SERVICES MARKETING IV UNIT

PREPARED BY S.POUGAJENDY, MBA, M.Phil,(Ph.D) SL/MBA/SREC

POSITIONING SERVICES
Differentiate from competition on attributes that target customers highly value Entails two decisions: Choice of target market (where to compete) Creation of differential advantage (how to compete) Determine important choice criteria of customers carefully Most important decision of a service organization is selecting the factors on which it will compete

POSITIONING SERVICES (CTD) Select a few factors and provide superlative performances in the chosen factors Target marketing Differential advantage

THE SERVICE DELIVERY SYSTEM (SDS)

Where the final assembly of the elements takes place and the product is delivered to the customer. (Christopher Lovelock)
All apparatus physical and procedural required by front-line and support staff.
A SDS should:
Customer friendly Employee friendly and Incorporate a feedback loop

(Albrecht and Zemke)

METHODS OF SERVICE DESIGN

High quality services do not happen by accident. A systematic a approach to design is required. There are two approaches to design : 1. Flowcharting / Service blueprinting Ideas from product design and manufacturing (Shostack, Kingman Brundage) 2. Cycle of Service approach Ideas based on the differences of products and services (Mahesh and Stanworth)
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METHODS OF SERVICE DESIGN

- BLUEPRINTING

Front stage
Line of interaction staff and customer contact
Physical evidence / Servicescape Standards Scripts Customer role

Back stage
Line of visibility what should the customer see? Line of internal physical interaction staff-to-staff contact. Line of internal IT interaction

METHODS OF SERVICE DESIGN

- CYCLE OF SERVICE (1)

1. Identification of a customer profile:

Front-line staff and supervisors were put into groups. Each group thought about customers they served.

2. Profiling the customer type 3. Plotting the current cycle of service

 Customers assess service one moment of truth at a time.  Each moment of truth customer makes a positive or negative assessment of the service.

METHODS (CTD)
Identifying frequently occurring negative moments of truth. 5. Plotting the future C.O.S. 6. Identifying particular positive MOTs to delight the customer. 7. Eliminating negatives to deliver the positives.
4.

8. Time bound planned for improvement

Managers developed plans to turn the ideas into action & presented them to Customer Service Director.

9. The spirit of service delivery

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SERVICE CHANNEL

A set of organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user. Used to move the customer towards the product Selling through wholesalers and retailers usually is much more efficient and cost effective than direct sales.
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Service Channel Functions

Information: gathering and distributing marketing research and

intelligence information about the marketing environment.

Promotion: developing and spreading persuasive communications

about an offer

Contact: finding and communicating with prospective buyers Matching: shaping and fitting the offer to the buyers needs,
including such activities as manufacturing, grading, assembling, and packaging.
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Channel Levels
0-level channel Producer 1-level channel Producer 2-level channel Producer
p Wholesaler

Consumer

Retailer p Consumer

Retailer p Consumer

3-level channel Producer p Wholesaler p Jobber

p

Retailer p Consumer
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PRICING
A firm must set a price for the first time when It develops a new product It introduces its regular product into a new distribution channel or geographical area It enters bids on new contract work ( as in Industrial Sale ) A company must set its price in relation to the value delivered and perceived by the customer
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PRICING POLICY (FACTORS )

Selecting the pricing objective Determining demand Estimating costs Analyzing competitors costs, prices, offers Selecting a pricing method Selecting the final price

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PRICING OBJECTIVE
The company first decides where it wants to position its market offering. The objective could be : Survival Maximize current profit Maximize market share Maximize market skimming Product - quality leadership
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PRICING STRATEGY :

IT IS A STRATEGIC TOOL THAT ORGANIZATIONS USE TO DIFFERENTIATE THEIR PRODUCTS FROM COMPETITORS AND THEREBY GAIN THE COMPETITIVE EDGE TO CAPTURE THE MARKET.

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STEPS IN DESIGNING THE PRICING STRATEGY

Develop marketing strategy - perform marketing analysis, segmentation, targeting, and positioning. Make marketing mix decisions - define the service, distribution, and promotional tactics. Estimate the demand curve - understand how quantity demanded varies with price.

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STEPS IN DESIGNING THE PRICING STRATEGY(CTD)

Calculate cost - fixed and variable costs associated with the service Understand environmental factors - evaluate likely competitor actions, understand legal constraints, etc Set pricing objectives - for example, profit maximization, revenue maximization, or price stabilization (status quo) Determine pricing - using information collected in the above steps, select a pricing method, develop the pricing structure, and define discounts

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PRICING STRUCTURES

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METHODS
Cost Based Pricing Competition based pricing Demand based pricing

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COST BASED PRICING

Price = Direct Cost + Overhead Cost + Margin

Direct Cost = Material + labour used to produce

the service

Overhead costs are apart from the fixed cost Used in Services like Advertising , Contracting , etc.

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COMPETITION BASED PRICING

This approach is based on using the competitors price as the point of reference
Eg: Fitness clubs, Driving classes, Computer classes etc.

When services are standard across providers.

In oligopolies where there are few large service providers : Airlines Price signaling Going-rate Pricing

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PRICE SIGNALING/GOING RATE

Found in markets where there are a number of competitors. If any one company offers a lower cost advantage others immediately match the price. Eg. Airlines. In this type of pricing strategy the charges offered are the ones that are prevalent in the market for the same type of service. Eg.Tourist bus services, Car hires etc.
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DEMAND BASED PRICING

Unlike in cost based and competition based pricing, demand based pricing is customer focused and not company or market focused. This type of pricing is fixed keeping in mind what the customers are likely to pay for the perceived value offered by the service. For the determination of demand based pricing non monetary costs also have to be considered, as these contribute to the perception of value.

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THE SERVICES MARKETING TRIANGLE

Company (Management)
Internal Marketing External Marketing

enabling the promise

setting the promise

Employees

Interactive Marketing

Customers

delivering the promise

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SERVICES MARKETING TRIANGLE-STRATEGY TRIANGLEOverall Strategic Assessment

How is the service organization doing on all three sides of the triangle? Where are the weaknesses? What are the strengths?

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?
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The Services Triangle and Technology

Company

Technology Customers

Providers

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COMMUNICATIONS AND THE SERVICES MARKETING TRIANGLE

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INTEGRATED SERVICES COMMUNICATIONS

Integrated Services Communications

a strategy that carefully integrates all external and internal communication channels to present a consistent message to customers sales and service people print Internet other forms of tangible communication including the servicescape advertising sales presentations  public relations service encounters with employees  pricing servicescape and other tangibles  service guarantees Internet and web presence  customer education
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This means coordination across:

How is this done in services?

FIVE MAJOR APPROACHES TO OVERCOME SERVICE COMMUNICATION CHANNELS

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(1) APPROACHES FOR ADDRESSING SERVICE INTANGIBILITY

Use narrative to demonstrate the service experience Present vivid information Use interactive imagery Focus on the tangibles Use brand icons to make the service tangible Use association, physical representation, documentation, and visualization Feature service employees in communication

Use buzz or viral marketing Leverage social media Aim messages to influencers Create advertising that generates talk because it is humorous, compelling, or unique Feature satisfied customers in the communication Generate word-of-mouth through employee relationships
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(2) APPROACHES FOR MANAGING SERVICE PROMISES

Create a strong service brand Coordinate external communication

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(3) APPROACHES FOR MANAGING CUSTOMER EXPECTATIONS

Make realistic promises Offer service guarantees Offer choices Create tiered-value service offerings Communicate the criteria and levels of service effectiveness
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(4) APPROACHES FOR MANAGING CUSTOMER EDUCATION

Prepare customers for the service process Confirm performance to standards and expectations Clarify expectations after the sale Teach customers to avoid peak demand periods and to seek slow demand periods
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(5) APPROACHES FOR MANAGING INTERNAL MARKETING COMMUNICATION

Create effective vertical communications Sell the brand inside the company Create effective upward communication Create effective horizontal communications Align back-office and support personnel with external customers through interaction or measurement Create cross-functional teams of sales, service, and operations people when developing new services or engaging in service improvements Maintain a customer focus throughout all functions
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END OF IV UNIT

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