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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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
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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 stimulatecontinued enthusiasm and hope they talk it up
Characteristics of Services
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2. Inseparability of Production (or performingthe service) and Consumption (using the
service) - happens at the same time
Characteristics of Services
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
Characteristics of Services
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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3. Heterogeneity - services are not alwaysdelivered 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, unlessyou use a machine to dispense the ice cream
Characteristics of Services
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3. Heterogeneity - services are not alwaysdelivered 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
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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
Characteristics of Services
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5. Simultaneity
6. Ownership
7. Nature of Demand
8. Quality Measurement
Characteristics of Services
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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
EXPANDING HORIZONS OF SERVICES..
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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
EXPANDING HORIZONS OF SERVICES..
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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)
Expanded Marketing Mix for Services
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
Expanded Marketing Mix for Services
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Expanded Marketing Mix for Services
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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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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
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CHANNELS OF DISTRIBUTION
- 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.