Marketing of Services Part-1

8/4/2019 Marketing of Services Part-1

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MARKETING OF

SERVICES

MBA IV Semester-2011 (PIMG)


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SERVICES

The sector of Explosive growth

More than 50% of the average familys budget is

spent on services

Share of services in the countrys GDP is about 60%

& likely to grow

Service sector is expected to grow @7%


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Why do firms focus on Services?

Services can provide higher profit margins and

growth potential than products

Customer satisfaction and loyalty are drivenby service excellence

Services can be used as a differentiationstrategy in competitive markets


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Why study Services Marketing?

Service-based economies

Service as a business imperative in manufacturingand IT

Deregulated industries and professional serviceneeds

Services marketing is different

Service equals profits


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What is Service? The Old View

Service is a technical after-sale function that is provided by

the service department.

Old:

Service =

wrench time

Old view of service =

Customer Service Center


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What is Service? The New View

Service includes every interaction between any customer and

anyone representing the company, including:

Dealers

Salespeople

Receptionists

andSchedulers

Managementand Executives

ServiceEmployees

Billing and

AccountingPersonnel

Web site andany e-channel

Interaction

Customer


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Service Can Mean all of These

Service as a product

Customer service

Services as value add

for goods

Service embedded in a

tangible product
http://www.kenan-flagler.unc.edu/Programs/execMBA/onemba/index.cfm


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Goods - things you can touch - tangible

Services - things you cant touch - but you

can see their effect intangible services are not physical, they are

intangible


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A Service is a type of a product.

a deed performed by one party for another

Discussions about the marketing of goods apply to

services as well.

Services have special characteristics that makethem different than products.

Service


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A product without physical characteristics;

a bundle of performance and symbolic attributes

designed to produce consumer want satisfaction.

Service


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Tangible

touch

see

taste

smell

Intangible

cant touch

cant see

cant taste

cant smell

Tangible / Intangible Attributes


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Goods and Services: Scale of

Elemental Dominance


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Continuum of Evaluation for Different

Types of Products

Difficult to evaluateEasy to evaluate

High in search

qualities

High in experience

qualities

High in credence

qualities

Most

Goods

Most

Services


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S.No. Physical Goods Services

1. Tangible Intangible

2. Homogeneous Heterogeneous3. Product and distribution

separated fromconsumption

Production, distribution

and consumption resimultaneous process

4. A thing A activity5. Core value produced in

factoryCore value produced inbuyer-seller interaction

6. Customers do notparticipate in theproduction process

Customers participate inproduction

7. Can be kept in stock Cannot be kept in stock

8. Transfer of ownership No transfer of ownership


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1. Intangibility - u cant touch this

2. Production (or performing the service) and

Consumption (using the service) - happens at

the same time

3. Heterogeneity - services are not alwaysdelivered the same way

4. Perishability - cannot be put in inventory orstored for later use

ie. You cant buy 2 haircuts

4 Characteristics of Services


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Services cannot be stored

Services cannot be protected through patents

- therefore a really great travel package and

service can be copied

a really great physical object can be patented,and NOT allowed to be copied

Characteristics of Services


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Marketing Strategies

stress tangible cues, eg. Smiling face

use personal information, sources, references

use word-of-mouth

contact customers after they buy to stimulatecontinued enthusiasm and hope they talk it up



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2. Inseparability of Production (or performingthe service) and Consumption (using the

service) - happens at the same time


Many people involved in delivering a service

mass production of services is hard to do


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2. Inseparability of Production (or performingthe service) and Consumption (using the

service) - happens at the same time


Marketing Strategies

Emphasize how much you train your people - so their

ability to give you good service will be high

Have many locations so customers can get to you

ie. Insurance sales come to your home


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It is very difficult to standardize services

eg. A machine can make ice cream cones a

standard size 100% of the time

A person filling an ice cream cone with a scoop

cannot do it the same amount each time, unlessyou use a machine to dispense the ice cream



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It is very difficult to standardize services

eg. A Taxi driver cannot drive you to the office in

exactly the same time each day because the traffic

patterns change

eg. A travel agent can sell you a vacation package -but cannot guarantee you will like the trip exactly

the same way another tourist did.



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4. Perishability - cannot be put in inventory orstored for later use

ie. You cant buy 2 haircuts

Demand fluctuates and changes, sometimes

depending on the season, or weather

eg. Taxi in the rain, vacation in summer



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5. Simultaneity

6. Ownership

7. Nature of Demand

8. Quality Measurement



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Service Providers

service providers have product lines and productmixes as wellexamples

Mastercard

insurance telephone services

cable services

ISPs - internet service providers

airlines, first class, economy class

banks


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MAJOR BENEFITS OF SERVICE SECTOR

To provide largest no. of jobs

Least affected by recession & highly stable

Potential for global trade in services with

the implementation of WTO


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EXPANDING HORIZONS OF SERVICES

1. Financial services

Banking

Insurance

Leasing

Merchant banking

Venture Capital

2. Postal & Courier services

Mass mailing services

Insurance

Space for advertisements


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EXPANDING HORIZONS OF

SERVICES..

3. Transport

4. Tourism

5. Hotel/ Hospitality

6. Health care7. Personal care

Beauty

Hairstyle

Gym


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8. Education

9. Professional services

Taxation

Career counsellingLegal counselling

Investment Management

Consultancy

Construction Turn key projectsEventManagement

- Trade exhibition,seminars, meetings, workshops, marriages

EXPANDING HORIZONS OF SERVICES..


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10. Entertainment / Leisure

- Cinema, Water park

11. News Agencies

- T.V., Net, Paper, Radio

12. Information Services- Yellow pages, Ask me

13. Public Utilities

- power, Sanitation

14. Information Technology15. Product Support Services

- Installation, Repair & Maintanence



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16. Domestic services

- Laundry, Gardening, Child care, security,Pest Mgt

17. Govt. Services

- Birth certificate, cast certificate

( network between Panchayaths & Munciplaities)

18. Social & Not- For-Profit service

- police

- Polio immunization

- Protection of Environment



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Significance of Service Marketing

Intensive competition

Growing consumer awareness

Increasing specialization (hospitals, hotels)

Market sophistication

Technology


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Marketing has revolutionized the Service

sector

Tangibilising the intangibles

eg. Changing the smell of hospital

Comfortable stay at hospital

Network class room Managing Differentiation in terms of offering, Delivery &

Image

Managing service Quality

Customer is the Boss & Boss is always right Standardization & customisation


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Industrialising the services

Synchronising the Demand & Supply

Internal Marketing

( satisfy our own employees)

Interactive marketing

( Interaction with customers)

Relationship Marketing

( establishing relationships with customers)

Application of Technology

( Airways- print ticket from computer)

Marketing has revolutionized the Service

sector


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Why should you Focus on service marketing

Tremendous scope for employment

Highly rewarding

Globalised opportunities

Challenging Scope for innovation

Scope for self employment (we help)

Suited for women ( customer courtesy)


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Challenges for Services

Defining and improving quality

Designing and testing new services

Communicating and maintaining a consistent image

Accommodating fluctuating demand

Motivating and sustaining employee commitment

Coordinating marketing, operations, and humanresource efforts

Setting prices

Finding a balance between standardization versuspersonalization

Ensuring the delivery of consistent quality


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Marketing Mix for Services


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MARKETING MIX

Key concept in the modern marketing

Considered to be core of marketing

It is the set of tools that the firm uses to

pursue its marketing objectives in the target

market

Decisions must be made for both the

distribution channels and the finalconsumers

M k ti L


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Marketing Lessons

Product

Price

Place

Promotion

Consumer

Cost

Convenience

Communication

OLD New


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Wining companies are those that can meet

customer needs economically andconveniently and with effective

communication

Services Marketing Mix7PsProduct, Price, Place, Promotion, People, Physical evidence,

Process


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MARKETING MIX

Marketing tools in relation to products, knownas the Marketing Mix, contains four elements :

i) Product - Customer Solution

ii) Price - Customer Cost

iii) Place - Convenience

iv) Promotion - Communication

contd


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- Dwayne D. Gremler

Services Marketing Mix

traditional marketing mix: Product

Place

Promotion Price

expanded mix for services:

P P

P


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Product PricePromotion Place

People Customers, Employees

Physical EvidenceFacility Design, Equipments &Others

Processes Flow, Number of steps &Customer involvement

Services Marketing Mix

S


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Expanded Mix for ServicesThe 7 Ps

Product Price

Place

Promotion

People All human actors who play a part in service delivery and thus influence the

buyers perceptions: namely, the firms personnel, the customer, and othercustomers in the service environment.

Physical Evidence The environment in which the service is delivered and where the firm and

customer interact, and any tangible components that facilitate performance orcommunication of the service.

Process The actual procedures, mechanisms, and flow of activities by which the service

is deliveredthe service delivery and operating systems.


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SERVICES MARKETING MIX-THETHREE NEW Ps

(1) ParticipantsAll the human actors, customers and staff who participate in theservuction system and influence each customers perception ofand satisfaction with the service. Because of the inseparabilityissue, front of house staff must interact continuously with their

customers. To satisfy these customers staff must processappropriate technical and interpersonal skills. It is oftenchallenging to recruit staff with one of these sets of skills, and itmay often be a considerable challenge to find staff comfortableand competent in both areas. These staff are referred to as

boundary spanners, or part-time marketers, as they have bothoperations and marketing responsibilities. Apart from a rangeof human resource management issues, who manages thesestaff, operations, marketing or both?


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SERVICES MARKETING MIX-THETHREE NEW Ps

(2) Process

The steps, procedures, mechanisms, and all activities

by which the service is delivered. It is the heart of

the delivery and operating systems.(3) Physical Evidence

Now referred to as the servicescape, its the

environment in which the service is performed,

where all customers, staff and company interactivity

occurs.

E d d M k ti Mi f


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Expanded Marketing Mix for

Services


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People

customer

service employees

other customers


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- Dwayne D. Gremler

People

are the firm in the customers eye

are a critical part of the product

may be involved in production

can facilitate or inhibit service performance

can impact service encounters via their attitude,

behavior, or degree of involvement


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- Dwayne D. Gremler

Process

the actual procedures, mechanisms, and flow

of activities by which the service is delivered.


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Process

service delivery systems

back stage

front stage

procedures

policies


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Physical evidence

atmosphere

dcor, music etc.

equipment

facilities

uniforms


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- Dwayne D. Gremler

Physical Evidence

includes:

(1)

background characteristics (furnishings, noise, color)

signs

(2) tangible cues/facilitating goods that facilitate performance orcommunication of the service

examples:

bank statements, travel brochures, business cards


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- Dwayne D. Gremler

Expanded Marketing Mix for Services

PRODUCT PLACE PROMOTION PRICE

Ph sical oodfeatures

Channel type Promotionblend

Flexibility

Quality level Exposure Salespeople Price level

Accessories Intermediaries Advertising Terms

Packaging Outlet location Salespromotion

Differentiation

Warranties Trans ortation Publicity Allowances

Product lines Storage

Branding


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- Dwayne D. Gremler

(Continued)


PEOPLE PHYSICALEVIDENCE

PROCESS

Employees Facility design Flow of activities

Customers Equipment Number of steps

Communicatingculture and values

Signage Level of customerinvolvement

Employee research Employee dress

Other tangibles



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Ways to Use the 7 Ps

Overall Strategic

Assessment

How effective is a firms

services marketing mix? Is the mix well-aligned with

overall vision and strategy?

What are the strengths and

weaknesses in terms of the7 Ps?

Specific Service

Implementation

Who is the customer?

What is the service? How effectively does the

services marketing mix for a

service communicate its

benefits and quality? What changes/ improvements

are needed?


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The Services Marketing Mix


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The Marketing Mix for Services

The tools available to a business to gain the reaction

it is seeking from its target market in relation to its

marketing objectives

7Ps Price, Product, Promotion, Place, People,Process, Physical Environment

Traditional 4Ps extended to encompass growth of

service industry


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Price


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Price

Pricing Strategy

Importance of:

knowing the market

elasticity

keeping an eye

on rivals

Image copyright: www.freeimages.co.uk


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Product


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Product Methods used to

improve/differentiatethe product and increase salesor target sales more effectivelyto gain

a competitive advantage e.g. Extension strategies

Specialised versions

New editions

Improvements real or

otherwise! Changed packaging

Technology, etc. Image copyright: www.freeimages.co.uk


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Promotion


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Promotion

Strategies

to make the consumer

aware of the existence

of a productor service

NOT just advertising


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Place


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Place

The means by which products and services get

from producer

to consumer and where they can be accessed

by the consumer The more places to buy the product and the easier

it is made to buy it, the better for the business

(and the consumer?)


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People


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People

People represent the business

The image they present can be important

First contact often human what is the lasting image they

provide to the customer?

Extent of training and knowledge

of the product/service concerned

Mission statement how relevant?

Do staff represent the desired cultureof the business?


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Process


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Process

How do people consume services?

What processes do they have to go through toacquire the services?

Where do they find the availabilityof the service?

Contact

Reminders

Registration

Subscription

Form filling

Degree of technology


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Physical Environment


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Physical Environment

The ambience, mood or physical presentation of the

environment

Smart/shabby?

Trendy/retro/modern/old fashioned?

Light/dark/bright/subdued?

Romantic/chic/loud?

Clean/dirty/unkempt/neat?

Music? Smell?


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The Marketing Mix

Blend of the mix depends upon:

Marketing objectives

Type of product

Target market

Market structure Rivals behaviour

Global issues culture/religion, etc.

Marketing position

Product portfolio Product lifecycle Boston Matrix


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CHANNELS OF DISTRIBUTION

Distribution refers to Place, one ofthePs in

marketing mix.

Channels of distribution should be thought of

as means to increase

the availability and/ or convenience of

service that help in satisfying the need of the

existing user or increase their use among the

existing or new customers.


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Branches have been the delivery system

for Banking.

Various characteristics of services also had

a lot of say in restructuring the channels of

distribution


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- Electronic Banking Services include :-

a) ATMs

b) Intelligent Terminals

c) Home Banking

d) Telemarketing

e) Internet Banking


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MARKETING MIX IN AIRLINES INDUSTRY


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Services are distinguished from products mainly because they are

generally produced at the same time as they are consumed, and cannot be

stored away or taken. An enhanced marketing mix needs to be deployed.

Its Not About Simply Reaching Out to Customers With the Right Service.

But, Its Also About Creating That Right Desire to Possess The Service.

Services are Deeds, Processes, and Performances.


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PRODUCT PRICE PLACE PROMOTION PEOPLE PROCESSPHYSICAL

EVIDENCE

RAINBOW OF SERVICE MARKETING MIX


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PRODUCT

Design.

Quality.

Range.

Brand Name.

Features.

PLACE

DistributionChannels.

Methods ofDistribution.

Coverage.

Location.

PRICE

List Price.

Discounts.

Commissions.

Surcharges.

Extras.

PROMOTION

Advertising.

Sales

Promotion.

Salesmanship.

Publicity.

4Ps OF MARKETING MIX


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Giving a Feel For The Product Inside a Service Wrapper .

Consumers are demanding not products, or features of products but thebenefits they will be offered.

The airline product includes of two types of services:

1. On the Ground Services.

2. In-Flight Services.

PRODUCT MIX


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PRICE MIX

Premium

Pricing

Value For

Money

Pricing

Cheap

Value

Pricing

APEX

Fares

Low-Cost

Pricing


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Online 24-hour reservationSystems.

Consolidation.

Tour Operator/ Travel Agent.

Affiliated with companies.

PLACE MIX


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PROMOTION MIX

Advertising

Publicity

Sales promotion

Word of mouth

Airlines Advertisement Needs to Keep inMind the Image of Country, The ScenicBeauty, Tourist Attractions, Rich CulturalHeritages or Which Would Attract

Number of Tourists.


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PROMOTION MIX

Advertising

Publicity

Sales promotion

Word of mouth

The PRO, Receptionist, TravelAgents, Media People Are VeryImportant People in Publicizing TheBusiness.


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PROMOTION MIX

Advertising

Publicity

Sales promotion

Word of mouth

The Travel Agents, Tour Operators,

Frontline Staffs Contribute a Lot to ThePromotion of Airlines Business.


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PROMOTION MIX

Advertising

Publicity

Sales promotion

Word of mouth Customer Loyalty Ladder .


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Competence.

Reliability.

caring Attitude.

Responsiveness.

Initiative.

Problem Solving Ability.

Goodwill.

PEOPLE MIX


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Reservation.

Flight Information.

Facilities at The Airport.

Baggage Handling.

Meal Service.

Flight Entertainment.

Deliver Quality Service.

PROCESS MIX


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On the ground:

Booking offices or ticketcounters.

Paperwork.

Brand Logo.

Tickets.

PHYSICAL EVIDENCE

In-flight:

Aircraft.Seating Configuration.

Good Inner-exteriors.

Cleanliness.

Uniforms.

Ambience.

Baggage.

Documents

Marketing of Services Part-1