MARKETING MIX

Traditional & Ps : Product / Service: Price: Place: Promotion

Specific to Services : People : Physical Evidence : Process

1. PRODUCTService is any activity offered to satisfy a need.Four levels of Service:2. Generic – Basic benefit3. Expected – benefit expected by a customer4. Augmented – added to generic to benefit the

customer5. Potential – Beyond the usual and expected

As the expectation of service may differ among customers – SEGMENT

e.g. Air Travel Railway Travel

1. A product forms the core of a firm. If it is flawed…

2. Marketing environment is dynamic – reconsider from time to time to meet the changing needs.

3. Competition pressure to repackage qualityServices are processes and not outcome

The Design of a Product4. Core product – bare minimum, no frills2. Augmented Product

Love lock – core + supplementary –E.g Check in, telephones, valet service

High contact and people processing services have more supplementary –

E.g. A budget Vs Star Hotel

Kotler – core +accessibility, atmosphere, customer interaction with service organisation and with one another.

Lynn Shostack: Molecular Model:Core – clean roomSupplementary – check in, check out restaurantIf more supplementary more price

3. Delivery Process:How core and supplementary are delivered to the

customer.E.g. A packaged Trip

Core : Design the package – flight, hotel reservation, scheduling stay at various places, customer’s role ………..

Supplementary – Sight seeing, taxi reservation, recreational activities ……..

Service as a substitute for Goods:Caterpillar – Cat financial, Cat insurance, Cat rental service, Cat logistics, Equipment trg.,

Own a Physical Good

Rent the use of Physical Good

Perform the work oneself

Drive own carUse own computer

Rent a car and drive itRent a computer and use it.

Hire someone to do the work

Hire a driver to drive the carHire a typist to use computer.

Hire a taxi Send work out to secretarial service

Then POSITION.Positioning is the way a service is perceived by consumers, particularly in relation to competing offerings.

Make a product to occupy a clear, distinctive and desirable place in the market and in the mind of the target consumer.Three steps for effective positioning:

1. Identify a set of potential competitive advantage to exploit

2. Select, define and refine the most appropriate set of attributes

3. Effectively communicate the products position to the desired market

Positioning can be:

1. Category Related2. Benefit Related3. Usage, Occasion and time of use related4. Price – Quality Related5. Physical attributes related6. Service Related7. Personnel Related8. Location Related

Perceptual Mapping5 – Star Deluxe Hotels in Mumbai

High Price

Low Facilities High Facilities

Low Price

Orchid Ecotel $189

Inter continentalThe grand $180

The Oberoi Towers$ 467

Hyatt Regency

Taj Mahal $292

Leela $ 230

Centaur $285

Changing Positioning:

- Change in complexity- Divergence – Customise

Complexity

Convergent Divergent

Simplicity

New McDonald

McDonald

Hairstyling

Barbering

BRANDING OF SERVICESA branding has distinctive elements – not merely name or logo but a heritage,

imagery, legends, values it stirs up the experience it conjures.

In product brand – product is primaryIn service brand – company is primaryE.G Liril Federal Express

Colgate Spicejet5 star McDonald

Branding helps to differentiate .The way servicing is done differentiates.

Effective branding provides marketing edge:

1. When service is similar, differentiates.2. When customer goes for a service the first time,

brand is the tilting point.3. Innovative service or brand extension.4. When change the marketing strategy, brand is

the anchor.5. Reduces perceived risk.6. Pricing

Four Tests to Assess the Power of a Brand

1. Distinctiveness –- Generic name with product – Jet air, United Airlines- Heritage – First Leasing- Proper names – Larsen and Tubro – Marriolt

J.P. Morgan- uncommon – Le Meridian, Citibank

2. Relevance: Communicates nature and benefit- Compaq- Ticketron- First Flight

3. Memorability – Brevity and simplicityMudra, Toys Rus, Rx

4. Flexibility – WestinPrudential RockMerrill Lynch - Bull

Customer Experience of the Brand:1. Consistency – service standards in all Moment

of Truth throughout cycle of service.2. Differentiation – both process and outcome

creates emotional bond.

To build a Service Brand:3. Dare to be Different:

new paths, maverick, Trend settersMotel 6 – DarknessBugs BBK –Thomas Cook -

2. Determine your own future:- Creative market segmentation – Just born..- Hampton Inn

3. Make Emotional Bond

4. Internalise the brand –- sell to employees the value- communicate brand to the entire

organisation- empowerment

SERVICE INTERACTIONSMany Services require interaction between

provider & customer – MOMENT OF TRUTHInteraction has 3 aspects:1. Service scope – Why the service exists?

- What value it gives? - Core service & adjuncts? - How will it be delivered?

2. Service Yard sticks – What is effective service to the customer?

- What is effective service in realtion to cost, quality, time & effort.

3. Service Transaction System:Operation system: How the service

produced? How will it be delivered? Front office, back office

Customer experience during the transaction is the yardstick for the effectiveness.

The relationship between the three should be optimised, consistent & adaptable.

2. PRICE

a. Difficult to fix the price because difficult to calculate unit cost. So some other unit of measurement

b. Demand flexibility and supply inflexibilityc. Price is surrogate for qualityd. Administered or market driven.

Cost plus pricing Vs Value in use pricing

3. PLACE – DISTRIBUTIONService inseparable from providerSo, direct marketingNow FranchisingCritical Factors to choose a location:

1. Convenience – retails, bank , repair services2. Cost – wholesalers, specialty stores3. Proximity to competition:

Shopping services: Tailors, designers4. Availability of support systems – Tourism, Resorts5. Geographic and Environmental Factors: Holidaying,

Gambling6. Communication Network – Financial services,

Software7. Transport Facilities : Wholesalers, Couriers…

4. PROMOTIONTraditionally, less promotion in services- Often small in size- Some felt some professions should not be

promoted- Selling service is difficult because

- Intangible- Supply inflexible

So, how to promote:- Use tangible symbols (Intangibility)- Use opinion leaders (credence and

experience)- Demarket (inflexible supply)Personal selling is more importantDirect response advertising

COMMUNICATION

Implications of communication in services- Intangibility- Customer involvement in production- The role of customer contact personnel- Difficulty of evaluating many services- Need to bring demand and supply into balance

1. Problem of intangibility –-abstractness – capture and display typical

customerse.g Tiger woods

- Generality – items that comprise a class of objects, persons, events – airline seats

- Nonsearchability – experiential and credence attributecustomer testimonials, independent reports

- Mental impalpability – complex, multidimensional, especially new services.Video of process, actual case histories…using metaphors – DHL Swiss Air Kellogg

2. Facilitate customer involvement in production – T.V & Media

3. Help customers to evaluate service offerings –Tangible cluesQuality of equipmentFacilities

4. Stimulate or dampen demand to match capacity

5. Promote the contribution of service personnel.Employees at work, employee of the month

Marketing Communication Mix

New opportunities for highly targeted communication –

- From different sources- From the organisation- Outside the organisation- WOM- Blogs- Editorial coverageInternet – Banner advertising

search engine

Personal Selling

Sales Promotion

Publicity Public Relation

Direct Response Advertising Awareness Advertising

Personal Services Organisational Services

Awareness Comprehension Conviction Action

Promotion Mix for Services

5. PEOPLEAll who play a part in delivery and influence buyer’s perception- dress, appearance, attitude, knowledge- In some cases, the provider is important- In others not so important

6. PHYSICAL EVIDENCESince services are intangible – we rely on tangible cues.Physical evidence is to service, what package is to a productEvidence can be vast from small details to more obvious ones

Some Elements of P.E

Essential Evidence: Integral to the service offering Peripheral Evidence – complementary to the coreFacility ExteriorFacility InteriorAmbience – AtmosphericsOther tangibles – Business cards, stationary ,

brochures

Variation in Form and use of Physical Evidence

Service Scope Complexity of the Physical Evidence

Elaborate Lean

Self-service(customer only)

Super marketGolf

ATMPost Office

Interpersonal service (both customer and employee)

HotelsRestaurantsHospitalsBank

Dry cleanHair Saloon

Remote Service(Employee only)

TelephoneInsuranceUtilities

Mail order deskRailway information through phone

Eg. Fast Food:

Food – Taste, smell, presentation, temperaturePackaging: Style, colourSeating: Comfort, layout, availabilityOverall appearance: hygiene, cleanliness, lightingFacilities – Toilet, children’s amusement, pay

phonesStaff – Appearance, dress code, efficiencyCorporate Image – logo, advertising, CSRService Delivery – Prompt, slow, slipshod

7. PROCESSThe procedures, mechanisms and flow of activities

to deliver the service.Points to be noted:1. Customer participation2. Location of the service delivery:

- at the provider’s premise- at the customer’s premise

3. High contact Vs Low contact4. Degree of standardisation5. Complexity of service

IMPACT OF TECHNOLOGY ON MARKETING OF SERVICES

Enormous Challenges – Shortening of PLC- Devpt. In technology accelerating customer sophistication- Concern with environment

Convergence of technology leads to new business – mobile and entertainment

Technology Foresight to create Business Value

1. Identify new technology based opportunities – radical – satellite cinema to rural areas.

2. Understand and manage technology3. Develop coherence between S.T & L.T. R & D

4. Criticality of Technology Foresight:- Commoditisation of markets, products and most

technologies- More perfect global markets- Capital availability in Emerging markets- Global technology equilibrium (Catalysed by

internet)- Increase pace of scientific discovery- Large coherent technology initiatives – E.g

Nanotechnology, Biotech- Relentless productivity increase from I.T.

Assessment of the Lifespan of the Technology

Some have become standards – Pentium MSOsSome Challenge – LINUXOpen system – share and be shared

Service InnovationNo more Mfg or Service firms – but solutions to

problems –Products + after sales serviceService + products – Mobile

Kinds of innovationSchumpeter – 1. New product offering2. New markets3. New sources of supply4. New methods of production5. Use of new technologyHertog and Bilderbeck:6. New service concept – call centres derivatives7. Client interface8. Service delivery system – design9. Technological options

Mapping Patterns of Service Innovation1. Supplier dominated – Microwave cook book2. Innovation within services – technology in class

room3. Client – led innovation – on-line banking4. Innovation through services – FedEx tracking

system5. Paradigmatic innovations – affects everyone

across the value chain – DTH, set up boxes6. In a firm’s internalised service functions –

impacting employee productivity, payroll7. In an outsourced service function - security

Impact of Technology on Service Firms1. Productivity – ATM, electronic transfer of money2. Offering new services – telemedicine, digital

libraries3. Control mechanisms – FedEx tracking, EBSCO –

hit rate4. Widening the reach of the distribution

Channels – on line reservation, E-commerce

5. Interlocked relationship – HP selling MS or UnixCISCO and Oracle

6. Managing customer relationships –Data bases, usage rates

7. Fostering Linkages with various stake holdersWebsite – educational institutions and

employersVideo conferencingAlumni and institutions

8. Global IT sourcing:off shoring, outsourcing – lower costEasy access to expertsGlobal supply search, skillsAccess to new marketsDeveloping experience with external

collaborationAssisting domestic IT staff to improve processes.