friend marketing

8/2/2019 Friend Marketing

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CHAPTER 1

INTRODUCTIONEntering the early part of the first decade of the third millenium, we the

citizens of the world find ourselves living in an economy dominated by service.

Services are now an integral part of any economys infrastructure and have become

indispensable to urban life. Transport, telecommunication, utilities (electricity and

water supply, garbage clean-up, etc.), education, health, financial institutions,

leisure, tourism facilitators, etc., have all become a part of our everyday life.

Erstwhile closed economies like China and Russia have also felt the heat and comeunder the influence of the service sectors. United States and Canada have

respectively 73 percent and 67 percent of their GDP coming from services.

But the service sector is not a new entity to the world economy. It always

existed in same form of evolution. In India, if we go by historical facts and

mythological stories, we find that we always had transporters, money-lenders,

doctors, (vaid, kabiraj), midvives (dai), masseurs (champi) and those whose

managed the dharmasalas and sarajkhanas. The last named were the forerunners of

the Oberios and the Tajs.

What constitutes the service sector ?

Services fall into three broad categories:

* Pure stand alone services like physiotherapy, counseling and consultancy.

* A combination of service and goods, like restaurants, retailing etc.

* Service as a component of goods in the total marketing-mix, like after sales


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service, service and repair of home appliances etc.

Thus, service is distinct from yet also simultaneously a part of - the

products marketingmix.

How would one define a service sector ?

The benefits of definition are manifold: a definition makes for ease of

comprehension, classification and awareness of the templates (limitations and

restrictions) of working and management. Many have attempted to define service

in such a manner as to bring out all its characteristics. The common theme of all

definations has invariably been that while service is intangible, it goes on to

produce tangible results or output. In other words, it acts like a facilitator.

Some definations are serious, academic and long and detail while others are

light-hearted. But they all drive home the unique features that differentiate service

from goods. They are:

* A service is any activity or benefit that one party can offer to another which is

essentially intangible and does not result in the ownership of anything. Its

production may or may not be tied to a physical product.

* Services anything that cannot be dropped on your foot.

* Services are economic activities that create value and provide benefits for

customers at specific times and places as a result of bringing about a desired

change in-or on behalf ofthe recipient of the service.

Services are the production of essentially intangible benefits and experience,

either alone or as part of a tangible product, through some form of exchange, with

the intension of satisfying the needs, wants and desires of the consumers.


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GROWTH OF SERVICE SECTOR ECONOMY:An analysis of data complied for International Labour Office (ILO)

and organization for Economic Cooperation and Development (OECD) showing

the relationship between per capita GDP and percentage of employment in the

service sector is very revealing. There is very close correlation between the level of

economic development in an economy and the strength of its service sector

although it has to be admitted that one can never be certain whether the service

would be true that a strong service sector will be a driver for an economy.

Highly developed economies like USA, UK and Canada had a very high

percentage of jobs in the services sectors as compared to less developed countries

like Bangladesh, Mexico or Ethiopia. Initially, in developed countries, it was the

manufacturing jobs that started taking flight.

Foundry and leather processing, which had a high component of labour, and

also were highly polluting, shifted out to Third world countries. With the US

signing the NFTA (North America free Trade Association), manufacturing job

shifted from Canada and us to Mexico. Countries like the US could have all their

basic goods produced at the same high quality outsource.

Like shoes are a case in point. The poor countries now \ the products of such

goods are getting low margins, yet these niggardly payments constitute a major

part of their GDP.

It successfully emphasizes the catalytic and multipliers effects that services have

on a nations economy:


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* Services have improved productivity.

* Services have a job multiplier effect.

Characteristics of the Service Industry:

There are four unique characteristics of service industry:

A. Intangibility

* A customer cannot see, touch or feel the service product. The consumer will only

believe what he can see for himself and assure himself of its reality.

* It is easier for a customer to evaluate a ready-made apartment or house for sale

than a blueprint of the project. He will not be able to imagine how the

house/apartment would like once it is finished nor evaluate the living conditions of

the locality.

* A salesman of time-sharing resorts or insurance products would fin it very

difficult to convince the customer about the offer-mostly due to the latters

inability to imagine of the offer features and its benefits. This will make it very

difficult for the marketer, and he ahs to be more persuasive than required for

selling tangible products like goods.

B. Perishability:-

Perishability is the second unique characteristics of the service industry. It implies

that unlike goods, services cannot be stored but have to be transacted during thegiven time. If the transaction cannot take place, then the service offer loses it value.

Service revenue can be never recovered with the hope of future sales. There is the

element of opportunity lost.


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A comparison would be useful elucidation:

* Goods Marketing i.e. even if there are no sales, goods can be stored with the

hope that they could be sold the next day or the next time.

* Services Marketing i.e. Perishability factor of services implies that in the service

industry there can never be delayed sales. The value of the service product is lost

if it is not purchased and consumed during the time of transaction.

* The ocean cruise ship will sail even if a few remain unsold; the outward bound

trek to the Pindari Glacier cannot wait for more bookings it is time bound by

Nature.

C. VARIABILITY OR NON-STANDARDISATION OR HETEROGENEIITY:

The service industry suffers from a curious characteristicsvariabilitythat

greatly affects its offer. The service offer is never consistent in its quality and

delivery.

The same service product is never delivered in the same way to the same

customer across two different time periods, a customers perceives the service

transaction as having a different quality when delivered from two different places

or even on two different occasions at the same service outlet.

* A customer might get a different quality of service from two different branches

of the same bank.

* A customer in a bank will never get the same kind of service, like cash withdrawl

or bank locker operations, from two different employees of even the bank or

branch.


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* The students of a B-school could have a certain subject taught by three different

faculties and each delivery would be vastly different.

INSEPARABILITY:

Amar Gopal Bose Jr. the founder of Bose Corporation, the marker of the

worlds most expensive and some say the best speakers an audio systems need

not present every time his products are sold.

* During surgery, both the surgeon as well as the patient should be present. If the

surgeon is late or occupied elsewhere and the patient is waiting, then the surgery

either does not take place, on the contrary there is the summated loss of human-

hours and classification of the customers.

* A group of German tourists are impatiently waiting for their charter flight. The

non-arrival of the air-craft has completely skewed the tourists itinerary.

* The marketing research class in a certain business school is cancelled due to the

non-arrival of the faculty, although the students were present in full strength.

However, the implication of inseparability for service marketing is

enormous. The entire focus would be to bring together under one roof and at one

time both the service provider as well as the consumer.

CLASSIFICATION OF SERVICE INDUSTRIES:-

It is very necessary to classify any industry, especially service. The

classification helps managers understand service, the offer, the unique deliver

process, and the common problems and accordingly recognize them and manage

them by bringing out solutions. There were many ways:-


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A. END-USER:-

Service industries can be classified by the type of user and thus there are

three types of end-users:-

1. Individual Consumer as an end-users i.e. services are consumed by individuals.

2. Business-to-Business end-users i.e. one business or firm from one industry will

seek services from another business or another company from another industry.

3. Industrial end-users i.e. these end-users of services are plants and factories. They

might require very unique services that are highly technical.

B. DEGREE OF TANGIBILITY -THE PRODUCT SERVICE CONTINUUM

The second way to classify services is by the degree of tangibility that they

in their offer. Services are inherently intangible, which implies that a consumer

cannot touch, feel or see a service product.

A few observations of the continuum:-

* The offerings of a firm range from pure goods to pure services.

* Those that are mostly goods are tangible and are very easy to evaluate by the

consumer.

* The range of offers has different qualities in themselves and the customers looks

for or seeks these qualities.

C. PEOPLE-BASED SERVICE:-

The Third way to classify service is by the type of contact that the service

and providers have with their customers. There are two types of such services.


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High Contact:

These kind of services are very much people based. There are a large

number of providers who cater to customers and meet them over a long period of

time. Some examples are teaching, counseling, surgery etc

Low Contact

These are also many types of services characterized by very low contact

with people. Providers interact very little with customers it is machines that do

the interaction. These kind of services are equipment-based and very popular in the

United States, United Kingdom and Europe.

D. Expertise

The fourth way to classify services is by the degree of expertise required to

do the service transaction by the service providers. This classification is dependent

on how qualified the service provider is and the level of certification of the

expertise he possesses. There can be two types of services under this classification:

Highly Professional Services:

Under this the service firm could be classified as a highly professional

organization, e.g., technical consultants like M. Dastur and Company, Tata

Consultancy Services etc

Non-Professional:

But there are also services that can be categorized as non-professional.

These could include cobblers, tailors, masons in housing or construction projects

and utility services like garbage cleaners from the Municipal Corporation.


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E. Orientation Towards Profit

The fifth way to classify service by the degree of orientation towards profit

that the service provider might have. Accordingly, there are two types of service

industry:

Commercially Oriented:

These service firms exist to make profits. They are owned by the

Government (Indian airlines, Ashok Hotel Group) as well as by the public at large

(ICICI Bank, Apollo Hospitals, etc).

Not for Profit Organization:

There are also many service organizations that are not for profit, e.g., public

municipal parks, public libraries, etc. These organizations carry out their services

with the societal concept in mind. One can better understand their philosophy by a

comparison with profit oriented organizations.

Service Marketing Mix

Having discussed the characteristics of a service, let us now look at the

marketing mix of service.

The service marketing mix comprises of the 7ps. these are:

1.ProductAn object or a service that is mass produced or manufactured on a largescale with a specific volume of units. A typical example of a mass produced

service is the Hotel Industry.


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2.PriceThe price is the amount a customer pays for the product. It is determined by

a number of factors including market share, competition, material costs,

product identity and the customers perceived value of the product.

3.PlacePlace represents the place where a product can be purchased. It is often

referred to as the distribution channel.

4.PromotionPromotion represents all of the communications that a marketer may use in

the market place. A certain amount a crossovers occur when promotion uses

the four principle elements together, which is common in film promotion.

5.PeopleAn essential ingredient to any service provision is the use of appropriate

staff and people.

6.ProcessRefers to the systems used to assist the organization in delivering the

service.

7.Physical EvidencePhysical evidence is the element of the service mix which allows the

consumer again to make judgements on the organization. If you walk into a

restaurant your expectations are of a clean, friendly environment.


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UNIT

2

CONSUMER BEHAVIOUR IN SERVICES

Customer Expectation of ServiceIf youre a service provider, customer expectations can pose a major

challenge. Thats because expectations are wondrous creatures: They grow, they

shrink, they changes share, they change direction. They shift constantly, and theyshift easily, and how satisfied (or dissatisfied) your customers are is determined by

these expectations and your performance in meeting them.

Your Performance

If expressed as a calculation, customer satisfaction =

Customer Expectations

Watch for ChangesIf your customers satisfaction level is changing, find out if something has

happened either at their end or yours, to affect their expectations. Whether that

either at their end or yours, to affect their expectations or perception. Whether that

change in satisfaction level is skyward of in the direction of the bottomless pit

analyzes in whats happening.


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What does the Customer Buy ? ( Object )The customer mostly buy goods, services. People, places, events, organization

ideas, information and experiences. All these generally fall under goods and

services but the offers that they buy can be.

High Involvement Offers:

1. Complexity of features: If the service product has complex features, it will

induce anxiety in consumers.

2. High Price: High Prices of service products will make consumers slow and

cautious in their decision making.

3. High perceived risks: A consumer perceives risk in consumption in two forms:

bodily harm and financial loss.

4. Large differences in features: If the consumers perceive that across a service

category there are large differences in features, then they would be highly

involved.

Low involvement service products have the following features:

1. Low price

2. Less difference in features

3. Simple features in the service product

4. Does not reflect a consumers personality

5. The products are of mostly daily needs

6. Low brand loyalty


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Impulse purchases: A customer goes through such purchases without any

permiditated plans made at the beginning of the day. He is desirous of instant

gratification.

Visual: The sight of the product might create an urge in the consumer to buy it.

Aural: The consumer is greatly influenced by the sound factor.

BUYING SITUATIONS FACED BY THE CONSUMER:

Customers find themselves in different buying situations, from purchase to

purchase and service transaction to service transaction. In other words, two trips to

the retail bank for two different purposes (e.g., the first to deposit a cheque in his

savings account and the second for a home loan may not have the same purchase

decisions. The second buying situation would differ greatly from the first if one or

more of the following factors are absent:

* The customer is aware of the service product category and service brands. For

instance, Mrs. Sharma knows what a credit card is and is also aware of a particular

brand in addition to others brands of cards.

* The customer has definite decision-making criteria about the purchase of the

service offer.

* The customer is competent enough to evaluate the service offer and and also has

definite evaluation criteria.

CUSTOMER PERCEPTION OF SERVICE

Jet Airways, to differentiate itself from staid, stodgy Indian Airlines, set a

dress code for its airhostesses and female stewards which telegraphed Jet Airways

intentions of being daring, modern and westernized, as in efficient. Based on


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their individual perceptions, the three women might have different behavior in

their service consumption process, which the marketer would be quite keen to

know.

Perception is the meaning that consumers ascribe to what they see around

them. The meaning that is given is influenced by:

* Past experience or learning,

* Preconceived notions, prejudice and assumptions,

* Expectations and personality,

* Family background, previous acculturation, values, beliefs and other social

factors, and

* Genuine knowledge and awareness.

However the perception of the service firm or its offers consists of factors both

internal and external to the customer and is greatly affected by the following:

External Factors:

a) Size:

The size of a stimulant like an advertisement in a newspaper, magazine or a

billboard has a direct bearing on the degree of perception.

b) Position:

The position of the advertisement or communication as a stimulant also ensures its

distinctiveness.


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c) Movement:

The human eye tends to seek and lock in to anything that has movement, even if it

happens to be at the periphery of vision.

d) Repetition:

Repetition of a message not only ensures more audience but also helps memory

retention and reinforcement amongst those who have been exposed to the message

before.

e) Intensity:

To capture the attention of the audience, viewers and customers, all marketers use

bright sound, psychedelic lightings, neon lights and glow signs.

f) Contrast:

When most communication is in a seemless flow of colour and patterns, human

perception tends to notice contrasty images quicker.

Internal Factors:

a) Selective attention:

Attention span of customers is limited. People tend to listen to see only those

communications of services that they are interested in and want to listen to or

capable of absorbing.

b) Selective Exposure:

Certain messages of services communication might go against the preferences and

beliefs of the customers.


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c) Flipping:

Readers of magazines and newspapers tends to flip through the pages and either

miss advertisements or do not get to see them in detail.

d) Zipping:

Viewers tend to use the fast-forward facilities to skip advertisements in

prerecorded programmes.


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UNIT3

RELATIONSHIP MARKETING

CONCEPT OF RELATIONSHIP MARKETING:

Relationship marketing is defined as : Relationship marketing is to identify

and establish, maintain and enhance relationships with customers and other

stockholders at a profit, so that the objectives of all parties are met.

Transactional marketing, which was developed in the late 1950s and 1960swas the source of many dominant principals, which are still popular among both

marketing academics and practitioners today.

Transactional marketings main concept, which centers on the four ps was

developed by Borden in 1964.

BENEFIT OF RELATIONSHIP MARKETING:

In todays competitive environment, customer retention and profitability

have become paramount for the success of any industry. Many companies have

now come to realize the benefits of creating lifelongs associations with fewers, but

more profitable consumers. Relationship marketing activities can have a major

impact on an organization, by improving customer satisfaction and longevity,

reducing marketing expenses, in addition to providing a competitive edge.

Adopting a relationship marketing approach can have many benefits for both

the service firm and its customers. These include reduced customer price

sensivity, barriers to competitive entry, lower marketing expenditures, stability and

decreased uncertainity.


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There are also confidence benefits. These are feelings of security and trust

which the customer develops towards the seller. Such emotions reduce ambiguity

and anxiety in the service being offered and hence, consumers prefer not to change

providers on a continuous basis. Customers today have multiple competitive

demands on their time and resources and are continually searching for two ways to

simply their choices.

STRATEGIES OF RELATIONSHIP MANAGEMENT:

A review of the relationship marketing literature suggests a lack of

knowledge and action surrounding the issue of implementation of relationship

marketing strategies.

There are several approaches to the implementation of relationship

marketing however, no one model is applicable across industry sectors. The

authors of the relationship marketing literature all seem to gravitate toward the

same themes when outlining steps for the implementation of a relationship

marketing strategy.

There are four types of retention strategies, which are discussed below.

Level-1: At level 1, the customer is tied to the firm primarily through financial

incentives lower price for greater volume purchases of lower prices for

customers who have been with the firm a long time.

Level2 At level 2, strategies bonds the customers to the firm through more

than financial incentives.


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Level 3 At level 3, Strategies involve more than social ties and financial

incentives, although there are common elements of level 1 and level 2 strategies

encompassed within a customization strategy and vice-versa.

TOOLS OF RELATIONSHIP MARKETING:

Customer Database:-

One of the most important and basic tools of relationship marketing is the

customer database. For some organizations, the database is so huge and complex, it

is often called as Marketing warehouse or data warehouse.

However, smaller version of the database is known as data mart. In all these

types of database efforts are made to save, as many data about the customer as

available and to retrieve them on demand.

The database captures data regarding almost all aspects of the customers

like their transaction habits, their life cycle stages, personal likeness and disliking,date of birth of the family members etc. so that whatever information is required

about the customer can be retrieved almost without any effort.

A complete and reliable database helps the company in many ways like

deciding about the attrition curve, the average purchase of the customer, the brand

switching and the targeting etc.

Data Mining:-

It is observed that even with the fastest microprocessors available for data

warehousing serious problems are encounteredin retrieving the required


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information on time. Data mining is a development in Information Technology,

through which required information is mined from the server.

However, a detail discussion on this is beyond the scope of this material and

hence no further discussion is offered.

OLAP (Online Data Processing) is another tool through which retrieval and

storage are made faster than ever before. This tools stores data in hypercube format

specially designed to summary values of each of the transaction points across all of

the various dimensions.

Source record are extracted from the relational database, aggregated and

batch loaded into predetermined dimensions on a dedicated multidimensional

server. If any time a user needs to see a new dimension, it can be created with the

next reload by the database administrator.

It must be mentioned here that these tools may not seen in isolation and all

these are used at the same time by the same programme.

RFM Model:-

This model is helpful in monitoring retention of a particular customer. This

method tries to rank a customer relative to all other customers in terms of Recency,

Frequency and Monetary Value. Recency is how a customer has visited for a

purchase, which according to Jim Nova is the most important indicator of future

behavior. Frequency is the repeat rate, while monetary value means the volume of

transaction is one go (or over a period of time).


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The RFM model suggests that a should find out segments of customers on

the basis of their recency, repeat rate and monetary value. The propagators of

repeat rate and monetary value. The propagators of this model insist that each

company might different strategies to deal with RFM segments, but such

segmentation is a must for relationship marketing.

Relationship marketing is essentially based on the skills of relationship

building and maintenance between the firm and the customer. To make a customer

loyal to the organization the marketers must delight he customer each time he/she

is visiting the firm. For this the firm must think ahead of its competitors and the

customer himself. Every time some pleasant surprise should be offered to delight

the customer.


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UNIT4

MARKET SEGMENTATION AND TARGETING

Market segmentation is a process of dividing a heterogeneous market market

into homogenous sub-units, concept that was first developed by a Wendell R.

Smith in a paper in 1956. It is defined as dividing a market into distinct groups had

different preferences and traits. Each of these groupings was called a segment, and

the process was known as market segmentation.

There are two types of factors:-

1) Pull factors:-

This is the fatal attraction that the people might have for a place due to

perceived higher greater opportunity, higher quality of life etc.

2) Push factors:-

People move by compulsion, due to natural calamities like flood, drought,

famine, political upheavals like partition, ethnic cleansing of Kashmiri pundits etc.

This makes a constant study of the market very necessary for the marketer,

and provides another reason for market segmentation.


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REQUIREMENTS FOR EFFECTIVE SEGMENTATION:

* Measurable and obtainable: size, purchasing power, and characteristics ofsegments.

* Accessible: The segments should be effectively reached and served.

* Substantial and viable: the segment chosen should be large and profitable. It

should be cost-effective for the service marketer to address the segment.

* Intensity in Competition: More the intensity of competition, less attractive isthe segment.

* Actionable: If the segments are attractive and have the potential for profit

making, then effective marketing programmes can be designed. NIIT found that

the Chinese market had huge potential and designed innovative marketing

programmes to serve that market.

Differentiable: The segments should be distinct from each other, behaving and

responding differently or else, the process becomes like underdifferentiated

marketing.

BASES FOR SEGMENTING THE SERVICE CONSUMER:

The service marketer can segment the market according to consumer

characteristics and consumer responses.

Consumer characteristics indicate who buys:

* Geo-demographic (e.g. politicalstate, districts, blocks, regionurban or rural

geographicNorth, South, East, West)


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* Demographic (e.g. age, gender, marital status, education etc.)

HOW TO SEGMENT THE MARKET ?

1. Survey Stage: Focus Group discussion and in-depth interviews for insights

into consumer attitudes, motivation and behavior; then developing a questionnaire

o administer to a sample.

2. Analysis Stage: After data-collection, factor and cluster analysis has to be made

to find out the factors that are major influencers amongst the clustering groups.

3. Profiling Stage: The clusters are then profiled by demographic, psychographic

and media usages.

MARKET TARGETING:

The service marketer evaluates these groups and chooses those groups which

it perceives it could cater to with its available resources. If a service marketer

chooses only one segment, then it is focus or concentrated marketing, wherebyhis attention is on a single market, known as a niche. If he chooses a few of the

segments, then it is multi-segment strategies, where a series of separate marketing

activities is designed for different market segments.

A service marketer with deep pockets and other resources addresses himself

to all the segments. The service marketer, over the period has come to the

realization that no single offer can satisfy the whole market.

Niche marketing makes a firm use its limited resources optimally, the

customers do not suffer from any confusion about the ability of the firm to service


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them. But with niche strategy, a service firm becomes vulnerable to powerful

competitors coming in.

MARKET POSITIONING:

The chosen segment is to be targeted for customer acquisition and retention.

For this to be successful, customers have to be persuaded that the service offer is

unique in features, value and benefits.

The offer, thus, has to be positioned in their minds to enable them to

recognize the offer as distinct from the crowd and to be persuaded that the offer is

the best offer for them.


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CONCLUSION

Marketing is essential in making the proper planning, designing and use of such

services and products for the better and optimal use of information. The library

should give priority to provide excellent customer service enhancing its image as

information provider in the information era. The library and information services

should be user-oriented especially when we are designing them to satisfy the

information needs of industrial people. Marketing of library and information

services includes customer (users) priorities, expectations, individuality,

responsiveness, relationship, quality of services, professional skills and

competencies, value-added services, etc. Therefore, university libraries must

develop a process for understanding the information needs, wants and opinions of

clients from the industries, and develop products and services which satisfy those

information needs.


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