marketing of services 03

8/7/2019 Marketing of Services 03

1/101

By

Prof. K.G. Muralidhara


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Introduction of Service Marketing


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Selling?

Advertising?

Promotions?

Making products available in stores?

Maintaining inventories?

All of the above, plus much more!


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Marketing is the process of planning and executing the

conception, pricing, promotion, and distribution of ideas,

goods, services to create exchanges that satisfyindividual and organizational goals

American Marketing Association


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Marketing management is the art and science of

choosing target markets and getting, keeping, and

growing customers through creating, delivering, andcommunicating superior customer value.

Marketing management is the art and science of

choosing target markets and getting, keeping, and

growing customers through creating, delivering, andcommunicating superior customer value.


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Industry

(a collection

of sellers)

Market

(a collection

of Buyers)

Goods/services

Money

Communication

Information


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Marketing

Mix

Product

Price Promotion

Place

Customer

Solution

Customer

Cost

Communication

Convenience


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Goods

Services

Events

Experiences Personalities

Place

Organizations

Properties Information

Ideas and concepts


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Based on :

Needs, Wants, Desires / demand

Products, Utility, Value & Satisfaction Exchange, Transactions & Relationships

Markets, Marketing & Marketers.


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Needs, wantsdemands

Markets Marketing &

Marketers

Utility, Value &Satisfaction

Xchange, Transaction

Relationships

Products


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The services sector has beengrowing at a rateof 8% per annum in recent years

More than half of our GDP is accounted for

from the services sector

This sector dominates with the best jobs, besttalent and best incomes


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-Theodore Levitt-


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It is the part of the product or the fullproduct for which the customer iswillingto see value and pay for it.


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It is intangible.

It does not result in ownership.

It may or may not be attached with a physicalproduct


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Banking, stock broking

Lodging

Restaurants, bars,

catering

Insurance

News and entertainment

Transportation (freight

and passenger)

Health care

Education

Wholesaling and

retailing Laundries, dry-cleaning

Repair and maintenance

Professional (e.g., law,

architecture, consulting)


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Physical goods Services

tangible intangible

homogeneous heterogeneous

Production and distribution are

separated from consumption

Production, distribution and

consumption are simultaneous

processes

A thing An activity or process

Core value processed in factory Core value produced in the buyer-sellerinteraction

Customers do not participate in the

production process

Customers participate in production

Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership


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1. Intangibility - u canttouch this

2. Production (or performingthe service)and Consumption (usingthe service) -

happens at the same time

3. Heterogeneity - services are not alwaysdelivered the same way

4. Perishability - cannot be put ininventory or stored for later useie. You cant buy 2 haircuts

4 Characteristics of Services


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1. Intangibility - u canttouch this

Services cannot be stored

Services cannot be protected throughpatents

- therefore a really greattravel package andservice can be copied

a really great physical object can be patented,and NOT allowed to be copied

Characteristics of Services


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People

Physical evidence

Process


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Goods and Services: Scale of

Elemental Dominance


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service providers have product lines andservice providers have product lines andproduct mixes as wellproduct mixes as wellexamplesexamples

MastercardMastercard

insuranceinsurance

telephone servicestelephone services

cable servicescable services

ISPsISPs -- internet service providersinternet service providers airlines, first class, economy classairlines, first class, economy class

banksbanks


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UNIT-2

CUSTOMER CENTRICITY


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1. The purpose of a company is to create a customerThe only

profit center is the customer.2. A business has twoand only twobasic functions: marketing

and innovation. Marketing and innovation produce results: all the

rest are costs.

3. The aim of marketing is to make selling unnecessary.

4. While great devices are invented in the Laboratory, greatproducts are invented in the Marketing department.

5. Marketing is too important to be left to the marketing

department.


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Are Banks trulyAre Banks truly

marketingmarketing--savvy andsavvy andcustomercustomer -- centric?centric?

Are Banks trulyAre Banks truly

marketingmarketing--savvy andsavvy andcustomercustomer -- centric?centric?


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Myth 1 The larger the range of products, themore customer-centric I am.

MythbusterMythbuster The range of products hasThe range of products has

emerged from beingemerged from being

competitioncompetition--centric.centric.


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Myth 2 Better technology leads to

better customer service.

MythbusterMythbuster TechnologyTechnology

alone does not deliver,alone does not deliver,

helps people do.helps people do.


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Myth 3 Launch a product and the customer will start

using instantly. - Give a customer a card and he will learn how to play

with it immediately

MythbusterMythbuster Customers needCustomers need

To be educated tooTo be educated too


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MythbusterMythbuster CustomersCustomers

are not only presentare not only present

where competition is.where competition is.

Myth 4 The only way to get a customer is from

competition.


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Myth 5 Just advertise and - You will sell.

MythbusterMythbuster Advertising will only sell,Advertising will only sell,

Not retain customers.Not retain customers.


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Myth 6 No difference between marketing & selling

MythbusterMythbuster Selling focuses on the needs of the seller; marketing onSelling focuses on the needs of the seller; marketing on

the needs of the buyer.the needs of the buyer.


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Myth 7 In the absence of relationships trust buildsfinancial brands

MythbusterMythbuster TTrust is not a differentiator at allrust is not a differentiator at all

it is the very minimum that the customer expects!!it is the very minimum that the customer expects!!


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Technology ?

Brand ?


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The real differentiator of

The real differentiator of

customercustomer centricity in acentricity in a

commoditised world of financialcommoditised world of financialproductsproducts --

Customer Service !Customer Service !


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Anyone who is in the market looking at a product /

service for attention, acquisition, use or consumption

that satisfies a want or a need

CUSTOMER IS . . . . .


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CUSTOMER has needs, wants, demands anddesires

Understanding these needs is starting point ofthe entire marketing

These needs, wants arise within aframework or an ecosystem

Understanding both the needs and theecosystem is the starting point of a long term

relationship


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As a priority , we must bring to our customers

WHAT THEY NEED

We must be in a position to UNDERSTAND their

problems

Or in a new situation to give them a chance to

AVOID the problems


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Value Benefit / Cost

Benefit Functional Benefit + Emotional

Benefit

Cost Monetary Cost + Time Cost +

Energy Cost + Psychic Cost


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Whoare your competitors?

Whatare their strengths and weaknesses?

Whathave been their strategies?Howare they likely to respond to your Marketing

plan?


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Strategic MarketingStrategic Marketing

Strategic marketing management is concerned with how we will

create value for the customer

Asks two main questions

What is the organizations main activity at a

particular time? Customer Value

What are its primary goals and how will these be

achieved? how will this value be delivered


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The Strategic-Planning, Implementation,

and Control Process

The Strategic-Planning, Implementation,

and Control Process


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External environment

(Opportunity &

Threat analysis)

Internal Environment

(Strength/ Weakness analysis)

Goal FormulationBusiness Mission


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HMT vs. Titan

HLL vs. Nirma

Bajaj vs. Honda

Dot.com boom, then bust and now resurgence

Market leadership today cannot be taken for

granted.New and more efficient companies are able

to upstage leaders in a much shorter period.


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Factors

Influencing

Companys

Marketing

Strategy

Factors

Influencing

Companys

Marketing

Strategy


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UNIT-3

CUSTOMER SATISFACTION


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Many aspects of the firms value propositioncontribute to customer satisfaction:

The core product or service offered

Support services and systems

The technical performance of the firm Interaction with the firm and it employees

The emotional connection with customers

Ability to add value and to differentiate as a firm

focuses more on the top levels


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Marketers are focused on stimulatingexchanges with customers who make upmarkets B2C or B2B.

The market is comprised of people whoplay a series of roles: decision makers,

consumers, purchasers, and

influencers. It is absolutely essential that marketers

have a detailed understanding ofconsumers, their needs and wants.

Much happens before and afterthe sale toaffect customer satisfaction


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Organize by product units Focus on profitable transactions

Look primarily at financialscorecard Focus on shareholders Marketing does the marketing Build brands through advertising Focus on customer acquisition No customer satisfaction

measurement Over-promise, under-deliver

Organize by product units Focus on profitable transactions

Look primarily at financialscorecard Focus on shareholders Marketing does the marketing Build brands through advertising Focus on customer acquisition No customer satisfaction

measurement Over-promise, under-deliver

Organize by customer segments

Focus on customer lifetime value

Look also at marketing scorecard

Focus on stakeholders

Everyone does the marketing

Build brands through performance

Focus on customer retention

Measure customer satisfaction andretention rate

Under-promise, over-deliver

Old Economy New Economy


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ExpectedService

PerceivedService

ServiceQuality

Gap

Perceived

ServiceQuality

Word ofMouth

PersonalNeeds

PastExperience

ExternalCommunication

to Customers

51


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Do your customers perceive

your offerings as meetingor exceeding their expectations?

Do you have an accurateunderstanding of

customers expectations?

Are there specificstandards in place to meetcustomers expectations?

Do your offerings meet or

exceed the standards?

Is the informationcommunicated to customers

about your offerings accurate?

Continue to monitor

customers expectationsand perceptions

YES

NO

YES

YES

YES

YES

Take corrective action




NO

NO

NO

NO

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Desired Service

Zoneof

ToleranceAdequate Service

Level CustomersBelieve Can and Should Be

Delivered

Minimum LevelCustomers Are Willing

to Accept

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End goal of customer focused strategies is the same:

Boosting retention and repurchase = moresales!!!

Creating BetterProducts orServices

Offeringcompellingcustomerexperience

Building deepercustomerrelationships


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The tools available to a business to gainthereaction it is seeking from its target market inrelationto its marketing objectives

7Ps Price, Product, Promotion, Place, People,Process, Physical Environment

Traditional 4Ps extended to encompass growthof service industry


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Pricing Strategy

Importance of:

knowingthe market elasticity

keeping an eyeon rivals


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Methods used toimprove/differentiatethe product and increasesales or target sales moreeffectively to gaina competitive advantagee.g. Extension strategies Specialised versions New editions Improvements real or

otherwise! Changed packaging Technology, etc.

Ima

e copyri

ht: www.freeima

es.co.uk


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Strategiesto make the

consumer aware ofthe existence of aproductor service

NOT justadvertising


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How do people consume services?

What processes do they have to go throughto acquire the services?

Where do they find the availabilityof the service? Contact

Reminders

Registration Subscription

Form filling

Degree of technology


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The ambience, mood or physical presentationof the environment

Smart/shabby?

Trendy/retro/modern/old fashioned? Light/dark/bright/subdued?

Romantic/chic/loud?

Clean/dirty/unkempt/neat?

Music? Smell?


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Unit

-IV

Delivering and performing Service


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A GAPS MODEL OF SERVICE QUALITY

CustomersService

Expectations

CUSTOMER SERVICEORGANIZATION

ServiceQualityGap

Customers

ServicePerceptions

GAP 5

OrganizationsUnderstanding of

Expectations

OrganizationsService Standards

OrganizationsService Performance

OrganizationsCommunications to

Customers

MarketInformation

Gap

ServicePerformance

Gap

InternalCommunication

Gap

ServiceStandardsGap

GAP 1

GAP 2

GAP 3

GAP 4

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CustomerExpectations

Key Factors:

Insufficient marketing research

Inadequate use of marketing research Lack of interaction betweenmanagement and customers

Insufficient communication betweencontact employees and managers

ManagementPerceptions of

Customer Expectations

Lack ofUpward

Communication

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GAP 2

Key Factors:

Inadequate management commitment

to service quality Absence of formal process for settingservice quality goals

Inadequate standardization of tasks Perception of infeasibility -- that

customer expectations cannot be met

ManagementPerceptions of

Customer Expectations

ServiceQuality

Specifications

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GAP 3

Key Factors:

Lack of teamwork

Poor employee - job fit Poor technology - job fit Lack of perceived control (contact personnel) Inappropriate evaluation/compensation system Role conflict among contact employees Role ambiguity among contact employees

ServiceQuality

Specifications

ServiceDelivery

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GAP 4

Key Factors:

Inadequate communication betweensalespeople and operations

Inadequate communication betweenadvertising and operations

Differences in policies and proceduresacross branches or departments

Puffery in advertising & personal selling

Service

Delivery

ExternalCommunications

to Customers

Lack ofHorizontalCommunication

76


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Service Culture

The Critical Importance of Service Employees

Boundary-SpanningRoles

Strategies for Delivering Service QualityThrough People

Customer-Oriented Service Delivery


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Demonstrate the importance of creating a serviceculture in which providing excellent service to bothinternal and external customers is a way of life.

Illustrate the pivotal role of service employees increating customer satisfaction and service quality.

Identify the challenges inherent in boundary-spanning roles.

Provide examples of strategies for creating customer-oriented service delivery through hiringthe rightpeople, developing employees to deliver servicequality, providingneeded support systems, andretainingthe best service employees.


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They are the service.

They are the organization inthe customerseyes.

They are the brand.

They are marketers.

Their importance is evident in: the services marketing mix (people) the service-profit chain the services triangle


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Every encounter counts

Employees are the service

Every employee can make a difference

Through their actions, all employees shape thebrand


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Understanding customer needs

Managing expectations

Traditional marketing communications

Sales and promotion

Advertising

Internet and web site communication


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Service delivery

Reliability, responsiveness, empathy, assurance,tangibles, recovery, flexibility

Face-to-face, telephone & online interactions The Customer Experience

Customer interactions with sub-contractors orbusiness partners

The moment of truth


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Hiringthe right people

Training and developing people to deliverservice

Employee empowerment Support systems

Appropriate technology and equipment

Rewards and incentives


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Overall StrategicAssessment

How is the service

organization doing onall three sides of thetriangle?

Where are theweaknesses?

What are thestrengths?

Specific ServiceImplementation

What is being

promoted and bywhom?

How will it bedelivered and bywhom?

Are the supportingsystems in place todeliver the promisedservice?


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Dont

Ignore customer

Blame customer

Leave customer tofend for himself

Downgrade

Act as if nothing iswrong

pass the buck

Do

Acknowledgeproblem

Explain causes Apologise

Compensate/upgrade

Lay out options

Take responsibility


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Dont

Promise and fail tokeep them

Show unwillingnessto try

Embarrass thecustomer

Laugh atthe customer

Avoid responsibility

Do

Recognise theseriousness

Acknowledge Anticipate

Accommodate

Adjust

Explain rules/policies


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Unit-V

Overview of some of the key factors


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Patients

Family members

Referral DoctorsSuppliers

Employees

Who is the key customer in the hospital?


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Patient Satisfaction is hospital services and itsperception by the patient minus patientexpectations

0 = Patient Satisfied

- = Patient Dissatisfied

+ = Patient Delighted Patient satisfaction measures need to be

developed from the patients perspective

Patients are becoming better informed

Involve patients for making improvements Patient satisfaction is not Static but Dynamic


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Good Medical Care

GoodNursing Care

Less Waiting Time

Excellent Hospitality Personal Attention

Courteous Behavior

Affordable Charges

Cleanliness

Good Coordination

Cooperation among

the Staff Discipline

Communication &Information

Transparency incharges andprocedures


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Health care is generally becomingcompetitive

Providers must not only maintain high

clinical standards but also service thatsatisfies the patients

To meet the dual challenge, providersmust have an understanding of what

constitutes both clinical excellence andcustomer satisfaction


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95

Agroup of potential customers with a great

deal in common for which a specialized set of

goods or services may be provided.

Examples:

Lawyers

Health Care Professionals

Accountants


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96

Successful continuing education organizationsmust continually communicate two messages:

The mission of the organizationtherefore

enhancingtheir image

The individual programs and productscurrently available


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97

Image Marketing Should Target:

y The general public

y

Client or potential client organizationsy The government

y Funding organizations

y Other stakeholders

y The institution


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98

Newspapers Personal Selling

Direct Mail Flyers

Radio Individual ReferralTelevision E-mail

Telephone Internet

Posters


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99

Darkenwald identified six factors that

motivate individuals to participate incontinuing education:

Social relationships Social welfare

External expectations

Personal advancement

Escape/stimulation

Learning opportunities


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100

Flyers are generally distributedto a general audience and use a

variety of inexpensive

distribution systems.


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Posted on windows

Left in offices & businesses

Mailed to prospective students

marketing of services 03

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