PRODUCT VS SERVICE-1) A product is tangible, it is physical and can be held, seen and movable-A

service is intangible, can only be felt and not touched.2) Product value is derived by the customer-Value
of service is offered by the service provider.3) Customer care of the product is limited-Customer care
forms critical component of marketing a service.4)A product can be stored for future use-A service is
perishable and cannot be stored for later use or sale.5) A product can be owned-A service cannot be
owned by the consumer once payment has been made.6) The quality of a product depends its nature-
Quality of a service depends on the service provider who shapes it.7) A product can be returned to the
seller-A service cannot be returned to the seller.8) The billing process of a service is a once off
transaction-Billing process can be continuous in the form of subscriptions for services rendered.9) It is
easy to compare quality of products-It is difficult to compare the quality of services offered.10) Products
can be quantified numerically-Services cannot be quantified in terms of numbers.CHARACTERISTICS-
1)Intangibility-When you buy a car, you can see it, feel it, and even test it prior to purchase. In other
words, products have tangible qualities that provide information to consumers so they can easily
compare one product to another. Services, on the other hand, are intangible. Most services cannot be
experienced or consumed until the purchase is made. Customers can easily end up feeling like they have
to make a purchasing decision without adequate information.2)Inseparability-To continue using the
automobile analogy, cars are produced at one location, sold at another, and used at yet another
location. Services are unique because they are usually provided and consumed at the same time in the
same location (e.g. a haircut or car tune-up). Because of the characteristic of inseparability, customers
have strong expectations about how a service will be provided, which can lead to disappointment if their
expectations are not met.A solid customer service process is the key to managing this challenge
effectively. How do you ensure customer satisfaction? How do you deal with unhappy customers? If you
don’t know the level of your customers’ satisfaction with your service, ask them! 3)Perishability-If a car
does not sell today, it can be stored and sold the following day or at some other time in the future.
Services, on the full one night and half empty the next. If the restaurant runs with an inflexible staffing
model, expenses are the same each night. However, the revenue picture is quite different, which
impacts profits. The same is true for Mt. Bachelor – every empty seat on the chairlift is lost revenue.
4)Variability-Once you have decided to buy a Honda Accord, you know that there will be no variation in
the quality of the Accord from one Honda dealer to another. Manufactured goods tend to have
automated processes and quality assurance procedures that result in a consistent product. However,
the quality of a service can vary by many factors, including who provides it, where it is provided, when it
is provided, and how it is provided. The more your business relies on humans to provide services
(instead of automation), the more susceptible you are to variability.7P/4P-1)Product-In case of services,
the ‘product’ is intangible, heterogeneous and perishable. Moreover, its production and consumption
are inseparable. Hence, there is scope for customizing the offering as per customer requirements and
the actual customer encounter therefore assumes particular significance. However, too much
customization would compromise the standard delivery of the service and adversely affect its quality.
Hence particular care has to be taken in designing the service offering.2)Pricing-Pricing of services is
tougher than pricing of goods. While the latter can be priced easily by taking into account the raw
material costs, in case of services attendant costs - such as labor and overhead costs - also need to be
factored in. Thus a restaurant not only has to charge for the cost of the food served but also has to
calculate a price for the ambience provided. The final price for the service is then arrived at by including
a mark up for an adequate profit margin.3)Place-Since service delivery is concurrent with its production
and cannot be stored or transported, the location of the service product assumes importance. Service
providers have to give special thought to where the service would be provided. Thus, a fine dine
restaurant is better located in a busy, upscale market as against on the outskirts of a city. Similarly, a
holiday resort is better situated in the countryside away from the rush and noise of a city.4)Promotion-
Since a service offering can be easily replicated promotion becomes crucial in differentiating a service
offering in the mind of the consumer. Thus, service providers offering identical services such as airlines
or banks and insurance companies invest heavily in advertising their services. This is crucial in attracting
customers in a segment where the services providers have nearly identical offerings.5)People-People
are a defining factor in a service delivery process, since a service is inseparable from the person
providing it. Thus, a restaurant is known as much for its food as for the service provided by its staff. The
same is true of banks and department stores. Consequently, customer service training for staff has
become a top priority for many organizations today.6)Process-The process of service delivery is crucial
since it ensures that the same standard of service is repeatedly delivered to the customers. Therefore,
most companies have a service blue print which provides the details of the service delivery process,
often going down to even defining the service script and the greeting phrases to be used by the service
staff.7)Physical Evidence-Since services are intangible in nature most service providers strive to
incorporate certain tangible elements into their offering to enhance customer experience. Thus, there
are hair salons that have well designed waiting areas often with magazines and plush sofas for patrons
to read and relax while they await their turn. Similarly, restaurants invest heavily in their interior design
and decorations to offer a tangible and unique experience to their guests.DIFFERENT QUEUE
CONFIGURATION-1)Single line / single server for Single Stage.2) Single Line/ Server at Sequential Stages.
3) Parallel lines to Multiple Servers.4) Designated Lines to Designated Servers.5) Take a Number Token
(Single or MultipleServers)CAPACITY MAXIMIZATION 1)Employ part time workers 2)Cross
Training 3)Involve Customers 4)Capacity Sharing. SERVICE POSITIONING-Positioning strategy is concern
with creating communicating and maintaining distinctive differences that will be noticed and valued by
those customers with whom the firm would like to develop a long term relationship•Successful
positioning requires managers to understand their target customers’ preferences, their conceptions of
value and characteristics of competitors’ offerings..A business must set itself apart from its competition.
To be successful it must identify and promote itself as the best provider of attributes that are important
to target customers.SP IMP-Underlines the search for competitive advantage..Market segmentation
forms the basis for focused strategies..Distinguishes a brand from its competitors..Conduct internal,
market & competitor analysis..Plot competitive strategies.FOCUS STRATEGY-A fully focus organizations
provides a limited range of services to narrow and specific market segment..A market focus company
concentrates on a narrow market segment but offers a wide range of services..Service focus firms offer a
narrow range of services to a fairly broad market..Unfocused services try to serve broad markets and
provide wide range of services( public utilities and government agencies).MARKET SEGMENTATION-
Market segmentation is the research that determines how your organization divides its customers or
cohort into smaller groups based on characteristics such as, age, income, personality traits or behavior.
These segments can later be used to optimize products and advertising to different customers.Market
segmentation also reduces the risk of an unsuccessful or ineffective marketing campaign. When
marketers divide a market based on key characteristics and personalize their strategies based on that
information, there is a much higher chance of success than if they were to create a generic campaign
and try to implement it across all segments.Marketers can also us segmentation to prioritize their target
audiences. If segmentation shows that some consumers would be more likely to buy a product than
others, marketers can better allocate their attention and resources.TYPES OF MARKET
SEGMENTATION-1)GEOGRAPHIC SEGMENTAT ION-While typically a subset of demographics,
geographic segmentation is typically the easiest. Geographic segmentation creates different target
customer groups based on geographical boundaries. Because potential customers have needs,
preferences, and interests that differ according to their geographies, understanding the climates and
geographic regions of customer groups can help determine where to sell and advertise, as well as where
to expand your business.2)DEMOGRAPHIC SEGMENTA TION-Demographic segmentation sorts a
market by demographic elements such as age, education, income, family size, race, gender, occupation,
nationality, and more. Demographic segmentation is one of the simplest and most commonly used
forms of segmentation because the products and services we buy, how we use those products, and how
much we are willing to spend on them is most often based on demographic factors.
3)FIRMOGRAPHIC SEG MENT ATION-Firmographic segmentation is similar to demographic
segmentation. The difference is that demographics look at individuals while firmographics look at
organizations. Firmographic segmentation would take into consideration things like company size,
number of employees and would illustrate how addressing a small business would differ from
addressing an enterprise corporation.4)BEHAVIORAL SEGMENTAT ION-Behavioral segmentation
divides markets by behaviors and decision-making patterns such as purchase, consumption, lifestyle,
and usage. For instance, younger buyers may tend to purchase body wash, while older consumer groups
may lean towards soap bars. Segmenting markets based off purchase behaviors enables marketers to
develop a more targeted approach.5)PSYCHOGRAPHIC SEGMEN TATION-Psychographic
segmentation takes into account the psychological aspects of consumer behavior by dividing markets
according to lifestyle, personality traits, values, opinions, and interests of consumers. Large markets like
the fitness market use psychographic segmentation when they sort their customers into categories of
people who care about healthy living and exercise.4 PRINCIPLE OF POSITIONING-1)Target Audience -
the attitudinal and demographic description of the core prospect. The customers who represents the
brand’s most fervent users.2)Frame of Reference (FOR) - the category in which the brand competes.
Context gives the brand relevance to the customer.3)Benefit/Point of Difference (POD) - the most
compelling and motivating benefit that the brand can own.4)Reason to Believe - the most convincing
proof that the brand delivers what it promises.ROLE OF POSITI-Customer Needs-Effective product
positioning requires a clear understanding of customer needs so that the right communication channels
are selected and key messages will resonate with customers. Product positioning starts with identifying
specific, niche market segments to target -- not just women over 25 but women from 25 to 30 who work
in senior-level management positions, make $X per year, are single and enjoy sporting activities. The
more specific, the better. In addition to identifying the customer based on demographic and
psychographic (personality/lifestyle) attributes, marketers need to understand customer needs,
especially relative to the products and services they have to offer, to clearly convey value as part of their
marketing plan.Competitive Pressures-Marketers must weigh competitive pressures when they are
considering the positioning elements of their marketing plans. Effective positioning conveys to
consumers why this company's product or service should be preferred over other competitive options
based on what the company knows about the target audience's needs. Effective marketing plans clearly
identify how the company's products or services are different from competitors' offerings and in what
ways. There is no value in being a "me too" product offering and simply copying what competitors are
doing. Marketers must stand out from the crowd in ways that hold value for their target
markets.Communication Channels-Product positioning helps marketers consider how their offerings are
different from others that consumers have to choose from. But it is not enough to know this from an
internal perspective -- marketers must communicate this to the target audiences. To do this effectively,
they must choose communication channels that are designed to connect with their identified target
audiences at times when they will be most receptive to these messages. Consider how automobile
manufacturers position their products through communication via television commercials during
sporting events, for instance, or how cosmetics manufacturers run full-page, full-color ads in women's
magazines.Carefully Crafted Key Messages-The final challenge in effective product positioning is
conveying the differentiating, value-added aspects of your product or service to your target audience
through the communication channels you have selected. These messages are designed to convey how
your product is different (and better) than competitive offerings, as well as to address the value-added
attributes that are important to your audience. Product positioning is at the foundation of any effective
marketing plan because it impacts the ultimate purchase decision.
SERVICE RECOVERY-Service recovery is a term for systematic efforts by a firm to correct a problem
following a service failure and retain customer’s goodwill..Service recovery refers to the actions taken by
an organizations in response to a service failure..Service failures bring about negative feelings and
responses from customers..Unrecovered failures can result in customers leaving, spreading bad word-
of-mouth and even challenging the organization through consumer rights organizations.EFFECT OF
SERVICE RECOVERY-Has a strong impact on customers satisfaction, loyalty, word-Of-
mouth communication..Customers who experience service failures but who are ultimately satisfied
based on recovery efforts by the firm, tend to be more loyal than those whose problems are not
resolved..Recovery Paradox – rare instances when an initially dissatisfied customer experiences an
excellent service recovery. Eg: hotel front desk person upgrades his guest to a better room at the
original price on non availability of room..It should be proactive..Recovery procedures need to be
planned..Recovery skills must be taught..Recovery requires empowered employees.SERVICE RECOVERY
STRATEGIES-The first strategy is to make the service fail-safe by doing it right the first time. It avoids
negativities of failures and it is the most important dimension of service quality. In order to achieve that,
there must be a top management commitment and a positive firm culture of ‘zero defection’ and
appreciate ‘relationship value of customers’ to uphold the standards of service without blindly adopting
the Total Quality Management from the product perspective.The second strategy is to encourage and
track complaints. According to research, almost 50% of customers encountered problems by do not
complain. This segment will have a higher chance of switching to competitor as organization has no
control over it. Encouraging complaint is healthy and it will allow organization to learn. Tracking
complaints will ensure no complaints are left out. Technology can be used to aid in handling of
complaints.The third strategy is to act quickly. Complaining customers want quick responses and do not
want to be ping-pong around different employees, which will seem to be shirking responsibilities. Even
when full resolution is likely to take longer, fast acknowledgement is required to appease them. There is
positive correlation between fast service recovery with satisfaction and loyalty.The fourth strategy is to
provide adequate explanations. This allows customers to understand why the failure occurred.
According to attribution theory, customer will understand and appreciate what is going on and they will
be more forgiving. The content and the style of the delivery must be suitable to the affected customers
subjectivelyThe fifth strategy is to treat customers fairly. They want justice in their complaint-handling
process, which involves procedure (speed, convenience, follow-up etc), interaction (behavior of service
representatives) and outcome. Therefore it is important that the process be handled properly to return
them the justice they seek. Recent research indicates that justice considerations have a large impact on
how customers evaluate firm’s recovery effort. Therefore, if they do not perceive themselves being just,
they will rate the recovery badly even when it is perfectly done. (Tax and Brown 2000)The sixth strategy
is to cultivate relationship with customers. Long term relationship will allow customers to be more
forgiving and open to the recovery process. Cultivation of strong relationship can provide an important
buffer to service firms when failures occur. The biggest challenge would be to restore their confidence
and trust again.The seventh strategy is to learn from recovery experience. Organizations can learn
through using tools to help evaluate experiences. They can use blueprinting, control charts, fishbone
diagram (cause and effect diagram) to use those acquired knowledge in their recovery effort. The last
strategy is to learn from lost customers through market research and get into the root cause analysis of
why they left.SERVICE SWITCHING BEHAVIOUR-Effect-The specter of consumer switching doesn't haunt
all businesses equally. For example, a mattress store might not depend that heavily on repeat business.
Instead, it might focus on offering appealing deals to draw in customers. The bargain prices motivate
customers not to switch, so customers might tolerate impersonal service, for example, or pushy
salespeople. And even if customers do switch, the mattress store’s business model doesn't depend on
serving the same customers time and again. Mattresses are infrequent purchases, and the market is
competitive, so the store must permanently focus on attracting new customers.Continuously Delivered
Services-In contrast, consumer switching is a serious threat for businesses that offer continuously
delivered services, according to the “Handbook of Developments in Consumer Behaviour,” by Victoria
Wells and G. R. Foxall. For example, banks, cellular-service providers and insurance companies offer
continuous service to customers. After such businesses drop the ball, their customers are likely to avoid
further problems by switching to competitors that have better reputations.Poor Service-The factors that
drive a customer to switch depend on the nature of the business, but generally, poor service quality is a
major culprit. For example, customers might abandon your business because the low-quality service
isn't meeting their needs, forcing them to opt for one of your competitors. Or they might abandon your
business because they believe the poor service isn't worth what you’re charging. In this case, they might
do without the type of service you’re providing rather than opt for a competitor. Either way, you
lose.Boredom-Boredom is another possible driving force of consumer-switching behavior, according to
the book “Consumer Behavior,” by Wayne D. Hoyer and Deborah J. MacInnis. When your product or
service is no longer new and exciting to consumers, they might leave just for the sake of variety.
Restaurants, for example, must balance offering traditional favorites with new items that create
excitement and intrigue.Considerations-Prevent consumer switching by soliciting feedback and
continually optimizing your customer service. You can’t please everybody, but making the effort can go
a long way. If your customers sense that you are out for their best interests, brand loyalty will develop,
and your business will be less threatened by consumer-switching behavior.HIGN & LOW CONTACT
SERVICES-There are plenty of ways to handle customer service, but the strategies behind them can be
broadly described as high-contact or low-contact. High-contact service means you offer your customers
a lot of hand-holding and direct support, while low-contact service means you give them tools to sort
things out for themselves. They're both valid options, so the real question is which approach will work
best for you and your clients….Information Gathering-The level of information you gather to address
customer problems will vary, depending on the level of customer service you provide. If you opt for low-
contact customer service, you'll address customer concerns and problems as they come up. This strategy
typically doesn't gather a lot of information to identify specific solutions. For example, a jewelry store
fixes watches as they break. The store does not collect information on the problem to create any kind of
problem solving work flow. High-contact customer service, however, analyzes customer complaints to
create solutions. For example, if you have a software company you'll analyze your customers' problems
to find easy solutions for the next time a customer has the same experience.Employee Access-The
strategy you choose decides how much access a customer has to your employees. Low-contact
customer service typically keeps customers at arm's length, dealing with entry-level service reps and
seldom reaching top-level managers or executives when a problem occurs. High-contact customer
service offers the customer an opportunity, if needed, to speak to employees higher up the chain of
command. For example, if a customer's new luxury car continuously breaks down after he purchases it,
he potentially can speak to a vice president or owner at the dealership from which he purchased the car
to discuss the problem.Customer Interaction-The way customers interact with your company differs
between high- and low-touch customer service programs. With low-touch customer service, customers
often don't speak directly with a human at all. For example, you might only offer an email address as
your point of contact when a customer needs help with a problem. High-touch customer service
typically offers a call center or a representative to meet the customer and fix the problem. For example,
if a customer has problems with his cable television and a service technician is sent to his home, this is
high-touch customer service.Service Availability-Problems with products and services happen at any
time of the day, and your choice of high or low contact customer service dictates what kind of response
your clients can expect. If you opt for low-contact customer service, customers typically can't contact a
representative outside of business hours. High-contact customer service typically uses 24-hour call
centers and help lines for customer problems.PURCHASE PROCESS FOR SERVICE-Pre purchase Stage-
The first stage in the service purchase process, where customers identify alternatives, weigh benefits
and risks, and make a purchase decision. The decision to buy and use a service is made in the pre
purchase stage. Individual needs and expectations are very important here because they influence what
alternatives customers will consider. If the purchase is routine and relatively low risk, customers may
move quickly to selecting and using a specific service provider.But when more is at stake or a service is
about to be used for the first time, they may conduct an intensive information search (contrast how you
approached the process of applying to college versus buying a pizza or a hamburger!). The next step is to
identify potential suppliers and then weigh the benefits and risks of each option before making a final
decision.Service Encounter Stage-After deciding to purchase a specific service, customers experience
one or more contacts with their chosen service provider. The service encounter stage often begins with
submitting an application, requesting a reservation, or placing an order. ontacts may take the form of
personal exchanges between customers and service employees, or impersonal interactions with
machines or computers. In high contact services, such as restaurants, health care, hotels, and public
transportation, customers may become actively involved in one or more service processes. Often, they
experience a variety of elements during service delivery, each of which may provide clues to service
quality.Service environments include all of the tangible characteristics to which customers are exposed.
The appearance of building exteriors and interiors; the nature of furnishings and equipment; the
presence or absence of dirt, odor, or noise; and the appearance and behavior of other customers can all
serve to shape expectations and perceptions of service quality.Service personnel are the most important
factor in most high-contact service encounters, where they have direct, face-to-face interactions with
customers. But they can also affect service delivery in low-contact situations like telephone-based
service delivery. Knowledgeable customers often expect employees to follow specific scripts during the
service encounter; excessive deviations from these scripts can lead to dissatisfaction. Handling service
encounters effectively on the part of the employee usually combines learned skills with the right type of
personality.Support services are made up of the materials and equipment plus all of the backstage
processes that allow front stage employees to do their work properly. This element is critical, because
many customer-contact employees can't perform their jobs well without receiving internal services from
support personnel. As an old service-firm axiom goes: "If you aren't servicing the customer, you are
servicing someone who is.Other Customers When customers use people-processing or mental stimulus
processing services, they often find themselves in close proximity to other customers. Waiting rooms at
a medical clinic may be filled with other patients; trains, buses, or aircraft are usually carrying many
passengers at once, requiring travelers to sit next to strangers. Similarly, restaurants serve many patrons
simultaneously, and a successful play or film will attract a large audience (in fact, the absence of an
audience is a bad sign!).Unfortunately, some of these other customers occasionally behave badly, thus
detracting from the service experience. Managers need to anticipate such incidents and have
contingency plans in place for how to deal with the different types of problems that might occur.
Post purchase Stage-During the post purchase stage, customers continue a process they began in the
service encounter stage—evaluating service quality and their satisfaction/dissatisfaction with the service
experience. The outcome of this process will affect their future intentions, such as whether or not to
remain loyal to the provider that delivered service and whether to pass on positive or negative
recommendations to family members and other associates.Customers evaluate service quality by
comparing what they expected with what they perceive they received. If their expectations are met or
exceeded, they believe they have received high-quality service. If the price/quality relationship is
acceptable and other situational and personal factors are positive, then these customers are likely to be
Satisfied.FACTOR INFLUENCING CUSTOMER EXPECTATION- Sources of desired service expectations
(desired services Zone of toleranceadequate service)1)Personal needs2) Enduring service
intensifiers - desired service expectations Sources of Adequate service expectations1. Transitory service
intensifiers (urgent need-small purchase, doctors etc2. Perceived service alternatives (booking of
tickets)3. Customer‘s self perceived service roles (food service in hotel)4. Situational factors (petrol
bank, food served for marriage)5. Predicted services (give quality service rather than predicted
service)Sources of both desired and predicted service expectations-1.Explicit services promises (ad -we
promises to customers)2. Implicit service promises (two company charges diff. prices)3.Word-of-mouth
communication4.Past experience (previous exposure to the focal firm‘s service )CUSTOMER PROFILE-A
good method of identifying and understanding customers is to develop customer profile..his approach is
similar to that used in market segmentation..The marketers creates some basis for dividing the various
customer groups..The marketer then develops a typical customer profile which helps to analyze and
understand consumer behavior.COMPONENTS OF COMPLAIN HANDLING -Thank the customer for
complaining-A complaint is a gift. Consider yourself lucky that the customer is prepared to give up their
time to let you know they have a problem, instead of just walking away.Say that you are sorry that the
problem has happened. This is not an admission of guilt on your part; it's good manners.Put yourself in
your customer's shoes-You will have more empathy with the customer and you should find a solution
more quickly.Start with the view that the customer has a valid point, not that they are trying to rip you
off. There are some professional complainers out there, but they are in the minority, and, if you are a
local store, you probably know them anyway. Accepting that the customer may well have a point should
trigger ideas for an acceptable resolution.Get the facts first-Letting the customer give you all of the
information helps you fully understand the situation and, if they are emotional, will give them time to
calm down.Correct the mistake-Don't leap straight to giving them something. While it's very tempting
to give the customer a gift, or vouchers, too often it is done instead of solving the problem. This can lead
to more complaints about the same thing in the future because the problem hasn't been hasn't been
fixed. Make sure that your definition of the right fix is the same as the customer's.Learn from every
complaint-Do something! Fix the process; train staff in the issue; eliminate the fault. Wherever possible
let the complaining customer know that they have helped you resolve a problem - they'll feel great and
come back again and again (and will probably tell their friends).Minimise reasons for complaints-Do you
have a culture of continuous improvement? Do you check customer (and employee) satisfaction
regularly? Do you check the quality of the goods sold in your organisation?Always respond-Make sure
that everyone who complains gets a rapid and appropriate response.Listen to your staff-They are much
closer to the customers than you are. Ask them for their views regularly and make changes when they
are sensible. Make sure their complaints are handled too.Lead by example-Make sure you always set a
good example to staff and make complaints your personal priority. Reward good complaints handling.