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Services marketing
Service economy
Service economy can refer to one or both of two recent economic developments. One is the increased importance of the service in industrialized economies. Services account for a higher percentage of US GDP than 20 years ago. The current list of Fortune 500 companies contains more service companies and fewer manufacturers than in previous decades. The term is also used to refer to the relative importance of service in a product offering. The service economy in developing countries is mostly concentrated in financial services, health, and education. Products today have a higher service component than in previous decades. In the management literature this is referred to as the servitization of products. Virtually every product today has a service component to it. The old dichotomy between product and service has been replaced by a service-product continuum. Many products are being transformed into services. For example, IBM treats its business as a service business. Although it still manufactures computers, it sees the physical goods as a small part of the "business solutions" industry. They have found that the price elasticity of demand for "business solutions" is much less than for hardware. There has been a corresponding shift to a subscription pricing model. Rather than receiving a single payment for a piece of manufactured equipment, many manufacturers are now receiving a steady stream of revenue for ongoing contracts. James Murrdock once said "When GDP are low...the service based economy must be also." Full cost accounting and most accounting reform and monetary reform measures are usually thought to be impossible to achieve without a good model of the service economy. Environmental effects of the service economy This is seen, especially in green economics and more specific theories within it such as Natural Capitalism, as having these benefits: 

Much easier integration with accounting for nature's services Much easier integration with state services under globalization, e.g. meat inspection is a service that is assumed within a product price, but which can vary quite drastically with jurisdiction, with some serious effects.


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Association of goods movements in commodity markets with negative commodity (representing emissions or other pollution, biodiversity loss, biosecurity risk) public bads so that no commodity can be traded without assuming responsibility for damage done by its extraction, processing, shipping, trading and sale - its comprehensive outcome Easier integration with urban ecology and industrial ecology modelling Making it easier to relate to the Experience Economy of actual quality of life decisions made by human beings based on assumptions about service, and integrating economics better with marketing theory about brand value e.g. products are purchased for their assumed reliability in some known process. This assumes that the user's experience with the brand (implying a service they expect) is far more important than its technical characteristics 

Product stewardship or product take-back are words for a specific requirement or measure in which the service of waste disposal is included in the distribution chain of an industrial product and is paid for at time of purchase. That is, paying for the safe and proper disposal when you pay for the product, and relying on those who sold it to you, to dispose of it. Those who advocate it are concerned with the later phases of product lifecycle and the comprehensive outcome of the whole production process. It is considered a pre-requisite to a strict service economy interpretation of (fictional, national, legal) "commodity" and "product" relationships. It is often applied to paint, tires, and other goods that become toxic waste if not disposed of properly. It is most familiar as the container deposit charged for a deposit bottle. One pays a fee to buy the bottle, separately from the fee to buy what it contains. If one returns the bottle, the fee is returned, and the supplier must return the bottle for re-use or recycling. If not, one has paid the fee, and presumably this can pay for landfill or litter control measures that dispose of diapers or a broken bottle. Also, since the same fee can be collected by anyone finding and returning the bottle, it is common for people to collect these and return them as a means of gaining a small income. This is quite common for instance among homeless people in U.S. cities. Legal requirements vary: the bottle itself may be considered the property of the purchaser of the contents, or, the purchaser may have some obligation to return the bottle to some depot so it can be recycled or re-used. In some countries, such as Germany, law requires attention to the comprehensive outcome of the whole extraction, production, distribution, use and waste of a product, and holds those profiting from these legally responsible for any outcome along the way. This is also the trend in the UK and EU generally. In the United States, there have been many class action suitsthat are

effectively product stewardship liability - holding companies responsible for things the product does which it was never advertised to do. Rather than let liability for these problems be taken up by the public sector or be haphazardly assigned one issue at a time to companies via lawsuits, many accounting reform efforts focus on achieving full cost accounting. This is the financial reflection of the comprehensive outcome noting the gains and losses to all parties involved, not just those investing or purchasing. Such moves have made moral purchasing more attractive, as it avoids liability and future lawsuits. The United States Environmental Protection Agency advocates product stewardship to "reduce the life-cycle environmental effects of products." The ideal of product stewardship, as administered by the EPA in 2004, "taps the shared ingenuity and responsibility of businesses, consumers, governments, and others," the EPA states at a Web site.

Role of the Service Economy in Development
Services constitute over 50% of GDP in low income countries' and as their economies continue to develop, the importance of services in the economy continue to grow.[1] The service economy is also key to growth, for instance it accounted for 47% of economic growth in sub-Saharan Africa over the period 2000±2005 (industry contributed 37% and agriculture 16% in the same period).[1] The means that recent economic growth in Africa relies as much on services as on natural resources or textiles, despite many of those countries benefiting from trade preferences in primary and secondary goods. As a result, employment is also adjusting to the changes and people are leaving the agricultural sector to find work in the service economy. This job creation is particularly useful as often it provides employment for low skilled labour in the tourism and retail sectors, thus benefiting the poor in particular and representing an overall net increase in employment. The service economy in developing countries is most often made up of the following: 

Financial services Tourism Distribution Health, and Education


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The export potential of many of these products is already well understood, e.g. in tourism, financial services and transport, however, new opportunities are arising in other sectors, such as the health sector. For example: 

Indian companies who provide scanning services for US hospitals South Africa is developing a market for surgery and tourism packages India, the Philippines, South Africa and Mauritius have experienced rapid growth in IT services, such as call centers, back-office functions and software development

Growth in the service economy also facilitates growth in the rest of the economy. Services such as energy, telecommunications and transportation are important to all sectors of the economy; financial services facilitate transactions and investment; health and education services that contribute to a fit, well-trained workforce; and legal and accountancy services allow an institutional framework required to run a successful market economy.

Tertiary sector of the economy
The tertiary sector of the economy (also known as the service sector or the service industry) is one of the three economic sectors, the others being these condary sector (approximately the same as manufacturing) and the primary sector (agriculture, fishing, and extraction such as mining). The service sector consists of the "soft" parts of the economy, i.e. activities where people offer their knowledge and time to improve productivity, performance, potential, and sustainability. The basic characteristic of this sector is the production of services instead of end products. Services (also known as "intangible goods") include attention, advice, experience, and discussion. The production of information is generally also regarded as a service, but some economists now attribute it to a fourth sector, the quaternary sector. The tertiary sector of industry involves the provision of services to other businesses as well as final consumers. Services may involve the transport, distribution and sale of goods from producer to a consumer, as may happen in wholesaling and retailing, or may involve the provision of a service, such as in pest control or entertainment. The goods may be transformed in the process of providing the service, as happens in the restaurant industry. However, the focus is on people interacting with people and serving the customer rather than transforming physical goods.


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For the last 30 years, there has been a substantial shift from the primary and secondary sectors to the tertiary sector in industrialized countries. This shift is called tertiarisation. The tertiary sector is now the largest sector of the economy in the Western world, and is also the fastestgrowing sector.

Service 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, labor, professional skills, facilities, networks, and systems; but they do not normally take ownership of any of the physical elements involved.

Evolution in service sector:
The service sector occupies an important place in the modern economies in as much as about 55% of jobs are being offered by the service sector by marketing numerous types of services to customers, such as food, personal care, entertainment, banking, insurance, transport, consultancy, tourism, office services, professional services etc. Service sector has a vital role to play in the economic, political and administrative changes that are taking place in India. The problems of adaptation and achievement are more acute in India as the development here has taken place in a span of few decades in few segments unlike other countries. With the increasing awareness the people look forward to better service sector, these expectations may be more. With a democratic political setup and too many expectations from the government¶s side will lead to deterioration in the quality of service to be provided. With the plan of expansion in new areas asking for introduction of new services and other areas demanding improvement in quality of service, the government is constantly under pressure to provide services quantitatively and qualitatively.

Therefore, the public agencies should venture into professional management to bring about result-oriented businesses. As the service revolution gathers momentum, more and more service businesses are entering into the scene, the scope of service sector has widened. The service sector management as a profession would contain the following: 1. Service deliverers: This involves the pure service rendered by the professional staff like doctors in hospitals, teachers in academics. 2. Service managers: The personnel who provide the supporting managerial services like administration ± e.g. a registrar in a University. 3. Service analysts: People who are entrusted with the task of concurrent review and evaluation of services in the organization ± e.g. personal manager in a HRD. 4. Supporting staff: Personnel employed in manual jobs in the service organizations such as nurses in hospitals.

Growth in service sector:
Service sector is the lifeline for the social economic growth of a country. It is today the largest and fastest growing sector globally contributing more to the global output and employing more people than any other sector. The real reason for the growth of the service sector is due to the increase in urbanization, privatization and more demand for intermediate and final consumer services. Availability of quality services is vital for the well being of the economy. In advanced economies the growth in the primary and secondary sectors are directly dependent on the growth of services like banking, insurance, trade, commerce, entertainment etc. Indian Service Sector In alignment with the global trends, Indian service sector has witnessed a major boom and is one of the major contributors to both employment and national income in recent times. The activities under the purview of the service sector are quite diverse. Trading, transportation and communication, financial, real estate and business services, community, social and personal services come within the gambit of the service industry.

One of the key service industry in India would be health and education. They are vital for the country¶s economic stability. A robust healthcare system helps to create a strong and diligent human capital, who in turn can contribute productively to the nation¶s growth. Post Liberalization The Indian economy has moved from agriculture based economy to a knowledge based economy. Today the IT industry and ITE'S industry are the dominant industry in the service sector. Media and entertainment have also seen tremendous growth in the past few years. Subsectors Information Technology Industry The Information Technology industry has achieved phenomenal growth after liberalization. The industry has performed exceedingly well amidst tough global competition. Being knowledge based industry; India has been able to leverage the global markets, because of the huge pool of engineering talent available and the proficiency in English language among the middle class. ITES sector The ITES sector has also leveraged the global changes positively to emerge as one of the prominent industries. Some of the services covered by the ITES industry would be:
y y y y y

Customer interaction services -Non voice and Voice. Back office, revenue accounting, data entry, data conversion, HR services. Medical Transcription. Content development and animation. Remote education, market research and GIS

Retailing Prior to liberalization, India had one of the most underdeveloped retail sectors in the world. After liberalization the scenario changed dramatically. Organized retailing with prominence on self service and chain stores has changed the dynamics of retailing. In most of the tier I and tier II cities supermarket chains mushroomed, catering to the needs of vibrant middle class. This indirectly contributed to the growth of the packaged food industry and other consumer goods. Financial Services-Banking And Insurance Prior to liberalization these two sectors were controlled and regulated by the government. Nationalized banks and insurance companies had a firm grip over the market. After liberalization the banking and insurance domain opened up for private participation. Banking Sector The three major changes in the banking sector after liberalization are:

Step to increase the cash outflow through reduction in the statutory liquidity and cash reserve ratio.
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Nationalized banks including SBI were allowed to sell stakes to private sector and private investors were allowed to enter the banking domain. Foreign banks were given greater access to the domestic market, both as subsidiaries and branches, provided the foreign banks maintained a minimum assigned capital and would be governed by the same rules and regulations governing domestic banks. Banks were given greater freedom to leverage the capital markets and determine their asset portfolios. The banks were allowed to provide advances against equity provided as collateral and provide bank guarantees to the broking community.

Insurance Sector The Insurance Regulatory and Development Authority Act 1999 (IRDA Act) allowed the participation of private insurance companies in the insurance sector. The primary role of IRDA was to safeguard the interest of insurance policy holders, to regulate, promote and ensure orderly growth of the insurance industry. The insurance sector could invest in the capital markets and other than traditional insurance products, various market link insurance products were available to the end customer to choose from. Some of the prominent insurance companies are:
y y y y y y

Bajaj Allianz Insurance Corporation Birla Sun Insurance Co Ltd HDFC Standard Insurance Co Ltd ICICI Prudential Insurance Co Ltd Max New York Insurance Co Ltd Tata AIG Insurance Co Ltd

Future Trends
y y y y

Globally outsourcing industry would continue to grow. Following the success of US and UK, more countries in the European Union would outsource their business. Technological power shift from the West to the East as India and China emerge as major players. Political backlash over outsourcing would come down as companies reap the benefit of outsourcing.

Nature of service marketing:
‡ ‡ Services are consumed as it is produced Services marketing has limited influence on customers prior to purchase than goods ± Need to experience intangible service to know it
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± ± ‡ ‡ ‡

Experience influences Post-Sale marketing Experience influences word-of-mouth communication

Services marketers can create brand awareness & induce trial Experience of benefits builds brand preference and brand value Services marketing is also done by service providing personnel ± How they conduct themselves with customers

± What they say, What they don¶t say ± How they behave, How they act ± ‡ ‡ Overall appearance

All these influences customer satisfaction and customer retention Delivering excellent quality service is the key!!

Classification of services: There are a number of ways in which services can be classified. Some of them are mentioned here. 1. On the basis of the END USER the services can be classified into following categories: y y y Consumer : leisure, hairdressing, personal finance and package holidays Business to Business: advertising agencies, printing, accountancy, Consultancy Industrial: Plant Maintenance and repair, work wear and hygiene, installation and project management. 2. The DEGREE OF TANGIBILITY can be used to classify a service. ‡Highly tangible: car rental, vending machines, and telecommunications ‡ Service linked to tangible goods: domestic appliance repair, car service. ‡Highly tangible: psychotherapy, Consultancy, legal services. 3. Services can be broken down into LABOR INTENSIVE (PEOPLE based) and EQUIPMENT based services. This can also be represented by degree of contact. ‡People based services: high contact : education, dental care, restaurants and medical services ‡ Equipment based: low contact: automatic car wash, launderette, vending machine, cinema.

4. The EXPERTISE and SKILLS of the service provider can be broken down into the following categories: ‡Professional: medical services, legal services, accountancy, tutoring. ‡Non Professional: babysitting, care taking, and casual labor. 1. The overall BUSINESS ORIENTATION ( PROFIT) is a recognized means of classifications: ‡Not for profit: The Scouts Association, charities, and public sector leisure facilities. ‡Commercial: banks, airlines, tour operators, hotel and catering services

Service Marketing

Classification of Services :1) By market segmentation 2) By degree of Tangibility 3) By skills of the service provider 4) By goals of the provider 5) By degree of regulation 6) By degree of labor Intensiveness
Service Marketing :Service marketing is a marketing based on relationship and value. It may be used to market a service or a product. Marketing a service-based business is different from marketing a goods-base business. We term marketing as a function by which a marketer deliver , promotes and plans goods and services to customer and clients. Nature of Service Marketing : 1. Intangibility 2. Low price festivity 3. No inventory 4. Value creation process 5. Providing tangibility for the intangibility Difference between service and goods : Basis Service Goods Intangible

Fully intangible may be physical evidence Fully tangible Inseperatability of buyer and provider
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Both must be present Remote transaction easy Ease of inventory Cannot store or ware house the service Easily inventoried Difficulty in Measuring and controlling quality Measure and control people processes instead of product Measure and control product quality only. Sensitivity to time Needed on demand or sale is lost Can usually wait to receive the product

High degree of risk Cost of failure very high Product can be replaced Consumption of the offering Customization likely to enhance customer perception of perceived quality Customization increases cost, but likely to enhance perceived product quality Personalization of buyer relationship Relationship can be as important as service Product is the focus of the transaction

Factors affecting development of service marketing : I. Organization size structure II. Regulatory bodies III. Growth in service industry IV. Characteristics of services V. Customer/Employee interaction VI. Service quality VII. Specific service sector Significance : i) Creation and expansion of job opportunities ii) An optimal utilization of resources iii) Paving avenues for the formation of capital iv) Increasing the standard of living v) Environment-friendly technology OR


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People Things
Services directed at people¶s bodies. ( People Processing )
y y y y

Tangible Actions

Health Care Beauty Salons Restaurants Public Transportation

Services directed at goods and other physical possessions ( Possession Processing ) Freight Transportation y Repair / Maintenance y Dry Cleaning Services directed at intangible assets. ( Information Processing )
y y y y

Intangible Actions

Services directed at people¶s minds. ( Mental Stimulus Processing )
y y y

Education Theaters Information Services

Banking Legal Services Insurance

1.People Processing: 1. Customers must physically enter the system. 2. Sometimes, service provider goes to customer with necessary tools. 3. People must be prepared to spend time actively cooperating with the service operation. ‡ ‡ Level of involvement can vary. Managers must think about processes / outputs in terms of what happens to customers or what benefits are created. Identify non-financial costs, time, mental and physical effort, fear, and pain etc.


2. Possession Processing: ‡ ‡ Working to tight deadlines to restore customer¶s possessions to good working order. People are less physically involved and usually, no real need for them to enter the service; often limited to requesting the service; explaining the problem or paying the bill only.
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The output in each instance, whether, installing software or repairing car etc. should be a satisfactory solution to a stated problem.

3. Mental Stimulus Processing: ‡ ‡ ‡ Services that interact with people¶s mind. Anything touching people¶s mind has power to shape attitudes and influence behaviour. Customers are in a position of dependency, and a potential for manipulations. Hence, strong ethical standards and careful oversight are required. Recipients should spend time but not necessarily be physically present in a service factory; just mentally in communication with information being presented. Information based content can be converted to digital bits, recorded or transformed into manufactured products viz. CD¶s, Video¶s, which can be packed and sold like any physical product.



4. Information Processing ‡ ‡ Most intangible form of service output. Customer involvement determined more by tradition or personal desire to meet face to face and not by the needs of the operational process. Customer / Supplier learn each other¶s needs, capabilities and personalities by personal meetings, however this relationship can also be build / sustained on trust or telephonic contact.


Scope of service marketing: no
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).


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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. Labor 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.

Characteristics of Services Marketing:
Services have four characteristics that greatly affect the design of marketing programs: y y y y Intangibility Perishability Variability Inseparability

One of the fundamental differences between product and service cited by authors (e.g. Srinivasan, 2007; Kotler & Keller, 2008; Lovelock, Wirtz & Chatterjee, 2006 and many others) is µIntangibility¶. Services are intangible. They do not have physical appearance like products. They cannot be felt; touched until they are bought for example a person getting cosmetic surgery cannot be seen until he or she purchase or use the service. So a company should demonstrate

their service quality through physical evidence. (Srinivasan, 2007) So, it is very important for any company to show physical evidence of their service to customers for example FedEx. It is one of the largest logistic and courier services provide company. It is in both businesses ³Business to Business where it helps companies in import-export of raw material and Business to Customers.´ It has many evidence of service quality or physical evidence for example FedEx puts every courier in wood box for protection, they package it in proper manner, it has scheme like if a courier will not reach at a time then it will pay back all money to its consumers. In the same way FedEx has their huge transport services such as Cargo planes, Trucks, Van. FedEx have good technologies such as internet service, ERP, GPS software which help them to find out the position of courier. It provides free insurance of the courier to their customers so if the courier lost then they will pay compensation. They have their huge logo, dress, branch in all cities whether it is metropolitan or tire one or two cities which is totally viceversa to Indian Department of Post where they do not have good infrastructure, technology and trained workforce. If there is good physical evidence then it will make great impact on customers. (FedEx, 2009) Challenges: Intangibility of services can cause lack of assurance and confidence on the part of the customers. There are some issues like it is complicated for customers to evaluated the service quality and similarly it is difficult for firm to set the price advertise and display the services. To overcome this customers tend to look for evidence in quality. Service companies should try to express their service quality through presentation and physical evidence of efforts made by firm to provide good quality service. If we talk about Indian consumers, there are some methods follow by them before using any services and products such as firstly they want to see, touch and feel the products then they make decision to buy it but services are intangible. So, it cannot be seen, touched and felt. This is one of the main challenges for Indian companies. How to overcome from these challenges? y Place: If we take retail sector as an example the interiors and exteriors of store should
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have clean line. The layout of chairs, and desks, visual merchandising of the store and the traffic flow should be planned carefully. The billing line should not get overly long. y People: There should be sufficient numbers of billing counters and employees in retail store to manage the crowed. They should always be ready to help customers. y Equipments: Computers, chairs, desks, background music, paintings, trolleys and other important products should be and look like µState of the Art¶. y Symbols and communication materials: Printed materials and symbols such as text, photos and name should suggest fast services. (Bruhn & Georgi, 2006)

Challenges: Service cannot be inventoried therefore Perishability can be a problem when demand fluctuates. The process, service relevant resources and the system are assigned for delivery of a service during a set period of time. If the schedule customer does not request and consume the service during the set time then the service cannot be stored and performed next time for him for an example a barber can serves another client when scheduled time started or time slot is over but a plane cannot charge for an empty seat after departure. (Hoffman & Bateson, 2006) The main challenge for service providing companies is if the schedule customer does not request and consume the service during the set time then the service cannot be stored and performed next time for him. A service provider cannot charge any service charge from customers as he can do in product oriented situation. How to overcome from these challenges? Several strategies can produce a better match between supply and demand in a service business: On the supply side: y Part time employees can help a business to serve peak demand for an example some colleges add part time faculties when enrollment goes up which help a firm to meet the demand successfully. y A company should use better technology to improve their work efficiency.
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On demand side: y A company should differentiate its price according to demand which help them to create the demand for an example in theater when movie released at that time the ticket price should be high because of more demand but after some days firm should decrease the price of ticket to increase the demand. y Reservation system can be a way which can help company to manage the demand.

The above characteristics are usually referred to in many texts which show that what makes services marketing so different to product oriented company.

Challenges: The other difference between product and service is Variability. Variability and People (1st p of 3¶P) are one of the main part of Service Marketing. Each time service is differ and varies for the next delivery even if the same service provider serves the same service and same service consumer requests the same service. Because of the service quality depends on who provides them, where, when and to whom services are highly variable. Those companies who have people base service process it is difficult for them to deliver same kind of service every time constantly. It is difficult to achieve the control on quality. (Bruhn & Georgi, 2006) If we talk about ³Mumbai Dabbawala´, they are considered as µSix Sigma¶ and the µManagement Guru¶. They have Six Sigma at 99.99% level; it means in every 600000 lunch Tiffin delivery, they forget one lunch Tiffin or they made mistake after every 600000 lunch Tiffin. Every day about 200000 Lunch Tiffin are delivered by near 5000 daddawala. They are trying to make 100% but due to people base service, they make mistake at some point of time. They have started online booking, coupon service and transport service to reduce the mistake ratio. So it shows that Variability is the part of Service Marketing. A company can minimize Heterogeneity by using new technology but they cannot stop it. Invest in good hiring and training procedure but they cannot stop it fully. How to overcome from these challenges? Commonly, service buyers are aware of the variability of the service so they often talk to others

before the selection of service provider. So, to reassure, maintain and gain new consumers companies should try to offer service quality and guarantees to reduce the consumers¶ perception of risk such as:


Task standardization: A company should improve their work method and it should standardize the specific rules and task and then they should work according to it. Every company should provide service blueprint to employees so they can follow it and which can simultaneously map out the process of service.


Investment in training and right hiring: Every company should provide training to its employees to improve their productivity and which help to lead more customer satisfaction and achieve the economics of scale.


Monitor customer satisfaction:

Every company should take customer feedback,

employees¶ suggestion. They should take consumers¶ survey and collect samples which help them to improve the service.

Challenges: The other difference between product and service is Inseparability. Whereas physical goods are firstly manufactured, put in to stock, distributed through wholesalers and retailers and consumed later but services are produced and consumed simultaneously. A barber cannot cut hair without the presence of customer. (Hoffman & Bateson, 2006) How to overcome from these challenges? To make services more effective a company should focus on these factors such as: y Training: Every company should provide training to its employees to improve their productivity so they can help to achieve the economics of scale. y Customer involvement: There should be customer involvement in process of service
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delivery such as self services. y Convenience: Location of the store, the opening and closing time of store must be convenient for customers.

Service market potential:
The concept of market potential It is defined as ³the maximum demand response possible for a given group of customers within a well defined geographic area for a given product or service over a specified period of time under well defined competitive environmental conditions.´ We will further split up this definition: 1. Market potential is the maximum demand response under certain assumptions (ultimate demand). 2. Relevant customer for the product and service. It is not merely the present consumer but also the potential consumer so that maximum possible demand is achieved. 3. The geographic area for which market potential is to be determined should be well defined. 4. There should be a clear understanding about the product & service for which the market potential is to be estimated. 5. The time period for which market potential is estimated should be specific. 6. Finally, a clear understanding of environmental & competitive conditions relevant in case of a particular product or service is also necessary. It is important to remember that the estimated market potential sets an upper boundary on the market size and can be expressed in either units and/or sales. Market potential consists of the upper limit of total demand which would theoretically be converged on at (infinite) rise of marketing expenditures of all relevant providers (see figure).


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Why Market Potential Analysis? Estimating the market or market potential for a new business or business expansion is critical in determining the economic feasibility of a venture. Estimating the market potential for a business is critical in evaluating its viability and provides an estimate of the maximum total sales potential for a given market. Estimating the market potential will determine if the market is large enough to support your businesses. Hence we get precise and reliable information in this area after conducting a market potential analysis. Difference between Sales &Market Potential Sales potential is for an individual company where as market potential is for the entire industry of product class, but both represents maximum demand response and are boundary conditions. Hence market potential and sales potential are different. Formula for Estimating Market Potential Estimating the market potential for a business requires specific information on the number of people or potential buyers, an average selling price, and an estimate of consumption or usage for a specific period of time. Once this information has been collected, it can be plugged into the following formula to derive the estimated market potential.

MP = N*P*Q where
MP = market potential N P Q = number of possible buyers = average selling price = average annual consumption

Estimating Market Potential Check-List This check-list will address a number of questions that need to be answered before an estimate can be calculated. 1. 2. 3. 4. 5. 6. 7. 8. i. What type of customer will buy the product or service? Where are these customers located? How many potential customers (N) are there? How often do they consume or use it? What is the Competition? What are people paying? What is the Potential for the Market to Develop? What is my share of the Market? Target Market

One of the most important components of estimating the market potential for a business is to determine its target market.

A target market can be thought of as the customers who are most likely to buy from you and generally are described using demographic variables (gender, age, education) as well as psychographic variables (lifestyle and belief system variables). In many cases, a business may have more than one target market. Think about the automobile industry, automobile manufacturers have a number of target markets, i.e., truck buyers, luxury car buyers, economy buyers. A business should be able to develop specific profiles for each of its target markets using demographic and psychographic variables. 1. Set of demographic variables include Age, Marital Status, HH Income, Gender, Race/Ethnicity, Family Life CY, Education, Religious, and Affiliation. 2. The second profile is referred to as psychographic lifestyle and describes your target market segment by their activities (work and leisure), interests (family, animals, environment, home, and community), and opinions. The lifestyle profile is more important in predicting future patronage than the demographic profile because it will determine what type of experience they are seeking. The following are a few psychological descriptors: Political affiliation, socially conscious, Cutting-edge, Familyoriented Conformist, Power-wielding, Trend follower, Thrill seeker, ³Green´, Funloving, Fashion-forward, Sports enthusiast. ii. Market or Trade Area

The market area can be thought of as the geographic area where the business intends to operate, i.e., a city block, between the rivers or the globe. Defining the market area is important because it defines the geographic area where potential consumers live and/or work. There are a number of ways to define a market area, some are easy and others are more difficult and require the services of a marketing professional. A market area is generally defined by geography, radius, trade area or drive-time. 1. The geographical areas include Neighbourhoods, Zip codes, City or County Boundaries, Metropolitan Statistical Areas, State (multi state) Boarders, Nation, Continent, World. 2. A ring or radius defined market area is performed by creating a circle a specified number of miles from a business location. 3. Drive Time Analyses: Drive time analysis is a more sophisticated analysis than the radius analysis as a number of variables are used to estimate the drive time to a given location. iii. Market Size

Once the market area and target market has been defined, it is possible to determine the number of potential customers for your business. This will allow you to estimate the N (number of potential customers) in the market potential equation. This total market potential will typically have to be adjusted downward to account for non-users. Example: An agritourism operator has decided, it will target its market towards children under 9 years old. The business has concluded its market area is Wake County which has 101,768 children under 9 years old. Therefore, N = 101,600 potential customers. These numbers were obtained from the US Census Bureau.


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However, not all children under 9 years of age will visit an agricultural facility. It is important to adjust these figures to get a more accurate estimate of the actual market potential. A survey of elementary school teachers found that only 68% of kindergarten through 3rd grade teachers indicated they would take an agriculturally-related field trip in the next year. As a result, the 101,600 kindergarten through 3 rd graders should be adjusted downward by multiplying by 68%. This results in an adjusted market potential of 69,088 potential students. Adjusted Market Potential = 101,600*68% = 69,088 iv. Consumption or Usage

A business need to determine how often its target market segment uses its product or service. This figure will have a significant impact on the estimated market potential. For instance, is the product purchased frequently, occasionally, or infrequently? Obviously the more frequently the product is purchased, the larger the market potential. Durable goods, products that can be used over a long period of time, are purchased less frequently than perishable items. As a result, the annual consumption of apples is greater than the annual consumption of television sets. v. Competition Analysis

One of the best sources of information is to investigate competing businesses. These businesses can provide a wealth of information that can be used in evaluating the potential for your business. By evaluating how a company markets its business, it is possible to determine the markets it is targeting. For example, if competing businesses are advertising in Southern Living, they are targeting affluent, middle age females. However, if they are advertising in the sports section of a metropolitan newspaper, they are most likely targeting males. In addition to collecting information on the markets they are targeting, a competitor analysis can reveal packaging preferences, target market information, pricing strategies, distribution channels and marketing strategies. Simply evaluate the products and services your competitor is providing. Are they producing family packs or individual serving sizes of their processed food product? How are they getting their products to their customers? Are their products value prices or are they priced for the high-end market? Are they focused on convenience, quality or quantity? What type of packaging material are they using? vi. Pricing

A product¶s pricing has a direct impact on the bottom line of a business and its success. Therefore investigate what others are charging and what the customer gets at that price when setting your price. Investigate your competition. Are your prices in alignment with theirs? What is the value of your product relative to theirs? Do not be a price taker or implement a ³me, too´ pricing strategy if your product can be differentiated and offers a higher value than competing products. If your price is too high to compete directly in the market, look for a niche market that desires your product¶s attributes and charge accordingly.


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Market Outlook

The situational analysis can be thought of as a comprehensive investigation into the business environment in which your company will be operating. This analysis will allow you to determine the health of the industry is it expanding, declining or stagnate. This should include an industry overview focused on industry trends and should provide a general review of the industry as well as research into regulatory and social implications that would directly or indirectly impact the demand or perception of your business. One important aspect is to determine if the market is saturated or if there is room for new businesses. Using the Market Development Index (MDI) it is possible to determine a product¶s lifecycle. The formula for estimating this is as follows: MDI = (Current market demand ÷ Maximum Market Potential) * 100 1. MDI < 33 (Considerable growth potential. High growth market, high prices and basic benefits. 2. MDI 33-67 Growth potential but need to offer more than basic product and compete at lower price. 3. MDI > 67 Mature market, still room for growth but becoming commodity products. Need to have very differentiated products to meet specific customer needs. viii. Market Share

The percentage of a market (either in units or revenue) accounted for by an individual business. This figure is important since it provides insight into how much of the total market potential a business might capture. If the market share is not large enough to support the business, then there is a problem. Also, if the number of units needed for the business to breakeven financially is known, it is possible to determine what share of the market will have to be captured for the business to achieve this break-even point. Market share information is very difficult to obtain and may need to be estimated using various scenarios. Application of Market Potential Analysis Market potential analysis offers decision support for specific questions for which such as: 1. 2. 3. 4. Exploration of potential (target) markets Determination of company locations Evaluation of ideas (screening) Designation of sales areas

Methods for Collecting Data Secondary data is used for the purpose. Most of the data are available on the internet and some needs to be purchased from marketing research firms. So desk research is the method through which the data are collected.


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Services are very different from products. So the marketing concepts need to be revisited while marketing a service. Services can range from financial services provided by the banks, technology services provided by the IT company, food and ambiance as a service provided by restaurants or even a blog where an author provides a service (information presentation, interesting reading etc) to his audience. Services marketing are dominated by the 7 Ps of marketing namely Product, Price, Place, Promotion, People, Process and Physical evidence.

The following form the marketing mix for services marketing, the first 4 P¶s being the core and the next 3 P¶s being the extended marketing mix. 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

7 P's product, promotion, placement and price


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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 ³worth 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 traveling, 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


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process. This can also be referred to as the ³services 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 possess the required technical skills, good interpersonal skills and positive attitudes that can become a key competitive advantage for the firm.

Service quality:
Service quality involves a comparison of expectations with performance. According to Lewis and Booms (1983) service quality is a measure of how well a delivered service matches the customers expectations. Generally the customer is requesting a service at the service interface where the service encounter is being realized, then the service is being provided by the provider and in the same time delivered to or consumed by the customer. The main reason to focus on quality is to meet customer needs while remaining economically competitive in the same time.[1] This means satisfying customer needs is very important for the enterprises survive. The outcome of using quality practices is:[2] 

Understanding and improving of operational processes Identifying problems quickly and systematically Establishing valid and reliable service performance measures Measuring customer satisfaction and other performance outcomes

Service quality is a business administration's term and describes the degree of achievement of an ordered service.[3] In this connection, objective and subjective service quality can be distinguished.[4] 

Objective service quality is the concrete measurable conformity of a working result with the previous defined benefit; since the measurability is remarkable dependent on the definition's accuracy, a measurable quality criterion easily can turn out as a subjective one.[5] 

Subjective service quality is the customers perceived conformity of the working result with the expected benefit; this perception is overlayed with the customers original imagination of the service and the service providers talent to present his performance as a good one.[6]


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Moreover, a defined result can turn out as unreachable. Then the best possible achievable result would be the objective ideal result, but subjective still be an unsatisfactory result of a service. Service quality can be related to service potential, service process or service result. In this way for example, potential quality can be understood as the co-workers qualification, process quality as the speed of the generated service and result quality as how much the performance matched the customers wishes.

Criteria of service quality
Word-of-mouth, personal needs and past experience create an expected service (Expectation of the service). The perceived service will be compared with the expected service by the customer. And leads to the perceived service quality as a result. Between the expected and the perceived service can appear a gap if the perceived service does not match with the expected service. Factors which influence the appearing of the gap were found by Parasuraman, Zeithaml and Berry in 1985. Parasuraman, Zeithaml and Berry (1985) identified ten determinants of service quality that may relate to any service: 

Competence (Possession of the required skills and knowledge to perform the service: knowledge and skill of the contact personnel, knowledge and skill of the operational support personnel, research capability of the organization) 

Courtesy (Politeness, respect, consideration and friendliness of the contact personnel: consideration for the customer's property, clean and neat appearance of public contact personnel) 

Credibility (Trustworthiness, believability and honesty. It involves having the customer's best interest at heart: company name, company reputation, personal characteristics of the contact personnel) 

Security (Freedom from danger, risk or doubt: physical safety, financial security, confidentiality) Access (Approachability and ease of contact: Service is easily accessible, waiting time to receive service is not extensive, convenient hours of operation, convenient location of service facility) 


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Communication (Informing the customers in a language they can understand and listening to them. It may mean that the company has to adjust its language for different consumers: explaining the service itself, explaining how much the service will cost, explaining the tradeoffs between service and cost, assuring the consumer that the problem will be handled) 

Understanding/ knowing the customer (Making the effort to understand the customer's needs: understanding customer's specific needs, providing individualized attention, recognizing the customer) 

Tangibles (Physical evidence of the service: appearance of physical facilities, tools and equipments used to provide the service, appearance of personnel and communication materials, other customers in the service facility) 

Reliability (The ability to perform the promised service dependably and accurately: service is performed right at the first time, the company keeps its promises in accuracy in billing, in keeping records correctly and in performing the services at the designated time) 

Responsiveness (The willingness and/ or readiness of employees to help customers and to provide prompt service, timeliness of service: mailing a transaction slip immediately, setting up appointments quickly)

Later they were reduced to five by Parasuraman, Zeithaml and Berry (1988): 

Tangibles (Physical evidence of the service: appearance of physical facilities, tools and equipments used to provide the service, appearance of personnel and communication materials) 

Reliability (The ability to perform the promised service dependably and accurately: consistency of performance and dependability, service is performed right at the first time, the company keeps it's promises in accuracy in billing and keeping records correctly, performing the services at the designated time) 

Responsiveness (The willingness and/ or readiness of employees to help customers and to provide prompt service, timeliness of service: mailing a transaction slip immediately, setting up appointments quickly) 

Assurance (The knowledge and courtesy of employees and their ability to convey trust and confidence: competence (possession of the required skills and knowledge to perform the service), courtesy (consideration for the customer's property, clean and neat appearance of public contact personnel), trustworthiness, security (safety and confidentiality))


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Empathy (The provision of caring, individualized attention to customers: informing the customers in a language they can understand, Understanding customer's specific needs, Providing individualized attention)

A 6th criteria was proposed by Grönroos in 1988: recovery. It has the same effect as the junk yard strategy, which is used to support the zero defects strategy. The customer needs to stay happy. Since there are many bad services being delivered to the customer and according to latest researches 12 good service encounters are needed to make up a bad one, the criteria recovery can play an important role.

Models of service quality
There are two main models: 

Service Quality Model of Grönroos Grönroos says that the expectations of the customer depend on the 5 determinants market communication, image, word of mouth, customer needs and customer learning. Experiences depends on the techniqal quality (what/ outcome) and the functional quality (how/process), which are filtered through the image (who). Both expectations and experiences can create a perception gap. 

GAP Model of Parasuraman, Zeithaml and Berry The model says that the expected service is influenced by the word-of-mouth, the personal needs , past experience and also by the external communication to customers. A perception gap can appear between the expected service and the perceived service. This gap is called the GAP 5 (also called the service quality gap), it occurs if the customer is not satisfied and depends on the other 4 gaps.

The perceived quality depends on the external communication to customers and the service delivery. The GAP 4 (also called the communication gap) is appearing between the external communication to customers and the service delivery. It appears when promises do not match the delivery. The service delivery depends on the service quality specifications. If they are not match each other the GAP 3 (also called the service performance gap) appears. The service quality specifications depends on the management perceptions of customer expectations, where the management perceptions of customer expectations influence the external communication to customers. The GAP 2 (also called the standards gap) occurs between the management perceptions of customer expectations and the service quality specifications if the wrong quality standards were consulted. ESHWARI.S---LORAA BUSINESS ACADEMY Page 30

The biggest gap, the GAP 1 (also called the marketing information gap) occurs between the management perceptions of customer expectations and the expected service. It appears because the service provider does not know what the customer expect.

Gaps model:
Key factors contributing to the gaps [7] GAP 1: Not knowing what customers expect: 

Lack of marketing research orientation Inadequate upward communication Too many levels of management

GAP 2: The wrong service quality standards: 

Inadequate management commitment to service quality Perception of infeasibility Inadequate task standardization Absence of goal setting

GAP 3: Service performance gap: 

Employee role ambiguity Employee role conflict Poor Employee job fit Poor Technology job fit Inappropriate evaluation and reward systems Lack of empowered service employees Lack of teamwork

GAP 4: When promises do not match delivery: 

Inadequate horizontal communication Tendency to overpromise

GAP 5: customer satisfaction:


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depends on gap 1-5 The greater the gap the lower the customer satisfaction, because expectation and perception do not match.

Theory Of The Gaps Model In Service Marketing
History of the Gaps Model The gaps model of service quality was first developed by a group of authors, Parasuraman, Zeithaml, Berry, at Texas A&M and North Carolina Universities, in 1985 (Parasuraman, Zeithaml & Berry). Based on exploratory studies of service such as executive interviews and focus groups in four different service businesses the authors proposed a conceptual model of service quality indicating that consumers perception toward a service quality depends on the four gaps existing in organization consumer environments. They further developed in-depth measurement scales for service quality in a later year (Parasuraman, Zeithaml, Berry, 1988). Theory of the Gaps Model Perceived service quality can be defined as, according to the model, the difference between consumers expectation and perceptions which eventually depends on the size and the direction of the four gaps concerning the delivery of service quality on the company s side (Fig. 1; Parasuraman, Zeithaml, Berry, 1985). Customer Gap = f (Gap 1, Gap 2, Gap 3, Gap 4) The magnitude and the direction of each gap will affect the service quality. For instance, Gap 3 will be favourable if the delivery of a service exceeds the standards of service required by the organization, and it will be unfavourable when the specifications of the service delivered are not met. The key points for each gap can be summarized as follows: y Customer gap: The difference between customer expectations and perceptions service quality gap. The difference between what customers management perceived about the expectation of customers. expected and the








The difference between management s perceptions of customer expectations and the translation of those perceptions into service quality specifications and designs. The difference between specifications or standards of service quality and the actual service delivered to customers. The difference between the service delivered to customers and the promise of the firm to customers about its service quality


Gap 3:


Gap 4:


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Fig. 1: The Integrated Gaps Model of Service Quality (Parasuraman, Zeithaml, Berry 1985)

Applications of the Gaps Model First of all the model clearly determines the two different types of gaps in service marketing, namely the customer gap and the provider gaps. The latter is considered as internal gaps within a service firm. This model really views the services as a structured, integrated model which connects external customers to internal services between the different functions in a service organization.


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Important applications of the model are as follows:

Fig. 2: The 10 determinants of service quality (Parasuraman, Zeithaml, Berry, 1985).

1. 2. 3.

The gaps model of service quality gives insights and propositions regarding customers perceptions of service quality. Customers always use 10 dimensions to form the expectation and perceptions of service quality (Fig. 2). The model helps predict, generate and identify key factors that cause the gap to be unfavourable to the service firm in meeting customer expectations.

The model provides a conceptual framework for academic and business researchers to study the service quality in marketing.

Application Areas Management, service marketing, consumer behaviour


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SERVQUAL or RATER is a service quality framework. SERVQUAL was developed in the mid eighties by Zeithaml, Parasuraman & Berry.

SERVQUAL was originally measured on 10 aspects of service quality: reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding the customer and tangibles. It measures the gap between customer expectations and experience. By the early nineties the authors had refined the model to the useful acronym RATER:      Reliability Assurance Tangibles Empathy, and Responsiveness

SERVQUAL has its detractors and is considered overly complex, subjective and statistically unreliable. The simplified RATER model however is a simple and useful model for qualitatively exploring and assessing customers' service experiences and has been used widely by service delivery organizations. It is an efficient model in helping an organization shape up their efforts in bridging the gap between perceived and expected service. The five gaps that organizations should measure, manage and minimize: ‡Gap 1 is the distance between what customers expect and what managers think they expect - Clearly survey research is a key way to narrow this gap. ‡Gap 2 is between management perception and the actual specification of the customer experience Managers need to make sure the organization is defining the level of service they believe is needed. ‡Gap 3 is from the experience specification to the delivery of the experience - Managers need to audit the customer experience that their organization currently delivers in order to make sure it lives up to the spec. ‡Gap 4 is the gap between the delivery of the customer experience and what is communicated to customers - All too often organizations exaggerate what will be provided to customers, or discuss the best case rather than the likely case, raising customer expectations and harming customer perceptions. ‡Gap 5 is the gap between a customer's perception of the experience and the customer's expectation of the service - Customers' expectations have been shaped by word of mouth, their personal needs and


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their own past experiences. Routine transactional surveys after delivering the customer experience are important for an organization to measure customer perceptions of service.

Quality measurement
Quality measurement is separated in subjective and objective processes, at which mostly the customers satisfaction is being measured. Measuring the customers satisfaction is an indirect way to measure quality. Objective processes are being subdivided into primary and secondary processes: 

During primary processes, test buyings from silent shoppers are being made or normal customers are being watched. During secondary processes quantifiable enterprise numbers like amount of complaints or the amount of given back goods are being analyzed, and with this information conclusions to quality can be drawn. 

Subjective processes are being subdivided into characteristic orientated, incident orientated and problem orientated processes. 

To the characteristic focused processes counts the SERVQUAL method To the incident focused processes counts the Critical Incident Theory To the problem focused processes counts the Frequenz Relevanz Analyse (german)

The most important and most used process to measure service quality is the SERVQUAL method. [edit]Approaches

to improve service quality

Generally the service design or the service delivery can be improved to achieve a high quality service. The service design consists in: 

Service product design Service facility design Service process designated

The service delivery consists in: 

Service delivery process Page 36


Service encounter environment Customer-Provider interaction

And the following approaches can be used for the improvement: 

Quality function deployment (QFD) Failsafing Moving the line of visibility and line of accessibility Blueprinting

Approaches to improve conformance quality
In order to ensure and increase the conformance quality of services, i.e. the service delivery happens as designed, various methods are available. Some of these [8] are listed below: 

Guaranteeing Mystery Shopping Recovering Setting standards and measuring Statistical process control Customer involvement

So, service quality consists in several factors. Enterprises can orientate a determined contingent of their organization to service, in the organizational department. Examples are establishing protest departments or Hotlines. Furthermore, enterprises can adapt their terms and conditions regarding to service. Goodwill regulations or widened replacement regulations. The function of service quality is competitiveness including customer satisfaction (maintain a customer base). It is not necessary that a firm applies all of the 5 main quality criteria. Instead the company can emphasize on the ones which are important for its strategy.


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Broad Dimensions of Service Quality:
The Importance of The Dimensions of Service Quality: Knowing the dimensions of service quality will enable your business to get repeating and loyal customers to your business as a way of maximizing revenue and increasing business. When running a business or in general working with customers, you should know about the dimensions of service quality. Because knowing this you are more likely to get repeating and loyal customers to your business, which is what most businessmen want, to increase revenue and maximize business. Service is just a part of the marketing mix, but a very important part both of the 4 and 7 P¶s. There are 5 dimensions of service quality with each their addition to make the quality of the service you offer your customers more unique and satisfying. First dimension is tangibles; Tangible defines the appearance of the physical facilities and surroundings, the equipment, personnel and of cause the way of communication. The tangible dimension create the first hand impression which the customers get and may in the future relate your company with. You want the first hand impression that your customers get to be a great picture they combine with something positive like quality for money spent. Don¶t expect to give a good first hand impression if you are having a software company developing their products on old computers with old versions of software. Simply because the software business goes so fast you must follow the development of technology. They will also remember how they where greeted when they arrived for the first meeting and they will certainly also remember the surroundings, like fresh air in light rooms rather than heavy air in darker rooms. Second dimension is Reliability; Reliability defines the ability of the company to perform and complete the promised service, quality, accurately and on time. Reliability is just as important as the first hand impression, because every customer wants to know that their supplier of what it may be are reliable and give the service agreed including great quality within the given timeframe without compromising on the quality. Third dimension is Responsiveness; Responsiveness defines the company¶s willingness to help its customers and provide it with a good, fast and quality service. Like all the other dimensions responsiveness is also very important, the customers will with no

doubt be able to feel if they are valued customers and if they get the best quality service possible. Fourth dimension is Assurance; Assurance defines the employees of the company, that they are skilled workers which can gain the trust and confidence of the customers. The employees must be able to give the customers assurance in the products they are trying to sell. If the coming or current clients of the company are not comfortable or feel safe dealing with the employees they are likely not to continue doing business with your company. Assurance is a lot about keeping and maintaining business relations. Fifth dimension is Empathy; Empathy defines a company who cares and gives individualized attention to its customers so they feel special and valued as a customer. The firth dimension of empathy combines the second, third and fourth dimension to a higher level, without they yet still can be compared, as they are all individual dimensions of the service quality mix. It is very important to give the customers individualized and quality attention, the more special and valued they feel the higher the chances are for them to return to your company and continue doing business. In General There are maybe also things which might not be covered by the dimensions of service quality, but then you need to think as if you where a customer, what would you expect from those whom you do business with? What would be the thing that makes the difference and differentiate the company compared to their competitors? Each of the dimensions are important in their own way and maybe they even seem logic, sometimes they are too logic so companies end up overseeing them, this is a mistake which they do but you shouldn¶t. It can certainly be the difference between a successful company and a company that are bound to close down within the next year or sooner.


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Market Opportunity Assessment Whether a founding team is seeking VC funding, or a big league Marketing team is selecting the next product, evaluating the market opportunity for new products should be a pragmatic, truthful, apolitical, customer centric process that is backed-up by an analysis of the best data available. Doing an adequate job requires looking outside the company to identify the target customer, as well as digging deep within the company to assess whether the development team has what it takes to deliver the product required in the time frame that makes sense. MARKETING MECHANICS can expertly guide your team through this process. We can take responsibility for the overall success of the process, or we can execute on any one of the individual steps. The Three Major Components of Market Opportunity Assessment Characterizing the Customer Exactly who is the customer? How many kinds of customers are there? Why will they buy? How will they buy? How much will they pay? Understanding the Competition What products compete directly? Who makes them? How are they sold? How good are they? What is the true cost to the customer? What is the indirect competition? (What other ways are there for customers to get the job done?) How will the competition respond to the new product? Specifying the Product What is the major must have feature set? What will the product cost? When is delivery needed? What is the expected life-cycle? How will it be sold? What kind of support is necessary? Are partners a critical piece of the whole product solution? Market Opportunity Assessment Services:
y y y y y

y y

Market Segmentation Model Market Forecast Customer Profile Customer Lifetime Value Model Competitive Assessment o direct competition o product alternatives Optimal Product Feature Determination Price Sensitivity Model


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Market Assessment Survey Take our one-minute survey on Market Assessment. Click here to take the survey. Market Assessment Workshops Workshops and Training sessions can be designed to address your company's needs and requirements and use products and market data most relevant to your company. The sample outline below was derived from a workshop delivered to members of the Silicon Valley Product Management Association (SVPMA). The workshop was deemed highly relevant by participants. The SVPMA workshop began with a discussion of "the whole product concept" and a review of probability distributions, Monte Carlo simulation and simple Markov models. The main thrust of the workshop was on how to use these statistical techniques to build practical, quantitative market models. In the context of assessing the opportunity for a home entertainment network product, sample models were developed for each stage of the market assessment process:
y y y

Characterizing the Target Market Segmenting the Available Market Determining the Accessible Market

The workshop concluded with two breakout sessions: a discussion on the market assessment process and a "hands on" quantitative walk through of the details of the simulations.

Market Assessment Workshop Outline



Preliminaries o The "Whole Product" o Market Assessment Preview o The benefits of a quantitative approach o Data intensive modeling o What if there is no data? Stochastic Models o Dealing with uncertainty o Probability o Risk o Monte Carlo simulation o Markov models Characterizing the Target Market o Where to start
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Demographic data o How to use analyst reports Segmenting Available Market o What does available mean? o Accounting for the competition Determining Accessible Market o Constraints and enablers o Modeling the success metrics Break Out Sessions o Hands on modeling o Making the process work for you

How to do a market assessment for your business:
A market assessment contains a detailed analysis of your proposed products and services, and then plans for product/service development. Market prospects, opportunities and characteristics critical to the survival and growth of your business need to be analysed. And Marketing plays a vital role in successful business ventures. How well you market your business will ultimately determine your degree of success or failure. The key element of a successful marketing plan is to know your customers ± their likes, dislikes and expectations. By identifying these factors, you can develop a marketing strategy that will allow you to fulfil their needs. A good market assessment will: y y y Identify your business position in the market, nominate marketing strategies and sets directions for future marketing activities. Define your market, how it works, the current trends and opportunities. Identify your customers by age, sex, income, educational level and residence. Which customers are more likely to purchase your product or service? How can you pitch your marketing campaign to maximise your market share for this customer base? How can you target other types of customers? Analyse and select promotional and marketing strategies, identify future marketing activities, develop reporting systems for marketing activities and develop training for marketing skills. Identify networking opportunities that will help you achieve better market reach.



To develop a marketing plan for your business, consider the following questions: y y y What goods or services do you offer? Are there similar/substitute goods or services available in the market? For what price? Who are your customers? Define your target market. What are the characteristics of your customers - what, why, where and how often do they buy?


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y y y y y y y y y y y

Is there a market for your product/service? Are your markets growing? Steady? Declining? Is your market share growing? Steady? Declining? Are your markets large enough to expand? Have you defined your market by size, geographic location, life cycle of the product or demographics? What will affect your market? Social trends, the economy, consumer confidence, industrial relations. What statistics and trends can you collect to help with market research? What form of marketing activities will best suit your business? What are the various ways you can offer and deliver your product or service to different customers? How will you attract, hold, increase your market share? How will you promote your sales? What pricing strategy have you devised?

Armed with this information, document your market assessment highlighting the key actions and strategies you can take to get your fair share of the market

How to Measure Customer Expectations & Perceptions of Service Quality:
Knowing what your customer wants from your business can be a huge mystery, particularly if your business serves people from all occupations and walks of life. It costs five times as much to entice a new customer to walk into your business than to keep an existing one, according to the All Business website. Retaining existing customers is particularly vital to a business during hard economic times. Measuring what your customers expect from your business is key to being able to serve them satisfactorily.
Difficulty: 1. Talk to people who frequent not only your business but other similar businesses. This will

help you to get an idea of what they perceive as excellent customer service. Jot these ideas down on a list, so that you can use the information to formulate a survey for your customers to take.
2. Build a survey out of your notes of what individuals see as being pertinent to excellent

customer service, and print out copies for your customers to fill out. Some examples are, "On a scale of one through ten, how quickly was your server able to fill your request? How long have you had to wait in line at the check out counter?" and other questions pertaining to the specifics of customer service at your business.
3. Decide on how you would like to conduct the survey: via email, mailing list or phone call.

You can even offer a prize for filling out the survey. For example, if you own a diner, have a once a month random drawing for a free meal for two at your restaurant.

Customers can fill out the survey and drop it into a box near the cash register in order to enter the contest. Other types of businesses may give away free gas or grocery gift cards. People enjoy entering free giveaways and are more likely to devote a minute or two of their time to completing the survey, if a prize is being offered upon completion.
4. Tally the survey results. If your tally reveals that your employees' customer service is

lacking, take steps right away to remedy the situation. If the consensus is that the customer service and expectations are all falling short, you may need to totally revamp your business operating procedures and the way employees assist the individuals who frequent your business.

customer behaviour specific to usage of services:
Where Does the Customer Fit in a Service Organization?
‡ Consumers rarely involve in manufacture of goods but often participate in service creation and delivery ‡ Challenge for service marketers is to understand how customers interact with service operations ± People processing (e.g., Hotel stay): customer is physically involved throughout entire process ± Possession processing (e.g., DVD repair): involvement may be limited to drop off of physical item/description of problem and subsequent pick up ± Mental stimulus processing (e.g., weather forecast): involvement is mental, not physical; here customer simply receives output and acts on it ± Information processing (e.g., health insurance): involvement is mental - specify information upfront and later receive documentation of coverage


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High-Contact and Low-Contact Services:
High Contact Services ‡ ‡ ‡ Customers visit service facility and remain throughout service delivery Active contact between customers and service personnel Includes most people-processing services

Low Contact Services ‡ ‡ ‡ Little or no physical contact with service personnel Contact usually at arm s length through electronic or physical distribution channels New technologies (e.g. Web) help reduce contact levels

Levels of Customer Contact with Service Organizations :


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The consumer

s mind is like a

Black Box :

Three Buying situations of consumer- Howard & Sheth:
‡ Straight Re- Buy/Routinized response behavior- here the customer comes for repurchase of the same service product- say for photocopying, bank draft. The customer is aware of the service product/brand, the purchase is of daily/frequent necessity. Low involvement with the purchase process. ‡ Modified Re-buy/ Limited problem solving- Here the customer is aware of the category/brands but not the new version or form. Liril soap, liquid liril body soap. ‡ Extensive problem solving/ Critical problem solving/New task- A customer would be in this buying situation when the offer is totally unfamiliar, he is not clear either about his decision criteria or evaluation criteria. Like insurance, travel package, vacations etc. these are high involvement purchasing processes so consumer would require time.

Roles in Service-Buying Behavior:
‡ Initiator/Influencer


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‡ ‡ ‡ ‡ ‡ ‡

Information gatherer Gatekeepers The devil¶s advocate Decider Buyer/purchaser User

Managing Service Encounters-1
Service Encounter: A period of time during which customers interact directly with a service Moments of Truth: Defining points in service delivery where customers interact with employees or equipment Critical Incidents: specific encounters that result in especially satisfying/dissatisfying outcomes for either customers or service employees


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Managing Service Encounters--2
‡ ‡ ‡ Service success often rests on performance of junior contact personnel Must train, coach, role model desired behavior Thoughtless or badly behaved customers can cause problems for service personnel (and other customers) ‡ Must educate customers, clarify what is expected, manage behavior.


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The Purchase Process for Services

Pre-purchase Stage y y y Awareness of need Information search Evaluation of alternative service suppliers

Service Encounter Stage ‡ ‡ Request service from chosen supplier Service delivery


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Post-purchase Stage ‡ ‡ Evaluation of service performance Future intentions

Awareness of need. Information and search qualities Evaluation of service alternatives ± ± ± ± Problems of comparing service offers. Customers as competition for service delivery. Role of mood, emotions and personal influences . Role of branding.

Service encounter Post purchase evaluation by customers.

Perceived Risks in Purchasing and Using Services: Functional
‡ ‡ ‡ ‡ ‡ ‡

unsatisfactory performance outcomes
monetary loss, unexpected extra costs wasted time, delays lead to problems personal injury, damage to possessions fears and negative emotions

Financial Temporal Physical

Psychological Social Sensory

how others may think and react unwanted impacts to any of five senses


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Components of Customer Expectations:
‡ Desired Service Level: The type of service customers hope to receive in terms of desired service. It sa wished-for level of service quality that customer believes can and

should be delivered ‡ Adequate Service Level: It is a minimum acceptable level of service that the customer will expect without being dissatisfied. ‡ Predicted Service Level: service level that customer anticipates/ believes firm will actually deliver ‡ Zone of Tolerance: range within which customers are willing to accept variations in service delivery

Factors that Influence Customer Expectations of Services:

Intangible Attributes, Variability, and Quality Control Problems Make Services Hard to Evaluate
‡ Search attributes before purchase ‡ Experience attributes Characteristics that can be experienced when actually using the Tangible characteristics that allow customers to evaluate a product


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service ‡ Credence attributes consumption ‡ Goods tend to be higher in search attributes, services tend to be higher in experience and credence attributes ‡ Credence attributes force customers to trust that desired benefits have been delivered Characteristics that are difficult to evaluate confidently even after

How Product Attributes Affect Ease of Evaluation:

Customer Satisfaction is Central to the Marketing Concept
‡ Satisfaction defined as attitude-like judgment following a service purchase or series of service interactions ‡ Customers have expectations prior to consumption, observe service performance, compare it to expectations ‡ Satisfaction judgments are based on this comparison ± Positive disconfirmation if better than expected


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± ± ‡

Confirmation if same as expected Negative disconfirmation if worse than expected

Satisfaction reflects perceived service quality, price/quality tradeoffs, personal and situational factors


Research shows links between customer satisfaction and a firm s financial performance

Customer Delight: Going Beyond Satisfaction
‡ Research shows that delight is a function of 3 components ± ± ± ‡ Unexpectedly high levels of performance Arousal (e.g., surprise, excitement) Positive affect (e.g., pleasure, joy, or happiness)

Is it possible for customers to be delighted by very mundane services?

A Service Business is a System Comprising Three Overlapping Subsystems
Service Operations (front stage and backstage) ‡ ‡ Where inputs are processed and service elements created. Includes facilities, equipment, and personnel

Service Delivery (front stage) ‡ Where final assembly of service elements takes place and service is delivered to

customers ‡ Includes customer interactions with operations and other customers

Service Marketing (front stage) ‡ Includes service delivery and all other contacts between service firm and customers


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Service Marketing System:
(1) High Contact Service--e.g., Hotel

Service Marketing System: (2) Low Contact Service--e.g., Credit Card


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A Framework for Developing Effective Service Marketing Strategies:

A Framework for Developing Effective Service Marketing Strategies:


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Differences among Services Affect Customer Behavior: 
  Consumers are rarely involved in the manufacture of goods but often participate in service creation and delivery Challenge for service marketers is to understand how customers interact with service operations Based on differences in nature of service act (tangible/intangible) and who or what is direct recipient of service (people/possessions), there are four categories of services:  People processing  Possession processing  Mental stimulus processing  Information processing

Four Categories Of Services (Fig 2.1):


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People Processing  Customers must:  Physically enter the service factory  Co-operate actively with the service operation  Managers should think about process and output from customer¶s perspective  To identify benefits created and non-financial costs: Time, mental, physical effort

Possession Processing 
  Customers are less physically involved compared to people processing services Involvement is limited Production and consumption are separable

Mental Stimulus Processing 
  Ethical standards required when customers who depend on such services can potentially be manipulated by suppliers Physical presence of recipients not required Core content of services is information-based  Can be ³inventoried´

Information Processing 
  Information is the most intangible form of service output But may be transformed into enduring forms of service output Line between information processing and mental stimulus processing may be blurred.


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MARKET SEGMENTATION, TARGETING Service market segmentation:
From a high-level, the goal of a marketing strategy is to identify a target market and develop a marketing mix that will appeal to those potential customers. Decisions regarding the ideal marketing mix can be organized in terms of Price, Promotion, Product, and Price. However, the goal is not to just come up with a particular strategy, but rather to focus on providing value to your key market segments. Use Demand Metric¶s Market Segmentation Tool to analyze market segment sizes and develop Customer Profiles based on Demographic, Psychographic, and Environmental criterion. What types of analyses need to be completed? As a starting point, most marketers conduct an internal analysis or their organization to identify which opportunities make the most sense to pursue. Use Demand Metric¶s S.W.O.T. Analysis Tool to get started. This framework identifies the firm¶s Strengths, Weaknesses, Opportunities, and Threats, with special attention paid to the various implications stemming from each. Once you have a clear understanding of your firm¶s capabilities and resources, you are ready to analyze the external environment to seek market opportunities that fit your organization¶s goals and objectives. Next, download Demand Metric¶s STEP Analysis Tool to review of the Social, Technological, Economic, and Political issues affecting your firm¶s ability to capitalize on a market. Combining the internal and external analyses provides a foundation for evaluating potential market opportunities, and serves as a basis for objectively comparing the attractiveness of each opportunity. It is helpful to view marketing strategy planning as a process of segmenting markets, targeting specific customers, and working to effectively position your offering among the competition. The following sections in this report will outline how to effectively segment, target, and position, your product or service. There are four basic types of market opportunities: Market Penetration, Market Development, Product Development, and Diversification.


2. Market Penetration is the attempt to increase sales of current products in present markets. Some strategies to penetrate markets include: more aggressive marketing, increasing service to improve renewal rates, or attracting competitor customers directly. 3. Market Development is the effort to increase sales by selling current products into new markets. Firms may advertise to reach new target customers within a geographic region, or look to international markets for expansion. 4. Product Development refers to offering new or improved products to present markets. By working closely with your customers, you may find new and innovative ways to better satisfy your target market. 5. Diversification means opening completely new lines of business, with new products in new markets. Many organizations diversify their product mix to mitigate risks related to economic variables such as recessions. The question becomes: which opportunities should be evaluated first? The answer falls out of a sound analysis of existing markets and potential new markets. Most companies look to markets that are close to home, since they are more familiar and can be responded to quickly. Additionally, it is more profitable to retain, rather than recruit new customers. For these reasons, market penetration is usually the first type of opportunity a firm will evaluate. Conversely, many organizations have found that market development, especially in rapidly growing China and India, is the key to their success. The next section will outline what ³markets´ are, and provide pragmatic advice for market segmentation. Market Segmentation Best Practices Market segmentation is a two-step process of: naming broad product markets, and segmenting those markets in order to select target markets. Use Demand Metric¶sMarket Segmentation Tool to help you with market sizing and analysis, and to develop customer profiles. Most segmentation efforts fail because inexperienced marketers attempt to find one or two demographic characteristics to segment a mass market. Generally, customer needs and behaviors do not fit nicely into one or two demographic characteristics. This section of the report will outline Best Practices related to segmenting your various product markets. 1. Defining Generic and Product Markets A market is a group of potential customers who have similar needs and are willing to purchase goods or services to satisfy those needs. Good marketers focus on the customer and develop marketing mixes for very specific target markets. On the other hand, poor marketers focus on their products when defining markets, leading to missed opportunities and questionable customer satisfaction. The point here is that a market is external to an organization; it doesn¶t make sense to segment potential markets based on the features contained in your products or services.


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Market Segmentation 1.Identification of customers' needs and market segments. 2.Develop profiles of resulting market segments.

Identification of Target Markets 3.Evaluation of attractivity of each segment. 4.Selection of target segments.

Positioning 5. Identification of differential advantages in each segment. 6. Development and selection of positioning concepts.

Marketing Planning 7. Development of a marketing mix for each segment according to the chosen position.

When narrowing down the mass market, it is helpful to think of two basic types of markets: generic markets and product markets. A generic market is a market of customers with generally similar needs, which organizations satisfy in a variety of ways. An example of a generic market would be the transportation market for a city; buses, trains, cars, bicycles, and walking, are all methods of getting around town. Contrastingly, a product market is a market of customers with very similar needs. An example of a product market would be for laptop computers, where customers have the choice between products from Microsoft, Dell, Apple, Fujitsu, etc. When evaluating potential market opportunities, look for a definition that is broader than your firm¶s

current product market, but not so broad that your firm could not handle the demand if it were generated. Work to establish a slightly broader definition for your current product markets. When defining your product market, there are four important aspects: 1. What - Product Type 2. To Meet ± Customer Needs 3. Who - Customer Segments 4. Where - Geographic Region An example of a product market might be ³marketing advisory services for mid-sized enterprises in North America with limited budgets.´ Once you have defined your product markets, you are ready to continue the segmentation process to identify potential target markets. 2. Understand Common Market Segment Dimensions There are common market segment dimensions for consumer and B2B markets. Following are two lists containing sample dimensions that can be used to slice and dice your consumer or B2B product markets. Be very careful when selecting your dimensions, as these parameters will form the basis for defining your target markets. * Note: the following lists are meant to provide examples that will stimulate your thinking of applicable dimension. There are thousands of variables that could be used for this exercise, so be sure to carefully select the right dimensions for your market. B2C Segmentation Criteria Demographic:
y y y y y y y y y

Age Income Marital Status Education Family Size Gender Geographic Location Social Status Occupation


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y y y y y y y y y y y y

Brand Preferences Price Sensitivity Conservative/Liberal Enviro-Friendly Hobbies Lifestyle Information Sources Service Preferences Buy Based on Trends Spontaneity Influenced by Peers Relationship Importance Behavioral:

y y y y y y

Purchase History Where They Shop Type of Store Preferences Association Memberships Internet Usage Impulsiveness Environmental:

y y y y y y

Country of Residence Political Climate Currency Payment Methods Shipping & Receiving Languages Spoken B2B Segmentation Criteria


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y y y y y y y y y

Annual Revenue # Employees Industry # Locations Years in Business Markets Served Products/Services Job Title Level of Experience/Seniority Psychographic:

y y y y y y y y y y y y y

Resistance to Change Diversification Oriented Open Minded/Rigid Decision Making Process Early Adopter/Follower Growth Oriented/Static Technology Sophistication Professionalism Require Referrals Awareness of Competitors Risk Aversion Loyalty Market Focused/Product Focused Behavioral:

y y y y

Website Visits Responses to Marketing Purchasing Methods Association Memberships


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y y y

Internet Usage Social Media Groups Collateral Views/Downloads Environmental:

y y y y y

Technology Landscape Purchasing Power Management Practices Purchasing Process Business Culture Using a Customer Relationship Management (CRM) database system can assist with clustering customers with similar needs, buying patterns, or other relevant characteristics. Discuss the opportunity to aggregate customers into market segments with your Information Technology leaders, as they should have some experience with gathering the data you need. 3. Group Customers into Homogeneous Micro Segments In this stage of the segmentation process, your goal is the find customers who have similar needs that will respond to a marketing mix in a predictable manner. Following are 4 criteria that strong market segments have in common:

1. Homogeneous - customers in a market segment should be very similar in both their segment dimensions and their likely response to a marketing mix. 2. Heterogeneous - customers in different market segments should be as divergent as possible with other segments. 3. Economic Upside - the segment needs to be large enough, or predicted to grow sufficiently, to be profitable. 4. Operational - the segment dimensions should be helpful for understanding & identifying customers and making decisions regarding the marketing mix. It is essential that market segments are operational. The whole point of segmenting is to assist with better targeting, positioning, and decision-making; be sure that your segment dimensions are extremely relevant. Once you have established distinct market segments based on various dimensions, you are ready to start targeting your potential customers. The next section of the report provides advice pertaining the effective target marketing techniques.


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Target Marketing:
Following are 5 criteria that indicate whether you have selected a viable target market: size, expected growth, competitive position, cost to reach, and compatibility. 1. Size - how large is this target market? Worth pursuing? 2. Expected Growth - even if the market is small, it may be profitable if there are indications that it will grow. 3. Competitive Position - low competition equals attractive market. 4. Cost to Reach - is this market accessible with our tactics? 5. Compatibility - how aligned is this market to our goals? There are three standard approaches to target marketing. The first approach is the Single Target Market approach whereby the firm selects one particular market segment and makes every effort to ³own´ that space. The second approach is the Multiple Target Market approach in which the firm selects two or more segments to go after, requiring a separate marketing mix for each. The final approach is the Combined Target Market approach and results from combining two or more submarkets into one larger target market, which is managed with a single strategy. Most organizations prefer to adopt a segmentation approach such as the Single or Multiple Target Market strategies. These firms adjust their marketing mix for each target market to ensure that each segment is very satisfied with their offerings. Generally, it is better to target specific segments with an appropriate solution, than to approach combined segments with an ³off-the-shelf´ solution.

INTRODUCTION: - The market for any product is normally made up of several segments. A market after all is the aggregate of consumers of a given product. And, consumer (the end user), who makes a market, are t of varying characteristics and buying behavior. There are different factors contributing for varying mind set of consumers. It is thus natural that many differing segments occur within a market. In order to capture this heterogeneous market for any product, marketers usually divide or disintegrate the market into a number of sub-markets/segments and the process is known as market segmentation. Thus we can say that market segmentation is the segmentation of markets into homogenous groups of ESHWARI.S---LORAA BUSINESS ACADEMY Page 65

customers, each of them reacting differently to promotion, communication, pricing and other variables of the marketing mix. Market segments should be formed in that way that difference between buyers within each segment is as small as possible. Thus, every segment can be addressed with an individually targeted marketing mix. The importance of market segmentation results from the fact that the buyers of a product or a service are no homogenous group. Actually, every buyer has individual needs, preferences, resources and behaviors. Since it is virtually impossible to cater for every customer s individual characteristics, marketers group customers to market segments by variables they have in common. These common characteristics allow developing a standardized marketing mix for all customers in this segment. Through segmentation, the marketer can look at the differences among the customer groups and decide on appropriate strategies/offers for each group. This is precisely why some marketing gurus/experts have described segmentation as a strategy of dividing the markets for conquering them. MARKETING STRATEGY AND MARKET SEGMENTATION: - When it comes to marketing strategies, most people spontaneously think about the 4P (Product, Price, Place, Promotion) maybe extended by three more Ps for marketing services (People, Processes, Physical Evidence). Market segmentation and the identification of target markets, however, are an important element of each marketing strategy. They are the basis for determining any particular marketing mix. Basic steps in marketing strategy are as follows:-


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Market Segmentation 1.Identification of customers' needs and market segments. 2.Develop profiles of resulting market segments.

Identification of Target Markets 3.Evaluation of attractivity of each segment. 4.Selection of target segments.

Positioning 5. Identification of differential advantages in each segment. 6. Development and selection of positioning concepts.

Marketing Planning 7. Development of a marketing mix for each segment according to the chosen position.

ATTRIBUTES OF EFFECTIVE SEGMENTATION Market segmentation is resorted to for achieving certain practical purpose. For example, it has to be useful in developing and implementing effective and practical marketing programmes. For this to happen, the segments arrived at must meet certain criteria such:Identifiable: The differentiating attributes of the segments must be measurable so that they can be identified. Accessible: The segments must be reachable through communication and distribution channels.


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Sizeable: The segments should be sufficiently large to justify the resources required to target them. A very small segment may not serve commercial exploitation. Profitable: - There is no use in locating segments that are sizeable but not profitable. Unique needs: To justify separate offerings, the segments must respond differently to the different marketing mixes. Durable: The segments should be relatively stable to minimize the cost of frequent changes. Measurable: The potential of the segments as well as the effect of a specific marketing mix on them should be measurable. Compatible: - Segments must be compatible with firm s resources and capabilities.

REASONS FOR MARKET SEGMENTATION Segmentation is the basis for developing targeted and effective marketing plans. Furthermore, analysis of market segments enables decisions about intensity of marketing activities in particular segments. A segment-orientated marketing approach generally offers a range of advantages for both, businesses and customers. Facilitates proper choice of target marketing:Segmentation helps the marketers to distinguish one customer group from another within a given market and thereby enables him to decide which segment should form his target market. Higher Profits: - It is often difficult to increase prices for the whole market. Nevertheless, it is possible to develop premium segments in which customers accept a higher price level. Such segments could be distinguished from the mass market by features like additional services, exclusive points of sale, product variations and the like. A typical segment-based price variation is by region. The generally higher price level in big cities is evidence for this. When differentiating prices by segments, organizations have to take care that there is no chance for cannibalization between high-priced products with high margins and budget offers in different segments. This risk is the higher, the less distinguished the segments are. Facilitates tapping of the market, adapting the offer to the target:-Segmentation also enables the marketer to crystallize the needs of target buyers. It also helps him to generate an accurate prediction of the likely responses from each segment of the target buyer. Moreover, when buyers are handled after careful segmentation, the responses for each segment will be homogeneous. This in turn, will help the marketer develop marketing offer/programmers that most suited to each groups. He can achieve specialization that is required in product, distribution, promotion and pricing for matching the particular customer group and develop offers and appeals for the segmented group.


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Stimulating Innovation: - An undifferentiated marketing strategy that targets at all customers in the total market necessarily reduces customers preferences to the smallest common basis. Segmentations provide information about smaller units in the total market that share particular needs. Only the identification of these needs enables a planned development of new or improved products that better meet the wishes of these customer groups. If a product meets and exceeds a customer s expectations by adding superior value, the customers normally is willing to pay a higher price for that product. Thus, profit margins and profitability of the innovating organizations increase. Makes the marketing effort more efficient and economic: - Segmentation ensures that the marketing effort is concentrated on well defined and carefully chosen segments. After all, the resources of any firm are limited and no firm can normally afford to attack and tap the entire market without any delimitation whatsoever. It would benefit the firm if the efforts were concentrated on segments that are more profitable and productive ones. Segmentation also helps the marketer assess as to what extend existing offer from competitors match the needs of different customer segments. The marketer can thus identify the relatively less satisfied segments and succeed by concentrating on them and satisfying their needs. Benefits the customer as well: Segmentation brings benefits not only to the marketer, but to the customer as well. When segmentation attains higher levels of sophistication and perfection, customers and companies can conveniently settle down with each other, as at such a stage, they can safely rely on each other s discrimination. The firm can anticipate the wants of the customers and the customers can anticipate the capabilities of the firm. Sustainable customer relationships in all phases of customer life cycle: - Customers change their preferences and patterns of behavior over time. Organizations that serve different segments along a customer s life cycle can guide their customers from stage to stage by always offering them a special solution for their particular needs. For example, many car manufacturers offer a product range that caters for the needs of all phases of a customer life cycle: first car for early teens, fun-car for young professionals, family car for young families, etc. Skin care cosmetics brands often offer special series for babies, teens, normal skin, and elder skin. Targeted communication: - It is necessary to communicate in a segment-specific way even if product features and brand identity are identical in all market segments. Such a targeted communications allows to stress those criteria that are most relevant for each particular segment (e.g. price vs. reliability vs. prestige). Higher market Shares: - In contrast to an undifferentiated marketing strategy, segmentation supports the development of niche strategies. Thus marketing activities can be targeted at highly attractive market segments in the beginning. Market leadership in selected segments improves the competitive position of the whole organization in its relationship with suppliers, channel partners and customers. It strengthens the brand and ensures profitability. On that basis, organizations have better chances to increase their market


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shares in the overall market. BASES FOR SEGMENTATION: Markets can be segmented using several relevant bases. There are huge number of variables which leads to market segmentation. They comprise easy to determine demographic factors as well as variables on user behavior or customer preferences. Segmentation is done for consumer market and industrial market. Bases for segmentation in consumer market:Consumer market can be segmented on the following customer characteristics 1. 2. 3. 4. Geographic Segmentation. Demographic Segmentation. Psychographic Segmentation. Behaviouralistic Segmentation.

Geographic Segmentation: - Potential customers are in a local, state, regional or national marketplace segment. If a firm selling a product such as farm equipment, geographic location will remain a major factor in segmenting your target markets since their customers are located in particular rural areas. While for retail store, geographic location of the store is one of the most important considerations, in this case city areas are preferred. Segmentation of customers based on geographic factors are:‡ ‡ ‡ ‡ Region: - Segmentation by continent / country / state / district / city. Size: - Segmentation on the basis of size of a metropolitan area as per its population size. Population density: - Segmentation on the basis of population density such as urban / sub-urban / rural etc. Climate: - Segmentation as per climatic condition or weather.

Demographic Segmentation: - Segmentation of customers based on demographic factors are:‡

Age (dominant factor):-Segmentation is done on the basis of age of person. Example Titan has segmented its product according to different age group of person.

‡ ‡ ‡ ‡ ‡


Income (dominant factor):-Segmentation is done on the basis of income level of a person. Occupation. Gender (dominant factor):-Product can be segmented for male and female. Family Size. Family life cycle. Nationality. Religion. Education:-

Psychographic Segmentation: - Psychographic Segmentation groups customers according to their life-style and buying psychology. Many businesses offer products based on the attitudes, beliefs and emotions of their target market. The desire for status, enhanced appearance and more money are examples of psychographic variables. They are the factors that influence your customers' purchasing

decision. A seller of luxury items would appeal to an individual's desire for status symbols Psychographic Segmentation includes variables such as:a. b. c. d. e. Activities. Interests. Opinions. Attitudes. Values.

Activities, Interests, and Opinions (AIO) surveys are one tool of measuring lifestyle. Behaviouralistic Segmentation: - Markets can be segmented on the basis of buyer behaviour as well. Since all Segmentation is in a way related to buyer behavior, one might be tempted to ask why buyer behavior-based segmentation should be a separate method. It is because there is some distinction between buyer¶s characteristics that are reflected by their geographic, demographic and psychographic profiles, and their buying behaviour. Marketers often find practical benefit in using buying behaviour as a separate segmentation base in addition to bases like geographic, demographics, and psychographics. The primary idea in buyer behaviour segmentation is that different customer groups expect different benefits from the same product and accordingly, they will be different in their motives in owing it and their behavior in buying it. Variables of buyer behavior are:a. Benefit sought: - Quality / economy / service / look etc of the product. b. Usage rate: - Heavy user / moderate user / light user of a product. c. User status: - Regular / potential / first time user / irregular /occasional. d. Brand Loyalty: - Hard core loyal / split loyal / shifting / switches. e. Readiness to buy. f. Occasion: - Holidays and occasion stimulate customer to purchase products. g. Attitude toward offering: - Enthusiastic / positive attitude / negative attitude / indifferent / hostile. Bases for segmentation in industrial market- In contrast to consumers, industrial customers tend to be fewer in number and purchase larger quantities. They evaluate offerings in more detail, and the decision process usually involves more than one person. These characteristics apply to organizations such as manufacturers and service providers, as well as resellers, governments, and institutions. Many of the consumer market segmentation variables can be applied to industrial markets. Industrial markets might be segmented on characteristics such as:


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1. Location. 2. Company type. 3. Behavioral characteristics.
1) Location In industrial markets, customer location may be important in some cases. Shipping costs may be a purchase factor for vendor selection for products having a high bulk to value ratio, so distance from the vendor may be critical. In some industries firms tend to cluster together geographically and therefore may have similar needs within a region.

2) Company Type: Business customers can be classified according to type as follows :

a. b. c. d.

Company size:-Whether the company is a large scale industry / a small scale industry. Large industry always tries to order in bulk commodities while opposite for small scale sector. Industry: - Whether the industry is manufacturing industry / service industry. Also sometime differentiation is done between public sector industry or a private sector industry. Decision making unit. Purchase Criteria.

3) Behavioral Characteristics In industrial markets, patterns of purchase behavior can be a basis for segmentation. Such behavioral characteristics may include:
y y y

Usage rate Buying status: potential, first-time, regular, etc. Purchase procedure: sealed bids, negotiations, etc.


Multi-level Segmentation: A Market can be segmented, using several bases in successionWhile discussing about bases of segmentation we must discuss about multi-level segmentation, as it is not as through segmentation bases discussed above are mutually exclusive and a market can be segmented only with one particular base, on either / or basis. Since customer characteristic are spread over several variables, any market can be segmented through several bases. Different bases can be used in combination in segmenting a given market. They just have to be relevant for the concerned market. Actually, the different bases can be used in succession in a suitable order, and the market can be segmented at multi-levels. For example, a market can be segmented using the demographic base in the first instance, followed by the psychographic base and the buyer behavior/benefit base. Or, the market can be segmented using volume as the base in the first instance, followed by the demographic/psychographic/buyer behavior/benefit base. Assuming for example, that the firm

first carries out volume segmentation of its market, it can know who the heavy user of its product are, but it cannot know the purpose for which they buy the product. The firm can then pick up the heavy users and carry out a multi-level segmentation, and continue its probe more deeply. Since each of these bases has several sub-bases, the numbers of levels in which a market can be segmented are indeed numerous. Actually, the aim should always be to go as deep as possible in segmenting the market so that segments that are most attractive and most suited can be chosen.

y Multi-level segmentation enables better selection of target market and better choice of
marketing mix: Multi-level segmentation enables the marketers to choose his target market better. It also helps him to make the winning strategy and strike the right product offer and the right marketing mix. With the information generated from multi-level segmentation, he can obtain a deeper understanding of the customers in each segment, their needs, buying motives and buying behaviour. He can understand in what way each of the different segments want the product to be, he can then tailor his product, marketing offer and promotional appeal, to fit the individual segment; he can select the priced, distribution method/channels, media vehicles, advertising massages and sales appeal, which will be appropriate.



George Day (1980) describes models of segmentation as the top-down approach: In this approach ³firms starts with the total population and divide it into segments´. He also identified an alternative model which he called the bottom-up approach. In this approach,´ firms starts with a single customer and build on that profile´. This typically requires the use of customer relationship management software or a database of some kind. Profiles of existing customers are created and analysed. Various demographic, behavioural, and psychographic patterns are built up using techniques such as cluster analysis. This process is sometimes called database marketing or micromarketing. Its use is most appropriate in highly fragmented markets. McKenna (1988) claims that this approach treats every customer as a "micro majority". Pine (1993) used the bottom-up approach in what he called "segment of one marketing". Through this process mass customization is possible.



Various advantages of market segmentation are:-

1. 2. 3. 4.

Helps distinguish one customer group from another within a given market. Facilitates proper choice of target market. Facilitates effective tapping of the market. Helps divide the markets and conquer them.
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Helps crystallize the needs of the target buyers and elicit more predictable responses from them ; helps develop marketing programmes on a more predictable base; helps develop market offer that are most suited to each group. Helps achieve the specialization required in product; distribution, promotion, and pricing for matching the customer group and develop marketing offers and appeal that match the need of each group. Makes the marketing effort more efficient and economic. Helps concentrate efforts on the most productive and profitable segment, instead of frittering them over irrelevant, or unproductive, or unprofitable segment. Helps spot the less satisfied segments and succeed by satisfying such segments. Brings benefits not only to the marketer but also to the customer as well.


7. 8. 9.

10. 11.

When segmentation attains high sophistication, customers and companies can choose each other and stay together.


EVALUATION OF THE SEGMENTS Whether market segmentation is successful or not can be evaluated by the following questions-


Is it sizeable: Size-wise, the popular segment is a bigger compared to the premium segment. In term of tonnage, of the total market of around 6, 00,000 tonnes, the popular segment account for 80 percent and the premium segment for the remaining 20 percent. If the firm wants a very large volume, it has to think of the popular segment. At the same time, it has to note that the premium segment too is sizeable, as it account for over 120,000 tonnes. In term of value, the premium segment is even more sizeable, formerly nearly 30 percent of the total market. Clearly, the segment cannot be ruled out as lacking in size. Is it growing: -


Growth rate and likely future position of the segment will be the next consideration in the evaluation process. Usually, business firms seek out the high growth segments. Analysis will readily indicate to the firm that in bath soaps, the premium segment happens to be the high growth segment. Whereas the popular segment has been growing at 10 percent per annum, the premium segment has been growing at over 20 percent annum.


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Is it profitable: Next consideration will be the extend of profitability. In the present example, the firms quickly sense that the premium segment is more profitable one. Even a relatively lower volume in the segment may bring in good returns. On the contrary, in the popular segment, a much larger volume will be necessary for the business to be viable, since prices and margins in the segment are low. Another point is that costs of marketing, distribution and promotion in the business are quite high and are constantly on the rise. Costs of launching a new brand are particularly high. The market is very competitive, aggressive promotional support through expensive media like TV becomes essential. In this background, the firm may come to the conclusion that it may be worthwhile to gamble in the premium segment rather than the popular segment.


Is it accessible: The firm has to now consider whether the segments are accessible to it. This may need further analysis. The market realities will have to be taken into consideration. The popular segment will be accessible only to the firm with a cost advantage, since price is a major determinant in this segment. Premium segment will be accessible only to firms, which enjoy a differentiation advantage, and which are also marketing savvy. Liril of Hindustan Lever has a commanding position in this segment. At the upper end of the segment, HLL¶s Pears and Dove are well entrenched. Several other brands of different companies are competing in the segment. The firm has to take due note of this reality. At the same time, analysis also reveals that new brands do keep entering the segment every now and then, and some of them do manage to stay. So, the firm has no reason to believe that the premium segment is not accessible to it, unless it is convinced that it is very weak in marketing.


Is it compatible with the firm¶s resources and capabilities: - Having reached the conclusion that the premium segment is sizeable, growth oriented, profitable and accessible, the firm has to now find out if the segment matches its resources. For some firms, the popular segment may be the natural choice and for others, the premium segment. And, for some other choosing both. The premium segment is a highly competitive segment. Only firms endowed with strong resources and an aggressive marketing strategy/culture can fight and survive in the market. The firm therefore has to assess whether the particular segments are compatible with its resources and capabilities.

Thus by this following analysis a firm can easily evaluate it market segmentations and also can tackle its problem.


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MARKET TARGETING Target Marketing involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments. Target marketing can be the key to a small business¶s success. The beauty of target marketing is that it makes the promotion, pricing and distribution of your products and/or services easier and more cost-effective. Target marketing provides a focus to all of your marketing activities. Market targeting simply means choosing one¶s target market. It needs to be clarified at the onset that marketing targeting is not synonymous with market segmentation. Segmentation is actually the prelude to target market selection. One has to carry out several tasks beside segmentation before choosing the target market. Through segmentation, a firm divides the market into many segments. But all these segments need not form its target market. Target market signifies only those segments that it wants to adopt as its market. A selection is thus involved in it. In choosing target market, a firm basically carries out an evaluation of the various segments and selects those segments that are most appropriate to it. As we know that the segments must be relevant, accessible, sizable and profitable. The evaluation of the different segments has to be actually based on these criteria and only on the basis of such an evaluation should the target segments be selected.


PROCESS OF CHOOSING THE TARGET MARKET The process of choosing the target Market are:- 

Choosing the target market is related to, but not synonymous with, market segmentation.  Segmentation is the means or the tool; choosing the target market is the purpose.  Segmentation can also be viewed as the prelude to target market selection.  Choosing the target market usually follows multi-level segmentation using different bases.  Choosing the target market involves several other tasks in addition to segmentation.

Looking at each segment as a distinct marketing opportunity.  Evaluating the worth of each segment (sales/profit potential).  Evaluating whether the segment is: 
      Distinguishable. Measurable. Sizable. Accessible. Growing. Profitable. Compatible with the firm¶s resources. 

Examining whether it is better to choose the whole market, or the only a few segment, and
deciding which ones should be chosen. fro m co mpet ing brands. selected segments. 

Looking for segments, which are relatively less satisfied by the current offers in the market  Checking out if the firm has the differential advantage / distinctive capability for serving the  Evaluating the firm¶s resources and checking whether it is possible to put in the marketing
programmes required for capturing the spotted segments with those resources. 

Finally selecting those segments that are most appropriate for the firm.

Target marketing tailors a marketing mix for one or more segments identified by market segmentation. Target marketing contrasts with mass marketing, which offers a single product to the entire market. Two important factors to consider when selecting a target market segment are the attractiveness of the segment and the fit between the segment and the firm's objectives, resources, and capabilities. 

Attractiveness of a Market Segment
The following are some examples of aspects that should be considered when evaluating the attractiveness of a market segment:

y y y y

Size of the segment (number of customers and/or number of unit s). Growth rate of the segment. Compet it ion in the segment. Brand lo yalt y o f exist ing customers in the segment.
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y y y y

Attainable market share given promotional budget and co mpet itors' expenditures. Required market share to break even. Sales potential for the firm in the segment. Expected profit margins in the segment.

Market research and analysis is instrumental in obtaining this information. For example, buyer intentions, sales force estimates, test marketing, and statistical demand analysis are useful for determining sales potential. The impact of applicable micro-environmental and macroenvironmental variables on the market segment should be considered. Note that larger segments are not necessarily the most profitable to target since they likely will have more competition. It may be more profitable to serve one or more smaller segments that have little competition. On the other hand, if the firm can develop a competitive advantage, for example, via patent protection, it may find it profitable to pursue a larger market segment. 

Suitability of Market Segments to the Firm
Market segments also should be evaluated according to how they fit the firm's objectives, resources, and capabilities. Some aspects of fit include:

y y y y

Whether the firm can offer superior value to the customers in the segment The impact of serving the segment on the firm's image Access to distribut ion channels required to serve the segment The firm's resources vs. capital invest ment required to serve the segment

The better the firm's fit to a market segment and the more attractive the market segment, the greater the profit potential to the firm.



There are several different target-market strategies that may be followed. Targeting strategies usually can be categorized as one of the following:

y y

Single-segment strategy - Also known as a concentrated strategy. One market segment (not the entire market) is served with one marketing mix. A single-segment approach often is the strategy of choice for smaller companies with limited resources. Selective specialization- This is a multiple-segment strategy, also known as a differentiated strategy. Different marketing mixes are offered to different segments. The product itself may or may not be different - in many cases only the promotional message or distribution channels vary.
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y y y

Product specialization- The firm specializes in a particular product and tailors it to different market segments. Market specialization- The firm specializes in serving a particular market segment and offers that segment an array of different products. Full market coverage - The firm attempts to serve the entire market. This coverage can be achieved by means of either a mass market strategy in which a single undifferentiated marketing mix is offered to the entire market, or by a differentiated strategy in which a separate marketing mix is offered to each segment



which segments to targeting.  how many products to offer.  which products to offer in which segments.

Market maturity.  Diversity of buyers' needs and preferences.  Strength of the competition.  The volume of sales required for profitability.
DECIDING THE SIZE OF TARGET MARKET After selecting the target market it is important for marketers to decide the size of the target market. Is the target market large enough to sustain a business which will provide products or services to them? A target market has to be of at least a minimum size to be viable. Suppose a firm chooses food processing and food packaging as its target market. In fact, they might be too large, and it might be wise to find a niche within those target markets. Therefore, the firm must then focus on a particular type of food market, such as a food production firm who wants to package its products for selling. Thus by targeting its product for its targeted market, the firm can decide its size on the basis of it.



Ineffective augmentation and targeting led to wrong product offers, inappropriate marketing appeals, wrong pricing, and overemphasis on the brand name. No firm can offer single product to satisfy all the segment. For example, in Indian market many MNCs offered single product to the entire segment. The offer did not suit middle class as such. They suited only the premium segment. Naturally, the firms were unable to gather worthwhile volumes. As the firm did not target those segments and as they failed to make product offers that were appropriate for them, the end result

was poor. For this reason firms like Reebok, Ray-ban, and Levi did not showed satisfactory result for quite sometime in Indian market while they were very successful in the western markets. Thus the choice of target marketing for a given industry can decide the fate of the industry in the market. This is because firms differ in their competencies, resources, objectives, and strategies.

Service design
Service Design is the activity of planning and organizing people, infrastructure, communication and material components of a service, in order to improve its quality, the interaction between service provider and customers and the customer's experience. For example, a restaurant may choose to have a Service Design agency change the way its menu is set out, or change the layout of the restaurant to improve the customer's experience. Customers can mean paying patrons, but also can be within an organization, so long as they are the direct recipients of a service e.g. an organization implements a new payroll interface for its staff - therefore the staff are effectively 'customers' of the payroll interface. To do this, Service Design methodologies are used to plan and organize people, infrastructure, communication and material components used in a service. The increasing importance and size of the service sector, both in terms of people employed and economic importance, requires services to be accurately designed in order for service providers to remain competitive and to continue to attract customers. The design (or redesign) of a service may involve re-organizing the activities performed by the service provider (Back office), e.g. how letters from customers are processed internally; and/or the redesign of interfaces and interactions that customers use to contact the service provider (Front office) e.g. website, in person, telephone, blog etc. Service Design is increasingly used by blue-chip private and public sector organizations as a means of creating the step change their customers require in terms of service experience. Service Design agencies apply design tools, techniques and thinking to service challenges, either to improve existing services or to create new ones. Typically, the work is based upon deep insights gathered by shadowing service users. This technique produces more accurate insights into the usability of a service than traditional remote surveys because what people say they do is frequently different to what they actually do. Concepts and ideas generated are captured in sketches or in service prototypes. The strong visual element, combined with the


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opportunity to test and rapidly change services and interfaces, delivers real value in today's competitive markets.

Characteristics of Service Design
y Service design is the specification and construction of technologically networked social practices that deliver valuable capacities for action to a particular customer. Capacity for action in Information Services has the basic form of assertions. In Health Services, it has the basic form of diagnostic assessments and prescriptions (commands). In Educational Services, it has the form of a promise to produce a new capacity for the customer to make new promises. y In a fundamental way, services are unambiguously tangible. Companies such as eBay, or collectives such as Wikipedia or Sourceforge are rich and sophisticated combinations of basic linguistic deliverables that expand customers' capacities to act and produce value for themselves and for others. In an abstract sense, services are networked intelligence. Service design can be both tangible and intangible. It can involve artifacts and other things including communication, environment and behaviours. y Several authors (Eiglier 1977; Normann 2000; Morelli 2002), though, emphasize that, unlike products, which are created and ³exist´ before being purchased and used, service come to existence at the same moment they are being provided and used. y While a designer can prescribe the exact configuration of a product, s/he cannot prescribe in the same way the result of the interaction between customers and service providers, nor can s/he prescribe the form and characteristics of any emotional value produced by the service. Consequently, service design is an activity that suggests behavioural patterns or ³scripts´ to the actors interacting in the service, leaving a higher level of freedom to the customers¶ behaviour.

In the 1960's, the economist Philip Kotler changed the perception of marketing. He described what marketing is rather than what marketers do, thereby changing marketing from a departmental specialization into a corporate wide doctrine. For Kotler, marketing was a 'social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others'. For him, a product is more than physical. A product is anything that can be offered to a market for attention, acquisition, or use, or something that can satisfy a need or want. Therefore, a product can be a physical good, a service, a retail store, a person, an organisation, a place or even

an idea. Products are the means to an end wherein the end is the satisfaction of customer needs or wants. Kotler distinguished three components: ‡ need: a lack of a basic requirement; ‡ want: a specific requirement for products or services to match a need; ‡ Demand: a set of wants plus the desire and ability to pay for the exchange.

Customers will choose a product based on their perceived value of it. Satisfaction is the degree to which the actual use of a product matches the perceived value at the time of the purchase. A customer is satisfied only if the actual value is the same or exceeds the perceived value. Kotler defined five levels to a product or service : 1. Core Benefit the fundamental need or want that consumers satisfy by consuming the product or service. 2. Generic Product a version of the product containing only those attributes or characteristics absolutely necessary for it to function. 3. Expected Product the set of attributes or characteristics that buyers normally expect and agree to when they purchase a product. 4. Augmented Product inclusion of additional features, benefits, attributes or related services that serve to differentiate the product from its competitors. 5. Potential Product all the augmentations and transformations a product might undergo in the future. Kotler noted that much competition takes place at the Augmented Product level rather than at the Core Benefit level or, as Levitt put it:


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'New competition is not between what companies produce in their factories, but between what they add to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing, and other things that people value.' Kotler's model provides a tool to assess how the organisation and their customers view their relationship and which aspects create value.

Service life cycle:
Product Service Life Cycle Stages:
Products and services experience a life cycle over the course of their existences, just as living beings do. Life cycles of products and services are similar and include four distinct phases: introduction, growth, maturity and decline. Each stage of the life cycle requires business to employ various strategies to attract and retain customers. Service providers and manufacturers also adopt different tactics throughout the life cycle to establish and protect their share of the consumer market from competitors offering comparable services and items. 1. Introduction

After development, a product or service provider introduces its offering to the public for sale. Since the idea is new, little or no competition exists during the life cycle's introduction phase. Public recognition of and desire for the new item remain low during this stage as a business' marketing efforts begin to educate potential buyers about the item's existence and benefits. During the introduction phase, service and product providers will either offer their items at low or high prices. Assigning high prices keeps manufacturing and distribution costs low as the market slowly welcomes and absorbs the item. Charging a low price for a service makes it more attractive and affordable to a larger clientele base within a shorter time period.

2. Growth

During the growth phase of the life cycle, consumers become increasingly aware of an item's existence and desirability. As a result, sales of a company's product or service grow at a faster rate than during the introduction stage. The product or service originator attempts to establish a clear identity for its item. The originator also tries to secure a loyal clientele base as competitors begin to introduce comparable products to consumers. During the final part of this stage, the sales and profits of the original product or service attain their highest levels.

3. Maturity

The life cycle's maturity phase involves increased competition from other product and service providers. Competitors continue to introduce different versions of the original item to consumers until the market becomes saturated with alternatives. The originator of the item will maintain its high level of sales during the beginning of this stage but, due to the drastic increase in the number of competitive products, will also experience an eventual decline in sales before the maturity stage finishes.

The original producer typically reduces the price of its item during the maturity stage in an attempt to retain its loyal clients. Communicating the differences between the original item and its competitors to the public will become necessary for the item to maintain its desirability among consumers. As the market becomes overly saturated toward the end of the maturity phase, some competitors cease production of their products and services. 4. Decline

The decline phase represents the end of the public's interest in purchasing the original item and competing facsimiles. Consumers either already have a version of the product or service or have simply wearied of the item altogether. Consumers have begun to have interest in another product or service altogether and are spending their money accordingly. As a result, competing products become scarce as competitors begin production of other, more profitable items. A comparatively small segment of the public may retain a residual interest in purchasing the original product or service during the decline stage. When even this segment loses interest, the product or service will have experienced the end of its life cycle.

The Product Life Cycle
A new product progresses through a sequence of stages from introduction to growth, maturity, and decline. This sequence is known as the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing mix. The product revenue and profits can be plotted as a function of the life-cycle stages as shown in the graph below:

Product Life Cycle Diagram


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Introduction Stage

In the introduction stage, the firm seeks to build product awareness and develop a market for the product. The impact on the marketing mix is as follows:
y y y y

Product branding and quality level is established, and intellectual property protection such as patents and trademarks are obtained. Pricing may be low penetration pricing to build market share rapidly, or high skim pricing to recover development costs. Distribution is selective until consumers show acceptance of the product. Promotion is aimed at innovators and early adopters. Marketing communications seeks to build product awareness and to educate potential consumers about the product.

Growth Stage

In the growth stage, the firm seeks to build brand preference and increase market share.
y y y y

Product quality is maintained and additional features and support services may be added. Pricing is maintained as the firm enjoys increasing demand with little competition. Distribution channels are added as demand increases and customers accept the product. Promotion is aimed at a broader audience.

Maturity Stage

At maturity, the strong growth in sales diminishes. Competition may appear with similar products. The primary objective at this point is to defend market share while maximizing profit.
y y y y

Product features may be enhanced to differentiate the product from that of competitors. Pricing may be lower because of the new competition. Distribution becomes more intensive and incentives may be offered to encourage preference over competing products. Promotion emphasizes product differentiation.

Decline Stage

As sales decline, the firm has several options:

Maintain the product, possibly rejuvenating it by adding new features and finding new uses.
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y y

Harvest the product - reduce costs and continue to offer it, possibly to a loyal niche segment. Discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product.

New Service Development
There are two levels of service innovation for new service development, including radical innovations and incremental innovations. For radical innovations, major innovation is new service driven by information and computer based technology. Besides, new service for existing market is called start-up business. New services for the market presently served are new services to customers of an organization. In the other hand, incremental innovations like service line extensions which is augmentation of existing service line (e.g. new menu items). Furthermore, service improvements which changes in features of currently offered service and style changes like modest visible changes in appearances are the examples of incremental innovations. In addition, new service development cycle is different from the one we are used to know.

Idea Generation & Screening Concept Development & Testing Business Analysis ± Profitability & Feasibility Service Development & Testing Market Testing Commercialization Post-introduction Evaluation
New product or service development: Taking your current offerings and somehow making them different or better. Here are the steps you'll take in product development: 1. Idea generation. Use creative idea starters like brainstorming to help you find the ideas you're looking for. A site like has some great thinking resources for you to


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improve your ability to think outside of the proverbial box. Try to combine two products you have into a single package or perhaps a product and a service, something to set your offering apart from others. If you can't think of anything, try considering a partnership or joint venture with another company. 2. Analysis. Analyze the potential success by asking some of your customers what they think. You don't need to do anything formal, just do some informal polling with the people who come in the door or through your opt in newsletter. Give them a couple of different options and ask them which one they'd buy if they were in the market for whatever you are selling. 3. Development. If you're packaging products or services together that already exist, the job is mostly done for you. However, you will still want to consider branding them as their own item. A simple example is the combination of 3 simple products (a burger, fries, and soft drink) into another product that is separately branded (a McDonald's Happy Meal). 4. Testing. Although you did take a poll, polls are not always accurate. After all, you're not asking people to actually pony up with any money! This is where the rubber meets the road and you need to find out if people are actually willing to buy your new and improved product. Be ready to make instant changes, if necessary, including raising or lowering the price or offering other incentives to move the product. 5. Marketing. After the testing stage has helped you refine your product a little more, you can move on to actively marketing your new product on a full scale, hopefully with noticeable improvements in sales.

Service Design:
Service design consists of four related componentsService product design- Refers to the design of the physical attributes of the service. ExThe meals served at the restaurant. Service facility design-Refers to the design of the physical layout of the facilities where the service delivered. Ex- A restaurant interior and customer¶s perception of the quality of the services like cleanliness, lighting, cleanliness. Service operations process design- The activities that are needed to deliver or maintain a service. Ex- steps needed to rent a car- collect license, validate payment option, check availability, obtain customer signature.


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New product or service development:
In business and engineering, new product development (NPD) is the term used to describe the complete process of bringing a new product to market. A product is a set of benefits offered for exchange and can be tangible (that is, something physical you can touch) or intangible (like a service, experience, or belief). There are two parallel paths involved in the NPD process: one involves the idea generation, product design and detail engineering; the other involves market research and marketing analysis. Companies typically see new product development as the first stage in generating and commercializing new products within the overall strategic process of product life cycle management used to maintain or grow their market share.

The process
1. Idea Generation is often called the "fuzzy front end" of the NPD process  Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths, Weaknesses, Opportunities & Threats), Market and consumer trends, company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or Ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features.  Lots of ideas are being generated about the new product. Out of these ideas many ideas are being implemented. The ideas use to generate in many forms and their generating places are also various. Many reasons are responsible for generation of an idea.  Idea Generation or Brainstorming of new product, service, or store concepts - idea generation techniques can begin when you have done your OPPORTUNITY ANALYSIS to support your ideas in the Idea Screening Phase (shown in the next development step). 2. Idea Screening   The object is to eliminate unsound concepts prior to devoting resources to them. The screeners should ask several questions:       Will the customer in the target market benefit from the product? What is the size and growth forecasts of the market segment/target market? What is the current or expected competitive pressure for the product idea? What are the industry sales and market trends the product idea is based on? Is it technically feasible to manufacture the product? Will the product be profitable when manufactured and delivered to the customer at the target price? 3. Concept Development and Testing


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Develop the marketing and engineering details         Investigate intellectual property issues and search patent data bases Who is the target market and who is the decision maker in the purchasing process? What product features must the product incorporate? What benefits will the product provide? How will consumers react to the product? How will the product be produced most cost effectively? Prove feasibility through virtual computer aided rendering, and rapid prototyping What will it cost to produce it? 

Testing the Concept by asking a sample of prospective customers what they think of the idea. Usually via Choice Modelling.

4. Business Analysis   Estimate likely selling price based upon competition and customer feedback Estimate sales volume based upon size of market and such tools as the Fourt-Woodlock equation  Estimate profitability and break-even point

5. Beta Testing and Market Testing      Produce a physical prototype or mock-up Test the product (and its packaging) in typical usage situations Conduct focus group customer interviews or introduce at trade show Make adjustments where necessary Produce an initial run of the product and sell it in a test market area to determine customer acceptance 6. Technical Implementation           New program initiation Finalize Quality management system Resource estimation Requirement publication Publish technical communications such as data sheets Engineering operations planning Department scheduling Supplier collaboration Logistics plan Resource plan publication


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Program review and monitoring Contingencies - what-if planning

7. Commercialization (often considered post-NPD)     Launch the product Produce and place advertisements and other promotions Fill the distribution pipeline with product Critical path analysis is most useful at this stage

8. New Product Pricing       Impact of new product on the entire product portfolio Value Analysis (internal & external) Competition and alternative competitive technologies Differing value segments (price, value, and need) Product Costs (fixed & variable) Forecast of unit volumes, revenue, and profit

These steps may be iterated as needed. Some steps may be eliminated. To reduce the time that the NPD process takes, many companies are completing several steps at the same time (referred to as concurrent engineering or time to market). Most industry leaders see new product development as a proactive process where resources are allocated to identify market changes and seize upon new product opportunities before they occur (in contrast to a reactive strategy in which nothing is done until problems occur or the competitor introduces an innovation). Many industry leaders see new product development as an ongoing process (referred to as continuous development) in which the entire organization is always looking for opportunities. For the more innovative products indicated on the diagram above, great amounts of uncertainty and change may exist, which makes it difficult or impossible to plan the complete project before starting it. In this case, a more flexible approach may be advisable. Because the NPD process typically requires both engineering and marketing expertise, cross-functional teams are a common way of organizing projects. The team is responsible for all aspects of the project, from initial idea generation to final commercialization, and they usually report to senior management (often to a vice president or Program Manager). In those industries where products are technically complex, development research is typically expensive, and product life cycles are relatively short, strategic alliances among several organizations helps to spread the costs, provide access to a wider skill set, and speeds the overall process.


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Also, notice that because engineering and marketing expertise are usually both critical to the process, choosing an appropriate blend of the two is important. Observe (for example, by looking at the See also or References sections below) that this article is slanted more toward the marketing side. For more of an engineering slant, see the Ulrich and Eppinger, Ullman references below.[1][2] People respond to new products in different ways. The adoption of a new technology can be analyzed using a variety of diffusion theories such as the Diffusion of innovations theory. A new product pricing process is important to reduce risk and increase confidence in the pricing and marketing decisions to be made. Bernstein and Macias describe an integrated process that breaks down the complex task of new product pricing into manageable elements.

[4] The Path to Developing Successful New Products points out three key processes that can play

critical role in product development: Talk to the customer, Nurture a project culture,and Keep it focused.

The new service development design considerations can be explained as follows:
1.Delivery system: What does the customer see, where does production occur? In B2B can we seamlessly move information from one processing point to the next? 2.Facilities design: Size, layout, how does it feel? Important in B2C ±if people are uncomfortable they probably won¶t come back. 3.Capacity planning: Queues and demand. Typically we don¶t plan for full capacity which would result in waste. What do we do with excess capacity? What do we do with customers when we have to make them wait? 4.Service encounter: Employee training and empowerment. The culture your people experience affects their ability and willingness which in turn affects customer relationships. 5.Quality: Measurements and managing expectations. Service quality is covered in another module. 6.Managing capacity and demand: Adjusting your plans to accommodate customer requirements, or is there a way to drive demand to map to your ability to deliver (think of happy hour). 7.Information: What to collect, keep, for competitive advantage. At issue here is privacy and who really µowns¶ the data? Can you think of any service that doesn¶t depend on information?


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New Service Development Cycle
Development Formulation of new services objective / strategy Idea generation and screening Concept development and testing Analysis Business analysis Project authorization Design Service design and testing Process and system design and testing Marketing program design and testing Personnel training Service testing and pilot run Test marketing Full Launch Full-scale launch Post-launch review

Service Blueprinting
Blueprints can be used by:Service Blueprinting is a tool for simultaneously depicting the service process, the points of customer contact, and the evidence of service from the customer¶s point of view. Service blueprinting may also be able to isolate fail points, establish a time frame, and analyze profitability 

Service Marketers creating realistic customer expectations, which is like service system design and promotion Operations Management rendering the service as promised, which is like managing fail points, training systems, and quality control. Human Resources empowering the human element, which is like job descriptions, selection criteria, and appraisal systems.
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System Technology providing necessary tools, which is like system specifications and personal preference databases.

Service Blueprint Components

Building a Service Blueprint

Common Issues in Blueprinting y y y y
Clearly defining the process to be blueprinted. Clearly defining the customer or customer segment that is the focus of the blueprint. Who should ³draw´ the blueprint? Should the actual or desired service process be blueprinted?
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y y y y

Should exceptions/recovery processes be incorporated? What is the appropriate level of detail? Symbology. Whether to include time on the blueprint.

Benefits of Service Blueprinting y y y y y y y y
Provides a platform for innovation. Recognizes roles and interdependencies among functions, people, and organizations. Facilitates both strategic and tactical innovations. Transfers and stores innovation and service knowledge. Designs moments of truth from the customer¶s point of view. Suggests critical points for measurement and feedback in the service process. Clarifies competitive positioning. Provides understanding of the ideal customer experience.

Service blue print:
What is a service blueprint? A service blueprint is a schematic diagram that represents all the details of a service from the customer and organisation¶s perspective. It shows how the different service components link into each other ± showing the different touchpoints and options customers have to choose from and how the internal workings support those choices. Because it maps out chronologically and in sequence all the various interactions and actions that occur in parallel when customer and company meet, it shows all the interactions by and with the customer. So it also illustrates the stages and complexity of the encounter and distinguishes between the customer experiences (and decisions) and the systems, invisible to the customer, that operate backstage to ensure that these are delivered.

When and why are they useful? Blueprints are flexible and powerful in that they depict a service at multiple levels of analysis ± they


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can facilitate the refinement of a single step as well as the creation of an entire service process. It is a way of µseeing¶ the service from the customer focus; the key part of the compliance outcome. In creating the current and future state blueprints it allows the Team to articulate and act upon customer insights, and focus on what¶s working, what¶s not working and what needs to be changed.

For designing:
y y

The development of new services, assessment and improvement of existing services Capturing how long processes within the service take, and how that equates to cost because they are presented with a base of time

y y

Comparison of differences in basic services, standards and processes Capturing of processes, architecture and systems in the context of service, not in isolation or solely from the internal business perspective

y y

Testing of assumptions on paper to identify fail points and thoroughly work out the bugs Cuts down time and inefficiency of random service development

For implementing:
y y y

Becomes a reference for planning and change Represents the new or changed service for a staff member to see during integration activity Forms a common point of reference for all parties (project team, affected staff and management) concerned with achieving a successful launch ± also serves as focal point for later refinements or last-minute changes

y y

Can be stored electronically for later reference, available for everyone involved Facilitates comparison of the desired and actual service

As a communication tool:
y y y

Provides a focus for conversations Is more precise than verbal descriptions, and less subject to misinterpretation Can be a formalised way to inspire corporate-wide change directed at integrating customer focus across the organisation


Can help convince the organisation that changes are in order and what specifically can be done


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What¶s in a service blueprint The blueprint sets out how the customer and organisation (back-office supporting people, processes and systems) interact through five components and three lines: ‡ Physical evidence Customer actions ²²²²²²²²±Line of interaction Visible contact, employee actions (onstage) ²²²²²²²²±Line of visibility Invisible contact, employee actions (backstage) ²²²²²²²²±Line of internal interaction Support processes Unlike a customer experience map this framework remains the same for each map. How you plot within that is up to the intent of the problem/opportunity, information you have (current or future state) and the nature of the service itself. So how do you make one? Ideally begin as a team, using the research and business analysis elicitation outputs (customer experience map, frameworks, models, insights, business processes, use cases, cotext diagrams) and shared knowledge to plot the service. As with mapping, the point of the initial blueprinting is generating team conversation about how the service works. Ask a simple question, then through the blueprint, try and find the answer. For example: ³How does the drive-through work?´ 1. Start with the customer actions as you¶ve described from the mapping exercise, these will serve as the foundation for all other elements of the blueprint. 2. Go through the service process step by step using the five components as your framework for the gathered data and knowledge 3. Break down the information into as much detail as is appropriate to the service, its complexity, and the scale of change proposed by the Initiative. For example, the level of detail for blueprinting how a drive-through works will differ from an initiative looking to change the process of how food gets delivered to the drive-through pick-up counter. For the latter the more detail described the better, as describing very small steps will help to more easily identify problem areas and resolution opportunities 4. Delineate each component of the service by indicating sequentially how each is connected


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5. Represent time in relation to the activities both standard execution time and the allowable deviation (e.g. 5 working days, but 10 are acceptable) 6. Do the blueprint once, then do it again. You will refine iteratively to the point a final comprehensive blueprint can be produced

Service Blueprinting:
A picture map that visually portrays the service system ±  process of delivery  role of customers & employees,  visible elements of the service Breaks down a service into logical components & easily definable tasks & steps

Blueprinting ± Key components:
Customer Action ± Line of External Interaction ³Onstage´ Contact Employee Action - Line of Visibility ³Backstage´ Contact Employee Action Line of Internal Interaction Support Processes

Service Blueprinting:
Useful at design & redesign stages of service development Different from other ³product´ blueprints because here it includes customers & their views of the service process


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Service blueprint components-:

Steps in Building a Blueprint:
1. Identify the service process to be blueprinted 2. Map the service process from the customers point of view 3. Map Contact Employee Actions ± Onstage - Line of External Interaction Backstage ± Line of Visibility ± what customers should see and which employees are in contact with the customers. 4. Map Internal Support activities


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Line of Internal Interaction ± clarify interfaces across departmental lines, their interdependencies 5. Add Evidence of Service at each Customer Action Step

Service Blueprinting:
1. Define standards for front-stage activities 2. Specify physical evidence 3. Identify principal customer actions 4. ------------line of interaction (customers and front-stage personnel)-------5. Front-stage actions by customer-contact personnel 6. ------------line of visibility (between front stage and backstage)-------------7. Backstage actions by customer contact personnel 8. Support processes involving other service personnel 9. Support processes involving IT

Physical Evidence:
A final critical service marketing element is physical evidence. This is directly tied to the service characteristic of intangibility. With products, your customers can look at, touch and feel your offering. To provide a similar experience, some physical evidence to validate service delivery is an important marketing consideration. If you provide lawn care service, your physical evidence of a quality service delivery is the neatly cut and manicured lawn. In a restaurant, your physical evidence of service is cleanliness, efficient food preparation and a friendly, courteous server. Without these proofs, customer retention and word of mouth are poor.

Elements of Physical Evidence:
Servicescape is a concept that was developed by Booms and Bitner to emphasize the impact of the physical environment in which a service process takes place. If you were to try to describe the differences a customer encountered when entering a branch of say like McDonald's compared with a small family restaurant, the concept of servicescapes may prove useful. Booms and Bitner defined a servicescape as "the environment in which the service is assembled and in which the

seller and customer interact, combined with tangible commodities that facilitate performance or communication of the service" (Booms and Bitner, 1981, p. 36). Physical evidence may be likened to 'landscape'. It includes facilities exterior (landscape, exterior design, signage, parking, surrounding environment) and facilities interior (interior design & decor, equipment, signage, layout, air quality, temperature and ambiance). Servicescape along with other tangibles like business cards, stationery, billing statements, reports, employee dress, uniforms, brochures, web pages and virtual servicescape forms the 'Physical Evidence' in marketing of services. Servicescape is not defined as above. The definition above is the definition for physical evidence. Physical evidence consist of servicescape combined with the tangible elements, so servicescape is a part of physical evidence.

Facility exterior
Exterior design Signage Parking Landscape Surrounding environment Facility interior Interior design Equipment Signage Layout Air quality/temperature

Other tangibles
Business cards Stationery Billing statements Reports Employee dress Uniforms Brochures Internet/Web pages


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Examples of Physical Evidence from the Customer¶s Point of View:
Insurance Not applicable

Other tangibles
Policy itself Billing statements Periodic updates Company brochure Letters/cards Uniforms Reports/stationery Billing statements



Express mail

Building exterior Parking Signs Waiting areas Admissions office Patient care room Medical equipment Recovery room Airline gate area Airplane exterior Airplane interior (décor, seats, air quality) Not applicable

Tickets Food Uniforms Packaging Trucks Uniforms Computers Signs Tickets Program Uniforms

Sporting event

Parking, Seating, Restrooms Stadium exterior Ticketing area, Concession Areas Entrance, Playiing Field

Positioning and Differentiation of Services y y y y y Definition and Concept Positioning Strategies Value Chain in Services Differentiation Role of Positioning in Marketing Strategy

Steps in Developing a Positioning strategy
y y y y y Determining Levels of Positioning Identification of Attributes Location of Attributes on Positioning Map Evaluating Positioning Options Implementing the Position


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Sources of Differentiation:
± Product Design ± Quality ± Additional Services ± Image ± People (Staff) ± Price ± Other

Choosing the Right Competitive Advantages:
‡ The best competitive advantages are« ± Important ± Distinctive ± Superior ± Communicable ± Pre-emptive ± Affordable (to company and consumer) ± Profitable

Positioning and Competitive Differentiation
The final stage in developing a strategic marketing plan is to analyze the target market to identify where competitors are positioned, and which attributes are most important when customers are making a purchase. Use Demand Metric¶s Competitive Product Positioning Map for help on this exercise. Product positioning refers to the place an offering occupies in the customers mind on important attributes, relative to competitive offerings. To understand your current market position, conduct a simple market research project to identify which product-class attributes are most important, which brands are perceived to best deliver each attribute, and where product improvements need to be made to improve customer satisfaction.

There are two basic strategies when it comes to positioning: head-to-head and differentiation. Organizations that have a solid competitive advantage in areas deemed relevant by the target market typically go after a large portion of the total market share, and are not afraid to compete head-to-head with new market entrants or established competitors. Those firms who cannot compete head-on with industry giants are better off looking for a niche in the market that their offering is particularly suited to fulfill. Conducting a comprehensive competitive analysis in conjunction with annual market research is an effective method for understanding your role as a supplier within the industry. As the environment changes, you will be in a position to capitalize on new market opportunities. Marketing is an organic process that involves understanding organizational capabilities & resources, analyzing attractive market opportunities, and executing well-timed campaigns to drive revenue. Getting back to the basics and developing disciplined processes related to internal, external, and market analyses, are essential for reacting to dynamic market conditions. Discuss the four types of market opportunity (market penetration, market development, product development, diversification) with Senior Management to identify which area your organization will be looking to exploit in the near future. Conduct a market segmentation initiative to define your general product market; further segment the market based on the needs of your customers and/or other relevant dimensions; and evaluate your submarkets to ensure they provide operational intelligence that supports decision-making. Once market segments and submarkets are established, analyze which segment(s) would be best to pursue. Adopt a Single, Multiple, or Combined Target Market strategy and further evaluate the competitive landscape in each market. Conduct market research to understand the current competitive positions for each brand in the marketplace, and identify areas your organization can provide a competitive advantage. Finally, tweak your marketing mix to achieve differentiation in the markets you serve, and update marketing materials to reflect your new position. Remember, maintaining leadership and revenue in any market requires diligence and the ability to listen and respond to current and potential customers.

Differentiates service processes on basis of:
Degree of Customer interaction and customization: y It is a marketing variable that describes the ability of the customers to affect personally the nature of service being delivered

Degree of Labour intensity in the process: This is the ratio of labour cost to capital cost.


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How to Make a Positioning Map
Four Principles of Positioning Strategy:          Must establish position for firm or product in minds of customers Position should be distinctive, providing one simple, consistent message Position must set firm/product apart from competitors A company cannot be all things to all people²must focus its efforts What does our firm currently stand for in the minds of current and prospective customers? What customers do we serve now, and which ones would we like to target in the future? What is value proposition and target segment for each of our current service offerings? How do our service offerings differ from competitor¶s? What changes must we make to our offerings to strengthen our competitive position?

Developing positioning maps:
Positioning maps and their role in product or service development:
Positioning maps and their role in product or service development What is the competitive advantage that a product or a service has over the competitors? What makes it distinguishable from competitor¶s products or services? One way to identify competitors is through a perceptual mapping. In a perceptual map, products are compared based on how customers view a set of comparable products on quality and cost. The perceptual map is derived from customer data measuring similarities among brands. Customers are asked to rate each pair of brands on a scale from similar to very dissimilar, which help find out how a product stands in comparison to competitors and decide whether to confront, compete, coexist or cooperate with them.


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To be able to sustain in competitive advantage your products must be valuable for customers, not easy to imitate and profitable to sell. Successful products fulfill a high emotional value state, for instance OXO who evolved a single product called GoodGrips to a full line of products penetrating a significant market share. Motorola developed a major presence in the consumer product category with one new product, called the Talkabout. In evaluating the value impact of these products, it is found that they were successful in communicating µvalues¶ in key categories that connected them to their customers. Product positioning has an important role to play in product development. The product positioning refers to the set of features and value that is valued by the target customer audience, relative to competing products. It is about how you differentiate your product or service in the mind of your prospect. When you position your product, especially in the established markets instead of creating products and services with distinctive advantage, the company can fall into trap of creating something, which is merely a duplication of the same product with identical characteristics. This is called a majority fallacy, which at the end often results in price wars. Due to the changes of situation (in the market or internal organization) you may need to reposition your product or service and decide what direction going to move. It is not easy to do, especially when the company has something to lose, such as existing customers or other products. Positioning is therefore an organized approach for finding a window in the mind of one¶s prospect in order to position effectively over there a product against its main competitors. This system is based on the concept that communication can only take place at the right time and under the right circumstances. The mind accepts only that new information which matches its current state. It filters out everything else. In other words, positioning is a process by which a psychological ³anchor´ has been placed into the minds of prospects so that they come to choose one specific person or company over another. The task is however a complex one which explains why so many products attempts fail. Cagan and Vogel argues that there are three key factors that must be present to guarantee the highest potential of success. ESHWARI.S---LORAA BUSINESS ACADEMY Page 105

Ability to identify product opportunities. ± As cultures continue to change, opportunities emerge for new products, which do not just solve existing problems but create possibilities for new experiences. Heightened understanding of the customer needs translated into actionable insights that define attributes. ± These attributes serve as guides in developing products form and features that consumers quickly recognize as useful, usable and desirable. True integration of engineering, industrial design and marketing which respects and appreciates perspective of each discipline. The identification of product opportunities should be the core force that drives companies that manufacture products, provide services or process information. A product opportunity exists when there is gap between what is currently in the market and the possibility for new or significantly improved products that result form emerging trends. A product that successfully fills a Product Opportunity Gap (POG) is perceived as useful, usable and desirable. Identifying a POG requires a constant sweep of a number of factors in three major areas; social trends (S), economic forces (E) and technological advances (T). The social factors include family and work patterns, consumption patterns, health issues, politics, sports and recreation etc. The economic factors focus on income that people perceive they have, or that they expect to have, to give them purchasing power. The technology factors focus on direct and imagined results from new scientific discoveries in corporate, military and university environments. The process therefore starts with a scan of what Cagan and Vogel call SET factors: Social trends, Economic forces, and Technical advances, which open opportunities for new products. For example, the retro trend (social), ample disposable income (economic), and new materials and processes (technology) opened an opportunity that Mazda capitalized on with its Miata sports car. SET factors change constantly, so they can lead to new insights that were not apparent before. Similarly, changing SET factors explain how products go out of fashion and even how a product can appear before its time. The next step is to detect in the SET factors some Product Opportunity Gaps. These POGs are a discrepancy between what is currently available on the market and what the SET factors suggest. Discovering POGs is part science and part art. When found, they lead to product opportunities.


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These SET factors generate opportunities for procuring new products that can have effect on the way people live their lives at any given moment. This goal is to create products and services by identifying emerging trends and to match that trend with the right technology and understanding of the purchasing dynamics. Successful new products become necessary once they µhit¶ the market, which when will become instantly desirable. Coca cola has been able to maintain its position as the leading soft drink for the entire century. Baby dolls hitting the children¶s mind lasted decades. Hit factory in the field of music is another classic example. Once POGs are identified, the challenge become translating the POGs into the development of a new product or the significant modification of an existing product. Positioning maps shows how breakthrough products are differentiated from the competition. The upper right quadrant of the map integrates the attributes of style and technology and adds a third dimension; Value. Style refers to the sensory and ergonomic elements of a product. It determines how well the product connects with the lifestyle of those in the target market. Technology refers to the functionality that enables the product to operate. It can include mechanical, electrical, chemical, or software and it includes materials and manufacturing choices as well. Finally, value is ³the level of effect that people personally expect from products and services, represented through lifestyle impact, enabling features, and ergonomics, which together result in a useful, usable, and desirable product.´ Useful means that the product satisfies a human need and is cost-effective, usable relates to ease of use, and desirable means that its attributes combine to make people want to own it. Upper right products, services and companies merge style and technology in a way that creates strong customer value and promotes positive user experience. Strong brand, corporate values and connection to customer values lead to both short term and long term customer satisfaction. Many breakthrough products stay in the upper right through the constant injection of useful, usable and desirable features of the customer. Each remaining quadrant contains products that emphasize only style, technology or low cost. Through the integration of the attributes represented in the upper right, breakthrough products meet the needs, wants and desires of customers resulting in increased sales, profit and brand


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equity. This integration results in the creation of breakthrough products that are perceived as having high value. The positioning maps show how different products in the same category can be located in a matrix with style and technology as the two axes. The third dimension, value, primarily exists in the upper right quadrant where companies make a concerted effort to integrate style and technology by responding to the needs of the customers. While this approach can lead to increased cost in production, the cost can often be easily returned with interest by establishing a higher price for the product, increased sales, increased interest in the company¶s product lines, or establishing or reaffirming a company¶s brand recognition. People pay more for quality and value of they feel they connect to their goals and aspirations. The Motorola Talkabout is an example of product that converted a core technology into a useful upper right product. Prior to Talkabout, there were generic short-range consumer walky-talkies with minimal features, lifestyle impact, and less attention to ergonomics in the lower left. Motorola¶s core wireless communication technology, which was used for professional applications, was in the lower right. Motorola had to change the performance standards from its professional line to meet projected price points in the consumer market. When consumer¶s felt the resulting quality is still much higher than the competitors, Motorola had to increase the amount charge for the product over what they had originally targeted. However through careful cost reduction, they still maintained a high profit margin on this highly successful product, which still meets the needs of the market. Some products possess ideal characteristics which is the characteristics that the target market most desires µideal¶. The logic here is that whenever a group of consumers has a distinctive ³ideal´ for a product category, they represent a potential target market segment. A firm does well if its attributes (of the product) are perceived by consumers as being close to their ideal. The objective is to be ³more ideal´ than the competitors. Each product must provide some unique combination of new features desired by the target market. Instead of allowing the customer to position products independently, marketers try to influence and shape consumers concepts and perceptions.


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Positioning Errors:
‡ Under-positioning: ± Not positioning strongly enough. ‡ Over-positioning: ± Giving buyers too narrow a picture of the product. ‡ Muddled Positioning: ± Leaving buyers with a confused image of the product.

Generic Product Positions & Value Propositions:


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Pricing of services:
Pricing for a Service: Determining prices if you own a consulting or service-oriented business is not much different from determining prices for a product-driven company. The main difference is that your service or your time is your product. To get started, you must evaluate what your competition is charging for similar services, then determine where your services fit in. Can you, for example, offer the same service at a higher quality? If so, you will probably be able to charge more. But if your competitors are offering more to the consumer than you are capable of, you may want to set your prices lower. You will also want to look at the market itself to determine what the market will bear and what effect your geographic location has on your pricing strategy. A manicurist in New York City, for example, could probably charge more than a manicurist in Idaho simply because people in metropolitan areas are more willing and able ² because of the relative higher costs of all products and services in those areas ² to pay a higher price than folks living in rural areas. Similarly, the principle of supply and demand applies to service companies. If there are several other businesses in your area performing the same or a similar service, the demand will probably be less because the supply is greater. Hence, you may have to charge less. On the other hand, if you own a dry-cleaning service, and you are the only dry cleaner in town, you can charge higher prices than you could if there were several dry cleaners located very close to you. A final thing to consider in pricing a service is reputation. If you have a stellar reputation, people will most likely be willing to pay more for your service since their perception will be that they are getting more. If you own a printing service, and you have a reputation as someone who can take on big jobs at the last minute, perform high quality work, and deliver on schedule, you will be able to charge premium prices. If you are a consultant, you must consider all of the above and add into the mix your credentials. For example, if you are a financial advisor, what is your degree? Do you have an M.B.A. from Harvard? The higher your credentials, the more you will be able to charge. Remember, when consulting, a good part of what people are buying is your experience.

What Do Customers Know about the Prices of Services?


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Figure 16-3 Customers Will Trade Money for Other Service Costs

Three Basic Price Structures and Difficulties Associated with Usage for Services:


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Pricing your product or service:
One of the most important roles in a business is pricing products and services. This underpins all your attempts to make a profit and all your marketing efforts. This guide gives an overview of what is involved in pricing your product or service. Pricing is both a marketing and a financial function. If you get it right, customers will feel they have value for money, while you produce enough profits to build your long-term success in business. If you get it wrong, you will have lower sales, higher marketing costs and lower overall profits. Pricing is also a function of perception ± people will sometimes buy an expensive car because they want to be seen to be driving an expensive car, and not buy cheap clothes because cheap implies low quality. Neither perception may be accurate but the pricing has had the reverse effect of conventional wisdom. Price and sales volume are interlinked. If you price high, you will usually sell fewer products or services. Unfortunately, the link isn¶t linear ± you can¶t increase prices by 20% and expect to lose only 20% of your sales. Fortunately, you don¶t need to be a mathematician to find an answer to the pricing puzzle, though it will make your life easier if you have access to a computer spreadsheet. To work out a sensible price strategy you need to know just five things:

Variable costs of a product/service.


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y y y y

Fixed costs. The type of customer you are targeting. The market and competitive environment. An estimate of the number of units you will sell (and could sell).

Variable costs The first key element is to understand the real cost of your product or service. Include everything that goes into selling it ± the cost of manufacture including: electricity and raw materials, packaging, import duties, sales commission, credit card fees, warehousing costs, wastage, delivery and installation costs. It is always a good idea to cover at least your variable costs when selling. However, there are times when you may wish to override this ± for example, in seasonal sales, or when offering something as a µloss leader¶ to gain market share. Shops do this when they offer µBuy one get one free¶. Having enticed you in with a good offer, they hope you will buy other things that are more profitable to them. You may also be unable to make an overall profit until you have reached a certain volume of sales. Fixed costs Your price must also include a contribution towards your overheads, which you must still pay for even if you do not sell a single thing. Fixed costs include salaries, rent, rates, phone costs, insurance, bank loans and marketing costs. You may not know all these to begin with, but you can work with realistic guestimates. How you then allocate overheads is a matter of choice, but one way is to add a percentage (say 20%) to the total variable cost of each product. Multiply this new price by the volume of products you expect to sell in the year. Does the total income cover all your costs ± fixed and variable ± and provide sufficient net profit? Use cautious sales projections ± it is better to overrecover costs than to sell lots at too low a price and not cover your overheads. As you grow, your costs will also grow, but not necessarily in proportion to the number of units you sell. You may also benefit from bulk buying and economies of scale (for example, the first unit may be disproportionately expensive to produce, but the run-on costs thereafter may be minimal). The type of customer You will want to set your price according to your target market. For example, if you make muffins you could find yourself selling to several distinct customer groups:
y y y y y

Over-the-counter take-away. Eat-in in your own coffee-shop. Other groups such as businesses for board meetings. Hotels and teashops. Other food shops.
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In each case, you would package your goods accordingly. You might sell:
y y y y

Single muffins. Small assorted packages of muffins at a slightly discounted price. Gift packs in company or hotel boxes. Bulk shipments at wholesale prices.

While you need to know your primary target, you may find yourself selling to other groups and will have to price accordingly. Premium buyers will expect to pay more for a product with more expensive packaging, for example or exclusive colours (such as metallic paint on cars). On the other hand, you will have to allow resellers to make their mark-up where relevant. Your competition Study what your competition is charging. Not only does it already have a toehold in the market, but also it knows, to a certain extent, what the market will bear. However, be aware that you don¶t have to charge the same. You can charge a premium if you can differentiate in some way that adds value for your customers, such as increased convenience, quality or service. Your competitors price is affected by:

Their position within the market ± for example, the type of customer they are trying to attract as opposed to other businesses. How people pay (less for cash in advance and more for extended credit). The speed of the job ± rush jobs generally attract a premium. Their unique benefits. Their discounting strategies. The calibre of their staff. The level of their customer service. What is included and excluded in the package (delivery, installation, configuration and so on).

y y y y y y y

On the whole, be wary of charging much less than your competition. As a smaller business, or someone just starting up, you are unlikely to be able to buy for less and your overheads are probably proportionally higher. Plus, you will have higher marketing costs since you are not well known. An exception is where you have used a genuine innovation or new technology to cut your costs of doing business.


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Pricing a service or trade
If you¶re selling a service or trade, especially as a µone-man-band¶, you are limited by how much time in a day you have to do things. You could set your prices on what the competition charges or what you think the market will bear. However, you then have no control over your end profits. Instead, work out what profit you want to achieve and what it will take to get there. If it turns out to be unrealistic, then you will have to change your pricing structure, maybe by changing your service so you can charge more, or by taking on assistants. First, however, you need to decide what your time is worth. Say you want to take home £20,000 a year. Let¶s imagine your overheads are £10,000. Excluding weekends and holidays; there are about 225 working days a year. If you spend only two days a month selling and doing paperwork, you have 200 chargeable days to recover £30,000 or £150 a day or around £20 an hour. If you feel, µBut I can¶t charge that for my time¶, then you must find other ways to add value. The pricing matrix Sometimes it is more worthwhile to work less for more. Imagine you plan to offer typing services, which you will sell by the hour and costs include:

The variable costs such as toner, paper, floppy disks, collection and delivery of material, which average out at £1/hour. The fixed costs such as rent, rates, marketing, electricity, phones, and insurance, but in this case not what you pay yourself. These come to £100 a week. You have decided you intend to work 30 hours a week.



Now look at the matrix below. If you have no idea where to start with pricing, take the prices of four of your lowest-priced competitors. Let¶s say these average £6/hour. Do the same for the four top prices in the range, say £15/hour. Enter these in the matrix below and see how they affect your bottom line. This will help you get a feel for the range within which you can work. When it comes to setting your price, be careful not to try to beat the wrong competitor! If you are not making enough profit, you are not going to last in business.

The pricing matrix Selling price/hour Hours/week Income = selling price x hours Variable cost/hour

High price £15.00 30 £450.00 £1.00

Low price £6.00 30 £180.00 £1.00


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Total variable costs (cost/unit x hours) Gross profit Fixed costs Net profit

£30.00 £420.00 £100.00 £320.00

£30.00 £150.00 £100.00 £50.00

In the low-priced example, you can see that you could end up with almost nothing to show for your hard work. You would have to work 84 hours at £6/hour to achieve the same result as you would at £15/hour for 30 hours. One of the biggest benefits of pricing your service properly is that it allows you to build in time to find the better paying clients who are more profitable. Working 84 hours a week leaves no time at all for living, let alone marketing yourself. Setting your price Ultimately, everything revolves around your unique selling point (USP) ± why someone should buy your product. A USP in turn usually comes down to one of three strategies:
y y y

Product/service differentiation ± you are better or unique. Price differentiation ± you are the cheapest. Customer service differentiation ± you offer a better service and/or are more fun to do business with.

While these are not mutually exclusive, you would not pay a premium for a hamburger in a fast chain, though you might for a hamburger in a top London hotel. On the other hand, you might also be happy to pay a premium for the pleasure of eating in the company of Snow White at a theme park. Having set your price, you must monitor your sales performance. If sales volumes drop, find out why:

Has the competition undercut you or is there an alternative product that cuts out the need for yours? If the problem doesn¶t lie there, take a fresh look at your business as a whole. Are you easy to do business with? Are your people as friendly as you would like them to be, or do they treat customers as unwelcome interruptions to their day? Is your positioning within the market correct? Positioning is about the way potential customers view your product compared to your competitors¶. For example, they may see you as pricey, but offering superb service. Are you perceived as greedy and no longer offering value?

y y y




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Go back to those sales leads that didn¶t turn into orders and ask them why they went to the competition. If your product or price is wrong for the market, don¶t be sentimental ± change it. Nothing in business is set in stone. Pricing is an art and a strategy. Much also depends on your marketing and selling abilities. Ultimately, something is only worth what someone will pay for it. It is easier to cut a high price than to raise a low price, particularly if the latter has established a value in your customer¶s mind.

The 7 Cs of pricing
Pricing is more than undercutting your competitors or covering your costs plus a profit. There are seven factors that will affect what you charge. 1. Costs Costs are the foundation of price. They are internal, tangible, and easy to predict and control. Aim to find the point that covers your costs and optimises your profits. 2. Competition Unless you can show that you are markedly superior, you have to offer your products or services at a price similar to or lower than that of your competitors. Remember, however, that a competitor is not necessarily someone selling the same product. It may be a product that is an acceptable substitute. For example, people might invest in learning keyboard skills rather than outsource their typing requirements. 3. Customers People are prepared to pay what a product is worth to them and this will be different for every single customer. Customers usually have in their heads what a fair price is. You will have to provide added value if you want them to spend more than this. 4. Conditions The conditions of sale include quantity discounts, retainer fees, credit terms, delivery, free add-ons, warranties, guarantees, loyalty bonuses, and so on. Some of these are ways of adding value, and of making direct price and quality comparisons difficult. Remember to add the real cost to you of offering these into your calculations for your variable costs or you could end up losing money. 5. Context There are times when your product is worth more to customers ± for example, if a client wants a typing job turned round overnight. 6. Cachet Cachet, or fashion, is beyond calculation ± you only have to look at the prices for product crazes to understand that there is no logic whatever to this. While you cannot predict fashions, you can present a unified image that enhances your status.

7. Confidence: Many people new to business badly under-price themselves because they cannot believe people will pay them any more! Much of this lies in self-belief. If you carry the assurance that you are worth a certain price, people will often believe you.

Methods of pricing: One big mistake I see small business owners make is using only
one method to calculate their prices. But, what if your calculations are wrong? Then, you are stuck with a bad price. Instead, I suggest that businesses use several different methods to calculate their prices. Method No. 1 -Costing out a price This first method takes into account your costs, your desired profit, and then totals these into a price. To find your business¶s total costs, you have to account for two types; direct costs and indirect costs. Direct costs are those you incur when delivering your service and typically include labor and materials. For example, if you owned a t-shirt store, your direct costs might include the labor to staff the store, the blank t-shirts you buy from a vendor, the decals you apply to the shirts and all the equipment you use to apply the decals to the shirts. Indirect costs are all the other costs not accounted for in your direct costs, and include things like rent, insurance, phone and utility bills and office supplies. These indirect costs cover everything you need to keep your business operating every day, whether or not you make any sales. After you¶ve uncovered what all your direct and indirect costs are, add them up. Just for fun, let¶s say these total $10,000 annually. Now, let¶s say you estimate you can sell 2,000 t-shirts in a year. Dividing your $10,000 in expenses by the 2,000 quantity, you end up with a breakeven of $5.00/t-shirt. This breakeven price is the lowest price you can charge and still cover all your costs. The next step is to ask yourself what profit you want. Let¶s say you¶d like to have $20,000 to live on during the year (not a princely sum, but I am just trying to keep this simple). This is your profit. OK, now take that $20,000 and divide it by the 2,000 t-shirts you expect to sell, and you come up with $10/t-shirt. Add this to your $5/t-shirt cost and the price you should charge is $15/t-shirt. Method No. 2 - Pricing competitively: After you¶ve established your cost-based price, you want to compare this price against market prices. These are prices your competitors are already getting, and are a key determinant of your own pricing.


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Finding competitive information isn¶t all that hard; it just takes a little digging. If I were an owner of a t-shirt store like in the example above, I would visit 5 other t-shirt shops and inquire about their pricing. Then I¶d ask myself do they offer the same quality t-shirts as me? If their prices are higher, what else are they offering to justify the price? If their prices are lower, is their product quality (or service) noticeably lower? This kind of competitive surveillance is crucial when determining your prices. Now, what if you are in a business-to-business market, or selling a service? Here are some common sources of information for competitive prices:
y y y

Your preferred customers who can supply you with price sheets from competitors. Trade associations who might monitor pricing among the trade. Job candidates interviewing with your company²who come from competitors.

Method No. 3 - Pricing by position Now, set your calculator aside and ask yourself this question ³How do I want to be perceived in my market?´ This is an important question because your price positions your service (or product) in your prospects¶ minds. What do I mean by this? OK, think Ferrari. Now, think Ford. Totally different price points, totally different perceptions, right? If you want your service to be positioned as higher-end (think Ferrari), you will choose a price point towards the higher end of the price ranges already found in your market. If, on the other hand, your service will be more workmanlike, sacrificing additional features and the finer touches, you¶ll price lower. In my book The Marketing Toolkit for Growing Businesses, I identify at least 13 different price strategies you could choose. But to make this easier, I¶ve boiled your choices down to just three:
y y y

Premium Price (most expensive 1/3rd of your market) Middle Market Price (mid-level 1/3rd of your market) Budget Price (least expensive 1/3rd of your market)

Depending on the tier you choose, you will price your product or service in that 1/3rd of the market. So for example, if you choose Middle Market, your price(s) should fall within the middle third of all prices in your market.

The basic aim of the Service Industry is to provide services to the clients/customers who need those services. These services include the services for the manufacturing units, as well as the services to other direct or indirect service providers who offer services to others involved in meeting human needs.

Pricing the services is always considered as difficult, especially when the quality of services vary from customer to customer. Some of the methods adopted could be: a. Charge the price as per cost of service-Based on costing of time spent, materials used etc., in rendering the service. b. What the others are charging.-most common method. c. What customer is willing to pay or what the customer is charging his customers based on this input service. d. Gamble and charge an estimated price. We can see that every consultant might have tried one or more of such methods, or variations of them, at one time or another with varying degrees of success. If service providers are operating in a protected environment, they have the advantage of charging the declared price as fixed by the apex/regulatory body. When the service provider is operating in a competitive field, the price fixation is very difficult. Similarly in case of service providers operating in unorganized sectors, the price fixation is very difficult job and many service providers are underpaid. If we are service providers and if study the methods adopted by established service providers in industry it can help us in pricing our services properly. Some of such factors which are generally considered by the service providers in fixing price for their services are: 1. Market Conditions-Demand for services and availability of Service providers. Most service providers go by this. Once price is fixed based on market forces, the other variable to earn profit is to maximize the operating cost. 2. Experience of the Service Provider- Experienced service providers demand and get higher price, than the new entrants. Same service provider can gradually increase his price as he gains experience and skill in that line. 3. Cost Plus. The services can not be sold at prices lower than cost plus reasonable return on investment. Here the service provider identify and group costs into fixed and variable to cover full variable cost in the price as done in case of products.


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4. Location of the place where services are required. Service providers charge higher fees when services are provided in remote places. Services rendered in remote places can get higher price than at place where such services are readily available in plenty or where competitors are operating. 4. Entry Barriers-Many services prescribe certain entry qualification like lawyer, doctors, accountants, and Engineers. Those service providers, who have necessary qualification and permitted to operate charge based on their expected earning level and here the educational qualification gives and indication of price to be fixed for the service offered. 5. Price customer is willing to pay. Golden principle followed by service providers is to fix the price based on the principle as to what the µcustomer can pay¶. It is don after discussions with service receiver about their perception of cost of services required vs. quality .No service provider would like to loose a Customer, by demanding price which the customer has no ability to pay. Often services are offered at by new entrants at uneconomical prices, because the service is a perishable commodity and we need the customers are needed in the long range for continuing the business. If customer is able to perceive that he is getting more than what he is paying for, there is every possibility of long range relationship between the service receiver and the service provider.

Unit: 4
Service delivery:
People and Services Marketing
'People' as part of the marketing mix: People are the most important element of any service or experience. Services tend to be produced and consumed at the same moment, and aspects of the customer experience are altered to meet the 'individual needs' of the person consuming it. Most of us can think of a situation where the personal service offered by individuals has made or tainted a tour, vacation or restaurant meal. Remember, people buy from people that they like, so the attitude, skills and appearance of all staff need to be first class. Here are some ways in which people add value to an experience, as part of the marketing mix - training, personal selling and customer service.


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Training. All customer facing personnel need to be trained and developed to maintain a high quality of personal service. Training should begin as soon as the individual starts working for an organization during an induction. The induction will involve the person in the organization's culture for the first time, as well as briefing him or her on day-to-day policies and procedures. At this very early stage the training needs of the individual are identified. A training and development plan is constructed for the individual which sets out personal goals that can be linked into future appraisals. In practice most training is either 'on-the-job' or 'off-the-job.' Onthe-job training involves training whilst the job is being performed e.g. training of bar staff. Offthe-job training sees learning taking place at a college, training centre or conference facility. Attention needs to be paid to Continuing Professional Development (CPD) where employees see their professional learning as a lifelong process of training and development. Personal Selling There are different kinds of salesperson. There is the product delivery salesperson. His or her main task is to deliver the product, and selling is of less importance e.g. fast food, or mail. The second type is the order taker, and these may be either 'internal' or 'external.' The internal sales person would take an order by telephone, e-mail or over a counter. The external sales person would be working in the field. In both cases little selling is done. The next sort of sales person is the missionary. Here, as with those missionaries that promote faith, the salesperson builds goodwill with customers with the longer-term aim of generating orders. Again, actually closing the sale is not of great importance at this early stage. The forth type is the technical salesperson, e.g. a technical sales engineer. Their in-depth knowledge supports them as they advise customers on the best purchase for their needs. Finally, there are creative sellers. Creative sellers work to persuade buyers to give them an order. This is tough selling, and tends to o ffer the biggest incentives. The skill is identifying the needs of a customer and persuading them that they need to satisfy their previously unidentified need by giving an order. Customer Service Many products, services and experiences are supported by customer services teams. Customer services provided expertise (e.g. on the selection of financial services), technical support(e.g. offering advice on IT and software) and coordinate the customer interface (e.g. controlling service engineers, or communicating with a salesman). The disposition and attitude of such people is vitally important to a company. The way in which a complaint is handled can mean the difference between retaining or losing a customer, or improving or ruining a company's reputation. Today, customer service can be face-to-face, over the telephone or using the Internet. People tend to buy from people that they like, and so effective customer service is vital. Customer services can add value by offering customers technical support and expertise and advice.

Service process: no

Distributing service:
Product distribution (or place) is one of the four elements of the marketing mix. An organization or set of organizations (go-betweens) involved in the process of making a product or service available for use or consumption by a consumer or business user. The other three parts of the marketing mix are product, pricing, and promotion.

The distribution channel
Distribution is also a very important component of Logistics & Supply chain management. Distribution in supply chain management refers to the distribution of a good from one business to another. It can be factory to supplier, supplier to retailer, or retailer to end customer. It is defined as a chain of intermediaries, each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user.

A number of alternate 'channels' of distribution may be available: 

Distributor,who sells to retailers via direct marketing, or brokers can also be used, Retailer (also called dealer or reseller), who sells to end customers Advertisement typically used for the consumption goods

Distribution channels may not be restricted to physical products alice from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc. process of transfer the products or services from Producer to Customer or end user. There have also been some innovations in the distribution of services. For example, there has been an increase in franchising and in rental services - the latter offering anything from televisions through tools. There has also been some evidence of service integration, with services linking together, particularly in the travel and tourism sectors. For example, links now exist between airlines, hotels and car rental services. In addition, there has been a significant increase in retail outlets for the service sector. Outlets such as estate agencies and building society offices are crowding out traditional grocers from major shopping areas.


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Channel decisions:
Channel Sales is nothing but a chain for to market a product through different sources. 

Channel strategy Gravity & adventure Push and Pull strategy Product (or service) Cost Consumer location

Managerial concerns:
The channel decision is very important. In theory at least, there is a form of trade-off: the cost of using intermediaries to achieve wider distribution is supposedly lower. Indeed, most consumer goods manufacturers could never justify the cost of selling direct to their consumers, except by mail order. Many suppliers seem to assume that once their product has been sold into the channel, into the beginning of the distribution chain, their job is finished. Yet that distribution chain is merely assuming a part of the supplier's responsibility; and, if they have any aspirations to be market-oriented, their job should really be extended to managing all the processes involved in that chain, until the product or service arrives with the end-user. This may involve a number of decisions on the part of the supplier: 

Channel membership Channel motivation Monitoring and managing channels

Type of marketing channel:
1. Intensive distribution - Where the majority of resellers stock the 'product' with convenience products, for example, and particularly consumer goods markets (price competition may be evident). the brand leaders in

2. Selective distribution - This is the normal pattern (in both consumer and industrial markets) where 'suitable' resellers stock the product. 3. Exclusive distribution - Only lambard specially selected resellers or authorized dealers (typically only one per geographical area) are allowed to sell the 'product'.


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Channel motivation:
It is difficult enough to motivate direct employees to provide the necessary sales and service support. Motivating the owners and employees of the independent organizations in a distribution chain requires even greater effort. There are many devices for achieving such motivation. Perhaps the most usual is `incentive': the supplier offers a better margin, to tempt the owners in the channel to push the product rather than its competitors; or a compensation is offered to the distributors' sales personnel, so that they are tempted to push the product. Julian Dent defines this incentive as a Channel Value Proposition or business case, with which the supplier sells the channel member on the commercial merits of doing business together. He describes this as selling business models not products.

Monitoring and managing channels:
In much the same way that the organization's own sales and distribution activities need to be monitored and managed, so will those of the distribution chain. In practice, many organizations use a mix of different channels; in particular, they may complement a direct salesforce, calling on the larger accounts, with agents, covering the smaller customers and prospects. These channels show marketing strategies of an organization. Effective management of distribution channel requires making and implementing decision in these areas.

Applying the Flow Model of Distribution to Services:
Distribution embraces three interrelated elements:  Information and promotion flow  To get customer interested in buying the service  Negotiation flow  To sell the right to use a service  Product flow  To develop a network of local sites

Distinguishing between Distribution of Supplementary and Core Services:
Distribution relates to both core services and supplementary services


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Core services for people processing and possession processing services require physical locations Core services for mental stimulus processing and information processing can be distributed electronically Supplementary services can be tangible or intangible widely and cost-effectively via nonphysical channels  Telephone  Internet in nature; latter can be distributed

Information and Physical Processes of Augmented Service Product (Fig 4.1)

Using Websites for Service Delivery:


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Distribution Options for Serving Customers: 
Customers visit service site  Convenience of service factory locations and operational schedules important when customer has to be physically present  Service providers go to customers  Unavoidable when object of service is immovable  More expensive and time-consuming for service provider  Service transaction is conducted remotely  Achieved with help of logistics and telecommunications

Six Options for Service Delivery (Table 4.1):

Channel Preferences Vary among Customers: 
   For complex and high-perceived risk services, people tend to rely on personal channels Individuals with greater confidence and knowledge about a service/channel tend to use impersonal and self-service channels Customers with social motives tend to use personal channels Convenience is a key driver of channel choice


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Places of Service Delivery: 
 Cost, productivity, and access to labor are key determinants to locating a service facility Locational constraints  Operational requirements Airports 

Geographic factors Ski resorts 

Need for economies of scale  Ministores  Creating many small service factories to maximize geographic coverage Automated kiosks Hospitals 

Separating front and back stages of operation  Taco Bell

Locating in multipurpose facilities  Proximity to where customers live or work Service stations Service Perspectives 4.2

Time of Service Delivery: 
Traditionally, schedules were restricted  Service availability limited to daytime, 40 to 50 hours a week  Sunday historically considered as a rest day in Christian tradition, Saturday in Jewish tradition, and Friday in Muslim tradition  Today


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For flexible, responsive service operations: 24/7 service²24 hours a day, 7 days a week, around the world

(Service Perspectives 4.3)  Some organizations still avoid 7-day operations, for example: Atlanta-based Chick-fil-A

³Being closed on Sunday is part of our value proposition´

The Challenge of Distribution In Large Domestic Markets: 
Marketing services (i.e., physical logistics) face challenges due to:  Distances involved (geographic areas)  Existence of multiple time zones  Multiculturalism (especially, immigrants and indigenous people)  Differences in laws and tax rates  Large U.S. companies counter this by:  Targeting specific market segments  Seeking out narrow market niches  Serving multiple segments across a huge geographic area is biggest marketing challenge

The Distribution Function:
‡ distribution is about getting the product or service to the customer as conveniently as possible; it deals with access and availability intermediaries perform many of the distribution functions on behalf of suppliers merchant intermediaries actually take title to physical products that they distribute agents do not ever own the products, but they arrange the transfer of title

‡ ‡ ‡

Distribution Channels:
‡ The role of distribution entails:
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‡ ‡ ‡ ‡ ‡

Arranging for its sale and transfer of title Promoting the product Storing the product Assuming some risk during distribution.

Intermediaries often perform these activities for producer or consumer.

The Distribution Functions:

The Well-Designed Distribution Strategy:


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Selecting the Type of Channel:
‡ some firms will distribute directly; others will use a number of intermediaries: ‡ ‡ ‡ ‡ ‡ ‡ producer+consumer (direct) producer+retailer+consumer producer+wholesalerVretailer+ consumer producer+agentVretailer+consumer producer+agent+wholesale+retailer+consumer

when would each of these be considered?

Major distribution channel:
y y y y For distribution of consumer goods, five different types of channels are widely used. Business goods are normally distributed through four major types of channels. There are only two common channels of distribution for services. Some producers are not content to use only a single distribution channel and use multiple channels (a.k.a dual distribution) Multiple channels can aggravate middlemen and cause conflicts in the channels.


Service Channels:


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Multiple Distribution Channels:
‡ ‡ some firms will use several distribution channels to reach specific markets or segments dual distribution is used, for example, to reach business and consumer markets, or to carry different groups of products or may be used to reach different segments of the seller¶s market; different sizes of buyers or different regions of the country some companies operate their own stores



Intensity of Distribution:

Considerations in Channel Choice:
‡ ‡ ‡ ‡ Market Considerations: Type of market, concentration, potential customers, order size. Product Considerations: Consider unit value, perishability, technical nature of product. Intermediaries Considerations: Services offered, availability, attitude, dominance. Company Considerations: Desire for channel control, management, money and services seller can provide to support sales.


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Conflict and Control in Channels:
‡ ‡ ‡ Channel conflict exists when channel members interfere with each others¶ objectives. Horizontal conflict involves firms on same level-- grocery store vs. drug store. Vertical conflict involves firms at different levels ‡ ‡ ‡ producer versus wholesaler producer versus retailer

Channel Power is the ability to influence or determine behaviour of others in channel. ‡ Based on expertise, rewards and sanctions.

Legal Considerations:
‡ ‡ ‡ ‡ Dealer Selection: Refusing to sell to some firms. Can be done carefully. Exclusive Dealing involves shutting out competitors, giving most business to one firm. Tying Contracts involves providing one item on condition other lines be carried as well. Exclusive Territories can create monopolies.

More Foreign Market Entry Channel Options
‡ Direct investment, including: ‡ ‡ ‡ ‡ Joint venture or partnership with a foreign company. Strategic alliance. Wholly-owned subsidiaries.

Multinational corporation, in which the foreign and domestic operations are integrated and are not separately identified.

Impact of information technology on service:
‡ Direct investment, including: ‡ Joint venture or partnership with a foreign company.


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‡ ‡ ‡

Strategic alliance. Wholly-owned subsidiaries.

Multinational corporation, in which the foreign and domestic operations are integrated and are not separately identified.

Channel functions:
Distribution Channel Functions
The distribution channel moves goods and services from producers to consumers. It overcomes the major time, place, and possession gaps that separate goods and services from those who would use them. Members of the marketing channel perform many key functions: ‡ Information:: gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange.

‡ Promotion:: developing and spreading persuasive communications about an offer.

‡ Contact: finding and communicating with prospective buyers.

‡ Matching: shaping and fitting the offer to the buyer's needs, including activities such as manufacturing, grading, assembling, and packaging.

‡ Negotiation: reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred. Others help to fulfill the completed transactions: ‡ Physical distribution: transporting and storing goods.

‡ Financing: acquiring and using funds to cover the costs of the channel work.

‡ Risk taking: assuming the risks of carrying out the channel work. See below for more information.


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Types of Distribution Channels: The first step in selecting a marketing channel is determining which type of channel will best meet both the seller¶s objectives and the distribution needs of customers. Channel Length Distribution channels can be described as being either short or long. A short channel involves few intermediaries. A long channel, on the other hand, involves many intermediaries working in succession to move goods from producers to consumers. In general, business products tend to move through shorter channels than consumer products due to geographical concentrations and comparatively few business purchases. Service firms market primarily through short channels because they sell intangible products and need to maintain personal relationships within their channels. Not-for-profit institutions also tend to work with short, simple, and direct channels. Please note Table 15.1 below that highlights the characteristics of short and long marketing channels.

Consumer Channels The simplest and shortest distribution channel is a direct channel. A direct channel carries goods directly from a producer to the business purchaser or consumer. One of the newest means of selling in a direct channel is the Internet. A direct channel may allow the producer to serve its customers better and at a lower price than is possible using a retailer. Sometimes a direct channel is the only way to sell the product because using channel intermediaries may increase the price above what consumers are willing to pay. Another reason to use a direct channel is control.


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Many producers, however, choose to use indirect channels to reach consumers. Customers are familiar with certain retailers or other intermediaries and habitually turn to them when looking for what they need. Intermediaries also help producers fulfill the channel functions previously cited. By creating utility and transaction efficiencies, channel members make producers¶ lives easier and enhance their ability to reach customers. The producer-retailer-consumer channel is the shortest indirect channel. GE uses this channel when it sells small appliances through large retailers such as Wal-Mart or Sears. The producer-wholesalerretailer-consumer channel is another common distribution channel in consumer marketing. Business-to-Business Channels B2B distribution channels facilitate the flow of goods from a producer to an organizational customer. Generally, B2B channels parallel consumer channels in that they may be direct or indirect. The simplest indirect channel in industrial markets occurs when the single intermediary²a merchant wholesaler referred to as an industrial distributor rather than a retailer²buys products from a manufacturer and sells them to business customers. Direct channels are more common to business-to-business markets because B2B marketing often means selling high-dollar, high-profit items to a market made up of only a few customers. In such markets, it pays for a company to develop its own sales force and sell directly to customers at a lower cost than if it used intermediaries. Channels for Services Because services are intangible, there is no need to worry about storage, transportation, and the other functions of physical distribution. In most cases, the service travels directly from the producer to the customer. Some services, however, do need an intermediary, often called an agent, who helps the parties complete the transaction. Examples include insurance agents, stockbrokers, and travel agents. Horizontal Marketing Systems A horizontal marketing system is a channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity. By working together, companies can combine their financial, production, or marketing resources to accomplish more than any one company could alone. Companies can join forces with competitors or noncompetitors. McDonald¶s places ³express´ versions of its restaurants in Wal-Mart stores. McDonald¶s benefits from Wal-Mart¶s considerable store traffic, while Wal-Mart keeps hungry shoppers from having to go elsewhere to eat. Multichannel Distribution Systems A multichannel distribution system is a distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments. This is also called a hybrid marketing channel. Multichannel distribution systems offer many advantages to companies facing large and complex markets. With each new channel, the company expands its sales and market coverage and gains opportunities to tailor its products to the specific needs of diverse customers. Multichannel distribution systems, however, are harder to control, and they generate conflict as more channels compete for customers and sales.


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Channel Strategy:
Marketers face several strategic decisions in choosing channels and marketing intermediaries for their products. Selecting a specific channel is the most basic of these decisions. Marketers must also resolve questions about the level of distribution intensity, the desirability of vertical marketing systems, and the performance of current intermediaries.

Marketing Channel Selection Marketing channel selection can be facilitated by analyzing market, product, producer, and competitive factors. A marketer could refer to Table 15.1 above for insights into whether the distribution channel should be short or long for the product in question. Then, he or she could refer to Figure 15.2 above and consider the alternative long or short channels for consumer goods, business goods, or services. Distribution Intensity Distribution intensity refers to the number of intermediaries through which a manufacturer distributes its goods. The decision about distribution intensity should ensure adequate market coverage for a product. In general, distribution intensity varies along a continuum with three general categories: intensive distribution, selective distribution, and exclusive distribution.

Conceptually : Information technology


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Storage media:
€ Local storage€ hard-disc, € CD drives € tape drives. € Network storage € Various forms of information storage text, image, audio, tables etc

€ Local € Network € € € Communication Wired- copper, optical fiber Wireless- RF, Satellite

€ Local processing € Network processing € Data processing € Algorithmic € Image € sampling € Filtering € Authenticating € Security

Impacts of technological Change:
€ Radically alter ways in which service firms do business with customers ( new services, more convenience), Behind the scenes ( re engineering , new value chains) € Create relational databases about customer needs and behavior, mine data banks for insights € Leverage employee capabilities and enhance mobility € Centralize customer service ±faster and more responsive € Develop national/ global delivery system € Create new, internet based business models All services can benefit from IT, but mental stimulus processing and information processing services have most to gain € Remote delivery of information based services ³ anytime , anywhere´

€ New service feature through web sites, email, internet ( information, reservations) € More opportunities to self service € New types of services

Designing the service communication mix:
Product/Service Promotion Our well-equipped and effective outbound call centers provide solutions which can be tailormade as per diverse necessities of our clients of various sectors. They provide fully integrated solutions for getting more customers and forming a stronger customer base. We help in generating momentum and provide new customers to spread awareness and excitement for client's newest products. Outbound calls to the target audience provide promotional product messages quite consistent and congenial with the company's product promotion strategies. Our product/service promotion services also encompass the following:
y y y y y

New product launches and line extension introductions Product recalls Product hotlines New product indication announcements Product advisory notices
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Outcomes research

Service industry Sales promotional strategies:
Service sector Sales promotion includes several communications activities that attempt to provide added value or incentives to consumers, or other organizational customers to stimulate immediate sales. These efforts can attempt to stimulate service interest, trial, or purchase. Examples of devices used in sales promotion include coupons, samples, premiums, point-ofpurchase (POP) displays, contests, rebates, and sweepstakes.

There are three types of sales promotion strategies: Push, Pull, or a combination of the two: 
A push strategy involves convincing trade intermediary channel members to "push" the product through the distribution channels to the ultimate consumer via promotions and personal selling efforts. The company promotes the product through a reseller who in turn promotes it to yet another reseller or the final consumer. Trade-promotion objectives are to persuade retailers or wholesalers to carry a brand, give a brand shelf space, promote a brand in advertising, and/or push a brand to final consumers. Typical tactics employed in push strategy are: allowances, buy-back guarantees, free trials, contests, specialty advertising items, discounts, displays, and premiums.


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A pull strategy attempts to get consumers to "pull" the product from the manufacturer through the marketing channel. The company focuses its marketing communications efforts on consumers in the hope that it stimulates interest and demand for the product at the end-user level. This strategy is often employed if distributors are reluctant to carry a product because it gets as many consumers as possible to go to retail outlets and request the product, thus pulling it through the channel. Consumer-promotion objectives are to entice consumers to try a new product, lure customers away from competitors¶ products, get consumers to "load up" on a mature product, hold & reward loyal customers, and build consumer relationships. Typical tactics employed in pull strategy are: samples, coupons, cash refunds and rebates, premiums, advertising specialties, loyalty programs/patronage rewards, contests, sweepstakes, games, and point-of-purchase (POP) displays.  Combination Strategy: A combination strategy occurs when the push and pull methods are used simultaneously for maximum promotional effect. In addition to providing incentives for a seller to promote a product, a manufacturer will also launch an advertising campaign to entice consumers to purchase the product.

Other strategies used in promotion are: 
Brand Reinforcement: A brand reinforcement strategy is used as a way to build customer loyalty, which leads to repeat sales. One common brand reinforcement strategy is the offering of a club membership where members can get discounts for purchases, as well as perks like free merchandise or being eligible for special sales that are not available to the general public.  Building Demand: Sales promotion strategy can involve increasing or building demand for a product. By advertising a special limited offer, such as offering 20 percent off the purchase price if you buy before a certain date, it can create a sense of urgency in consumers, who then give the product a try. Another way to build demand is to use advertising to show how your product fills a need in a way that your competition's product does not.


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Sales Promotion Methods:
Sales promotion involves any initiative to market a service or product in order to increase sales, according to the Marketing Teacher website. This is done by persuading customers to buy something by offering incentives, or deals, which they find irresistible. Since the goal of sales promotion is to increase the bottom line, businesses have to become creative when marketing their products. They employ various means to achieve this.

Organizations may offer discounts, or "sale prices," on some of their products. These are usually short-term. This promotion is ideal for a product that is due to expire soon and needs to be liquidated, to make seasonal items move faster during the holidays, to promote a new product or attract customers. This promotion method traditionally results in an increase in sales.

Buy-One-Get-One Free (BOGOF):
The Buy-One-Get-One Free, or BOGOF, is a sales promotion in which buyers are promised two items for the price of one. BOGOF offers customers an item of equal or lesser value for free with the purchase of a product at full price. The seller doesn't lose money because the wholesale cost of the item is low enough that selling two for the price of one still provides a profit, explains the Marketing Teacher website.

Bonus Points and Loyalty Cards:
Bonus points offer a sales promotion in which consumers are given credit for each purchase they make with your business. The idea is for the customer to build points to a certain level to gain a reward. A loyalty card works in a similar way. A customer fills up a card with a certain number of proof of purchase stamps that they receive after each transaction. Once the card is completed, the customer is rewarded with a free product or service, like a cup of coffee, free hair cut or car wash.


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Sales Promotion Techniques:
Sales promotion techniques can be specialized to certain industries, but most techniques can be intuitive or learned by trial and error as you are in the process of selling. Simple advice for successful promotions like pre-qualifying leads, respecting the client, building a relationship and setting realistic goals are often not implemented in pitches, emails, phone conversations and marketing materials. TV commercials bombard people with information. If you are face-to-face or have a personal contact with your client, your techniques must be different.

Continuous Improvement and Tracking: Consider what you can accomplish daily,
weekly, monthly or annually. Expectations that are too high will result in failure and stress, which will affect you mentally, physically and emotionally. Examine what sales promotion techniques you are using, if there was something you could have done better, what techniques your competition is using, and how you can implement them. Write what you can accomplish in terms of sales, calls or profit. Keep in mind that sales promotion techniques must be constantly improved.

Targeting: Many sales promotions try to attack too large an audience. Consider who you
would want to talk to. If you are calling, you would not purchase a list of a million phone numbers from around the world. If your goal is to get people to come to your store, you would want to call only people who live within a certain radius of your store. If your product deals with homes, you would want your sales promotion to focus on private homeowners.

Questioning: Once you have a person in the store or on the phone, your goal is to determine if
she has a need (or if you can create a need). If you are talking to a tourist, he will not be interested in coming to your car dealership, no matter what payment options you are promoting. Ask questions. Determine if this is someone who may be interested in your product, then begin your sales promotion.


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Stories Sell: Anyone can make general statements that their product is the best and saves
money. A sales promotion for a certain product must answer the question of what makes this product unique. Use numbers, percents and concrete experiences to show the client why they should buy your product and not the thousands of others on the market. Stories of success paint a picture for the client to get excited about the product and think, "If he can do it, so can I." A good sales promotion uses names and describes how the product affected a certain person.

Respect Sells: Respect the client, his needs and restrictions. A good sales promotion
technique solves the client's' problem for him. If he can't pay the full amount, acknowledge his budget constraints and offer payments. If he is concerned with a certain aspect of the product, acknowledge the fear and explain how it can be resolved.

Advantages of sales promotion:
"Sales Promotion comprises that range of techniques used to attain sales or marketing objectives in a cost effective manner by adding value to a product or service either to intermediaries or end users, normally but not exclusively within a defined time period. Almost every Company uses Sales Promotion techniques at some stage of the product life cycle since sales promotion techniques provide a strong incentive to BUY! Generally, there are 3 modes of Sales Promotion y y y

Consumer oriented Sales force oriented Retailer oriented

Building service customer relationship:
6 Steps To Customer Relationship Management
Developing, Motivating And Managing Your People Even though you have hired the right people, there is still a need to orient them into the organisation's customer relationship culture and define key communication skills. In Call Centers

and Technical Support departments, there is a tendency to rely on technical/functional skills and neglect interpersonal skills development. This can result in providing acceptable material service, the more tangible aspect, yet unacceptable personal service, the competitive differentiator. Therefore to build a customer relationship culture, it is important to: Provide training in key areas required to deliver exceptional personal service Reinforce these skills using ongoing coaching and feedback Measure current performance levels Reward performance using a combination of monetary awards and non-monetary recognition Establishing Effective Service Delivery Processes Effective processes and procedures provide the foundation for smoothing or inhibiting the material service element of the customer interaction. Efficient service delivery systems appear transparent to the customer. Poor systems create those 'speed bumps' that necessitate personal intervention in order to satisfy the customer requirements. The critical elements in ensuring a positive material customer experience are: Mapping the service delivery processes Evaluating critical success points in the process Defining service standards and objectives for these essential points Establishing service delivery procedures to optimise material service Creating service level agreements to smooth internal service delivery Building In Continuous Improvement No matter how effective the service delivery processes, or well-trained the service deliverers, things go wrong. Products have faults. Customers get frustrated. Things slip through the cracks. The organisations that are built around managing the customer experience are able to resolve these issues effectively. This process known as "recovery" is an important differentiator in building customer loyalty. In order to recover effectively, it is necessary to: Actively seek customer feedback and complaints: you cannot improve if you don't know what went wrong in the first place. Train staff how to handle customer complaints effectively using the correct mix of empathising, apologising and resolution. Make sure that the real problem is solved, not just the symptoms. Focus on proactive (prevention) as well as reactive (cure) problem solving. Ensuring Managers Are The Key Change-Agents As consultants, we observe that senior management often has the vision, intention and commitment to introduce a comprehensive customer relationship management system. The

y y y y

y y y y y

y y y y

"make or break" element is in involving middle management in the change process, and empowering them to be the key change-agents. To do this, it is important to: Engage the management team early and often in the process Involve management members in articulating the customer experience strategy Teach managers coaching skills so that they are able to articulate and reinforce the key personal service skills Use managers as facilitators when rolling out interpersonal skills training Reward managers on establishing, monitoring and updating service delivery processes Ensure managers are able to act as an example to their teams.

y y y y y y

8 Rules For Good Customer Service:
Good customer service is the lifeblood of any business. You can offer promotions and slash prices to bring in as many new customers as you want, but unless you can get some of those customers to come back, your business won't be profitable for long. Good customer service is all about bringing customers back. And about sending them away happy - happy enough to pass positive feedback about your business along to others, who may then try the product or service you offer for themselves and in their turn become repeat customers. If you're a good salesperson, you can sell anything to anyone once. But it will be your approach to customer service that determines whether or not you¶ll ever be able to sell that person anything else. The essence of good customer service is forming a relationship with customers ± a relationship that that individual customer feels that he would like to pursue. How do you go about forming such a relationship? By remembering the one true secret of good customer service and acting accordingly; "You will be judged by what you do, not what you say." I know this verges on the kind of statement that's often seen on a sampler, but providing good customer service IS a simple thing. If you truly want to have good customer service, all you have to do is ensure that your business consistently does these things: 1) Answer your phone. Get call forwarding. Or an answering service. Hire staff if you need to. But make sure that someone is picking up the phone when someone calls your business. (Notice I say "someone". People who call want to talk to a live person, not a fake "recorded robot".) For more on answering the phone, see Phone Answering Tips to Win Business.

2) Don't make promises unless you will keep them. Not plan to keep them. Will keep them. Reliability is one of the keys to any good relationship, and good customer service is no exception. If you say, ³Your new bedroom furniture will be delivered on Tuesday´, make sure it is delivered on Tuesday. Otherwise, don't say it. The same rule applies to client appointments, deadlines, etc.. Think before you give any promise - because nothing annoys customers more than a broken one. 3) Listen to your customers. Is there anything more exasperating than telling someone what you want or what your problem is and then discovering that that person hasn't been paying attention and needs to have it explained again? From a customer's point of view, I doubt it. Can the sales pitches and the product babble. Let your customer talk and show him that you are listening by making the appropriate responses, such as suggesting how to solve the problem. 4) Deal with complaints. No one likes hearing complaints, and many of us have developed a reflex shrug, saying, "You can't please all the people all the time". Maybe not, but if you give the complaint your attention, you may be able to please this one person this one time - and position your business to reap the benefits of good customer service. 5) Be helpful - even if there's no immediate profit in it. The other day I popped into a local watch shop because I had lost the small piece that clips the pieces of my watch band together. When I explained the problem, the proprietor said that he thought he might have one lying around. He found it, attached it to my watch band ± and charged me nothing! Where do you think I'll go when I need a new watch band or even a new watch? And how many people do you think I've told this story to? 6) Train your staff (if you have any) to be always helpful, courteous, and knowledgeable. Do it yourself or hire someone to train them. Talk to them about good customer service and what it is (and isn't) regularly. Most importantly, give every member of your staff enough information and power to make those small customer-pleasing decisions, so he never has to say, "I don't know, but so-and-so will be back at..." 7) Take the extra step. For instance, if someone walks into your store and asks you to help them find something, don't just say, "It's in Aisle 3". Lead the customer to the item. Better yet, wait and see if he has questions about it, or further needs. Whatever the extra step may be, if you want to provide good

customer service, take it. They may not say so to you, but people notice when people make an extra effort and will tell other people. 8) Throw in something extra. Whether it's a coupon for a future discount, additional information on how to use the product, or a genuine smile, people love to get more than they thought they were getting. And don¶t think that a gesture has to be large to be effective. The local art framer that we use attaches a package of picture hangers to every picture he frames. A small thing, but so appreciated.

These moments the following seven rules should be applied by employees that are actually interacting with your customers:
1. Acknowledgement Acknowledge that there is a problem. It doesn¶t matter whether the customer didn¶t understand certain aspects that are obvious from an organization¶s perspective. He is the one that has a problem and if you want to keep this customer he needs to be taken serious. If one tries to convince customers that there is no problem, you are actually telling them they are stupid. This applies also to situations when the customer is following the wrong steps to perform a task ± never blame the customer. 2. Empathy Understand the problem from a customer¶s point of view and also understand that he might be upset after a problem has occurred. While it is not necessary to listen to a customer when he starts cursing at employees, front-line employees should try to create an atmosphere that supports and enables a positive solution of a problem. Confronting the customer with his anger and frustration will not lead to an escalation of the problem, communicating that one can understand his situation will. 3. Apology Saying sorry in the name of the company occurred is essential. Whether the employee should apologize in his name or in the name of his company depends on the context of the service recovery. If the employee (or a direct colleague) was involved when the problem occurred, he should apologize for himself. If the employee is in a call-center and a problem happened at a completely different location in the organization, he should apologize in the name of the organization ± everything else is not authentic.


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4. Own the problem Taking ownership of the problem by the employee that is confronted with the problem (no matter in what position he is in) ensures that customers feel that they are taken care of. And even if your job is not to resolve the problem ultimately, telling customers to go somewhere else (and not "bringing" them there) sends the message that they don¶t care. 5. Fix The Problem Obviously fixing or at leasing trying to fix the problem for the customer should be the top priority. This might be easy in some situations (maybe just replacing the defect product) it becomes a challenge when the problem is not a real problem. Let¶s say the customer was simply using the product in a wrong way, fixing the problem in such a situation means re-educating the customer so that he uses the product or service in the supposed way. 6. Provide assurance When Customers get in touch with you to report a problem and to demand a fix their most important need is to be taken serious. Giving them a feeling of assurance that the problem will be sorted out and should (hopefully) not occur again will leave a professional impression and help rebuild the customer¶s confidence a company¶s products and services. 7. Provide compensation If you want to make angry customers happy, give them money. Providing a refund, token or other compensation depending on the severity of the problem remains to be a powerful method for service recovery. Increasing the amount of money that a company pays to company to fix problems requires a rigorous control but it can indeed ensure that your customers are satisfied. It is important to note that just "handing out money" is not enough ± if money is handed out unfriendly or even worse, in a tedious discussion with the customers, satisfaction will not be restored.

Role of internal marketing in service delivery:
The growth of the services industry has dramatically increased over the recent years. To sustain this growth, management of service organisations need to focus their attentions on continuing to offer their customers superior service delivery. Internal marketing is being embraced by many organisations as it is believed that it will encourage appropriate behaviours to create superior customer value and thus superior business performance. Hence, the creation of internal marketing results in internal customer satisfaction and improved service quality, which leads to customer satisfaction and success in the external market.


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The Role of Internal Marketing in the Motivation of High Contact Service Employees
Contact personnel play a pivotal role in the delivery of high contact services. The service employee often represents the organisation in the eyes of the customer. Due to this, the role of employee is both complex and multi-dimensional. Management must be aware of the difficulties associated with this role and consequently the need for internal marketing, focusing on the area of motivation, which is required for a successful service experience. The paper outlined, will highlight the role of the service employee in the service process, the challenges which this presents to the boundary spanning employee. The paper will then address the manner in which, management can use internal marketing to motivate employee to provide the best possible service to customers. Internal marketing and the use of motivation in the service context, will lead to lower turnover rates, improved performance, increased customer satisfaction and increased communication levels within the organisation.

Internal marketing of services, key success
Internal Marketing is a prerequisite to improve service quality, is the company commitment to customer service the basis of honor, it is important to improve business performance. In order to successfully implement internal Marketing and service enterprises should be the core Strategy within the business tip to service Culture training organization for the protection and reconstruction to ensure the realization of Marketing objectives within the For service businesses, the staff is an integral pArt of service, employee satisfaction will directly affect the quality of service, thereby affecting customer satisfaction and business performance, therefore, service firms need to conduct internal Marketing staff, the employees as internal customers, improve staff satisfaction, and encourage employees to proactively provide customers with quality service. First, the importance of internal Marketing enterprises 1. Internal marketing is a prerequisite to improve service quality. Service quality by reliability, responsiveness, security, empathy and tangibles constitute five dimensions, service personnel to the service directly affect the quality of the five dimensions. reliability requirements of enterprises can accurately provide services as promised. And services are often staffed to provide, in large measure, determine whether the service personnel to provide timely and accurate business

promised services; from the response of the point of view, to so that employees can take the initiative to help consumers, businesses only need to develop customer-focused service standards accordingly, also a need for internal marketing, and customer contacts in the local employment of the staff have a strong willingness to serve and improve their services ability and level, so that employees can help customers spontaneously; security dimensions are highly dependent on dry service the ability to inspire customer confidence. 2. service personnel in the process of contact with customers, either to establish a good relationship with customers and enhance customer business trust, establish a good image for the enterprise, the enterprise can undermine the trust of customers, damage to corporate reputation. empathy standing customer requirements for the position of companies, concerned about the needs of customers, to provide personalized services. 3. service companies rely on employees only, only one to focus and flexibility to provide customers with personalized service; intangibility of the service, customers in determining the quality of services, often through a number of tangible property to evaluate the quality of services, so service personnel dress, demeanor to become customers cues to judge the quality of service. From the above analysis, service impact on the five dimensions of service quality, impact on customer perception of the quality of business services, and enterprises to develop internal marketing is To address how the employees are willing and able to provide quality services to customers of the problem, so, internal marketing is a prerequisite to improve service quality, internal marketing can help enterprises to develop and improve service quality.

IC practice
Five general modes of IC practice are itemised below, ranked loosely according to their position along a spectrum from tactical to strategic activities.


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The modes of IC practice, arranged along a spectrum from the tactical to the strategic

[edit]Message distribution The American political scientist and communication theorist Harold Lasswell popularised the concept of the communication channel in his 1948 paper The Communication of Ideas[citation needed]. Formal channels typically fall into one of four broad categories: 

Electronic: - Communications that are delivered and/or accessed electronically, either by computer, telephone, television or other devices. Examples include email, intranet, video and webcasts, DVD, electronic newsletters, podcasts, blogs, Wikis, voicemail, conference calls, SMS text messaging, screensaver messaging, desktop alert messages, desktop news feeds and internal social media tools (e.g.: internal Twitter-style sites such as Yammer) 

Print: - Paper-based communications. Examples include magazines, newsletters, brochures, postcards and other 'desk drops', posters, memos, communication packs or 'toolkits' for line managers, etc. 

Face-to-face: - One-to-one and one-to-many forums where people are physically present. Examples include a 'cascade' of team meetings or briefings, conferences, site visits, 'back to the floor', consultation forums, 'brown bag' lunches, round-table discussions, 'town meetings', etc. 

Workspace: - the working environment. Examples include notice boards, plasma and LCD screens, accessories (e.g.: mousemats), window decals, etc.

Informal channels reflect the non-linear dynamics of a social network and can be as influential, if not more so, than official channels, often more likely to stimulate and create discussionand dialogue. The channels may manifest themselves via the rumour-mill, water-cooler conversations, social networking, graffiti, spoof newsletters, etc. [edit]Selecting channels One of the key challenges any internal communicator will face is how to select the right channels and the right mix of channels - for both the audience and the message. Bill Quirke[10]offers a simple guide; the 'rich' interaction enabled in 'face-to-face' communications is appropriate where risks of misunderstanding or emotional impact are high; the 'lean' interaction offered in written or one-way communications are better suited to the low impact, low emotion distribution of information. See Weick[11] for some theoretical grounds for this basic insight. The practical considerations are:


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Availability: what channels either already exist within the organisation or can be introduced effectively? 

Audience: who are they, where are they based, how do they prefer to access information and how effective will the proposed channel be in reaching them and engaging them? 

Objectives: what does the organisation want people to learn, think, feel or do as a result of the message? 

Content: what is the context and substance of the message? (For example, sensitive messages may need to be communicated face-to-face, rather than by, say, SMS text message.)

[edit]Traffic control A typical large organisation IC function will be concerned to monitor and limit the quantity of information flowing through each internal channel, prioritising according to the relevance of a given message to the audience implicated in that channel, as well as the urgency and impact of the message. Such organisations typically face a risk that channels (such as intranetnews, or email) are over-used for inappropriate, low value messages, causing vital audience groups to filter them out. [edit]Channel development and administration IC teams will often (but not always) hold responsibility for the administration and development of several of the organisation's communications channels. The range of media available is wide - and growing fast with new electronic media. Initially, IC tends to focus on the existing resources of the organization, typically an intranet, email distributions, and newsletters. One common element of channel development and administration involves managing supplier relationships - agencies external to the organization typically specialise in one main channel area, such as audiovisual, or print production. [edit]Line manager 'cascade' Sending information down the line to local supervisors, expecting them to deliver it without any corruption, interpretation or deviation has long been the main focus of 'cascaded' internal communications (for example, UK guidance from The Industrial Society, now the Work Foundation, focused on giving managers very clear instructions about what to say and how to say it). However, in recent years thinking has evolved and literature now concentrates on empowering managers to facilitate discussion rather than cascade management of messages which will have little authority or impact. This is a particularly strong theme in the writing of TJ and Sandar Larkin.[12] Clampitt (2005) lists three approaches managers use to communicate with their employees.[13] Employee communication is an important skill for all line managers, irrespective of their seniority. Like any skill it requires training and development. Often, organisations do not invest the appropriate amount of time and effort in developing managers' communications skills. Too often this leads to


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managers abdicating responsibility for communications to their 'internal communications department' and a lack of confidence in facilitating discussion in their teams. This raises debate around the following issues: 

The nature of supervisory relationships and organisational communication The potency of managers as a channel of official communications How best to support managers in their roles

[edit]Social Media Social media is becoming increasingly important in the field of Internal communication. Global companies often use facebook, twitter, wikipedia and various other Web 2.0 technologies to communicate with employees. Leaders often have internal blogs. A challenge that arises from this is how to effectively deliver internal messages via mediums which are predominantly user led. There is also significant research into the impact of social media on company culture and internal communication. [edit]Message design and production Basic IC services to an organization begin with editorial services - either fine-tuning messages drafted by participants in the organization, or drafting new material on their behalf. IC practitioners might simply correct basic grammar, etc., especially in organisations where many participants may be operating in their second or third language. Or they might re-work it to conform to house style or its branded equivalent, 'tone of voice'. The skillset involved relates closely to media professions such as journalism, copywriting and film or print production. Message design may be iterative, or involve a range of participants in an approvals process. More advanced IC services might include identification of needs arising, relaying them to the relevant organizational leader, and initiating message production. In this case, more aspects of the message are available for the IC practitioner to refine or make recommendations on; including the best 'source' for the message; the most effective communication channel; the mode of interpellation (i.e., whether this message is intended to inform, to instruct, to negotiate, to consult, or to involve); the appropriate 'production values'; optimal audience segmentation; timing of message delivery; and so on. [edit]Project communications IC practitioners may be seconded to a specific project team, to support the stages of the project that carry a communications or engagement component. Project communicators might produce a schedule of communication objectives and milestones for the project; a map of vital stakeholders (senior individuals or large groups / segments of the overall population); and a message framework


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to guide project participants towards a single, coherent message about their work. They might also contribute to the project's aggregate risks 'log' on the reputational risks, and work-up contingency plans covering unintended situations. [edit]Change communications While simple project communications usually have limited impact on their audience, one species change communications - is developing into a specialism in its own right. Change in organizations is defined as that which calls into question the existing political and psychological compacts among participants. Threats to these settled arrangements typically provoke resistance of various kinds, when we experience them from 'the receiving end'. Organizational change is highly theorized, with a range of 'change models' available in research literature (many based on research into grieving, by Elisabeth Kubler-Ross). Organizational development is a growing competency within HR, and the vital role played by the communications component in change efforts is becoming better theorised (e.g. Larkin and Larkin (1994),[14] Kotter (1996),[15] Schein (2004)[16]) and more widely acknowledged in large organizations. Change guru (John Kotter says: "When the environment constantly changes, the organization must innovate to adapt to or control that environment. When your external environment changes, your internal environment should adjust as well, and internal communication is vital during these times."[citation needed]) [edit]Crisis communications Organizations occasionally face unplanned reputational crises which can destroy brand value or even finish the organization. At such moments, the support of the internal constituency becomes especially valuable, as employees' friends and relatives seek their account of events, and as talented and motivated participants consider whether or not to remain with the organization. As with Media relations and PR, the role IC plays in a crisis can be decisive for the success or failure of an organization, as it responds to a critical challenge. Organizations with a mature IC function may have contingency planning in place, ready to be tailored to the particulars of the situation. They are also more likely to have 'well flexed', well-rehearsed line management communications capability, etc., making crisis communications more effective. Less mature IC functions may find it difficult to bring senior leaders' attention to the internal audience, when critical stakeholders such as investors or customers appear more likely to desert the organization. Although unplanned and usually under-resourced, the quality of an IC function's response in a crisis often has a decisive impact in the maturing of an IC function within an organization. Effective responses bring IC up the list of priorities for senior leaders, following the crisis.


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[edit]Business partnering In common with the Ulrich model for Human resources practice, IC may be delivered via a 'business partnering' relationship, acting as adviser to a given function or unit on IC issues relevant to the delivery of their strategic plans and projects. As a representative of the audiences with a stake in the developments under discussion, this can be both an awkward and a privileged position to occupy, requiring skills of diplomacy and objectivity. According to Kitchen and Schultz (2001)[17]: "Communicators have sometimes been referred to as "doctors of business". While it is important to pay close attention to the corporation's view of the problem, it is necessary to go beyond the brief and diagnose the real situation ... the best way to test the hypothesis is to talk to the audience or key constituency ..." The IC business partner then reflects this insight back in terms of what will and won't engage the stakeholders of interest to the business leader. [edit]Strategic leadership In the most mature IC functions, the IC leader 'brings' the internal constituency to senior leader discussions and decision-making processes, refining the decision to be communicated, as well as how and when to communicate it. S/he may either act as a representative of the internal constituency, or provide senior leaders with processes that make it feasible to consult or directly involve participants in such decisions. Given the origins of IC as a "mouthpiece" of the senior leadership, organizations tend to prove resistant to the possibility that IC would add value to strategic decision-making. Establishing IC in a strategic role may require a crisis to prove that value, or IC functions might earn their place in the decision-making process by making their contribution more tangible - for example, offering metrics which help leaders understand more clearly the Return on investment the IC function is delivering.


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Unit: 5
Types of Service Marketing Strategies:

Marketing a service is different from a product because it is intangible. The service marketing mix includes the four Ps (product, place, price and promotion), but it extends to include three more Ps (physical evidence, process and people). Creating worth and value to a business's core services are some of the strategy's main goals. Maintaining contact with customers, consistently informing them of news and relevant service-oriented information can keep them coming back to use a business's services.

Establishing the Brand

Branding a company gives credibility to its services. It is the only representation of the company--since there is no physical product--so the imagery should be consistent in every aspect of the marketing campaign. Inconsistencies in brand visuals can lead to confusion, and even lack of trust. For example, if a customer receives a business card, and finds the website has a completely different look, he might assume that it is for a different company. The same corporate palette, fonts, logos and photography should all be integrated into everything from brochures to social media applications.

Defining the Service's Value

Once the core business services have been formulated, it is necessary to develop its perceived value---which is how the customer will view its worth. This goal can be established in the company's mission statement and translated into every aspect of the customer relations strategy. The customer has to see the importance of the service and discover how to integrate it in his life. For example a person might not initially see the value of financial planning service, but through informing them about the service, communicating its benefits and its importance in retirement, he might see its value and how to apply it to his life.

Providing Incentives

Incentives can be the deciding factor in choosing one service-oriented company over another. It can be linked to the business's services, like a bank offering discounted life insurance to its checking account holders. Or it can be discounts in conjunction with a partnered, noncompetitive, service provider that can end up benefiting both parties and the client. For instance, a wedding planner can have an agreement with a local photographer to provide cheaper packages to her clients, in exchange for referrals. This arrangement provides an incentive to the client, resulting in cheaper photos of her wedding day.


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The strategy used when promoting a service typically focuses on awareness, recall and retention. The first step is to inform the potential client of the company and service's existence, which can be as costly as a national print and TV advertisement campaign or as cheap as small ads in the local paper. Providing promotional items, such as pens, brochures, magnets and tshirts, can help the customer recall the company when its services are needed. Once the customer has been served, discounts and value customer incentives can be used to retain them.

Relationship Management

One key factor in service businesses is the relationships made with clients. Keeping in touch with them through newsletters, mailings, follow-up phone calls helps to keep a business top of mind. Additionally, providing them with free information can help to establish credibility. For example, a lawyer specializing in start-up incorporation can provide clients with relevant small business legal news. Maintaining consistent correspondences with clients will increase the chances or frequency of them using the services. Furthermore, with Internet social media applications, online newsletters and blogs can be a less expensive way to maintain client relations.

Marketing strategy for different services:

Mobile Health Marketing Strategies
Mobile health, or ³mHealth,´ refers to the widespread use of mobile telecommunication and multimedia technology involved in the delivery of health services and distribution of health information. Within the past decade, the definition of mHealth has expanded to encompass public health and wellness, and the definition of ³mobile phone´ has also stretched to include not only voice messaging, SMS (short messaging service), and MMS (multimedia messaging service), but also smart phone capabilities such as internet, video, and imaging functions. Although smart phones are usually unaffordable in low income countries, mHealth has the potential to revolutionize health information systems and create an individualized health care experience for people around the globe.(1) Over 3.3 billion individuals own mobile phones worldwide, equating to 2.5 times more cell owners than land-line owners. As a point of comparison with other current technologies, only

1.3 billion people utilize the internet, and 1.5 billion own televisions. Citizens utilize mobile communication for numerous purposes, including career, family, social networking, business, etc. Overall, the opportunities offered by modern technology could tremendously enhance and change the social marketing framework.(2) While some people insist that mobile equipment fosters social seclusion, research has shown that mobile devices can serve as powerful tools for maintaining strong relationships that originated in person. The inherent social networking quality of the mobile phone causes marketers to reconstruct their views of the target ³audience´ for publicity messages. Craig Lefebvre, Research Professor of Public Health Communication and Marketing in the Department of Prevention and Public Health at The George Washington University, explains: ³What these new technologies make plain is that it is, indeed, a networked world ± one in which we do not design µmessages¶ for priority audiences, stakeholders, partners, donors, and other groups, but a world in which they talk back to us, and just as importantly, with each other.´(3) As described earlier, ³mobile technology´ encompasses any device or tool that utilizes cellular or wireless machinery to communicate to other devices, which includes basic mobile telephone functions in addition to internet connectivity. From a smart phone, an individual can access social networking sites such as Facebook, MySpace, or YouTube, browse and search websites, and receive emails. Innovative e-health applications are currently exploring how this expanded internet connectivity can be utilized to ³provide remote sensing of health status, transmit clinical information, including x rays and other biometric data, and facilitate e-prescribing.´ One future goal is to create an application which allows for individuals to view their personal health record via a mobile device. Mobile marketers approach the mobile phone as being far from simply another means of advertising, but instead as extremely distinctive due to its option for rapid response. Certain combinations of resources exist exclusively within the mobile phone experience; for example, the community health department can call an individual to instruct them to fill out a questionnaire, which the subject can then click to take from their phone, which subsequently offers immediate data for the health program.(4) The differences between various segments of the cell phone markets exist not due to demographics, but instead due to how people use their phones. For example, adults between the ages of 18 and 29 use their cell phones for SMS, IM, email, and internet much more frequently than older adults do. Users ages 35 and older are referred to as ³adult adopters,´ meaning that this cohort was not introduced to cell phones until adulthood and therefore primarily only use them for the most basic purposes (calling and the occasional texting).(5) Mobile applications for public health programs can be applied to the four P¶s of the marketing mix (described in Module 1).


Products and services: Mobiles have a lot of potential to enhance current intervention schemes. Phones are useful in behavior change campaigns, and are frequently utilized in conjunction with websites and social networking programs to monitor behavior and provide feedback for individuals. Price: A financial benefit of increased phone use is the rapidly expanding market for downloading applications. However, in addition to this, mobile phones create a unique opportunity to overcome many psychological and social barriers that prevent people from accessing public health services (an intangible version of ³cost´). Through mobilefacilitated encouragement and motivation, phones can offer social support to foster behavioral changes. For example, in San Francisco, the health campaign SEXINFO reacted to the growing prevalence of sexually transmitted diseases in urban adolescence. Due to widespread cell phone use in their target audience (15 to 19 year old African Americans), they were able to create an ³opt-in´ text messaging provision to offer information regarding sexual health, relationship advice, and referrals to other helpful public services. Place: One asset of phones is the ability to ³place-shift´ multiple tasks, meaning that live, recorded, or stored media can be listened to on the device through the internet or an alternative data network. Additionally, Global Positioning Systems (GPS) can now be installed in phones, allowing for the creation of locator applications. For example, in 2007, a mobile phone service in South Africa utilized SMS text messages to notify community members about local HIV testing site locations. Individuals would send an SMS with the text ³HIV´ and their town postal code, and would receive an instant response that directed them to the two closest testing units. Promotion: Perhaps the most obvious strength of the mobile health revolution is that the devices allow for consistent back-and-forth and one-to-one communication. Also, health information can be provided on demand to individuals whenever they desire access. For example, The Mayo Clinic InTouch Program offers a ³Symptom Checker´ for subscribers to rapidly evaluate the severity of their illness, along with ³a first aid guide with detailed tips on treating and responding to medical emergencies, an emergency room finder to locate nearby locations, health alerts, healthy living tips,´ and other benefits.(6)




The mHealth revolution is just beginning, and technologies are becoming an increasingly viable option in developing nations. For example, the Indian company IdeaForge just developed a hand-powered cell phone charger, which can be cranked for just one minute to yield three minutes of phone time. Because having a phone is such a vital component of emergency obstetric care, Maternova is evaluating the product¶s effectiveness by having midwives test

it.(7) New innovations such as this one demonstrate how mHealth is an ever-growing sector and is ripe with marketing opportunities. Despite the great successes of mobile health that have been achieved thus far, many research gaps and policy barriers remain. In a paper published by the mHealth Alliance, Mechael et. al. explores the primary obstacles to mHealth in low and middle income countries. Five major themes of mHealth applications can be defined:(8)

Treatment compliance: This refers to the use of mobile applications to ensure that patients strictly adhere to their drug treatment schedule. In lower and middle income countries, infectious disease compliance must be monitored. In high income countries, chronic disease is a more common problem. One challenge to this monitoring system is that medications are not always accessible in resource-poor areas, making it impossible for patients to properly adhere to the treatment plan. Data and Disease Surveillance: The former tedious techniques of collecting data by hand have been replaced by digital methods, and the outcomes in terms of error reduction, time, and cost savings are not entirely clear but seem to be positive. Barriers in this area include developing an effective coordination system of data sharing between different health information systems locally and globally, and determining what the rights and guidelines for usage of this data should be. Health Information Systems and Point-of-Care Support: Whereas health information systems were formerly created only for physicians and doctors, community health workers are now included in the target group. This new age of ³telemedicine´ can drastically expand the dissemination of information and expertise through user-friendly technologies and systems. Barriers to making this vision a reality include clinician resistance to the new equipment, as well as unknown expenses and consequences of universally accessible support systems. Health Promotion and Disease Prevention: SMS text messages can be extremely useful for the distribution of essential health education materials, as well as information about disease prevention and public clinic locations. Current barriers to further expanding this beneficial teaching method include legal responsibilities, accuracy of information, and security risks. Emergency Medical Response: This area of mHealth has been the most difficult to study, simply due to the nature and tendencies of emergencies themselves. However, mobile technologies are potentially an extremely useful means of quickly accumulating assistance in a disastrous situation. Barriers include restrictions such as network
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capacity, as well as infrastructure costs (transportation and roads), particularly for national emergency call locations.(9) Further research in all five of these areas is necessary, as well as continued development of mHealth to overcome the limitations and barriers within the current system.(10) While the majority of results from widespread use of mobile devices have been positive, some negative repercussions may surface as well. For example, ³the data challenge´ refers to the fact that household data can no longer be collected by randomly dialing telephone numbers within a certain area. Especially in younger populations or in underprivileged areas, it is growing increasingly difficult to contact people who ³more and more choose who they want to contact them.´(11) Overall, the use of mobile devices among public health workers provides the opportunity for an expanded and improved relationship with the target audience. The benefits of the phone go beyond communication, as mobile devices can serve as marketing tools that recognize each part of the marketing mix. Mobile devices have the potential to revolutionize social marketing in the public health sector, as they offer immediate access to health information, provide social support and networking capabilities, effectively engage audiences, and assist in collecting data from and providing feedback to individuals.

Foodservice Marketing Strategies:
For the past century Advertising and Merchandising techniques used in marketing were to attract the attention of the potential targeted market to the client's products and services. To help our clients accomplish this, we employ the five techniques of marketing as follows: 1. Advertising - initiate attention-grabbing ads in various media, including the internet to let the public know "who, what, where and why" of the client's operation. We offer established alternative methods to extend your advertising dollar. 2. Merchandising - suggest point-of-sale attention grabbers for the customers once they enter the establishment to entice them to buy. 3. Promotions - energize interesting and appealing programs to get prospective customers to make a decision to patronize the client's restaurant. 4. Public Relations - stimulate activity to keep the best features of the client's establishment in the public's eye. Developing programs of participation of the client with the community are also functions of good P.R. 5. Loyalty Programs - to grow your customer base and keep them coming back. Today¶s economic system requires a fresh outlook on marketing strategies. Until now, restaurant operator¶s marketing efforts were directed at building higher sales volumes to achieve increased profits.

Today a new stratagem is needed. The newest thinking is to plan to conserve your current customer base while reorganizing your operations to produce a profit at every sales level. This new thinking about marketing means a major revision of our previous policies and practices for marketing of restaurants. Now, GEC¶s activities will focus on the development of suitable marketing and merchandising promotions that will accomplish the following y y y y y y y

Maintain customer loyalty Promote awareness of your products and service. Stimulate carry-out business. Institute catering off-premises where feasible. Show you methods to improve your visibility in the community. Develop low cost/high-interest promotions that really bring people in. Redefine operating costs for each attainable sales level.

GEC believes in a hands-on marketing approach. We work with your serving staff to create greater motivation to sell and to adequately provide service to your clientele. Menu Marketability We will analyze the marketability of your menu. The menu should not only reinforce your theme, but must be eye catching and also appealing on the internet. Each potential menu item must be scrutinized in two ways: does it fit into the theme, and is it a good profit item? Standardization, definition and graphic display actively incorporated into your presentation of food and beverages can stimulate sales and profits. The appearance of your facility, your logo, signage, graphic display will be considered as active tools to attract attention to your operation. Price can be used to promote selected menu items. Employees can be instructed in good suggestive salesmanship. GEC developed the Marketing Blitz The strategy of the business Goliaths is to saturate the target market with media insertions of newspaper ads, T.V. 30 and 60 second commercials and radio spots throughout the day. The purpose of penetration advertising (PA) is to establish and maintain their company¶s identity in the selected marketplace long enough to effect significant long term profits. The cost of such campaigns can run into millions of dollars. Are they successful? In most cases they are. How Does the Marketing Blitz Work? How can the little guys compete against this? Does he have the huge funds? No! Does he have the human resources? No! Does he have the time working in his favor? No! What he does have is the imagination, the daring and the drive to do a lot with very meager resources.


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That is the basis of the development of the "Marketing Blitz" or the Blitz as it is called. For restaurant operators, The impact of this target attack is to: 1. 2. 3. 4. 5. reawaken your existing customer¶s interest in your products and services. exploit the weaknesses of your competition and "borrow" their customers. create growing attention to your loyalty program by constant promotions and rewards. concentrate on providing the best food, service and hospitality to your customers. keep the pressure on, never let up, hour after hour, day after day until you achieve your immediate sales and profit goals.

Hospitality Consulting-Marketing Plan & Strategy Do you have an Effective Marketing Strategy Your marketing strategy is your plan to bring your product/service to the market place and match them to the needs of your customers. Morphose, does much more than just prepare a document for you; we position you for success. We work with you and your team to create your own blueprint for success! Morphose Marketing Plan & Strategy is focused on the key concept that customer satisfaction is the main goal. The Marketing Strategy & Plan will include: Products / Services study Market Analysis Size Segment Growth Competitors Customers Buying behaviour Marketing Plan Product Positioning Strategies Pricing Growth Distribution Channel penetration Advertising Public relations Tradeshows Creative promotions etc.


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The Strategy & Plan will provide a logical framework within which your organisation can develop and pursue its strategies over the next 2-3 years. Hospitality Consulting-Standard Operating Procedure S.O.P. is a very important and integral part of any industry especially Hospitality Industry. This process ensures consistency in Service and Product delivery to the Guest i.e. each guest in the hotel gets the same kind of service pertaining to the task. S.O.P. has to be generally prepared by each department. However, this process has today evolved to be handled by an External Professional Team who looks at it completely from the customer¶s point of view. The outcome is complete customer satisfaction & a more effective S.O.P. Our team of experts from hospitality operations, sales, production backgrounds with their years of experience and expertise will be working on your project. They have had experience in setting up restaurants, hotels and their operating procedures. They will help you create a Process that is not only practical but extremely efficient. Our S.O.P. will detail out the following areas of your Hotel/Restaurant: a. Production b. Stores c. Service d. Accounting. Hospitality Training-Selling Skills To be a satisfied, successful sales person, you must first be a satisfied, successful person. Most people can discern the difference between a sales person who is out to make a dollar and one who is out to make a difference. These Morphose Workshops will elaborate the following areas always looking at it from the client¶s perspective: People skills Body Language Personality Types Team spirit Social grace Business etiquette Grooming & Manners. Hospitality Training-Service Skills


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Positive and healthy customer experiences will be the life blood of corporate growth and success in the twenty first century. It doesn¶t depend which industry you are part of, the elements of exceptional customer service are transferable across industries and sectors. Customer Service is no longer a luxury, but the need of the hour. These workshops will handle this aspect in a unique, skill-full and entertaining way drawing upon the realm of observation and experience, in a delightful and humorous story form, delivering a great message and learning experience for any organization large or small, as to how to deliver world class service, retain customers and enlarge the bottom line. Salted and peppered with appropriate activities, stories, role plays and games, our workshops packs a terrific punch for the participants of a hospitality sector in the following modules: People skills Body Language Personality Types Team spirit Social grace Business etiquette Grooming & Manners. Hospitality Training-Soft Skills Enough and more has been said about soft skills and it¶s importance in any organization¶s growth and success story. Simply put, Soft skills are the people's ability to handle the soft side of business, like, influencing, communication, team management, delegating, appraising, presenting, motivating etc. Our following modules will offer the participants all of these and much more« Goal Setting & Planning Time Management Stress Handling Work-life balance Creative thinking Team Building Conflict Resolution The Right Attitude Finding Solutions. Individual Training-Job Seeker Our programs will help you to showcase your personality with confidence and successfully handle all aspects of a job search.


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We believe - ³The best jobs don¶t necessarily go to the most qualified applicants, they go to the best job seekers.´ Some of our Programs Self Assessment Grooming How to answer the most difficult interview questions? How to manage your stress before and during an interview? Right Job Search Process Portfolio preparation Effective Presentation & Communication Skills Effective Listening and Questioning Techniques Group Discussion ± Techniques Positive influence of Body Language Interview Tips Grooming How to answer the most difficult interview questions? How to manage your stress before and during an interview? Campus to Corporate (Business Etiquette). Individual Training-Skills For Homemaker We know with certainty that the Homemaker Skills are just as important in our day and age as they have always been. Homemaking involves love, service, respect, mentoring, setting examples and many more things. Some of our Programs Parenting Skills From Boss to Mommy Self Image & Self Evaluation Personal Growth Hobbies & Dreams Time management The Family Meal Sharing TIme Responsibility Time Personal Time Understanding the In-Laws Conflicts & Solutions. Retail Service-Customer Experience Optimization Do you have an Effective Marketing Strategy for your Retail Growth?

Your customers have conscious and unconscious experiences each and every time they walk into your store or open your catalogue or visit you online. Exhilarating, good, bad or indifferent, these experiences create multiple emotional impressions in their minds. Positive & Lasting customer experience builds deep emotional connections leading to strong brand preference, increased loyalty, repeat business and ultimately - greater profits. Do you want help & expertise to manage your customer experience for maximum value & profitability? Our Customer Experience Optimization model is: Sensitively and creatively tailor-made for your store by our retail experts. Created to Leverage in-store and online assistance store ambience customer sensitivities training tools Focused on an evaluation report of the current customer experience Created for easy to execute and manage Strategy Impactful and adds value increase loyalty Profitable growth. Retail Service-Marketing Plan & Strategy Do you have an Effective Marketing Strategy for your Retail Growth Planned or Purposeful growth requires a framework for thinking²from optimizing the business, to expanding it, to redefining it. This requires a process for investigating, generating, evaluating, and initiating growth opportunities. Morphose Marketing Plan & Strategy is centered around the key concept that customer satisfaction is the main goal. The Marketing Strategy & Plan will include: Strategy: Identification of your leverage Power Points. Your Strengths Unique selling point from the consumer¶s & market¶s point of view Product Study Identification of your ³Vacuum space´ Un-met needs of the consumer & market

Markets that are not being pursued by competitors New product possibilities Retails space usage Identification of your ³Black Holes´ Internal barriers Business barriers that are preventing potential growth Pricing Product Quality Service Predictable results Plan: Generate Create new breakthrough ideas & concepts Develop on new opportunities Solution approach Evaluate Focus resources on best & most executable ideas Promotional Activity plan Initiate Strategy & Plan Blue print Timelines. Retail Service-Retail Communication Are you looking for help in creating a Powerful and Effective Visual Communication ? At Morphose we offer our clients - Creative Marketing, Effective Advertising and Innovative Public Relations plans to satisfy your retail communication goals. We are known for our exceptional talent for gathering, disseminating and writing information that is direct and meaningful, while emphasizing exquisite visual execution. Through this passionate attention to detail, innovation and understanding of our clients¶ business needs and goals, we produce winning results that exceed expectations. Media Relations: Involves building and maintaining a positive relationship with the media : Web Coverage Press Kit (Words, drafting and dissemination of press releases, organizing press conferences and meeting with media professionals) Visual Communication: Involves building product value through creative advertising & visual execution. Product Brochures & Catalogue


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Print Branding advertisements Promotional advertisements Coporate Training-Conflict Management Coporate training-Conflict Management Coporate Training-Creative Power Power of Self Belief Positive Thinking Proactive Thinking Coporate Training-Organizing Skills Time management Stress management Productive Meeting skills Goal Setting Work Life Balance Personal Effectiveness.

Service marketing strategies for tourism service marketing
Tourism is a unique business. Back in the days of brick and mortar businesses, most tourism products were sold through travel agencies. Airline flights, hotel bookings, car rentals and package tours were handled by a select group of trained professionals who took a fee for their service. As the internet continued to grow and ecommerce tools were developed, tourism was a natural fit for the internet. The ability to access millions of pieces of information instantaneously, track things like miles, and even plan complicated itineraries was made possible with just a few clicks of the mouse. Large national companies took advantage of this almost immediately, although recently, smaller companies that promote tourism products are beginning to emerge with some prominence. It is these companies in particular that must learn to take advantage of internet marketing strategies for tourism products. Of all the popular online marketing tactics, there are four that all business owners promoting tourism products should focus extensively on.


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1. Newsletters, Deals and Tweets ± The ability to quickly send out short text like blogs of information regarding hot destinations, good deals and even changes in itineraries is vital for the tourism industry. By allowing quick and concise contact with potential clients, it is often possible to pique interest and get them to your site ± the first step towards conversion 2. SEO / Article Marketing ± writing fun and interesting articles about travel is easy. By creating interest generating pieces about exotic travel localities or little known travel tips, tourism web business owners can easily generate additional targeted traffic to their sites. Getting these articles indexed and ultimately ranked on major search engines will allow travel sites to target niche terms and acquire customers across the board with varied, but targeted, interests. 3. Content ± While content is important for any web-based business, it is a critical tool for internet marketing for tourism products. Create interesting content about travel destinations, providing attractive information, and insider tips by providing content that is, not just keyword rich for the spiders, but full of information travelers will actually want to read about. Always remember that people will naturally want to research their chosen destination, so provide that information for them right on your site through well written and updated content. RSS Feeds and API Integration ±This is the reason sites such as and were able to make millions of dollars in revenue. The rapid sharing of data across the globe enables travel sites, agencies, airlines and hotels to share the same information and conduct business. Marketing tourism products and services online is very competitive and the right execution plan is necessary to be successful. This execution strategy involves hundreds of elements including but not limited to Search Engine Optimization, Affiliate Marketing, Email Marketing, Sponsored Search, Banner Advertising and more. A full service internet marketing companycan assist you in executing this complex marketing strategy.

Logistics Service:
Dealing with perishable agriculture produce in areas where infrastructure is a bottleneck, managing logistics can be your biggest nightmare. The SCS Group works with its clients to establish the required backward and forward linkages so the issue of efficient product flow is addressed.


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Through partnership with the International Association of Refrigerated Warehouses and The World Food Logistics Organization, the role played by The SCS Group in creation of a viable cold chain infrastructure in South Asia has been regarded as pioneering by the Indian government organizations. We have in the past created efficient procurement systems and distribution networks for various clients. Our strength lies in building relationships through our network of agribusiness professionals both in India and abroad. THE SCS GROUP has a software team in place to provide specific IT solutions to the public refrigerated warehousing industry by making the optimum usage of the multi-platform web based applications by client companies to provide customers access to information on inventory, receipts and invoices over the Internet.

Service marketing strategies for financial services:
‡ Porter (1980) advocated three main ways of achieving competitive advantage: cost leadership, differentiation and focus. ± Cost leadership involves a very tight control of the costs e.g. economies of scale, maximizing customer value . A significant difference between lowering costs and achieving cost leadership i.e. having lowest cost base. At same time, service quality levels need to match target market expectations and the value of employee skills and knowledge be fully appreciated. ± Differentiation very hard to achieve in financial services. FIs have tried to achieve differentiation through branding but has not really been successful. New attempt by Santander in early 2010 ± Focus strategy requires FI to maintain such close links with its customers/target market leaving no room for competition. Suitable for smaller organizations e.g. smaller building societies. Dwindling number of smaller building societies may suggest that this strategy not proving successful. ‡ Financial services is a highly competitive industry but competition may come from an unexpected direction e.g. First Direct. First non-branch bank whose vision and strategy are benchmarks in industry. FIs now offer on-line or telephone banking, but First Direct, through an understanding of its target market, has managed to hold onto its premium position in the marketplace. Once a company has identified a specific market segment to

Service Positioning:

serve, the next phase is to position the service in the market place. How the service is designed (service blueprinting and physical evidence) will impact the image of the service in

the consumers mind (Ziethmal et al, 1996). A service offering¶s position is the way it is perceived by consumers, particularly in relation to competing offerings. To develop effective positioning strategies, managers need insights into how the various attributes of a service are valued by the current and prospective customers within that segment. An organization¶s service offering is successfully positioned if it has established and maintains a distinctive place for itself in the consumer¶s mind relative to competing organization¶s offerings. If a service is successfully positioned, the mention of the service will conjure up in the customer¶s mind an image that is distinct from images of similar service offerings (Ziethaml et al, 1996).

Information Technology Marketing Strategy
Information technology professionals with products and services to offer potential customers benefit from using strategic marketing to reach their target market. A variety of resources are available to these professionals to achieve their sales objectives. Trade shows, strategic advertising, informative white papers and free product trials are all components of an effective marketing strategy. 1. Trade Publications

Advertising in trade publications is one marketing strategy to ensure that your target market actually sees your ads. When you place in ad in a publication that is not specific to an industry in which you wish to market, your advertisements might not be seen by the right people. Placing an ad in a trade magazine, though, is a focused marketing strategy for your information technology company. To prepare the ad itself, consider your target market and decide how your product can best serve them. White Papers Using a white paper as a marketing tool is one way to promote your information technology products as solutions to potential customers' problems. A white paper once referred to an official government report, but now is used by marketing firms and departments to show the value of products. These marketing tools are often used on websites to influence those who are looking for information relevant to a particular issue. Information technology firms can benefit from this when potential customers search the Internet for advice or information on the service your technology provides.


Trade Shows

Having a booth at an industry trade show is a valuable way to introduce yourself and your products to potential customers. Before booking a spot at a trade show, spend time developing the promotional material you will distribute to interested individuals. Brochures are a useful tool to disseminate information and build interest in your services. In addition to the material you will

be distributing, carefully plan the actual layout of your booth. You want to look professional, and this will likely require spending money, but it will be worth it when you land clients from the experience. Free Trials

Offering free trials enables your potential customer base to become familiar with your product and have a firsthand understanding of its usefulness. This marketing technique is particularly useful in the information technology field, where software updates can improve processes and increase productivity. By demonstrating product value in this manner, an information technology firm benefits from giving a company time to develop reliance upon its products. This also is useful marketing strategy, as it enables a technology firm to get valuable feedback from its target market.

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