SERVICE MARKETING

GROUP – 4

MBA-2008

DC School of Management & Technology, Kerala

GROUP MEMBERS

• Abhilash J. Krishnan• James• Lakshmy Mohan• Mary Manju• Nancy George• Pradeep Mahato

• Robin Antony• Sabitha P.K.• Sangeetha Motti• Sherin Shehanas.A.B• Sneha Deena Mathew• Sneha Jose

CONTENTS….

Service Marketing Planning Process

Servicescapes and Resource Allocation

Pricing of Services, Types of Pricing

Promotion of Services – Advertisement

Service Product Development & Management

Service Design & Development

Customer Defined Service Standards

SERVICE MARKETING PLANNING

SERVICE MARKETING

• Services marketing is marketing based on relationship and value. Marketing a service-base business is different from marketing a goods-base business.

• There are several major differences, including:– The buyer purchases are intangible – It's difficult to compare the quality of similar services – The buyer cannot return the service– SM consists of traditional "4 P's," Product, Price,

Place, Promotion and 3 additional "P's“- People, Physical evidence, and Process.

SERVICE MARKETING PLANNING

• Planning: Process of anticipating future events and conditions and of determining the best way to achieve organizational goals

• Service Marketing planning: Implementing planning activities devoted to achieving service marketing objectives

SERVICE MARKETING PLANNING PROCESS - STEPS

1. Defining the Mission of the 1. Defining the Mission of the OrganizationOrganization

– MissionMission: the essential purpose that differentiates one company from others

– The mission statement specifies the organization’s overall goals and operational scope and provides general guidelines for future management actions

2. Determine Organizational 2. Determine Organizational ObjectivesObjectives

– An organization lays out its basic objectives, or goals, in its mission statement

– These objectives in turn guide development of supporting service marketing objectives and plans

– Well-developed objectives should state specific, quantitative intentions along with deadlines for achieving them

3. Assessing Organizational Resources, 3. Assessing Organizational Resources, Evaluating Environmental Risks & Evaluating Environmental Risks &

OpportunitiesOpportunities

– This step involves a back-and-forth assessment of strengths, risks, and available opportunities.

4. Formulating, Implementing, and 4. Formulating, Implementing, and Monitoring a Service Marketing StrategyMonitoring a Service Marketing Strategy

– Service Marketing strategy: a firm’s overall program for selecting and satisfying a target market

– A marketing strategy is aimed at satisfying consumers in the selected target market through a careful balance of the elements of the marketing mix – each of which represents a subset of the overall marketing strategy

SERVICESCAPE&

RESOURCE ALLOCATION

SERVICESCAPE

MEANING:

“The environment in which the service is assembled and in which the seller and customer interact, combined with

tangible commodities that facilitate performance or communication of the service."

RESOURCE ALLOCATION

• Assign the available resources in an economic way.

• Part of resource management.

• Main objective is to smooth resources requirements by shifting slack jobs beyond periods of peak requirements.

• This work combines statistics, simulation, and optimization models

with the objective of developing best-practice scheduling and pricing rules for use in management and technology development.

• Service organizations like call centers deploy networks of human agents and automated assets to serve their customers.

PRICING OF SERVICES

Service Pricing Pricing is the mechanism by which sales are transformed into

revenue

– Why pricing of Service is critical?

1) Customers knowledge of service with respect to reference price.

2) Pricing of service is unique.

3) Providers may face difficulty in estimate price in advance.

4) Individual customer needs are different. So comparison of price become difficult.

Objectives and Approaches in Pricing a Service.

• Pricing Objectives:1) Survival

2) Profit or revenue maximization

3) Prestige

• Approaches in pricing Services1) Cost based

2) Demand based

3) Competition based

Factors Considered When Pricing a Service

1) Role of non monetary cost a) Time cost b) Search cost c) Convenience cost d) Psychological cost

2) Competition 3) Urgency 4) Economic Value in use 5) Market research

Pricing Tripord

Pricing Strategy = Cost+ Competition+ Value to customer

The cost that a service provider needs to recover

is through imposing a minimum price or floor price for a specific service offered. Which has to match with Customer’s perceived value of the offering which sets a ceiling on the price.

Price = Direct Cost+ Overhead cost+ Profit Margin.

4 Meaning of Perceived Value

1 Pricing strategies when customer means value is low price.

eg: Discounting, Penetrating pricing.

2 Pricing strategies when customer means value is every thing.

eg: Prestige pricing, skimming pricing.

3 Pricing strategies when customer means value is the quality one get from the price.

eg: Value price, market segmentation pricing.

4 Pricing strategies when customer means value is all that one get for all that one give.

eg: Result based pricing

TYPES OF PRICING

Types of Pricing•Cost plus pricing

•Competitor based pricing

•Promotional pricing

•Penetration pricing

•Price discrimination

•Skimming

Cost Plus Pricing

• The most common way for businesses to decide on a price.

• Add up the cost of the raw materials and labor that have gone into making the product to determine its cost. Then add on an element of profit over and above the cost mark up

Competitor Based Pricing

• Firms have to charge similar prices to other firms.

• This happens when there is lots of choice and not much product differentiation e.g. petrol, CDs

Promotional Pricing

• Sales

• Special offers

• Final reductions

• Buy one get one free!

• Used to increase sales in the short term, in order to clear space for new lines, undercut a rival or clear stock that is no longer in demand.

Penetration Pricing

• Setting an initial low price - to get consumer interested.

• When this low price is below cost it is called loss leading.

• Once established the price will increase.

• Example - collectors magazines

Price Discrimination

• Charging different prices to different consumers for the same product.

• Example is rail/bus travel for students

Skimming

• Opposite to penetration pricing

• Firms charge a high price to begin with which helps to make the product desirable

• Once established firm will lower the price

• Example - digital TV, MP3 players

PROMOTION OF SERVICES

PROMOTION

• Strategies to make the consumer aware of the existence of a product or service

• Not just advertising

ADVERTISEMENT

• Advertising is a form of communication intended to persuade its viewers, readers or listeners to take some action.

• It usually includes the name of a product or service and how that product or service could benefit the consumer, to persuade potential customers to purchase or to consume that particular brand.

TYPES OF ADVERTISEMENT

• Television

• Infomercials: An infomercial is a long-format television commercial, typically five minutes or longer.

• Radio advertising

• Print Advertising

• Online advertising

Cont’d….

• Mobile advertising

• Billboard advertising – Billboards are large structures located in public places

which display advertisements to passing pedestrians and motorists.

– Most often, they are located on main roads with a large amount of passing motor and pedestrian traffic;

– However, they can be placed in any location with large amounts of viewers, such as on mass transit vehicles and in stations, in shopping malls or office buildings, and in stadiums.

Cont’d….

• In-store advertising

• Covert advertising: – Covert advertising, also known as guerrilla

advertising, is when a product or brand is embedded in entertainment and media.

– For example, in a film, the main character can use an item or other of a definite brand, as in the movie Minority Report, where Tom Cruise's character John Anderton owns a phone with the Nokia logo clearly written in the top corner, or his watch engraved with the Bulgari logo

• Celebrities

SERVICE PRODUCT DEVELOPMENT &

MANAGEMENT

Product Lines Defined

• Proprietary or catalog: Standard products offered to many customers and usually inventoried in anticipation of sales orders.

• Custom-built: Different variations of accessories and options to complement

proprietary or catalog products offered.

Cont’d….

• Custom-designed: Products designed for (and usually only for) a particular user.

• Industrial services: Intangibles, i.e., maintenance, machine repair, consulting.

New Product Approaches

• Technology push: – When perceived value of particular technology is

great; firm has only a vague notion of possible applications, and usually not much more.

• Market pull: – Primarily the result of marketing research

methodologies of interviewing potential users about their needs, then developing solutions to those perceived market needs.

Phases of New Product Development

Idea and concept generation

Screening and evaluation

Business analysis

Product development

Product testing

Product commercialization and introduction

SERVICE DESIGN&

DEVELOPMENT

SERVICE DESIGN•Activity of planning & organizing people, infrastructure, communication & material components of a service.

•In order to improve its quality, the interaction between service provider & customers & the customers experience must be taken care of.

•For eg. A restaurant may choose to have a service design agency to change the way its menu is set out, or to change the layout of the restaurant to improve the customers experience.

•This technique produces more accurate insights into the usability of a service than traditional remote surveys.

Design considerations for High-versus Low-customer- contact service firms

• Facility location

• Facility layout

• Product design

• Process design

Facility Location

• The choice location of the firm’s service operation depends upon the amount of customer contact that is necessary during the production process

• If customers are an integral part of the process, convenient locations located near customers’ homes will offer the firm a differential advantage over competitors

• In contrast, low-contact businesses should consider locations that may be more convenient for labour, sources of supply & closer to major transportation routes.

Facility Layout

• High contact service firms should take the customers’ physical & psychological needs & expectations into consideration

• In contrast low contact facility layouts should be designed to maximize employee expectations & production requirements

• Thereby designing facilities for high contact services is often more expensive than low contact services

Product Design

• High contact services that produce purely intangible products are defined almost solely by the physical evidence that surrounds the service & by the thoughts & opinions of others.

• In low contact services the customer is not directly involved in the production process, so the product is defined by fewer attributes.

Process Design

• In high contact operations the physical presence of the customer in the process itself must also be considered.

• Each stage in the process will have a direct & immediate effect on the customer

• For eg. A hotel guest is directly involved in the reservation process, the check-in process, the consumption process associated with the use of hotel room itself and the hotel amenities & the check-out process.

• In contrast since the customer is not involved with many of the production steps in low contact services, their evaluation is based primarily on the outcome itself

CUSTOMER DEFINED SERVICE STANDARDS

CUSTOMER DEFINED SERVICE STANDARDS

• They are the heart of delivery of service that customers expect.

• They are the link between customer’s expressed expectations & company’s action to deliver to those expectations.

TYPES OF SERVICE STANDARDS

• Hard --- things that can be counted, timed, or observed through audits

• Soft ---must be documented using perceptual measures--- but can be measured

Examples of Measures (HARD)

• Number of Errors (Mistakes) per Transaction

• Counts of Smiles, Using Customer Name, Using Protocol.

• Violation of Dress Code

• Availability of Systems (Phone Lines, Power)

• Number of Complaints Received

• Number of Warranty Claims

Examples of Measures (SOFT)

• Accuracy of Transaction

• Friendly Personnel

• Knowledgeable Personnel

• Helpful Personnel

• Costs

• Value Received

1. Identify Existing or Desired Service Encounter Sequence

2. Translate Customer Expectations Into Behaviors/Actions2. Translate Customer Expectations Into Behaviors/Actions

4. Set Hard or Soft Standards

5. Develop FeedbackMechanisms

5. Develop FeedbackMechanisms

7. Track Measures Against Standards

Measure byAudits or

Operating DataHard Soft

Measure byTransaction-

Based Surveys

3. Select Behaviors/Actions for Standards 3. Select Behaviors/Actions for Standards

6. Establish Measures and Target Levels 6. Establish Measures and Target Levels

8. Update Target Levels and Measures 8. Update Target Levels and Measures

Process for Setting Process for Setting Customer-Defined Standards Customer-Defined Standards