ma session 1
TRANSCRIPT
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MARKETING APPLICATIONS
Session 1
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Some FACTS
Wal-mart is in the list of Fortune 500
GE derives almost 40% of its revenuefrom services
In India service sector contributes 56%of GDP
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Services dominate the United StatesEconomy:
GDP by Industry, 2001
Source: Bureau of Economic Analysis, November 2002
Finance, Insurance,Real Estate
20%
Wholesale andRetail Trade
16%
Transport, Utilities,Communications
8%Health6%
BusinessServices
5%
Other Services 11%
Government(mostly services)
13%
Manufacturing 14%
Agriculture, Forestry,Mining, Construction 8%
SERVICES
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Fastest growing services
Health care
Higher education
Entertainment
Financial
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New Generation services Management consultancy
Computer maintenance
Recruitment services
Management training
Value-added telecom services Call centre/BPO
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What is a SERVICE ?
A service is any act or performance
one party can offer to another that isessentially intangible & does not resultin the ownership of anything.
Its production may or may not be tied to a physical product
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Defining the Essence of a
Service An act or performance offered by one party to another
An economic activity that does not result in ownership
A process that creates benefits by facilitating a desiredchange in:
customers themselves
physical possessions
intangible assets
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Distinguishing Characteristics of
Services Customers do not obtain ownership of services
Service products are ephemeral and cannot be inventoried
Intangible elements dominate value creation
Greater involvement of customers in production process
Other people may form part of product experience
Greater variability in operational inputs and outputs
Many services are difficult for customers to evaluate
Time factor is more important--speed may be key
Delivery systems include electronic and physical channels
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Growth Factors Economic,socio cultural & life style
change
Women taking up jobs
Explosion of IT sector
Advent of many new technical products
Reforms & liberalization
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Tasks involved Understanding the nature of services
Understanding the customer & his expectations
Giving a shape to service
Organizing delivery system
Pricing strategy
Promoting the services
Extended marketing mix-7P`s
Differentiation
Quality & satisfaction
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Differentiation parameters
Time
Special offerings
People
Physical evidence Convenience
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Marketing ScenarioCompany
Employees Customers
InternalMarketing
Externalmarketing
InteractiveMarketing
f
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Elements of The Services MarketingMix:
7Psvs.the Traditional 4PsRethinking the original 4Ps
Product elements
Place and time Promotion and education
Price and other user outlays
Adding Three New Elements Physical environment
Process
People
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The 7Ps:
(1) Product ElementsAll Aspects of Service Performance that Create Value
Core product featuresboth tangible and
intangible elements Bundle of supplementary service elements
Performance levels relative to competition
Benefits delivered to customers (customers dontbuy a hotel room, they buy a good nights sleep)
Guarantees
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The 7Ps:
(2) Place and TimeDelivery Decisions: Where, When, and How
Geographic locations served
Service schedules
Physical channels
Electronic channels
Customer control and convenience
Channel partners/intermediaries
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The 7Ps:(3) Promotion and Education
Informing, Educating, Persuading, and Reminding Customers Marketing communication tools
media elements (print, broadcast, outdoor, retail, Internet, etc.)
personal selling, customer service sales promotion
publicity/PR
Imagery and recognition
branding corporate design
Content
information, advice
persuasive messages customer education/training
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The 7Ps:(4) Price and Other User Outlays
Marketers Must Recognize that Customer OutlaysInvolve More than the Price Paid to Seller
Traditional Pricing Tasks
Selling price, discounts, premiums
Margins for intermediaries (if any)
Credit terms
Identify and Minimize Other Costs Incurred by Users Additional monetary costs associated with service usage (e.g., travel to
service location, parking, phone, babysitting,etc.)
Time expenditures, especially waiting
Unwanted mental and physical effort
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The 7Ps:(5) Physical Environment
Designing the Servicescape and providingtangible evidence of service performances Create and maintaining physical appearances
buildings/landscaping
interior design/furnishings
vehicles/equipment
staff grooming/clothing
sounds and smells
other tangibles
Select tangible metaphors for use in marketing communications
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7Ps:(6) Process
Method and Sequence in Service Creation andDelivery
Design of activity flows
Number and sequence of actions for customers
Providers of value chain components Nature of customer involvement
Role of contact personnel
Role of technology, degree of automation
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The 7Ps:(7) People
Managing the Human Side of the Enterprise The right customer-contact employees performing tasks well
job design
recruiting/selection
training
motivation
evaluation/rewards
empowerment/teamwork
The right customers for the firms mission
fit well with product/processes/corporate goals
appreciate benefits and value offered
possess (or can be educated to have) needed skills (co-production)
firm is able to manage customer behavior
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Managing the 7Ps Requires Collaborationbetween Marketing, Operations, and HRFunctions
Customers
Operations
Management
Marketing
Management
Human Resources
Management
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The search for customer loyalty
Targeting, acquiring & retaining the right customers is atthe core of many successful service firms.
All businesses aspire to have a database of loyalcustomers.
Loyalty is described as a
customers willingness to continue patronizing a firm purchasing & using its goods & services on a repeated
& preferably exclusive basis &
recommending the firms products to friends &
associates.
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What Makes Loyal CustomersMore Profitable?
Tend to spend more as relationship develops
customers balances may grow
may consolidate purchases to one supplier Cost less to serve
less need for information and assistance
make fewer mistakes
Recommend new customers to firm (act as unpaid salespeople or Customer Advocates)
Trust leads to willingness to pay regular prices vs. shopping
for discounts
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Franchising
Resources are limited
Long-term commitment of store managers is
crucial
Local knowledge is important
Fast growth is necessary to pre-empt
competition
Franchising has become a popular way to expand
delivery of all 7Ps to multiple sites
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The 7 S Framework
Strategy
Shared Value
Skills
Structure
Staff
System
Style