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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