowed Jio platforms and Facebook to run their businesses on June 24th 2020.  Apart from this, the deal will help Facebook  aggressively push their WhatsApp pay through Jio platforms.  In addition to this, the agreement will open the way for cryptocurrency and block chain technology of Facebook in the Indian market. The government of India allowed block chain technology. It will strengthen the facebook global business. Another plus point of this consensus between Jio and facebook is use of Augmented reality. Facebook augmented reality division Oculus will leverage its technology to Jio Ar. This is expected to redefine marketing communications. One more unnoticed thing in this agreement is advertisement sharing. Facebook ad space can be leveraged by Jio Mobile. This will redefine mobile advertising and marketing in india. The new friendship will open the doors for developing a super app like ‘we chat’ where the customer starts the day with newspaper , meetings , payments,and sports. Finally, this deal will open new vistas for indian gaming industry. Facebook can come out with games like farmville to the indian market. 

Jio Mart and whatsapp  business Model

The business model of WhatsApp and Jio Mart is simple and enriching. The Jio Mart provides training to Unorganized kirana store managers. They will register their Kirana store with JioMart . These Kirana store owners should use jip platform and WhatsApp to conduct the business. Now, A customer uses his Jio Mart link on the WhatsApp or Jio App directly to book orders. The message is passed to  Nearby Local stores whatsApp account. The local store accepts the order. here , customers can track the order. Products are delivered to the customer location by nearest grocers. The products can be bought by Kirana store or reliance Jio Mart wholesale outlet will transport goods to Kirana stores. Payments will be made to kirana stores according to product margins. 

Conflicting interests.

Managing business independently:  Jio and Whatsapp will be different entities and run their businesses on existing revenue models.

Data Privacy: Customer data at both JioMart and WhatsApp can be leaked or misused. The US government has strict rules for customer data privacy. However, Indian government does not have a concrete plan for the same. Thus, Indian data can move to the USA and USA data will not come to india. This may lead to India china app issues like situation in future. 

Net Neutrality: Facebook and WhatsApp and Jio can leverage each other. This may create the most discussed topic i.e Net Neutrality. Free basics may come back to India from the backdoor. 

Advertisements will consume data packs of customers: Facebook ads appearing on Reliance Jio platform may result in excess consumption of data packs of customers. This is how facebook can increase their revenues. 

Facebook denial of data localization: The whatsApp pay dismal performance in India and government restriction on data localization has hit a roadblock. There is no clarity on how indian consumer data can be held together. Contrary to this Reliance has agreed to share customer data of theirOver the top (OTT) market to the central government.

Supreme Court and whatsApp litigations: Though the central government gave nod for the whatsApp pay, Supreme court has stopped its commercialization as cases already pending in front of them.

Restrict data to competitors: Facebook and Jio can restrict their used data to the market . This will ring a death bell for Google and Microsoft. The minute details of customers help facebook to narrow its targeting. 

New product proliferation: Both Jio and Facebook launch new products of both companies as well as their associates. Customers may find it difficult to digest. 

References:

1. Facebook buys 9.99% stake in Reliance Jio for Rs 43,574 crore. (2020). Retrieved 9 September 2020, from https://economictimes.indiatimes.com/tech/internet/facebook-buys-9-99-stake-in-reliance-jio-for-5-7-billion/articleshow/75283735.cms#:~:text=Facebook%20will%20invest%20Rs%2043%2C574%20crore%20in%20Jio%20Platforms%2C%20a,especially%20for%20its%20WhatsApp%20unit.

2. TechCrunch is now a part of Verizon Media. (2020). Retrieved 9 September 2020, from https://techcrunch.com/2020/06/24/india-approves-facebooks-5-7-billion-deal-with-reliance-jio-platforms/

3. Explained: What the Jio deal means for Reliance and Facebook. (2020). Retrieved 9 September 2020, from https://indianexpress.com/article/explained/what-the-jio-deal-means-for-reliance-facebook-6374686/

4. Four Reasons Why Reliance Jio-Facebook Deal is Commercially Sensible and Good for India, Writes Subramanian Swamy. (2020). Retrieved 9 September 2020, from https://www.news18.com/news/opinion/why-reliance-jio-facebook-deal-is-commercially-sensible-and-good-for-india-subramanian-swamy-writes-2595979.html

5. John, C. (2020). Facebook-Jio Deal: How Is It Going to Shake Up The Indian Market?. Retrieved 9 September 2020, from https://www.thequint.com/tech-and-auto/tech-news/facebook-reliance-jio-deal-explained-how-does-it-benefit-users

6. Diplomat, T. (2020). The Realpolitik of the Reliance Jio-Facebook Deal. Retrieved 9 September 2020, from https://thediplomat.com/2020/04/the-realpolitik-of-the-reliance-jio-facebook-deal/

7. Facebook-Jio Deal: What India’s Competition Regulator Will Have to Consider. (2020). Retrieved 9 September 2020, from https://thewire.in/business/facebook-jio-deal-what-indias-competition-regulator-will-have-to-consider

Services Marketing notes

Introduction to Services marketing

Services are intangible products produced and consumed simultaneously in a short period Infosys, an Indian technology company offers Information Technology solution to ANZ Grindlays Bank those are intangible in nature. Here, a customer ANZ cannot touch the product but can perform banking tasks using software. Infosys offers Consulting Services, Cloud Solutions, enterprise resource planning software, block chain technology, and other services. These Solutions may have a software product, website, software manual, and a report in the tangible format, but clients like ANZ do not see coding testing and executing part of the solution. Apart from this, business meetings follow-up calls and annual maintenance are series of actions and performances in an intangible format executed on a particular time and place.

Services Marketing characteristics. 

Intangibility

Services are employee actions and performances based on company procedures and are not a physical goods. Thus one cannot touch, feel, see or inventoried like goods. For example Apollo hospitals performance actions like medical examination, diagnosis, treatment, and surgery on patients that cannot be seen or touched. In many situations, patients don’t know how surgery has been done. Due to this characteristic of Intangibility, managers find it difficult to forecast and execute the demand. For example Taj Vivanta, Panaji, Goa, experiences huge demand in March, April, and May. Conversely the demand goes down in July. Yet, Taj Vivanta, has similar number of rooms to book throughout the year. 

Further Services cannot be patented; Hence these are copied easily by competitors. Services cannot be easily demonstrated like goods.  Though, Metro rail carries passengers from one destination to another it cannot show how exactly a rail was driven. So this is quality measurement is another hurdle for marketers and consumers. A customer finds it difficult to assess the service quality of restaurants like Saravanan's,V asudeva adigas, and Adyars. In addition to these Services marketers has a hurdle of deciding about what to include in advertising and other marketing communications. Indian Institute of Management Bangalore can communicate about courses but cannot advertise the pricing. The unit of service cost is complex and difficult to determine. Lakme saloons have different beauty solutions at different price points. This difference leads to the evolution of price quality relationships that vary from customers to customers.

Heterogeneity:

Services are performed by people. Therefore, services performed by different people are not the same. Even the same person's service performance on different days varies.  Further, a customer who avail services may have different perceptions and satisfactions. These characteristics exhibit services heterogeneity.  For example ,  Kesari travels may provide two different packages to two different customers on the same day depending upon a customer's affordability and acceptability. Keasri travel desk executives may provide maximum offers to customers in the morning when they are fresh to work. However, same executives may offer less packages to customers in the late evening when they are tired. These variations in services  based on people's  time and the organization pose a big challenge for maintaining the service quality. Apart from this, other customers at a service location also influence customers' purchase. A few customers like crowded service outlets and a few do not. Added to this, employees behaviour also determines customers purchasing. In addition to this, if a service is given by the third party, it increases the service heterogeneity. For instance, Airtel customer queries are answered by IBM executives who are not part of the organization. However, customers think that they have called Airtel executives.

Simultaneous production and consumption

 The major distinguishing feature between goods and services is goods are produced first and sold later. Whereas services are sold in the beginning and production takes place later. To illustrate, Hero motocorp produces the two-wheelers at Kolar plant in Karnataka, dispatched to Bengaluru, sold over months and used by customers over the years. But OYO has to sell its rooms first and customer experience the stay and dining later. Here, customers of OYO is a part of the production and consumption by asking room boy for facility adjustments or modifications.  Customers can ask for sugarless tea or spicy dishes with a dining staff. A notable thing in this entire process is a customer interacts with the service employees regularly in a production and consumption process. Therefore, a customer may be happy or happy with the room service. In a travel industry company like VRL do not allocate seats next to the female passenger to any strange male passenger. If seats are not reserved like that a female customer may not experience the service properly. This services characteristics of simultaneous production and consumption often makes service providers take the role as a part of the product. Shahrukh Khan, a film actor from India, actively takes part in the production and marketing of his red chillies entertainment products. 

As service production consumption is simultaneous, scaling it to the masses is a daunting task. More than that, customers’ satisfaction depends on employee services and his interactions with the firm in real time. A customer who walks into State Bank of India will be either happy or unhappy after his interaction with a clerk or cashier.  Due to this feature of production and consumption simultaneously, a few companies are decentralizing their operations to localize services. McDonald's restaurants in the different countries have adopted local sourcing; It reduces the cost of importing and also provides local Cuisine. McDonald India, do not sell beef burgers due to religious sentiments but sell veg burgers in a large quantity. Another problem of production consumption simultaneously is irritated customers.  As they are part of a production and consumption process, they expressed their happiness or unhappiness on the process itself. Wonderla and excel amusement parks must have secure yet fun facilities in their premises otherwise customers express their opinion on the location also on social media. 

Perishability 

Services cannot be stored, saved or returned or resold. A journey in Indian railways by a customer cannot be stored or saved. Here, customers would experience a service in a given time. If a customer is unhappy about the train facility in the journey, can he return it? No, because they are perishable in nature. Today with Advent of mobile phones and internet-based movie technologies, movie theatres in India are facing occupancy rate issues. One cannot inventory the seats of a particular show. Hence, PVR should make proper demand forecasting for the capacity utilization. Services cannot be returned or resold. Flipkart in their first Bill Billion Day Sale did not anticipate technology problems. Customers on that day could not buy anything. Later, Flipkart had apologized in the public for the service failure.

Services marketing mix

People

Employees of the organization who are part of a service delivery influence buyer behavior. They create awareness about services. Reliance Trends executives provide new arrival information to customers 

Employees grooming and their behaviors have a direct impact on  customers satisfaction. Hence,air hostesses in the Indian Indigo Airlines  should be wearing company uniforms and have a cordial relationship with customers while serving in an airline industry. 

In certain services like education and career counseling, service providers themselves act as a service. The success of an education institution solely depends on teachers. However, in certain services like house maintenance plumber has a relatively less significance in the service delivery though they are very critical for the organizational performance. In a few services, customers' timely information or requirements have a significant role in the service delivery. If requirements are not specified or information not given when required it affects the service quality. For example, a customer books an apartment with a Godrej property without specifying his requirements in the beginning has to accept later whatever the property built by the Godrej. A customer who goes to the indica saloon should tell about a haircut style in the beginning. Otherwise, he cannot modify it later. Social media has allowed customers to share their opinions and recommendations to other colleagues or customers.  When The War like a situation has broken up between India and China many have asked  the customers and colleagues and friends to boycott the China mobile applications like Tick Tock and sharechat.