Services Marketing MixProduct, Price, Place, Promotion

Guided By:Dr. Reena Ladiwala

Submitted to:Department of business administration

M. K. Bhavnagar university,Bhavnagar.

Service Marketing

Prepared By:Kartik Gohel,

Trishala Madhani, Dhara Bhadiyarda, Rajnandiniba Gohil

PRESENTED BY: KARTIK GOHEL

Product

Definition of ‘services’

“Services are intangible activities or benefits that an organization provides to consumers (such as airline trips, financial advice, or automobile repair) in exchange for money or something else of value”

- Kerin et al

Definition of ‘Services’

“ A service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product”.

- Kotler and Armstrong

Characteristics of Services

Intangibility There is no physical presence

Inseparability The customer must be present for the service to take

place

Inconsistency The service provider cannot provide exactly the same

service every time

Inventory A service cannot be stored.

Service Marketing Mix

The essence of every marketing strategy is the marketing mix. For service marketing , due to special and unique features the marketing mix is extended to include physical evidence , process and people. Thus marketing mix of service are….. Product Price Promotion Place People Process Physical Evidence

Example: Product of AXIS Bank:

The main products of AXIS Bank are Saving Account, Current Account and Demat Account. The other products are Home loan, personal loan, Insurance, Credit cards, etc.

For better marketing of products, the products are categorized under Axis Bank and Axis Sales.

PRESENTED BY: TRISHALA MADHANI

Price-Role of non-monetary costs, pricing strategy pricing

and revenue Management, yield management

Price

Pricing is one of the most important elements of the marketing mix, as it is the only element of the marketing mix, which generates a turnover for the organisation.

Price must support the other elements of the marketing mix. Pricing is difficult and must reflect supply and demand relationship. Pricing a product too high or too low could mean lost sales for the organisation 

Role of non-monetary Costs

When a customer buys a product, he is not only spending money, he is spending other things as well. These things are called non-monetary costs and they are spent in the form of time, convenience, effort and psychology.

Non-monetary costs represent other sources of sacrifice perceived by consumers when buying and using a service. Time costs, search costs, and psychological costs often enter into the evaluation of whether to buy or rebuy a service, and may at times be more important concerns than monetary price.

Types of Non-monetary costs Time costs Most services require direct participation of the

consumer and thus consume real time. Consider the investment you make to exercise, see a

physician, or get through the crowd to watch a concert or baseball game. Not only are you paying money to receive these services; you’re also expending time. Time becomes a sacrifice made to receive service in multiple ways. First, because service providers cannot completely control the number of customers or the length of time it will take for each customer to be served, customers are likely to expend time waiting to receive the service. Waiting time for a service is virtually always longer and less predictable than waiting time to buy goods.

Search costs

When a consumer decides to buy a product/ service, he makes effort in searching for the best one among all the choices. This effort is called “search cost” and is a type of non-monetary costs 

Convinience costs

There are also convenience (or perhaps more accurately inconvenience) costs of services. If customers have to travel to a service, they incur a cost, and the cost becomes greater when travel is difficult, as it is for elderly persons. The inconvenience a person undergoes to avail a product/ service is called convenience cost, and it is a type of non-monetary costs.

Psychological costs

Often the most painful non-monetary costs are the psychological costs incurred in receiving some services. Fear of not understanding (insurance), fear of rejection (bank loans), fear of uncertainty (including fear of high cost)— all of these, constitute psychological costs that customers experience as sacrifices when purchasing and using services 

Pricing Strategy

Pricing is one of the most important elements of the marketing mix, as it is the only element of the marketing mix, which generates a turnover for the organisation. 

The table below explains different pricing methods and price strategies with an example of each pricing strategy

Pricing Strategy Definition ExamplePenetration Pricing Here the organisation

sets a low price to increase sales and market share. Once market share has been captured the firm may well then increase their price.

A television satellite company sets a low price to get subscribers then increases the price as their customer base increases.

Skimming Pricing The organisation sets an initial high price and then slowly lowers the price to make the product available to a wider market. The objective is to skim profits of the market layer by layer.

 games console company reduces the price of their console over 5 years, charging a premium at launch and lowest price near the end of its life cycle.

Competition Pricing Setting a price in comparison with competitors. In reality a firm has three options and these are to price lower, price the same or price higher than competitors.

Some firms offer a price matching service to match what their competitors are offering. Others will go further and refund back to the customer more money than the difference between their price and the competitor's price.

Product Line Pricing Pricing different products within the same product range at different price points.

An example would be a DVD manufacturer offering different DVD recorders with different features at different prices e.g. A HD and non HD version.. The greater the features and the benefit obtained the greater the consumer will pay. This form of price discrimination assists the company in maximising turnover and profits.

Bundle Pricing The organisation bundles a group of products at a reduced price. Common methods are buy one and get one free promotions or BOGOFs as they are now known. Within the UK some firms are now moving into the realms of buy one get two free Etc

This strategy is very popular with supermarkets who often offer BOGOF strategies.

Premium Pricing The price is set high to indicate that the product is "exclusive"

Examples of products and services using this strategy include Harrods, first class airline services, and Porsche.

Psychological Pricing The seller here will consider the psychology of price and the positioning of price within the market place.

The seller will charge 99p instead £1 or $199 instead of $200. The reason why this methods work, is because buyers will still say they purchased their product under £200 pounds or dollars, even thought it was a pound or dollar away. My favourite pricing strategy.

Cost Plus Pricing The price of the product is production costs plus a set amount ("mark up") based on how much profit (return) that the company wants to make. Although this method ensures the price covers production costs it does not take consumer demand or competitive pricing into account which could place the company at a competitive disadvantage.

For example a product may cost £100 to produce and as the firm has decided that their profit will be twenty percent they decide to sell the product for £120 

Cost Based Pricing This is similar to cost plus pricing in that it takes costs into account but it will consider other factors such as market conditions when setting prices.

Cost based pricing can be useful for firms that operate in an industry where prices change regularly but still want to base their price on costs.

Value Based Pricing This pricing strategy considers the value of the product to consumers rather than the how much it cost to produce it. Value is based on the benefits it provides to the consumer e.g. convenience, well being, reputation or joy.

Firms that produce technology, medicines, and beauty products are likely to use this pricing strategy.

Revenue ManagementRevenue Management is the application of

disciplined analytics that predict consumer behaviour at the micro-market level and optimize product availability and price to maximize revenue growth. The primary aim of Revenue Management is selling the right product to the right customer at the right time for the right price and with the right pack. The essence of this discipline is in understanding customers' perception of product value and accurately aligning product prices, placement and availability with each customer segment. 

Yield management

Yield management is a variable pricing strategy, based on understanding, anticipating and influencing consumer  behavior in order to maximize revenue or profits from a fixed, perishable resource

PLACEBHADIYADRA DHRA V.

ROLL NO: 28

Service distributionRole of customer in service deliveryDelivery through intermediariesFranchisingElectronic channelsSelf service technologies

Since service delivery is concurrent with its production and cannot be stored or transported, the location of the service product assumes importance. Service providers have to give special thought as to where the service is provided. A fine dining restaurant is better located in a busy, upscale market as opposed to the outskirts of a city. A holiday resort is better situated in the countryside away from the rush and noise of a city.

In the marketing mix, the process of moving products from the producer to the intended user is called place. In other words, it is how your product is bought and where it is bought. This movement could be through a combination of intermediaries such as distributors, wholesalers and retailers

Place = hard to find & get

In a services context, we often move nothing

Experiences, performances and solutions are not being physically shipped and stored

More and more informational transactions are conducted through electronic and not physical channels

Distribution in a Services Context

Customers visit service site Convenience of service factory locations and

operational schedules important when customer has to be physically present

Service providers go to customers Unavoidable when object of service is immovable Needed for remote areas Greater likelihood of visiting corporate customers

than individualsService transaction is conducted at arm’s

length Achieved with help of logistics and

telecommunications

Distribution Options for Serving Customers

Another way to look at it: Can a service provider add or change the service outlet structure to increase sales/add convenience?

Examples: Doctors on call / Food / Education

Six Options For Service Delivery

Hire the Right PeopleCompete for the Best PeopleHire for Service Competencies and Service

InclinationBe the Preferred Employer

Develop People to Deliver Service QualityTrain for Technical and Interactive SkillsEmpower EmployeesPromote Teamwork

Strategies for Delivering Service Quality through People

Provide Needed support systems Measure Internal Service Quality Provide Supportive Technology and

Equipment Develop Service-Oriented Internal Processes

Retain the best PeopleInclude Employees in the Company’s VisionTreat Employees as CustomersMeasure and Reward Strong Service

Performers

example

Cost, productivity and access to labor are key determinants to locating a service facility

Locational constraints Operational requirements

-Airports Geographic factors

-Ski Resorts Need for economies of scale

-Hospitals

Places of Service Delivery

Mini stores Creating many small service factories to maximize

geographic coverage-Automated kiosks

Separating front and back stages of operation-Taco Bell

Purchasing space from another provider in complementary field

Dunkin Donuts with Burger King

Locating in Multipurpose Facilities Proximity to where customers live or work

-Service Stations

Five of the supplementary services are information-based

These services can all be distributed electronically. They are: Information Consultation Order-taking Billing Payment

Distribution of Supplementary Services in Cyberspace

Technological Innovations Development of “smart” mobile telephones and

PDAs, and Wi-Fi high-speed Internet technology that links users to Internet from almost anywhere

Voice-recognition technology Web sites Smart cards

• detailed information about customer• Store Act as electronic purse containing digital

money

Electronic channels can be offered together with physical channels, or take the place of physical channels

Service Delivery Innovations Facilitated by Technology

Popular way to expand delivery of effective service concept, without a high level of monetary investments compared to rapid expansion of company-owned and -managed sites

Franchisor provides training, equipment and support marketing activities. Franchisees invest time and finance, and follow copy and media guidelines of franchisor

Growth-oriented firms like franchising because franchisees are motivated to ensure good customer service and high-quality service operations

Study shows significant attrition rate among franchisors in the early years of a new franchise system

One third of all systems fail within first four years Three fourths of all franchisors cease to exist after 12

years

Franchising

Alternative: license another supplier to act on the original supplier’s behalf to deliver core product, e.g. Trucking companies Banks selling insurance products

Distribution in services often involve moving nothing and many information-based services can be distributed electronically

Options for service delivery include:Customers visit the service siteService providers go to their customersService transaction is conducted remotely

Channel preferences vary among customers

Summary of Distributing Services

Place and time decisions include where services should be delivered in bricks-and-mortar context, when it should be delivered

Delivery in cyberspace is facilitated by technology and e-commerce allows 24-hour delivery, saving time and effort

Intermediaries play roles in distributing servicesFranchising brings both advantages and

disadvantages to the firm Service processes affect international market entry

differently

PRESENTED BY: RAJNANDINIBA GOHIL

Promotion

What is promotion ?

Promotion means advancement within an organisation.It is an upward movement of an employee from current

job to another that is higher in pay, responsibility, status and organisational level.

Definitions

“ A promotion is the transfer of an employee to a job that pays more money or that enjoys some preferred status ”

According to Scott and Spreigal

“ A promotion involves a change from one job to another that is better in term of status and responsibility “

According to Edwin B. Flippo

Informing

PersuadingReminding

Promotion -1

Personal Selling: Face to face personal communication- Eureka Forbes

In person selling, tele-marketingAdvertising- Mass communication efforts

through mediaSales Promotion- Communication through

contests, OOH, trade shows, free samples, yellow pages, call helplines

Promotion-2

Publicity- Communicating with an audience by personal or non-personal media that are not paid for delivering the message

Print media news, broadcast media news-UTI,PTI, Reuters, annual reports, speeches by employees

Examples-LuxSame theme over the years

Chips

Competition

Celebrity endorsement

Using famous people to attract target segment

ICICI Bank- Print Ad

TV Channels

Print Media

Print- Newspapers & Magazines

Radio

Purposes of promotion.

• To put the employee in a position where he will be of greater value to the company.

• To develop competitive spirit and zeal in the employees to acquire the skill and knowledge etc. required by higher level jobs.

• To promote employee self-development and make them await their turn of promotions. It reduce labour turnover

Role of Marketing communications

Position and differentiate the service Helps Customers to evaluate Service

Offerings Promote the Contribution of the Service

Personnel Add Value through Communication Content Facilitate Customer Involvement in

Production Stimulate or Dampen Demand to match

Capacity

Marketing Communication

Marketing Communication Tools

Advertising

SalesPromotion

DirectMarke

ting

Publicity/Publi

cRelations

Internet

Marketing

Publicity/Public

Relations

Deciding on Communications Mix

Personal SellingPersonal confrontation,

cultivation, response

Direct MarketingNonpublic, customized,up-to-date, interactive

The Changing World of MC

Old World

“Talking At” Consumers

Focus on Winning New Customers

Marketers Relied Primarily onAdvertising and Promotions

Deciding on Communications Mix

AdvertisingPublic, pervasive, expressive, impersonal

Sales promotionCommunication, incentive, invitation

Public relations and publicityCredibility, surprise, dramatization

Role of Marketing communications

Position and differentiate the service Helps Customers to evaluate Service

Offerings Promote the Contribution of the Service

Personnel Add Value through Communication Content Facilitate Customer Involvement in

Production Stimulate or Dampen Demand to match

Capacity

INTEGRATED MARKETING COMMUNICATIONS

INTEGRATED MARKETING COMMUNICATIONS

Integrated Communication Approach

Definition: A management concept that is designed to make all aspects of marketing communication such as advertising, sales promotion, public relations, and direct marketing work together as a unified force, rather than permitting each to work in isolation.

Defining IMC

IMC is a strategic business process used to plan, develop, execute and evaluate coordinated, measurable, persuasive brand communication programs with consumers, customers, prospects employees and other relevant external and internal audiences.

Traditional Approach to Marketing Communications

Point ofpurchase

Publicity

Publicrelations Direct

marketing Interactivemarketing

Specialevents

Packaging

Salespromotion

Directresponse

MediaAdver-tising

Contemporary IMC Approach

Point ofpurchase

Publicity

Interactivemarketing

Publicrelations

Directmarketing Special

events

Packaging Salespromotion

Directresponse

MediaAdver-tising

A Contemporary Perspective of IMC

Demand for accountabilityDemand for accountability and Measurement of Outcomes

Recognized as a business process

Importance of relevant audience

Recognized as a business process

Multiple relevant audiencesIMC

Direct Marketing is Part of IMC

DirectResponseAdvertising

DirectResponseAdvertising

DirectMail

Catalogs

Telemarketing

InternetSales

ShoppingChannels

DirectMail

Telemarketing

Catalogs

ShoppingChannels

DirectMarketing

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Sales Promotion Tools

• Consumer-oriented

• [For end-users]

• Trade-oriented

• [For resellers]

Events

Loyalty Programs

Bonus Packs

Refunds/Rebates

Contests/SweepstakesPremiums

Samples

Coupons

CoopAdvertising

TradeShows

TrainingPrograms

POP Displays

TradeAllowances

Objectives

Role of marketing communications in services

Challenges of service communicationsMarketing communications planningMarketing communications mixRole of the internet, and other electronic

media in service marketing communicationsRole of corporate designIntegrated marketing communications

Benefits of IMC

IMC provides greater:Brand differentiation.Accountability within a firm.Trust among consumers.Levels of effectiveness in cutting throughmessage clutter than single strategies.