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SOME TERMS

WHAT IS A SERVICE / SERVICE PRODUCT


AN ACTIVITY / PERFORMANCE GIVEN BY A SERVICE PROVIDER TO A SERVICE
USER TO SOLVE HIS PROBLEM AND GIVE SATISFACTION AND AT THE SAME
TIME HELP THE COMPANY TO ACHIEVE ITS COMMERCIAL AND FINANCIAL
OBJECTIVES.
A SERVICE PRODUCT IS MOSTLY INTANGIBLE IN NATUTRE AND THE PURCHASE
OF A SERVICE PRODUCT DOES NOT RESULT IN OWNERSHIP BY THE USER. A
SERVICE IS NOT A THING

E.G:

RENTING A ROOM

TRANSPORTATION BY ANY MODE

SEEING A MOVIE

GETTING ADVICE FROM A DOCTOR / LAWYER

EDUCATION

BANKING SERVICES

BUYING INSURANCE

HIRING A TAXI

PERFORMANCE BY AN ACTOR / ARTIST

MAJOR BUSINESS OBJECTIVES


( VIA CS/CD )

COMMERCIAL

FINANCIAL

SALES (VOLUME, VALUE)


PROFIT
MARKET SHARE
RETURN ON
GROWTH RATE
INVESTMENT (ROI)
RANKING
RETAINING EXISTING AND
DEVELOPING NEW CUSTOMERS

ECONOMIC ACTIVITIES, SERVICE ECONOMY

ECONOMIC ACTIVITIES
WHAT?
NATIONAL WEALTH (GDP) CREATING ACTIVITIES
CLASSIFICATION OF EAs
a. PRIMARY EAs
AGRICULTURE, FORESTRY, MINING& FISHING
b. SECONDARY EAs
MANUFACTURING & CONSTRUCTION
c. TERTIARY EAs
SERVICES

ECONOMIC ACTIVITIES

SECTORS OF ECONOMY
a)
b)
c)

AGRICULTURE SECTOR, TREND


MANUFACTURING AND CONSTRUCTION SECTOR,
TREND
SERVICES SECTOR, TREND

SERVICE ECONOMY
AN ECONOMY IN WHICH:
a)

b)
c)
d)

A GREATER PORTION OF THE NATIONAL WEALTH(GDP)


IS CREATED BY THE SERVICES SECTOR OF ECONOMY
(T.EAs),
MOST PEOPLE ARE EMPLOYED IN SERVICES
MOST EXPENDITURE IS ON SERVICES AND
EXPORT OF SERVICES PLAYS AN IMPORTANT ROLE.

ROLE OF SERVICES IN ECONOMY

CRITERIA USED TO JUDGE THE IMPORTANCE OF


SERVICES IN THE ECONOMY.
1.
2.
3.
4.

OUTPUT OF WEALTH
EMPLOYMENT
CONSUMER EXPENDITURE
ROLE OF SERVICES IN EXPORT TRADE

PROBLEMS IN ASSESSING THE SIZE OF SERVICES SECTOR

THREE PROBLEMS
1.

2.

VARYING DEFINITION OF A SERVICE PRODUCT.


WHAT IS INCLUDED / NOT INCLUDED IN SERVICES
SECTOR.
DIFFERENT BASES OF MEASURING THE SIZE OF
SERVICES SECTOR.
a)
b)
c)
d)

3.

EMPLOYMENT BASIS
OUTPUT BASIS
EXPENDITURE ON SERVICES
ROLE IN EXPORT

POOR QUALITY OF OFFICIAL / SECONDARY DATA

UNO CLASSIFICATION OF COUNTRIES


1.
2.
3.

MORE DEVELOPED COUNTRIES (MDCs)


LESS DEVELOPED COUNTRIES (LDCs)
LESS LESS DEVELOPED COUNTRIES (LLDCs)

TREND TOWARDS SERVICE ECONOMY IN MDCs.

CHANGING TREND IN MDCs

SINCE THE WW II, SERVICES SECTOR OF ECONOMY


(ALL TYPES OF SERVICES) HAS GROWN FAST IN
MDCs, EG: USA, WE AND JP.

PAKISTAN:
a.
b.
c.

AGRICULTUR SECTOR 40%,


MANUFACTURING + CONSTRUTION SECTOR 35%,
SERVICES SECTOR 25%.

FAST GROTH RATE 8%, BEST JOBS, HIGH INCOME,


BEST TALENT
FUTURE OF SERVICES SECTOR IS BRIGHT.

FEATURES OF EMPLOYMENT IN SERVICES SECTOR


MORE EMPLOYMENT
COMPOSITION OF WORKFORCE IN SERVICES
SECTOR IS CHANGING. MORE WOMEN WORK IN
SERVICS ORGANIZATIONS
BETTER PAID JOBS,TALENT, AND CAREERS (BA, IT)
MORE PART-TIME WORKERS

REASONS FOR THE GROWTH OF SERVICES

REASONS FOR THE GROWTH OF


SERVICES IN ECONOMY

1)

EIGHT MAJOR REASONS


LOW LABOUR PRODUCTIVITY IN SERVICES
WHICH HAS LED TO SHIFT IN EMPLOYMENT.
LABOUR PRODUCTIVITY=OUTPUT PER
EMPLOYEE
WHY LOW PRODUCTIVITY IN SERVICS?
a) DECLINE IN HOURS WORKED PER PERSON
b) LESS/POORLY TRAINED MANPOWER IN
SERVICES SECTOR
c) LESS/ SLOW USE OF TECHNOLOGY IN
SERVICES.
HAS NOT BENEFITED FROM EOS.

REASONS FOR THE GROWTH OF


SERVICES IN ECONOMY
2)

OVERALL GROWTH OF DEMAND FOR SERVICES FROM


COMPANIES
FINANCIAL, INSURANCE, LEGAL, RESEARCH, ADVERTISING,
TRAINING SERVICES etc.

3)

OUTSOURCING OF BUSINESS SERVICES


BUSINESS SERVICES PREVIOUSLY CARRIED-OUT BY
THE COs THEMSELVES, ARE BEING OUTSOURCED
TODAY. COs CAN NOW HIRE MANY TYPES OF SERVICES
WITHOUT OWNING THEM AT LESS COST.
THUS, SERVICES COs HAVE BEEN SET-UP.
EG: MRAs, ADAs, ENGINEERING MAINTENANCE COs,
TRAINING INSTITUTIONS, TRANSPORT & FOOD
PROVIDERS, JANITORIALS SERVICES COs etc.

REASONS FOR THE GROWTH OF


SERVICES IN ECONOMY
4) DEREGULATION AND PRIVATIZATION OF SERVICES
BUSINESS (BIA, COM etc)
5) GROWTH OF DEMAND FOR SERVICES FROM CONSUMERS.
WHY?
a) SOCIETY IS GETTING WEALTHIER, THUS, THE
LIFESTYLE IS CHANGING
-

TRANSFER OF CERTAIN KINDS OF HOUSEHOLD JOBS TO


OTHERS
- PEOPLE HAVE TURNED TO SERVICES EXPENDITURE

b) LIFE EXPECTANCY IS INCREASING


c) LIFE IS BECOMING COMPLEX
d) MORE COMPLEX PRODUCTS

REASONS FOR THE GROWTH OF


SERVICES IN ECONOMY
6)
7)
8)

GROWTH OF DEMAND FROM CERTAIN PROFESSIONS


GLOBALIZATION OF BUSINESS
GROWTH OF GOVERNMENT SIZE

REASONS FOR INCREASE IN SERVICES EXPENDITURE


AND NEEDED SERVICES
REASONS

SERVICES NEEDED

WANT MORE LEISURE TIME


MORE WORKING WOMEN

TRAVEL, HOTELS,
DAY-CARE NURSERIES, FEMALE SERVANTS

INCREASED LIFE EXPECTANCY

HEALTH-CARE SERVICES, OLD-AGE


HOSTELS

COMPLEXITY OF PRODUCTS

SKILLED LABOUR / MECHANICS FOR


MAINTENANCE AND REPAIR

COMPLEXITY OF LIFE

PROFESSIONAL / CONSULTANTS &


ADVISERS, ADULT EDUCATIONAL CENTERS

INCREASE IN NEW PRODUCTS /


TECHNOLOGIES
EG: COMPUTERS, TVs, FAX,
INTERNET ETC.

NEED FOR NEW SERVICES

GLOBALIZATION OF BUSINESSES

INCREASED DEMAND FOR :


1)
2)
3)
4)
5)

COMMUNICATION SERVICES
TRAVEL SERVICES
INFORMATION SERVICES
LEGAL SERVICES
HOSPITALITY SERVICES

SERVICES DEVELOPED DURING THE LAST 30 YEARS


(A) CONSUMER SERVICES
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)

DAY-CARE NURSERIES
MOBILE PHONE SERVICES, ATM SERVICES
TV/COMPUTER/FAX EQUIPMENT REPAIR SERVICES.
PROFESSIONALS/ CONSULTANTS AND ADVISERS
CAR RENTAL SERVICES
TRAVEL AGENCIES
ADULT EDUCATION CENTERS
CREDIT CARD SERVICES
PHYSICAL FITNESS CENTERS
BEAUTY PARLOURS

11) CONSUMER LEASING COs.

SERVICES DEVELOPED DURING THE LAST 30 YEARS


(B) BUSINESS SERVICES
1)
2)
3)
4)
5)
6)
7)
8)

CONTRACT MAINTENANCE
CONSULTANT FIRMS
WAREHOUSING
MRAs, ADAs,
CONTRACT R AND D SERVICES,
FRANCHISING SERVICES
JANITORIAL SERVICES
OFFICE TRANSPORT AND FOOD SERVICES

HISTORICAL CHANGES IN UNDERSTANDING


A SERVICE PRODUCT

HOW HAS THE DEFINITION OF THE TERM


SERVICECHANGED OVER YEARS?

EARLIER DAYS:
ADAM SMITH
SERVICES ARE BARREN AND UNPRODUCTIVE ACTIVITES WHICH PERISH
INSTANTLY. DO NOT ADD WEALTH TO A NATION.

i.

LATER ON:
J.B. SAY
REJECTED ADAM SMITHS VIEWS.
ACCEPTED THAT SERVICES ARE USEFUL ACTIVITIES, WHICH SATISFY
CUSTOMERS NEEDS. ARE PRODUCTIVE AND ADD WEALTH TO A NATION.

ii.

ALFRED MARSHAL
USEFUL AND NEED SATISFYING ACTIVITIES WHICH GET DESTROYED AT
THE MOMENT OF THEIR CREATION.

iii.

DIFFERENT RESEARCHERS
ACTIVITIES WHICH DO NOT CHANGE THE PHYSICAL FORM OF A
GOOD EG. WHLs, RETs, ect

TODAY

WHAT IS A SERVICE / SERVICE PRODUCT


AN ACTIVITY / PERFORMANCE GIVEN BY A SERVICE PROVIDER TO A SERVICE
USER TO SOLVE HIS PROBLEM AND GIVE SATISFACTION AND AT THE SAME
TIME HELP THE COMPANY TO ACHIEVE ITS COMMERCIAL AND FINANCIAL
OBJECTIVES.
A SERVICE PRODUCT IS MOSTLY INTANGIBLE IN NATUTRE AND THE PURCHASE
OF A SERVICE PRODUCT DOES NOT RESULT IN OWNERSHIP BY THE USER. A
SERVICE IS NOT A THING

E.G:

RENTING A ROOM

TRANSPORTATION BY ANY MODE

SEEING A MOVIE

GETTING ADVICE FROM A DOCTOR / LAWYER

EDUCATION

BANKING SERVICES

BUYING INSURANCE

HIRING A TAXI

PERFORMANCE BY AN ACTOR / ARTIST

CHARACTERISTICS OF SERVICES

CHARACTERISTICS OF SERVICES
1)
2)
3)
4)
5)

INTANGIBILITY
PERISHABILITY
INSEPARABILITY
HETROGENEITY / VARIABILITY / INCONSISTANCY
NO OWNERSHIP BY THE USER
DISTINGUISH THEM FROM GOODS
THESE CHARACTERISTICS CREATE BOTH CHALLENGES
AND OPPORTUNITIES IN THE MARKETING OF SERVICES
AND AFFECT THEIR M-MIX

INTANGIBILITY

FIVE SENSES
WHAT?
CANNOT BE SEEN, ------------- BEFORE PURCHASE.
THEREFORE, DIFFICULT TO JUDGE THEIR QUALITY BEFORE
HAND. HOWEVER, OPINION ABOUT THEIR QUALITY CAN BE
OBTAINED FROM OTHERS.
BUYERS HAVE FAITH IN THE S. PROVIDER

INTANGIBILITY
PROBLEMS CREATED:
CANNOT BE PACKAGED, DISPLAYED, DEMONSTRATED,
SAMPLED, PATENTED, MAKES CHOICE DIFFICULT etc.

HOW PEOPLE JUDGE QUALITY


OF A SERVICE PRODUCT
1)
2)
3)
4)
5)
6)

REPUTATION OF THE SERVICE PROVIDER. RELIABILITY


PRESENT CUSTOMERS
PHYSICAL ENVIROMENT
FACILITATING EQUIPMENT
PRICE
PROCESSES
METHODS USED IN CREATING AND DELIVERING SERVICES

STRATEGIES TO OVERCOME PROBLEMS


CREATED BY INTANGIBILITY
a)

SHOW VISUALS OF THE BENEFITS OF A SERVICE


PRODUCT IN PROMOTIONAL CAMPAIGNS SO THAT
CUSTOMERS CAN SEE AND JUDGE QUALITY BEFORE
PURCHASE.

E.G.
AIRLINES:
SHOW A TRAVELER ENJOYING LEGROOM
EDUCATIONAL INSTITUTIONAL:
SHOW LEARNING ENVIRONMENT IN A CLASS ROOM
HOTEL:
SHOW A DECORATED HOTEL ROOM, A RESTAURANT.
PLASTIC SURGERY:
MAKE DRAWINGS AFTER THE SERVICE HAS BEEN APPLIED

STRATEGIES TO OVERCOME PROBLEMS


CREATED BY INTANGIBILITY
b)

CREATE A STRONG ORGANIZATION IMAGE.

c)

e)

PROVIDE TANGIBLE CLUESWHICH ENABLE HIM TO


JUDGE QUALITY.
STIMULATE WOM COMMUNICATIONTO OVERCOME
DISPLAY PROBLEM
USE BRAND NAMES TO OVERCOME PATENT PROBLEM.

f)

ADOPT POSTPURCHASE COMMUNICATION

d)

HOW RELEVANT IN TANGIBILITY IN SERVICES?


ALTHOUGH INTANGIBILITY IS A KEY
CHARACTERISTIC OF SERVICES BUT VERY FEW
SERVICES ARE PURELY INTANGIBLE
EG: TEACHING, NURSING etc.

MOST SERVICES ALSO CONSIST OF SOME


TANGIBLE ELEMENTS
EG: AIR TRAVEL, BANKING, TELECOMMUNICATION ETC.

THUS, TANGIBILITY IS RELEVANT TO MANY


SERVICES

PERISHABILITY
WHAT ?
PRODUCED,DELIVERED AND CONSUMED AT THE SAME TIME.
CANNOT BE STORED. CANNOT BE PRODUCED BEFORE
HAND. THEREFORE, IF NOT USED AT THE TIME A SERVICE IS
PRODUCED, IT GETS DESTROYED FOR EVER.
LOSS OF REVENUE

PERISHABILITY

PROBLEMS CREATED
SINCE SERVICES CANNOT BE STORED, CANNOT BE PRODUCED
BEFORE HAND AND SINCE THEIR DEMAND FLUCTUATES TOO
OFTEN, THEREFORE, PLANNING THEIR DEMAND AND SUPPLY IS
RELATIVELY DIFFICULT.

E.G.

1)
2)
3)

PUBLIC TRANSPORT
HOTEL ROOMS (HOLIDAY PLACES)
TELEPHONE SERVICE

STRATEGIES TO OVERCOME PROBLEMS


CREATED BY PERISHABILITY
a)

DEMAND SIDE

OFFER FLEXIBLE / DIFFERENTIAL PRICING STRATEGY AT


DIFFERENT TIMES OF THE YEAR, DAYS OF THE WEEK, DAY
/ NIGHT*

INTERMITTENT PROMOTION, NOT CONTINUOUS

OFFER GROUP DISCOUNT*

ORGANIZE SPECIAL SHOWS,INTRODUCE A NEW PRODUCT


DURING IDLE TIME

INTRODUE RESERVATION SYSTEM


*SHORT TERM STEPS. HABITUAL

b)

SUPPLY SIDE

USE PART-TIME EMPLOYEES

TEMPORARY INCREASE IN EQUIPMENT

INTRODUCE SELF-SERVICE IN STORES.

INSEPARABILITY

WHAT?
CANNOT BE SEPARATED FROM SERVICE PROVIDER OR THE
SOURCE AND OFTEN FROM THE SERVICE USER

INSEPARABILITY
PROBLEMS CREATED
1) REQUIRES THE PRESENCE OF THE SERVICE PROVIDER AND THE SERVICE
USER
MOSTLY PRODUCED,DELIVERED AND CONSUMED AT THE SAME TIME.
LOT OF INTERACTION AND CUSTOMERS PARTICIPATION. ENCOUNTER
POINTS.
2) LIMITS THE SCALE OF OPERATION. MASS PRODUCTION NOT POSSIBLE
3) AFFECTS QUALITY.
PROFESSIONAL AND ENTERTAINMENT SERVICES ARE NEEDED FROM A
SPECIFIC SERVICE PROVIDER. QUALITY DEPENDS ON BOTH SERVICE
PROVIDER AND SERVICE USER.
4) DIRECT SALES IS THE MAIN CHANNEL OF DISTRIBUTION (EXCEPT TAs, EAs).
THIS IS AN OPPORTUNITY.SOME SERVICES CAN BE DELIVERED
ELECTRONICALLY.

STRATEGIES TO OVERCOME PROBLEMS


CREATED BY INSEPARABILITY
1)
2)
3)
4)
5)

WORK IN LARGE GROUPS


WORK FAST
TRAIN MORE SERVICE PROVIDERS
USE AUTOMATED MACHINES
USE MULTISITE LOCATIONS

HETROGENEITY / VARIABILITY / INCONSISTANCY

WHAT?
EACH UNIT OF SERVICE MAY DIFFER IN QUALITY.
CUSTOMERS ARE AWARE OF IT.
EXAMPLES

DOCTORS (WHO, WHEN, WHERE)


PIA (DIFFERENT FLIGHTS)
FRANCHISE OPERATIONS
BANK BRANCHES

QUALITY DEPENDS UPON:


a)
b)
c)
d)
e)
f)

SERVICE PROVIDER
CUSTOMER(S)
WHEN PROVIDED
WHERE PROVIDED
FACILITATING EQUIPMENT
PROCESS OF CREATING AND DELIVERING A SERVIC PRODUCT

HETROGENEITY / VARIABILITY / INCONSISTANCY

PROBLEMS CREATED
1)
2)

VARIATION IN QUALITY
DIFFICULT TO STANDARDIZE QUALITY

STRATEGIES TO OVERCOME PROBLEMS


CREATED BY HETROGENEITY

DIFFICULT TO STANDARDIZE EACH UNIT OF SERVICE.


1) STANDARDIZE SERVICE CREATION, PRODUCTION
AND DELIVERY PROCESSES
2) STANDARDIZE PHYSICAL ENVIRONMENT / TIMING
3) CONSTANT TRAINING OF S. PROVIDERS
4) MECHINIZE SERVICES
5) MONITOR CS PERIODICALLY
6) STANDARDIZE CUSTOMERS SPECIFICATIONS

NO OWNERSHIP
DOES NOT BECOME OWNER, CAN USE THE
SERVICE / FACILITY. NO TRANSFER OF
OWNERSHIP TITLE. PAYMENT IS MADE FOR
USING THE SERVICE / FACILITY.

NO OWNERSHIP
PROBLEM CREATED
SOME TIME NO EVIDENCE OF PURCHASE AND
USE

NO OWNERSHIP
STRATEGY TO OVER COME PROBLEM
PROVIDE A PHYSICAL CLUE

MARKETING DIFFICULTIES / CHALLENGES WHICH ARISE DUE TO


CHARACTERISTICS OF SERVICES

NO OWNERSHIP

NO EVIDENCE OF PURCHASE AND USE

FRAMEWORKS

FRAMEWORKS TO HELP UNDERSTAND


SERVICES AND PHYSICAL PRODUCTS
PSS, SSP
FEW PRODUCTS ARE EITHER PURE TANGIBLE
OR INTANGIBLE
MOST PRODUCTS ARE COMBINATION OF BOTH
TANGIBLE AND INTANGIBLE ELEMENTS.
CUSTOMER SATISFACTION COMES FROM BOTH
TANGIBLE AND INTANGIBLE ELEMENTS OF A
PRODUCT.
EG: RESTAURANTS:
CS COMES FROM BOTH FOOD AND THE SERVICES GIVEN.
COURTESY, SPEED, ENVIRONMENT, CONVENIENCE etc.

GOODS-SERVICES CONTINUUM MODEL


GOODS-SERVICES CONTINUUM MODEL
A MODEL, WHICH BASED ON TANGIBLE AND
INTANGIBLE ELEMENTS, SHOWS THE RANGE
OF PRODUCTS OFFERED FROM PURE
TANGIBLES TO PURE INTANGIBLES, FOR CS, IN
THE MARKET.

GOODS-SERVICES CONTINUUM MODEL

DEG OF
INTANG.
Es

RESTAURANT

DEG OF
TANG.
Es

CAR
TOOTHPASTE

AIR
TRAIVAL

TEACHING

BALANCE
BETWEEN
TANGIBLE AND
INTANGIBLE
ELEMENTS

FIVE CATEGORIES OF PRUDUCTS BASED ON G-S CONTINUUM

PURE TANGIBLE PRODUCTS


NO PSS / ACCOMPANYING SERVICES
TANGIBLE PRODUCTS + PSS
PURE INTANGIBLE SERVICE PRODUCTS
SERVICE PRODUCT + SSP
ACCOMPANYING MINOR TANGIBLE PRODUCTS
TANGIBLE PRODUCT + SERVICE PRODUCT, IN THE SAME
RATIO. HYBRID

SHOSTACKS MOLECULAR MODEL OF A PRODUCT


THIS MODEL SUGGESTS TO THINK OF A
PRODUCT AS A MOLECULE ,HAVING TANGIBLE
AND INTANGIBLE ELEMENTS.
BASED ON WHETHER THE DOMINANT
ELEMENTS ARE TANGIBLE OR INTANGIBLE, THIS
MODEL HELPS TO VISUALIZE BOTH A SERVICE
PRODUCT AND A TANGIBLE PRODUCT.

SHOSTACKS MOLECULAR MODEL OF A PRODUCT


A. SERVICE PRODUCT
THE MOLECULE, INCLUDING THE NUCLEUS OF A
S.PRODUCT, IS DOMINATED BY INTANGIBLE
ELEMENTS, NO OWNERSHIP OF THE SOURCE
WHICH PRODUCES THE SERVICE.
B. TANGIBLE / PHYSICAL PRODUCT
THE MOLECULE, INCLUDING THE NUCLEUS, IS
DOMINATED BY TANGIBLE ELEMENTS.
OWNERSHIP OF THE PHYSICAL PRODUCT.

SHOSTACKS MOLECULAR MODEL OF A PRODUCT

AIR TRAVEL

CAR

KEY
ELEMENTS OF A PRODUCT
= TANGIBLE ELEMENTS
= INTANGIBLE ELEMENTS

FUNCTIONAL DIFFERENCES BETWEEN


PHYSICAL PRODUCTS AND SERVICES

FUNCTIONAL DIFFERENCES
BETWEEN PHYSICAL PRODUCTS AND
SERVICES
SERVICES
1) CANNOT BE FELT BEFORE
PURCHASE.
2) SHOW LACK OF USE OF
PACKAGING
3) DIFFICULT TO SAMPLE /
DEMONSTRATE / DISPLAY
4) PATENT NOT POSSIBLE
5) DIFFICULT TO JUDGE
PRICE & QUALITY BEFORE
HAND
6) REQURES PRESENCE OF
SERVICE PROVIDER

PHYSICAL PRODUCTS
CAN BE..

MOSTLY IN A PACKAGE

CAN BE EASILY SAMPLED /


DISPLAYED

PATIENT IS POSSIBLE

CAN JUDGE

NOT NECESSARILY

FUNCTIONAL DIFFERENCES
BETWEEN PHYSICAL PRODUCTS AND
SERVICES
7) SIMULTANEOUS
PRODUCTION &
CONSUMPTION
8) DIRECT SALE, RARELY
MIDDLEMAN IS NEEDED.
SHORT D. CHANNEL IF AT
ALL NEEDED.
9) LIMITED SCALE OF
OPERATION. ABSENCE OF
MASS PRODUCTION
10)PRECISE
STANDARDIZATION OF
QUALITY IS DIFFICULT
(WHO, WHEN & WHERE
PROVIDED)

AT DIFFERENT TIMES

MOSTLY SOLD VIA M. MEN

MASS PRODUCTION

POSSIBLE

FUNCTIONAL DIFFERENCES
BETWEEN PHYSICAL PRODUCTS AND
SERVICES
11) CANNOTBE STORED,
INVENTORY NOT
POSSIBLE, CANNOT
PRODUCE BEFORE HAND

CAN BE STORED. CAN


PRODUCED BEFORE HAND

12) DEMAND FLUCTUATION IS


OFTEN & DIFFICULT TO
EVEN-OUT

LESS OFTEN. EASY TO


MATCH

13) CANNOT BE OWNED

CAN BE OWNED

14) AN ACTIVITY

A THING

CLASSIFICATION OF SERVICES,
SECTORS OF SERVICE PORVIDERS

CLASSIFICATION OF SERVICES

A.

NO STRICT BASES OF CLASSIFICATION.


DIFFERENT AUTHORS HAVE USED DIFFERENT
BASES
BASIC SOURCE OF SERVICE
1)

2.

PEOPLE-BASED SERVICES
i. RENDERED BY PROFESSIONALS / CONSULTANTS
ii. RENDERED BY SKILLED LABOUR
iii. RENDERED BY UNSKILLED LABOUR
EQUIPMENT- BASED SERVICES
i. AUTOMATED EQUIPMENT
ii. EQUIPMENT OPERATED BY PROFESSIONALS OR
SKILLED PEOPLE
iii. EQUIPMENT OPERATED BY UNSKILLED PEOPLE

CLASSIFICATION OF SERVICES
B.

BUYER RELATED BASES


i.
ii.

CURTOMERS PRESENCE NECESSARY OR NOT


BUYERS PURCHASE MOTIVE
CONSUMER SERVICES OR BUSINESS / INDUSTRIAL SERVICES

iii.

SHOPPING HABIT
HOW A BUYER PURCHASES A SERVICE IN TERMS OF
EFFORTS, TIME SPENT AND FREQUENCY
a)

CONSUMER CONVENIENCE SERVICES


FREQUENTLY USED, LOW PRICE, WIDELY AVAILABLE
b) CONSUMER SHOPPING SERVICES
QUALITY - PRICE COMPARISION
c) CONSUMER SPECIALITY SERVICES
STRONG LIKING FOR A S. PROVIDER
d) CONSUMER UNSOUGHT SERVICES

CHARACTERISTICS OF VARIOUS TYPES


OF CONSUMER SERVICES
CHARACTERISTICS

C. CONVENIENCE
SERVICES (TAXI)

C. SHOPPING
SERVICES (AIR
TRAVEL)

C. SPECIALITY
SERVICES (MEDICAL
ADVICE)

TIME & EFFORTS


SPENT

VERY LITTLE

SOMEWHAT

CONSIDERABLE

S. PROVIDERS
PREFERENCE

NO / LITTLE

STRONG

VERY STRONG

PRIOR PLANNING
FOR PURCHASE

NO / LITTLE

YES

YES

PRICE LEVEL

LOW

HIGH

HIGH

PRICE QUALITY
COMPARISON

NO

YES

NO

PURCHASE
FREQUENCY

FREQUENTLY

INFREQUENTLY

INFREQUENTLY

CLASSIFICATION OF SERVICES
C.

SELLER RELATED BASES


i. S. PROVIDERS MOTIVE

ii.

D.

PROFIT (BUSINESS SERVICES)


NOT-PROFIT (CHARITY SERVICES)
SECTOR WHICH PROVIDES THE SERVICE
GOVT SECTOR SERVICES
FEDERAL, PROVINCIAL AND LOCAL GOVERNMENT
BUSINESS SECTOR SERVICES
PRIVATE NON PROFIT SECTOR SERVICES

FUNCTION PERFORMED BY SERVICES

COMMUNICATION, TRANSPORTATION, EDUCATIONAL,


FINANCIAL, HEALTH SERVICES etc.

SERVICE PRODUCT CATEGORIES


1. TRANSPORTATION AND COMMUNICATION SERVICES.
2. UTILITY SERVICES
SERVICES NEEDED FOR HOUSEHOLD OPERATIONS
3. BANKING AND INSURANCE SERVICES
4. RENTAL AND HOUSING, HOTELS & ESTATE AGENTS SERVICES
5. PERSONAL/HEALTH-CARE SERVICES
6. RECREATION AND LEISURE SERVICES
7. PROFESSIONAL AND CONSULTANT SERVICES
8. DISTRIBUTION SERVICES
9. PUBLIC ADMINISTRATION AND DEFENCE SERVICES
10. EDUCATIONAL SERVICES
11. CONSTRUCTION AND ENGINEERING SERVICES
12. ECOLOGY SERVICES
13. TOURISM

SECTORS OF SERVICE PROVIDERS


(1)

GOVERNMENT SECTOR SERVICE PROVIDERS.


COURTS, HOSPITALS, EDUCATIONAL INSTITUTIONS,
SECURITY AGENCIES, PAKISTAN RAILWAY, POST
OFFICE, PTCL,

(2) BUSINESS SECTOR SERVICE PROVIDERS


BANKS, INSURANCE COMPANY, TRANSPORTATION
COMPANIES, EDUCATIONAL INSTITUTIONS, HOSPITALS,
MOTION PICTURES , REAL ESTATE AGENTS.
(3) PRIVATE NON-PROFIT SECTOR SERVICE PROVIDERS
CHARITY ORGANIZATIONS, HOSPITALS, EDUCATIONAL
INSTITUTIONS.

MARKETING AND TYPES OF MARKETING


IN A SERVICE COMPANY

MARKETING OF SERVICES
INTRODUCTION

ORDER OF ADOPTION OF MARKETING


MARKETING IS LESS DEVELOPED IN SERVICES
BUSINESSES. IT STARTED IN 1975 WHEN:
a)

MARKETING PEOPLE MOVED FROM


MANUFACTURING COMPANIES TO SERVICES
COMPANIES
b) DEVELOPMENT OF SERVICES MARKETING
LITERATURE
c) TEACHING OF SERVICES MARKETING

PAKISTAN 1995

BASICALLY SERVICES ARE MARKETED IN THE


SAME MANNER AS THE GOODS.
PRINCIPLES, CONCEPTS, PROCESSES etc ARE
SAME.

ORDER OF ADOPTION OF MARKETING


A. IN THE BUSINESS SECTOR
1) CONSUMER NONDURABLE GOODS MANUFACTURING
COMPANIES
2) CONSUMER DURABLE GOODS MANUFACTURING
COMPANIES
3) INDUSTRIAL EQUIPMENT AND RMs MANUFACTURING
COMPANIES
4) CONSUMER SERVICES COMPANIES (BIA, HOTELS).

B. CHARITY ORGANIZATIONS

MARKETING OF SERVICES
INTRODUCTION

HOWEVER, DUE TO SOME CHARACTERISTICS OF


SERVICES, MARKETING OF SERVICES IS
SOMEWHAT DIFFERENTAND DIFFICULT.
FOR EXAMPLE
i.

SERVICES MARKETING MIX CONSISTS OF 7 VARIABLE


ELEMENTS AND NOT 4
ii. MUCH MORE CUSTOMER / EMPLOYEE INTERACTION
iii. PATENT PROTECTION IS IMPOSSIBLE DUE TO
INTANGIBILITY. THUS, PRODUCT DIFFERENTIATION IS
SHORT LIVED.

DIFFERENCE BETWEEN THE MARKETING CONCEPT


AND MARKETING MANAGEMENT

TWO VIEWS ABOUT MARKETING


a)

MARKETING CONCEPT
EVERYBODY IS CUSTOMER FOCUSED.
DECISIONS IN ALL DEPARTMENTS ARE CUSTOMER
FOCUSED.
COORDINATED FUNCTION

DIFFERENCE BETWEEN THE MARKETING CONCEPT


AND MARKETING MANAGEMENT
b)

MARKETING MANAGEMENT
NOT SO IN MARKETING MANAGEMENT.
CS THE IS RESPONSIBILITY OF THE MARKETING
DEPARTMENT ONLY.
ISOLATED FUNCTION.

PURPOSE OF BUSINESS

TO CONTINUOUSLY CREATE, WIN AND RETAIN SUFFICIENT


NUMBER OF SATISFIED CUSTOMERS, PROFITABLY.
TO ACHIEVE IT, A COMPANY NEEDS TO USE THE MARKETING
CONCEPT.

CRITERIA TO ASSESS
HOW CUSTOMER ORIENTED A COMPANY IS ?
1)
2)

ATTITUDE AND BEHAVIOUR OF EVERYBODY TOWARDS THE


CUSTOMERS.
COORDINATION AT TWO LEVELS:
a)
b)

3)
4)
5)
6)
7)

WITHIN THE MARKETING DEPARTMENT


BETWEEN MARKETING AND ALL OTHER DEPARTMENTS.

WHETHER OR NOT KEY MANAGERS ARE IN CONTACT WITH


CUSTOMERS.
HOW ACCURATELY THE NEEDS OF TM CUSTOMERS HAVE
BEEN IDENTIFIED
EXTERNAL MARKETING. CS LEVEL (H, M, L). SHOULD KEEP
INCREASING
INTERNAL MARKETING
INTERACTIVE MARKETING

EXAMPLES OF MARKET-ORIENTED OR
NOT MARKET-ORIENTED SERVICE ORGANIZATIONS.
A.

MARKET- ORIENTED COMPANIES.


1) DHL
2) CITIBANK
3) MARRIOTT HOTELS
4) SINGAPORE AIRLINE
COMPLY WITH CRITERIA OF A MARKET-ORIENTED
COMPANY.

EXAMPLES OF MARKET-ORIENTED OR
NOT MARKET-ORIENTED SERVICE ORGANIZATIONS.

NOT MARKET- ORIENTED COMPANIES


1) PTCL
2) KESC
3) NBP
DO NOT COMPLY WITH CRITERIA OF A MARKETORIENTED COMPANY.

STEPS NEEDED TO IMPLEMENT


THE MARKETING CONCEPT
A.

ROLE OF TOP MANAGEMENT


1) BE FIRST TO CHANGE TO CUSTOMER
FOCUSED ATTITUDE AND BEHAVIOUR. ROLE
MODEL. IF THEY DONT DO SO, OTHERS WILL
NOT DO SO.
2) SET OBJECTIVES AND INCENTIVES WHICH ARE
CUSTOMER-FOCUSED.
3) PROMOTE MARKET-ORIENTED EXECUTIVES IN
ALL DEPARTMENTS.

STEPS NEEDED TO IMPLEMENT


THE MARKETING CONCEPT
B.

C.

TRAINING IN CUSTOMER-ORIENTATION AND


BASIC MARKETING
TO CREATE CUSTOMER FOCUSED ATTITUDE
AND BEHAVIOUR IN EVERYBODY.
CUSTOMER-ORIENTED CULTURE.
STATING IN EVERYBODYS JOB DESCRIPTION
HOW HIS / HER JOB AFFECTS CS.

WHEN MARKET-ORIENTATION
MAY BE INAPPROPRIATE
PREVENTION BY LAW
PROFESSIONALLY MARKETING IS CONSIDERED
UNETHICAL
IN TIMES OF SCARCITY

STATUS OF MARKETING
IN SERVICES COMPANIES

a)

TWO CONFLICTING VIEWS


MARKETING IS LESS USED / DEVELOPED IN
SERVICES
REASONS
1) PROBLEMS CREATED DUE TO SPECIFIC
CHARACTERISTICS OF SERVICES.
2) OPPOSITION TO MARKETING FROM SOME
PROFESSIONS
3) MANY SERVICES ORGANIZATIONS ARE SMALL AND
IN DIRECT CONTACT WITH CUSTOMERS,
THEREFORE, SUCH BUSINESSES DO NOT NEED
MARKETING

STATUS OF MARKETING
IN SERVICES COMPANIES
4) DEMAND IS GREATER THAN SUPPLY.
5) SOME SERVICES COs HAVE MONOPOLY OR
NO / LITTLE COMPETITION.
5) PREVENTED BY LAW.
6) POOR QUALITY OF MANAGEMENT PERSONNEL
IN SOME SERVICES COs. THEY ARE NOT
TRAINED IN MARKETING.
7) OVERALL LACK OF AVAILABILITY OF
MARKETING KNOW-HOW ABOUT SERVICES
MARKETING.

STATUS OF MARKETING
IN SERVICES COMPANIES

SERVICES COMPANIES USE / HAVE DEVELOPED


MARKETING
REASONS
1. POSITIVE CHANGE IN ATTITUDE TOWARDS
MARKETING IN SERVICES COs DURING THE LAST 30
YEARS.
EG: BIA, HOTELS,CAR RENTAL COs etc..
2) ARE SUCCESSFULLY FIGHTING COMPETITION.
3) HAVE SUCCESSFULLY INTRODUCED NEW S.
PRODUCTS
EG: CREDIT CARDS, CONSUMER FINANCING
SCHEMES, NEW INSURANCE POLICIES, DIFFERENT
EDUCATIONAL COURSES etc.

STATUS OF MARKETING
IN SERVICES COMPANIES
4. REMOVAL OF LEGAL / PROFESSIONAL
BARRIERS.
5. MOVEMENT OF MARKETING PERSONNEL
FROM MANUFACTURING BUSINESSES TO
SERVICES COs.
6) DEVELOPMENT OF SERVICES MARKETING
KNOW-HOW AND TEACHING SERVICES
MARKETING IN BUSINESS SCHOOLS

STATUS OF MARKETING
IN SERVICES COMPANIES
CONCLUSION
USE OF MARKETING IN SERVICES COs IS SLOW, LESS
SPREAD AND POORLY STRUCTURED BUT IT IS
DEVELOPING.

THREE TYPES OF MARKETING IN A SERVICE COMPANY


1)
2)

3)

EXTERNAL MARKETING
FIND NEEDS OF TM AND MAKE AN APPROPRIATE M-MIX TO
SERVE / SATISFY THE CUSTOMERS.WIN AND RETAIN THEM
INTERNAL MARKETING
SELECT, TRAIN, COACH, DEVELOP, MOTIVATE AND
COMPENSATE EMPLOYEES TO SERVE CUSTOMERS WELL.
CREATE ABILITY, WILLINGNESS AND JOB MATCHING
PERSONALITY
INTERACTIVE MARKETING
TEACH CUSTOMERS SERVING SKILLS (TOUCH SKILLS)
SUCH AS COURTEOUSY, CONCERN, GRACEFULNESS etc.
ACTUAL DELIVERY OF SERVICE TAKES PLASE DURING
INTERACTIVE MARKETING

THREE TYPES OF MARKETING IN A SERVICE COMPANY


COMPANY

INTERNAL
MARKETING

EMPLOYEES

EXTERNAL
MARKETING

INTERACTIVE MARKETING

CUSTOMERS

MARKETING-MIX IN SERVICES
AND MARKETING STRATEGIES

MARKETING-MIX IN SERVICES BUSINESS


WHAT
MARKETING-MIX MEANS A COMBINATION OF SEVEN
VARIABLE AND CONTROLLABLE ELEMENTS OF MARKETING,
DETERMINED BY KEEPING IN MIND THE MARKETING
ENVIRONMENT AND THE TM, TO ACHIEVE COMPANYS
COMMERCIAL AND FINANCIAL OBJECTIVES, IN THE MOST
EFFICIENT WAY, VIA CUSTOMER SATISFACTION
DIFFERENT COMPANIES CHOOSE DIFFERENT MARKETING- MIX,
ACCORDING TO THEIR TM.
CHANGING ONE ELEMENT OF MARKETING MIX, AFFECTS THE
OTHER ELEMENTS.

EXTERNAL UNCONTROLLABLE FACTORS


WHICH MAKE THE MARKETING ENIRONMENT

a)
b)

POLITICAL/LEGAL FACTORS
ECONOMIC FACTORS
CULTURAL/SOCIAL FACTORS
DEMOGRAPHIC FACTORS
GEOGRAPHIC FACTORS
TECHNOLOGICAL FACTORS
COMPETITIVE FACTORS
INFLUENCE CB, M-MIX, ALL COMPANIES
NOT KNOWING THE M E IS LIKE A BIRD WITHOUT
FEATHERS(SAADI)
c) IT IS USELESS TO TELL A RIVER TO STOP RUNNING.
BEST IS TO LEARN SWIMING IN THE DIRECTION IT IS
FLOWING (CHINESE PROVERB)

MARKETING-MIX IN SERVICES BUSINESS


SEVEN ELEMENTS
4 TRADITIONAL + 3 NEW ONES
IGNORING ANY OF THEM CAN LEAD TO FAILURE.
CUSTOMERS HEAVILY RELY ON PRICE, PEOPLE
AND PHYSICAL ENVIRONMENT/ EVIDENCE TO
JUDGE THE QUALITY OF A SERVICE PRODUCT.

REASONS FOR EXPANDING M-MIX FOR SERVICES


1.
2.
3.

TRADITIONAL M-MIX NOT SUFFICIENT TO MAKE


CUSTUMERS BUY AND SATISFY THEM
HETROGENEITY CHARACTERISTIC NECESSITATES
INCLUSION OF PROCESSES
INSEPARABILITY CHARACTERISTIC NECESSITATES
INCLUSION OF PEOPLE.
a)
b)

4.

PEOPLE WHO CREATE AND DELIVER THE SERVICE.


SERVICE PROVIDER
PEOPLE WHO RECEIVE THE SERVICE.THE CUSTOMER,
OTHER CUSTOMERS

NEED FOR QUALITY SERVICE ALSO NECESSITATES


INCLUSION OF PHYSICAL ENVIRONMENT AND PHYSICAL
EVIDENCE

WHY MARKETING STRATEGIES FORMULATION


IS DIFFICULT IN SERVICES
a)

UNIQUE CHARACTERISTICS OF SERVICES :

UNLIKE GOODS, INTANGIBILITY CHARATERISTIC OF


SERVICES MAKES CONSUMERS CHOICE OF DIFFERENT
COMPETING PRODUCTS DIFFICULT. OPINION CAN BE
OBTAINED FROM OTHERS.
INSEPARABILITY MAKES MARKETING STRATEGY OF
SERVICES LOCALIZED. RELATIVELY DIFFICULT TO SELL
SERVICES ON NATIONWIDE BASIS.
PERISHABILITY MAKES STORAGE OF SERVICES
IMPOSSIBLE, THUS, PLANNING SUPPLY AND DEMAND OF
SERVICES IS DIFFICULT
HETROGENEITY MAKES ENSURING OF UNIFORM QUALITY
DIFFICULT.

CUSTOMER SATISFACTION (CS)

CUSTOMER SATISFACTION (CS)


WHAT IS CS?
A FEELING OF PLEASURE CREATED IN THE MIND
OF A CUSTOMER, WHEN THE ACTUAL PRODUCT
OR BRAND PERFORMANCE MATCHES WITH THE
BUYERS EXPECTED PRODUCT PERFORMANCE,
ON USE, AND WHICH MAKES A CUSTOMER REPURCHASE THE PRODUCT.
SATISFIED CUSTOMERS ARE AN APPRECIATING
ASSET.
THEY SHOULD BE THE GOAL OF MARKETING AND
ALSO THEY SHOULD BE USED AS A TOOL IN
PROMOTION.

SALES AND PROFIT


IS NOT THE OBJECTIVE OF MARKETING,
IT IS THE BYPRODUCT AND REWARD
OF
CUSTOMER SATISFACTION.

LEVEL OR DEGREE OF CS
1)

2)

3)

JUST SATISFIED CUSTOMERS


APP = EPP
SHOW LOYALTY TOWARDS THE PRODUCT OR
BRAND AND THEY MAY REPEAT PURCHASE.
HIGHLY SATISIFIED OR DELIGHTED CUSTOMERS
APP > THAN EPP
SHOW HIGH LOYALTY TOWARDS THE PRODUCT
OR BRAND DUE TO BOTH EMOTIONAL AND
RATIONAL AFFINITY. THEY WILL REPEAT
PURCHASE.
DIS-SATISFIED CUSTOMERS
APP IS <THAN EPP
CUSTOMER SWITCHES TO ANOTHER PRODUCT
OR BRAND

BENEFITS OF CS
A SATISFIED CUSTOMER
BUYS AGAIN
TALKS FAVOURABLY TO OTHERS.
PAYS LESS ATTENTION TO COMPETING BRANDS
AND TO THEIR PROMOTION.
BUYS OTHER PRODUCTS OF THE SAME COMPANY.
MAKES EASY TO INCREASE PRICE BY A
REASONABLE MARGIN.

CHAIN OF EVENTS RESULTING FROM CV AND CS


CV
FIRST TIME PURCHASE
APP
MATCHES / EXCEEDS EPP
BRAND LOYALTY
REPEATS PURCHASE
INCREASE IN SALES AND MS
(COMMERCIAL OBJECTIVES)
EOS
(TOTAL UNIT COST REDUCES)
INCREASE IN PROFIT, ROI, DIVIDEND
(FINANCIAL OBJECTIVES)

METHODS OF TRACKING CS
TRACK BOTH OWN AND MAJOR COMPETITORS CS
LEVEL
FOUR METHODS:
1) COMPLAINT AND SUGGESTION SYSTEM
- THROUGH A FORM, TOLL-FREE TELEPHONE
NUMBER, FAX, E-MAIL ETC., THE COMPANY
MOTIVATES CUSTOMERS TO GIVE FEEDBACK
(LIKES / DISLIKES), ON USING THE PRODUCT.
- OFTEN USED BY RESTAURANTS, HOTELS,
AIRLINES, PETROL STATIONS, HOSPITALS ETC
- LESS THAN 5% CUSTOMERS COMPLAIN / GIVE
SUGGESTIONS. THINK WONT DO ANY GOOD
- SWITCH IF NOT SATISFIED.
- NOT A GOOD METHOD.

METHODS OF TRACKING CS
2)

CUSTOMER SATISIFACTION SURVEY


- PERIODICALLY.
- THE COMPANY INTERVIEWS
CUSTOMERS IN PERSON, OVER TELEPHONE OR MAILS A
QUESTIONNAIRE TO A RANDOM SAMPLE OF TM
CUSTOMERS, TO GET FEEDBACK ON THEIR LEVEL OF CS,
BOTH ON OWN AND COMPETITORS BRANDS.

METHODS OF TRACKING CS
3)

GHOST OR MYSTERY SHOPPING


- A GHOST SHOPPER IS A HIRED CUSTOMER.
- SHOPPING BY A GHOST SHOPPER, BOTH OF
COMPANYS AND COMPETITORS PRODUCTS.
HIS REPORT, CONTAINING FINDINGS, FORMS
BASIS OF CS LEVEL.

4)

LOST CUSTOMER ANALYSIS AND INTERVIEW


WITH EX-CUSTOMERS
A) THE COMPANY MONITORS TREND IN
CUSTOMER LOSS RATE AND
B) INTERVIEWS EX-CUSTOMERS

SERVICE PRODUCT

SERVICE PRODUCT
a)
b)
c)
d)
e)
f)

PRODUCT MIX AND PRODUCT MIX DIMENSIONS


QUALITY
QUANTITY
BRANDING
RELIABILITY
WARRANTY

THE SERVICE PRODUCT

THE FIRST AND THE MOST IMPORTANT ELEMENT OF THE M-MIX


IN SERVICES. NO AMOUNT OF PROMOTION OR PRICE
ADVANTAGE WILL BE HELPFUL IF THE S.PRODUCT IS BAD AND
DOES NOT CONFORM TO THE CUSTOMERS REQUIREMENTS.

S.PRODUCT MAY BE
a) CONSUMER SERVICE PRODUCT
b) BUSINESS SERVICE PRODUCT
c) PEOPLE- BASED
d) EQUIPMENT-BASED

TO ANALYZE AND PLAN A SERVICE PRODUCT IN DETAILS,IT IS


BETTER TO DIVIDE IT INTO 5 LEVELS.

EACH LEVEL ADDS BOTH:


a) CUSTOMER VALUE(BENEFITS) AND
b) COST

FIVE LEVELS OF A SERVICE PRODUCT


PLE
O
PE

P. E
NV
IRO
NM
EN
T
DEL

CR

BRN

COMP
PRIMARY AND
ADDITIONAL
BENEFIT(S)
SOUGHT

XS

CONSUMER
BENEFIT
CONCEPT
OR CORE
PRODUCT
LEVEL

CO

SERVICE
CONCEPT
OR BASIC
EXPECTED
PRODUCT
LEVEL

QLTY
Fs

SERVICE
DELIVERY
SYSTEM

PR
OC
E

SS

TY
N
RA
R
WA

F. EQUIPMENT

SERVICE
OFFER OR
AUGMENTED
PRODUCT
LEVEL
POTENTIAL
PRODUCT
LEVEL

CONSUMER BENEFIT CONCEPT


CORE PRODUCT LEVEL

THIS LEVEL SHOWS PRIMARY AND ADDITIONAL BENEFITS WHICH


TM CUSTOMERS WANT.
FOR EXAMPLE: A HOTEL GUEST WANTS:
1. REST,COMFORT
2. SLEEP
3. FACILITIES FOR PERSONAL PREPARATION
4. ROOM SERVICE
5. AVAILABILITY OF SNACKS
6. PLEASANT VIEW etc.
AS BENEFITS, WHEN HE RENTS A HOTEL ROOM.
THUS, BENEFITS SHOULD BE CENTRAL OR THE MAIN
FOCUS IN DESIGNING A HOTEL ROOM OR ANY S.PRODUCT.
MAIN AND ADDITIONAL REASONS FOR PURCHASE

CONSUMER BENEFIT CONCEPT


CORE PRODUCT LEVAL

PRIMARY AND ADDITIONAL BENEFITS MAY CHANGE


OVERTIME, THUS, NEED FOR UPDATING A S.PRODUCT
PERIODICALLY.
BENEFITS MAY BE:
A) RATIONAL
B) EMOTIONAL

SERVICE CONCEPT
BASIC EXPECTED PRODUCT LEVEL
MEANS THE BASIC SERVICE PRODUCT EXPECTED
BY THE CUSTOMER, BASED ON PRIMARY AND ADDITIONAL
BENEFITS SOUGHT. IT INCLUDES COMPOSITION/ COMPONENTS,
BRAND NAME, COMPANY NAME, FEATURES, QUALITY etc.
FOR EXAMPLE
REST, SLEEP AND FACILITIES FOR PERSONAL PREPARATION
WOULD MEAN A HOTEL ROOM HAVING:
- COMFORTABLE BED, BEDSHEETS etc.
- SUITABLE FURNITURE
- ALMIRAH
- BATHROOM WITH NECESSARY FACILITIES
- QUIET ENVIRONMENT
GIVE CS

SERVICE OFFER
THE AUGMENTED PRODUCT LEVAL
THE SERVICE PRODUCT OFFERED BY THE COMPANY OR THE
ACTUAL S.PRODUCT WHICH THE CUSTOMER GETS.
SERVICE OFFER IS MADE UP OF:
A) SERVICE CONCEPT / THE BASIC EXPECTED PRODUCT PLUS
B) EXTRA UNEXPECTED SERVICES OFFERED BY THE COMPANY AND
C) SSP
- USED AS CAs/DAs FOR PRODUCT POSITIONING AND FOR

CUSTOMERS DELIGHT.
EXAMPLES:
A) HOTEL ROOM
FREE STAY OF CHILDREN, COMPLIMENTARY
BREAKFAST, LATE CHECK-OUT, TV, FRESH FLOWERS, AIR
PORT PICK-UP AND DROP, IN HOUSE MOVIES, CREDIT
FACILITIES
B) FLIGHT
MOVIES, MUSIC, DUTY FREE MERCHANDIZE SELLING,
AIR TO GROUND TELEPHONE FACILITIES, ANNIVERSARY
CELEBRATIONS etc.

TWO ASPECTS OF SERVICE OFFER


AUGMENTED PRODUCT LEVEL
1. SERVICE ELEMENTS
2. SERVICE QUALITY AND QUANTITY

ELEMENTS OF SERVICE OFFER


AGUMENTED PRODUCT LEVEL

TWO TYPES OF ELEMENTS


A) INTANGIBLE ELEMENTS
FOR EXAMPLE:
IN AIR TRAVEL, THE INTANGIBLE ELEMENTS ARE:
PUNCTUAL,FREQUENTS & CONVENIENT FLIGHTS,
PRE-FLIGHT SERVICES, IN-FLIGHT SERVICES.
B) TANGIBLE ELEMENTS (IN AIR TRAVEL)
COMFORTABLE SEAT, GOOD FOOD / DRINKS,
MAGAZINES,NEWS PAPERS, DUTY-FREE
MERCHANDIZE etc.

ATTENTION MUST BE PAID TO BOTH TYPES OF ELEMENTS. BOTH


MUST BE CONTROLLED.
TANGIBLE ELEMENTS ARE EASY TO MANAGE / CONTROL.

ELEMENTS OF SERVICE OFFER


AGUMENTED PRODUCT LEVEL

NOT ALL THE ELEMENTS ARE PROVIDED BY THE COMPANY.


SOME ELEMENTS ARE PROVIDED BY THE CUSTOMERS
THEMSELVES. THESE ARE DIFFICULT TO CONTROL, eg
OTHER GUESTS / PASSENGERS BEHAVIOUR IN A
RESTAURANT OR ON A FLIGHT.

AFFECT QUALITY OF SERVICE PRODUCT AND REPUTATION


OF THE COMPANY.

SERVICE QUALITY AND QUANTITY


IT MEANS QUALITY AND QUANTITY OF BENEFITS AS JUDGED BY THE
CUSTOMER.
QUALITY OF SERVICE
- DEGREE OR LEVEL OF PRIMARY AND ADDITIONAL BENEFITS
OF THE SERVICE OFFER.
- PROBLEM TO STANDARDIZE AND MAINTAIN QUALITY IN
PEOPLE-BASED SERVICES. QUALITY AFFECTS SIZE OF DEMAND
AND PRODUCT POSITIONING.
QUANTITY OF SERVICE
- AMOUNT OF SERVICE BENEFITS GIVEN,
FOR EXAMPLE:
AMOUNT OF ATTENTION GIVEN TO A GUEST IN A RESTAURANT.

POTENTIAL PRODUCT LEVEL

MEANS ALL THE POSSIBLE FEATURES/ BENEFITES WHICH


CAN BE ADDED IN THE CURRENT PRODUCT, IN FUTURE

THE SERVICE DELIVERY SYSTEM


HOW A S.PRODUCT IS DELIVERED TO THE CUSTOMER?
THE SYSTEM USED TO DELIVER THE S.PRODUCT TO THE
CUSTOMER.
IMPORTANT AND INTEGRAL COMPONENT OF A SERVICE
PRODUCT.
THE TWO (SP AND SDS) ARE INSEPARABLE. AFFECTS
QUALITY AND CS.

THE SERVICE DELIVERY SYSTEM

ELEMENT OF SERVICE DELIVERY SYSTEM

A) PEOPLE INVOLVED
1)

COMPANYS OWN STAFF

2)

CUSTOMER CONTACT STAFF


CUSTOMER NON-CONTACT STAFF

CUSTOMERS (THEIR BEHAVIOUR, APPEARANCE)

THE CUSTOMER
OTHER CUSTOMERS

B) PHYSICAL EVIDENCE (ENVIRONMENT / SETTING)

PLACE WHERE SERVICE IS DELIVERED


BUILDING, INTERIOR LAY-OUT, DCOR etc

C) FACILITATING EQUIPMENT
D) PROCESS USED

FACTORS WHICH INFLUENCE


A SERVICE COMPANAYS PRODUCT LEVELS
1.PRIMARY AND ADDITIONAL BENEFITS SOUGHT
BY THE CUSTOMERS
2. COMPOSITION OF INTANGIBLE AND TANGIBLE
ELEMENTS OF A SERVICE PRODUCT
3. QUALITY OF SP ELEMENTS
4. QUANTITY OF SP ELEMENTS
5. COST OF S.PRODUCT
6. SERVCE DELIVERY SYSTEM

DIFFICULTIES ARISING IN TRANSLATING


SERVICE CONCEPT INTO SERVICE OFFER
1) WHICH EXTRA INTANGIBLE AND TANGIBLE
ELEMENTS TO PROVIDE
2) DIFFICULTIES IN CONTROLLING VARIOUS
ELEMENTS, PARTICULARLY THOSE PROVIDED
BY THE CUSTOMER (S).
3) COST KEEPING RISING WITH EACH EXTRA
SERVICE / SSP

DIMENSIONS OF PRODUCT MIX

PRODUCT-MIX AND PRODUCT-LINE

FEW COMPANIES RELY ON A SINGLE PRODUCT, MOST SELL


MANY PRODUCTS.

PRODUCT-MIX:A COMPANYS ASSORTMENT OF PRODUCTS, NEW AND OLD,


OFFERED TO TM CUSTOMERS FOR CS / CD AND TO ACHIEVE
COMPANYS OBJECTIVES.

PRODUCT-LINE:A GROUP OF CLOSELY RELATED PRODUCTS WHICH HAVE


SIMILAR USES / FUNCTIONS, TM CUSTOMERS, PRICES AND
WHICH ARE DISTRIBUTED THROUGH THE SAME CHANNEL.

EACH PRODUCT-LINE IS USUALLY HANDLED BY A SEPARATE


TEAM OF EXECUTIVES (GROUP PM, PMs/BMs)

DIMENSIONS OF PRODUCT-MIX
THREE DIMENSIONS OF PRODUCT-MIX
1) PRODUCT-MIX BREADTH / WIDTH
THIS MEANS NUMBER OF PRODUCT - LINES CARRIED BY A
COMPANY.
TAKES A LONG TIME TO DEVELOP AND ADD A PRODUCT-LINE.
MIX EXTENSION.
COSTS LOT OF MONEY. RISKY
DECISION AT HIGHEST LEVEL.

SERVICE PRODUCT-MIX OF A HOTEL


PRODUCT-MIX WIDTH OR BREADTH
AUTO
CURRENCY
MEETING
GUEST RESTAURENTAL OUT-DOOR SPORTS EXCHANGE
ROOMS RANTS ROOMS SERVICES CATERING

PRODUCTLINE LENGTH
AND
DEPTH

SEMINAR HALL
NORMAL PAKISTANI
TRANING ROOMS
CHINESE
FOOD
ROOMS
CONTINENTAL
ARRANGEMENTS
SINGLE
PERSONNEL
DOUBLE THAI
EXECUTIVE JAPANESE
SINGLE
DOUBLE
CARS
SUITES
COACHES
e-ROOMS
HONEYMOON
ROOMS

TENINIS
SQUASH
SWIMMING
INDOOR
GAMES
GOLF

TCs
CNs

DIMENSIONS OF PRODUCT-MIX
2)

3)

PRODUCT-LINE LENGTH
THIS MEANS NUMBER OF DIFFERENT BRANDS IN A
PRODUCT LINE
PRODUCT LINE DEPTH
VARIANTS OF BRANDS WITHIN A PRODUCT-LINE.
BOTH NUMBER 2) AND 3) ARE LINE-EXTENSIONS.
TAKE LESS TIME AND INVESTMENT.
LESS RISKY. DECISIONS AT MM / GPM LEVEL

DIMENSIONS OF PRODUCT-MIX
A COMPANY CAN EXPAND ITS PRODUCT-MIX AND
GROW BY ADDING NEW PRODUCT-LINES OR BY
INCREASING PRODUCT-LINE LENGTH OR DEPTH.
A COMPANY CAN ALSO PRUNE / CONTRACT ITS
PRODUCT-MIX BY ELEMINATING A PRODUCT-LINE
OR A PRODUCT / BRAND / VARIANT

FACTORS TO CONSIDER
WHEN EXPANDING THE PRODUCT-MIX
1)
2)

SIZE AND GROWTH RATE OF SEGMENT / MARKET


MATCH WITH COMPANYS

3)
4)

5)
6)
7)

OBJECTIVES
RESOURCES
MANAGEMENT KNOW-HOW

WILL THE NSP COMPLEMENT THE EXISTING S.PRODUCTS


WILL IT GIVE OPTIMUM PRODUCT-MIX RANGE.
WIDTH, LENGTH AND DEPTH.
LITMUS TEST :
INCRESE IN PROFITABILITY
WILL IT HAVE DISTINCT POSITIONING
LESS PRICE SENSITIVITY, BARGAINING POWER
LESS AVAILABILITY OF SUBSTITUTES

FACTORS TO CONSIDER
WHEN PRUNING THE PRODUCT-MIX

GIVE NO IMPORTANCE TO SENTIMENTS.


1)
2)
3)
4)

CAN WE REVITALIZE IT
CAN WE SELL IT ABROAD
WILL IT IMPROVE PROFITABILITY
RESOURCES SAVED CAN BE ALLOCATED TO MORE
SUCCESSFUL PRODUCTS
5) NO DISRUPTIVE EFFECT ON OVERALL OPERATION

NEW SERVICE PRODUCT

A NEW SERVICE PRODUCT

SEVERAL WAYS TO DEFINE A NSP


1)
2)

3)

4)

5)

ME-TOO PRODUCT
NEW TO THE COMPANY BUT ALREADY AVAILABLE FROM ANOTHER
COMPANY.
ADAPATED PRODUCT
ALREADY AVAILABLE BUT ADAPTED FOR A NEW MARKET
SEGMENT.
EG: TELEPHONE BOOTHS
INNOVATION
NSPs SHOWING SUBSTANTIAL IMPROVEMENT OVER THE
EXISTING SP TO BETTER SATISFY NEEDS.
EG: MOBILE TELECOMMUNICATION
INVENTION
A
TOTALLY NEW SERVICE PRODUCT, NOT PREVIOUSLY AVAILABLE
AND WHICH MEETS AN UNSATISFIED NEED. CREATES A NEW
PRODUCT CLASS
EG:
SATELLITE TV COMMUNICATION.
AN EXISTING SERVICE BUT DELIVERED THROUGH A NEW SDS.
EG: BANKING SERVICES THROUGH ATMs.

SOURCES OF NEW SERVICE PRODUCTS

ACQUISITION
THROUGH NEW PRODUCT DEPELOPMENT
PROCESS

WHY SERVICES COMPANIES NEED


TO DEVELOP NEW SERVICE PRODUCTS
1)
2)

3)
4)

CANNOT CONTINUE TO RELY ON EXISTING S. PRODUCTS


FOR SUCCESS.
TO INCREASE SALES, MS, PROFIT AND THE NEED TO
REMAIN COMPETITIVE BY MEETING CHANGING
REQUIREMENTS OF CUSTOMERS.
TO REPLACE OUTDATED S. PRODUCTS.
TO UTILIZE UNUSED CAPACITY / FACILITIES
EXAMPLES:
UNUSED SPACE / FACILITIES IN A SPORTS CENTRE.

WHY SERVICES COMPANIES NEED


TO DEVELOP NEW SERVICE PRODUCTS
5)

TO SMOOTH-OUT SEASONAL DEMAND


EXAMPLES:
MARRIAGE HALLS FOR MEETINGS / EXAMINATION
CENTRE DURING OFF-SEASON.

6)
7)
8)

TO REDUCE DEPENDENCY ON TOO-FEW PRODUCTS


BANKS HAVE MANY SERVICE
PRODUCTS
TO EXPLOIT OPPORTUNITIES WHEN A COMPETITOR MAY
DROP-OUT OR NEW NEEDS OF CUSTOMERS MAY COME-UP.
TO MAINTAIN REPUTATION OF BEING LEADERS IN R AND D

WHY LACK OF NSPs IN SERVICE COMPANIES

MOST SERVICES COMPANIES, EXCEPT BIA DO NOT HAVE A


PRODUCT DEVELOPMENT DEPARTMENT.
REASONS:

MANY SERVICES COMPANIES ARE IN THE PUBLIC SECTOR, WITH


LITTLE COMPETITION / MONOPLY. LACK OF MOTIVATION TO
INNOVATE.

LACK OF RESOURCES
FINANCIAL, MNGT. etc. MOSTLY SMALL COMPANIES.

CANNOT BE PATENTED
LESS INCENTIVE TO DEVELOP A NSP. FOCUS ON ME-TOO
PRODUCTS .

CONCEPT TESTING IS DIFFICULT


USE TESTS ARE ALSO DIFFICULT

HIGH COST OF NEW SERVICE PRODUCT DEVELOPMENT

HIGH FAILURE RATE OF NSPs

HOME-

FAILURE OF NEW SERVICE PRODUCTS

70-80% FAILURE RATE

REASONS.
1)
2)
3)
4)
5)
6)
7)

THE BASIC SERVICE PRODUCT EXPECTED BY THE


CUSTOMER, IS NOT WELL DESIGNED. NOT BASED ON THE
BENEFITS SOUGHT BY THE TM CUSTOMERS.
LACK OF COMPANY-CLIENT INTERFACE DURING THE
DEVELOPMENT PROCESS OF A NSP.
WRONG CRITERIA USED IN MARKET SEGMENTATION AND
PRODUCT POSITIONING. THESE ARE NOT CUSTOMER
WANTED CRITERIA.
GOOD NSP BUT MARKET POTENTIAL HAS BEEN
OVERESTIMATED.
FAULTY PRICING, PROMOTION, DISTRIBUTION OR SDS
INACCURATE / UNHEALTHY SPREAD OF IMAGE OF A NSP BY
CUSTOMERS
COMPETTITORS FIGHT HARDER THAN EXPECTED

STAGES IN NEW SERVICE PRODUCT


DEVELOPMENT PROCESS
1.

IDEAS GENERATION
STARTING POINT, CREATE AS MANY NEW IDEAS AS
POSSIBLE
IDEAS MAY COME EITHER FROM INSIDE OR OUTSIDE
THE COMPANY, VIA :a)
b)
c)
d)

BRAINSTORMING SESSION
SUGGESTION BOX
MARKETING RESEARCH
FOCUS GROUP, INDIVIDUAL INTERVIEWS
VISIT TO OTHER COUNTRIES.

MOST IDEAS USUALLY COME FROM CUSTOMERS.

STAGES IN NEW SERVICE PRODUCT


DEVELOPMENT PROCESS
2.

IDEAS SCREENING BY A MANAGEMENT TEAM


SEPARATE WORKABLE IDEAS FROM NON-WORKABLE
IDEAS BY A MANAGEMENT TEAM, ON THE FOLLOWING
CRITERIA, TO JUSTIFY USE OF RESOURCES

ADDITIONAL MANPOWER, SPACE, MACHINES REQUIRED.


COMMERCIAL ASPECTS.
DEVELOPMENT TIME.
SURVIVED IDEA(S).

STAGES IN NEW SERVICE PRODUCT


DEVELOPMENT PROCESS
3.

CONCEPT DEVELOPMENT AND CONCEPT TESTING.


a)

CONCEPT DEVELOPMENT

b)

DEVELOP A MEANINGFUL VERBAL AND PICTORIAL


DESCRIPTION OF THE SURVIVED BUSINESS PROPOSAL

CONCEPT TESTING

TEST THE PRODUCT CONCEPT WITH A SUITABLE NUMBER


OF TM CUSTOMERS, USING VERBAL AND PICTORIAL
DESCRIPTION, TO JUDGE THEIR UNDERSTANDING AND
LIKING / DISLIKING.

NEW SERVICE PRODUCT CONCEPT TESTING

USUALLY, CONCEPT TESTING IS IGNORED IN SERVICES.


PROBLEMS IN CONCEPT TESTING :
1)
2)

CONCEPT TESTING IS DIFFICULT OF A SERVICE PRODUCT


BECAUSE DESCRIBING SOMETHING WHICH IS MOSTLY
INTANGIBLE, IS VERY DIFFICULT.
RESULTS VARY TOO-MUCH, WHICH DEPEND ON :

3)

SERVICE PROVIDER
PHYSICAL ENVIRONMENT
THE CUSTOMER

HOME-USE TESTS ARE NOT POSSIBLE.

BENEFITS OF CONCEPT TESTING :


1)
2)

OPPORTUNITY TO EVALUATE A S. PRODUCT BEFORE ITS


CREATION AND INTRODUCTION.
OPPORTUNITY TO GET INPUT ON THE SPECIFICATIONS
(INTANGIBLE AND TANGIBLE ELEMENTS) OF A NEW S.
PRODUCT, FROM THE USERS.

STAGES IN NEW SERVICE PRODUCT


DEVELOPMENT PROCESS
4.

DETAILED BUSINESS ANALYSIS OF THE PRODUCT


BASED ON THE SELECTED IDEA
a)
b)
c)

ESTIMATED SALES, COSTS AND PROFIT FOR THREE


CONSECUTIVE YEARS
PROBABILITY OF SUCCESS OR FAILURE OF NSP.
POSSIBILE RESPONSE / REACTION OF COMPETITORS.

STAGES IN NEW SERVICE PRODUCT


DEVELOPMENT PROCESS
5.

DEVELOPMENT OF THE NEW S. PRODUCT FOR TRIAL

TRANSLATE THE NSP IDEA / PROPOSAL, AS PASSED BY


THE TM CUSTOMERS, INTO THE NEW SERVICE PRODUCT
THIS MEANS :i.
ii.
iii.
iv.

INVESTMENT
HIRING AND TRAINING OF STAFF
CONSTRUCTION OF OPERATIONAL FACILITY
DESIGNING SDS.

STAGES IN NEW SERVICE PRODUCT


DEVELOPMENT PROCESS
6.
7.
8.

MANAGEMENTS FINAL DECISION


GO / NO GO
TEST MARKETING
COMMERCIALIZATION OF NSP
a)
b)
c)

WHEN
WHERE
HOW

STAGE 1,2,3 AND 4 DO NOT INVOLVE MUCH COSTS.


MANY S. PRODUCTS FAIL AT THESE STAGES.
OTHER STAGES INVOLVE LOT OF COSTS.

DIFFICULTIES FACED
IN INNOVATING SERVICE PRODUCTS

RESEARCH AND DEVELOPMENT IS NOT WELL DEVELOPED


IN SERVICES COMPANIES AS COMPARED TO IN
MANUFACTURING COMPANIES.
REASONS:
1) DEVELOPING THE DESIRED SPECIFCATIONS OF A NEW S.
PRODUCT IS DIFFICULT, PARTICULARLY OF PEOPLE- BASED
SERVICES.
2) TESTING OF NEW SERVICES IS DIFFICULT.
3) GREAT RISK OF BEING QUICULY COPIED. CANNOT BE
PATENTED.
EXAMPLES
a) AIRLINES (FILMS, DUTY FREE ITEMS)
b) BANKS (VARIOUS KINDS OF ACCOUNTS)

4) LACK OF NEW IDEAS IN SERVICE INNOVATION

QUALITY IN SERVICES COMPANIES

QUALITY IN SERVICES COMAPANIES

TWO TYPES OF QUALITY


1) QUALITY OF THE SERVICE PRODUCT
2) QUALITY OF THE SERVICE DELIVERY SYSTEM,
PARTICULARLY THE APPEARANCE AND
BEHAVIOUR OF CUSTOMER CONTACT STAFF,
QUALITY OF CUSTOMERS AND QUALITY OF
PHYSICAL ENVIRONMENT.

SIGNS OF QUALITY SERVICE


1)

PEOPLE
A.OWN
CUSTOMERS CONTACT STAFF
CUSTOMERS NON-CONTACT STAFF

B.CUSTOMERS
THE CUSTOMER
OTHER CUSTOMERS

2)
3)
4)
5)

PHYSICAL ENVIRONMENT AND EVIDENCE


FACILITATING EQUIPMENT
PROCESSES
PRICE

SERVICE QUALITY MODEL

FIVE GAPS THAT CAUSE QUALITY PROBLEMS


AND, THUS, THESE MUST BE CLOSED.
1) GAP BETWEEN CONSUMER EXPECTATIONS AND
MANAGEMENTS UNDERSTANDING
2) GAP BETWEEN MANAGEMENTS UNDERSTANDING
AND SERVICE-QUALITY STANDARDS.
3) GAP BETWEEN SERVICE-QUALITY STANDARDS AND
THE ACTUAL SERVICE DELIVERY
4) GAP BETWEEN THE ACTUAL SERVICES DELIVERY
AND THE PROMOTIONAL CLAIMS
5) GAP BETWEEN THE ACTUAL SERVICE AND THE
EXPECTED SERVICE

SERVICE QUALITY MODEL


EXPECTED SERVICE
5
ACTUAL SERVICE
DELIVERED
1

3
MANAGEMENTS
SERVICE QUALITY
STANDARDS
2
MANAGEMENTS
UNDERSTANDING
OF CONSUMERS
EXPECTIONS

PROMOTIONAL
CLAIMS
4

HOW TO MAINTAIN QUALITY


IN A SERVICE BUSINESS
1)
2)

BE CUSTOMER FOCUSED. KNOW TM CUSTOMERS AND


THEIR NEEDS
TOP MANAGEMENTS COMMITMENT TO QUALITY
THEY MUST ACT AS A ROLE MODEL OF QUALITY
MANAGEMENT CAN SHOW ITS COMMITMENT TO QUALITY
BY:
a)
b)
c)

3)

BY SETTING OBJECTIVES AND INCENTIVES BASED ON QUALITY


JOB DONE AND NOT ON QUANTITY JOB
PROMOTE QUALITY ORIENTED PEOPLE IN ALL DEPARTMENTS
PROVIDE TQM TRAINING TO EVERYBODY

SET HIGH QUALITY STANDARDS


EG:
i.
ii.
iii.

SWISSAIR- 96% CS
CITIBANK PHONE CALL ANSWERED WITHIN 10 SECONDS
CUSTOMERS LETTER ANSWERED WITHIN TWO DAYS

HOW TO MAINTAIN QUALITY


IN A SERVICE BUSINESS
4)

HAVE A SYSTEM FOR MONITORING SERVICE


PERFORMANCE
i.
ii.

5)
6)
7)

OWN
MAJOR COMPETITORS
VIA GHOST SHOPPING, CUSTOMER SURVEYS,
SUGGESTIONS AND COMPLAINT FORM / TOLL FREE
TELEPHONE NUMBER

HAVE A SYSTEM TO RESOLVE COMPLAINTS QUICKLY


SATISFY BOTH EMPLOYEES AND CUSTOMERS
STATE IN EVERYBODYS JOB DESCRIPTION HOW HIS JOB
AFFECTS CUSTOMER SATISFACTION

HOW TO DEFEND MARKET POSITION?

HOW TO DEFEND MARKET POSITION


CREATE DIFFERENTIATION TO DEFEND
WHAT IS DIFFERENTIATION ?
DESIGNING AND BUILDING MEANINGFUL,
BELIEVABLE, AFFORDABLE AND SUSTAINABLE
DIFFERENCES IN THE M-MIX ELEMENTS,
APPLICABLE TO MOST CUSTOMERS, FOR
COMPETITIVE ADVANTAGE,POSITIONING AND
FOR CUSTOMER SATISFACTION

HOW TO DEFEND MARKET POSITION

EIGHT WAYS TO CREATE DIFFERENTIATION :


1) OFFER EXTRA SERVICES AND SSPs.
EXTRA SERVICES / SSPs CAN BE EASILY COPIED.
2) HAVE BETTER SERVICE DELIVERY SYSTEM
BETTER TRAINED, MOTIVATED AND MORE
EXPERIENCED PEOPLE, P. ENVIRONMENT/ EVIDENCE,
FACILITATING EQUIPMENT AND PROCESSES.
MAKE PROCESSES AUTOMATED / MECHANIZED FOR
UNIFORMITY IN QUALITY
3) EXTENSIVELY USE A SYMBOL OR A LOGO OR A BRAND
NAME TO FIX THE IMAGE OF THE COMPANY.
EG HOTELS.

HOW TO DEFEND MARKET POSITION


4) MAKE EASY FOR THE CUSTOMER TO ORDER / GET
THE SERVICE.
5) OFFER SERVICE WARRANTY
6) ADD FEATURES
7) PERSONAL INVOLVEMENT BY HIGHER
MANAGEMENT.
FREQUENT FOLLOW-UP CONTACTS BY CUSTOMER
CONTACT STAFF
8) ON-TIME COMPLETION OF WORK

MANAGING PRODUCTIVTIY IN SERVICES

MANAGING PRODUCTIVITY IN SERVICES

VARIOUS COSTS ARE GOING-UP AND AN


INCREASE IN PRICE IS LIMITED BY COMPETITION
AND GOVT. REGULATIONS.
THUS, NEED FOR PRODUCTIVITY TO KEEP THE
COSTS DOWN.
FOUR METHODS TO IMPROVE PRODUCTIVITY
1) HIRE AND DEVELOP MORE SKILLFUL WORKERS.
2) S. PROVIDER TO WORK WITH A BIG GROUP
EXAMPLES:
A DOCTOR HANDLING MORE PATIENTS, EACH
GETTING LESS TIME.
QUALITY MAY SUFFER TO SOME EXTENT.

MANAGING PRODUCTIVITY IN SERVICES


3)

4)

USE AUTOMATED EQUIPMENT AND STANDARDIZED


PROCESSES.
EXAMPLE:
SOUTH - WEST AIRLINE USES AUTOMATED EQUIPMENT
FOR TICKET PURCHASING AND BOARDING PASSES.
INTRODUCE SELF-SERVICE TO REPLACE SERVICE
FROM THE COs STAFF.
EXAMPLE:
KFC-SALAD BAR

BRANDING, WARRANTY AND


AFTER SALE SERVICES

BRANDING

SERVICE PRODUCT BRANDING


BRANDING MEANS GIVING A NAME, SYMBOL AND A NUMBER TO A
PRODUCT IN ORDER TO DIFFERENTIATE ONE PRODUCT FROM
ANOTHER.
IN THE PAST, BRANDING WAS MAINLY USED IN CONSUMER GOODS.
TODAY IT IS ALSO BECOMING POPULAR IN SERVICES.
BRAND, BRAND NAME ,TRADEMARK
EXAMPLEX
MOAVAN ACCOUNT (FAYSAL BANK)
IZAFA TERM CERTIFICATES (FAISAL BANK)
INDIGO (MOBILINK)
DJUICE (TELE NOR)
JAZZ (MOBILINK)
SMART (TELENOR)
BAHBOOD SAVING CERTIFICATES (NATIONAL SAVINGS)

SERVICE PRODUCT WARRANTY


AN UNDERTAKING BY A SELLER THAT THE SERVICE
SOLD IS FIT FOR USE OR WILL PERFORM AS
SPECIFIED. IMPORTANT IN CERTAIN SERVICES.
FOR EXAMPLE
MUTUAL FUNDS
TERMS CERTIFICATAES ISSUED BY BANKS
GOVERNMENT SECURITIES

BUILDS CONFIDENCE IN THE SP / CO.

AFTER SALE SERVICES

GIVING SOME EXTRA SERVICE AFTER HAVING USED THE


MAIN SERVICE.
POPULAR IN SOME SERVICES
FOR EXAMPLE,
AIRLINES HELPING PASSENGERS IN HIRING TRANSPORT / BOOKING
HOTEL ACCOMMODATION.

PRICE

MARKETING-MIX IN SERVICES
PRICE
DEFINING PRICE
IMPORTANTACE OF PRICE FOR THE COMPANY AND THE
CUSTOMER
PRICING OBJECTIVES
FACTORS WHICH AFFECT PRICE DETERMINATION
PRICING METHODS
PRICING STRATEGIES
PRICE LEVELS
DISCOUNTS
PAYMENT MODES AND TERMS (MOP, TOP)

PRICING
DEFINITION:A) AMOUNT OF MONEY NEEDED BY A
CUSTOMER TO OBTAIN A PRODUCT. IT
GENERALLY INCLUDES THE PRICE OF
PSS OR SSP OFFERED BY THE
COMPANY.
B) WORTH OR VALUE OF BENEFITS OF A
PRODUCT IN THE MIND A CUSTOMER,
MEASURED IN SOME MONETARY UNITS.

PRICE UNDER VARIOUS NAMES


IN SERVICES MARKETING

TUITION FEE
INTEREST RATE
RENT
FARE
FEE
PREMIUM
SALARY
WAGE
BRIBE
INCOME TAX
TOLL TAX
HONORARIUM

CHARACTERITCS OF PRICE
1)

AN ELEMENT OF M-MIX. IT MUST BE


CUSOMTER-ORIENTED

2)

UNLIKE OTHER Ps OF M-MIX, PRICE GENERATES


REVENUE, OTHER ELEMENTS INCUR COSTS.

3)

UNLIKE OTHER Ps OF M-MIX, PRICE CAN BE


CHANGED QUICKLY. IT IS THE MOST FLEXIBLE
ELEMENT OF M-MIX

4)

SETTING PRICE AND FIGHTING PRICE


COMPETITION IS NUMBER ONE PROBLEM
FACING THE MARKETING EXECUTIVES.

PRICING OBJECTIVES
1.
2.
3.
4.
5.

MAXIMIZATION OF CURRENT PROFIT


HIGH CURRENT SALES VOLUME AND MS
TO REFLECT PRODUCT QUALITY LEADERSHIP
TO BE ENSURE SURVIVAL OF THE COMPANY. SHORT TERM
OBJECTIVE.
TO MAINTAIN STATUS QUO OF THE CURRENT PRICE LEVEL
IN THE MARKET AND TO AVOID A PRICE WAR
MANAGEMENT MUST DECIDE PRICING OBJECTIVES BEFORE
SETTING THE PRICE
THE CLEARER A FIRM IS ABOUT ITS PRICING OBJECTIVES,
THE EASIER IT IS TO SET THE PRICE.

FACTORS WHICH INFLUENCE


PRICE DETERMINATION
A) INTERNAL FACTORS:1.
2.
3.
4.
5.

PRICING OBJECTIVES.
PRODUCT POSITIONING AND M-MIX STRATEGIES.
PLC
PRODUCTION CAPACITY
TOTAL PRODUCT COST.
A COMPANY SHOULD TRY TO BE A LOW-COST
PRODUCER
IT SETS THE FLOOR PRICE OF THE PRODUCT.

FACTORS WHICH INFLUENCE


PRICE DETERMINATION
AT A CERTAIN LEVEL OF PRODUCTION, THE TOTAL
COST OF A PRODUCT IS MADE-UP OF:
1.
VARIBLE PRODUCT COSTS (VPC)
THEIR TOTAL VARIES WITH THE QUANTITY PRODUCED OR
SOLD. EG: CONSUMABLES, RMs, PMs ETC.
2.
FIXED COSTS OR OVERHEADS (FC)
THEIR TOTAL DOES NOT VARY WITH LEVEL OF PRODUCTION
OR SALES. EG: SALARIES OF EXECUTIVES, RENT,
DEPRECIATION ETC.

TOTAL COST IS THE SUM TOTAL OF FIXED AND VARIABLE


COSTS FOR A CERTAIN LEVEL OF PRODUCTION.

FACTORS WHICH INFLUENCE


PRICE DETERMINATION
B) EXTERNAL FACTORS:1) CUSTOMERS PERCEIVED VALUE (CPV). IT
SETS THE CEILING PRICE OF A PRODUCT
CPV INDICATES:A) PRODUCTS WORTH OR VALUE IN THE MIND
OF TM CUSTOMERS.
B) PAYING CAPACITY OF TM CUSTOMERS.
CPV IS DETERMINED VIA MARKET RESEARCH ON A
REPRESENTATIVE SAMPLE OF TMCs,

EFFECTS OF CUSTOMER PERCEIVED VALUE (CPV):


1) PRODUCT PRICE > CPV
2) PRODUCT PRICE < CPV
2) PRODUCT PRICE = CPV

CUSTOMER DOES NOT BUY


CUSTOMER BUYS
BUYS OR BARGAINS.

FACTORS WHICH INFLUENCE


PRICE DETERMINATION
2)
3)
4)
5)

6)
7)
8)

ESTIMATED VOLUME DEMAND AT DIFFERENT PRICES.


ELASTIC OR INELASTIC DEMAND.
MAJOR COMPETITORS PRICES AND THEIR EXPECTED
REACTION.
STAGE IN THE ECONOMY CYCLE AND THE PREVAILING
ECONOMIC CONDITIONS (INFLATION, INTEREST RATE,
EXCHANGE RATE)
POSSIBILITY TO CHANGE THE PRICE IN FUTURE.
POSSIBILITY OF GOVT. INTERVENTION.
FAIR PROFIT TO RESELLERS TO GAIN THEIR SUPPORT.

MAJOR METHODS OF SETTING PRCIE


1)
2)
3)
4)
5)
6)

COST-PLUS, MARK-UP OR COST-BASED PRICING


METHOD.
BREAK-EVEN ANALYSIS OR TARGET RETURN
PRICING METHOD.
COMPETITION-BASED PRICING METHOD OR
GOING RATE PRICING METHOD.
CUSTOMER PERCEIVED VALUE PRICING
METHOD.
VALUE PRICING METHOD
SEALED-BID PRICING METHOD.

MAJOR METHODS
OF SETTING PRICE OF A SERVICE PRODUCT
1. COST - PLUS OR MARK-UP PRICING METHOD

ADDING A CERTAIN MARK-UP TO THE TOTAL COST OF


PRODUCING , MARKETING AND DELIVRING A SERVICE
PRODUCT TO CUSTOMERS.
IT HAS THREE STEPS
1) CALCULATE TOTAL VARIABLE AND FIXED COST PER UNIT
2) DECIED MARK-UP AND
3) ADD MARK-UP TO THE TOTAL UNIT COST, USING THE FOLLOWING
FORMULA
PRICE = TOTAL UNIT COST
1.0 - % MARK-UP

MAJOR METHODS
OF SETTING PRICE OF A SERVICE PRODUCT
COST- PLUS PRICING METHOD IS FURTHUR
DIVIDED INTO:
a) PROFIT-ORIENTED COST-PLUS PRICING
b) GOVERNMENT CONTROLLED COST-PLUS PRICING

MAJOR METHODS
OF SETTING PRICE OF A SERVICE PRODUCT
2.

MARKET- BASED OR COMPETITION-BASED


PRICING MEATHOD
FIXING THE PRICE OF A SERVICE KEEPING IN
MIND THE PRICE OF STRATEGIC COMPETITORS
POPULAR, WHY?
SIMPLE, COLLECTIVE WISDOM

MAJOR METHODS
OF SETTING PRICE OF A SERVICE PRODUCT

SERVICE PROVIDERS PRICE MAY BE:


a) SAME AS THAT OF MAJOR COMPETITORS. NO
PRODUCT DIFFERENCES. COST NOT
CONSIDERED.
b) BELOW THAT OF MAJOR COMPETITORS. TWO
DRAWBACKS:
PRICE WAR
SERVICE USER PERCEIVES LOW QUALITY OF SP.

c) ABOVE THAT OF MAJOR COMPETITORS


DISTINCT BENEFITS, DISTINCT OR EXTRA SERVICES AND
SSPs
S.PROVIDER HAS HIGH IMAGE/ PRESTIGE/ SDS

MAJOR METHODS
OF SETTING PRICE OF A SERVICE PRODUCT
3)

CUSTOMER PERCEIVED VALUE PRICING METHOD


SET PRICE CLOSE TO THE WORTH OF SP AS
PERCEIVED BY TM CUSTOMERS. FIND VIA MR.
COST IS CONSIDERED.

IT HAS FOUR STEPS :

FIND TOTAL PER UNIT COST


FIND OUT CPV VIA MARKETING RESEARCH
KNOW STRATEGIC COMPETITORS PRICE
FIX PRICE OF THE SERVICE PRODUCT CLOSE TO THE CPV,
KEEPING THE MIND THE PRICE OF STRATEGIC
COMPETITORS.

PRICING STRATEGIES
1.

DIFFERENTIAL / FLEXIBLE DISCRIMINATORY


PRICING STRATEGY
TWO OR MORE PRICES OF THE SAME SERVICE TO
ACCOMMODATE DIFFRENCES IN CUSTOMERS,
LOCATIONS AND TIMINGS, etc

PRICING STRATEGIES

THREE SUCH PRICING STRATEGIES, EACH FOR


A DIFFERENT PURPOSE.
a) CUSTOMER- SEGMENT FLEXBLE PRICING STRATEGY
b) LOCTION FLEXIBLE PRICING STRATEGY
c) TIME FLEXIBLE PRICING STRATEGY

MAJOR DISADVANTAGE:
CUSTOMERS GET HABITUAL, DELAY PURCHASES

PRICING STRATEGIES
2. DISCRETE PRICING STRATEGY
QUOTING A PRICE WITHIN THE FINANCIAL AUTHORITY OF A
DECISION MAKER WHO HAS SYMPATHTIC ATTITUDE
TOWARDS A SERVICE PROVIDER.

3. DIVERSIONARY PRICING STRATEGY


OFFERING A LOW PRICE OF ONE OF THE MANY SERVICE
PRODUCTS IN ORDER TO DEVELOP AN IMAGE OF A LOW
PRICE COMPANY AND TO INCREASE CUSTOMERS TRAFFIC.

4. GUARANTEED PRICING STRATEGY


PAYMENT IS MADE BY A CUSTOMER ONLY IF CERTAIN
RESULTS ARE GUARANTEED OR DELIVERED BY THE
SERVICE PROVIDER

PRICING STRATEGIES
5. FIRST LOSS-ORDER PRICING STRATEGY
REDUCING PRICE FOR THE FIRST ORDER WITH THE HOPE
OF GETTING FUTURE BUSINESS AT A BETTER PRICE

6. OFFEST PRICING STRATEGY


THE PRICE OF THE BASIC SP IS LOW BUT EXTRA SERVICES
OR SSP CARRY HIGHER CHARGES

7. BUNDLE PRICING STRATEGY


OFFRING ONE PRICE OF A BUNDLE OF SERVICES WHICH IS
LOWER THAN THE SUM TOTAL OF INDIVIDUAL PRICES

8. TWO-PARTS PRICING STRATEGY


a) FIXED PART
b) VARIABL PART

PRICE VS NON-PRICE COMPETITION


(A) PRICE COMPETITION

PRICE IS THE PRIMARY BASIS FOR FIGHTING


COMPETITION. IT IS USED WHEN PRODUCTS ARE
SIMILAR. PRICE IS SET AS LOW AS POSSIBLE TO
GAIN VOLUME SALES AND MS. MINIMUM PSS ARE
OFFERED.

POSSIBILITY OF PRICE WAR. MOST COMPANIES


WANT TO AVOID IT AND, INSTEAD, PROMOTE
THEIR PRODUCT ON THE BASIS OF BETTER
AVAILABILITY AND SPTs.

CONSUMERS BENEFIT ON SHORT TERM BASIS.


THEY BUY AS LONG AS A BRANDS PRICE IS
LOWEST.

PRICE VS NON-PRICE COMPETITION


(B) NON-PRICE COMPETITION
PRICE IS NOT THE PRIMARY BASIS OF FIGHTING
COMPETITION.
THE SELLER HAS A GOOD PRICE AND INCREASES
VOLUME SALES AND MS BY EMPHASIZING ON THE
OTHER Ps OF M-MIX

ADDITIONAL CLASSFIFCATION BASIS


OF SERVICES FOR PRICING PURPOSE

BASIS:
WHO REGULATES / CONTROLS THEIR PRICE
THREE CATEGORIES OF SERVICES FOR PRICING
PURPOSE:
1) SERVICES SUBJECT TO GOVERNMENT PRICE CONTROL
2) SERVICES SUBJECT TO FORMAL PRICE REGULATION BY
TRADE BODIES
3) SERVICES SUBJECT TO PRICE REGULATED BY MARKET
FORCES

DISCOUNTS

DISCOUNTS
PERCENTAGE REDUCTION IN THE LIST PRICE OF A
PRODUCT.
TYPES OF DISCOUNTS.
1. TRADE DISCOUNT:
FOR PERFORMING CERTAIN DISTRIBUTION
FUNCTIONS.
2. CASH DISCOUNT:FOR PAYING BILL WITHIN A SPECIFIED
PERIOD. E.G 2 \ 10 , NET / 30.

DISCOUNTS
3. QUANTITY DISCOUNTS
TO ENCOURAGE CUSTOMERS TO BUY LARGE
QUANTITIES / AMOUNT. CAN BE ON:(a). NONCUMULATIVE BASIS
DISCOUNT BASED ON THE SIZE OF
EACH INDIVIDUAL ORDER.
ENCOURAGES LARGE ORDERS.
(b) CUMULATIVE BASIS
DISCOUNT BASED ON TOTAL VALUE OR
VOLUME PURCHASED IN A CERTAIN
PERIOD.
CUSTOMER IS TIED UP WITH THE SELLER.
E.G FFPs, FGPs

DISCOUNTS
4. SEASONAL DISCOUNT:
SLACK / OFF-SEASON TO EVEN-OUT DEMAND
AND SUPPLY, TO AVOID INVENTORY COST.
5. PROMOTIONAL ALLOWANCE
FOR PROMOTIONAL SERVICES PERFORMED
BY THE MM.
EG: DISPLAYS, RETAILERS AD SHOWING
SELLERS PRODUCT.

PLACE

MARKETING-MIX IN SERVICES
PLACE
LOCATION. ACCESSIBILITY
VIA PHYSICAL AND COMMUNICATION MEANS
DISTRIBUTION CHANNELS
DISTRIBUTION COVERAGE

PLACE
DISTRIBUTION

TWO ASPECTS/ DECISIONS


A. LOCATION OF SERVICES PROVIDER
SINGLE OR MILTI-SITE LOCATIONS

FACTORS TO BE CONSIDERED IN LOCATION


1) DOES THE CUSTOMER GO TO THE SERVICE
PROVIDER OR DOES THE SERVICE PROVIDER GO
TO THE CUSTOMER
2) ACCESSABLE VIA PHYSICAL AND COMMUNICATION
MEANS

PLACE
DISTRIBUTION
B. DISTRIBUTION CHANNEL STRUCTURE AND
EXTENT OF COVERAGE.
1. DIRECT DISTRIBUTION CHANNAL IS USED MOST
OFTEN
2. INDIRECT DISTRIBUTION CHANNEL. USED LESS
3. EXTENSIVE, SELECTIVE OR EXCLUSIVE
DISTRIBUTION COVERAGE

PROMOTION

MARKETING-MIX

PRODUCT

PERSONAL
SELLING

PRICE

ADVERTISING

PLACE

SALES
PROMOTION
TOOLS

MARKETING TOOLS FOR CS.4,5 OR 7


INTEGRATED / COORDINATED FOR IMC

PUBLIC
RELATIONS

PROMOTION

PUBLICITY

MARKETING-MIX IN SERVICES

PROMOTION
TO INFORM, CONVINCE OR REMIND
STRESS ON AVAILABILITY, CONSISTENT SERVICE
QUALITY, PEOPLE, AND PHYSICAL ENVIRONMENT /
EVIDENCE AND LOCATION

PROMOTIONAL-MIX:
1)
2)
3)
4)
5)

PERSONAL SELLING
ADVERTISING
SALES PROMOTION TECHNIQUES
P. RELATIONS AND PUBLICITY
MAILING

PROMOTION
DEFINITION
PURPOSE
TO COMMUNICATE WITH (TO INFORM, PURSUADE OR REMIND) AND
TO INFLUENCE TM CUSTOMERS TO USE COMPANY`S PRODUCT(S).
DEFINITION
PROMOTION IS TO INFORM, PERSUADE OR REMIND TARGET MARKET
CUSTOMERS OF A PRODUCT OR A COMPANY, THROUGH VARIOUS
METHODS OF PROMOTION, IN ORDER TO ACHIEVE MARKETING
OBJECTIVES.

PROMOTIONAL METHODS

FIVE MTHODS, EACH WITH DIFFERENT FEATURES AND


SUITABLE IN DIFFERENT PROMOTIONAL SITUATIONS.
1)
2)
3)
4)
5)

PERSONAL SELLING (PS)*


ADVERTISING (AD)*
SALES PROMOTION TOOLS OR TECHNIQUES (SPTs)
PUBLIC RELATIONS (PR)
PUBLICITY (PB)

*PRIMARY METHOD

IMC
METHODS MUST BE COORDINATED FOR GREATEST IMPACT
a)
b)

SEQUENSE
SAME MESSAGE

PROMOTIONAL METHODS
1) PERSONAL SELLING

DIRECT PRESENTATION OF A PRODUCT TO A


CUSTOMER OR A GROUP OF CUSTOMERS, THROUGH
A REPRESENTATIVE, EITHER IN A FACE TO FACE
SITUATION OR OVER PHONE (TELEMARKETING)

DIRECTED AT INFLUENCERS, END-CUSTOMERS OR


ON MIDDLEMEN.

MAJOR PROMOTIONAL METHOD FOR COMPLEX


PRODUCTS, BUYER IS A PROFESSIONAL.

PROMOTIONAL METHODS
2) ADVERTISING:

NON-PERSONAL, MASS PROMOTION OF A PRODUCT OR A


COMPANY, THROUGH FIVE ADVERTISING MEDIA. PAID

PRINT, BROADCAST & FILM, ELECTRONIC, DISPLAY AND


TRANSIT MEDIA

MAJOR PROMOTIONAL METHOD FOR SIMPLE PRODUCTS

PROMOTIONAL METHODS
3) SALES PROMOTION TOOLS OR TECHNIQUES

TEMPORARY AND SHORT TERM INCENTIVES, GIVEN TO


SALES REPRESENTATIVES, INFLUENCERS, MIDDLEMEN OR
TO CONSUMERS, IN ORDER TO ENCOURAGE QUICKER AND
BIGGER SALE OR PURCHASE OF A PRODUCT, DURING A
SPECIFIED PERIOD.

COMPARE SALE BEFORE, DURING AND AFTER A SALES


PROMOTION TOOL HAS BEEN USED, TO JUDGE
EFFECETIVENESS OF SPTs

SUPPORTIVE PROMOTIONAL METHOD TO PERSONAL


SELLING OR ADVERTISING.

PROMOTIONAL METHODS

THREE KINDS OF SALES PROMOTION TOOLS:


a) SALES FORCE INCENTIVES
b) TRADE INCENTIVES
c) CONSUMER INCENTIVES

CHARACTERISTICS OF SALES PROMOTION TOOLS


1)

YIELD FAST RESULTS

2)

WORK BEST WITH A SUPERIOR PRODUCT.

3)

BECOMING VERY POPULAR. WHY?


a)

CUSTOMERS AND MM ARE BECOMING INCENTIVE / DEAL ORIENTED

b)

COMPETITORS PRESSURE

c)

MANAGEMENTS PRESSURE ON PM & SALES EXECUTIVES

PROMOTIONAL METHODS
4)

PUBLIC RELATIONS
A VARIETY OF COMMUNICATION EFFORTS, MADE BY A COMPANY, TO CREATE A
FAVOURABLE ATTITUDE / OPINION OF VARIOUS PUBLICS * TOWARDS THE
COMPANY OR ITS PRODUCTS SO THAT SELLING BECOMES EASY.

BUILDS

RELATIONS.

USUALLY, NO SPECIFIC PRODUCT PROMOTIONAL MESSAGE IS COMMUNICATED IN


PUBLIC RELATION EFFORTS.

PR MODES / TOOLS:
NEWSLETTERS, LOBBYING (INFLUENCING VIA PERSONAL CONTACTS),
SPONSORING EVENTS (LITERARY, CHARITY, SPORTS, SCIENTIFIC), HOUSE
MAGAZINE,RELEASING NEWS ABOUT COMPANY, PEOPLE OR PRODUCTS ETC.

USED AS A SUPPORTIVE PROMOTIONAL METHOD TO MAJOR METHODS OF


PROMOTION.
*PUBLICS : STOCKHOLDERS, EMPLOYEES, CUSTOMERS, SUPPLIERS, PRESSURE
GROUPS, SOCIETY, GOVERNMENT, MEDIA PEOPLE, POLITICIANS ETC.

PROMOTIONAL METHODS
5)

PUBLICITY
A SPECIAL FORM OF PUBLIC RELATIONS.
INVOLVES RELEASING NEWS, ARTICLES,
PHOTOGRAPHS, HOLDING PRESS CONFERENCES ETC.,
ABOUT A PRODUCT OR THE COMPANY, TO THE MASS
MEDIA, FOR PUBLICATION / BROADCASTING AS A
NEWS ITEM. IT IS NON-PAID
HAS HIGH CREDIBILITY
USED AS A SUPPORTIVE PROMOTIONAL METHOD TO
MAJOR METHODS OF PROMOTION

PROMOTIONAL MIX
AN APPROPRIATE COMBINATION OF PERSONAL SELLING,
ADVERTISING, SALES PROMOTION TECHNIQUES, PUBLIC
RELATIONS AND PUBLICITY, IN ORDER TO ACHIEVE
PROMOTIONAL AND MARKETING OBJECTIVES.
PROMOTIONAL OBJECTIVES
AWARENESS, KNOWLEDGE, LIKING, PREFERENCE, BUY,
LOYALTY AND TO HAVE BRAND NAME ON THE TOP OF MIND.
MARKETING OBJECTIVES:
SALES, MS, GR, RANKING,RETAINING EXISTING AND
DEVELOPING NEW CUSTOMERS AND PROFIT.

PEOPLE

MARKETING-MIX IN SERVICES

a)

PEOPLE
PLAY A CENTRAL ROLE IN BUILDING CS BY CREATING AND
DELIVERING THE SERVICE, PARTICULARLY THE
CUSTOMERS CONTACT STAFF
TWO CATEGORIES OF PEOPLE
COS STAFF

b)

CUSTOMERS CONTACT STAFF


CUSTOMERS NON-CONTACT STAFF

CUSTOMERS
i.
ii.

THE CUSTOMER
OTHER CUSTOMERS

THEIR APPEARANCE AND BEHAVIOUR

TYPES OF STAFF

CUSTOMER-CONTACT
STAFF

CONNECTS CO TO CUSTOMER
CONNECTS CUSTOMER TO THE COMPANY.
THEREFORE, HE IS THE COMPANY
BACKBONE OF CO, CRITICAL FACTOR. WHY?

CUSTOMER - NONCONTACT
STAFF
PROVIDES MANAGEMENT SUPPORT
AND VARIOUS RESOURCES

CUSTOMER CONTACT STAFF


DIFFERENTIATORS
HIRE, TRAIN, COACH,DEVELOP,MOTIVATE AND
COMPENSATE BETTER CUSTOMER CONTACT
STAFF THAN THAT OF MAJOR COMPETITORS.
STAFF DIFFERENTIATORS
1. GRACEFULL AND COURTEOUS
2. GOOD COMMUNICATION
3. COMPETENT / SKILLFUL
4. RESPONSIVE/ CUSTOMER FOCUSED
5. EMPOWERED
6. MOTIVATED
7. TRUSTWORTHY

PHYSICAL ENVIRONMENT AND EVIDENCE

TWO ASPECTS
OF PHYSICAL ENVIRONMENT AND EVIDENCE
A. PHYSICAL ENVIRNMENT
A PLACE WHERE THE SERVICE IS CREATED OR
DELIVERED OR WHERE THE INTERACTION BETWEEN
THE SERVICE PROVIDER AND THE SERVICES USER
TAKES PLACE.

PAY ATTENTION TO:


1) LAYOUT OF BUILDING
2) NOISE LEVEL
3) COLOURS USED, DECOR, FURNITURE,
TEMPERATURE etc.
4) FACILITATING EQUIPMENT

TWO ASPECTS
OF PHYSICAL ENVIRONMENT AND EVIDENCE
B. TANGIBAL CLUE
A DOCUMENT WHICH SUPPORTS THAT THE
CUSTOMER HAS PURCHASED AND USED
THE SERVICE. IT ALSO REFLECTS THE
IMAGE OF THE SERVICE PROVIDER

TWO ASPECTS
OF PHYSICAL ENVIRONMENT AND EVIDENCE
BANKS, HOTELS , RESTAURANTS, AIRLINES etc,
SPEND LOT OF MONEY ON PHYSICAL
ENVIRONMENT AND THE TANGIBLE CLUE.
THESE ITEMS SHOULD MATCH WITH THE
PRODUCT POSITIONING
POOR PHYSICAL ENVIRONMENT AND TANGIBAL
CLUE CAN HURT A SERVICE COMPANY AND
CONVEY A NEGATIVE MASSAGE AND IMAGE

PROCESSES

MARKETING-MIX IN SERVICES
PROCESSES

WHAT
INDIVIDUAL SMALL,SEQUENTIAL, SPECIFIC AND VALUE
ADDING STEPS CARRIED OUT TO PRODUCE AND DELIVER A
SERVICE OR COMPLETE A TASK.
WRITTEN
MECHANIZE
CUSTOMERS INVOLVEMENT

KINDS:
PRODUCTION AND DELIVERY PROCESSES

EXAMPLES:
RESERVATION / APPOINTMENT SYSTEM, SELF SERVICE IN
STORES, RESTAURANTS etc.

PROCESS

WHAT
SMALL, SEQUENTIAL, SPECIFIC AND VALUE ADDING STEPS TO COMPLETE A TASK
EXAMPLE FROM McDONALDS
STEPS:
1) GREETING BY THE COUNTER ATTENDANT.
GOOD AFTERNOON
2) ASK THE CUSTOMER TO GIVE HIS ORDER
MAY I TAKE YOUR ORDER
3) REPEAT BACK THE ORDER TO AVOID MISTAKES
4) ASK IF THERE IS SOMETHING ELSE THE CUSTOMER
WOULD LIKE
WOULD YOU LIKE TO ORDER FRENCH FRIES
5) ASK FOR PAYMENT
6) ANNOUNCE, ASSEMBLE THE ORDER AND PRESENT IT
WITH COURTESY.
THANK AND ASK THE CUSTOMER TO COME AGAIN.

SPECIALITY TO COMMODITY CONTINUUM MODEL

SPECIALITY TO COMMODITY
CONTINUUM MODEL

SPECIALITY, A COMMODITY PRODUCT,TOP, MOP, PLC


AS A SPECIALITY PRODUCT MOVES THROUGH ITS PLC, IT
BECOMES A COMMODITY PRODUCT. THIS SPECIALITY TO
COMMODITY SLIDE RESULTS IN:A) LOW PRODUCT IMAGE
B) LOW PRICE
C) INCREASED COMPETITION
D) LOW PROFIT

COMPETITION OF A SPECIALITY PRODUCT IS FOUGHT ON


PERFORMANCE QUALITY, FEATURES, BENEFITS, OPTIONS,
DURABILITY, OUTLOOK, REPAIRABILITY, PACKAGE, PSS ETC
COMPETITION OF A COMMODITY PRODUCT IS PRIMARILY
BASED ON PRICE AND MODE / TERMS OF PAYMENT.

SPECIALITY TO COMMODITY
CONTINUUM
LOW
HIGH

COMPETITION

HIGH
HIGH

SPECIALITY
PRODUCT

PRICE

PROFIT

COMMODITY
PRODUCT

LOW
HIGH

PRODUCT IMAGE

LOW

LOW

MARKRT SHARE GROWTH STRATEGIES

MARKET SHARE
IT MEANS PERCENTAGE OF A MARKET OR OF A
PRODUCT CLASS CONTROLLED BY A COMPANY OR
BY A PRODUCT / BRAND

CURRENT USER STATUS

USERS

COMPETITORS` USERS
. SHIFT / SWITCH, OM

INFREQUENT, FREQUENT
LOYAL , RETAIN

NON-BELIEVERS OF PRODUCT
CLASS
FORGET

USE MORE OFTEN, OM


INTRODUCE NEW
USES
RM

NON-USERS
OF
PRODUCT CLASS
CONVERT THEM TO USERS, OM

MARKET SHARE GROWTH STRATEGY


PRODUCTMARKET EXPANSION MATRIX
ANSOFFS MATRIX
CURRENT PRODUCTS

CURRENT
MARKET

NEW
MARKET

NEW PRODUCTS

1. MARKET
PENETRATION
STRATEGY

3. PRODUCT
DEVELOPMENT
STRATEGY

2. MARKET
DEVELOPMENT
STRATEGY

4. DIVERSIFICATION
STRATEGY

MARKET PENETRATION STRATEGY


THIS STRATEGY CONSISTS OF INCREASING
SALES AND MS OF A CURRENT PRODUCT IN
THE CURRENT MARKET THROUGH DIFFERENT
AND MORE AGGRESSIVE MARKETING-MIX
STRATEGIES AND TACTICS

MARKET PENETRATION STRATEGY

THREE MARKETING TACTICS TO INCRESE MARKET


SHARE
1.

ENCOURAGE CURRENT USERS TO REMAIN LOYAL AND USE


MORE FREQUENTLY, IF THEY ARE INFREQUENT USERS.
DO SOMETHING DIFFERENT AND INNOVATIVE, E.G.
OFFER INCENTIVES, DO ENTERTAINMENT, ORGANIZE
EVENTS etc.

2.

SHIFT COMPETITORS USERS.


MAKES SENSE IF THERE ARE MAJOR WEAKNESSES IN
COMPETITORS PRODUCTS, PRICING, DISTRIBUTION, PROMOTION
OR THEY LACK FUNDS.

3.

CONVINCE NON-USERS OF THE PRODUCT-CLASS, IF STILL


UNDECIDED.

MARKET DEVELOPMENT STRATEGY


CONSISTS OF INCRESING SALES AND MARKET
SHARE OF A CURRENT PRODUCT BY ENTERING
INTO A NEW GEOGRAPHIC OR DEMOGRAPHIC
MARKET OR A NEW USE-AREA.
TACTICS
A) URBAN TO RURAL, OTHER COUNTRIES
B) ADULT TO CHILDREN
C) GENDER SHIFT

PRODUCT DEVELOPMENT STRATEGY

THIS STRATEGY CONSISTS OF INCREASING


SALES AND MARKET SHARE OF A PRODUCT BY
DEVELOPING EITHER A NEW PRODUCT OR
IMPROVED VARIANTS, FOR THE CURRENT
MARKET

TACTICS
a) DEVELOP A NEW PRODUCT
b) OFFER BENEFITS VIA NEW PRODUCT
FEATURES.

DIVERSIFICATION STRATEGY
ENTER A NEW MARKET WITH A COMPLETELY NEW
PRODUCT, BOTH UNRELATED WITH THE CURRENT
BUSINESS. Eg
PIA : HOTEL BUSINESS, SPEEDEX
SAS: HOTEL BUSINESS, AUTO RENTAL SERVICES
ALFALAH : WARID

THIS STRATEGY IS ADOPTED WHEN GROWTH IS


NOT POSSIBLE FROM THE OTHER THREE
STRATEGIES.
RISKY, COSTLY AND LONG-TERM STRATEGY. TOP
EXECUTIVES MAKE THIS DECISION.

PROFITABILITY

PROFIT =
=

FOUR WAYS TO INCREASE PROFITABILITY


1) INCREASE VOLUME (UNITS)
2) INCREASE PRICE
3) REDUCE VPCs VIA BETTER PURCHASE OF
INPUTS.
4) REDUCE FCs VIA EFFECTIVENESS AND
EFFICIENCY OF PEOPLE THROUGH TRAINING
AND UPTO DATE USE OF TECHNOLOGY IN
OPERATION.

REVENUE COSTS
(UNITS X PRICE) (VPCs + FCs)

LONG-TERM PROFITABILITY
PRODUCT OR BRAND

INCREASE
VOLUME
PRODUCT
DEVELOPMENT

MARKET
DEVELOPMENT

ENTER NEW
USE-AREAS

INCREASE
PRODUCTIVITY
MARKET
PENETRATION

ENTER NEW
GEO. OR DEMO.
SEGMENTS

INCREASE
USAGE RATE
& QUANTITY

COST *
REDUCTION

OPERATION

WIN
COMPETITORS
CUSTOMERS

* VPCs AND FCs

IMPROVE FF
AND LABOUR
EFFECTIVENESS
& EFFICIENCY

MARKETING

WIN
NON-USERS
OF P-CLASS

WHY DO COMPANIES NEED VOLUME


GROWTH?
1.

TO INCREASE LONG-TERM PROFITABILITY

2.

TO COMPENSATE INCREASING COSTS VS PRICE INCREASE.

3.

TO OFFER A CHALLENGE TO PEOPLE.

4.

TO IMPROVE COMPANYS MARKET RANKING.

GROWTH STRATEGIES

NINE WAYS TO GROW :


1.
2.
3.
4.
5.
6.

INCREASE PRODUCT-LINES (INCREASE P-MIX WIDTH)


INCREASE PRODUCT-LINE LENGTH AND DEPTH.
MARKET PENETRATION STRATEGY (MORE USAGE)
MARKET DEVELOPMENT STRATEGY(MORE USERS)
PRODUCT DEVELOPMENT STRATEGY
(BANKS: CREDIT CARDS).
PRODUCT DIVERSIFICATION STRATEGY
EG: AIRLINES HAVING OWN HOTELS

GROWTH STRATEGIES
7)

FORWARD INTEGRATION
GOING INTO A NEW BUSINESS IN WHICH THE OUTPUT OF
THE CURRENT BUSINESS CAN BE GAINFULLY USED AS AN
INPUT TO PRODUCE AN OTHER PRODUCT
EG : DRYCLEANING EQUIPMENT MANUFACTURING
COMPANIES GOING INTO DRYCLEANING
BUSINESS.

8)

BACKWARD INTEGRATION
GOING INTO A NEW BUSINESS IN WHICH THE OUTPUT OF
THE NEW BUSINESS CAN BE GAINFULLY USED AS AN
INPUT FOR THE CURRENT BUSINESS
EG : DRYCLEANING COMPANIES ACQUIRING EQUIPMENT
MANUFACTURING COMPANIES.

9)

HORIZONTAL INTERRATION
ACQUIRING / MERGIING WITH A SIMILER COMPANY

DIVISIONS OF A SERVICE ORGANIZATION

DIVISONS OF A SERVICE ORGANAIZATION


A) INVISIBLE PART
- CONSISTS OF:
1. INTERNAL AREAS
2. INTERNAL STAFF
PROVIDES RESOURCES AND MANAGEMENT SUPPORT TO
THE CUSTOMER CONTACT STAFF

3. INTERNAL PROCESSES
B) VISIBLE PART
- CONSISTS OF :
1. CUSTOMER CONTACT STAFF
2. THE CUSTOMER
3. OTHER CUSTOMERS
4. PHYSICAL SETTING
5. FACILITATING EQUIPMENT
6. DELIVERY PROCESS

DIVISIONS OF A SERVICE ORGANIZATION


SERVICE ORGANIZATION
INVISIBLE PART

INTERNAL AREAS

THE
CUSTOMER
A

VISIBLE PART

CUSTOMER CONTACT STAFF

INTERNAL STAFF
(NON-CUSTOMER CONTACT STAFF)
INTERNAL PROCESSES

PHYSICALSETTING
FACILITATING EQUIPMENT
PROCRSS TO DELIVER
OTHER
CUSTOMERS
B,C,D.

MIS AND MARKETING RESERACH

NEED FOR INFORMATION FOR DECISION MAKING


DURING VARIOUS STAGES OF MANAGEMENT

CHARACTERISTICS OF INFORMATION
1)
2)
3)
4)
5)

RELEVANT
ADEQUATE
TRUE / ACCURATE
UPDATED
ON TIME

INFORMATION IS AVAILABLE BOTH FROM INSIDE AND


OUTSIDE A COMPANY, THROUGH MR.
UNLESS INFORMATION IS USED, IT IS WORTHLESS.

Marketing Management Tasks

MARKETING INFORMATION SYSTEM


MIS
ANALYSIS
PLANNING
ORGANISING
IMPLEMENATION
MONITOR/
CONTROL

ICR

MARKET &
CUSTOMERS
ME

MKT. I S
2

MDSS

MR

COs PERFORMANCE
REACTIONS
TO M-MIX

ACTIONS

DATA / INFO ABOUT


MIS BEGINS AND ENDS WITH MARKETING MNGT.
ASSESS INFO NEEDS THROUGH INTERVIEWS
DEVELOP NEEDED INFO USING SUITABLE COMPONENT OF MIS
DISTRIBUTE INFO TO RIGHT MANAGERS FOR GOOD DECISION MAKING.

WHAT IS MARKETING RESEARCH ?

IT IS A SYSTEMATIC PROCESS OF DESIGNING, GATHERING,


ANALYSING AND REPORTING RELEVANT, ADEQUATE,
TRUE, UPDATED AND TIMELY INFORMATION ON A SPECIFIC
MARKETING TASK, FOR DECISION MAKING, TO THE
RELEVANT MARKETING PEOPLE.

OVERALL OBJECTIVES OF MARKETING RESEARCH


i.

TO REDUCE UNCERTAINTIES IN DECISION MAKING.

ii.

TO MONITOR / CONTROL PERFORMANCE OF MARKETING


ACTIVITIES.

STATUS OF USE OF MR IN SERVICES BUSINESS


OFTEN USED IN AIRLINES, BANKS, INSURANCE COs.
FIVE STAR HOTELS, FAST FOOD RESTAURANTS etc.
IN SUCH COs, MARKETING RESEARCH IS A COMPONENT
OF MIS.
IN MANY SERVICE BUSINESSES, IT IS NOT USED DUE TO
VARIOUS REASONS.
RECOMMENDED SPENDING :
1-2% OF SALES
SMALL COs.
CAN ENGAGE STUDENTS FOR MR.

THE MARKETING RESEARCH PROCESS

MR PROCESS IS MUCH THE SAME IN


ORGANIZATIONS MARKETING A PHYSICAL OR A
SERVICE PRODUCT.
EIGHT STEPS OF MR PROCESS:
1.

DEFINE THE MARKETING TASK/ PROBLEM

BE SPECIFIC
EG :

COPY TESTING
PRICE RESPONSIVENESS
CUSTOMER SATISFACTION LEVEL
CONCEPT TESTING.

THE MARKETING RESEARCH PROCESS


2.

DECIDE DATA / INFO SOURCE :


i.

ii.

PRIMARY DATA
NEW DATA GATHERED INTERNALLY OR EXTERNALLY.
EXPENSIVE AND TIME CONSUMING.
SECONDARY DATA
ALREADY AVAILABLE INSIDE OR OUTSIDE.
INEXPENSIVE
SOURCES :
COS INTERNAL RECORDS OR REPORTS FROM
OUTSIDE SOURCES

GOVT. PUBLICATIONS
TRADE / PROFESSIONAL BODIES
MR FIRMS
INSTITUTIONS

THE MARKETING RESEARCH PROCESS


3.

DECIDE RESEARCH APPROACH FOR GATHERING P. DATA


i.
ii.
iii.

SURVEY METHOD
OBSERVATION METHOD
EXPERIMENTAL METHOD

CHOICE OF METHOD DEPENDS UPON THE NATURE OF


TASK, TIME AVAILABLE AND THE COST.

HOW TO GATHER PRIMARY DATA


PRIMARY DATA GATHERING METHODS

SURVEY METHOD
GATHERING DATA/
INFO BY ASKING Qs

OBSERVATION METHOD
PEOPLES ACTIONS,
BEHAVIOUR, HEARING
WHAT THEY SAY

INTERVIEW TELEPHONE
PERSON(S)

POSTAL

PERSONAL
OBS

INDIVIDUAL

FOCUS GROUPS

ELECTRONIC
OBS

EXPERIMENTAL
METHOD
SEEING RESULTS
BY CHANGING ONE
VARIABLE

THE MARKETING RESEARCH PROCESS


4.

PREPARE A QUESTIONNAIRE TO RECORD


RESPONSES / OBSERVATIONS, TO QUESTIONS.
DECIDE SAMPLE PLAN FOR P. DATA

5.

i.
ii.
iii.

6.

COLLECT DATA
i.
ii.

7.

OWN OR OUTSIDE STAFF


ACTIVE PHASE, EXPENSIVE PHASE, PRONE TO ERROR

ANALYSE DATA AND MAKE A REPORT


i.
ii.

8.

WHICH TM TO SURVEY ?
HOW MANY?
WHICH ONES ?

TABULATE THE DATA, AVOID PRESENTING LOT OF DATA


EXTRACT FINDINGS FROM THE DATA USING VARIOUS
STATISTICAL TECHNIQUES.

PRESENT FINDINGS IN WRITING TO THE MANAGEMENT.

QUESTIONNAIRE
IS A SET OF APPROPRIATE QUESTIONS,
PRESENTED TO A RESPONDENT FOR
RECORDING ANSWERS, RESPONSES OR
OBSERVATIONS.
USED COMMONLY

QUESTIONNAIRE
CHARACTERISITCS OF A GOOD QUESTIONNAIRE
A) SIMPLE WORDS
B) SHORT AND SIMPLE QUESTIONS
C) SEQUENTAL QUESTIONS.
D) PERSONAL QUESTIONS TOWARDS THE
END.
E) ONE SPECIFIC IDEA PER QUESTION.
F) NOT TOO MANY QUESTIONS. 10 12
QUESTIONS ARE SUFFICIENT.

QUESTIONNAIRE
G) INCLUDE BOTH OEQs AND CEQs
1) OEQs (DICHOTOMOUS, MULTIPLE CHOICE, SCALING,
DIRECT AND INDIRECT).
- GENERALLY, MAKE THE RESPONDENT THINK
- ANSWERED IN RESPONDENTS OWN WORDS
- REVEAL MORE INFO.
2) CEOs (DICHOTOMOUS, MULTIPLE CHOICE,
SCALING, DIRECT AND INDIRECT).
- GENERALLY, DO NOT MAKE THE
RESPONDENT THINK
- RESPONDENT MAKES HIS CHOICE OF ANSWER
FROM THE PRE-SPECIFIED ANSWERS.
TEST THE QUESTIONNAIRE BEFORE ITS USE
ON A LARGE SCALE.

SUB-CLASSIFICATION OF OEQs AND CEQs


1)
2)
3)

4)

5)

DICHOTOMOUS QUESTION
GIVES CHOICE BETWEEN TWO ANSWERS
MULTIPLE CHOICE QUESTION
GIVES CHOICE BETWEEN MORE THAN TWO ANSWERS
SCALLING QUESTION
GIVES CHOICE OF ANSWER ON A NUMERICAL SCALE
(MINIMUM TO MAXIMUM)
DIRECT QUESTION
A QUESTION WHICH CONTAINS THE WORD YOU OR
YOUR TO MAKE IT A PERSONALIZED QUESTION
INDIRECT QUESTION
A QUESTION WHICH CONTAINS THE WORDS OTHER
PEOPLE IN ORDER NOT TO MAKE IT A PERSONALIZED
QUESTION

PROBLEMS IN MR
IN SERVICES ORGANIZATIONS
THREE PROBLEMS
RELUCTANT ATTITUDE TOWARDS MR IN SERVICE
ORGANIZATIONS.
ALTHOUGH THE USE OF MR HAS GROWN IN
SERVICES BUSINESS, YET THERE IS RESISTANCE
TO ITS VALUE IN SOME QUARTERS.
REASONS ARE :1.

a)

REGARD MR UNETHICAL
EG: PROFESSIONAL SERVICES.
b) SMALL COMPANY SIZE AND BEING LOCAL IN OPERATION
DOES NOT JUSTIFY EXPENDITURE ON MR. EG: REPAIR
WORKSHOPS, BEAUTY PARLOURS.
c) MONOPOLY IN BUSINESS.
DEMAND IS MUCH GREATER THAN SUPPLY.

PROBLEMS IN MR
IN SERVICES ORGANIZATIONS
d)
e)

LACK OF MANAGERIAL KNOW-HOW IN MR AND ITS


AWARENESS IN S. COMPANIES.
CLAIM THAT THE STAFF IS CLOSE AND IN DIRECT
CONTACT WITH CUSTOMERS. THUS, NO NEED TO
SPEND ON AN EXTERNAL MR AGENCY.
DRAWBACKS OF SUCH CONTACTS
i.
ii.

TOO UNPLANNED
TOO INFORMAL

THUS, THE RESULTS ARE OFTEN WRONG.

2.

POOR QUALITY AND QUANTITY OF SECONDARY


DATA.

PROBLEMS IN MR
IN SERVICES ORGANIZATIONS
3. PROBLEMS RESULTING FROM THE
CHARACTERISTICS OF A SERVICE PRODUCT
CHARACTERISTIC
1)

INTANGIBILTY
THUS, DIFFICULT TO OBTAIN PATENT
AND RISK OF BEING COPIED QUICKLY

2) INSEPARABILITY
THE PRESENCE OF SERVICE PROVIDER
IS NECESSARY .
3) QUALITY STANDARDIZATION IS
DIFFICULT.
QUALITY DEPENDS UPON THE
S. PROVIDER, P.EVIDENCE, THE
CUSTOMER AND OTHER CUSTOMERS
PRESENT.

EFFECTS ON MR

REDUCES INCENTIVE FOR R&D


(INNOVATION) THUS, FUCUS ON
ME-TOO SERVICES

HOME-USE TESTS ARE NOT POSSIBLE.


CREATES PROBLEMS IN CONCEPT
TESTING

MR RESULTS MAY BE VERY WRONG OR


DIFFERENT.

MARKETING RESEARCH
PUBLIC SECTOR OBJECTIONS

MR IS MUCH LESS DEVELOPED IN THE PUBLIC SECTOR


THAN IN THE PRIVATE SECTOR.
REASONS :
1)

MONOPOLY IN MANY SERVICE CATEGORIES.

2)

MARKETING AND MR IS REGARDED UNNECESSARY

3)

PUBLIC SECTOR SERVICES ARE FOR THE WHOLE


COMMUNITY, NOT FOR A PARTICULAR SEGMENT OF
SOCIETY. GENERALLY, NO DISCRIMINATION.
THIS IS UNLIKE IN THE PRIVATE SECTOR WHERE
DISCRIMINATION IS DONE VIA MARKET SEGMENTATION.

4)

UNLIKE THE PROFIT CRITERION USED IN THE PRIVATE


SECTOR SERVICES, NON-PROFIT EVALUATION CRITERIA
ARE USED IN JUDGING A PROPOSAL IN THE PUBLIC
SECTOR SERVICES.

MARKET AND ENVIRONMANTAL ANALYSIS


WHAT IS MARKET AND ENVIRONMANTAL
ANALYSIS ?
GATHERING AND ANALYSING DATA / INFO ABOUT THE
MARKET AND THE MARKETING ENVIRONMENT (ME), MAKING
CONCLUSIONS (IDENTIFYING Os and Ts) AND THEIR IMPACT
ON THE M-MIX.
MARKET AND ENVIRONMANTAL ANALYSIS IS DONE VIA
MARKETING RESEARCH AND MARKETING INTELLIGENCE
SYSTEM (FOR ME).
MARKET AND ENVIRONMANTAL ANALYSIS A IS THE SAME
BOTH FOR PRODUCTS AND SERVICES

MARKET AND ENVIRONMANTAL ANALYSIS


MAJOR QUESTIONS WHICH MUST BE ANSWERED IN A
MARKET AND ENVIRONMANTAL ANALYSIS
1. DO NEEDS / WANTS FOR A PARTICULAR SERVICE EXIST ?
2. TO WHAT EXTENT THESE HAVE BEEN SATISFIED OR ARE
UNSATISFIED?
FIND VIA MR.
3. SIZE OF DEMAND / MARKET.

MARKET AND ENVIRONMANTAL ANALYSIS


4.
5.
6.
7.
8.

PRICE WHICH THE CUSTOMER IS READY TO PAY.


COST OF PRODUCING AND DELIVERING THE SERVICE BY
THE COMPANY.
PROFITABILITY.
STRATEGIC COMPETITORS
THEIR NUMBER, SIZE, AGGRESSIVENESS, THEIR M-MIX AND
THE TYPE OF COMPETITION.
MAJOR CHANGES IN THE EXTERNAL UNCONTROLLABLES

STEPS OF MARKETING PLANNING PROCESS

THE MANAGEMENT PROCESS


FIVE PHASES OF MANAGEMENT
1)

SITUATION ANALYSIS
GATHERING, STUDYING
AND ANALYSING FACTS
ABOUT PAST & PRESENT
PERIODS.

5) TAKING ACTIONS

MAKING CONCLUSIONS
AND PREDICTING THEIR
EFFECTS ON FUTURE

2)

PLANNING

SETTING OBJECTIVES,

MAKING STRATEGIES / TACTICS

DETERMING RESOURCES

DECIDING MONITORING
MECHANISM AND ITS TIMING

4) LEADING, DIRECTING,
MONITORING,EVALUATING
CONTROLLING, MOTIVATING

3) ORGANIZING AND IMPLEMENTING


ORGANIZATION STRUCTURE, STAFFING,
GIVING RESPONSIBILITIES,
EMPOWRING,TRAINING; COACHING
COMMUNICATING AND EXECUTING THE
PLAN

KEY PLANNING TERMS / CONCEPTS


DEFINITIONS
CONCEPT
COMPANY
MISSION
OBJECTIVE

DEFINITION AND CHARACTERISTICS


THE PURPOSE FOR WHICH A COMPANY IS ESTABLISHED, EXPRESSED IN TERMS OF
CUSTOMERS NEED, PRODUCTS AND TARGET MARKET. WHAT BUSINESS THE COMPANY
IS IN?
WHAT A PERSON OR A COMPANY WANTS TO ACHIEVE . END RESULTS SELECTED AFTER
EVALUATING ALTERNATES. QUANTITATIVE AND QUALITATVE. MUST BE :-

1) WRITTEN
4) MUTUALLY AGREED
5) MATCH WITH COMPANYS OBJECTIVES

2) SMART

3) PURE

6) PRIORITIZED

STRATEGY

HOW A PERSON OR A COMPANY INTENDS TO ACHIEVE THE OBJECTIVE (S).


OVERALL AND NON-SPECIFIC ACTION, METHOD OR A GAME PLAN.

GENERATE AND EVALUATE ALTERNATE STRATEGIES BEFORE SELECTING THE


FINAL STRATEGY

INVITE PARTICIPATION

LOOK FOR CREATIVITY

LONG-TERM

TACTICS

DETAILED AND SPECIFIC ACTIONS WHICH WILL BE TAKEN TO IMPLEMENT


THE CHOSEN STRATEGY IN ORDER TO ACHIEVE THE OBJECTIVE (S).

INVITE PARTICIPATION

LOOK FOR CREATIVITY

SHORT TERM

WHAT IS PLANNING?

ONE OF THE STAGES OF MANAGEMENT PROCESS DURING WHICH:A MANAGER AFTER HARD THINKING AND INTENSIVE CONSULTATION:1) SETS OBJECTIVES / GOALS
2) ESTABLISHES STRATEGY
a)
b)
c)

TM
SCAs IN THE MARKETING-MIX
PRODUCT POSITIONING

3) DEVELOPS A DETAILED PLAN OF SPECIFIC ACTIONS / TACTICS


4) DETERMINES NEEDED RESOURCES
5) DECIDES A MONITORING OR CONTROLLING MECHANISM AND ITS TIMING
NEEDED IN ALL COMPANIES, IN ALL BUSINESS FUNCTIONS AND AT ALL LEVELS.

A PLAN IS THE RESULTANT DOCUMENT PRODUCED AT THE END OF THE


PLANNING STAGE

A PLAN GIVES A CLEAR ROAD MAP TO FOLLOW.

IT IS A WORKING DOCUMENT

STEPS IN PLANNING PROCESS


SITUATIONAL ANALYSIS
SET GOALS FROM
ALTERNATIVES

DECIDE TM

DECIDE SCAs FOR TM


DECIDE PRODUCT POSITIONING
ESTABLISH
MARKETING MIX STRATEGIES
AND TACTICS FROM ALTERNATIVES

DECIDE RESOURCES
DECIDE MONITORING MECHANISM
AND ITS TIMING

STEPS OF MARKETING PLANNING PROCESS


1.

SITUATION ANALYSIS
a)

STUDY COMPANYS, COMPETITORS AND MARKETS


PERFORMANCE FOR THREE YEARS (CURRENT, -1YEAR AND -2
YEARS).
THIS WILLSHOW COMPANYS TREND IN PERFORMANCE
COMPARED TO THE COMPERTITORS AND MARKET
PERFORMANCE.
KNOW REASONS FOR GOOD / BAD RESULTS.

b)

GATHER, STUDY AND ANALYSE INFO ON THE ME AND MARKET


FOR THE BUDGET YEAR.

c)

IDENTIFY MAJOR Ss AND Ws IN THE M-MIX, PARTICULARLY IN


PRODUCT(s) AS WELL AS IN THE COMPANY AND Os AND Ts IN
THE ME AND MARKET.
SWOT ANALYSIS.

MARKETING ENVIRONMENT (ME)


ACTORS AND FORCES, OUTSIDE THE MARKETING
DEPARTMENT, WHICH AFFECT MARKETING
ACTIVITIES OR DECISIONS ABOUT MARKETINGMIX OR MARKETING PERFORMANCE.
DIVIDED INTO MACRO AND MICRO EXTERNAL
UNCONTROLABLE FORCES / ACTORS

MACRO EXTERNAL UNCONTROLLABLE FORCES


1.
2.
3.
4.
5.
6.
7.

POLITICAL AND LEGAL FORCES


ECONOMIC FORCES
CULTURAL AND SOCIAL FORCES
GEOGRAPHIC AND NATURAL FORCES
DEMOGRAPHIC FORCES
TECHNOLOGICAL FORCES
COMPETITIVE FORCES

LOCATION
OF
STRENGTHS AND WEAKNESSES
(OWN AND COMPETITORS)

VARIOUS Ps OF M-MIX
PRODUCT SUPPORT SERVICES
COMPANY PERFORMANCE
A) SALES
B) MS, GR, RANKING

HUMAN RESOURCE AND THEIR


SKILLS (QUANTITY & QUALITY)
NON-HUMAN RESOURCES
(QUANTITY & QUALITY)
COMPANY IMAGE

QUALITATIVE SWOT ANALYSIS


STRENGTHS
----------------------------- ----------------------------------------------------------- ------------------------------

WEAKNESSES
----------------------------- ----------------------------------------------------------- ------------------------------

OPPORTUNITIES
---------------------------- --------------------------------------------------------- ------------------------------

THREATS
----------------------------- ----------------------------------------------------------- ------------------------------

BASIC PRINCIPLE FOR SUCCESS


MUST HAVE A SUSTAINABLE COMPETITIVE ADVANTAGE (s) (SCA)

WHAT IS A SCA?
SOMETHING BETTER IN ANY OF THE ELEMENTS OF MARKETINGMIX, NECESSARY FOR LONG -TERM ABOVE AVERAGE SUCCESS OF
A COMPANY.

CHARACTERISTICS OF A SCA
(a) MEANINGFUL/ IMPORTANT
(b) BELIEVABLE
(c) AFFORDABLE
(d) DIFFERENT
(e) SUSTAINABLE

IF YOU DO NOT HAVE A SCA, DO NOT COMPETE

STEPS OF MARKETING PLANNING PROCESS


2.

3.

FORMULATE CRITICAL ASSUMPTIONS MADE


FOR THE ACHIEVEMENT OF THE PLAN.
EG: PRICING ASSUMPTIONS, LAW AND ORDER
SITUATION.
OBJECTIVES SETTING
a)
b)

KNOW COMPANY OBJECTIVES


SET OBJECTIVES
KEEP a,b AND c UNDER STEP 1 AND a) UNDER STEP 3
IN MIND
i. QUANTITATIVE (WRITTEN, SMART).
SALES, PROFIT etc.
ii. QUALITATIVE (PURE)

STEPS OF MARKETING PLANNING PROCESS


4.

ESTABLISH STRATEGIES AND TACTICS :


i.

SELECT TM
VIA SEGMENTATION
ii. CREATE SDAs
iii. DEVELOP DISTINCT PRODUCT POSITIONING
iv. DEVELOP AN APPROPRIATE M-MIX TO ACHIEVE CS
v. DECIDE RESOURCES
vi. DECIDE MONITORING MECHANISM AND ITS TIMING

STEPS OF MARKETING PLANNING PROCESS


5.

IMPLEMENT THE PLAN :


i.
ii.

iii.

CREATE AN APPROPRIATE ORGANIZATION.


RECRUIT STAFF WITH ABILITY / TALENT,
WILLINGNESS / MOTIVATION AND SUITABLE
PERSONALITY.
EXECUTE THE PLANNED STRATEGIES AND
TACTICS.

STEPS OF MARKETING PLANNING PROCESS


6.

MONITOR / EVALUATE / CHECK


ACTUAL RESULTS
VS
PLANNED RESULTS

7.

TAKE NEEDED ACTIONS :


i. RECOGNIZE, APPRECIATE / REWARD.
ii. HELP, REPRIMAND, GIVE WARNING, REPLACE
iii. CHANGE OBJECTIVES / STRATEGIES / TACTICS
VERY OFTEN THE MISTAKE LIES IN THE EXECUTION
OF STRATEGIES AND TACTICS

REPRIMAND
SERVERE VERBAL DISAPPROVAL OF A BIG
WRONG ACT OF AN EXPERIENCED
SUBORDINATE, BY HIS SENIOR

BENEFITS OF PLANNING
GIVES DIRECTION VIA GOALS
SETS YARDSTICK OR STANDARDS
REDUCES / AVOIDS UNCERTAINTY OR
HAZARDS BY LOOKING AHEAD,
ANTICIPATING CHANGE AND ITS IMPACT;
AND RESPONDING TO CHANGE
IMPROVES EFFECTIVENESS AND
EFFICIENCY DUE TO WELL THOUGHT
SPECIFIC ACTIONS
MAKES OTHER STAGES OF MANAGENENT
RUN EASY AND SMOOTH
ENSURES COORDINATION BETWEEN
VARIOUS PEOPLE AND DEPARTMENTS

WHAT PLANNING WILL AND


WILL NOT DO
A) WILL DO
a)
b)
c)
d)
e)
f)
g)

PLANNING FORCES PEOPLE TO THINK.


PLANNING ENHANCES CREATIVITY.
GUIDES EFFORTS
GIVES A YARDSTICK
PLANNING MINIMISES UNCERTAINTY AND SURPRISE.
MAKES OTHER MANAGEMENT PHASES / TASKS EASY.
IMPROVES EFFECTIVENESS AND EFFICIENCY DUE TO
WELL THOUGHT SPECIFIC ACTIONS

B) WILL NOT DO
PLANNING WILL NOT GIVE A PERFECT CRYSTAL BALL. IT
WILL NOT PREDICT FUTURE WITH 100% ACCURACY

PLANNING PROCESS
WHERE ARE WE
NOW ?

HOW WILL WE KNOW


IF WE HAVE ARRIVED
OR NOT ?

WHERE DO WE
WANT TO Go TO ?

HOW WILL WE
GET THERE ?

WHAT IS A MARKETING PLAN ?


A PLAN IS THE RESULTANT DOCUMENT OF THE PLANNING
PHASE OF MANAGEMENT PROCESS .
IT CONTAINS:
1) EXECUTIVE SUMMARY,
2) SA,
3) OBJECTIVES,
4) STRATEGY AND TACTICS,
5) NEEDED RESOURCES
6) MONITORING MECHANISM AND ITS TIMING
7) PROFIT / LOSS
8) KEY SUCCESS FACTORS / ASSUMPTIONS

FOR THE BUDGET / PLANNING YEAR, TO GUIDE MANAGERS


DURING THE REMAINING PHASES OF MANAGEMENT .
IT IS A WORKING DOCUMENT

PERIOD OF PLANNING
A)

STRATEGIC PLANNING / PLAN


1) LONG-TERM
MORE THAN 5 YEARS
TOP MANAGERS
2) MEDIUM-TERM
2-5 YEARS

B) OPERATIONAL OR TACTICAL PLANNING / PLAN

SHORT-TERM, USUALLY 1 YEAR


DERIVED FROM THE STRATEGIC PLAN
MOSTLY ALL MANAGERS

MANY COMPANIES OPERATE WITHOUT FORMAL PLANS.


NOT GOOD, NOT DO WELL.

WHY MARKETING STRATEGIES FORMULATION


IS DIFFICULT IN SERVICES
a)

UNIQUE CHARACTERISTICS OF SERVICES :

UNLIKE GOODS, INTANGIBILITY CHARATERISTIC OF


SERVICES MAKES CONSUMERS CHOICE DIFFICULT.
OPINION CAN BE OBTAINED FROM OTHERS.
INSEPARABILITY MAKES MARKETING STRATEGY OF
SERVICES LOCALIZED. RELATIVELY DIFFICULT TO SELL
SERVICES ON NATIONWIDE BASIS.
PERISHABILITY MAKES STORAGE OF SERVICES
IMPOSSIBLE, THUS, PLANNING SUPPLY AND DEMAND OF
SERVICES IS DIFFICULT
HETROGENEITY MAKES ENSURING OF UNIFORM QUALITY
DIFFICULT.

SITUATION ANALYSIS
AND
PLANNING PHASE
SITUATION ANALYSIS AND PLANNING PHASE IS
HOMEWORK FOR A MANAGER.
THE BETTER IS THE HOMEWORK DONE, THE MORE
EASY IT BECOMES TO CARRY-OUT THE REMAINING
PHASES OF MANAGEMENT

WHO DOES PLANNING IN A COMPANY?


TOP
MANAGERS

STRATEGIC
PLANNING

TOP
MANAGERS

MIDDLE
LEVEL
MANAGERS

OPERATIONAL
PLANNING

FIRST
LEVEL
MANAGERS