MBA IV Semester-2011 (PIMG)

MARKETING OF SERVICES

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%

Why do firms focus on Services?

Services can provide higher profit margins and growth potential than products Customer satisfaction and loyalty are driven by service excellence Services can be used as a differentiation strategy in competitive markets

Why study Services Marketing?

Service-based economies Service as a business imperative in manufacturing and IT

Deregulated industries and professional service needs

Services marketing is different Service equals profits

What is Service? The Old View

Service is a technical after-sale function that is provided by the service department.

Old view of service = Customer Service Center

Old: Service = wrench time

What is Service? The New View

Service includes every interaction between any customer and anyone representing the company, including:
Dealers
Web site and any e-channel Interaction Billing and Accounting Personnel Service Employees
Customer

Salespeople

Receptionists and Schedulers Management and Executives

Service Can Mean all of These

Service as a product Customer service

Services as value add for goods Service embedded in a tangible product

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

Service
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 make them different than products.

Service
A product without physical characteristics;

a bundle of performance and symbolic attributes designed to produce consumer want satisfaction.

Tangible / Intangible Attributes

Tangible touch see taste smell Intangible cant touch cant see cant taste cant smell

Goods and Services: Scale of Elemental Dominance

Continuum of Evaluation for Different Types of Products

Most Goods
Easy to evaluate

Most Services
Difficult to evaluate

High in search qualities

High in experience qualities

High in credence qualities

S.No.

1. 2. 3.

4. 5.

6.

7. 8.

Physical Goods Tangible Homogeneous Product and distribution separated from consumption A thing Core value produced in factory Customers do not participate in the production process Can be kept in stock Transfer of ownership

Services Intangible Heterogeneous Production, distribution and consumption re simultaneous process A activity Core value produced in buyer-seller interaction Customers participate in production Cannot be kept in stock No transfer of ownership

4 Characteristics of Services
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 always

delivered the same way

4. Perishability - cannot be put in inventory or

stored for later use
ie. You cant buy 2 haircuts

Characteristics of Services
1. Intangibility - u cant touch this
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 1. Intangibility - u cant touch this

Hard to explain and display Services if you cant see them

Prices are difficult to set - depends on customers expectations

Characteristics of Services 1. Intangibility - u cant touch this

Marketing Strategies stress tangible cues, eg. Smiling face use personal information, sources, references use word-of-mouth contact customers after they buy to stimulate continued enthusiasm and hope they talk it up

Characteristics of Services 2. Inseparability of Production (or performing the 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

Characteristics of Services 2. Inseparability of Production (or performing the 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

Characteristics of Services 3. Heterogeneity - services are not always

delivered the same way 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, unless you use a machine to dispense the ice cream

Characteristics of Services 3. Heterogeneity - services are not always

delivered the same way 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.

Characteristics of Services 4. Perishability - cannot be put in inventory or

stored 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

Characteristics of Services
5. Simultaneity 6. Ownership 7. Nature of Demand

8. Quality Measurement

Service Providers
service providers have product lines and product mixes as well examples Mastercard insurance telephone services cable services ISPs - internet service providers airlines, first class, economy class banks

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

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

EXPANDING HORIZONS OF SERVICES..

3. Transport 4. Tourism 5. Hotel/ Hospitality 6. Health care 7. Personal care Beauty Hairstyle Gym

EXPANDING HORIZONS OF SERVICES..

8. Education 9. Professional services
Taxation Career counselling Legal counselling Investment Management Consultancy Construction Turn key projects Event Management

Trade exhibition,seminars, meetings,

workshops, marriages

EXPANDING HORIZONS OF SERVICES..

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 Technology 15. Product Support Services - Installation, Repair & Maintanence

EXPANDING HORIZONS OF SERVICES..

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

Significance of Service Marketing

Intensive competition Growing consumer awareness Increasing specialization (hospitals, hotels) Market sophistication Technology

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

Marketing has revolutionized the Service sector

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)

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)

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 human resource efforts Setting prices Finding a balance between standardization versus personalization Ensuring the delivery of consistent quality

Marketing Mix for Services

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 final consumers

Marketing Lessons
OLD
Product
Price Place Promotion

New
Consumer
Cost Convenience Communication

Wining companies are those that can meet customer needs economically and conveniently and with effective communication Services Marketing Mix 7Ps
Product, Price, Place, Promotion, People, Physical evidence, Process

MARKETING MIX
Marketing tools in relation to products, known as the Marketing Mix, contains four elements : i) ii) iii) iv) Product Price Place Promotion Customer Solution Customer Cost Convenience Communication contd

Services Marketing Mix

traditional marketing mix:
Product Place Promotion Price

expanded mix for services:

P P P
- Dwayne D. Gremler

Services Marketing Mix

Product Promotion Price Place

People

Customers, Employees
Others

Physical Evidence Facility Design, Equipments &

Processes

Customer involvement

Flow, Number of steps &

Expanded Mix for Services The 7 Ps

Product Price Place Promotion
All human actors who play a part in service delivery and thus influence the buyers perceptions: namely, the firms personnel, the customer, and other customers in the service environment.

People

Physical Evidence
The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.

Process
The actual procedures, mechanisms, and flow of activities by which the service is deliveredthe service delivery and operating systems.

SERVICES MARKETING MIX-THE THREE NEW Ps

(1) Participants All the human actors, customers and staff who participate in the servuction system and influence each customers perception of and satisfaction with the service. Because of the inseparability issue, front of house staff must interact continuously with their customers. To satisfy these customers staff must process appropriate technical and interpersonal skills. It is often challenging to recruit staff with one of these sets of skills, and it may often be a considerable challenge to find staff comfortable and competent in both areas. These staff are referred to as boundary spanners, or part-time marketers, as they have both operations and marketing responsibilities. Apart from a range of human resource management issues, who manages these staff, operations, marketing or both?

SERVICES MARKETING MIX-THE THREE 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.

Expanded Marketing Mix for Services

People
customer service employees other customers

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
- Dwayne D. Gremler

Process
the actual procedures, mechanisms, and flow of activities by which the service is delivered.

- Dwayne D. Gremler

Process
service delivery systems
back stage front stage

procedures policies

Physical evidence
atmosphere
dcor, music etc.

equipment facilities uniforms

Physical Evidence
includes: (1)
background characteristics (furnishings, noise, color) signs

(2) tangible cues/facilitating goods that facilitate performance or communication of the service
examples: bank statements, travel brochures, business cards
- Dwayne D. Gremler

Expanded Marketing Mix for Services

PRODUCT
Physical good features Quality level Accessories Packaging Warranties Product lines Branding

PLACE
Channel type

PROMOTION PRICE
Promotion blend Salespeople Advertising Flexibility

Exposure Intermediaries

Price level Terms Differentiation Allowances

Outlet location Sales promotion Transportation Publicity Storage

- Dwayne D. Gremler

Expanded Marketing Mix for Services

(Continued)
PEOPLE
Employees Customers Communicating culture and values Employee research

PHYSICAL EVIDENCE
Facility design Equipment Signage Employee dress Other tangibles

PROCESS
Flow of activities Number of steps Level of customer involvement

- Dwayne D. Gremler

Expanded Marketing Mix for Services

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 the 7 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?

The Services Marketing Mix

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

Price

Price
Pricing Strategy Importance of:
knowing the market elasticity keeping an eye on rivals
Image copyright: www.freeimages.co.uk

Product

Product
Methods used to improve/differentiate the product and increase sales or target sales more effectively to 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

Promotion

Promotion
Strategies to make the consumer aware of the existence of a product or service NOT just advertising

Place

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?)

People

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 culture of the business?

Process

Process
How do people consume services? What processes do they have to go through to acquire the services? Where do they find the availability of the service?
Contact Reminders Registration Subscription Form filling Degree of technology

Physical Environment

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?

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

CHANNELS OF DISTRIBUTION
Distribution refers to Place, one of thePs 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.

CHANNELS OF DISTRIBUTION
Branches have been the delivery system for Banking. Various characteristics of services also had a lot of say in restructuring the channels of distribution

CHANNELS OF DISTRIBUTION
However, the technological evolution has brought a great change and development of innovative channels of distribution. The types of Branches in operation include : - Full Service Branches - Limited Service Branches (SPOKES) linked to Main (HUB) branches - Specially Branches like Corporate Banking Branches, Housing Finance Branches, NRI Branches, SME Branches contd

CHANNELS OF DISTRIBUTION
a) b) c) d) e) Electronic Banking Services include :ATMs Intelligent Terminals Home Banking Telemarketing Internet Banking

MARKETING MIX IN AIRLINES INDUSTRY

Services are Deeds, Processes, and Performances.

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.

RAINBOW OF SERVICE MARKETING MIX

PRODUCT

PRICE

PLACE

PROMOTION

PEOPLE

PROCESS

PHYSICAL EVIDENCE

4Ps OF MARKETING MIX

PRODUCT
Design. Quality. Range. Brand Name. Features.

PLACE
Distribution Channels.

PRICE
List Price. Discounts. Commissions.

PROMOTION
Advertising. Sales Promotion. Salesmanship.

Methods of Distribution.
Coverage. Location.

Surcharges. Publicity. Extras.

PRODUCT MIX

Giving a Feel For The Product Inside a Service Wrapper .

Consumers are demanding not products, or features of products but the

benefits they will be offered.

The airline product includes of two types of services:

1. On the Ground Services.

2. In-Flight Services.

PRICE MIX

Premium Pricing

Value For Money Pricing

Cheap Value Pricing

Low-Cost Pricing

APEX Fares

PLACE MIX

Online 24-hour reservation Systems.

Consolidation.
Tour Operator/ Travel Agent.

Affiliated with companies.

PROMOTION MIX

Advertising

Airlines Advertisement Needs to Keep in Mind the Image of Country, The Scenic Beauty, Tourist Attractions, Rich Cultural Heritages or Which Would Attract Number of Tourists.

Publicity

Sales promotion

Word of mouth

PROMOTION MIX

Advertising
The PRO, Receptionist, Travel Agents, Media People Are Very Important People in Publicizing The Business.

Publicity

Sales promotion

Word of mouth

PROMOTION MIX

Advertising

Publicity
The Travel Agents, Tour Operators, Frontline Staffs Contribute a Lot to The Promotion of Airlines Business.

Sales promotion

Word of mouth

PROMOTION MIX

Advertising

Publicity

Sales promotion

Word of mouth

Customer Loyalty Ladder .

PEOPLE MIX
Competence. Reliability. caring Attitude. Responsiveness. Initiative. Problem Solving Ability. Goodwill.

PROCESS MIX
Reservation. Flight Information. Facilities at The Airport. Baggage Handling. Meal Service.

Flight Entertainment.
Deliver Quality Service.

PHYSICAL EVIDENCE

On the ground:
Booking offices or ticket counters. Paperwork.

In-flight:
Aircraft. Seating Configuration.

Good Inner-exteriors.
Cleanliness. Brand Logo. Uniforms. Ambience. Baggage. Labels or Tag.

Tickets.