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Marketing Exam Study!

Needs/wants/demands Societal marketing concept Marketing management orientations Strategic planning Defining a market-oriented mission Growth Strategies/Product-Market Expansion Grid What are ser ices! Distincti e ser ice marketing challenges " P#s of ser ice Enlightened marketing En ironmentalism $onsumer concerns of Marketing
Macro en ironment s% microen ironment and their components

Marketing &ntelligence 'esearch ()*ecti es+ explorator,- descripti e- causal &nno ation .dopter $ategori/ation $onsumer market $onsumer )u,er )eha iour 0our categories of ser ice Marketing Segmentation 1arget marketing Market positioning 'e2uirements for effecti e segmentation 0our ser ice focus strategies &mportant s% determinant attri)utes Esta)lishing ser ice le els 3ack 1rout#s four principles of positioning Goods- Ser ices- and Experiences Goods and ser ices classifications 1otal 4ualit, Management 5rand Sponsorship New product de elopment strateg, Product 6ife c,cle St,le- fashion- fad General Pricing .pproaches New product pricing strategies Price-ad*ustment strategies 0lowcharting $ore product 7 Supplementar, ser ices 8flower of ser ice9 $ompetition-)ased pricing 8ser ices9 :alue-)ased pricing 8ser ices9
$on entional distri)ution channel s% ertical marketing s,stem

Push s% pull strateg, Stimulate or dampen demand to match capacit, ( ercome the pro)lems of intangi)ilit, Ser ice )lueprints Ser ice process redesign $ustomers as partial emplo,ees 3a, customers $apacit, constrained ser ice organi/ations Producti e capacit, ; approaches to managing demand 4ueue configurations Elasticit, in the ser ice sector 0rom excess demand to excess capacit, Ser ice emplo,ees are cruciall, important 1he c,cle of failure 1rain ser ice emplo,ees acti el, Empower the front line <ow to identif, the )est candidates =nions 0our ad antages to incremental profits of a lo,al customer $ustomer relationship management

Mem)ership relationships and lo,alt, programs 'educing customer defections ; different perspecti es of ser ice 2ualit, Gaps in ser ice design and deli er, $ustomer-dri en approaches to impro e producti it, 'educing interfunctional conflict Ser ice-profit chain > le els of ser ice performance 3ohn ?otter#s " stages of leadership E olution ersus turnaround 6eadership- $ulture- and climate

Marketing logistics and suppl, chain management Marketing communications mix

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Marketing Exam Study!

Needs/Wants/Demands Needs - States of felt depri ation- including )asic ph,sical needs for food- clothing- warmth- and safet,% Social needs for )elonging and affection- indi idual needs for knowledge and self expressionthese needs were not created ), marketersA the,#re )asic part of human make up% Wants - 0orm of human needs that take as shaped ), culture and indi idual personalit, - We need food- )ut we want 5ig Mac#s Demands - <uman wants that are )acked ), )u,ing power Societal marketing concept - . principle of enlightened marketing that holds that marketing strateg, should deli er alue to the organi/ation#s customers in a wa, that maintains or impro es the well )eing of societ, - &s a firm that sense- ser es- and satisfies immediate needs- wants- and interests of the market alwa,s doing what#s )est for societ, in the long run 1hree considerations underl,ing the Societal Marketing $oncept - $ompanies need to )alance )etween these B concepts o Societ,8human welfare9 o $onsumers8want satisfaction9 o $ompan,8profits9 Customer relationship management (CRM - ( erall process of )uilding and maintaining profita)le customer relationships ), deli ering superior customer alue and satisfaction - (ne of most important concepts for modern marketing - $'M is the generic term for an, corporate software s,stem that collects and organi/es customer data and pro ides marketing managers- customer ser ice representati es and sales representati es with powerful information tools Strategic planning - 1he process of de eloping and maintaining a strategic fit )etween the organi/ation#s goals and capa)ilities and its changing marketing opportunities - C&f ,ou fail to plan- ,ou are planning to failD De!ining a market"oriented mission - Mission Statement o (rgani/ations exist to marketing something- 8good/ser ice/)rand/idea9 o (rgani/ations start with clear purpose or mission- )ut o er time- it ma, change - . clear mission statement guides the people in the organi/ation to do these+ o @% $ore alues to which the firm is committed o E% $ore purpose of the firm o B% :isionar, goals the firm will pursue to fulfill its mission - . market oriented mission statement defines the )usiness in terms of satisf,ing )asic customer needs E Downloaded for free at www%uofgexamnetwork%com

Marketing Exam Study!


#ro$th Strategies/%roduct"Market Expansion #rid - Growth share matrix o . portfolio planning method that e aluates a compan,#s S5=s in terms of their market growth rate and relati e market share% S5=s are classified as stars- cash cows- 2uestion marks- or dogs Stars <igh growth- high share )usiness products- often need hea , in estment to finance their rapid growth- e entuall, their growth will slow and turn into cash cows $ash $ows 6ow-growth- high-share )usiness or products- the,#re esta)lished and successful S5=s needing less in estment to hold their market share 4uestion Marks 6ow-share )usiness units in high-growth markets- re2uiring a lot of cash to hold their share- let alone increase it- should decide to in est or let it die off Dogs 6ow-growth- low share )usiness and products- ma, generate enough cash to maintain themsel es- )ut not to )e large sources of cash - Product-market expansion grid o . portfolio planning tool for identif,ing compan, growth opportunities through market penetration- market de elopment- product de elopment Existing Products Existing Markets Existing Products Market Penetration Market de elopment New Products Product De elopment Di ersification

Market penetration . strateg, for entering the market with a new product- then focusing efforts on increasing the sales of that product in order to capture market share Product de elopment . strateg, for compan, growth ), offering modified or new products to current market segments Market de elopment . strateg, for compan, growth ), identif,ing new market segments for current compan, products Di ersification . strateg, for compan, growth ), starting up or ac2uiring )usinesses outside the compan,#s current products and markets

What are ser&ices' - Ser ices in ol e a form of rental and non-ownership o Meaning access of usage fees for a defined period of time- instead of )u,ing it outright - Ser ices non-ownership framework o 'ental good ser ices F right to a ph,sical good B Downloaded for free at www%uofgexamnetwork%com

Marketing Exam Study!


o Defined space and place rentals F pri ate space shared with other customers o 6a)our and expertise rentals F hire people o .ccess to shared ph,sical en ironments F share use of an en ironment- not pri ate o S,stems and networks+ access 7 usage F rent right to participate Ser ice product o . ser ice product comprises of all the elements of the ser ice performance- )oth tangi)le and intangi)le- that creates alue for customers

Distincti&e ser&ice marketing challenges - Most ser ice products cannot )e in entoried o Most ser ices in ol e actions or performances- so it can#t usuall, )e stocked o &f there#s no demand- unused capacit, is wasted and firm loses the chance to create alue from these assets - &ntangi)le Elements usuall, dominate alue creation o =suall, intangi)le elements like internet-)ased transactions and the expertise and attitudes of ser ice personal create most alue in ser ice performances - Ser ices are often difficult to isuali/e and understand o Mental intangi)ilit,- the, cannot picture their ser ice the, recei e so the, ma, night purchase it o 5usinesses educate customers and pro ide confidence for the customers - $ustomers ma, )e in ol ed in $o-production o $ustomers ma, need to co-operate with ser ice personnel in hair salons- hotels- 2uickser ice restaurants- li)raries- .1M o $ustomers often function as partial emplo,ees! - People ma, )e part of the ser ice experience o Sometimes depends on the attitude of people 8emplo,ees9- if the, ha e a )ad attitudethere ma, )e a )ad ser ice experience o E en people standing in line with ,ou o Should organi/e segments that are similar together- and ones that are different- set them apart - (perational &nputs and (utputs 1end to :ar, More Widel, o When a ser ice is deli ered face to face- and consumed as it#s produced- final Cassem)l,+ must take place in real time o Performance- speed- and 2ualit, ma, ar, widel, - 1ime 0actor 0re2uentl, .ssumes Great &mportance o Man, ser ices now a da, are in more of a hurr,- willing to pa, extra to sa e time o Should minimi/e customer waiting times - Distri)ution make take place through non-ph,sical channels o Manufactures re2uire ph,sical distri)ution channels to mo e their products from factor, to customers o Ser ice )usinesses are a)le to use electronic channels to deli er all or most of their ser ice elements 8internet9 ( %)s o! ser&ice - Product Elements o Ser ice products lie at the heart of a firm#s marketing strateg,- if it#s poorl, designed- it won#t create meaningful alue for customers o Ser ice products need a core product that response to the customers# primar, need and an arra, of supplementar, ser ice elements that help use the core product effecti el, > Downloaded for free at www%uofgexamnetwork%com

Marketing Exam Study!


Place and 1ime o When deli ering- it in ol es decisions on when and where to deli er- as well as methods o =se the electronic or ph,sical channels- speed and con enience of place and time ha e )ecome important determinants of effecti e ser ice deli er, toda, Price and other user outla,s o Make sure customer sees this price as Cworth itD- if not- go )e,ond this o Make it worth it to the customer- and gi e the customer satisfaction Promotion and Education o 5e sure to use marketing programs- without them- no one will know a)out ,our product o Suppliers need to inform customers a)out )enefits of this ser ice- where and when to o)tain it- and how their participation can pro ide the )est results Process o <ow a firm does things- the underl,ing processes- these are *ust as important as what it does o $reate an effecti e process o $ustomers are often in ol ed in these processes- as co-producers o &f it#s )adl, designed slow processes and ineffecti e- it leads to a disappointing experience as well o Make sure front line staff does the )est the, can Ph,sical En ironment o .ppearance of )uildings- landscaping- ehicles- interior furnishing- e2uipment- staff uniforms- signs- printed materials- and other isi)le cues are all signs of good e idence of a firms 2ualit, o Manage ph,sical e idence carefull, People o No matter what- ser ices will alwa,s re2uire direct interaction )etween customers and customer-contact personnel o 1hese interactions strongl, influence how customers percei e ser ice 2ualit, Producti it, and 4ualit, o &mpro ing producti it, is essential for an, strateg, for reducing costs- )ut making inappropriate cuts will lead to )ad ser ice 2ualit, o &mpro ing 2ualit, is essential for product differentiation and for )uilding customer satisfaction and lo,alt, o &t#s unwise to in est in ser ice-2ualit, impro ements without understanding trade-offs )etween the incremental costs and incremental re enues

Marketing management orientations - Managing the marketing effort o 'e2uires four marketing management functions- analysis, planning, implementation, and control .nal,sis Managing the marketing function )egins with complete anal,sis of compan,#s situation .nal,/e markets to find attracti e opportunities and a oid en ironmental threats Planning . detailed plan that assesses the current marketing situation and outlines marketing o)*ecti es- a marketing strateg,- action programs)udgets- and controls ; Downloaded for free at www%uofgexamnetwork%com

Marketing Exam Study!

Needed for each )usiness- product- or )rand &mplementation 1he process that turns marketing plans into marketing actions to accomplish strategic marketing o)*ecti es $ontrol 1he process of measuring and e aluating the results of marketing strategies and plans and taking correcti e action to ensure that o)*ecti es are achie ed 0our steps in ol ed in showing the marketing control o 0&G E%G Set goals H Measure E aluate 1ake correcti e performance H performance H action H What do we What is Wh, is it What should we want to achie e! happening! happening! do a)out it! H H H H Operating control in ol es checking ongoing performance against annual plan and taking correcti e action when necessar,- it#s purpose is to ensure the compan, achie es the sales- profits- and other goals set out in its annual plan Strategic control in ol es looking at whether the compan,#s )asic strategies are well matched to its opportunities- marketing strategies and programs )ecome 2uickl, outdated ), using a tool such as the marketing audit o Marketing audit is a comprehensi e- s,stematic- independentand periodic examination of a compan,#s en ironmento)*ecti es- strategies- and acti ities to determine pro)lem areas and opportunities and to recommend a plan of action to impro e the compan,#s marketing performance

Enlightened marketing - . marketing philosoph, holding that a compan,#s marketing should support the )est long-run performance of the marketing s,stem - $onsists of ; principles o $ustomer-(riented Marketing $ompan, should iew and organi/e its marketing acti ities from the customer#s point of iew o &nno ati e marketing . principle of enlightened marketing that re2uires a compan, to continuousl, seek real product and marketing impro ements o :alue marketing . principle of enlightened marketing that holds that a compan, should put most of its resources into alue-)uilding marketing in estments 1hings like one shot sales promotion- minor packaging changesad ertising puffer, F ma, rise in short run sales- )ut in long run- tr, to change product#s 2ualit,- features- or con enience Enlightened marketing calls for )uilding long term customer lo,alt, o Sense-of-mission marketing . principle of enlightened marketing that holds that a compan, should define its mission in )road social terms rather than the narrow product terms I Downloaded for free at www%uofgexamnetwork%com

Marketing Exam Study!


o Societal marketing . principle of enlightened marketing that holds that a compan, should make marketing decisions ), considering consumers# wants- the compan,#s re2uirements- and societ,#s long run interest $ompanies should turn e er,thing the, manufacture and market into such desira)le- en ironmentall, friendl, products

*our %rinciples o! %ositioning Strategy - Must esta)lish position for firm or product in minds of customers - Position should )e distincti e- pro iding one simple- consistent message - Position must set firm/product apart from competitors - . compan, cannot )e all things to all people- must focus its efforts 3ack 1rout Consumer concerns o! Marketing - <igh prices o $onsumers complain that high prices result from unnecessar, and expensi e ad ertising o .rgue that intermediaries do work that would otherwise had )een done ), manufactures- and the, *ust get lots of mone, for helping o .lthough )rand name is more expensi e than Cno nameD- )rands are more reassuring% When we pa, for a product- we don#t *ust )u, the material costs- we put in the studies and all the time and effort it took to make it- i%e% research- ad ertising- etc% - <igh-Pressure Selling o When a sales associate is working on commission- consumers complain that marketers want the most mone, and it is not fair o &nformation is power- consumers now know information )efore making large purchasesso now are not as fooled ), the sales associates tricks o .lso consumers are protected from some high-pressure selling tactics - Decepti e Practices o Sometimes marketers are accused of decepti e practices that lead consumers to )elie e that the, will get more alue than the, actuall, do o Decepti e practices are illegal in $anada and regulated ), the $ompetition .ct and the $ompetition 5ureau o Decepti e pricing 0alsel, ad ertising something as ha ing reduced from the regular price- when in fact the product was ne er offered for sale o Misleading things are decepti e practices - =nsafe Products o $onsumers also complain a)out product safet, o Most manufacturers want to produce 2ualit, goods- the, operate in legal and ethical )oundaries of their complain most of the time o =nsafe products result in more costs than rewards o Marketers know that customer-dri en 2ualit, results in customer satisfaction- which in turn creates profita)le customer relationships - Planned ()solescence o <olding new products which are )etter and more efficient so the, can make more profit on other goods o Ex- holding )ack rust proof metals- the, sa, there#s metal that cannot )e trusted- )ut after E ,ears- a car metal rusts G Downloaded for free at www%uofgexamnetwork%com

Marketing Exam Study!


Marketers respond that consumers like changes and the, pro ide as much satisfaction as possi)le o $ompanies do not design their products to )reak down earlier )ecause the, do not want to lose customers to other )rands o 1he, seek constant impro ement to ensure that products will consistentl, meet or exceed customer expectations We) lining o Discriminating against certain groups of customers )ased on neigh)ourhoods o 1his is done through the internet- )ased on factors that lead them to )elie e the, change prices o 1he, can find information online a)out ,ou to discriminate against ,ou o 1he, can sort people into more categories- in some cases- predict how ,ou )eha e o

*our ser&ice !ocus strategies - 0ramework for de eloping effecti e ser ice marketing strategies o 1he figure outlines ke, steps- the process of creating a strateg, is an iterati e processone who#s components are isited more than once o 0ig @B%G - 1he > strategies o =nderstanding the $ustomer 1hink like the customer- understand the customer#s needs and how the, )eha e in ser ice en ironments <ow the, esta)lish expectation and choose )etween alternati e suppliers <ow customers respond to ser ice encounters o 5uilding the Ser ice Model $reate a meaningful alue proposition- a package that specifies what )enefits and solutions ,our firm tends to offer- and how it proposes to deli er them to target customers 1ransforming this concept into a ser ice product means de eloping a specific package of core and supplementar, product elements and then distri)uting each element of the package to customers at appropriate places and times Ensure ,our strateg, will )e financiall, ia)le- create a )usiness model that allows the costs of creating and deli ering the ser ice 8plus a margin for profits9 to )e reco ered through realistic pricing strategies $ustomers won#t )u, unless the, percei e that the )enefits o)tained from this alue exchange exceed the financial and other costs the, incur- including time and effort Must )e promoted through effecti e communication techni2ues and must position ,oursel es accuratel, o Managing the $ustomer &nterface De elop strategies for managing the customer interface Em)race all points at which customers interact with ,our compan, Design effecti e ser ice processes with ,our own particular focus as a marketer )eing on the role pla,ed ), customers and experiences ,ou wish to engineer for them as the, mo e through each step process towards desired outcome Work with colleagues in <' to de elop strategies for managing emplo,ees in wa,s that ena)le them to deli er outstanding performances o &mplementing Ser ice Strategies

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Marketing Exam Study!


.chie ing profita)ilit, will re2uire creating relationships with customers right from the right market segments and finding wa,s to )uild on and reinforce their lo,alt, &f things go wrong- organi/e 2uick ser ice reco er, to retain customers ()tain customer feed)ack to help firm a oid repeating failures and to )etter meet customers# future needs and expectations De elop strategies for impro ing ser ice 2ualit, and producti it,- this will lead to financial success- unless ,our customers are satisfied with the 2ualit, the, recei e

*our categories o! ser&ice - 0ig @>%@ o People Processing Some ser ices re2uire ,ou to )e in ph,sical contact with the suppliers- e,e exam- haircuts- etc% .s a customer- ,ou must co-operate with them to enhance and en*o, ,our ser ice 1he, are ser ices directed at peoples )odies 1angi)le action o Possession Processing Ser ices directed at ph,sical possessions 0or example- a sick pet- malfunctioning snow )lower- a parcel that needs to )e sent to another cit, $ustomers are less ph,sicall, in ol ed with this t,pe of ser ice than with people processing ser ices Production and consumption ma, )e descri)ed as separa)le o Mental-Stimulus Processing Ser ices directed at people#s minds .n,thing affecting people#s minds has the power to shape attitudes and influence )eha iour 'ecipients don#t ha e to )e ph,sicall, present in ser ice factor, Jou can sleep through a flight- )ut ,ou can#t sleep through a educational seminar and )e an, wiser 1hings are- entertainment- professional ad ice- ps,chotherap, o &nformation Processing Ser ices directed at intangi)le assets Professionals in a wide ariet, of fields use their )rains to perform information processing and packaging .ccounting- )anking- insurance- legal ser ices- etc 0or simplicit,- com)ine co erage of mental-stimulus processing ser ices and information processing ser ices under the term information-based services En&ironmentalism - .n organi/ed mo ement of concerned citi/ens- )usinesses- and go ernment agencies working to protect and impro e the natural en ironment - En ironmental sustaina)ilit,+ a management approach that in ol es de eloping strategies that )oth sustain the en ironment and produce profits for the compan, o Sustaina)ilit, is a crucial )ut difficult goal Macro en&ironment &s+ microen&ironment and their components K Downloaded for free at www%uofgexamnetwork%com

Marketing Exam Study!


1he marketing microen ironment o 1he forces close to the compan, that affect its a)ilit, to ser e its customers F the compan,- suppliers- marketing intermediaries- customer markets- competitors- and pu)lics Ma*or forces in the Marketing Micro En ironment 80ig >%@9 o 1he $ompan, When designing market plans- marketing management takes other compan, groups into account F groups such as top management- finance- research and de elopment- purchasing- operations- and accounting Marketer managers make decisions within strategies and plans made ), top management- and work closel, with other departments 1ogether- all these departments ha e an impact on the marketing department#s plans and actions 1he, should think harmon, to pro ide superior customer alue and satisfaction o Suppliers Suppliers are an important link )ecause it#s the o erall customer alue deli er, s,stem Supplier pro)lems can affect marketing- marketer managers must watch closel, for suppl, shortages or dela,s- la)our strikes- and other e ents can cost sales in the short run and damage customer satisfaction in the short run Most marketers toda, treat their suppliers as partners in creating and deli ering customer alue Good partnership relationship management results in success for suppliers- and ultimatel, its customers o Marketing &ntermediaries 0irms that help the compan, to promote- sell- and distri)ute its goods to its customers 1he, include retailers- wholesalers- distri)utors- )rokers- marketing ser ices agencies- and financial intermediaries 'etailers )u, merchandise from manufacturers- wholesalers- and distri)uters to resell them- usuall, in stores to customers Wholesalers )u, merchandise from arious manufacturers- organi/e itand sell it to retailers Distri)utors ph,sicall, stock and mo e goods from their points of origin to their destinations- usuall, from the manufacturer to the wholesaler or directl, to the retailer 5rokers are another t,pe of marketing intermediar,- the, arrange for mo ement of goods from their point of origin to the retailer or wholesaler- )ut ne er ph,sicall, touch or take possession of the merchandise o 1he alue the, add- is the knowledge and relationship with producer of goods Marketing ser ice agencies are the marketing research compan, target and promote its products to the right markets- firms use them to promote their compan, 0inancial intermediaries include )anks- credit companies- insurance companies- and other )usinesses that help finance transactions or insure against the risks associated when )u,ing and selling of goods o Most firms and customers depend on financial intermediaries to finance their transactions @L Downloaded for free at www%uofgexamnetwork%com

Marketing Exam Study!


6ike suppliers- marketing intermediaries form in important component of the compan,#s alue deli er, s,stem- its 2uest is to create satisf,ing customer relationships $ustomers 1here are three )road t,pes of customers that an organi/ation ma, ser e $onsumers o .re indi iduals who )u, goods and ser ices for their own use or CconsumptionD- the, t,picall, )u, items one at a time- do not negotiate prices- and )u, from retailers 5usiness )u,ers o 0all into one or more su)categories Some use to purchase goods and ser ices for use in their production process (thers include resellers such as retailers and wholesalers- who )u, goods from manufacturers or producers to resell at a profit .nd e er, )usiness also )u,s supplies- such as penspaper- computers- and telephone ser ices Go ernment )u,ers o Purchase goods and ser ices to produce pu)lic ser ices or transfer goods and ser ices to others who need them $ompetitors 1he marketing concept states that to )e successful- ,ou must pro ide greater customer alue and satisfaction that competitors do Marketers must also gain strategic ad antage ), positioning their offerings strongl, against their competitors# offerings in the minds of those customers No competiti e single marketing strateg, is )est for all companies Each firm should consider its own si/e and industr, position compared with those of its competitors 1here are man, different strategies for different companies Pu)lics .n, group that has an actual or potential interest in or impact on an organi/ation#s a)ilit, to achie e its o)*ecti es Se en different t,pes of pu)lics 0inancial pu)lics o &nfluence compan,#s a)ilit, to o)tain funds o 5anks- in estment houses- and stockholders are ma*or financial pu)lics Media pu)lics o $arr, news- features- and editorial opinion o Newspapers- maga/ines- radio- tele ision stations Go ernment pu)lics o Management must take go ernment de elopments into account- marketers must consult the compan,#s law,ers on issues of product safet,- truth in ad ertising- and other matters $iti/en-action pu)lics o . compan,#s marketing decisions ma, )e 2uestioned ), consumer organi/ations- en ironmental groups- minorit, groups- and others @@ Downloaded for free at www%uofgexamnetwork%com

Marketing Exam Study!

6ocal pu)lics o Neigh)ourhood residents and communit, organi/ations General pu)lic o $ompan, needs to )e concerned a)out the general pu)lic#s attitude towards its products and acti ities &nternal pu)lics o &nclude workers- managers- olunteers- and )oard of directors 1he marketing macroen ironment o 1he larger societal forces that affect the organi/ation#s marketing acti ities F demographic- economic- natural- technological- political- and cultural forces Six ma*or factors affecting the marketing macroen ironment 80ig >%E9 o Demographic En ironment 1he stud, of human populations in terms of si/e- densit,- location- age- genderrace- occupation- and other statistics People who stud, demographics assume certain people do certain things at certain ages o Economic En ironment 0actors that affect consumer purchasing power and spending patterns $hanges in &ncome $hanging $onsumer Spending Patterns o Natural En ironment Natural resources that are needed as inputs ), marketers or that are affected ), marketing acti ities Marketers should )e aware of se eral trends in the natural en ironment Shortages of raw materials &ncreased pollution &ncreased go ernment inter ention &n toda,#s age- we# e spawned the Cgreen mo ementD o 1echnological En ironment 0orces that create new technologies- creating new product and market opportunities 1echnolog, is perhaps the most dramatic force now shaping our destin, New technologies create new markets and new opportunities and marketers must )e aware of new technolog, de elopments to take ad antage of them o Political En ironment 6aws- go ernment agencies- and pressure groups that influence and limit arious organi/ations and indi iduals in a gi en societ, Most political people agree some regulation in free markets are good to ensure fairness 1here are B things wh, )usiness legislation has )een enacted 0irst is to protect companies from each other Second is to protect consumers from unfairness 1hird is to protect the interests of societ, o $ultural En ironment &nstitutions and other forces that affect societ,#s )asic alues- perceptionspreferences- and )eha iours $ore )eliefs are )eliefs and alues passed on from parents to children and reinforced ), schools- churches- )usinesses- and go ernment @E

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Marketing Exam Study!


Secondar, )eliefs are alues more open to change- )elie ing in marriage is a core )eliefA )elie ing that people should get married in earl, life is a secondar, )elief Marketers ha e some chance at changing secondar, alues- )ut little chance of changing core alues

Marketing ,ntelligence - . s,stematic collection and anal,sis of pu)licl, a aila)le information a)out competitors and de elopments in the marketing en ironment - &s a specific )ranch of competiti e intelligence - Goal is to impro e strategic decision making- asses s and track competitors# actions- and pro ide earl, warning of opportunities and threats - Growing use of marketing intelligence raises some ethical issues- most techni2ues are legal- )ut some are considered 2uestiona)le Consumer market - .ll indi iduals in a particular geographic region- who are old enough to ha e their own mone, and choose how to spend it Consumer -uyer -eha&iour - 1he )u,ing )eha iour of consumers F indi iduals who )u, goods and ser ices for their own use or consumption 0actors &nfluencing $onsumer 5eha iour - $ultural 0actors o $ultural factors exert a )road and deep influence on consumer )eha iour- the marketer needs to understand the role pla,ed ), the )u,er#s culture- su)culture- and social class $ulture 1he set of )asic alues- perceptions- wants- and )eha iours learned ), a mem)er of societ, from famil, and other important institutions Su)culture . group of people with shared alue s,stems )ased on common life experiences and situations Social $lasses 'elati el, permanent and ordered di isions of a societ, into groups whose mem)ers share similar alues- interests- and )eha iours - Social factors o . consumer#s )eha iour is also influenced ), social factors such as mem)ership in small groups and famil,- and social roles and status Groups . person#s )eha iour is influenced ), man, small groups . group consists of two or more people who interact to accomplish indi idual or mutual goals Primar, groups are with which a person has regular )ut informal interaction F such as famil,- friends- neigh)ours- and co-workers Secondar, groups F organi/ations such as religious groups- professional associations- and trade unions 'eference groups F ser e as face to face- or indirect points of comparison or reference in forming a person#s attitude or )eha iour @B Downloaded for free at www%uofgexamnetwork%com

Marketing Exam Study!

(pinion leaders are a person within a reference group who- )ecause of special skills- knowledge- personalit,- or other characteristics- exerts influence on others o Marketers find wa,s to influence the opinion leaders

0amil, 0amil, mem)ers ha e a strong influence on )u,er )eha iour- marketers are interested in the roles and influence of the hus)and- wife- and children with the purchase of different products 'oles and Status . person )elongs to man, groups+ famil,- clu)s- organi/ations 1he persons position in each group can )e defined as )oth role and status Personal 0actors o . )u,er#s decisions are also influenced ), personal characteristics such as the )u,er#s age and life-c,cle stage- occupation- economic situation- lifest,le- and personalit, and self-concept .ge and 6ife-$,cle Stage People change preferences in goods and ser ices the, )u, o er lifetimes (ccupation Peoples occupation affect the goods and ser ices the, )u,- rich people and poor people )u, different products Economic Situation . persons economic situation will affect product choice- so marketers watch trends in personal income- sa ings- interest rates =se economic indicators to point out recession and other situations 6ifest,le . person#s patter of li ing as expressed in his or her acti ities- interestsand opinions Personalit, and Self-$oncept Each person#s distinct personalit, influences his or her )u,ing )eha iour Personalit, refers to the uni2ue ps,chological characteristics that lead to relati el, consistent and lasting responses to one#s own en ironment 1he idea is that )rands ha e personalities- and that consumers are likel, to choose )rands whose personalities match their own 0i e )rand-personalit, traits o Sincerit, 8down to earth- honest- wholesome- and cheerful9 o Excitement 8daring- spirited- imaginati e- and up to date9 o $ompetence 8relia)le- intelligent- and successful9 o Sophistication 8upper class and charming9 o 'uggedness 8outdoors, and tough9 Ps,chological 0actors o . persons )u,ing choices are further influenced ), four ma*or ps,chological factors+ moti ation- perception- learning- and )eliefs and attitudes Moti ation8dri e9 . need that is sufficientl, pressing to direct the person to seek satisfaction of the need Maslow#s <ierarch, of Needs 0ig I%B Perception @>

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1he process ), which people select- organi/e- and interpret information to form a meaningful picture of the world People can form different perceptions of the same stimulus )ecause of three perceptual processes+ selecti e attention- selecti e distortion- and selecti e retention o Selecti e attention 1he tendenc, for people to screen out most of the information to which the, are exposed- meaning marketers ha e to work especiall, hard to attract the customer#s attention o Selecti e distortion Descri)es tendenc, of people to interpret information in a wa, that will support what the, alread, )elie e o Selecti e retention People tend to select and retain information that supports their )eliefs 6earning $hanges in an indi idual#s )eha iour arising from experience 5eliefs and .ttitudes . )elief is a descripti e thought that a person holds a)out something o Ma, )e )ased on real knowledge- opinion- or faith- and ma, or ma, not carr, an emotional charge .n attitude is a person#s relati el, consistent e aluations- feelings- and tendencies toward an o)*ect or idea $onsumer 5u,er Decision Process
Need recognition &nformation search E aluation of alternati es Purchase decision Post purchase )eha iour

,nno&ation .dopter Categori/ation - 0ig I%; - &nno ators are defined as first E%;M of )u,ers to adopt new ideaA the earl, adopters are the next @B%;MA the earl, ma*orit, are the next B>MA late ma*orit, is the next B>MA laggards are the last @IM o &nno ators are enture some F the, tr, new ideas at some risk o Earl, adopters are guided ), respect- the,#re opinion leaders in their communities adopting new ideas earl, )ut carefull, o Earl, ma*orit, are deli)erate F although the, are rarel, leaders- the, adopt new ideas )efore the a erage person o 6ate ma*orit, are sceptical F the, adopt an inno ation onl, after ma*orit, of people ha e tried it o 6aggards are suspicious of changes and adopt the inno ation onl, when it has )ecome something of a tradition itself %roduct 0i!e Cycle - .ll products will pass through the P6$ o What#s different is <ow long it takes )etween stages <ow long it remains in each stage - De elopment F no customers- no profits- hea , spending - &ntroduction F earl, adopter customer- no profits- high launch costs @; Downloaded for free at www%uofgexamnetwork%com

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Growth F earl, ma*orit, customers- rapid sales growth and re enues Maturit, F late maturit, customers- flat sales- declining profits Decline F laggard customers- declining sales- replaced ), new products

Marketing Segmentation - Di iding a market into distinct groups with distinct needs- characteristics- or )eha iours who might re2uire separate products or marketing mixes - 0our important segmentation topics+ segmenting consumer markets- segmenting )usiness markets- segmenting international markets- and re2uirements for effecti e segmentation o Segmenting $onsumer Markets 1here is no single wa, to segment a market- a marketer has to com)ine se eral segmentation aria)les to find the )est structure Ma*or aria)les are+ Geographic Segmentation o Di iding market into groups )ased on geographic units such as nations- regions- pro inces- countries- cities- or neigh)ourhoods Demographic Segmentation o Di iding market into groups )ased on demographic aria)les such as age- gender- famil, si/e- famil, life c,cle- incomeoccupation- education- religion- race- generation- and nationalit, o Demographic segmentation characteristics+ .ge and life-c,cle stage Gender &ncome Ps,chographic Segmentation o Di iding a market into different groups )ased on social classlifest,le- or personalit, characteristics 5eha ioural Segmentation o Di iding a market into groups )ased on consumer knowledgeattitude- use- or response to a product @I Downloaded for free at www%uofgexamnetwork%com

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5eha ioural aria)les are+ (ccasions 5enefits sought =ser status =sage rate 6o,alt, status Segmenting 5usiness Markets 5usinesses use the same aria)les to segment their markets- the, also use some additional aria)les such as operating characteristics- purchasing approachessituational factors- and personal characteristics Segmenting &nternational Markets $ompanies can segment international markets using one or a com)ination of se eral aria)les o

Re1uirements !or E!!ecti&e Segmentation - 1here are man, wa,s to segment a market- )ut not all segmentations are effecti e o 1o )e useful- markets segments must )e+ Measurea)le+ the si/e- purchasing power- profiles of the segments- can )e measured .ccessi)le+ the segments can )e effecti el, reached and ser ed Differentia)le+ the segments are conceptuall, distinguisha)le and respond differentl, to different marketing mix elements and programs .ctiona)le+ effecti e programs can )e designed for attracting and ser ing the segments 2arget marketing - . set of )u,ers sharing common needs or characteristics that the compan, decides to ser e - When e aluating market segments- a firm must look at three factors+ segment si/e and growthsegment structural attracti eness- and compan, o)*ecti es and resources o Segment Si/e and Growth $ompan, must first collect and anal,/e data on current segment sales- growth rates- and expected profita)ilit, for arious segments o Segment Structural .ttracti eness $ompan, must examine ma*or structural factors that affect long run segment attracti eness Segment is less attracti e it if contains man, aggressi e competitors- or man, su)stitute products o $ompan, ()*ecti es and 'esources E en if a segment has the right si/e and growth is structurall, attracti ecompan, must consider its own o)*ecti es and resources in relation to that segment Some attracti e segments can )e dismissed )ecause the, do not mesh with the compan,#s long-run o)*ecti es Selecting 1arget Segments - =ndifferentiated 8mass9 marketing o . market-co erage strateg, in which a firm decides to ignore market segment differences and go after the whole market with one offer o 1argeting )roadl,- focusing on what is common in the needs of the market rather than what is different - Differentiated 8segmented9 marketing @G Downloaded for free at www%uofgexamnetwork%com

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. market-co erage strateg, in which a firm decides to target se eral market segments and designs separate offers for each o (ffering product and marketing ariations to segments- companies hope for higher sales and a stronger position within each market segment o Differentiated marketing also causes increase in costs of doing )usiness $oncentrated 8niche9 Marketing o . market-co erage strateg, in which a firm goes after a large share of one or a few segments- or niches o &nstead of going after a small share of a large market- the firm goes after a large share of one or a few segments or niches o &t can market more effecti el, ), fine-tuning its products- prices- and programs to the needs of carefull, defined segments o $oncentrated marketing can )e er, highl, profita)le- at the same time- it in ol es higher-than-normal risks Micromarketing o Differentiated and concentrated markets tailor their offers and marketing programs to meet the needs of arious market segments and niches o Micromarketing is the practice of tailoring products and marketing programs to the needs and wants of specific indi iduals and local customer groups o &ncludes+ 6ocal Marketing &n ol es tailoring )rands and promotions to the needs and wants of local customer groups F cities- neigh)ourhoods and e en specific stores &ndi idual Marketing 1ailoring products and marketing programs to the needs and preferences of indi idual customers F also la)elled Cmarkets-of-one marketingD- Ccustomi/ed marketingD- and one-to-one marketingD% o

Market positioning - Products position o 1he wa, the product is defined ), customers on important attri)utes F the place the product occupies in customers# minds relati e to competing products - $hoosing a positioning strateg, o 1he positioning task consist of three steps+ &dentif,ing possi)le competiti e ad antages 1he ke, to winning customers and )uilding profita)le relationships with them is to understand their needs )etter than competitors do and deli er more alue Jou must deli er the 2ualit, ser ice ,ou ad ertise &dentif, ,our competiti e ad antages- differentiate through+ o Product differentiation Ph,sical design ,our product differentl, o Ser ices differentiation Pro ide speed,- con enient- or careful deli er, o $hannel differentiation Gain competiti e ad antage through the wa, the, design their channel#s co erage- expertise- and performance o People differentiation @" Downloaded for free at www%uofgexamnetwork%com

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<iring and training )etter people than their competitors do o &mage differentiation $ompanies image the, portra, should show distincti e )enefits and positioning De eloping strong distincti e image calls for creati it, and hard work $hoosing the right competiti e ad antages <ow man, differences to promote! o Man, marketers think that companies should aggressi el, promote onl, one )enefit to the target market o $ompan, should de elop a uni2ue selling proposition 8SP9 for each )rand and stick to it o $ompanies should promote one proposition in crowded marketing societ, o . compan, should a oid B ma*or positioning errors =nder positioning- failing to e er reall, position the compan, at all ( er positioning- gi ing )u,ers a too narrow picture of the compan, $onfused positioning- lea ing )u,ers a confusing image of a compan, Which Differences to Promote! o &mportant+ the difference deli ers a highl, alued )enefit to target )u,ers o Distincti e+ competitors do not offer the difference- or the compan, can offer it in a more distincti e wa, o Superior+ the difference is superior to other wa,s that customers might o)tain the same )enefit o $ommunici)a)le+ the difference is communica)le and isi)le to )u,ers o Pre-empti e+ competitors cannot easil, cop, the difference o .fforda)le+ )u,ers can afford to pa, the difference o Profita)le+ the compan, can introduce the difference profita)l, Selecting an ( erall Positioning Strateg, 5u,ers t,picall, choose the product that gi es them the greatest alue :alue proposition is the full positioning of the )rand F the full mix of )enefits on which it is positioned 0ig G%> Price :s% 5enefits o More for more o More for the same o More for less o 1he same for less o 6ess for much less De eloping a Positioning Statement

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. statement that summari/es compan, or )rand positioning F it takes this form+ to 8target segment and need9 our 8)rand9 is 8concept9 that 8point-of-difference9%

#oods3 Ser&ices3 and Experiences - . product is a ke, element in the marketing offeringA it#s one of the > Ps of the marketing mix - $ompan,#s marketing offer often includes )oth tangi)le good and ser ices - Goods and ser ices are tangi)le and intangi)le- experiences are memora)le 6e els of Goods and Ser ices - Product planners need to think a)out goods and ser ices on three le els 80ig "%@9 - $ore product or )enefit - .ctual product o Packaging- features- design- 2ualit, le el- )rand name - .ugmented product o Warrant,- deli er,- credit- installation- ser ice #oods and ser&ices classi!ications - Goods and ser ices fall into two )road classes )ased on the t,pes of consumers that use them o $onsumer Products $on enience+ fre2uent- immediate purchases- low in ol ement 1oilet paper- soap Shopping+ less fre2uent purchases- careful comparison )etween products $lothes- hotels- cars 8regular9 Specialt,+ uni2ue characteristics or )rand- )u,ers put forth special effort to purchase Designer clothes- legal ser ices- real-estate- luxur, cars =nsought+ not usuall, purchased- or known a)out New inno ations- )lood donations o &ndustrial Products Product )ought ), indi iduals and organi/ations for further processing or for use in conducting a )usiness Difference )etween consumer and industrial is the purpose for which the product is )ought Ex9 if a lawnmower is )ought for a home- it#s a consumer product- if it#s )ought for a landscaping )usiness- it#s an industrial product 1here are B groups Materials and parts o &nclude raw materials and manufactured materials and parts o Price and ser ice are the ma*or marketing factors in purchaseusuall, not ad ertising $apital items o &ndustrial products that aid in the )u,er#s production or operations- including installations and accessor, e2uipment &nstallations o consist of ma*or purchases such as )uildings- and fixed e2uipment Supplies and ser ices o &nclude operating supplies 8lu)ricants- coal- paper- pencils9 and repair and maintenance items 8paint- nails- )rooms9 EL Downloaded for free at www%uofgexamnetwork%com

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o Supplies are the con enience products of the industrial field )ecause usuall, purchased with minimum of effort or comparison Ser ices are maintenance and repair ser ices and )usiness ad isor, ser ices

Product marketing decisions - 0ig "%B o Product attri)utes 4ualit,- features- st,le and design o 5randing Name- term- sign- s,m)ol or com)ination that identifies the maker or seller of a product/ser ice o Packaging o 6a)elling o Product support ser ices .dditional ser ices that delights the customer and ,ields profits for compan, Product line - . group of products that are closel, related )ecause the, function in a similar manner- are sold to the same customer groups- are marketed through the same t,pes of outlets- or fall within gi en price ranges 4rand Sponsorship - . manufacturer has > sponsorship options+ o 1he, can launch the product as a manufacturers brand (or national brand) or the manufacturer can sell it to resellers who gi e it a private brand 8store brand or distributor brand9 o Most manufacturers create their own )rand names- others market licensed brands% o Some companies can *oin forces and co-brand a product Manufacturer#s 5rands s% Pri ate 5rands - Pri ate )rands o . )rand created and owned ), a reseller of a product o Ma, )e hard to esta)lish and costl, to stock and promote o 'etailers usuall, price their pri ate )rand cheaper than manufacturers )ecause the, ha e more control - Manufacturer#s )rands o 6ong dominated the retail scene- )ut there ha e )een increase in pri ate )rands o Not as profita)le in economic down times 6icensing - Most manufacturers spend millions to create their own )rand names - Some companies license names or s,m)ols pre iousl, created ), other manufacturers- names of well-known cele)rities- or characters from popular mo ies and )ooks o 1he, do this at a fee $o-)randing - 1he practice of using the esta)lished )rand names of two different companies on the same product - &n most co-)randing situations- one compan, licenses another compan,#s well known )rand to use in com)ination with its own - 1hese relationships usuall, in ol ed complex legal contracts and licences - Cgi ing awa, ,our )rand is a lot like gi ing awa, ,our child F ,ou want to make sure e er,thing is perfectD E@ Downloaded for free at www%uofgexamnetwork%com

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Ne$ product de&elopment strategy - 1he de elopment of original products- new )rands- and product impro ement and modifications- through the firm#s own research and de elopment 8'7D9 efforts - 0irm can o)tain a new product in two wa,s o .c2uisition+ 5, )u,ing a whole compan,- patent- or a licence to produce someone else#s product o New product de elopment+ De elopment of original products- new )rands- and product impro ements and modifications through the firm#s own research and de elopment efforts - Ma*or stages in the new product de elopment process are+ @% &dea Generation E% &dea Screening B% $oncept De elopment and 1esting >% Marketing Strateg, De elopment ;% 5usiness .nal,sis I% Product De elopment and 1esting G% 1est Marketing "% $ommerciali/ation @% &dea Generation o 1he s,stematic search for new product ideas o $ompan, must usuall, generate man, ideas to find a good one o Good product ideas usuall, come out from watching and listening to customers E% &dea Screening o Sorting through new product ideas to identif, good ideas- and separate them from the not-so-good ideas B% $oncept De elopment and 1esting o De eloping the new product idea into arious alternati e forms and testing the concepts with a group of potential customers >% Marketing Strateg, De elopment o Designing an initial marketing strateg, for a new product )ased on the product concept Product concept+ a detailed ersion of the new product idea that can )e shown to potential customers ;% 5usiness .nal,sis o . re iew of the sales- cost- and profit pro*ections for a new product to determine whether the compan,#s o)*ecti es will )e met I% Product De elopment and 1esting o De eloping the product concept into a real working ersion of the product and su)*ecting it to a ariet, of tests o .ll new products must pass through the product de elopment and testing phase G% 1est Marketing o 1esting the product and marketing program in real- )ut limited market conditions "% $ommerciali/ation o 1he full-scale introduction of the new product into the market

Style3 !ashion3 !ad - St,le o . )asic and distincti e mode of expression EE Downloaded for free at www%uofgexamnetwork%com

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0ashion o . currentl, accepted or popular st,le in a gi en field 0ad o . fashion that enters 2uickl,- is adopted with a great /eal- peaks earl,- and declines er, 2uickl,

#eneral %ricing .pproaches - 1he price the compan, charges will )e somewhere )etween one that is too low to produce a profit and one that is too high to produce an, demand - $ompanies select prices ), selecting a general pricing approach that includes one or more of these three sets of factors o $ost-5ased Pricing .dding standard mark-up to the cost of the product $ost-plus pricing ma, not alwa,s )e optimal if it ignores demand and competitor pricesA howe er this approach remains popular and effecti e in man, sectors (ne ad antage is that sellers are more certain a)out costs than demand- and so mark-up-)ased pricing is less risk, .nother cost-oriented pricing approach is )reak-e en pricing- or a ariation called target profit pricing Setting price to )reak e en on the costs of making and marketing a productA or setting a price to make a target profit o :alue-5ased Pricing Setting price )ased on )u,ers# perceptions of alue rather than on the sellers cost Price is considered along with the other marketing mix aria)les )efore marketing program is set $ost )ased pricing and alue )ased pricing are re erse processes 0ig @L%; EB Downloaded for free at www%uofgexamnetwork%com

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o :alue pricing is offering *ust the right com)ination of 2ualit, and good ser ice at a fair price $ompetition-5ased Pricing Setting prices )ased on the prices that competitors charge for similar products .lso known as going-rate pricing Going-rate pricing is 2uite popular- when demand elasticit, is hard to measurefirms feel that the going price represents a fair return .lso the, feel that holding the going price will pre ent harmful price wars

Ne$ product pricing strategies - Pricing strategies usuall, change as the product passes through its life c,cle - 1he, choose )etween two )road strategies+ o Market-Skimming Pricing . high price for a new product to skim maximum re enues la,er ), la,er from the segments willing to pa, the high priceA the compan, makes fewer )ut more profita)le sales Going through each price le el to sell as much as high prices as possi)le- and then lowering price and selling as much as possi)le Market skimming onl, makes sense under certain conditions- product must ha e a high 2ualit, and image must support the higher price- as well as enough )u,ers must want the product at that price .lso- costs of producing a smaller olume cannot )e so high that the, cancel the ad antage of charging more 0inall, competitors should not )e a)le to enter the market easil, and undercut the high price o Market-Penetration Pricing Setting a low price for a new product in order to attract a large num)er of )u,ers and a large market share 6arge num)er of sales olume results in falling costs- allowing the compan, to cut its price e en further Se eral conditions must )e met for this low-price strateg, to work Market must )e highl, price sensiti e so that a low price produces more market growth Production and distri)ution costs must fall as sales olume increases 6ow price must help keep out the competition Penetration pricing organi/ation must maintain its low-price position- or the price ad antage ma, onl, )e temporar, %rice"ad5ustment strategies - $ompanies must ad*ust their )asic prices to account for arious market differences and changing situations - Six price ad*ustment strategies+ o Discount and allowance pricing $ompanies ad*ust their price to reward customers for certain responses such as earl, pa,ment of )ills- olume purchases- and off-season )u,ing 1hese are called discounts and allowances Discount+ a straight reduction in price on purchases during a stated period of time $ash discount+ a price reduction to )u,ers who pa, their )ills promptl, 4uantit, discount+ price reduction to )u,ers who )u, large olumes E> Downloaded for free at www%uofgexamnetwork%com

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0unctional discount8trade discount9+ offered ), the seller to tradechannel mem)ers who perform certain functions such as sellingstoring- and record keeping Seasonal discount+ price reduction to )u,ers who )u, merchandise or ser ices out of season .llowance+ promotional mone, paid ), manufacturers to retailers in return for an agreement to feature the manufacturer#s products in some wa, 1rade-in allowances+ price reductions gi en for turning in an old item when )u,ing a new one Promotional allowances+ pa,ments or price reductions to reward dealers for participating in ad ertising and sales support programs Segmented Pricing Selling a product or ser ice at two or more prices- where the difference in prices is not )ased on differences in costs 1akes se eral forms $ustomer-segment pricing+ different customers pa, different prices for same product or ser ice- ex9 adults/students/seniors Product-form pricing+ different ersions of the product are priced differentl, )ut not according to differences in their costs 6ocation pricing+ compan, charges different prices for different locations e en though cost of offering at each location is the same 1ime pricing+ price aries ), the season- month- da,- and e en hour Ps,chological Pricing . pricing approach that considers the ps,cholog, of prices and not simpl, the economicsA the price is used to sa, something a)out the product 'eference prices+ prices that )u,ers carr, in the minds to refer to when the, look at a gi en product- ex9 sale prices s% regular prices Promotional pricing 1emporar, pricing products )elow the list price- and sometimes )elow cost- to increase short-run sales Stores will put in a few products as loss leaders F products priced )elow their cost to attract customers to the store in hope that the, will )u, other items at normal mark ups Some manufacturers offer cash re)ates to consumers who )u, the product from dealers within a specified time Geographical Pricing $ompan, must decide to price its products located in different parts of the countr, or world <ow will shipping costs )e paid! 0(5-origin pricing o Goods are placed free on )oard- and the shipping responsi)ilit, is on the customer- who pa,s the freight from the factor, to destination- each customer picks up their own costs =niform-deli ered pricing o (pposite of 0(5 pricing- compan, charges same price plus freight to all customers- regardless of their location o 0reight charges is set at the a erage freight cost- e er,one pa,s the same price no matter how close the, are None pricing E;

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0alls )etween 0(5 and uniform pricing- compan, sets up two or more /ones- all customers within a gi en /one pa, a single total price 5asing-point pricing o Sellers select a gi en cit, as C)asing pointD and charges all customers the freight cost from that cit, to the customer location regardless of the cit, 0reight-a)sorption pricing o Seller a)sor)s all or part of the actual freight charges in order to get the desired )usiness o =suall, used for market penetration &nternational Pricing $ompanies marketing outside of their countr,- must decide what prices to charge in the different countries in which the, operate o

*lo$charting - <elps management isuali/e the customer#s total ser ice experience Research 6-5ecti&es7 exploratory3 descripti&e3 causal - Explorator, research o 0ormats pro)lems more precisel,- clarif,ing concepts- gathering explanations- gaining insight- eliminating impractical ideas- and forming h,pothesises o Does not seek to test them- *ust finds them out - Descripti e research o Seeks to descri)e a product- determine how man, people use the product o Defines 2uestions- prepares the compan, for re2uired changes - $ausal research o Seeks to find cause and effect relationships )etween aria)les o .ccomplishes this ), experiments $ore product 7 Supplementar, ser ices 8flower of ser ice9

Supplementar, ser ices pla, one of two roles+ 0acilitating supplementar, ser ices F re2uired for ser ice deli er, or aid in the use of the core product 8ie% information- order-taking- )illing- pa,ment9 Enhancing supplementar, ser ices F which add extra alue for customers 8ie% $onsultation- <ospitalit,- safekeeping- exceptions9

0lower of ser ice+ ser ices that will likel, to occur in this order+ @% &nformation $ustomers need rele ant information F especiall, new customers F and pro ide it 2uickl, and accuratel,

E% $onsultation &n ol es a dialogue to pro)e customer re2uirements and then de elop a tailored solution
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B% (rder-taking Should )e polite- fast- and accurate so that customers do not waste time and endure unnecessar, mental or ph,sical effort

>% <ospitalit, F reflect pleasure at meeting new customers and greeting old ones when the, return $an decrease or increase the satisfaction with the core product

;% Safekeeping F assistance with personal possessions will )ring customers to the core product I% Exceptions F se eral t,pes G% 5illing 1imel,- fast- accurate so customers don#t ha e to come )ack and ask for refunds and corrections Special re2uests Pro)lem-sol ing <andling of complaints/suggestions/compliments F pro ide 2uick response 'estitution F customers expect to )e compensated for performance failures

"% Pa,ment
Competition Based Pricing

0irms with relati el, undifferentiated ser ices need to monitor what competitors are charging and should tr, to price accordingl, or else customers will see little or no difference )etween competing offerings and )u, the cheapest one Ofirms with the lowest cost per unit of ser ice en*o,s a market ad antage and often assumes price leadership &f lower price does not work firms increase their alue offering m, promoting high 2ualit, and ser ice compared to the competition Price competition intensifies with @% &ncreasing num)er of competitors E% &ncreasing num)er of su)stituting offers B% Wider distri)ution of competitor and/or su)stitution offers
EG

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>% &ncreasing surplus capacit, in the industr,

Price competition decreases with @% Non-price-related costs of using competing alternati es are high F sa ing time and efford are of e2ual or greater importance to customers than price E% Personal relationship matter F ser ices that are highl, personali/ed and customi/ed are er, important customers- thus discouraging them from responding to price competiti e offers B% Switching costs are high F taking time- mone,- and effort- to switch pro iders customers are less a)le to take ad antage of competing offers >% 1ime and location specificit, reduce choice

Managers should watch that firms should not fall in to the trap of comparing competitors# prices dollar for dollar- and then seeking to match them

8alue -ased pricing Understanding Net alue

$ustomers weigh the percei ed )enefits o)tained from the ser ice against the percei ed costs the, will incur :alarie Netihaml proposes four )road expressions of alue+ @% :alue is low price E% :alue is whate er & want in a product B% :alue is the 2ualit, is the 2ualit, & get for the price & pa, >% :alue is what i get for what & gi e

P> is known as Net :alue F the sum of all the percei ed )enefits 8gross alue9 minus the sum of all the percei ed costs of ser ice 0our distinct )ut related strategies for capturing and communicating the alue of a ser ice+ @% =ncertaint, reduction- relationship E% 'elationship enhancement B% 6ow-cost leadership >% :alue perception management

'educing uncertaint, include+


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Marketing Exam Study!

@% 5enefit-dri en pricing F in ol es pricing the aspect of the ser ice that directl, )enefits customers E% 0lat-rate pricing F in ol es 2uoting a fixed price in ad ance of ser ice deli er, so as to a oid surprises for users

Discounting is not the )est wa, to win new )usiness if a firm is to seek lo,al customers 8offering discounts on large purchases or two or more ser ices )undled together will9 Cost leadership 6ow-priced ser ices appeal to customers on tight financial )udgets and ma, also stimulate larger purchases $hallenge is to price low to con ince customers that the, are getting good alue Second challenge is to ensure that economic costs are low enough to ena)le profits Managing the %erception &alue Effecti e communications and e en personal explanations are needed to help customers understand the alue the, recei e

6&ercome the pro-lems o! ,ntangi-ility

Mittal suggests intangi)ilit, of ser ices can cause > pro)lems @% !bstractness F a)stract concepts such as financial securit, do not ha e a one to one correspondence with ph,sical o)*ects- it can )e challenging for marketers to connect their ser ices to those concepts E% "enerality F refers to items that comprise a class of o)*ects- persons- or e entsA marketers must communicate that the, ha e a specific offering distinctl, different from competing offerings B% Non-searchability F refers to the fact that intangi)les cannot )e searched or inspected )efore the, are purchased 8ie% surgeon#s expertise9 >% #ental impalpability F man, ser ices are sufficientl, complex that it is difficult for customers to understand what the )enefits of the products are

Marketing communications mix F marketers that ha e access to numerous forms of communication

Different communication elements ha e distincti e capa)ilities relati e to the t,pes of messages that the, can con e, and the market segments most likel, to )e exposed to them 8fig% @G%E9
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Personal communications F in ol e personali/ed messages that mo e in )oth directs to )oth parties 8&e% 1elemarketing9 Qleft columns of fig% @G%ER &mpersonal communications F messages that mo e in one directions are targeted a group of customers than one indi idual Qright columns of fig @G%ER

Ser&ice 4lueprints

Ser ice )lueprints clarif, the interactions )etween customers and emplo,ees- and how these are supported ), )ackstage acti ities and s,stems Distinguishes )etween what customers experience Cfront-stageD and the acti ities of emplo,ees and support processes C)ackstageD- where customers can#t see them Gi es managers the opportunit, to identif, potential fail points

Ser&ice %rocess Redesign

SP' re itali/es processes that ha e )ecome outdated .chie e the following ke, performance measures @% 'educed num)er of ser ice failures E% 'educed c,cle time B% Enhanced producti it, >% &ncreased customer satisfaction

Ser ice process redesign encompasses reconstitution- rearrangement- or su)stitution of ser ice processes @% Eliminating non- alue-adding steps 0ig @K%@ pg >BL E% Shifting to self-ser ice B% Deli ering direct ser ice >% 5undling ser ices ;% 'edesigning the ph,sical aspects of ser ice processes

Customers as %artial Employees

:iewing customers as Cpartial emplo,eesD can influence the producti it, and 2ualit, of ser ice processes and outputs Managing customers as partial emplo,ees in ol es+ @% $onduct a C*o) anal,sisD of customers# present roles in the )usiness- and compare it with the roles the firm would like them to pla,
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E% Determine if customers are aware of how the, are expected to perform and ha e the skills needed to perform as re2uired B% Moti ate customers ), ensuring that the, will )e rewarded for contri)uting and performing well >% 'egularl, appraise customers# performance

9ay customers

=ndesira)leA a oid attracting them first place 2hie! : no intention of pa,ing and steals Rule -reaker : ser ice )usinesses need to esta)lish rules of )eha iour for emplo,ees and customers to guide them safel, through the arious steps of the ser ice encounter 4elligerent : those that get er, angr,- or icil, calm and swearing at machines- ser ice is clums,- customers are ignored- etc% *amily !euders : people who get into arguments with other customers 8often with their own famil,9 8andal : using securit, to pre ent people from andalising and ph,sical a)use from customers or drunks

Capacity Constrained 6rgani/ations pg ;;;

Producti e capacit, can take on se eral forms+ @% Ph,sical facilities designed to contain customers and used for deli ering people processing ser ice or mental- stimulus processing ser ices E% Ph,sical facilities designed for storing or processing goods that either )elong g to customers or are )eing offered to them for sale B% Ph,sical e2uipment used to process people possessions- or information ma, em)race a huge range of items and )e er, situation-specific >% 6a)our is a ke, element of producti e capacit, in all high-contact ser ices and man, low-contact ones ;% &nfrastructure F man, organi/ations are dependent on access to sufficient capacit, in the pu)lic or pri ate infrastructure to )e a)le to deli er high-2ualit, ser ice to their own customers

Measures of capacit, utili/ation include the num)er of hours that facilities- la)our- and e2uipment are producti el, emplo,ed in re enue operation- and the units or percentage of a aila)le space that is utili/ed in re enue operations% $hasing demand 8se eral actions that managers can take to ad*ust capacit, as needed+
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@% Schedule downtime during periods of low demand E% =se temporar, emplo,ees B% 'ent or share extra facilities and e2uipment >% $ross-train emplo,ees ;% 6et customers perform self-ser ice

*i&e approaches to managing demand

@% 1aking no action and lea ing demand to find its own le el E% 'educe demand in peak periods B% &ncrease demand when there is excess capacit, >% &n entor,ing demand until capacit, )ecomes a aila)le ;% $reating formali/ed 2ueuing s,stems
Di!!erent <ueue Con!igurations

&n single line- se2uential stages- -customers proceed through se eral ser ing operationsas in a cafeteria $arallel lines to multiple servers offer more than one ser ing station- allowing customers to select one of se eral lines in which to wait 8ie% )anks- fast food restaurants $reate single line to multiple servers 8commonl, known as CsnakeD9 as a solution for thinking that ,ou are in the shortest line )ut watch in frustration that the other lines are mo ing twice as fast %esignated lines in ol e assigning different lines to specific ategories of customer 8express lines of @E items or less9 1ake a num)er sa es customers the need to stand in a 2ueue- )ecause the, know the, will )e called in their order of arri al $ustomers who waited in parallel lines to multiple ser ers reported significantl, higher agitation and greater dissatisfaction with the fairness of the ser ice deli er, process than customers who waited in a single line

*rom Excess Demand to Excess Capacity

&'cess demand( the le el of demand exceeds maximum a aila)le capacit,- with the result that some potential customers are denied ser ice and )usiness is lost %emand e'ceeds optimum capacity( No one is actuall, turned awa,- )ut conditions are crowded and customers are likel, to percei e a deterioration in 2ualit, of ser ice and feel dissatisfied
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%emand and supply are )ell balanced( Staff and facilities are )us, without )eing o erworked- and customers recei e good ser ice without dela,s &'cess capacity( Demand is )elow optimum capacit, and producti e resources are underutili/ed- resulting in low producti it,

Marketing 0ogistics and Supply chain management pg =>? Marketing logistics (physical distri-ution : the tasks in ol ed in planning- implementing- and controlling the ph,sical flow of materials- final goods- and related information from points fo origin to points of consumption to meet customer re2uirements at a profit%

&n ol es getting the right product to the right customer in the right place at the right time Marketing logistics addresses not onl, outbound distribution 8mo ing products from the factor, to resellers and ultimatel, to customers9 )ut also inbound distribution 8mo ing products and materials from suppliers to the factor, and reverse distribution 8mo ing unwanted products returned ), consumers9
Supply chain management : managing alue-add flows of materials- final goods- and related information )etween suppliers- the compan, resellers- and final users

Minimum distri)ution costs impl, slower deli er,- smaller in entories- and larger shipping costs 1he goal of marketing logistics should )e to pro ide a targeted le el of customer ser ice at the least cost

#a*or logistics functions

(rder processing F orders set up m, salespeople through mail or telephone- ia the internet o :endor-managed in entor, 8:M&9 s,stems F allows customers to share realtime data on sales and current in entor, le els with the supplier

Warehousing o Distri-ution centres : a large- highl, automated warehouse designed to recei e goods from arious plants and suppliers- take order- sill the efficientl,- and deli er goods to customers as 2uickl, as possi)le o $ompanies must store their tangi)le goods until the, are sold

&n entor, le els affect customer satisfaction

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o Man, companies ha e greatl, reduced their in entories and related costs through *ust in time logistics s,stems- where producers and retailers carr, onl, enough in entor, of parts or merchandise for a few da,s of operations

1ransportation carriers affects the pricing of products- deli er, performance- and condition of the goods when the, arri e F which affect customer satisfaction o ,ntermodel transportation : com)ining two or more modes of transportation

+ntegrated supply chain management

,ntegrated supply chain management : the logistics concept that emphasi/es teamwork- )oth inside the compan, and among all the channel organi/ations- to maximi/e the performance of the entire distri)ution s,stem $ompanies are adopting the concept of integrated suppl, chain managemement with te goal of harmoni/ing all of the commpan,#s logistics decisions in order to create high market satisfaction at a reasona)le cost (ne compan,#s distri)ution s,stem is another compan,#s suppl, s,stem Growing num)er of firms now outsource some or all of their logistics to third-part, logistics 8BP69 pro iders third"party logistics (@%0 pro&iders F an independent logistics that performs an, or all of the functions re2uired to get its clients# product to market

Stimulate or Dampen Demand to match capacity pg @(A

ad ertising and sales promotions can help to change the timing of customer use- and thus help to match demand with the capacit, a aila)le at a gi en time demand management strategies include reducing usage during peak demand periods and stimulating it during off-peak periods with high fixed costs 8ie- hotels9

%ush &s pull strategy Promotional Strategies 8know the difference9 - Push strateg,+ o Promotional effort to channel mem)ers to stock- promote products to consumers o Personal selling and trade promotion-dri en o '.'E - Push Strateg, Example o M(NS1E' Energ, Drink o Sales force pushes product to+ $on enience stores Gas station 5ars and clu)s B> Downloaded for free at www%uofgexamnetwork%com

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o Stores in turn push products onto consumers Pull strateg,+ o Promotional efforts to appeal directl, to consumers o .d ertising and sales promotion-dri en Pull Strateg, Example o :&.G'. .d ertises directl, to consumers $onsumers ask for the product ), name

Con&entional marketing channel &s &ertical marketing =;(

0ig @@%I Con&entional distri-ution channel F consists of one or more independent producerswholesalers- and retailers- each a separate )usiness seeking to maximi/e its own profits e en at the expense of profits for the s,stem as a whole o no channel mem)er has much control o er the other mem)ers- and no formal means exists for assigning roles and resol ing channel conflict

8ertical marketing system (8MS : consists of producers- wholesalers- and retailers acting as a unified s,stem% (ne channel mem)er owns the other has contracts with them- or has so much power that the, all cooperate 8ie% sears )u,s more than ;LM of its goods from companies that it partl, or wholl, owns9 *ranchises are special t,pes of ertical marketing s,stems that link se eral stages in the production-distri)ution

Elasticity in the ser&ice sector

Price Elasticit, - . wa, of measuring how sensiti e the market is to price changes o &nelastic+ minimal change in demand as price increases o Elastic+ significant drop in demand as price increases Ser&ice Employees are crucially important

Ser ice emplo,ees are+ @9 $art of the product+ emplo,ees are the most isi)le element of the ser icedeli ers the ser ice- and significantl, determines ser ice 2ualit, E9 +s the service firm+ front-line emplo,ees represent the ser ice firm- and from a customer#s perspecti e- are the firm
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B9 +s the brand+ front-line emplo,ees and ser ice are often a core part of the )rand% &t is the emplo,ees who determine whether the )rand promise gets deli ered or not

Ser ice emplo,ees pla, a ke, role in anticipating customers# need- customi/ing the ser ice deli er,- and )uilding personali/ed relationship with customers- which ultimatel, lead to customer lo,alt,% 3ames <eskett and his colleagues formali/ed the ser ice-profit chain which demonstrates the chain of relationship )etween ,) &mployee Satisfaction, retention, and productivity -) Service value .) /ustomer satisfaction and loyalty 0) 1evenue gro)th and profitability for the firm

.lthough the 2ualit, of technolog, and self-ser ice interface is )ecoming the core engine for ser ice deli er,- and its importance has )een ele ated drasticall,- the 2ualit, of front-line emplo,ees still remains cruciall, important Ser ice deli ered ), the front line is highl, isi)le and important to the customer- and therefore a critical component of the ser ices strateg,

2he cycle o! !ailure

1he c,cle of failure captures the implications of such a strateg, 8hiring workers as cheapl, as possi)le to perform repetiti e work at fast food restaurants- calling centersetc9 - with its two concentric )ut interacti e c,cles+ one in ol ing failures with emplo,ees- the second with customers 2he employee cycle of failure )egins with a narrow design of *o)s to accommodate low skill le els- an emphasis on rules rather than ser ice- and the use of technolog, to control 2ualit, 2he customer cycle of failure )egins with repeated emphasis on attracting new customers- who )ecome dissatisfied with emplo,ee performance and the lack of continuit, implicit in continuall, changing faces there is a failure to measure all rele ant costs three ke, cost aria)les often omitted+ @9 the cost onf constant recruiting- hiring- and training E9 the lower producti it, of inexperience new workers B9 the costs of constantl, attracting new customers
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2rain ser&ice employees acti&ely

ser ice emplo,ees need to learn+ o 2he organi3ational culture, purpose and strategy 4 start strong with new hiresfocus on getting emotional commitment to the firm#s core strateg,- and promote core alues such as commitment to ser ice excellence- responsi enessetc%9 o +nterpersonal and technical skills 4 interpersonal skills tend to )e generic across ser ice *o)s - and include isual communications skills such as making e,e contact- )od, language- etc%9 o $roduct5service kno)ledge 4 knowledgea)le staff are a ke, aspect of ser ice 2ualit, 1raining is extremel, effecti e in reducing person/role stress 1raining and learning professionali/es the front line- mo ing these indi iduals awa, from the common image of )eing in low-end *o)s that ha e no significance
Empo$er the !ront line

Empowerment approach is more likel, to ,ield moti ated emplo,ees and satisfied customers than the Cproduction lineD alternati e- where management designs a relati el, standardi/ed s,stem and expects workers to execute tasks within narrow guidelines% Empowerment is most likel, to )e appropriate when most of the factors are present in compan, 1he firm#s )usiness strateg, is )ased on competiti e differentiation- and on offering personali/ed- customi/ed ser ice 1he approach to customers is )ased on extended relationship rather than on short term transactions 1he organi/ation uses technologies that are complex and non-routine in nature 1he )usiness en ironment is unpredicta)le and surprises are to )e expected Existing managers are comforta)le with letting emplo,ees work independentl, for the )enefit of )oth the organi/ation and its customers Emplo,ees ha e a strong need to grow and deepen their skills in the work en ironment- are interested in working with others- and ha e good interpersonal and group process skills

0our features for empowerment throughout the organi/ation


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$o)er to make decisions that influence work procedures and organi/ation direction +nformation about organi3ation performance 1e)ards )ased on organi/ation performance- such as )onuses 6no)ledge that ena)les emplo,ees to understand and contri)ute to organi/ational performance

Empowerment can take at se eral le els+ Suggestion involvement empowers emplo,ees to make recommendations through formali/ed programs 7ob involvement represents a dramatic opening up of *o) content 3o)s redesigned to allow emplo,ees to use a wider arra, of skills

8igh involvement gi es e en the lowest-le el of emplo,ees a sense of in ol ement in the compan,#s o erall performance

Bo$ to identi!y the -est candidates

()ser e )eha iour o <iring decision should )e )ased on the )eha iour that recruiters o)ser e- not the words the, hear

$onduct personalit, tests o Willingness to treat customers and colleagues with courtes,- and considerationand tat- percepti eness of customer needs- and a)ilit, to communicate accuratel, and pleasantl, are traits that can )e measured

&ts )etter to hire up)eat and happ, people- )ecause customers report higher satisfaction when )eing ser ed ), more satisfied staff 1o impro e hiring decisions- successful recruiters like to emplo, structured inter iew )uilt around *o) re2uirements- and to use more than one inter iewer During the recruitment process- ser ice companies should let candidates know the realit, of the *o)- there), gi ing them a change to Ctr, on the *o)D and assess whether it#s a good fit or not

Cnions

1he power of organi/ed la)our is widel, cited as an excuse for not adopting new approaches in )oth ser ice and manufacturing )usinesses
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3effre, Pfeffer+ Cthe effects of unions depend er, much on what management doesD 1he higher wages- lower turno er- clearl, esta)lished grie ance procedures- and impro ed working conditions often found in highl, unioni/ed organi/ations are all characteristics of the c,cle of success+ ,ielding positi e )enefits in a well managed ser ice organi/ation ,) $rofit derived from increased purchases &ndi iduals or )usinesses ma, purchase more as their families or )usinesses grow larger and need to purchase larger 2uantities -) $rofit from reduced operating costs .s customers )ecome more experienced- the, make fewer demands on the supplier 8less mistakes made9 .) $rofit from referrals to other customers Positi e world of moth recommendations are like free sales and ad ertising- sa ing the firm from ha ing to in est as much mone, in these acti ities 0) $rofit from price premium new customers often )enefit from introductor, promotional discountswhereas long-term customers are more likel, to pa, regular prices- and when highl, satisfied are e en willing to pa, a price premium

*our ad&antages to incremental pro!its o! a loyal customer

Mem-ership relationships and loyalty programs

Mem)ership relationship

. formali/ed relationship )etween the firm and an identifia)le customer- which ma, offer special )enefits to )oth parties o .d antage to firms is it allows ser ices to know who it current customers are and- usuall,- what use the, make of the ser ice offered% o Good for segmentation purposes

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-

. framework for thinking a)out how to )uild customer lo,alt, $omprises B se2uential strategies+ @9 5uild a foundation for lo,alt,+ a% Segment the market )% 5e selecti e- ac2uire customers who fit the core alue proposition c% Manage the customer )ase ia effecti e tiering of ser ices d% Deli er 2ualit, ser ice E9 $reate 6o,alt, 5onds+ a% 5uild higher le el )onds+ social- customi/ation- structural )% Gi e lo,alt, rewards c% Deepen the relationship ia+ cross-selling- )undling B9 'educe churn dri ers 8see 1&%US+N" /US2O#&1 %&9&/2+ONS section9

9+"U1& --(,: 2he )heel of loyalty $g( 0;.

Reducing customer de!ections 'educing customer defection 8also called customer churn9+ 1he first step is to understand the reasons for customer switchingo 1hese include+ core ser ice failure 8greatest reason9A dissatisfactor, ser ice encountersA high- decepti e- or unfair pricingA incon enience in terms of time- location or dela,sA and poor response to ser ice failure% address ke, churn dri ers+ o after understanding some generic churn dri ers- ,ou should address these pro)lems ), deli ering 2ualit, ser ice- minimi/ing incon enience and other non-monetar, costs- and fair and transparent pricing% &mplement effecti e complaint handling and ser ice-reco er, procedures o Effecti e complaint handling crucial in persuading unhapp, customers not to switch pro iders increase switching costs o man, ser ices ha e natural switching costs 8time consuming to switch ma*or )ank account etc%9 o ,ou can increase or create new switching costs ), instituting penalties through contracts
D di!!erent perspecti&es o! ser&ice 1uality

1here are ; different perspecti e one can iew the word <uality according to the context+
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@91he 1ranscendent iew+ 4ualit, is s,non,mous with excellenceA argues that people recogni/e 2ualit, onl, through the experience gained from repeated exposure% $ustomers will know 2ualit, onl, when the, see it% E91he Produce-5ased approach+ 2ualit, is a measura)le aria)le% difference in 2ualit, represent differences in the attri)utes possessed ), the product% 1his iew fails to account for differences in the tastes- needs and preferences of indi idual customers% B9=ser 5ased definitions+ C2ualit, lies in the e,e of the )eholderD% 4ualit, e2uals maximum satisfaction% 'ecogni/es that different customers ha e different wants and needs >91he manufacturing-)ased approach+ concerned primaril, with engineering and manufacturing practices% 0ocuses on conformance to internall, de eloped specificationwhich are often dri en ), producti it, and cost-containment goals% ;9:alue 5ased definitions+ define 2ualit, in terms of alue and price% 1rade-off )etween performance and price%

#aps in ser&ice design and deli&ery

1here are G t,pes of gaps that can occur at different points during the design and deli er, of a ser ice performance+ @92he kno)ledge gap: the difference )etween what ser ice pro iders )elie e customers expect and customers# actual needs and expectations% E92he standards gap: the difference )etween management#s perceptions of customer expectations and the 2ualit, standards esta)lished for ser ice deli er,% B92he delivery gap: the difference )etween specified deli er, standards and the ser ice pro ider#s actual performance on these standards% >92he internal communications gap: the difference )etween what the compan,#s ad ertising and sales personnel think are the product#s features- performance- and ser ice 2ualit, le el- and what the compan, is actuall, a)le to deli er% ;92he perceptions gap: 1he difference )etween what is deli ered and what customers percei e the, ha e recei ed 8una)le to accuratel, e aluate ser ice 2ualit,9 I92he interpretation gap: the difference )etween what a ser ice pro ider#s communication efforts actuall, promise and what a customer thinks was promised G92he service gap: 81<E M(S1 SE'&(=S G.P9 the difference )etween what customers expect to recei e and their perception of the ser ice that is actuall, deli ered Gaps @-;-I-G are external gaps 8)etween customer and organi/ation9 Gaps E-B- > are internal gaps 8)etween departments within the organi/ation9
Customer"dri&en approaches to impro&e producti&ity

Producti it, measure the output produced relati e to the input used% 1he task of impro ing ser ice producti it, usuall, assigned to operations managers% Such actions include 8)ut not limited to9+ control costs reduce waste of materials or la)our
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using automated machines training emplo,ees to work more producti el,

$ustomer-Dri en .pproaches+ -Man, situations in ol e high customer input -managers should examine impro ing customer inputs -examine B strategies+ @9$hanging the timing of customer demand 8shift demands awa, from peak timesA offering demand though other channels i%e% internet9 E9&n ol e customer more in production 8customers can assume roles of organi/ation emplo,ees9 B9.sk customers to use third parties 8 delegating one or more support functionsA eg% Deli er, team so customer doesn#t need to tra el- eg% 1ra el agenciesA third parties can )e cheaper and more producti e and allow the main organi/ation to speciali/e on ser ice features9 ; le&els o! ser&ice per!ormance Ser ice performance can )e categori/ed into four le els+ @9 Service =osers: o organi/ations that are at the )ottom of ser ice 2ualit, o S)ottom of the )arrel# from )oth managerial and customer perspecti e o t,picall, sur i e )ecause there is no ia)le alternati e -) Service Nonentities: o Performance lea es much to )e desired o Eliminated the worst features of losers o Marketing strategies unsophisticated o Difficult, distinguishing one from another B9 Service $rofessionals+ o Different league from nonentities o $lear market-positioning strateg, o $ustomers seek out these firms )ased on good reputation o Explicit links )etween )ackstage and front stage acti ities .) Service =eaders: o CcrTme de la crTmeD of their industries o ser ice leaders are outstanding o reputation of excellent ser ice and a)ilit, to delight customers firms can either mo e up or down the performance ladder% 9ohn Eotter)s ( stages o! leadership 3ohn ?otter argues that in most successful processes of change management- those in leadership roles must na igate through eight stages+ @9creating a sense of urgenc, to de elop the impetus 8momentum9 for change
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E9putting together a strong enough team to direct the process B9creating an appropriate ision of where the organi/ation needs to go >9communication that new ision )roadl, ;9empowering emplo,ees to act on that ision I9producing sufficient short term results to create credi)ilit, and counter c,nicism G9)uilding momentum and using that to tackle the tougher change pro)lems "9 anchoring the new )eha iours in the organi/ational culture E&olution &ersus turnaround 1ransformation of an organi/ation can take place in two pa,s+ e olution or turnaround E olution+ in )usiness context in ol es continual mutations designed to ensure sur i al of the fittest management must e ol e focus strateg, of the firm to take ad antage of changing condition and new technologies firm can#t remain successful without a continuing series of mutations 1urnaround+ leaders 8usuall, new ones9 tr, to )ring failing organi/ations )ack from the )rink of failure ad antageous to )ring a new $E( in from outside the organi/ation in turnaround situations > hurdles leaders face in reorienting and formulating strateg,+ @% $ogniti e hurdles- when people cannot agree on the causes of pro)lems and the need for change E% 'esource hurdles- when the organi/ation is constrained ), limited funds B% Moti ational hurdles- pre ent a strateg,#s rapid execution when emplo,ees are reluctant to make needed changes >% Political hurdles- organi/ed resistance from powerful ested interests seeking to protect their positions 0eadership3 Culture3 and climate (rgani/ational $ulture+ Shared perception or themes regarding what is important in the organi/ation Shared alues a)out what is right and wrong Shared understanding a)out what works and what doesn#t work Shared )eliefs and assumptions a)out wh, these things are important Shared st,les of working and relation to others (rgani/ational $limate o 'epresents the tangi)le surface la,er of the organi/ation#s underl,ing culture
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o

I ke, factors that influence and organi/ations working en ironment are it#s fle'ibilityhow free emplo,ees feel to inno ateA responsibility to the organi/ationA the le el of standards people setA the percei ed aptness of re)ardsA the clarity people ha e a)out mission and aluesA and the le el of commitment to a common purpose o climate represents the shared perceptions of emplo,ees a)out the practicesprocedures- and t,pes of )eha iours that get rewarded and supported in a particular setting o multiple climates often exist within an organi/ation

(rgani/ation 6eaders o leaders are responsi)le for creating cultures and the ser ice climates that go along with them o transformation leadership ma, re2uire changing culture that doesn#t work Ser&ice"pro!it chain 0ig E>%@

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