Services marketing

Services marketing is a subfield of marketing, which can be split into the two main areas of
goods marketing (which includes the marketing of fast moving consumer goods (FMCG) and
durables) and services marketing. Services marketing typically refers to both business to
consumer (B2C) and business to business (B2B) services, and includes marketing of services
like telecommunications services, financial services, all types of hospitality services, car
rental services, air travel, health care services and professional services.

Services are economic activities offered by one party to another. Often time-based,
performances bring about desired results to recipients, objects, or other assets for which
purchasers have responsibility. In exchange for money, time, and effort, service customers
expect value from access to goods, labour, professional skills, facilities, networks, and
systems; but they do not normally take ownership of any of the physical elements involved.

There has been a long academic debate on what makes services different from goods. The
historical perspective in the late-eighteen and early-nineteenth centuries focused on creation
and possession of wealth. Classical economists contended that goods were objects of value
over which ownership rights could be established and exchanged. Ownership implied
tangible possession of an object that had been acquired through purchase, barter or gift from
the producer or previous owner and was legally identifiable as the property of the current
owner.

Adam Smith’s famous book, The Wealth of Nations, published in Great Britain in 1776,
distinguished between the outputs of what he termed “productive” and “unproductive”
labour. The former, he stated, produced goods that could be stored after production and
subsequently exchanged for money or other items of value. But unproductive labour,
however” honourable,…useful, or… necessary” created services that perished at the time of
production and therefore didn’t contribute to wealth. Building on this theme, French
economist Jean-Baptiste Say argued that production and consumption were inseparable in
services, coining the term “immaterial products” to describe them.

Alternative View
A recently proposed alternative view is that services involve a form of rental through which
customers can obtain benefits. What customers value and are willing to pay for are desired
experiences and solutions. The term, rent, can be used as a general term to describe payment
made for use of something or access to skills and expertise, facilities or networks (usually for
a defined period of time), instead of buying it outright (which is not even possible in many
instances).

There are five broad categories within the non-ownership framework

1. Rented goods services: These services enable customers to obtain the temporary right
to use a physical good that they prefer not to own (e.g. boats, costumes)
2. Defined space and place rentals: These services obtain use of a defined portion of a
larger space in a building, vehicle or other area which can be an end in its own right
 (e.g. storage container in a warehouse) or simply a means to an end (e.g. table in a
restaurant, seat in an aircraft)
3. Labour and expertise rental: People are hired to perform work that customers either
choose not to do for themselves (e.g. cleaning the house) or are unable to do due to
the lack of expertise, tools and skills (e.g. car repairs, surgery)
4. Access to shared physical environments: These environments can be indoors or
outdoors where customers rent the right to share the use of the environment (e.g.
museums, theme parks, gyms, golf courses).
5. Access to and usage of systems and networks: Customers rent the right to participate
in a specified network such as telecommunications, utilities, banking or insurance,
with different fees for varying levels of access and use.

7 Ps of Services Marketing
Marketing services is different from marketing goods, and the marketing tools and practices
developed for goods marketing are often not directly transferable to the marketing of
services. There are several major differences, including:

 The buyer purchases are intangible

 The service may be based on the reputation of a single person
 It's more difficult to compare the quality of similar services
 The buyer cannot return the service

4 P's product promotion placement and price

The differences have resulted in a divergence in the education of services marketing versus
regular marketing. Apart from the traditional "4 P's," Product, Price, Place, Promotion, there
are three additional "P's" consisting of People, Physical evidence, and Process.

Product refers to the creation of a service concept that will offer value to target customers
and satisfy their needs better than competing alternatives. This consists of a core product that
responds to the customer primary need and an array of supplementary service elements that
are mutually reinforcing value-added enhancements that help customers to use the core
product more effectively.

Place and time may involve physical or electronic channels such as banks now offer
customers a choice of distribution channels including visiting a branch, using a network of
ATMS, doing business by phone or conducting them over the Internet.

Price and other user outlays are crucial as well. To determine if a particular service is
“worth it”, customers go beyond monetary considerations and assess the outlays of their time
and effort. Thus, service marketers must set prices that target customers are willing and able
to pay and minimize other burdensome outlays that are incurred. These may include
additional monetary expense in travelling, time expenditures, unwanted mental and physical
effort and exposure to negative sensory experiences.

Promotion in services marketing is also educational in nature, especially for new customers.
Suppliers need to teach these customers about the benefits of the service, where and when to
obtain it, and how to participate in service processes to get the best results. This can be
delivered via individuals such as salespeople, at websites, on display screens in self-service
equipment and through a variety of advertising media.

The process of delivering the service is very often as important as the function of the service.
Operational inputs and outputs can vary widely due to the lack of inventory and real time
interaction involved. Nonetheless, variability can be reduced through careful design of the
customer service process, adopting standardized procedures, implementing rigorous
management of service quality, high standards of training, and automation. Furthermore,
customers are often involved in co-production as partial employees through self-service,
telecommunications and the Internet.

Physical environment includes the appearance of buildings, landscaping, vehicles, interior

furnishing, equipment, uniforms, signs, printed materials and other visible cues that provide
evidence of service quality, facility service delivery and guide customers through the service
process. This can also be referred to as the “services cape” which can have a profound impact
on customer satisfaction and service productivity.

People refer to the human capital of the firm, i.e. the employees. These individuals should
posses the required technical skills, good interpersonal skills and positive attitudes that can
become a key competitive advantage for the firm.

INTRODUCTION TO THE INDUSTRY

The Travel and Tourism industry is still one of the largest single businesses in world
commerce and its importance is widely recognized.

The tourism industry is now one of the largest sectors earning foreign exchange. In the face
of many benefits, many countries have started assigning due weight age to the tourism
industry in their national development agenda.

Tourism statistics:

i. The tourism industry as a whole is presently estimated to earn over US$ 3.5 trillion
worldwide.

ii. The travel and tourism industry generates about 11% of world GDP and 200 million jobs
across the global economy.

TOURISM INDUSTRY IN INDIA

Indian Tourism industry is one of the most important export industries of the country.
Although the international tourist inflow is relatively low, A India has found tourism
emerging as an important sector of its economy.

Recent statistics have revealed that during the first quarter of 2006, the performance of the
tourism industry has been very encouraging which has registered an 11% increase in foreign
tourist arrivals.
India Tourism office at Tokyo won two International Awards in Tour Expo held at Daegu in
Korea for excellent tourism promotion. Indian Pavilion won the Best Booth Design Award as
well as Best Folklore Performance Award competing with major players in tourism such as
China, Japan, Thailand, Malaysia and Canada.

About the company

The Kuoni Travel Group, India, is the country’s largest travel and Tourism Company and a
100% subsidiary Kuoni Travel Holding.

Kuoni India’s vision focuses on providing all travel and travel-related services to travellers
from, within and to India.

Kuoni Travel Group, India was formed when Kuoni Travel Holding, Switzerland acquired
100% equity in SOTC on May 22nd, 1997. The Company was renamed Kuoni Travel (India)
Ltd. SOTC World Famous Tours became a valued brand.

Kuoni Travel (India) Ltd. became India’s largest travel company with the acquisition of SITA
World Travel a forerunner in Destination Management, incentive and business travel market.

Today, Kuoni-India is active across virtually every travel segment and operates a number of
highly successful brands in India as also controls strategic markets around the world

Organization Chart

Board of directors:-

1) Armin Meier, CEO, Kuoni Group.

 2) Max E. Katz, Chief Financial Officer, Kuoni Group.

3) Zubin Karkaria, CEO and Managing Director, Kuoni India & south Asia.

4) Reto Wilhelm, EVP – Leisure Travel Europe, Asia and Destination Management
Kuoni Group.

About the competitors

Cox & Kings is the longest established travel company in the world.

At present, the COX & KINGS group has offices in UK (2 offices), USA, Japan, Germany
Italy, Turkey, Pakistan and Nepal. In India, Cox & Kings has offices in Mumbai, New Delhi,
Chennai, Bangalore, Calcutta, Ahmedabad, Cochin, Hyderabad, Pune, Goa and Jaipur and
one satellite office in Andheri in Mumbai and Gurgaon in Delhi.

Thomas Cook is one of the world’s leading international travel and financial services groups
and serves over 20 million customers a year. They provide services to customers at 4,500
locations in more than 100 countries and employee over 20,000 people.

The Thomas Cook Holiday comes with a 150-year-old guarantee of eternally sunlit
memories. They couldn’t expect any less from the people who invented travel for leisure.
They offer the world’s most enjoyable holidays, to exotic destinations in India and abroad
where everything is taken care of from beginning to end.

Established in 1984, Kesari Tours is a premium travel company, which offers world-
class holidays in India and around the world. Kesari have perfected their tour itineraries to
meet the special needs of the Indian tourist abroad. The motto of organization is ‘No
compromise on quality’.

At Kesari Tours, they have made a motto that if they make a promise to their customers, they
honor it. They believe in honest, transparent deals. No hidden costs and no compromise on
sightseeing. They strive for 100% satisfaction of tourists. The company enjoys an immense
goodwill. That’s what they earned out of their beliefs.
 A passion for Travel & a vision for creating innovative travel packages were the two
driving forces saw the beginning of a Travel Company in a very modest way in
Mumbai’s Masjid Bunder.

The tremendous success & satisfaction of their tours paved way for Raj to hold its banner
high & it continues to do so till date. They are proud to say that year after year they have
improved on the product, adding new destinations, new attractions, pro-active marketing, &
building customer confidence

Quality measurement

Kuoni has been granted ISO: 14001, environmental certification in autumn, becoming the
first tour operator to earn this Destination.

Awards & Accolades

 2005 – Galileo India Express Award for ‘Best Outbound Tour Operator’
 2005 – Business Super brand
 2004 – Galileo India Express Award for ‘Best Outbound Tour Operator’
 2004 – Malaysia Tourism Award for ‘Best Foreign Tour Operator’
 2004 – Singapore Tourism Board Award for ‘Best Travel Experience in India’
 2004 – Star Cruises The Top Agents Award for 2004

Comparative Service Marketing Mix of SOTC and Cox and Kings

ü PRODUCT

Tourism service is the combination of tangible and intangible elements. The tourism
product, which is mainly the destination, can only be experienced. The views of the
location travel to the destination, the accommodation and facility as well as the
entertainment at the destination all form the tourism product

Components of Tours as a Product.

WITH RESPECT TO THE

Sr.No. BENEFIT MEANING TRAVEL AND TOURISM
INDUSTRY
The fundamental benefit or
1 CORE BENEFIT service that the customer is Travelling.
buying.
2 BASIC Basic, functional attributes. Ticketing, hotel reservation.
 PRODUCT
EXPECTED Set of attributes/conditions Customer friendliness, good
3
PRODUCT the buyer normally expects. food.
Prompt services,
That meets the customers
AUGMENTED comfortable and convenient
4 desires beyond
PRODUCT trip, spectacular sights, and
expectations.
music.
Totally customized tour
POTENTIAL The possible evolution to
5 packages, A grade service at
PRODUCT distinguish the offer.
every stage.

SOTC

SOTC offers a variety of tours which includes tours for families with kids, tours for senior
citizens, theme vacations like beaches and also special packages for pure vegetarian and
Janis.

COX AND KINGS

COX AND KINGS also offers a variety of tours which include tours for families with
kids, tours for senior citizens, tours for Marathi people, and tours for Gujarati people.

PRICE

Pricing in tourism is a complex process. Pricing includes the prices of other services like Air
travel, Bus, Railways, Hotels, etc. All are included in tourism package. Pricing also depends
on the Geographic location of the destination.

Pricing also depends on Seasonality. Seasonality is the most important factor in pricing. To
match demand and supply tourist managers try to get either discount

SOTC

SOTC offers price sensitive tours like cost saver and premium tours which can be
afforded by all classes.

COX AND KINGS

COX AND KINGS does not believe that the customer should pay a premium for excellent
service and outstanding holidays. It is their policy to keep the prices as low as possible that is
they follow Low Price Policy
PLACE

Different distribution strategies are selected to reflect the company overall objectives.
Tours as a product is distributed as a travel. Internet is also used widely. The middleman
may be tour operators, who buy tours in bulk and make them available to travel agents
who are retailers.

SOTC

Different distribution strategies are selected for Tours marketing by SOTC. There are
also small agents (who have taken franchise of SOTC) spread all over the town/country who
also play a role of place. SOTC act as wholesalers and also act as a retailer. The latest mode
of reaching the customers is through Internet that is SOTC has its own website from where
information on the tours can be procured, direct booking can be done for which the payment
can be made through the credit card. SOTC also has its own offices from where booking can
be done.

COX AND KINGS

Almost same distribution strategies are used by COX AND KINGS also. They too
have wide spread offices all over the country and their own website from where direct
booking can be done.

PROMOTION

Advertising and sales promotion in Tourism is very effective when supplemented by

publicity and personal selling. Public or PR (Public Relation) plays an important role in
tourism. It is also through recommendation of friends and relatives which is itself a biggest
promotion.

Word-of-mouth is a very important tool of promotion in tourism. Research shows that about
80% of the tourist visited different places on the persuasion of their friends and relatives and
also their own judgments.
 One can see a clear domination by global and Multi-National tour operators. Kuoni
Travel (India) was the top advertiser in this category commanding a 10% share.

SOTC

SOTC uses electronic, print and all sorts of media as tourism is a highly promoted
industry. SOTC gives printed ads in .The Times of India mentioning the special tours in it
with the special prices offered by them. Brochures are another form of communication
provided by SOTC to stimulate customers and motivate them to buy. They are used to
demonstrate in pictures and words the images and positioning of the product and the
organizations.

COX AND KINGS

COX AND KINGS also advertises in newspapers. It also has a tie up with leading
publications for features on travel, which appear once a week.

PEOPLE

It plays a most important part in tourism. In people, local people are very important,
that how they treat tourist. The travel agents, guides, staff, sales staff, etc of company they
are the people. Travel Company also like Railways, Air, etc. is included in people.

SOTC

Kuoni group (India) employs 2900 employees through its 347 offices and caters to 3 million
customers. SITA alone enjoys loyalty of its 2, 00,000 Indian customers.

COX AND KINGS

COX AND KINGS employs 2600 employees it has 13 offices in India and a network of over
500 GSAs across the country (general sales agent).

PROCESS

The operation process of the SOTC and COX AND KINGS is given in the form of
sequential steps involved in the delivery of the tours as a product.

Provision of travel information — The information regarding the travel is provided at a

convenient location where the potential tourist seeks clarification about their proposed tour.

SOTC

SOTC provides information through its website, newspaper ads and in SOTC branches in the
form of pamphlets.

COX AND KINGS

COX AND KINGS also provides information through its website, newspaper ads and in
SOTC branches in the form of pamphlets.

Preparation of itineraries — It is a composition of series of operations that are required to

plan a tour.

SOTC

The itineraries in SOTC are customized that is if the customer doesn’t wish to visit a
particular place that place can be replaced with a place the customer wants to visit.

COX AND KINGS

COX AND KINGS has fixed itineraries the customer can cancel the visit but it will not be
replaced by any other place.

Liaison with providers of services— Before any form of travel is sold over the counter to a
customer; contracts have to be entered with the providers of various services including
transportation companies, hotel accommodation, coaches for local sightseeing etc.
SOTC

SOTC has its contracts with many of the Indian companies like Hilton, etc.

COX AND KINGS

COX AND KINGS also has tie-ups with various 5-star hotels across the country.

Planning and costing tours— Once the contracts and arrangements are entered into, then the
task of planning and costing the tour, this will depend on the tour selected as well as
individual requirements.

SOTC

In SOTC the tours are customized that is if customer can’t afford the premium holiday he
will be given the same tour but the cost will be reduced by offering him a deluxe hotel instead
of a five star hotel or by offering him a non ac bus instead of a ac coach.

COX AND KINGS

COX AND KINGS follows a low price policy that is they fix the tour price as low as
possible.

Ticketing— The computerized reservation system has in recent years revolutionized the
reservation system for both rail and air travel.

SOTC

In SOTC the tours, air and rail tickets are booked online.

COX AND KINGS

COX AND KINGS also book tours, air and rail tickets through their online access system.

Provision of foreign currency and insurance—In case of foreign travel the final task provide
foreign currency as well as insurance.

SOTC

SOTC provides its customers with foreign currency and visa services.

COX AND KINGS

COX AND KINGS provides its customers with foreign currency and travel insurance.
PHYSICAL EVIDENCE

The tourist attraction, which is an expensive for the customer must be tangibilized with
the help of tangible items like, comfortable seats while traveling, layout, and design of the
resort, natural service, etc. the sign posts that indicate directions, route maps, information
regarding rules and regulations of the tourist spot and the sign regarding the public
utilities like toilets, telephone booth also form a part of the physical evidence. Printed
matters such as brochures also play an important role in the development of tourism. As
the product, in tourism is intangible.

SOTC

SOTC provides its customers with a detailed brochure of the tour they have selected, a list
of things to be done before going for a holiday e.g. cooking gas switch to be turned off etc
and if the customer is going for foreign tour then a list of basic words like hello, water etc
in the foreign country language which will make it easy for the customer, this establishes
value for money, product image and status, which must be matched when the product is
delivered.

COX AND KINGS also provides its customers with a detailed brochure of the tour.

To conclude, the above facts and figures draw a clear picture that SOTC is the best
company in comparison with COX and KINGS.SOTC is reasonable in price, offers best
customer service which results into customer satisfaction. SOTC is the market leader in
outbound tourism as COX and KINGS is the market follower.

SWOT ANALYSIS