service markeitng sc
TRANSCRIPT
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Services Marketing
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The service sector
The services sector has been growing at a rate
of 8% per annum in recent years
More than half of our GDP is accounted for
from the services sector (57%-60%)
This sector dominates with the best jobs, best
talent and best incomes
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There are no such thing as serviceindustries. There are only industries
whose service components are
greater or less than those of otherindustries. Everybody is in service.
-Theodore Levitt
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What is services?
It is the part of the product or the full
product for which the customer iswilling to see value and pay for it.
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Service definitions
An activity or series of activities of more or less
intangible nature that normally, but not
necessarily, take place in interactions between
the customers and service employees and/or
physical resources or goods and/or systems of
the system provider which are provided as
solutions to customers problem- Gronroos (1990)
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Any activity or performance that one party can
offer to another that is essentially intangible
and does not result in ownership of anything.
Its production may not be tied to physical
product
- Philip Kotler (1991)
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What is a service?
It is intangible.
It does not result in ownership.
It may or may not be attached with a physicalproduct
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Services could meet
Personal needs haircuts, tuition, massage
parlors
Business needs courier services, office
cleaning services, delivering fresh flowers
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Most products have a service
component
They could be
Equipment based (kiosks, ATMs)
People based varying skill levels
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Characteristics of services
Intangibility
Inseparability
Perishability Variability
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Intangibility
Physical intangibility ( taste, odor, feel)
Mental intangibility ( grasp or measure..)
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Implications of intangilbility
Services cannot be stored
Services cannot be patented
Services cannot be displayed Decision regarding advertising and marketing
is difficult
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Inseparability
Outlet accessibility can limit the area covered
by the service.
Image is important: Image affects the
perception of the service.
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Implications of inseparability
Cannot be mass produced at a central location
Operations have to be decentralized so that
the services can be provided directly to the
customers
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Perishability
Services cannot be stored or held in inventory.
If not used when available, they go to waste.
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Implications of perishability
Cannot be inventoried
Short lived value of service
There is lot of time pressure ( both for salesand operation)
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Variability
Service quality tends to vary considerably.
Haircut from your hair dresser vs. Big Mac
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Implications of variability
Services cannot be standardized
Difficulty in setting quality controls
Difficulty in communicating the clients Determination of quality is possible only after
the performance of the service
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Difference between physical
goods and servicesPhysical goods Services
tangible intangible
homogeneous heterogeneous
Production and distribution areseparated from consumption
Production, distribution andconsumption are simultaneous
processes
A thing An activity or process
Core value processed in factory Core value produced in the buyer-seller
interaction
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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Goods Services Resulting Implications
Tangible Intangible Services cannot be inventoried
Services cannot be patented
Services cannot be readily displayed or communicated
Pricing is difficult
Standardized Heterogeneous Service delivery and customer satisfaction depend on
employee action
Service quality depend on many uncontrollable factorsThere is no sure knowledge that the service delivered
matches what was planned and promoted
Production separate
from Consumption
Simultaneous
production and
consumption
Customers participate and affect the transaction
Customers affect each other
Employees affect the service outcome
Decentralization may be essential
Mass production is difficult
Non perishable Perishable It is difficult to synchronize supply and demand with
services
Services cannot be returned or resold
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The three additional Ps of Service
Marketing
People
Physical evidence
Process
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Product
Physical good features
Quality level
Accessories
Packaging
Warranties
Product lines
Branding
Place
Channel type
Exposure
Intermediaries
Outlet locations
Transportation
Storage
Managing channels
Promotion
Promotion blend
Sales people
Number
Selection
Training
Incentives
Advertising
Targets
Media types
Types of Ads
Copy thrustSales promotion
Publicity
Price
Flexibility
Price level
Terms
Differentiation
Discounts
Allowances
People
Employees
Recruiting
TrainingMotivation
Rewards
Teamwork
Customers
Education
Training
Physical Evidence
Facility design
Equipment
SignageEmployee dress
Other tangible
Reports
Business cards
Statements
Guarantees
Process
Flow of activities
Standardized
CustomizedNumber of steps
Simple
Complex
Customer involvement
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Factors promoting service sector FOREIGN DIRECT INVESTMENTS
BETTER LIVING STANDARDS
HIGH DISPOSABLE INCOME
CONVENIENCE FACTOR
DUAL INCOME HOUSEHOLD
NEW TECHNOLOGICAL DEVICES
CONCERN OF PRODUCTIVITY
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Challenges confronted by service
sector INFRASTRUCUTRE
TECHNOLOGY
EMPLOYEES
CONSUMERS
COMPETITION
SUPPLIERS
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Macro environment factors that
affect the service marketPOLITICAL
ECONOMICAL
SOCIAL
TECHNOLOGICAL
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POLITICALECOLOGICAL/ ENVIRONMENTAL ISSUE
CURRENT / FUTURE LEGISLATIONS OF THE HOME MARKET
GOVERNMENT POLICIES
HOME MARKET LOBBYING/ PRESSURE GROUPS
FUNDING GRANTS AND INITIATIVES
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ECONOMICAL ECONOMY SLOWDOWN
INTEREST AND EXCHANGE RATES
TAXATION SPECIFIC TO PRODUCTS/ SERVICES
BUYING AND SPENDING POWER OF THE CUSTOME
ECONOMY TRENDS AND SITUATION
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SOCIALLIFESTYLE TRENDS
CULTURE
BRAND , COMPANY & TECHNOLOGY IMAGE
CONSUMER ATTITUDES & OPINIONS
CONSUMER BUYING PATTERNS
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TECHNOLOGICAL COMPETING TECHNOLOGY DEVELOPMENT
REPLACEMENT OF TECHNOLOGY/ SOLUTIONS
TECHNOLOGY ACCESS/ PATENTS
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Service triangle
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The framework has 6 relationships
The service firm strategy must be communicated to its
customers
The service strategy also be communicated to firm employees
There should be consistency in the service strategy and the
systems that are developed to run day to day operation to
achieve strategic goals
The impact of organizational systems on the customer
The importance of organizational system and employee
efforts
The interaction between customer and service provider
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Service triangle marketing model
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References : Valarie Ziethaml, Mary Bitner, Dwayne Gremler, Ajay Pandit, 4th Ed, Services
marketing- Integrated Customer Focus Across the Firm. McGraw Hill companies
Christopher Lovelock, Jochen Wirtz, Jayanta Chatterjee, Service Marketing-
People, Technology, Strategy, 6th Ed, Pearson
Vinnie Jauhari, Kirti Dutta, Services- Marketing, Operations and
Management, Oxford Higher Education
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MANAGING SERVICES
MARKETING MIX
MOD-2
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CONTENTS
Customer gap
GAPS Model of service quality
Managing the gaps for enhanced service
quality
SERVQUAL
Service blue print
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EXPECTED
SERVICE
PERCEIVED
SERVICE
CUSTOMER GAP
CUSTOMER GAP
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Gaps Model of Service Quality
Expected service
Perceived service
Service delivery
Customer driven service designs
and standards
Company perceptions of
consumer expectations
External communication
to customers
CUSTOMER
COMPANY
Gap 1
Gap 2
Gap 3 Gap 4
Customer Gap
THE PROVIDER GAPS
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THE PROVIDER GAPS
Gap 1- Not knowing what customers expect
Gap 2- Not selecting the right service
designs and standards
Gap 3- Not delivering to service standards
Gap 4- Not matching performance with
promises
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GAP 1: NOT KNOWING WHAT CUSTOMER
EXPECT
EXPECTEDSERVICE
COMPANY PERCEPTION
OF CONSUMER EXPECTATION
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Causes for Gap 1
Inadequate marketing research orientation
Lack of upward communication
Insufficient relationship focus
Inadequate service recovery
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Gap 2: Not having right service quality designand standard
CUSTOMER DRIVEN SERVICE
DESIGN AND STANDARS
MANAGEMENT PERCEPTION OF
CUSTOMER EXPECTATIONS
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Causes for Gap 2
Poor service design
Absence of customer driven standards
Inappropriate physical evidence and
servicescape
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Gap 3: Not delivering to service design andstandards
CUSTOMER DRIVEN SERVICE
DESIGN AND STANDARS
SERVICE DELIVERY
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Causes for Gap 3
Deficiencies in human resource policies
Customer who do not fulfill roles
Problems with service intermediates
Failure to match supply and demand
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Gap 4: Not matching performances withpromises
SEVICE DELIVERY
EXTERNAL COMMUNICATIONSTO THE CUSTOMERS
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Causes for Gap 4
Lack of integrated service marketing
communications
Ineffective management of customer
expectations
Overpromising
Inadequate horizontal communications
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SERVQUAL
Reliability
Responsiveness
Assurance
Empathy
Tangibles
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SERVICE DESIGN & SERVICE BLUE
PRINT
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Service Design
Service design is a process across 4 Ds
Discover
Define
Develop
Deliver
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It is about understanding the client, organization
and market, develop ideas, translate them
into feasible solutions and to help in
implementing them
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Characteristics of service design
Service design represent client perspective
Service design addresses unique features of
the services
Service design integrates expertise from
various disciplines
Service design is interactive
Service design is ongoing
Diff t ki d f ti i l d d i
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Different kind of expertise included in
service design
Management
Product development
Human resources
Process management
Quality management
Strategy
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Marketing
Communications
Public relations
Branding
Price
Promotion
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Research
Psychology
Ethnography
Market research
Observation
Testing
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Design Interaction design
Interface design
Experience design Interior design
Sensualization
Product design
Participatory design
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Challenges of service design
Oversimplification
Incompleteness
Subjectivity
Biased interpretation
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Stages in new service development
Front end planning
o Business strategy development or review
o New service strategy development
o Idea generation
o Concept development and evaluation
o Business analysis
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Implementation
o Service development and testing
o Market testing
o Commercialization
o Post introduction evaluation
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New service strategy matrix
Offerings
Markets
Current customers New customers
Existing service Share building Market development
New service Service development Diversification
*Ansoffs Matrix
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Service design benefits: True understanding of market needs
Higher value with the resource available
Changes organizational culture
New perspective on future development
Higher effectiveness
Higher efficiency
Connects organization and clients
Higher quality experiences as basis of success
Differentiation against competition
Brand affinity
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Service blueprint
A Service Blueprint is a picture or a map that
accurately portrays the service system so that
the different people involved in providing it
can understand and deal with it objectivelyregardless of their roles or their individual
points of view.
The three important contents of an
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The three important contents of an
Service Blueprint
Process
Evidence
Points of contact
Steps involved in building service
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Steps involved in building service
blueprint
Identify the process to be blueprinted
Identify the customer or segment targeted
Map the process from customer point of view
Map contact employee actions, onstage and
backstage
Link customers and contact person needed to
support functions Ask for evidence of service at each customer
action step
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Structure of a Service Blueprint
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Advantages of Service Blueprinting
Brings clarity to the service delivery process
Enables identification of critical incidents, which
contribute or damage the consumer experience
Provides insight on areas where employees need tobe trained
Enables further improvement of the process
Helps to put coordination activities in perspective
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CONSUMER AND BUYING
BEHAVIOR
MOD 3
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Qualities of services
Search qualities
Experience qualities
Credence qualities
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PROPERTIES OF OFFERINGS
SEARCH QUALITIES : Attributesthat a consumer can determine beforepurchasing.
They include colour, feel, style, price, fit,
hardness, & smell.Goods like automobiles, furniture, jewelry, &
clothing have high search quality because
prepurchase determination & evaluation of their
attributes is possible. Goodshigh in search quality can easily be evaluated.
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EXPERIENCE QUALITIES
Attributes that can be discerned only afterpurchase or during consumption. Vacations
and restaurant meals have high experience quality
because their attributes cannot be known or
assessed until they have been consumed.
They are more difficult to evaluate.
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CREDENCE QUALITY
Includes the characteristics that the consumerfinds almost impossible to evaluate even after
purchase & consumption. Wheel
alignment in automobiles, a surgery have high
credence quality. Most
difficult to evaluate because the consumer may be
unaware of or may lack sufficient knowledge to
appraise the level of satisfaction
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Stages in Consumer Decision Making & Evaluation of Services
Need
RecognitionInformation
Search
Evaluation of
alternatives
Purchase &
Consumption
Post purchase
Evaluation
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Need Recognition
1. Physiological needs-Biological needs such as food,water, and sleep.
2. Safety and security needs-Shelter, protection, andsecurity.
3. Social needs-Affection, friendship, and acceptance.4. Ego needs-Prestige, success, accomplishment, and
self-esteem.
5. Self- actualization-Self-fulfillment and enriching
experiences.
I f ti S h
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Information Search
Use of personal sources-friends andexperts
Non-personal sources-mass or selectivemedia
Perceived risk-Intangible, non-standardised, and usually sold withoutguarantees or warranties.
Evaluation of Service Alternatives
Evoked Set
S i P h & C ti
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Service Purchase & Consumption
Emotion and Mood
Service provision as Drama
Service Roles and Scripts
Compatibility of Service Customers
Post Purchase Evaluation
Attribution of Dissatisfaction
Innovation diffusion
Brand loyalty
Consumer behavior model (consumer decision
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Consumer behavior model (consumer decision
making process)
EKB Model
Black Box model
Nicosia model
( )
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EKB model (Engel Kollat Blackwell)
Five distinct aspects in consumer
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Five distinct aspects in consumer
decision making in EKB Model
Input
Information processing
Decision process
Decision variables
External factors
l k
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Black Box
Black BoxINPUT OUTPUT
l k d l
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Black Box Model
Bl k b d l
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Black box model
Stimuli
Customer characteristics
Responses
Ni i M d l
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Nicosia Model
Changing dynamics of the Indian
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Changing dynamics of the Indian
consumers
Income growth
Increased disposable income
Women participating in the workforce
Education and health services Entertainment
Comfort with technology Technology babies ( 8-19 years of age)
Impatient aspirers (20-25 years of age)
Balance seekers (26-50 years of age)
Arrived veterans (51-60 years of age)
F t i fl i b i b h i
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Factors influencing buying behavior
Cultural factor
Social factor
Personal factors
Psychological factors
C lt l f t
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Cultural factors
Culture is a complex whole which includes
knowledge, belief, art, moral, custom and any
other capabilities and habits acquired by man
as member of the society External material culture
Internal material culture
Subculture
Social class
S i l f t
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Social factors
Reference groups
Family
P l f t
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Personal factors
Age Customer lifestyle
Stage of family life cycle
Married couples
Child bearing families
Families with pre school children
Families with school children
Families with teenagers
Families as launching centers (first child gone to last child leaving home)
Middle aged parent (empty nest to retirement) Aging family members (retirement to death of both spouses)
Stages in family life cycle Characteristics Relevance of purchasing
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Married couples Relative independence,
present and future oriented
Furnishing apartments, travel,
clothing, appeal totogetherness
Child bearing couples Youngest child under 6,
limited independence, future
oriented
Goods and services geared
towards the child, family
oriented items
Families with school children Young child, dependent future
oriented
Savings, home , education,
insurance
Families with teenagers Independent child, high
income level
Home, luxury, education,
family vacations
Families as launching centers Children independent and
earning
Retirement, travel, home,
luxuries
Middle aged/ aging family
members
Children independent, no
children at home
Health, luxuries, self
gratification
C lif t l
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Consumer lifestyle
Lifestyle: is a constellation of individual characteristics thatreflect certain behaviors, such as participation in social groups
and relationship with significant others, commitment to
certain behaviors and a central life interest
SRI I t ti l VALS f k
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SRI Internationals VALS framework
Innovators
Thinkers
Achievers
Experiencers
Believers
Strivers
Makers
Survivors
Innovators
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Innovators
They are successful, sophisticated and havehigh self esteem. Image is important to them,
not as evidence of status or power but an
expression of their personalityEg: owning an Rolls Royce, using a chartered
flight
Thinkers
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Thinkers
Motivated by ideals, thinkers have moderaterespect for the status quo institutions of
authority and social decorum, but are open to
new ideasEg; people taking the services of Indian Airlines
Achievers
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Achievers
They lead a goal oriented lifestyle, motivatedby the desire for achievement. They have
many wants and needs and are very active in
consumer market place People opting for tutorials supporting their
education, short term programs of premier
institute
Experiencers
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Experiencers
Self expression is the prime motivator. Youngenthusiastic and impulsive customers, they
quickly become enthusiastic about new
possibilities but equally quick to cool. Theseavid consumers are heavy spenders
Services from KFC, Caf Coffee Day
Believers
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Believers
They are conservative and conventionalpeople with concrete beliefs based on
traditions. Opting for familiar products and
established brands, the believers arepredictable consumers
People purchasing groceries from the
traditional mom & pop shop (Kiranas)
Strivers
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Strivers
Trendy and fun loving, strivers are motivatedby achievements. They are also concerned
about the opinions and approvals of others
and like to demonstrate their ability to winover peers
People taking international tour plans,
Makers
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Makers
They are practical people who are motivatedby self expression. Makers have constructive
skills and value self sufficiency. They are
suspicious of new ideas and big businesses People who seek lots of alternatives to carry
out their living
Survivors
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Survivors
Leading narrowly focused lives, survivors arecautious consumers.. They represent a modest
markets for most products and services
People availing the services of low costsaloons, retail outlet, public transport etc..
Psychological factors
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Psychological factors
Perception
Beliefs and attitudes
Learning
Consumer motivation
Perception
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Perception
It is the meaning that consumer ascribe to whatthey see around. 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
Genuine knowledge and awareness
Customer perception
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Customer perception
Influenced by two factors
External factor
Internal factor
External factors
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External factors
Size Position
Movement
Repetition
Intensity
Contrast
Color
Directionality
Directionality Format
Isolation
Novelty
Learned attention including
Stimuli
Attractive spokesperson
Scene changes
Size: the size of the stimulant like an advertisement in newspaper
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Size: the size of the stimulant like an advertisement in newspaper,magazine or bill board has a direct bearing on the degree ofperception (giant balloons, giant cut outs) (Image)
Position: the position of the advertisement or communication as astimulant also ensures its distinctiveness
Movement: the human eye tends to seek and lock onto anything thathas a movement, even it happens to be at the periphery of the vision
Repetition: of a message not only ensures more audience but alsohelps memory retention and reinforcement amongst those who havebeen exposed to the message before
Intensity: to capture the attention of the audience, viewers and thecustomers, all marketers use bright sound, psychedelic lighting, neonlights and glowing lights
Contrast: when most communication is in a seamless flow of color
and patterns, human perception tends to capture contrasty imagesquicker ( Image 1, Image 2)
Color: color pictures are more noticed for their depth and varietythan the black and white combinations which are considered dull andmonotonous (Image )
Di i li h d f ll h di i d l d i
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Directionality: the eyes tend to follow the direction and leads given
by elements in the stimuli like in racy advertisement
Format: in retail store, visual merchandising plays a key role in
heightening the perception about the merchandise (Image)
Isolation: when a service marketer separates a stimulus object from
others, making them distinctive . Isolation factor works in enhancing
the perception (Image)
Novelty: customers tend to notice any offer or communication that is
different from what they normally tend to expect. (Image)
Learned attention including stimuli:
Attractive spokesperson:
Scene changes:
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