SERVICES MARKETING

Dharmendra Sanwal, Xavier Labour Relations Institute, Jamshedpur ABSTRACT In this paper we look into the implications of service complexity for the process of differentiating offerings. We also look into the consumer choice behavior and its various drivers like brand name and functional quality and carry a step-by-step analysis on how to build a service brand.

INTRODUCTION Service Offerings Versus Products Most physical goods tend to be relatively high in search qualities-, these are attributes, which a customer can determine prior to purchasing a product, such as color, style, shape, price, fit, feel, hardness, and smell. Other goods and some services, by contrast may emphasize experience qualities, which can only be discerned after purchase or during consumption, as with taste, wear ability, ease of handling, quietness and personal treatment. Finally, there are credence qualities- characteristics that customers find hard to evaluate even after consumption. Examples include surgery, legal services, etc. Services on the other hand emphasize experience qualities, which can only be discerned during consumption, and credence qualities, which customers have to take on faith, since they involve characteristics that are hard to evaluate even after consumption. In addition, more complex services, such as some professional services or financial services. may be "mentally intangible" in that an average customer's understanding of features and benefits may be extremely limited. As a result, it is relatively harder to define the nature of a service product prior to, purchase and evaluate it against competing alternatives. This problem is most acute for first-time users without prior experience of the service in question. CONSUMER CHOICE BEHAVIOUR IN SERVICES The Drivers Of Consumer Choice The drivers of consumer choice in services can be broadly categorized as brand name and functional quality.

Brand Name The absence of a tangible physical good on which a brand name can be affixed often necessitates assigning greater prominence to the corporate brand name on the various physical products and facilities used to deliver the service (e.g. displaying an airlines logo, and names on airplanes, ground transportation vehicle. baggage handling vehicle, ticketing counter, etc). Thus in the context of marketing of services, the brand equity could reside in the name of the firm itself Functional Quality The perceived service quality concept suggests that the service quality perception is formed by the disconfirmation between expected and experienced service. The consumer expects a service based on marketing communication, word of mouth and image. The actual service experience is based on the actual service process and the outcome of the service. These two dimensions are known as functional quality (how the service process functions) and technical or the outcome quality (what the service process leads to) dimensions. The process consumption of services, that is the involvement of the consumer during the production of the service, implies that even though the outcome might be positive, a poorly perceived process might cause the whole experience to be tainted. In such a scenario the functional quality is much more critical than the technical quality. This functional quality should be separated from the core service provided which is influenced by the knowledge and skill of the employees. Since services are very competitive and there is very high level of replication of products, the consumer do not perceive a drastic fall in quality with falling price. For highly intangible service offerings in particular, organization-wide factors, such as the level of functional service quality, may be emphasized when adding value (Gronroos. 1984; Parasuraman et al., 1991). In addition, contributions

from Bharadwaj et al. (1993), and Zeithaml (1988) suggest that extrinsic cues such as image and reputation may be particularly important in adding value in cases where consumer understanding of service offerings is limited. This is likely to be the case, in particular, where service offerings are complex and, as a result, highly "mentally intangible" to the average consumer. The following section considers the implications of service complexity for the process of differentiation. Service complexity The factors that consumers use to evaluate service offerings -that is those, which can be used in differentiating a service may be contingent on the complexity of the service offering in question. For certain more complex or sophisticated financial services offerings in particular, their high intangibility makes it potentially difficult to envisage the use of specific services features as the basis for differentiation. Easingwood (1995) says customers arc more likely to purchase a new product if they understand the product. Customer understanding of a new product is helped by previous experience with the product class and by the relative simplicity of the products developed. This is more likely for existing customers of the company who are already familiar with the type of products that the company offers. A major problem for the consumer is identifying cues, which provide an insight into the nature of the service experience. In this respect, a lack of consumer understanding may result in increased reliance on experience and credence qualities of the service offerings. However, this may be less of a problem in the case of more simple services with features and benefits which consumers find relatively easy to understand and evaluate. Intrinsic cues are usually product specific attributes, often tangible in nature. Extrinsic cues are external to the product, with the examples of brand name and advertising being used by the author. An important extrinsic cue is quality as defined by abstract dimensions that can be generalized across offerings, also called higher-level abstraction. When customers are purchasing offerings where search qualities arc important in the customers perception of value and, hence, intrinsic attributes have a high predictive value, then customers w ill tend to rely on those intrinsic attributes. Further when intrinsic cues are scarce (as is arguably the case for more complex services offerings), when it is costly in terms of time and effort to evaluate intrinsic cues, and when the offering is high in experience and credence qualities, then extrinsic attributes will be far

more important in the customer's assessment of value. Extrinsic attributes can serve as value signals and can substitute for active weighing of benefits and cost and this is likely to be the case, particularly when the incidence of search and credence qualities is high. Relating the above propositions to complex services, it can be argued, therefore, that the extrinsic factors and brand image/reputation elements mentioned above may well be particularly important to the mix of factors which adds value to a complex services offering. WHAT SHOULD A SERVICE MARKETEER DO? By identifying the drivers of consumer choice, a service marketer can identify the factors, which can be leveraged in different service conditions to add value to the consumer and thus differentiate the offering. Issues relating to which elements of the offering to emphasize when adding value may be particularly important in the case of services, as the characteristics of the typical services offering may have major implications. An organization's ability to compete effectively in a particular market is increasingly seen as being dependent on its capacity to deliver offerings that comprise a competitive bundle of benefits, or value, to the consumer. The process of adding value is in essence differentiating one's offerings effectively in the eyes of the consumer. One of the means to achieve this is through " Branding". Branding- Delivering A Value Proposition Achieving distinction from competitors is no less important for firms marketing services than for firms marketing goods. A brand can provide information and communicate efficiently, qualify a product or service, or establish differentiation. A truly powerful brand can do all three if necessary. The essential purpose of a brand is to distinguish one company's offerings from that of other companies. Consisting of names and other distinguishing elements such as slogans and symbols, brands provide customers an efficient mechanism for identifying a particular firm or its products. BRANDING IN SERVICES In services marketing the company brand is the primary brand, in packaged goods marketing the product brand is the primary brand. The locus of brand impact is different for packaged goods and services because services lack the inherent physical presence that facilitates individual product

packaging, labeling, and display. Thus, in services, the company brand becomes paramount. A service company presents its brand to consumer, customer prospects, employees, and other stake holders through a variety of potential media, including facilities, signs, print and television advertising, delivery trucks, employee uniforms, and more. The core of the presented brand is the company's name, but the accompanying words and symbols, and the visual presentation of these stimuli, play key roles also. The service the company provides, how well it performs the service, and the service's value combine to influence customers' interpretations of the presented brand. Customer's experience-based beliefs are powerful, diminishing the effects of companycontrolled communications that contradict actual experience. This is why the service concept, quality, and value are more important than the presented brand for experienced customers. Customer focus Services marketing has a very sensitive aspect where the strategy revolves around the customer. The need for customer oriented marketing is that firms have begun to realize that customers' needs are unique. Building a strategic relationship with the customer starts with a simple premise-, marketing to individuals rather than accounts, focusing on the process of marketing to individuals. This process driven approach represents a major change in the way companies handle marketing. This approach emphasizes a market segment size of n = I or the individual. In other words concentrating on the individuals is the path to increased sales. However, embracing this n = I marketing and sales concept means a fundamental shifts in attitudes. It involves moving from a 'Get the order, no matter what it takes' culture to one that emphasizes providing the best solution to the individual customer.

STEPS FOR BUILDING A SERVICE BRAND Six Components of Building A Brand With appropriate senior management commitment, building a relevant and powerful brand for any consumer-focused company, including a bank. is a reasonable goal. According to the consultants Booz-Allen, there are six components to successfully branding a company. These steps blueprint the process of developing a concise message or promise that an institution wants to communicate to its customers and for executing a strategy that delivers on that promise. The following figure illustrates the process of building brands. (Source: Branding the Bank, Booz Allen Hamilton, and www.bah.com) The first step in building a branded business is to understand the role of the brand in that particular business, including the leverage it can provide across markets and product categories. A brand can provide information and communicate efficiently, qualify a product or service, or establish differentiation. A truly powerful brand can do all three if necessary. To decide what role brands should play, it is important to take a dispassionate look at the Current status of the organization and product/service offering-how they arc perceived by customers, competitors and employees. In addition, the institution has to understand what these distinct constituencies need to know and believe about the brand. For instance, in General Electric's appliance business, the retail trade is most interested in product quality, marketing support and access to credit. Consumers are interested in product quality, but in addition seek a set of design attributes. GE's brands thus play two roles. Services like Banks need to take a similar approach and determine the role of brands in their retail, institutional and internal markets.

Secondly, brand builders must choose a brand architecture consistent with the chosen role and the institution's products, services and market landscape. There are three types of brand architectures: a single brand-one brand that covers the entire product range; tiered brands, with a parent brand supported by sub-brands for each product line; or multiple brands, with each product carrying its own brand distinct from the parent. Sony, Home Depot and Visa are examples of single brand architecture. A tiered brand architecture is used by companies such as Sears and Nabisco, where individual brands benefit from the corporate brand umbrella (e.g. Craftsman tools by Sears). Procter & Gamble is a company that uses multiple brand architecture, with each of its products-Tide, Pampers, Ivory Soap, etc.-building and supporting its own brand identity. Which brand architecture to choose depends on business objectives and market conditions? The single brand architecture best applies when customers seek the same attributes across market segments and product lines. The tiered brand architecture allows the institution to build on critical foundation attributes while still tailoring the marketing message to specific segments. Multiple brands are needed when each market segment has distinct needs. The third step in branding a business and developing a brand strategy is to position the brand to effectively communicate the value proposition. Critical here are clarity, consistency and relevance. Volvo (safety), Nike (limitless performance) and Wal-Mart (good deals) are examples of companies that have clear brand positions. The clarity is achieved through the consistent use of all marketing levers (e.g., price, product design, image and channel selection) to drive home a single message. In the fourth step, a company must develop the programs needed to deliver the brand and the brand promise. This happens through programs or services that convey the brand message to the target audience. Nike's support of grassroots athletic events and Visa's Olympic sponsorship illustrate the type of programs needed to creatively deploy brands. Nike helps amateur athletes perform, while Visa demonstrates its global reach. Essential for generating brand performance is the fifth step in effective branding: creating or
designing an organization to lead and manage a branded business, one that includes the right skills and structure

including William Campbell, formerly the marketer behind many of Philip Morris' successes. Finally, for a brand to be effective in the marketplace, the business system must be aligned with the brand promise. While this may sound like a platitude, in reality this is the most difficult aspect of branding, particularly in a service business. It must start at the very top with a vision and strategy that is embraced and articulated by senior management. Visualizing Virgin Air without Richard Branson or Nike without Phil Knight and the importance of leadership in establishing and driving a brand becomes obvious. BRANDING IN FINANCIAL SERVICES Case Study- ICICI Bank Philosophy:
"Trademark customer experience differentiates a bank from competitors offering the same products and services. "
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Service levels must be better than the expectations that are built through marketing and advertising, and then people will talk about 'your' service. Touch customers in many ways (insurance, banking, mortgage financing, retirement planning and so forth), and through various channels (branch, online, direct mail, telephone and so forth) Catch the Customers Young: Target audience must be youngsters in their twenties with whom it can establish a lifelong relationship. Tap into its vast quantities of information about customers' habits. Brand Building Exercise: Ran a campaign in the print media for educating the ordinary investor: Weekly investment articles were published in all major dailies. 'Umbrella' campaign: Conveyed values of safety, security, and shield against calamities, for investors. Used Amitabh Bacchan, the famous film star as their brand ambassador. Unified and new group identity for ICICI has been the focus of their branding strategy. First financial services company to brand its Bonds offerings:ICICI SAFETY BONDS For promoting ICICI Prudential Life Insurance Company Ltd the theme was 'cover every Indian with joy, hope, freedom, life'. Further they chose children from municipal schools who received endowment policies worth Rs. 20,000 each, from the MD.

to execute the brand strategy. Citibank, for example, has recently recruited a number of people with brand-building skills,

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