Definition of Marketing
Marketing is total system of interacting design to plan, price, promote & distribute need satisfying products & services to existing & potential consumers.
Definition of Service
A service is any activity or benefit that one party can offer to another that is essentially intangible and does result in the ownership of anything.
Definition of service marketing
It is a part of product or the full product for which the consumer is willing to see value and pay for it
The service concept
There are three levels of service concept as follows
1. The core service :-
The core benefit is specifically related to basic need of customer. The consumer may be feeling hungry or is tired of work and needs a change of place.
2. The expected service:-
This relates to customers expectation of what kind of services are available to satisfy their needs. The hungry customer may decide to visit a snack bar or fast food joint in order to satisfy the need of food. Customer will except a certain level of service offered- a range of items on a menu and also clean kitchen, surroundings and prompt service staff.
3. The augmented service:-
Augmenting the service means making it better some ways, service provider differentiate their offerings in an attempt to influence customer choice and satisfaction. Restaurants may create a special ambiance through table layout, interior décor, and different light combination.
Growth of services:-
The global scene
The Indian scene
Factors behind the rapid growth of service sector:-
Factors Types of service required
Increasing affluence Greater demand for services activities which consumer used to perform themselves such as interior decorator ,laundry, care of household products care of garden etc.
More leisure time Greater demand for recreation and entertainment facilities, travel to resorts, adult’s education and self improvement courses.
Higher percentage of women in labor force Greater demand foe crèches, baby sitting facilities, household domestic help.
Greater life expectancy Greater demand for nursing homes and healthcare services.
Greater complexity of products Greater demand for skilled specialists to provide maintenance for complex products such as air conditioner ,cars, home computers.
Increasing complexity of life Greater demand for specialists in income tax ,labor laws ,legal affairs, marriage counseling,
Employment services
Greater concern about ecology and resource scarcity Greater demand foe purchased or leased services, car rental, resort to time sharing rather than ownership basis.
Increasing numbers of new products The computer sparked development of such service industries as programming ,repair and time sharing.
Characteristics / unique features of Services
1. Intangibility:-
• Unlike physical products, services are intangible; they can not be seen, touched, or smelt.
• Services like banks, hotels, hospitals etc., have varying degrees of tangible and intangible components.
• Services as a group have a dominant intangible component; and that is its specialty. Because of this customer cannot sample a service in advance and it, therefore, becomes difficult for the consumer to judge a service before it is bought; he has no ‘tangibles’ to go by for judging the service in advance; he cannot know its exact outcomes in advance.
2. Inseparability:-
• Services are marked by 2 kind of inseparability:
• Inseparability of production and consumption.
• Inseparability of the services from the person who possess the skill and performs the service.
o Services are produced and consumed concurrently. This is not so with physical products. The latter are manufactured are manufactured at one point of time and location, and consumed at another point of time and location; they are stored somewhere and transported to places where customers are located. Services, on contrary, are consumed simultaneously- at the same point of time and location. Secondly, Services are also inseparable from there providers. The latter are integral part of the services.
3. Variability/heterogeneity:-
• Services are marked as variability because of 3 reasons:
• The inseparability of the service provider leads to some variability; variability automatically enters the picture depending on the person performing the service.
• Services are highly people-intensive and anything, that is people-intensive is bound to be marked by variability in performance
• In services, the effect varies dependent on when and where the service is provided.
4. Perish ability:-
• Services can not be stored.
• There is no inventories in case of service.
• Service does not even exist when you buy one. You can order it, and then you get it.
5. Ownership:-
Services do not result in ownership of anything.
Unlike in product marketing, in service marketing there is no ownership transfer.
The buyer does not become the owner of anything, he just uses it or experiences the service.
Implications and means of overcoming characteristics.
1.Intangibility:-
Sampling is difficult.
Difficult to judge quality and value in advance.
Not possible to patent or have copyright.
Relatively difficult to promote.
Overcome:-
Focus on benefits.
Use brand names
Use personalize service.
Develop reputation increase tangibility
2 Inseparability:-
Requires presence of performer.
Direct sale limited scale operations.
Learn to work in larger groups.
Work faster.
Train more services geographically limited markets.
3 Heterogeneity:-
Difficult to standardize quality.
Careful selection and training of personnel.
Define behavior norms.
Reduce role of human element.
4 Pershability:-
Cannot be stored.
Problem of demand fluctuation.
Better match between supply and demand by price reduction in low demand season.
5 Ownership:-
Customer has access to but not on activity
Stress advantage to non-ownership such as easier scheme.
TACKLING THE UNIQUE PROBLEMS:
Services are marked by certain by certain unique characteristics resulting in certain unique problems in marketing. Marketing strategy in service business must tackle these unique problems.
INTANGIBILITY:
Intangibility is the first unique characteristic of services and it poses some unique problems in marketing. The service marketer can tackle these problems by following ways:
FOCUS ON BENEFITS:
In the first place, the marketer can tackle the intangibility factor by highlighting the benefits of the services. He can use statistics/facts and figures about his service for convincing customers. He can specifically highlight factors like reliability, performance, safety and customer care, quoting facts and figures about his services as well as that of his competitors/industry.
INCREASE TANGIBILITY:
The service marketer can also develop a tangible representation of the intangible service and play it up. E.g.: Credit Cards. All credit cards (e.g. American Express, Visa, and MasterCard)
Have two identifiable features:
(i) a physical entity (a card with distinct looks), and
(ii) a brand name.
Credit card marketers can make their intangible service tangible to some extent by focusing on such tangible features. In its card, Amex uses colors of gold/platinum, colors that depict richness and prestige. Thereby, it introduces an element of tangibility.
USE WELL KNOWN PERSONALITIES IN PROMOTION:
Service marketers can also bring in a tangible element by using well-known personalities in promotion. They can also develop a good reputation of the service over a period of time and use the reputation for promoting the service. Over a period of time, reputation, which is usually an intangible element, may become a tangible element in the perception of the customers.
INSEPARABILITY:
Because of the inseparability factor, customers judge the quality of a service based on the person performing the service. In fact, often they insist that a particular person should provide the service for them. This limits the quantum of service produced.
This can be tackled to an extent by making the service personnel work faster and cover more customers in the available time, using appropriate gadgets if necessary. Standardising the service performance process step by step and ensuring that the process is handled the same way by all service personnel, and reducing the variability through proper selection, training and motivation of the service personnel are the other possible steps.
VARIABILITY:
The problem of variability can be overcome to an extent by putting group of personnel in charge of the service, rather than individuals. Second, by systematically coaching every service person in the outfit, the standard of everyone can be raised to a uniformly high level. Reducing the human element and enhancing mechanization and automation is another solution.
PERISHABILITY:
The perishable characteristic of services also poses a special problem as it renders demand-supply balancing difficult. Since services cannot be stored and supplied, it is often difficult to smoothen out their demand and supply. This means that capacity planning, capacity scheduling, and capacity utilization will call for great ingenuity in service marketing. Differential pricing can be used as a device for matching demand and supply better. With such a pricing, the peak time demand can be reduced and non-peak time demand cultivated. If the marketer does not prefer differential prices, he can achieve the same effect by having a regular price pegged at a relatively higher level and allowing a discount on it as warranted by the situation. Reservation systems too can be useful in some cases. On the supply side, the marketer can go in for part-time employees, so as to enhance the service supply during times of peak demand.
CLASSIFICATION OF SERVICES:
There are number of ways of classifying service activities and following are most commonly used:
END-USER:
End user services can be classified into following categories:
CUSTOMER:
Package holidays, leisure, and Personal finance.
BUSINESS TO BUSINESS:
Advertising agencies, Public Relations, Printing, Accountancy.
INDUSTRIAL:
Plant maintenance and repairs, hygiene, machine installation, project management.
SERVICE TANGIBILITY:
The degree of tangibility can be used for classification:
HIGHLY TANGIBLE:
Car rental, mobile phones, vending machine.
SERVICES LINKED TO TANGIBLE GOODS:
Domestic appliance repairs, car services, plumbing jobs.
HIGHLY INTANGIBLE:
Physiotherapy, legal services, insurance, consultancy, coaching.
PEOPLE-BASED SERVICES:
Services can be broken into labor-intensive and equipment-based services.
LABOR/PEOPLE-BASED SERVICES (high manpower services):
Education, dental care, physiotherapy, restaurant.
EQUIPMENT-BASED SERVICES (low manpower services):
Laundry, vending machines, ECG testing, Cinema.
EXPERTISE:
The expertise and skill of the service provider can be broken into following categories:
PROFESSIONAL: medical, legal, accountancy, financial, architecture, management consultancy.
NON-PROFESSIONAL: babysitting, caretaking.
PROFIT ORIENTATION:
The overall business orientation can be used for classification:
NOT FOR PROFIT: The Rotary International, Red Cross, Green Peace, etc.
COMMERCIAL: Banks, airlines, insurance, tour operators, hotels, etc.
7 P’s of SERVICE MARKETING
Product
Price
Place
Promotion
People
Process
Physical evidence
Product
The product aspects of marketing deal with the specifications of the actual goods or services, and how it relates to the end-user's needs and wants. The scope of a product generally includes supporting elements such as warranties, guarantees, and support.
The customer benefit concept
The service concept
The service offer
The service form
The service delivery system
Pricing
This refers to the process of setting a price for a product, including discounts. The price need not be monetary; it can simply be what is exchanged for the product or services, e.g. time, energy, or attention. Methods of setting prices optimally are in the domain of pricing science. A number of modes of pricing techniques exist, which span:
Elasticity’s (whether Price Elasticity of Demand, Cross Elasticity of Demand, or Income Elasticity of Demand)
Market skimming pricing
Market penetration pricing
Elasticity’s are a microeconomic concept, which gauges how elastic demand is for a given good/service. In a marketing context, its usefulness relates to the suitable level at which a product can be priced, in accordance with price, a product's complements and substitutes, and the level of income a consumer possesses.
Market skimming pertains to firm releasing a good in a "first to market" scenario. As an example, picture a company which releases a new type of personal media playing system. It may set the good at an initially high level, but reduce it over time, once the level of demand gradually rises. Market skimming is best operable within a first to market scenario, since there would be few competitors within the company's industry. This pricing strategy is also best implemented within a market of high entry barriers (such as a monopoly or an oligopoly). This is so since the high barriers to entry discourage competitors into the industry for the product.
Market penetration concerns pricing policies for late entrants to a market. As another example, a company could release a product into a market years after it is initially introduced, but at an artificially low price in order to stimulate demand. The result of such a pricing strategy would be to draw consumers from competitors and into purchasing its own product. Market penetration, in contrast to market skimming, best functions within a market form with low barriers to entry (such as perfect competition or monopolistic competition). Low barriers to entry facilitates a company's ability to sell goods at a price lower than its market clearing point.
Placement (or distribution)
This refers to how the product gets to the customer; for example, point-of-sale placement or retailing. This third P has also sometimes been called Place, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also referring to how the environment in which the product is sold in can affect sales.
PROMOTION
The fundamental difference which must be kept in mind while designing the promotion strategy for services is that the customer relies more on subjective impressions rather than convert evidence. This is because of the intangible nature of services.
The marketer can rely heavily on word of mouth communication. It is a powerful promotional tool in respect of services. In services, word of mouth often proves to be a more powerful tool than company –generated mass promotional communications.
PEOPLE
People matter the utmost in service marketing. In services, quality depends on the people who perform the service. Services are people intensive unlike physical products that are material intensive. Customers have a liking for service personnel who make them feel important. By handling the human element appropriately they can enhance service quality and customer satisfaction.
Service personnel are important in all organizations but more so in an organization involved in providing services. The behavior and attitude of the personnel providing the service is an important influence on the customer’s overall perception of the service.
High or low contact is defined on the basis of total time the customer has to spend in the system compared with the relative time it takes to service him.
Motivation of employees is an important aspect. The motivation requirement does not stop with those who are directly engaged in the production/delivery of the service, but extends to the staff engaged in administrative and support services as well.
Training is crucial aspect in service marketing. Since an employee’s commitment towards serving the customer and his attitude towards the service as such are crucial in service marketing, behavioral and attitude training is of special importance here. Poor service is often traced to negative attitude of employees.
Training should also develop right attitude. Caring for the customer, showing concern, being sensitive even to the unarticulated needs of the customer are parts of positive attitude.
Training is needed in communication too. Good communication at the customer contact level is an essential ingredient in service delivery.
Consumers make judgment and perception of the service based on the employees they interact with.
Service is a team task rather than an individual one. A network of employees is involved in service provision and generating customer satisfaction.
Give employees the authority, responsibility and incentives to help customers in unique way.
Disneyland is the best example in imparting training to service staff. The frontline service people are trained to become the best guides to visitors.
Physical evidence : In most service situations the customer is present while the service is actually produced/delivered. Because of this the surroundings in which the customer is actually served becomes importance in service situation. The surrounding constitute the physical evidence of the services, they can be seen, touched and felt. For example, the appearance and cleanliness of a restaurant influence a customer’s perception of services. They are tangible and controllable aspects of service. The service manager has to effectively manage the constituents of physical evidence.
Process : The arrangement by which the customer actually receives delivery of the service constitutes the process. For example, in a fast food outlet, the service process comprises buying of coupon at the counter and picking up the items against them at the delivery desk. In an air travel process involves many more steps, from booking the tickets up to reaching the destination. The success of the final delivery of the services will depend upon the customer satisfaction generated at every step of the process.
Task involved in Service Marketing
1. Understanding the nature of Services
Key factor of Service Marketing
Services directed at people
Ex. Cable T.V. or entertainment service
Services directed at goods
Ex. Dry cleaning is directed at goods
One time service
Recurring service
Customer goes to service provider or vice-versa
2. Understanding the customer Expectation
Service marketer must understanding the customer well and correctly size up their expectation of the service.
Exit response from customer
Ex. Questionnaire, Personal talk
Consumer care panels
Face to Face Talk
3. Giving a shape to the Service
Giving a shape to the service actually means developing the service product. In order to carry it out, the service marketer must have a good grasp of the following ideas:
Service Benefits
Service Offer
Service Expectation
Service Elements
Service Form
4. Organizing the Delivery system
1. location decision
Choosing the right place to serve maximum clientele is the main requirement.
2. using channels
service marketer should decide whether to use intermediaries or not.Ex. services like airlines use intermediaries such as travel agents
5. Developing 7 P’s
Developing the different marketing strategies by using 7 P’s of marketing.
6. Achieving Differentiation
Differentiate through Special Constituents of Service
Marketers can differentiate their services from competitors by including some special features
Differentiate through Actual Performance of Service.
a. on the basis of People providing the Service
By improving employees skills
By improving responsiveness
By improving courtesy
By improving communication
b. on the basis of Physical Evidence in the Service
by improving performance through facilities, equipments
c. on the basis of Process in the Service
Differentiate through Experience
Differentiate through Branding
7. Measuring service Quality
ServQual model: Developed by Parasuranman
Tangibles: Appearance of product
Reliability: provide accurately
Responsiveness: willingness to help
Assurance: increase confidence in customer
Empathy: individual attention to customer
Gaps considered by model
Gap 1: Difference between customer expectations and firms perception of expectation.
Gap 2: Difference between firms perception of expectation and specifications firm actually adopts.
Gap 3: Difference between adopted specifications and service quality actually delivered.
Gap 4: Difference between quality actually delivered and promise made to the customer through promotion.
Gap 5: Difference between services expected by customer and received by customer.
8. Monitoring customer satisfaction
Get complaints- win customer
complaints are effective opportunities for serving customer s better.
Marketing is total system of interacting design to plan, price, promote & distribute need satisfying products & services to existing & potential consumers.
Definition of Service
A service is any activity or benefit that one party can offer to another that is essentially intangible and does result in the ownership of anything.
Definition of service marketing
It is a part of product or the full product for which the consumer is willing to see value and pay for it
The service concept
There are three levels of service concept as follows
1. The core service :-
The core benefit is specifically related to basic need of customer. The consumer may be feeling hungry or is tired of work and needs a change of place.
2. The expected service:-
This relates to customers expectation of what kind of services are available to satisfy their needs. The hungry customer may decide to visit a snack bar or fast food joint in order to satisfy the need of food. Customer will except a certain level of service offered- a range of items on a menu and also clean kitchen, surroundings and prompt service staff.
3. The augmented service:-
Augmenting the service means making it better some ways, service provider differentiate their offerings in an attempt to influence customer choice and satisfaction. Restaurants may create a special ambiance through table layout, interior décor, and different light combination.
Growth of services:-
The global scene
The Indian scene
Factors behind the rapid growth of service sector:-
Factors Types of service required
Increasing affluence Greater demand for services activities which consumer used to perform themselves such as interior decorator ,laundry, care of household products care of garden etc.
More leisure time Greater demand for recreation and entertainment facilities, travel to resorts, adult’s education and self improvement courses.
Higher percentage of women in labor force Greater demand foe crèches, baby sitting facilities, household domestic help.
Greater life expectancy Greater demand for nursing homes and healthcare services.
Greater complexity of products Greater demand for skilled specialists to provide maintenance for complex products such as air conditioner ,cars, home computers.
Increasing complexity of life Greater demand for specialists in income tax ,labor laws ,legal affairs, marriage counseling,
Employment services
Greater concern about ecology and resource scarcity Greater demand foe purchased or leased services, car rental, resort to time sharing rather than ownership basis.
Increasing numbers of new products The computer sparked development of such service industries as programming ,repair and time sharing.
Characteristics / unique features of Services
1. Intangibility:-
• Unlike physical products, services are intangible; they can not be seen, touched, or smelt.
• Services like banks, hotels, hospitals etc., have varying degrees of tangible and intangible components.
• Services as a group have a dominant intangible component; and that is its specialty. Because of this customer cannot sample a service in advance and it, therefore, becomes difficult for the consumer to judge a service before it is bought; he has no ‘tangibles’ to go by for judging the service in advance; he cannot know its exact outcomes in advance.
2. Inseparability:-
• Services are marked by 2 kind of inseparability:
• Inseparability of production and consumption.
• Inseparability of the services from the person who possess the skill and performs the service.
o Services are produced and consumed concurrently. This is not so with physical products. The latter are manufactured are manufactured at one point of time and location, and consumed at another point of time and location; they are stored somewhere and transported to places where customers are located. Services, on contrary, are consumed simultaneously- at the same point of time and location. Secondly, Services are also inseparable from there providers. The latter are integral part of the services.
3. Variability/heterogeneity:-
• Services are marked as variability because of 3 reasons:
• The inseparability of the service provider leads to some variability; variability automatically enters the picture depending on the person performing the service.
• Services are highly people-intensive and anything, that is people-intensive is bound to be marked by variability in performance
• In services, the effect varies dependent on when and where the service is provided.
4. Perish ability:-
• Services can not be stored.
• There is no inventories in case of service.
• Service does not even exist when you buy one. You can order it, and then you get it.
5. Ownership:-
Services do not result in ownership of anything.
Unlike in product marketing, in service marketing there is no ownership transfer.
The buyer does not become the owner of anything, he just uses it or experiences the service.
Implications and means of overcoming characteristics.
1.Intangibility:-
Sampling is difficult.
Difficult to judge quality and value in advance.
Not possible to patent or have copyright.
Relatively difficult to promote.
Overcome:-
Focus on benefits.
Use brand names
Use personalize service.
Develop reputation increase tangibility
2 Inseparability:-
Requires presence of performer.
Direct sale limited scale operations.
Learn to work in larger groups.
Work faster.
Train more services geographically limited markets.
3 Heterogeneity:-
Difficult to standardize quality.
Careful selection and training of personnel.
Define behavior norms.
Reduce role of human element.
4 Pershability:-
Cannot be stored.
Problem of demand fluctuation.
Better match between supply and demand by price reduction in low demand season.
5 Ownership:-
Customer has access to but not on activity
Stress advantage to non-ownership such as easier scheme.
TACKLING THE UNIQUE PROBLEMS:
Services are marked by certain by certain unique characteristics resulting in certain unique problems in marketing. Marketing strategy in service business must tackle these unique problems.
INTANGIBILITY:
Intangibility is the first unique characteristic of services and it poses some unique problems in marketing. The service marketer can tackle these problems by following ways:
FOCUS ON BENEFITS:
In the first place, the marketer can tackle the intangibility factor by highlighting the benefits of the services. He can use statistics/facts and figures about his service for convincing customers. He can specifically highlight factors like reliability, performance, safety and customer care, quoting facts and figures about his services as well as that of his competitors/industry.
INCREASE TANGIBILITY:
The service marketer can also develop a tangible representation of the intangible service and play it up. E.g.: Credit Cards. All credit cards (e.g. American Express, Visa, and MasterCard)
Have two identifiable features:
(i) a physical entity (a card with distinct looks), and
(ii) a brand name.
Credit card marketers can make their intangible service tangible to some extent by focusing on such tangible features. In its card, Amex uses colors of gold/platinum, colors that depict richness and prestige. Thereby, it introduces an element of tangibility.
USE WELL KNOWN PERSONALITIES IN PROMOTION:
Service marketers can also bring in a tangible element by using well-known personalities in promotion. They can also develop a good reputation of the service over a period of time and use the reputation for promoting the service. Over a period of time, reputation, which is usually an intangible element, may become a tangible element in the perception of the customers.
INSEPARABILITY:
Because of the inseparability factor, customers judge the quality of a service based on the person performing the service. In fact, often they insist that a particular person should provide the service for them. This limits the quantum of service produced.
This can be tackled to an extent by making the service personnel work faster and cover more customers in the available time, using appropriate gadgets if necessary. Standardising the service performance process step by step and ensuring that the process is handled the same way by all service personnel, and reducing the variability through proper selection, training and motivation of the service personnel are the other possible steps.
VARIABILITY:
The problem of variability can be overcome to an extent by putting group of personnel in charge of the service, rather than individuals. Second, by systematically coaching every service person in the outfit, the standard of everyone can be raised to a uniformly high level. Reducing the human element and enhancing mechanization and automation is another solution.
PERISHABILITY:
The perishable characteristic of services also poses a special problem as it renders demand-supply balancing difficult. Since services cannot be stored and supplied, it is often difficult to smoothen out their demand and supply. This means that capacity planning, capacity scheduling, and capacity utilization will call for great ingenuity in service marketing. Differential pricing can be used as a device for matching demand and supply better. With such a pricing, the peak time demand can be reduced and non-peak time demand cultivated. If the marketer does not prefer differential prices, he can achieve the same effect by having a regular price pegged at a relatively higher level and allowing a discount on it as warranted by the situation. Reservation systems too can be useful in some cases. On the supply side, the marketer can go in for part-time employees, so as to enhance the service supply during times of peak demand.
CLASSIFICATION OF SERVICES:
There are number of ways of classifying service activities and following are most commonly used:
END-USER:
End user services can be classified into following categories:
CUSTOMER:
Package holidays, leisure, and Personal finance.
BUSINESS TO BUSINESS:
Advertising agencies, Public Relations, Printing, Accountancy.
INDUSTRIAL:
Plant maintenance and repairs, hygiene, machine installation, project management.
SERVICE TANGIBILITY:
The degree of tangibility can be used for classification:
HIGHLY TANGIBLE:
Car rental, mobile phones, vending machine.
SERVICES LINKED TO TANGIBLE GOODS:
Domestic appliance repairs, car services, plumbing jobs.
HIGHLY INTANGIBLE:
Physiotherapy, legal services, insurance, consultancy, coaching.
PEOPLE-BASED SERVICES:
Services can be broken into labor-intensive and equipment-based services.
LABOR/PEOPLE-BASED SERVICES (high manpower services):
Education, dental care, physiotherapy, restaurant.
EQUIPMENT-BASED SERVICES (low manpower services):
Laundry, vending machines, ECG testing, Cinema.
EXPERTISE:
The expertise and skill of the service provider can be broken into following categories:
PROFESSIONAL: medical, legal, accountancy, financial, architecture, management consultancy.
NON-PROFESSIONAL: babysitting, caretaking.
PROFIT ORIENTATION:
The overall business orientation can be used for classification:
NOT FOR PROFIT: The Rotary International, Red Cross, Green Peace, etc.
COMMERCIAL: Banks, airlines, insurance, tour operators, hotels, etc.
7 P’s of SERVICE MARKETING
Product
Price
Place
Promotion
People
Process
Physical evidence
Product
The product aspects of marketing deal with the specifications of the actual goods or services, and how it relates to the end-user's needs and wants. The scope of a product generally includes supporting elements such as warranties, guarantees, and support.
The customer benefit concept
The service concept
The service offer
The service form
The service delivery system
Pricing
This refers to the process of setting a price for a product, including discounts. The price need not be monetary; it can simply be what is exchanged for the product or services, e.g. time, energy, or attention. Methods of setting prices optimally are in the domain of pricing science. A number of modes of pricing techniques exist, which span:
Elasticity’s (whether Price Elasticity of Demand, Cross Elasticity of Demand, or Income Elasticity of Demand)
Market skimming pricing
Market penetration pricing
Elasticity’s are a microeconomic concept, which gauges how elastic demand is for a given good/service. In a marketing context, its usefulness relates to the suitable level at which a product can be priced, in accordance with price, a product's complements and substitutes, and the level of income a consumer possesses.
Market skimming pertains to firm releasing a good in a "first to market" scenario. As an example, picture a company which releases a new type of personal media playing system. It may set the good at an initially high level, but reduce it over time, once the level of demand gradually rises. Market skimming is best operable within a first to market scenario, since there would be few competitors within the company's industry. This pricing strategy is also best implemented within a market of high entry barriers (such as a monopoly or an oligopoly). This is so since the high barriers to entry discourage competitors into the industry for the product.
Market penetration concerns pricing policies for late entrants to a market. As another example, a company could release a product into a market years after it is initially introduced, but at an artificially low price in order to stimulate demand. The result of such a pricing strategy would be to draw consumers from competitors and into purchasing its own product. Market penetration, in contrast to market skimming, best functions within a market form with low barriers to entry (such as perfect competition or monopolistic competition). Low barriers to entry facilitates a company's ability to sell goods at a price lower than its market clearing point.
Placement (or distribution)
This refers to how the product gets to the customer; for example, point-of-sale placement or retailing. This third P has also sometimes been called Place, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also referring to how the environment in which the product is sold in can affect sales.
PROMOTION
The fundamental difference which must be kept in mind while designing the promotion strategy for services is that the customer relies more on subjective impressions rather than convert evidence. This is because of the intangible nature of services.
The marketer can rely heavily on word of mouth communication. It is a powerful promotional tool in respect of services. In services, word of mouth often proves to be a more powerful tool than company –generated mass promotional communications.
PEOPLE
People matter the utmost in service marketing. In services, quality depends on the people who perform the service. Services are people intensive unlike physical products that are material intensive. Customers have a liking for service personnel who make them feel important. By handling the human element appropriately they can enhance service quality and customer satisfaction.
Service personnel are important in all organizations but more so in an organization involved in providing services. The behavior and attitude of the personnel providing the service is an important influence on the customer’s overall perception of the service.
High or low contact is defined on the basis of total time the customer has to spend in the system compared with the relative time it takes to service him.
Motivation of employees is an important aspect. The motivation requirement does not stop with those who are directly engaged in the production/delivery of the service, but extends to the staff engaged in administrative and support services as well.
Training is crucial aspect in service marketing. Since an employee’s commitment towards serving the customer and his attitude towards the service as such are crucial in service marketing, behavioral and attitude training is of special importance here. Poor service is often traced to negative attitude of employees.
Training should also develop right attitude. Caring for the customer, showing concern, being sensitive even to the unarticulated needs of the customer are parts of positive attitude.
Training is needed in communication too. Good communication at the customer contact level is an essential ingredient in service delivery.
Consumers make judgment and perception of the service based on the employees they interact with.
Service is a team task rather than an individual one. A network of employees is involved in service provision and generating customer satisfaction.
Give employees the authority, responsibility and incentives to help customers in unique way.
Disneyland is the best example in imparting training to service staff. The frontline service people are trained to become the best guides to visitors.
Physical evidence : In most service situations the customer is present while the service is actually produced/delivered. Because of this the surroundings in which the customer is actually served becomes importance in service situation. The surrounding constitute the physical evidence of the services, they can be seen, touched and felt. For example, the appearance and cleanliness of a restaurant influence a customer’s perception of services. They are tangible and controllable aspects of service. The service manager has to effectively manage the constituents of physical evidence.
Process : The arrangement by which the customer actually receives delivery of the service constitutes the process. For example, in a fast food outlet, the service process comprises buying of coupon at the counter and picking up the items against them at the delivery desk. In an air travel process involves many more steps, from booking the tickets up to reaching the destination. The success of the final delivery of the services will depend upon the customer satisfaction generated at every step of the process.
Task involved in Service Marketing
1. Understanding the nature of Services
Key factor of Service Marketing
Services directed at people
Ex. Cable T.V. or entertainment service
Services directed at goods
Ex. Dry cleaning is directed at goods
One time service
Recurring service
Customer goes to service provider or vice-versa
2. Understanding the customer Expectation
Service marketer must understanding the customer well and correctly size up their expectation of the service.
Exit response from customer
Ex. Questionnaire, Personal talk
Consumer care panels
Face to Face Talk
3. Giving a shape to the Service
Giving a shape to the service actually means developing the service product. In order to carry it out, the service marketer must have a good grasp of the following ideas:
Service Benefits
Service Offer
Service Expectation
Service Elements
Service Form
4. Organizing the Delivery system
1. location decision
Choosing the right place to serve maximum clientele is the main requirement.
2. using channels
service marketer should decide whether to use intermediaries or not.Ex. services like airlines use intermediaries such as travel agents
5. Developing 7 P’s
Developing the different marketing strategies by using 7 P’s of marketing.
6. Achieving Differentiation
Differentiate through Special Constituents of Service
Marketers can differentiate their services from competitors by including some special features
Differentiate through Actual Performance of Service.
a. on the basis of People providing the Service
By improving employees skills
By improving responsiveness
By improving courtesy
By improving communication
b. on the basis of Physical Evidence in the Service
by improving performance through facilities, equipments
c. on the basis of Process in the Service
Differentiate through Experience
Differentiate through Branding
7. Measuring service Quality
ServQual model: Developed by Parasuranman
Tangibles: Appearance of product
Reliability: provide accurately
Responsiveness: willingness to help
Assurance: increase confidence in customer
Empathy: individual attention to customer
Gaps considered by model
Gap 1: Difference between customer expectations and firms perception of expectation.
Gap 2: Difference between firms perception of expectation and specifications firm actually adopts.
Gap 3: Difference between adopted specifications and service quality actually delivered.
Gap 4: Difference between quality actually delivered and promise made to the customer through promotion.
Gap 5: Difference between services expected by customer and received by customer.
8. Monitoring customer satisfaction
Get complaints- win customer
complaints are effective opportunities for serving customer s better.