Professional Documents
Culture Documents
Services Marketing
2011
Table of Contents
CORE SERVICE AND VARIOUS SUPPLEMENTARY SERVICES..5 FACILITATING SERVICES ......................................................................................................................................... 8 ENHANCING SERVICES ......................................................................................................................................... 10 HARD AND SOFT SERVICE STANDARDS .................................................................................................................... 11 CHANNELS OF SERVICE DELIVERY ............................................................................................................................. 14 COMMUNICATION MIX ............................................................................................................................................ 16 SERVICE BLUEPRINTING............................................................................................................................................ 21 SERVICESCAPE .......................................................................................................................................................... 23 SERVICE QUALITY GAP MODEL AND QUALITY DIMENSIONS ................................................................................... 28 PRICING STRATEGY ................................................................................................................................................... 35 Critical Analysis ......................................................................................................................................................... 42
Table of Figures
Figure 1: SubWay - Flower of Service ........................................................................................................................ 6 Figure 3: Facilition Services ....................................................................................................................................... 7 Figure 2: McDonald's - Flower of Service .................................................................................................................. 7 Figure 4: Communication Mix ................................................................................................................................. 16 Figure 5: Role Of Communication Mix .................................................................................................................... 19 Figure 6: McDonald - Go Global Act Local ............................................................................................................... 20 Figure 7: Mc Donald's Blueprint .............................................................................................................................. 21 Figure 8: Subway-Blueprint ..................................................................................................................................... 22 Figure 9: Service Gap Model.................................................................................................................................... 28 Figure 10: Characteristics and Evaluation Outcomes .............................................................................................. 29 Figure 11: Strategies to influence expectations ...................................................................................................... 30 Figure 12: McDonald's Pricing ................................................................................................................................. 36 Figure 13: SubWay Pricing ....................................................................................................................................... 38 Figure 14 : SubWay & Mc Donald 's Pricing Strategies............................................................................................ 41
Subway offers a wide variety of submarine sandwiches and salads on its menu. It offers an assortment of vegetarian and non-vegetarian fares. They also cater to the health-conscious customers by providing them with 97% fat free subs. Subway offers a separate specialty menu for breakfast. Apart from subs and salads, they also provide side dishes like cookies, desserts and beverages.
Subway allows customization of sandwiches by offering a variety of gourmet breads, different kinds of flavored meat, fresh and exotic vegetables and variety of sauces, both low and high calorie. Following the Think Global, Act Local policy, it offers ingredients specific to the locations; for instance, it offers Halal meat in Hyderabad.
MCDONALDS
McDonald's is without a doubt the world's largest and fastest growing restaurants in the world, serving food and drink to 38 million customers daily. Right from its inceptions through being multi-billion dollar quick service restaurant, hamburgers and fries have always been at the front of McDonald's menu. However, their menu has expanded keeping the taste and the lifestyle of the local customers in mind. Its extensive menu also offers a full range of desserts, hot and cold drinks to cater to everyone.
McDonalds underlying strategy for success in the Indian market is- Local sourcing is the key for Truly Indian products. Prior to its launch into India, it invested six years to develop its unique cold chain,
5
The efficiency with which the staff at Subway and McDonalds serves the customers is enhanced by the range of services that supplement the core service. Following the flower of services approach, the given figure shows the services that support the core service at Subway.
Facilitating
Enhancing
Figure 3: Facilition Services
Directions: in case of Subway, they provide a signage to direct the customers to the vegetarian and the non-vegetarian counters.Also, both Subway and McDonalds have user-friendly websites wherein customers can log on from any place at any time to locate their nearest stores.
Prices: Prices of the different items of food available at both Subway and McDonalds are displayed on a display board. Apart from that it also displays the prices of the other side dishes which the customer might want to buy.
Instructions on using core product: Since Subway is a made-to-order restaurant where a customer has full freedom to customize his sandwich, for a first-time customer, there are instruction sheets at both, vegetarian and the non-vegetarian counters that instruct the customers on the steps to follow to place an order for a sandwich. It also lists down the variety of ingredients and gourmet breads that it offers to its customers.
Notifications: At Subway, they are prompt enough to notify its customers of any technical problems that might bring inconvenience to them. At times, when the toaster is not in working condition, they put up a notice communicating the same. Both Subway and McDonalds also notify the customers of any promotional or combo offers for the day through posters and leaflets. They allow customers to sign up for offers on the net to get regular notifications on current offers and current news on Subway.
Conditions for service: At McDonalds, they promise to deliver the order within minute, at particular time slots, else they give a soft-drink free to the customer. This information is very explicitly visible to make sure that no customer misses to notice it.
ORDER FULFILMENT
8
On-site order fulfillment: Here the customers are served immediately as the orders are placed. Once the customer has decided what to eat, that is, a sandwich or a salad, he moves on to the next step where he chooses bread from a variety of gourmet breads for his sandwich. He also decides the size of the sandwich he would like to have, that is, 6-inches or foot-long. In the next step the customer gets the option of adding extra ingredients to his/her sandwich like double layers of meat or extra cheese for better taste. He then chooses the assortment of vegetables he would like to have. The last item on the list of ingredients is the variety of sauces that subway offers. The customer might want to supplement the sub or salad with his choice of drinks. At McDonalds, they follow an on-site order fulfillment method too, where they promise to deliver the orders in a minute, else they give a soft drink free. McDonalds also allows its customers to enjoy its meals while they are on their move. Through McDonalds Drive Thru, customers enter the drivethru, place their orders and pick then up within minutes.
Web-site order placement: McDonalds allows its customers to become members which in turn helps them place orders online.
Telephone order placement: Subway also promises an express delivery facility to offices and home which allows customers to place orders through phone. McDonalds provides home delivery service to its customers with no restriction on the minimum order. However, they charge an additional fee of Rs 20/- per order irrespective of its size.
BILLING The billing process goes very systematically. A typical customer would start by placing orders looking at the display board. As he makes his order, the amount due is displayed on the machine after each item is entered. Once all the items have been recorded, the billing machine displays the total amount due. The person who is recording also verbally states the amount due as a confirmation. The invoice is generated and the payment is made. The billing process uses all the four elements, namely
9
PAYMENT
Payment at both Subway and McDonalds is done using the conventional method of payment through cash or card. The customer is allowed to make payment through credit card only above billing of a certain amount. Also, they provide coupons and vouchers through newspaper inserts, which can be redeemed by the customers.
ENHANCING SERVICES
CONSULTATION The staff at the counter provides customized advice to customers who are visiting both Subway and McDonalds for the first time. They also help customers decide on what orders to place and which combo offers to avail.
HOSPITALITY Subway is seen as a place to hangout with friends. Customers, mostly the younger generation go to Subway when they need to sit, eat and drink with their friends. Also, a Subway outlet is usually never jam-packed with customers, hence there is never a queue to enter or place orders. Thus, there is never a need for waiting space. The customers could also sit for as long as they want without being asked to leave. McDonalds offers high quality products at affordable prices which it promises to serve on time. They have a policy of greeting every customer with the traditional Welcome to McDonalds, How may I serve you. A lot of importance is given to the smile during the greeting. Each McDonalds outlet has a washroom for must.
10
SAFEKEEPING Subway provides the perfect ambience by ensuring that the outlets are clean, the seats are wellspaced out and it allows the customer to sit back and relax. Their packaging for take always is also ecofriendly and attractive. McDonald's is driven by the philosophy of Quality, Service, and Cleanliness & Value for Money. This translates into a commitment to provide customers high quality products, served quickly with a smile, in a clean and pleasant environment at an affordable price. This effectively means that the McDonald's menu is priced at a value that the largest segment of the Indian consumers can afford while at the same time ensuring that quality is not sacrificed for value. The packaging at McDonalds for orders like Happy Meals which most of the times contains happy Toys and other such items are a major attraction for the kids. These Happy Meals have different toys which when collected will form a set. This in turn, attracts children and increases the sales.
EXCEPTIONS Subway caters to the needs of the health conscious customers by providing them 75% fat-free subs and salads. Also, Subway has a policy of getting a feedback form filled by its customers.
11
Preparation Standards: Best quality standardized ingredients ensure standardized preparation standards can be followed. Every product has a fixed procedure of preparation. However, newer McDonalds stores offer MFY (Made for You) where the product is made only after the order is placed.
Other standards: Use FIFO (First in First Out) for all inventories. Reverse osmosis water treatment plant best technology for water purification at every outlet to provide water. Strict standards for vegetarian products including eggless mayonnaise and eggless icecream. SERVICE Some soft standards followed by McDonalds staff are Welcome every customer with a smile and are genuinely friendly at all times
12
Hard standards Serve fresh and hot Serve within one minute of receiving order or give a free coke. This is implemented in a few outlets and is not applicable during peak hours. Cleanliness and Hygiene The counters, tables, floor area are to be kept clean at all times. All staff required to cover their heads and wear gloves when within preparation area. All these standards are evaluated by mystery shoppers and rated. This is called a RVR Restaurant Visitation Report) which provides a snapshot of the stores performance over a period of a few hours. The stores are graded either A, B, C or F. SUBWAY No information is available on the hard standards followed by the company. Below are some soft standards Subway has laid out. Quality All material, vegetables, sauces, meat and cheese have to be sourced from the supplier certified by Subway. Franchises cannot procure from other non-certified suppliers. All material has to be stored at specified temperatures to ensure freshness. All franchises are required to abide by the Gold Certification standards of Subway.
Cleanliness All employees must at all times wear gloves while making a sandwich or handling material. All employees must at all times wear a plastic covering their hair to ensure hygiene. Service The employees should greet the customer with a smile.
13
Subway uses Franchising as its channel of delivery. Subway currently has 35340 restaurants in 98 countries. This is being followed by Subway from its inception. As all franchisers, Subway requires each store to operate by the strict standards of quality, service and cleanliness defined by the company. The Subway franchise ensures that safety measures are taken by all its franchisees to provide quality food. All employees need to use gloves at all stages of food handling. Members of the specialty food franchise have to attend a training course in their local area in order to provide needed information to their employees on this regard. Fresh food stock preparation and temperature regulation helps the fast food franchise to keep up its high standards of hygiene. It is to provide the necessary specifications on the levels of cleanliness to be maintained by franchisees that the Subway franchise initiated "Gold Standard" policies. However, there have been several problems faced by Subway along the way. Quality standards: There have been several complaints from consumers all over the world regarding quality issues of vegetables, meats and sauces used in Subway sandwiches. Most of these issues arise due to improper storage of materials in the store. Temperature controls arent maintained resulting in spoilage and wastage. Legal woes: Subway has faced more legal cases than most other franchises. Franchisees complain that even one slip results in threatening letters from the head office. Or complaints regarding too many stores opening in the nearby areas resulting in cannibalization.
14
MCDONALDS
McDonald's is the world's leading global foodservice retailer with more than 33,000 locations in 118 countries. McDonalds has several company owned stores, but uses Franchising for both domestic and international expansion. McDonald's India was set up as a 50:50 joint-venture between McDonald's at a global level and regional Indian partners such as Hardcastle Restaurants Private Limited in western India, and Connaught Plaza Restaurants Private Limited in northern India. McDonalds currently has over 220 restaurants in the country. McDonalds doesnt provide any financial assistance and absentee ownership of finance is not allowed. Also, the financial requirements are quite steep. MFY- In order to implement the MFY (Made for You) option for customers, the franchises are required to upgrade their equipment at their own expense. This caused some problem with maintaining standard service across all outlets. Pricing and menu may also be a point of difficulty for the franchiser and franchisee as prices vary between company owned and franchised stores. Inconsistent standards- There are several instances of poor service or disgruntled customers complaining about the quality of food served. This is because it is difficult to enforce the exact same standards in all franchised stores.
15
PROVIDERS
Interactive Marketing Communications
Personal Selling
CUSTOMERS
The diagram above clearly explains a generic model for communication which is being implemented by services based companies in the world. The communication model is divided into 3 parts as clearly seen above:a) Internal Marketing Communications: It company should manage the information and its flow from company to employees in order to accurately and consistently reach to customers who are hearing and seeing it. b) External Marketing Communications: These are the channels (not under the companys control) through which the company disseminates the information to its customers. These channels provide equal opportunities to all the companies for communication to masses.
16
I N T E R N A L
In Housing Training, Performance-linked pay Employee of the Month Newspapers, Magazines Television, Radio Hoardings, Pamphlets, Banners, vehicle advertising on Cabs Emails Websites, Banner Ads, M-Commerce Movies Coupons Goodies , Corporate Rebates No No
Internal Branding
S E R V I C E M A R K E T I N G
Advertising
E X T E R N A L
Sales Promotion
Public Relations
C O M M U N I C A T I O N M I X
CSR Activity
Fit to Hunger
Social Media
Facebook , Twitter, YouTube Confirmation Calls for Home Delivery Personalisation and Customization of Sub. NO Countrywise Website NO
Confirmation Calls for Home Delivery Probing and giving alternatives for better Deals. NO Countrywise Website NO
I N T E R A C T I V E
Instruction Material
Servicescapes
Name Boards Kids Zone, Interior Menu Board Ronald Donald Mc Donalds on tissue Paper ,Tray Paper and Sauce Sashes Dress Code Online orders Placing orders on phone At Franchises
Name Boards Normal Interiors NO SubWay on Tissue Paper & Tray Paper Dress Code Online orders Placing orders on phone At Franchises
Service Encounters
18
19
20
21
22
Figure 8: Subway-Blueprint
MCDONALDS McDonalds recognizes culturally defined expectations in allowing its franchisees around the world tremendous freedom in designing their Servicescape. McDonalds strategy is to have restaurants worldwide reflect the culture and community in which they are found.
Facility Interior
All McDonalds outlet are standardized in terms of layout and have proper in-store branding. The
24
Red depicts vibrance, cheerfulness while yellow depicts friendliness and brightness. At McDonalds, music is a positive auditory cue stimulating specific consumer behaviour and emotions. Music appears to influence buyer-seller interaction. There is audio played about the latest offers and products. Also a balance and constant sound creates a pleasant sound environment. All employees at McDonald are provided with uniforms and name badges along with caps with McDonald signature M arch. Employees are also trained with appropriate soft skills to address customers. Every employee or front line executive greets the customer and exchanges pleasantries
25
SUBWAY
Elements of Physical Evidence Facility Exterior: Subway sandwich restaurants are often simple eat outs using minimal architecture and traditional branding with yellow and white shades. The facility exterior often gives a look of freshness and is located amidst other eateries in food courts of malls or recreation centres. Signage: The signage at every Subway store is uniform as per international standards. The store size is generally small and hence there is no room for enough glass branding. Unlike McDonalds, Subway doesnt have extensive branding on door panels and windows. Facility Interior: The size of any Subway outlet is small in relation to McDonalds, Also, since Subway outlets are located in multiple eatery zones they do not have an exclusive seating arena for its patrons. However the exclusive Subway stores has minimal seating arena. The in-store lighting is sufficient however not exclusively bright as seen with McDonalds. The color scheme used in all subways is Green depicting a sense of Freshness. Most of the subway outlets have the aroma of freshly baked cookies that draws one towards it. The employees have a proper uniform and our courteous. Also the person who takes your order is the same one who prepares your Sub thus allowing more time for interaction. Since every Sub is customized as per the customer it takes time.
26
Roles of Servicescape
Package McDonalds Strong visual metaphors, right from its outlets to the employees to the trays to ketchup cups Well designed outlets with appropriate with signs, appropriate ventilation and proper seating arena The goal of being the customers third place is achieved with comfortable chairs, children play arena for customers to interact Red and Yellow colour scheme along with McDonald branding to differentiate from others. Subway Visual metaphors in the form of wrapping paper, beverage cups. Small outlets or kiosk with minimal signs and few seats. More of a restaurant to have a quick bite.
Facilitator
Socializer
Differentiator
Regular branding
27
Mc Donalds and Subway SERVICE QUALITY GAP MODEL AND QUALITY DIMENSIONS
The five gaps that organizations should measure, manage and minimize: Gap 1 (listening gap) is the distance between what customers expect and what managers think they expect - Clearly survey research is a key way to narrow this gap. Gap 2 (standard and specification gap) is between management perception and the actual specification of the customer experience - Managers need to make sure the organization is defining the level of service they believe is needed.
28
29
SUBWAY
Location: City Centre Mall, Banjara hills, Hyderabad Mode of service delivery: mainly Self Service Model Number of visit: 3 (to check reliability) In our visit to SUBWAY there we had initial perception about the subway of low calorie fast food alternative which is quick and fresh. Reason for this perception was firstly their tagline EAT FRESH and their commercials starring Jared who had lost something like 150 pounds by eating an all-Subwaysandwich diet. Finally we also had in mind that there will be offer of day SUB OF THE DAY with this perception when we visited to SUBWAY there was no disappointment at all. From their nutrition charts we could make out that we can have good low calorie food. This was tangible cue on the counter making us aware that they provide what they convey. But best was, they were also having option of normal full of calorie diets for those who like it that way so in our group no one has to compromise. One of the service facilitator for us their separate VEG and NON VEG counter and their separate preparation counter. *Experience till this place actually reduce the communication gap as we were getting all we expected and it was in level of tolerance service zone so it was a good service. Dimension for service in terms of
30
Mc DONALD
Location: City Centre Mall (1st floor, Banjara hills, Hyderabad) Mode of service delivery: mainly Self Service Model Number of visit: 3 (to check reliability) In our visit to Mc DONALDS there we had initial perception about the mc Donalds of tasty food with fun and basically reasonable family and friends restaurant. Reason for this perception was firstly their tagline I m lovin it and their adds on different places with packaging and also else were. Finally we also had in mind that it will be not costly at all. When we reach there it was different then subway in many respect firstly, multiple delivery counter and no separate counter for VEG and NON veg. separate sitting space and even different private meeting hall. Nice ambience, good music and clean place to enjoy food. There were multiple counters each taking order then and there and no customization. Here look at menu and order whatever you like from the menu. Lot of tangible cues which help in deciding meal and there were lot of complementary priced meals options. It is for the entire segment who seeks value for money apart from quality. *Experience till this place actually reduce the communication gap as we were getting all we expected and it was in level of tolerance service zone so it was a good service. Dimension for service in terms of tangible quality was good as employees were properly dressed, hygienic and clean area, good seating arrangement. After looking at this entire scenario there was assurance that food delivered will be good and in accordance with expectation. We were quit assured with the quality because of the brand image they have in the market. Finally they replace the food if something goes wrong this also increase assurance from their side which is generally unsaid case for all the restaurants. Now further we went to place our order, here we were having ample of tangible cue (physical evidence) which helped us in making the decision, what to order? Further all information about the meals which we generally happy meals were provided and people were assisting if extra information
32
33
Rating on Basis of high low and medium Service quality dimensions (high is good Assurance and low is bad) Tangibility Empathy Responsiveness Reliability Service gap (low is good and high is Listening bad) Communication Performance Standard
SUBWAY medium medium high high medium low low medium low
Mc DONALDS medium high medium high high low low low low
34
The resources available with the organization. A well thought out price for a product or service should fulfill three things: Achieve the financial goals of the company Fit the realities of the marketplace Support a product's positioning and be consistent with the other variables in the marketing mix.
Pricing strategies are of various types mainly: Competition based pricing Cost-plus pricing Price skimming Penetration pricing Limit pricing Premium pricing Target pricing
35
MC DONALDS
Value Pricing McDonalds has a unique pricing strategy that falls exclusively on their many product lines. Their Value Meals fall into the category of value pricing. McDonalds has certain value pricing and bundling strategies such as happy meal, combo meal, family meal etc to increase overall sales volumes. For example, you can order a Mc Veggie Value meal that comes with a Mc Veggie burger, medium drink and fries for around Rs99 where the customer can save Rs 39 if he/she bought the food items separately. You can Super Size this meal to get a large drink and large fries for a little more money or you can go with another value meal that might include different items for different price.
Also in its promotions, M c D o n a l d s c a m e u p w i t h a v e r y c a t c h y p u n c h l i n e A a p k e z a m a n e m e i n , b a a p k e zamane ke daam. This was to attract the middle and lower class consumers and the effect can clearly be seen in the consumer base McDonalds has now.
36
Promotional Pricing To promote its breakfast menu Mc Donalds has come up with a new scheme of giving Rs 20 off on its Great Breakfast meal. This kind of promotional pricing is adopted to target new customers, to increase its base of customers and to give a variety in its offerings to its existing customers to help increase volume.
SUBWAY
Value Pricing Subway tries to create value products by service in terms of quality, ambience, variety, and convenience. By introducing the concept of sub of the day the company tries to satisfy the needs of its present customers by creating a sense of curiosity amongst in the sense they would want to know what sandwich is the sub of the day.
37
Bundling Strategies Subway offers combo offers of a sandwich, potato chips/cookie and a drink at only Rs. 45 extra for a medium size meal and Rs. 50 for a large size meal.
Promotional Pricing To increase its current consumers base and also to attract new customers, Subway has come up with new campaign where with any 6 inch sub and a medium beverage the company is offering another 6 inch sub for free. In September 2011, Subway has introduced a buy one get one free offer on Mondays. This is valid on all its sandwich offerings.
38
39
40
41
42
43