Introduction to Marketing, Services & Services Marketing

Instructor

Dr. Ravi Shanker

DEFINITION:
MARKETING IS A SOCIAL AND MANAGERIAL PROCESS. BY WHICH INDIVIDUALS AND GROUPS OBTAIN WHAT THEY NEED & WANT.. THROUGH CREATING & EXCHANGING PRODUCTS & VALUE WITH OTHERS.

MARKET FORCES BEARING ON MARKETING MIX

CONSUMERS BUYING BEHVIOUR

TRADES BEHAVIOUR

COMPETITIORS GOVERNMENT POSITION & BEHAVIOUR BEHAVIOUR

MARKETING MIX

1 2

PRODUCT PLANNING
PRICING 3 BRANDING
CHANNELS OF DISTRIBUTION

4 5

PERSONAL SELLING ADVERTISING PROMOTIONS

FACT FINDING & ANALYSIS

6 7 8

10

PHYSICAL HANDLING

SERVICING

BORDENS CONCEPT 1964

DISPLAY

PACKAGING

9 11 12

AMA (1985) DEFINITION: MARKETING IS THE PROCESS OF PLANNING & EXECUTING THE CONCEPTION, PRICING, PROMOTION AND DISTRIBUTION OF IDEAS, GOODS & SERVICES TO CREATE EXCHANGE & SATISFY INDIVIDUAL & ORGANISATIONAL OBJECTIVES.

Meaning of Marketing. PLANNING EXECUTING 4Ps EXCHANGE GOODS & SERVICES MARKETING IS A LIST OF ITEMS WHICH YOU SHOULD UNDERTAKE.

CORE OF MARKETING:
MARKETING MIX 4Ps + 2Ps + + +

MEGA-MARKETING Power & Public Relations

P P
POWER

P P
PR

Kotlers Mega Marketing

P P

P P P P
PHYSICAL EVIDENCE

P PEOPLE

McCarthys 4P

PROCESS
Boom & Bitners 7Ps for Services

Arguments Against.
ADHOC

ADDITIONS CANT BE CORE, AS ALWAYS SOMETHING MAY BE LEFT OUT & SOMETHING ELSE COULD BE DATED.

Caution.
NORTH

AMERICAN MODEL WAS DEVELOPED FROM THE EMPIRICAL DATA ON CONSUMER PCKAGED GOODS AND DURABLES.

WHAT

ABOUT INDUSTRIAL GOODS, SERVICES & BULK UNBRANDED COMMODITIES..

Therefore. NEED TO DEVELOP A DEEPER UNDERSTANDING OF THE MARKETING FUNCTION

THE MOST IMPORTANT ISSUE IN MARKETING IS TO ESTABLISH, STRENGTHEN & DEVELOP CUSTOMER RELATIONS, WHERE THEY CAN BE COMMERCIALIZED AT A PROFIT & WHERE INDIVIDUAL & ORGANIZATIONAL OBJECTIVES ARE MET

THIS

FUNCTION IS NOT SAME AS THE MARKETING DEPARTMENTS IT IS SPREAD OVER A LARGE PART OF THE ORGANIZATION

HENCE

What marketing is

Therefore marketing is more than a process, performed by a few people confined to the marketing department Its an orientation i.e., Customer orientation, market orientation, . Its a philosophy: combining the above two It could be the culture in an organization

The Service Sector

Includes Jobs

businesses, government agencies, nonprofits range from high-paid professionals and technicians to minimum-wage positions organizations vary in size-from huge global corporations to local small businesses have added more economic value than agriculture, raw materials & manufacturing combined

Service

Services

Examples of Service Industries

Health

Care eye, dentistry, hospital,

Professional

Services - accounting, legal,

architectural
Financial

Services - banking, investment Insurance - restaurant, hotel/motel, resorts

Hospitality Travel Others

- airlines, travel agencies, theme park

- hair styling, pest control, plumbing, lawn maintenance, counseling services, health club

Internal Services
Service

elements within an organization that facilitate creation of--or add value to--its final output, like: legal services transportation catering and food services Security, cleaning and landscaping recruitment and training accounting and payroll administration these services are being outsourced

Increasingly,

Factors Stimulating Competition in the Service Economy

Government

Policies (e.g., regulations, trade agreements) Changes (e.g., affluent, time poor, seek experiences)

Social

Advances

in IT

(e.g., speed, digitization, wireless, Internet)

Internationalization

(e.g. Travel, transnational companies)

Factors Stimulating Competition in the Service Economy

Business

Trends

Manufacturers offer service

Growth of chains and franchising Pressures to improve productivity and quality More strategic alliances Marketing emphasis by nonprofits Innovative hiring practices

WHY GROWTH IN SERVICES

REASON
1. AFFLUENCE

DEMAND FOR
PEST CONTROL, PERSONAL SECURITY, INTERIOR DESIGN. TA, RESPORTS, VACATION ENTERTAINMENT, ADULT EDU. COURSES NURSING HOMES, HEALTH CARE

2. LEISURE TIME

3. LIFE EXPECTANCY

WHY GROWTH IN SERVICES

REASONS
4. PRODUCTS' COMPLEXITY

DEMAND FOR
HOME COMPUTERS, ASS FOR DURABLES, MAINTENANCE SERVICES

5. LIFE'S COMPLEXITY

TAX CONSULTANT, LEGAL ADVISORS, MARRIAGE COUNSELORS

6. RESOURCE SCARCITY & ECOLOGY 7. NEW PRODUCTS

CAR POOL,, WATER MGMT. POLLUTI ON CONTROL. TIME SHARING: WEB SHOPPE'

Myths About Services Sectors

MYTHS
A SERVICE ECONOMY PRODUCES SERVICES AT THE EXPENSE OF OTHER SECTORS
MANY SERVICE INDUSTRIES ARE MAJOR PURCHASERS OF MANUFACTURES GOODS.

MYTHS
SERVICE PRODUCTION IS PRIMARILY LABOUR INTENSIVE

CAPITAL INTENSIVE, THEREFORE PRODUCTIVITY ISSUES EQUALLY IMPORTANT.

MYTHS
SERVICES COME LATER, FIRST PEOPLE SATISFY THEIR PRODUCT NEEDS

RESEARCH FINDINGS: PEOPLE VALUE SERVICES AS MUCH AS PRODUCTS, BUT SERVICES THEY MAY BUY IN LESS CYCLICAL WAY

MYTHS
GOVT. SECTOR IS IN SERVICES SECTOR

TELEPHONE, HEALTHCARE, AIRLINES, POWER GENERATION & DISTRIBUTION ETC. ARE BEING PRIVATISED

MYTHS
SERVICES BUSINESS ARE COTTAGE INDUSTRIES & SERVICE JOBS ARE LOW PAYING

CHECK THE LIST OF FORTUNE 500

So why not to study.. ..Service Marketing?

Services Marketing

Objectives
Define

services Identify Characteristics of Services Explain Implications of Service characteristics on Marketing Mix Introduce each element of the Service marketing Mix

DEFINITION
A SERVICE IS AN ACTIVITY OR A SERIES OF ACTIVITIES OF MORE OR LESS INTANGIBLE NATURE THAT NORMALLY, NOT NECESSARILY, TAKES PLACE IN INTERACTIONS BETWEEN THE CUSTOMER & EMPLOYEE/ PHYSICAL RESOURCE OF SERVICE PROVIDER, WHICH ARE PROVIDED AS SOLUTION TO CUSTOMER PROBLEMS.

What is a Service? Defining the Essence

An act or performance offered by one party to another. (Performances are intangible, but may involve use of physical products.) An economic activity that does not result in ownership A process that creates benefits by facilitating a desired change in customers themselves, physical possessions or intangible assets

Service Defined
Instrumental

activity For consumption Consumer participation No ownership

REASONS FOR SEPARATE MARKETING MIX FOR SERVIVCES

CONCEPTS AND THEORIES EVOLVED FROM MANUFACTURING INDUSTRIES SERVICES ARE BASICALLY DIFFERENT FROM GOODS, THEREFORE DIFFERENT APPROACH SERVICES HAVE UNIQUE CHARACTERISTICS, DIFFERENT FROM GOODS, EACH SERVICE CHARACTERISTIC HAS SPECIFIC MARKETING IMPLICATIONS, WHICH REMAIN UNADDRESSED BY CONVENTIONAL MARKETING

Intangibility

Inseparability

The Service

Heterogeneity

Perish ability

Meaning of Intangibility

Services cannot be inventoried Services cannot be patented Services cannot be readily

displayed or communicated Pricing is difficult

Intangibility-Tangibility Spectrum
Salt

Soft Drinks
Detergents Automobiles Cosmetics Fast-food Outlets

Intangible Dominant Tangible Dominant

Fast-food Outlets Advertising Agencies Airlines Investment Management Consulting Teaching

Intangibility: Implications & Strategies

Cannot

see or feel, smell, hear, or taste Cannot be Stored No ready Display Communication Problem No Patent
Youre in good hands with Indian Airlines.

Stress symbolic Clues Associate tangible symbol with service Tangible cues like membership cards WOM, Personal Source Organizational Image Post Purchase Communication

Meaning of Perishability

It is difficult to synchronize supply

and demand with services Services cannot be returned or resold

Perish ability: Implications & Strategies

Cannot be stored No Inventorization Lost sale = lost income

Demand management to Cope up with Fluctuations Forecasting Supply management Better Match through Processes Pricing adjustments

Meaning of Heterogeneity

Service delivery and customer satisfaction

depend on employee actions, therefore Standardization is difficult. Service quality depends on many uncontrollable factors, so Quality Control is Difficult . There is no sure knowledge that the service delivered matches what was planned and promoted

Heterogeneity or Variability: Implications & Strategies

Provided

by people Inherent variance Standardization and quality Control difficult

Standardization

Personnel selection Training Automation Industrialization Customization

Meaning of Inseparability: Simultaneous Production & Consumption Customers participate in and

affect the transaction Customers affect each other Employees affect the service outcome Decentralization may be essential Mass production is difficult

Inseparability: Implications & Strategies

Time

Tangible products
Production Sale Consumption

Intangible products
Sale Production Consumption

Selection & Training of Contact Persons Manage Customers Multi-site Operations

Six Distinctions: Between Goods & Services

Marketing Intangibles

Relationships of Provider to Customer The Service Encounter Connection Simultaneous Production and Consumption No Storage or Inventory

Quality Control

Service Characteristics and Marketing Implication for Strategic Decisions

Service
Characteristics
-Cannot be stored,

Marketing Implications
No patents, Communication problem, No ready display, Pricing difficulties Consumer involved in production, No mass production, Supply demand match
-Standardization

Strategies
-Tangible

Intangibility

clues, Personal sources, Post purchase comm. WOM, Organizational image Cost accounting for prices
-Selection training of contact

Inseparability

person, Manage Multi-site location

consumer,

Heterogeneity

&

-Industrialize & Customize

Quality control difficult Perishability No inventorization

-Cope

with fluctuating demand & match through process

Services Marketing Mix

Traditional Expanded Building

Marketing Mix Mix for Services: 7 Ps

Customer Relationships Through People, Processes, and Physical Evidence to Use the 7 Ps

Ways

9Ps of Integrated Service Management

Product

elements Strategy

Positioning

Promotion
Physical Place, Price

and education

evidence

cyberspace, and time

and other user costs

People Process Productivity

and quality

(1) Product Elements

All Aspects of Service Performance that Create Value Core product features Bundle of supplementary service elements Performance levels relative to competition Benefits delivered to customers Guarantees

(2) Positioning
All Aspects of Service Positioning as Against Competition Segmentation Drill Demographic versus Benefit Segments Positioning Intangibles The Question of Corporate Positioning as against Brand Positioning

(3) Promotion and Education

Informing/Educating, Persuading, & Reminding Marketing communication tools
media elements (print, broadcast, outdoor, retail, Internet, etc.) personal selling, customer service sales promotion, publicity/PR
Imagery

and recognition

corporate design and branding Content

information, advice, persuasive messages customer education/training

(4) Physical Evidence

Providing tangible evidence of service performances Create and maintaining physical appearances buildings/landscaping interior design/furnishings vehicles/equipment staff grooming/clothing other tangibles
Select

tangible metaphors for use in marketing communications

(5) Place, Cyberspace, & Time

Delivery Decisions re: Place, Time, Methods, Channels
Geographic
Physical

locations served

channels

Electronic
Customer

channels
control and convenience

Service

schedules
partners/intermediaries

Channel

(6) Price & Other User Costs

Managing Customer Outlays Relative to Corporate Revenues
Quoted

price level and trade margins

Discount

terms time, volume, user sensitive Price-setting mechanism determined by seller or negotiation/barter auction/reverse auction
Credit

terms

(6) Price & Other User Costs

Managing Customer Outlays Relative to Corporate Revenues
Strategies

to minimize other user costs out-of-pocket financial expenses (e.g., travel, phone) time investments and mental/physical effort negative sensory experiences

(7) People
The Human Side of the Enterprise
The

right employees performing tasks well job design Recruiting Selection training motivation Evaluation Rewards empowerment teamwork

.(7) People
The Human Side of the Enterprise
The

right customers for the firms mission fit well with product/processes/corporate goals appreciate benefits and value offered possess (or can be educated to have) necessary skills firm is able to manage customer behavior for productivity, satisfaction of other customers, employee protection

(8) Process
Method and Sequence in Service Creation and Delivery Design of activity flows Number and sequence of actions for customers Providers of value chain components Nature of customer involvement Role of contact personnel Role of technology, degree of automation

(9) Productivity and Quality

Synergy in Value Creation for Customers and the Firm Achieve productive transformation of inputs to outputs efficiency (cost control, avoidance of waste) effectiveness (value added, including quality and timeliness)
Attain

customer-defined quality standards

Reliability and Responsiveness Human Dimensions in terms of competence/trust tangibles

The Services Marketing Triangle

Company (Management)
Internal Marketing
Enabling

External Marketing Setting the Promise

the Promise

Employees

Customers Interactive Marketing Delivering the Promise

Services Marketing Triangle Applications Exercise

Focus

on a service organization. In the context you are focusing on, who occupies each of the three points of the triangle? How is each type of marketing being carried out currently? Are the three sides of the triangle well aligned? Are there specific challenges or barriers in any of the three areas?

Ways to Use the Services Marketing Triangle

Overall Strategic Assessment Specific Service Implementation What is being promoted and by whom? How will it be delivered and by whom? Are the supporting systems in place to deliver the promised service? How is the service organization doing on all three sides of the triangle? Where are the weaknesses?

What are the strengths?

Interdependence of Marketing, Operations & Human Resources

Operations
Customers

Management

Marketing Management

Human Resources management

Defining 3 Functional Imperatives

Marketing imperative
Target right customers and build relationships Offer solutions that meet their needs Define quality package with competitive advantage

Defining 3 Functional Imperatives

Operations imperative
Create, deliver specified service to target customers Adhere to consistent quality standards Achieve high productivity to ensure acceptable costs

Defining 3 Functional Imperatives

Human resource imperative
Recruit and retain the best employees for each job Train, motivate them to work well together Achieve both productivity and customer satisfaction

The Services Triangle & Technology

Company

Technology

Providers

Customers

Some Impacts of Technological Change

Radically

alter ways in which service firms do

business
with customers (new services, more convenience) behind the scenes (reengineering, new value chains)
Create

relational databases about customer needs and behavior, mine databanks for insights

Impacts of Technological Change (contd)

Leverage

employee capabilities and enhance

mobility Centralize customer service, be faster and more responsive Develop national/global delivery systems Create new, Internet-based business models

Review
Define

services Identify Characteristics of Services Explain Implications of Service characteristics on Marketing Mix Introduce each element of the Service marketing Mix Role of Information Technology