7PS OF SERVICE MARKETING & FACTORING

By Elvya lopes
7PS OF SERVICE MARKETING
Product :
Product is something which satisfies the needs and wants of the customer. It is the
actual item which is held for sale in the market. Product mix constitute the
combination of all the products for sale in the market.

Price :
Price is the actual amount which the customer pays for the product. Just like
goods, businesses can decide from one of these practices for pricing
Penetration Pricing (low price kept to capture market share)
Skimming Pricing (high price initially then lowering of price)
Competition Pricing (pricing at par of competition)
Pricing decides position of the product among the competion.
Place:
Place mix includes places where the services will be performed. Services, unlike goods,
cannot be separated from its provider. Hence services are provided where its provider
is.Hence place is decide how the services will be available to the customers.
At the right time, and
At the right place

Promotion :
Business has to convey to the customer about what it is offering and how is it offering it
better that its competition. This is done through promotion mix. Promotion mix includes
Advertising
Branding
Personal Selling
Sales Promotion
Public Relations
Direct Marketing
Social Media Outreach
People :
Services are inseparable. That is, they cannot be separated from the provider. These
providers are the People in the marketing mix.
Example :The chef in the restaurant, a banker in the bank, an air hostess in the flight.

Process :
Its the route of the actual product from the provider to the user

Physical Evidence :
Services are intangible. But they are often provided along with many tangible
elements. Physical evidence includes the environment/place where the service is
provided, and any tangible elements that facilitate the performance or
communication of the service. Its the tangible part which is more or less
complementary to the service.
FACTORING
 Why use Factoring ?

Through the use of Factoring recevible are instantly converted into cash
flows leading to improved cash flow that can help funding growth.

Factoring provides credit protection for export sales which enables to do

business with buyerw who are unwilling to open letter of credit.

Factoring also provides other peripheral service such as advisory services ,

credit services ,credit assessment , etc .
Factoring is of recent origin in Indian Context .

Kalyana sundaram committee recommended introduction of factoring in

1989
Banking Regulation Act. 1949 was amended in 1991 for bank setting
services.

SBI /Canara Bank have set up their Factoring Subsidiaries

SBI Factor Ltd. (April ,1991)
CanBank Factor Ltd.(August ,1991)

RBI has permitted Bank to understand factoring services through

subsidiaries.
 Types Of Factoring

Recourse Factoring

Non-recourse Factoring

Maturity Factoring

Cross-border Factoring

International Factoring
 RECOURSE FACTORING

Up to 75% to 85% of the Invoice Receivable is factored.

Interest is charged from the date of advance to the date of collection.
Credit risk is with the client.
Factor does not participate in the credit sanction process.
In India, factoring is done with recourse.
 NON-RECOURSE FACTORING

Credit risk is with the factor.

Higher commission is charged.
Factoring participates in credit sanction process &Approves credit limit given
by the client to the customer.
In USA/UK, factoring is commonly done without recourse.
 MATURITY FACTORING

Factor does not make any advance payment to the client.

Pays on guarantee payment dates or on collection of Receivables.
Nominal Commission is charged.
No risk to Factor
 CROSS-BORDER FACTORING

It is similar to domestic factoring except that there are four parties ,viz
a) Exporter
b) Export Factor
c) Import Factor
d) Importer
It is also called Two-factor system of factoring.
Exporter enters into factoring arrangement with Export Factor in his country & assigns to
him export receivable.
Export Factor enters into arrangement with Import Factor &has arrangement for client
evaluation &collection of payment for an agreed fee.
Notation is made on the invoice that importer has to make payment to the Importer
Factor.
Import factor collects payment &remits to export Factor who passes on the process the
Exporter after adjusting his advance, if any.
Where foreign currency is involved ,Factor covers exchange risk also.
 INTERNATIONAL FACTORING

It mans the services of a factor in a domestic business are simply extended to

international trade.it depends upon the tpe of export factoring &the
arrangement made by the exporter &the factor .

Types :
Two factor system
Single factor system
Direct export system
Direct import factor system