srm (module 1&2)
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MODULE 1
SERVICE DEFINITION, NATURE AND CHARACTERISTICS
Definition:-
A service is an activity or series of activities of more or less intangible nature that normally but
not necessarily take place in interactions between the customer and the service employee and/or
physical resources or Goods and/or systems of the service provider which are provided as
solutions to customer problems.
According to Philip Kolter, A service is any act or performance than one party can offer to
another i.e. essentially intangible and does not result in ownership of anything. Its production
may or may not be linked to a physical product.
Services are borne with the following elements:
y Deeds, process and performances; examples of these may include transportation, utilitiesor media etc.
y Different to goods or products; different in characteristics,y Often linked to goods or products; services are related to goods/products in varying
degrees and
y Intangible produced and delivered simultaneously that can not be stored and involvesconsumer in the process of consumption and delivery and ownership is not transferred.
A comprehensive definition of services must include the following elements:
y Lack of physical output or constructiony Benefit to the receiver from the service rather than the product offeredy The intangible nature of servicesy The possible combination of a service with the production of goodsy M
arketing of an idea or a concept
NATURE OF SERVICES
Services are economic activities that bring about a desired change in, or on behalf of, the
service recipient, thereby creating value and providing benefits for the customers. Thus,
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words, the element of Inseparability enunciates that services are produced and
consumed at the same time.
3) Heterogeneity: Heterogeneity characteristics of service emphasizes that serviceencounters involve individuals namely service providers and consumers. Moreover,
service encounters tale place again and again at different times. As a consequence,
there are likely to be variations in service provision by virtue of the participants, the
time of the encounter or the circumstances. In simple words, we can say that, the
homogenous services provided by the different service providers will vary in
standards and quality as the services delivery process invariably depends on both the
employees and customers.
4) Perishability: Perishability relates to the factor that services unlike tangible goodscannot be stocked or stored. Perishability is linked to the notion of inseparability or
simultaneity in that services must be provided and utilized at the point of
consumption during the service encounter otherwise the same undergoes under-
utilized or wasted. In simple words, we can say that services are borne with a feature
Perishability which means deterioration or wastage if not used while produced or
provisioned.
For example, three vacant seats in an airplane go perished/un-utilized incase of a
particular flight carried out from one destination to the other destination.
5) Ownership: Ownership, as a characteristics is the outcome of non-traditionalapproach.
Ownership relates to the notion that the consumers of services do not
become the owner of the services themselves but only have temporary access to the
services.
Classification of services
GLOBAL PERSPECTIVE
1. BUSINESS SERVICES.
a. Professional service:It include legal services, accounting , auditing and bookkeeping services taxation services,
medical and dental services etc.
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b Computer and related services:
It include consultancy services related to the installation of computer hardware ,software
implementation services ,data processing services, data base services.
C Research and development services:
R&D services on natural science, R&D services on social sciences, interdisciplinary R&D
services.
d Real estate services:
Involving own or leased property and on fee or contract basis.
e Rental / leasing services without operators :
it include relating to ships, relating to air craft, relating to other transport equipments,
relating to other machinery and equipments.
f. other business services:
It includes advertising services ,market research and public opinion, polling services,
packing services, printing publishing.
2. COMMUNICATION SERVICES
1) Postal services
2) Courier services
3) Tele communication services - It include voice Tele phone services, telex
services, Voice mail telegraphic services.
4) Audio visual services: it includes audio visual services, motion picture projection
services, radio and television services.
3. CONSTRUCTION AND RELATED ENGINEERING SERVICES:
it includes general construction work for building ,general construction work for civil
engineering, installation and assembly work, building completion and finishing work.
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4. DISTRIBUTION SERVICES:
Includes commission agents services, whole sale services, retailing services, franchising.
5.EDUCATIONAL SERVICES:
Includes primary education services, secondary education services, higher education
service, adult education services and other education services.
6.ENVIRONMENTAL SERVICES: INCLUDES sewage services, refuse disposal
services, sanitation and similar services.
7. FINANCIAL SERVICES:
a insurance and insurances related services :includes life ,accident and health insurance
services, on life insurances services, banking and other financial services, acceptance of
deposits.
b financial leasing, security: includes all payments and money transaction
services ,guarantees and commitments and trading for own account or for account of
customers whether on an exchange , in an over the counter market.
8. HEALTH RELATED AND SOCIAL SERVICES:
It includes hospital services, other human services and social services.
9. TOURISM AND TRAVEL RELATED SERVICES:
Includes the hotels and restaurant travel agencies and tour operators services and tourist
guide services.
10. RECREATIONAL , CULTURAL AND SPORTING SERVICES:
It includes entertainment services, news agency services, libraries, museums , other cultural
services , sporting , other recreational services.
11. TRANSPORT SREVICES:
a) Maritime transport services: includes passenger transportation , freight
transportation, rental of vessel with crew, maintenance and repairs of vessels, supporting
services for maritime transport .
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b) Internal waterways transport:
includes passenger transport, freight transport, rental of vessel with crew, maintenances and
repairs of vessels and supporting services for internal waterways.
c) Space Transport :
d) Air Transport: includes passenger transportation ,freight transportation ,rental of air
craft with crew ,maintenances and repair of air craft, and supporting services for air
transport.
f) Pipe Line Transport:
it includes transportation of fuel, transportation of other goods ,service auxiliary to all modes
of transport, cargo handling services, storage and ware house services, freight transport
agency services and other transport services.
NATIONAL ECONOMIC PERSPECTIVE
In simplest form services are that part of the economy left over after the exclusion of
agriculture manufacturing and mining. In order to delineate the services of the Indian
economy, government of India has revised many times the framework for the classification
of services to facilitate the national account statistics.
BUSINESS PERSPECTIVE
With the integration of global markets and the growing competition, a services marketing
manager has to concentrate on specific category of services that can aid the company to gain
competitive advantage/competitive edge over the competitors. Classification of services so
carried out from economic perspective may not be relevant for the marketers for devising
effective marketing mix strategies. So, they adopted different approaches for the
classification of services based upon the production, delivery and consumption of the
services.
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SERVICES ON THE BASIS OF LABOUR INTENSITY
Labour intensity is defined as the ratio of labour cost .service industry is generally presumed
to be labour intensive with delivery of services by individual for other individual on one to
one basis.A simple classification of services sector equipment or capital involvement is
visualized in this sector also.
SERVICE BY NATURE OF RELATIONSHIP
With the introduction of consumer relationship management concept in service organization
marketers are trying to difference services on the basis of relationship with customers. Some
services are brought across the counter but some services need membership before being
availed like banking,insurance,educational institutes. Customer data in the form of databases
is maintained in the later case to build up formal relationship with customers.
CONVENIENCE,SHOPPING AND SPECIALITY SERVICES
Like tangible goods services can be classified as being convenience, shopping and speciality
services. Convenience services are easily available and are bought frequently with a
mininmum of consumer efforts. Shopping services like comparison of quality price and
reputation. Speciality services draw a special attention and immense efforts o the part of
customers. These services include consultancy services,medical services and legal services.
FINANCIAL SERVICES
a) insurance and insurance related services:
b) financial leasing ,securities etc.
includes
money market instruments . foreign exchange derivative products including ,but not limited to,future and options exchange rate and interest rate instruments ,including products such as
swaps,forward rate agreement etc.
transferable securities other negotiable instruments and financial assets,including bullion.
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TRANSPORT SERVICES
a. Maritime transport services.
Maritime transport services includes the passenger transportation,freight transportation,rental
of vessels with crew,maintenance and repair of vessel,pushing and towing services and
supporting services for maritime transport.
b. Internal waterways transportInternal waterways transport includes the passenger transportation, freight
transportation,rental of vessel with crew.
c. Air transportation servicesAir transport services include the passenger transportation,fright transportation,rental of
aircraft with crew.
d. Space transport
e.rail transport services and other fright services
f. Pipeline transport.
EVOLUTION OF SERVICE INDUSTRY
INTRODUCTION
Services have become increasingly important in the economic structure of many countries with
growing contribution to employment and GD
P levels.D
omestic service organizations are alsofacing increasing competition from international service providers while, on the other hand, there
are significant opportunities for the marketing of services across national borders.
However, many marketing concepts and tools currently applied to services Marketing have been
simply transferred over from the manufacturing sector. While there are common elements
between services and physical goods with an overriding need to recognize and respond to
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customer requirements, there is a need for services-specific marketing tools andconcepts. As a
result, services marketing are an important area of Independent knowledge for marketers.
What is a Service?
In economics and marketing, a service is the non-material equivalent of a good. It is claimed to
be a process that creates benefits by facilitating either a change in customers, a change in their
physical possessions, or a change in their intangible assets.
By supplying some level of skill, ingenuity, and experience, providers of a service participate in
an economy without the restrictions of carrying stock (inventory) or the need to concern
themselves with bulky raw materials. On the other hand, their investment in expertise does
require marketing and upgrading in the face of competition which has equally few physical
restrictions.
Following are some earlier and additional contemporary definitions of services.
work output that perishes in the very instant of its production (Smith, 1991).
A good is a tangible physical object or product that can be created and transferred; it has
existence over time and thus can be created and used later. A service is intangible and
perishable. It is an occurrence or process that is created and used simultaneously ornearly simultaneously (Sasser, 1978).
A service is an activity or series of activities of more or less intangible nature that normally,
but not necessarily, take place in interactions between customer and service employees
and/or physical resources or goods and/or systems of the service provider, which are
provided as solutions to customer problems (Gronroos, 1990).
Services are deeds, processes, and performances (Zeithaml & Bitner, 1996).
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Evolution of the Services Marketing Field
THE FIRST ERA: SERVICESMARKETING
Fisk, Brown and Bitner (1993) employed the metaphor of biological evolution to describe the
history of the services marketing field. Biological evolution describes how species emerge and
develop, so Fisk, Brown and Bitners portrayal of the emergence and development of the
services marketing field involved three evolutionary stages:
1) Crawling Out (Pre 1980) when early services scholars created and defended the services
marketing field: 2) Scurrying About (1980 to 1985) when a rapidly growing and enthusiastic
community of scholars quickly built the basic structure of services marketing; and 3) Walking
Erect (1986 to 1992) when the services marketing field achieved a measure of respect and
legitimacy within the marketing discipline and beyond.
Evolution of the ServicesMarketing Field
THE SECOND ERA: THE EMERGENCE OF MULTIDISCIPLINARY FIELD
Remarkable change has occurred in the services marketing field since the publication of
Fisk, Brown and Bitner (1993). To portray these changes in the services field, we continue with a
metaphorical approach, but we shift the nature ofthe evolutionary metaphor from biological
evolution to social evolution.
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Social evolution portrays the changes in human culture. In evolutionary terms, we shift
the 2 metaphor from genes to memes. Richard Dawkins (1976) introduced the term meme and
referred to memes as units of imitation (p. 206). Memes comprise cultural information that is
learned and transmitted across generations. More recently, several authors have helped
popularize the meme concept (Aunger 2002; Blackmore 1999; Brodie 2004; Distin 2005). It is
important to note that the stages of social evolution--and hence the diffusion of memes--are not
discrete like those of biological evolution. Instead, each social evolution stage is cumulative as
cultures evolve and become more complex.
Recent Stages of Service Evolution
DEVELOPMENT OF SERVICE MARKETING
Using an evolutionary metaphor as a framework for their study, Fisk, Brown and Bitner
(1993) traced eleven years ago the evolution of the service marketing literature from its
Embryonic beginnings in 1953 until its maturity in 1993. They identify three stages in this
evolution: Crawling Out (1953-79), Scurrying About (1980-1985), and Walking Erect (1986-
1993).
The Crawling Outstage (1953-79),
This stage began in 1953 with the first service marketing scholars struggling to publish their
work and culminated with the debate of how and why services were different from goods (e.g.,
Shostack 1977). From this early work came the identification of some of the distinctive
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characteristics of services, such as intangibility, inseparability, heterogeneity, and perishability
(Shostack 1977).
The Scurrying Aboutstage (1980-1985)
This stage also saw the first papers in new areas of investigation, such as service design and
mapping (Shostack 1984) and service encounter (Czepiel, Solomon and Surprenant 1985), which
flourished in the next period.
In the Walking Erectstage (1986-1993)
The scholars achieved a respected stance as service marketing became an established field within
the marketing discipline (Fisk, Brown and
Bitner 1993). The publications on many of the primary topics matured considerably. These
topics include managing quality given the heterogeneity of the service experience, designing and
controlling intangible processes, managing supply and demand in capacity constrained services,
and organizational issues resulting from the overlap in marketing and operations functions (Fisk,
Brown and Bitner 1993; Swartz, Bowen and Brown 1992).
Recipients of a Service
What is the service acting upon and how is it
doing it?
People
Processing
Possessions
processing
TangibleActions
Service is aimed at
peoples physical
body
Service is aimed at
material items
Intangible Actions
Service is aimed at
peoples psyche
Service is aimed at
information
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THE FUTURE OF THE SERVICE FIELD
Building Community is the next stage in the social evolution of the service field. Academic
disciplines play essential roles in the creation and diffusion of knowledge. As the academic study
of service phenomena has steadily broadened its reach from its origins in the services marketing
and management fields, the rapid increase in the number of participants in the services field
creates both opportunity and peril. We believe that the broader services field has reached a
critical juncture. Sophisticated social networking is needed to grow and disseminate service
knowledge.
CONCLUSION
The evolution of the service field from its beginnings in services marketing to a much broader
service field was described. We have offered recommendations for the future of the service field.
A culture of multidisciplinary collaboration is needed for the service field to build a community
of scholars, business leaders and customers. Critical to this are T-shaped people--including those
from the arts--who can communicate via a common language that bridges areas of service
endeavor. Such T-shaped people can move us from silos of knowledge to webs of knowledge.
Through it all, a customer centric orientation must be adopted and maintained. To that end, we
argue that the entire service field, not just service marketing, should be customer centered.
DISTINCTION BETWEEN GOODS AND SERVICES.
PRODUCT
Definition: commodities offered for sale; "good business depends on having good merchandise";
"that store offers a variety of products".
The Meaning of Service
Service is a word used constantly. The word service has an impression on many people. For
example; people who work as lifeguards view their work as a service to the community.
Naturally, based on working as a lifeguard their definition of service would be an action
beneficial to the well-being of others. Not surprisingly, a similar definition was found in the
Oxford English Dictionary (OED). Service is described in the Oxford English Dictionary as "the
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action of serving, helping, or benefiting; conduct tending to the welfare or advantage of another;
condition or employment of a public servant; friendly or professional assistance." Furthermore,
in Webster's Ninth New Collegiate Dictionary, service is described as "the occupation or
function of serving others; employment as a servant; contribution to the welfare of others.
What are some of the main differences between products and services? And when are these
relevant?
Tangibility versus Intangibility
Products are tangible. You can buy pork as a tangible product. You buy it, you ship it and sell
it. In the same way as you buy stamps, cigarettes and cars.
Financial service companies however, make it possible to exchange pork bellies Futures, on the
Chicago Mercantile Exchange (CME). A future is (not the most simple example of) a service
with which you can hedge your risk. In this last case, most of the people trading on the CME will
never see or smell the pork bellies.
The ownership between products and services is different. A stock could be called a financial
product that you own. You can place a stock order which might result in a transaction later on.
You bank services a depot fee for saving you a lot of work. You cannot own a service.
Where the product is much more standardized, the service is tailor-made. Companies
differentiate in offering products and services, but the variations between similar products of
different producers are less prominent than the variations between services.
You can count products in the same way as you can count your money (or have your service you
this information). A service is not countable, but is "leveled;" better than the best service is not
possible. There is a limit in what a service can offer.
A product is produced by a manufacturing process. A service is offered by the utility element
of companies; you subscribe to a service in the same way that you subscribe to your gas and
electricity supplier.
And this brings us to the essential of these differences; changing from one (product approach) to
the other (service offering) is very complex, because of the last mentioned differences. Not only
the process is different but the style change you need to support this change...
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products are tangible whereas services are intangible.... products can be bought ,services can be
felt.... products are non-perishable,services e perishable... products are non-ephemeral....services
are ephimeral... products are countable, services are not countable.... products can be owned.. but
service cannot be owned......
MODULE - 2
SERVICE MISSION AND ITS DEVELOPMENT
Mission Statement
The mission statement should be a clear and succinct representation of the enterprise's purpose
for existence. It should incorporate socially meaningful and measurable criteria addressing
concepts such as the moral/ethical position of the enterprise, public image, the target market,
products/services, the geographic domain and expectations of growth and profitability.
The intent of the Mission Statement should be the first consideration for any employee who is
evaluating a strategic decision. The statement can range from a very simple to a very complex set
of ideas.
A mission statement is a statement of the companys purpose. A mission statement is useful for
putting the spotlight on what business a company is presently in and the customer needs it is
presently endeavoring to serve. A mission statement deals with the present and answers the
question What is our business and what are we trying to accomplish on behalf of our
customers? A mission statement is a logical vantage point from which to look down the road.
(Thomas Strickland, p.4, 28)
A mission statement defines the companys purpose. It is a single statement of why something or
someone exists
A mission statement is a statement of the organizations reason for being, its purpose what it
wants to accomplish in the larger environment. (Kotler p.49). It explains why the organization
does what it does. It says what, in the end, the organization wants to be remembered
for.(Drucker). A clear mission statement acts as an invisible hand that guides people in the
organization. (Kotler p.49).
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An effective mission statement clearly defines who the customer is and what services and
products the business intends to provide. It also serves as a guide for day-to-day operations and
as the foundation for future decision-making.
A companys Mission Statement acts as the companys compass. The mission is the path. (The
vision is the end point.) The mission directs the company to its vision (dream). With it, anyone in
the organization can always judge the direction the company is moving in relation to its stated
purpose. With it, one can easily make adjustments to keep the company moving in the direction
intended.
Missions may need to be revised every few years in response to every new turn in the economy.
A company must redefine its mission if that mission has lost credibility or no longer defines an
optimal course for the company. (Kotler p.68)
To develop a mission statement at the corporate level the following steps are suggested:
(Drucker)
1. Establish a mission-writing group The writing group must be able to identify the companys
reason for existing, the primary customer, and what the goals and results should be. Members
should include the chief executive, the board chairman or another representative of the board, a
writer, a manageable number of additional members who represent different parts of the
organization, and a facilitator.
2. Adopt criteria for an effective mission statement. Gather ideas and suggestions for first drafts.
The writing group should adopt the criteria they will use to judge the effectiveness of the mission
they are about to develop. Following the adoption of criteria, the group moves on to ideas and
suggestions for the mission statement. Idea-generating techniques include:
y Open brainstorming: any thought or idea is welcome.y Each group member finishes the sentence, The mission should bey Small teams complete in a very short time span to draft and nominate the best new
mission statement
y Go around the group two or three times asking for the one word that must be in themission statement.
y Each person quickly draws a picture of the mission, then shows and tells.
To conclude the exercise, the group:
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y Posts and reviews all ideas and suggestions. The facilitator draws a circle around thewords or phrases that appear most often.
y Discusses key ideas or themes the must be captured in the new statement.y Discusses key ideas or themes that must not be part of the new mission statement.
3. Develop one or more draft statements. The writers along or with a small group develops drafts
of at least two possible new mission statements.
4. Judge initial drafts against criteria and suggest revisions or new options. To judge drafts and
make suggestions:
y The groups reviews the criteria for an effective mission statement.y The first draft statement is posted in front of the group.y Group members individually rate the draft for each criteria using the worksheet.y The facilitator polls and records the groups response for each criteria to determine the
overall strengths and we4aknesses of the draft.
y The group discusses the merits of the draft and makes specific suggestions for how itmight be improved. All suggestions are encouraged and recorded.
y The second draft statement is posted and steps are repeated.y The facilitator instructs each group member to individually write their recommended
mission statement. Members read their statement aloud, and give it to the writer.
y The group discusses whether it has developed an effective statement or whether the
writer should develop a second set of drafts.
5. Develop second drafts. The writer or small subgroup develops a second draft of one or more
possible new mission statements.
6. Gain feedback from outside the writing groups. The board chairman and chief executive
decide who outside the writing group will be asked to give feedback. This may includes
organization wide input or a few key people inside or outside the organization. Each individualgroup being contacted for their response is:
y Shown the criteria for an effective mission statement.y Asked for a rating of each draft, based on the criteria.y Asked for comments on the merits and weaknesses of the draft(s).y Asked for ideas or recommendations for improvement.
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7. Summarize feedback and distribute second drafts and summary to writing group.
8. Propose a draft mission statement. The writing group meets:
y Reviews the second draft(s).y Discusses a summary of feedback from outside the writing group.y Rates the draft(s) against criteria and cites merits and weaknessesy Attempts group editing or rewriting.y Approves its proposed mission statement..
9. Presents the proposed mission statement for board approval.
CUSTOMER ORIENTED SERVICE MARKETING
The essence of every companys mission is the customer orientation in one way or
another. With the evolution of marketing concept, the customers hold a dominant position in
every marketing endeavour.
Customer orientation implies putting customers ahead of profits and creating total value
for the customers. Creating and delivering value to the customers is the base for width, length
and depth of product mix. The successful combination is the one that results in continuous
creation of real values for the customers. In reality, customers do not only purchase any productor service but they purchase the value/utility of that product or service.
Customer centric marketing emphasizes understanding and satisfying needs, want, and
resources of individuals and customers rather than those of mass markets/segments.
According to American Marketing Association,Marketing is an organisational function
and a set of processes for creating, communicating and delivering value to customers and for
managing customer relationship in ways that benefit the organisation and its stakeholders.
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Distinction between Sales oriented and Customer oriented marketing
Marketing Variables Sales Oriented Customer Oriented
Starting point Organisation Target markets
Marketing focus Product/service Customer needs
Customer focus New business(attraction) Existing customer base
(growth and retention)
Competitive edge Lowest delivered cost Superior quality or service
Product strategy Generic product Augmented product
Promotional strategy Selling /advertising Integrated marketing
communication
Pricing strategy Maximising profit margins Profitable use of resources
Marketing objective Sales volume Customer satisfaction
Planning approach Reactive ProactiveTime perspective Short term(tactical) Medium and long
term(strategic)
FEATURES OF CUSTOMER ORIENTED SERVICE MARKETING
A customer orientation provides impetus for building conductive organisational culture.
Some basic features of customer oriented service marketing are:
It is organisational wide concept.
It affects the competitive advantage of the organisation.
It makes the organisation highly dynamic in the presence of ever changing
customers needs and aspiration.
Puts customers first.
Creates superior value for customers.
Leads to increase overall business performance.
Employees of marketing oriented companies became value-adders.
Employees of marketing oriented companies know how to listen to and respond to
customers.
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CUSTOMER ORIENTATION CREATES VALUE FOR THE CUSTOMER
(Trigger points of customer value)
In the presence of wide range of services that too competing with each other, todays customers
are quite smart and sophisticated and looking for companies that create maximum value for them
based on their needs and wants. Customer value items from the basic philosophy of the
company. The mission, vision, strategies, policies and programs all have bearing on creating,
enhancing and maintain value to the stakeholders including customers, employees, etc.
Marketing mix service encounter
E marketing mix
Employees:- are recruited and trained in such a way to make service encounter enjoyable and
pleasing for the customers. Every type of employees including boundary spanners, managers,
etc., are trained and developed on behavioural fronts so as to provide complete psychological
satisfaction to the customers.
Technology:- is being employed in every aspect of services marketing to enhance value to
both organisation and customers. Technology facilitates easy access, better quality, reduced cost
and improved services cape of the services contributing to total mutual value.
Service marketing mix:- is created to satisfy customers and organisational objectives, hence
todays marketing strategies are more customer-driven creating value from customers
perspective. Through marketing mix the marketing manager attempt to create and deliver
customer value. All elements of marketing mix corresponding to the value/utility
COMPANY
TECHNOLOGY
EMPLOYEES
CUSTOMER
VALUE
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COMPONENTS OF CUSTOMER ORIENTED SERVICE MARKETING
Customer oriented service marketing is directed to accomplish the strategic intent,
encompassing the mission, vision and objectives of the company, that are focused on customers.
Customer oriented marketing involves:
y Designing customer-driven process and programsy Establish a strong marketing information systemy Segment and Target marketsy Hire the best talentsy Stress operation efficiencyy Continually measure and find-tune their customer focus
However, the basic elements of customer oriented services marketing have been presented
below:
Research
For formulating customer oriented marketing strategies, scanning the environment is very much
essential. Marketing research techniques are being employed to systematically conduct studies. The
intention is to fetch as much information as may be required in the decision making process by the
Information
Research Communicatio
ENVIRONMENT
CUSTOMERS
Marketing
strategies
Service
encounter
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marketers. The research may be conducted by the employees of the organisation or services of other
agencies may be hired for conducting research studies for the organisation. Research provides data
on the customer behaviour patterns, purchase behaviour, demand etc.
Information
Raw Data gathered from the internal and external environment is processed to form information
that is used by the decision makers on various aspects. Information gathered through the marketing
research, marketing intelligence system and internal accounting system is pooled together in the
form of database enabled by technology. Customers often require information about how to obtain
and use a product or services.
Marketing Strategies
As no organisation can do everything well, managers concentrate their efforts and resources in
the form of time, money and labour on some activities tasks to earn maximum profits. This way
they can use their capabilities to gain competitive advantage without wasting resources on unfruitful
or non feasible activities.
Strategy is a long term response to the external marketing opportunities within internal resources
and framework that provides competitive edge to the firm. Strategies reflect how to match resources
to the changing environment and customers expectations.
The major dimensions or attributes of service strategies are:
Product technology Capacity Facilities and location Process technology Human resources Operating decision
Supplier integration Quality
The strategies are periodically monitored and revised to address the changing needs of
the customers.
Communication
Communication, both verbal and non verbal, is an essential element in the marketing of
services. This is particularly true for pure services involving high employee- client interactions. For
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instance in professional services like financial consultancy, doctor, the communication is considered
to be of high importance. There is a high degree of interaction between customers and insurers
while taking insurance cover.
As started earlier service delivery involves interaction between service providers and customers;
every entity engages in some sort of communication. Employees verbal behaviour during an
encounter like talking, greeting and words of courtesy affects the customers perception regarding
employees, friendliness and consequently enhance the perceived quality of the service. So effective
communication has significant results of both service providers and customers.
Customer Service
Customer service provider understands who the principal customers of the work force
development system are. Whether he is able to identify their needs and expectations and what
constitutes positive customer satisfaction. And also places appropriate emphasis on excellence
and speed of response in work performance.
Customer service is the set of behaviours that a business undertakes during its interaction with
its customers. It can also refer to a specific person or desk which is set up to provide general
assistance to customers.
To excel in delivering customer service, the service providers should take the following steps:
Divide the basic services into separate service activities Conduct periodic surveys Provide necessary infrastructure and advanced technology Track changes in the external environment
Technology
Technology is used to services businesses to lower costs, increase productivity, improve the
way service is delivered, put more information in service encounter, personalize the service, collect
data on consumer needs, add value for the customer, differentiate the service and build relationship
with customer.
Other benefit range from speedy execution, instant provision of service, more information to
reduced burden on service provider, economies of scale, reduced variable cost and standardized
services, etc.
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CUSTOMERORIENTEDMARKETING INVOLVES.....
Designing customer-driven processes and programmes Establish strong marketing information systems Concentrate on segmentation and target market Hire the best talents Stress operational efficiency Continually measure and fine tune their customer focus
IMPORTENCE OF CUSTOMERS IN SERVICE DELIVERY
Unlike manufacturing goods, services may demand customer involvement at pre
transaction, transaction and post transaction stages. Customers give inputs to the
operations of service form. Their presence may be required during all stages of
operations, at starting or ending of operations or just their mental presence is required.
The customers play three typical roles in service context. They are.
y Customer as producers of servicesy Customer as users of servicesy Customer as an influence on other customers
Customer as producers of services
In high contact services, customers act as producers of services. For example, active
involvement of customers is required in case of consultancy services or hospitality services.
They actively participate in the service encounter and affect the service creation. It is observed
that as the customer involvement, the efficiency of operations decreases, Due to high
involvement of customers in the service creation. The advantage is that customers can customize
their own services and can be more satisfied with it than if it would provided by other persons.
Customers as users of services
The ultimate services are for customers who purchase these services to satisfy their specific
needs. As services are intangible, the main challenge for the marketer is to develop customertrust in the service organisation.
Customers as an Influence on other customers
This is highlighting the importance of customer- customer interaction in marketing the
services. Customer- employee relation can be managed by employing persons of specific skills
but it is very difficult to manage customer-customer relationship, as both these persons are
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external to service organisation. These interactions influence the perceptions of one person
regarding the quality of service being offered by the service firm.
SERVICE MARKET SEGMENTATION
To achieve the objectives of the marketing company the marketing persons have to
prepare or plan a programme.The way to achieve the task is by preparing and planning the
policies in line with the customer expectations .The process of understanding these customer
needs or requirements is greatly enhanced by targeting ,segmentation and positioning.
The initial success of modern marketing accrued from the concept of mass
marketing.Mass marketing is aimed at marketing standardized products or services to the entire
population
Eg: -In the Indian context was telephone services of the Government of India.
Advantages of mass marketing
-Higher volume or market size
-lower cost of production
-lower cost lead to either cheaper products or services offers or better margin for the
marketer
Disadvantages of mass marketing
-The cost of mass marketing through media and channels may be prohibitive due to the
extensive coverage required.
-To enjoy economics of scale ,the investment has to be large.Not every company has the
ability to make these investments.
-Not all the potential customers are equally lucrative.When faced with resources
constraints,the marketer may need to choose to serve the most lucrative segments.
-If the objective of the marketing is to profitably meet the needs of the customers,then it would
be obvious that not all customers have the same need.Hence ,mass marketing services may not
meet their specifc needs.
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So in order to derive the marketing advantages the segmentation of the market is necessary.
E g: The services ofBSNL and MTNL till April 2003 were on the basis of mass marketing.
There was no service differentiation or tariff variation across the segments. They took pride in
providing same mass services to every kind of customer, but with the advent of wireless in local
loop(WLL) services provided by Reliance Infocom and BSNL themselves ,and the mobile
telephony, the competitive pressure increased. Therefore , in order to remain profitable and yet
offer the highest value for the money for each type of customers, the tariff was revised to serve
the different market segments. The tariff and service offering are clearly based on segmentation.
A market segment is a group of potential or actual customers who have similar
needs,wants.preferences or buying behaviour.The marketer does not create the segments by
himself but they pre-exist in the market.
Advantages of segmentation
-Service offered can be fine-tuned to the needs of the customers ,so that they derive
maximum satisfaction .
-The customers have a choice of selecting a service and a corresponding price range
that suits their budget.
-The most appropriate distribution channel, in terms of money and efficiency can be
used.
-By serving a particular segment or a niche, the investment in resources ,marketing
.production facilities etc can be minimized, thereby increasing the return on investment .
The marketers today are looking to serve the niche markets in order to maximize the benefits.
A niche is a further sub-divided or narrowed-down customer segments that is quite distinctive.
Eg: Within the Indian economy telephone users segment too, there may exist a sub-segment
of Indians who have relatives or close friends abroad to whom they need to speak often. There
are thus telephone companies that offer special schemes such as pre-paid low charge
international cards or even enable reverse charging the overseas parties.This is a sizable niche for
which a special offering is made by the international telephone service providers.
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In order to earn profit from segmentation ,the segments must meet certain requirements:
Distinctiveness:
Each segment should be internally homogeneous.it should have some qualities that
are commaon across all members of the segments conversely, it should be distinct and different
from any other segment.
Measurable segment:
It should be possible to measure the size of the market segment.
Substantial size of segment:
The segment must be large enough so that the marketer can invest in product or service
development to meet the specialized demands profitably. Thus the cost of creation of unique
service and the investment must be justified by the size of the anticipated demand.
Accessibility
Each distinct segment should be capable of being reached easily and capable of being
reached easily and capable of being accessible for appropriate action.
PROCESS OF SEGMENTATION
For services in the segmentation process is similar to the one followed for the good
marketing.
1. IDENTIFICATION OF THE BASES FOR SEGMENTATIONThe bases for segmentation can be identified and grouped according to the characteristics of
markets and customer traits.
Geographic segmentation
Products that can be distributed far and wide using trade channels, customers have to
present in or around the point of delivery of most services. This makes the geographic base quite
vital.
Example- for a grocery supermarket, the residents living in a radius of about 1.52 to 2 kilometers
will form the target market segment. For industrial catering services, institutions or businesses
within a 10 kilometer radius of the kitchen facilities may be the target market segment.
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Demographic segmentation
The bases of segmentation in this group are the demographic variables such as
age , family size, family life cycle, gender, occupation, education, religion, income, social
class etc.
Eg: dancing class offered during summer vacation, children in the age group of 12 to 16 may be
the target market segment. For entry level life insurance recently employed or recently married
person would be the perfect target market segment.
Psychographic segmentation
The bases for segmentation in this type can be social class, life style, or personality
characteristics of the groups.
For eg: if you are seeking donation for a charity the target market segment would be those who
are socially active and financially well-off.
Behavioral segmentation
In this the corporations or institutions invite the bids for services, make decisions on award
of contracts and measure the performance depends on the style of ownership and corporate
philosophy.
The segmentation can also be made basing on the following
Usage rate-
Eg -BSNL- the segmentation strategy is based on usage or response rate.
Loyalty- The strategy of customer retention is well-known. The companies such as general
insurance companies of a reduction in renewal premium as away of encouraging customers to
remain loyal.
Cluster Analysis As A Tool For Segmentation
When segmentation is done using a single base or characteristics the identificationof similar customers and finding the size of such segments are relatively easy. The difficulties
arises when two or more characteristics are required to identify and describe a particular segment.
Under such circumstances the technique of cluster analysis can be used.
The cluster analysis includes calculation of relative distance between various customers
along various dimensions, coordinates, or characteristics.
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2. DEVELOPMENT OF ECONOMIC POTENTIAL OF THE SEGMENTBased on the size of the chosen segment and its relative accessibility a forecast of the
segment potential can be developed. This would include projection of both volumes and value
potential that can be achieved.
3. SELECTION OF APPROPRIATE MARKET SEGMENTBased on the size of the market its economic potential, accessibility, competition and
form, a decision is made regarding the economic viability of segments. The decision making
process may also include the financial and managerial strength and weakness of marketing
company. In this manner the segments with the best fit are usually chosen.
Example: when reliance infocom decided to enter the telecommunications market, it decided to
choose the most appropriate segment of local telephone users across India as the main target
market segment for the following reasons.
- It had the ability to invest large sums of money.- As local telephony represents the largest number of customers, it chose WLL technology
to tap in to the market segment.
- Local telephony has the possibility of being alignment with the land based networks asopposed the mobile telephony in view of its long term aim of making profits from larger
turn over rather than short term profitability, it chose local telephony as the main vehicle
for launch.
TARGET MARKET IDENTIFICATION AND DEVELOPMENT
Targeting in services
Targeting follows segmentation and is defined as the process of estimation of and comparison of
previously identified segments for selecting one or more segments that fetch the best results for
the business
A product focusing on a specific target market contrasts sharply with one, following the market
strategy of mass marketing.
Targeting strategies
y Single segment strategies (Concentrated Marketing):It is an approach in which the firm targets only one segment, develops a single marketing
mix and eventually gains specialization in the segments.
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Eg: IBS, a software firm focusing on the airlines industry software packages.
Selective specialization(Differentiated Marketing Strategy)
In this a company prepares different types of marketing mixes for different segments, which
may or may not be related to the same product or service.
Eg: LIC focusing on retired peoples and also working peoples.
y Product specialization (Undifferentiated Marketing)This strategy offers a single product or services to various segments.
Eg: Vicks vaporub, a single product for all type of customers.
y Market SpecializationThis strategy aims to meet the various needs of the target segments. The target segment for
this group remains the same and the company tries to cater to different needs of the segments
by offering products or services across different categories.
Eg: An educational institution that offers a wide range of courses in commerce science etc.
serves the need of different students community that has completed high school.
y Full market coverageThis strategy aims to offer various product or services to the entire market in which it can
serve the entire market by adapting a mass marketing strategy were only one undifferentiated
marketing mix is developed. The other way is to develop a differentiated marketing mix for
each segments and thus cover the entire market.
Eg: When a Hindi movie is realized in India and abroad with English subtitle as a mass
marketing strategy and when only the CD of the movie is released with local language
subtitles as a differentiated marketing mix to cover those segments in the market.
CRITERIA USED BY THE MARKETERS TO EVALUATE MARKET SEGMENTS
FOR TARGETING
y Segment size and Growth potentialThe size of the different segments in the market should be compared on the basis of their
present capacity and future potential as well.
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Eg: An educational institution should collect the data for full time students, part time students
and distance education students and then compare the data based on their ability to earn profits
for the institution to choose its target segment.
y Structural attractivenessAssessing a segments structural attractiveness involves analyzing the present and
potential competitors, substitutes of products or services available in the markets and the relative
power of suppliers and the buyers.
Eg: The proposal to open a five star hotel may not prove to be a very attractive in the city
were major hotel chains like Taj and ITC have established and popular hotels.
y Company objective and resourcesIt is essential that the segment features match the company objective and resources in terms of
growth potential and structural attractiveness and the company should have the required human,
financial and other resources necessary for effective operations in the segment.
Eg: An airlines that aims at serving the business class and highest class should have the
necessary resources to serve the needs of its customers and requisite destinations and to operates
smoothly at peak business hours.
Targeting can be done by the firms by adopting a logical and systematic methodology /
steps. Which are as follows: -
STEP 1: - Identify the potential buyers: - Through proper market research and market
segmentation (it is the process of pulling apart the entire market as a whole and separating it into
manageable disparate units based on various demographic, political, economic and social factors;
it can also be customer / product / competition related segmentation). After the process of
Segmentation the next step is for the organization to decide how it is going to target these
particular group(s).
STEP 2: - Select the target audiences: - The factors that influence Targeting are the Internal
and External Environment. Internal environment includes the mission, vision, values and
objectives of the firm; whereas; External factors are the social, cultural, economic, global,
demographic, natural, task, technological, political and legal environment.
Through appropriately compiling the customers profile to decide the 4 Ps Product, Price, Place
and Promotion and obtain the demographic, psychological, geographic and behavioral
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information of the buyer. Targeting is deciding the potential buyers, products to be offered and
appropriately positioning each product to the segment.
STEP 3: - Proper positioning of the Product: - After developing an appropriate segmentation
and target strategy; positioning strategy can be worked out effectively. Positioning enables the
firm to create a positive image, gain competitive advantage and place the brand in the customers
mind to enhance their goodwill and become the most preferred brand.
Instructions for successful targeting
Step-1
Decide who has the problem that your product or service can best solve. It needs to be a pressing
problem so that your target market has a need and will feel compelled to immediate action.
D
etermine key identifying factors of this market, such as age, gender, income level, social status,geography, education and their life priorities.
Step 2
Make sure your target market can afford your offering and that there is enough demand and
market share for you to be profitable. Take the time to ensure that there is a long-term demand
for your offering in this market so that you can continue to grow your business.
Step 3
Get to know your ideal client - how they think, what is important to them, how they do business.
What publications and organizations do they flock to? What kind of leisure activities do they
pursue? How do they access information?
Step 4
Build a team of people that can identify with and likes working with your target market. This
will help you to stay focused on your market's mindset and to bring the right level of enthusiasmto your marketing and customer service. This team will know the language that your market uses
that will convey your message most effectively.
Step 5
Identify your unique value proposition and promote it by using it as the backbone of your
marketing in a way that has value to your target market. What do you bring to your target market
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that allows you to meet their needs as no one else can? Show how this difference will positively
benefit your market using a blend of fact and emotion.
Step 6
Combine different marketing styles in a way that is directed specifically to your target market.
You could mass market by running television advertising using particular language that will
resonate with your target market while also doing pinpointed marketing to publications that cater
to your market. You could market directly to individuals through promotions involving personal
contact while running a booth at a trade show.
Step 7
Create a system for measuring your marketing's effectiveness in reaching your target market.
Keep track of client demographics to make sure that you have targeted the right group and that
you are getting the message across in the right way. Get in the habit of asking questions of your
clients that help you keep the right strategy.ecides to serve.public relation or selling
differentiation.
References
How to Select a TargetMarket in a Marketing Strategy:By Laura Bramble
Target Marketing :By Rupal Jain
POSITIONING OF SERVICES
The positioning of services is like products positioning , the products/goods positioning
is a process of creating a right image of products/goods in the minds of customers where
tangibles in terms of functional and operational facilities or utilities are used as positioning
variables but in case of services positioning intangible utilities and benefits are shown through
tangibles where physical evidence and process involved in the execution of services servicescape
are shown through promotional media to create good image of the services that a service
provider wants to extend or give to the intended customers.
A products position is how potential buyers see the product. Positioning is expressed
relative to the position of competitors.
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JackTrout and Al Ries are two men who brought the positioning process to the forefront of the
marketing world in the early 1970s. According to Al Ries and JackTrout positioning is a
game people play in todays me-too market place.
This "positioning" is part of an over-all marketing strategy in which the marketing
specialists choose who they want to target for their product and then "position" their product to
that market. There are many different types of strategies for this style of advertising. There are
broad, price segment, usage segment, geographical segments, psychological segments and
channel distribution marketing strategies.
It refers to the place an offering occupies in consumers minds on important attributes
relative to competitive offerings.
Positioning is a process that companies use in business marketing to create an image in
the mind of the consumer. With all of the media and the mass marketing we have in todays
society, everyone is over powered with advertising messages. We have advertisements on the
Internet, television, stores and even before a movie at the theater. With the correct positioning a
company can bring its product to the front of the consumers mind and make their product
a stand out brand.
Approaches
Head-to-Head positioning:
It involves competing directly with competitors on similar attributes in the same target
market.
Differentiation positioning:
It involves seeking a less competitive, smaller market niche in which to locate a brand.
Assumptions
y Consumers generally use a small number (2 to 4) of product attributes when they thinkabout a particular product or product class.
y In determining a brands position and the preferences of consumers, companies obtainthree types of data from consumers.
Evaluations of the important attributes for a product class.
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Judgement of the existing brands with the important attributes. Rating of an ideal brands attributes.
POSITIONING
Positioning is something that happens in the minds of the target market. It is the
aggregate perception the market has of a particular company, service in relation to their
perceptions of the competitors in the same category. It will happen whether or not a companys
management is proactive, reactive or passive about the on-going process of evolving a position.
But a company can positively influence the perceptions through enlightened strategic actions.
In marketing positioning is known as the process by which marketers try to create an
image or identity in the minds of their target market for its product, brand or organisation.
It is to identify the relevant dimensions & to locate the positions of existing &potential new products along these dimensions.
Products are represented by locations in a space of several dimensions thatdistinguish among the products.
RE-POSITIONING
Repositioning involves changing the identity of a product relative to the identity of
competing products in the collective minds of the target market.
DE-POSITIONING
De-positioning involves attempting to change the identity of competing products, relative
to the identity of your own product, in the collective minds of the target market.
STRATEGIC POSITIONING
Strategy is partly about how an organisation or agency positions its services within a
changing environment. It should lead to questions about whether the current positioning is
sustainable and sound.
CONSUMER POSITIONING OF SERVICES
Consumer positioning of services involves two concepts.
1. It means the position the firm or organisation occupies in the minds of consumers. What acompany thinks is their position in the market place does not matter. What a consumer
think that is important.
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2. Positioning is always relative to the competition. In choosing a service firm , consumerwill compare its service offerings to other firms within the industry.
METHODS OF POSITIONING
Service can be positioned by
1. Service attributes2. Use or application3. Price /quality relationship4. Service class5. Service user6. competitor
DIFFERENTIATION OF SERVICES
Differentiation
A firm is said to have achieved a differentiated competitive advantage when its customers
perceive that the service offered by it is different from that of its competitors on the base of any
of the elements of the marketing mix,product/service, price, promotion, and distribution.
Differentiating attributes for a product or service should meet the following criteria;
Important- customers in the target group view the difference offered by the firm as very
important and attach high value to it.
Distinctive- The product or service attribute offered by a firm is not offered by its competitors or
the value of the differential attribute offered is unique when compared to that offered by its
competitors.
Superior-The firm makes the product/service and obvious choice for the customers to opt for, as
no other firm offers the differential benefit in such a way.
Communicable-The difference in the offer of the firm should be easily explained and
communicated to the customers.
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Pre-emptive - The difference offered by a firm should be such that it cannot be copied by the
competitors easily.
Affordable - Customers should be able to pay for the difference in service or product being
offered by the firm.
Profitable - A firm should be able to offer the difference to the customer without losing out onits own profitability.
The main step towards differentiation is to decide the number of benefits and attributes on which
a firm wants to differentiate its product/services from those of its competitors. For example, a
hotel offering free pick up and drop facility at the airport is differentiating its service based on
the convenience and price factors as the customers have to hire a taxi otherwise.
Differentiation of servicesfocus on the features and benefits of the product/service itself that aredifferent from the features/benefits offered by competing products. And it is the "personality"
that we want our product/service to be remembered for. The label or tag or mental short-cut that
associate with the product (the brand, your name) that makes it stand out from others in the field.
Differentiation Strategy
Differentiation strategy is an integrated set of action designed to produce or deliver goods or
services that customers perceive as being different in ways that are important to them. It calls
for you to sell no standardized products to customers with unique needs.
Differentiated Service is a design pattern for business services and software, in which the
service varies automatically according to the identity of the consumer and/or the context in
which the service is used. Sometimes known as Smart Service orContext-Aware Service.
Differentiated Service is extensively covered in a few narrow technical areas, such as telecoms
networks and internet (see Differentiated services). It is also mentioned in some marketing
sources, with reference to customer segmentation. But the general principle of service
differentiation extends far beyond these domains, and it is one of the mechanisms for
implementing flexibility in a Service-Oriented Architecture (SOA).
Various dimensions of the service can be differentiated, including:
y Information quality. For example, an information service providing stock prices mayoffer real-time prices to selected users and 15-minute-delay prices to everyone else.
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y Security. For example, a user may have restricted access to sensitive information when heis using an insecure network connection. And access to the financial accounts may be
restricted prior to publication.
y Customer Segmentation. For example each retail customer may get a different set ofspecial offers, and this can be generated dynamically, according to the contents of the
shopping basket or the path through the store.
Differentiating factors can include identity (including personalization) and context (including
presence).
Steps in Differentiation
There are eight-steps to determine the bases of differentiation and selecting a differentiation
strategy;
The first step is to determine who the real buyer is. In other words, within the overall buying
cycle who would interpret your offer and decide. It is possible that apart from the end user,
channel members may also be the buyers.
The second step in this process is that the firm must identify the direct and indirect impact on its
buyers value chain to determine the value the firm should create for its buyers. A firm must
explore all possible options to influence thebuyers value chain in its direction. Such an analysis
of buyers value chain would provide a foundation for determining the buyer purchase
criteria(BPC)
Therefore, logically, the third step is to rank the buyer purchasing criteria. At times, such an
analysis might suggest purchase criteria that the buyer does not currently perceive. However the
same must be identified in a manner that it can be operationalized, and their list of buyer
purchase criteria on a continuous basis to sustain competitive advantage. Such an inventory of
BPC is then divided into two categories; use criteria and signalling criteria.
The fourth step is that the firm must identify its existing sources of uniqueness in relation to its
competitors and also the potential new sources of uniqueness, because differentiation stems from
the uniqueness of firms value chain. Since differentiation is always relative, a firms value chain
must also be compared with the value chain of competitors. Such an exercise should result in the
identification of specific factors of uniqueness, which porter termed as drivers.
The fifth step then is to study the cost implications of al, the identified factors, both use criteria
and signalling criteria, which can lead to differentiation.
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The sixth step is to choose the configuration of value activities that create the most valuable
differentiation for the buyer.
The seventh step is to check the sustainability factor of your chosen differentiation strategy.
Sustainability has to check against erosion or imitation.
The last stage is that of cost reduction in activities that do not affect the chosen forms of
differentiation. Such a strategy would not only improve profitability but also reduce vulnerability
to competitors because of price premium.
If these stages are carefully analysed, then one can develop such differentiation strategies which
are not only implementable but also sustainable, and give a competitive advantage to the
organization.
DIFFERENTIATION VERSUS POSITIONING
Differentiation and positioning are two related terms in marketing theory but both are different
from each other. According to Schnaars, differentiation seeks merely to make products different
in order to avoid competition and positioning steers product perceptions to a particular point in
the consumers minds. In fact, positioning incorporates a sense of direction rather than simply a
sense of difference. Therefore, product positioning implies a greater concern with changes in
product image as opposed to physical product changes.
Ries and Trout have summarised the meaning of positioning that it is not what you do to the
product but what you do to the mind of the consumer.
However, these two concepts are related concepts- perhaps one leads to the other. If
differentiation strategy, arising out of the value chain analysis, has to be implemented, in the
implementation plan one cant ignore the communication and positioning element of the
differentiated value.
REFERENCE
y Ravi Shankar, ChristopherLovelook&JochenWirtz
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