Mba Ii Year I Semester: (Autonomous)

LECTURE NOTES
ON
SERVICES MARKETING
MBA II YEAR I SEMESTER

(Autonomous)
Mrs A Sujatha
ASST.PROFESSOR
DEPARTMENT OF MANAGEMENT STUDIES

CHADALAWADA RAMANAMMA ENGINEERING COLLEGE
CHADALAWADA NAGAR, RENIGUNTA ROAD, TIRUPATI (A.P) - 517506
Mrs A SUJATHA, Asst. Prof., Dept. of MBA, CREC Page 1

CHADALAWADA RAMANAMMA ENGINEERING COLLEGE,
TIRUPATI
(AUTONOMOUS)
MBA II year Third Semester, Academic Year: 2018-19
Course Name : Services Marketing (17CE00311)

Course Coordinator : Mrs. A SUJATHA
L–T–P : 4–0–0
Course Instructor : Mrs. A SUJATHA
SYLLABUS
Course Description: To facilitate the students about the concepts of Services Marketing through
cases.
Course Objectives: Students will be to understand

 Marketing Management of companies offering Services
 Characteristics of services,
 To understand consumer behavior in services,
 Align service design and standards,
Delivering service, managing services promises
Unit- I Introduction to Services Marketing Classes: 15

Introduction to Services Marketing: Scope and Definition- Services Marketing Environment-
Definition- Goods and Services- Components of Service- Characteristics- Service Delivery as a
System- Service Facility Design and Layout- HRM Issues- -Building Services Aspirations-
Tracking Customer Behavior-.
Unit - II Services Marketing Planning Classes: 15
Services Marketing Planning process – Developing an effective service Strategy – Market

segmentation – Positioning and differentiation of services..
\
Unit - III Customer Expectations of service Classes: 10
Customer Expectations of service: Service expectations, types of expectations, factors that
influence customer expectations of service. Issues in involving customers service expectations,
Customer defined service standards.
Unit - IV Management of Services Marketing Classes: 15
Management of Services Marketing: Introduction- Marketing Mix- Developing a Package- Product

Attractiveness- Components of Promotion Mix- Strategic Services Marketing- Service Target
Segments- Positioning the Services- Creating and Maintaining Value Relationship- Market
Leadership Strategies.

Unit - V Service Marketing Practices Classes: 15
Service Marketing Practices- Marketing of Financial and Insurance Services- Marketing of

Hospitality, Travel and Tourism Products- Marketing of Educational and Professional Services-
Marketing of Healthcare Services.
Reference:
1. John E. G. Bateson, K. Douglas Hoffman: Services Marketing, Cengage Learning, 4e, 2015.
2. Ram Mohan Rao: Services Marketing (Pearson Education) Christoper Lovelock, Jochen wirtz,
Jayanta Chatterjee, Services Marketing, 7th edition Pearson
2015
3. Valarie A. Zeithaml & Mary Jo-Bitner: Services Marketing – Integrating customer focus
across the firm, TMH, 6e, 2013.
4. Nimit Chowdhary, Monika Chowdhary, Textbook of Marketing of Services: The Indian
Experience, MACMILLAN, 2013.
5. Govind Apte: Services Marketing, Oxford Press, 2011.
Mode of Evaluation: Assignments (20%), Seminars (20%), Written Examinations (60%)

CHADALAWADA RAMANAMMA ENGINEERING COLLEGE,
TIRUPATI
(AUTONOMOUS)
LESSON PLAN
Subject: Services Marketing, Subject Code: 17CE00
Class: II MBA, Branch: MBA, Semester: III, Academic Year: 2018-19
Name of the faculty: Mrs A SUJATHA
Date
(As per Actual
Lecture Academ Date of
Topics to be covered Remarks
No. ic completio
calenda n
r)
1 01-08-2018 Introduction to Services Marketing
2 02-08-2018 Importance of Services Marketing
3 03-08-2018 Services Marketing Environment
4 03-08-2018 Characteristics of Service &Components of Service
5 08-08-2018 Difference between Goods and Services
6 09-08-2018 Service Delivery as a System
7 10-08-2018 Service Facility Design and Layout
8 10-08-2018 HRM Issues
15-08-2018 Independence Day
10 16-08-2018 Building Services Aspirations
11 17-08-2018 Tracking Customer Behavior
12 17-08-2018 Services Marketing Planning process
22-08-2018 Eid-UI-Zuha (Bakrid)
13 23-08-2018 Developing an effective service Strategy
24-08-2018 Varlakshmi Vratham
14 29-08-2018 Market segmentation
15 30-08-2018 Benefits of Market Segmentation
16 31-08-2018 Market Positioning
17 Market Targeting
31-08-2018
03-09-2018 Sri Krishnasthami
18 05-09-2018 Positioning process
19 06-09-2018 Planning and branding service products

Date
(As per Actual
No. ic completio
calenda n
r)
20 07-09-2018 Differentiation of services
21 07-09-2018 New service development
22 12-09-2018 Introduction to Customer Expectations of service

13-09-2018 Vinayaka Chavithi
23 14-09-2018 Service expectations
24 14-09-2018 Types of expectations
25 19-09-2018 Promotional objectives
26 20-09-2018 factors that influence customer expectations of
21-09-2018 service
Moharam
27 26-09-2018 Issues in involving customers service expectations
28 27-09-2018 Customer defined service standards
29 28-09-2018 Developing a Customer Service Strategy
30 28-09-2018 Value addition to the service product
01-10-2018 to 09-10-2018 I Mid-term Examinations
31 10-10-2018 New service development
32 11-10-2018 Marketing testing
33 12-10-2018 Marketing Communication Objectives
34 12-10-2018 Marketing Communications Mix Theory
17-10-2018 Durgastami
18-10-2018 Vijaya Dasami

35 19-10-2018 Management of Services Marketing
36 19-10-2018 Marketing Mix
37 24-10-2018 Promotion mix
38 25-10-2018 Developing a Package &Importance
39 26-10-2018 Product Attractiveness
40 26-10-2018 Components of Promotion Mix
41 31-10-2018 Strategic Services Marketing
42 01-11-2018 Service Target Segments
43 02-11-2018 Positioning the Services
44 02-11-2018 Creating and Maintaining Value Relationship
06-11-2018 Naraka Chaturdhi
07-11-2018 Deepavali
45 08-11-2018 Market Leadership Strategies

Date
(As per Actual
No. ic completio
calenda n
r)
46 09-11-2018 Service Marketing Practices
47 09-11-2018 Marketing of Financial and Insurance Services
48 14-11-2018 Marketing of Hospitality Services
49 15-11-2018 Emerging Services in Insurance Sector
50 16-11-2018 Travel and Tourism Services
51 16-11-2018 Tourism marketing mix
21-11-2018 Malid-un-nabi
52 22-11-2018 Elements of travel and tourism industry
23-11-2018 Karthika Punnami/ Gurunanak Jayathi
53 28-11-2018 Marketing of Educational and Professional Services
54 29-11-2018 Effective Marketing Strategy for Professional Firm
55 30-11-2018 Marketing of Healthcare Services
56 30-11-2018 Marketing of Hospitality Services
57 01-12-2018 MODEL TEST
03-12-2018 to 10-12-2018 II Mid-term Examinations
11-12-2018 To 16-12-2018 Preparation
Course Instructor Head of the Dept. Principal

CHADALAWADA RAMANAMMA ENGINEERING COLLEGE
(AUTONOMOUS)
(Affiliated to JNTUA, Approved by AICTE, New Delhi and Accredited by NAAC ‘A’ Grade)
Tirupati – 517506, Chittoor Dt. Andhra Pradesh.
TEACHING PLAN
SUBJECT NAME: Services Marketing (17CE00311)
S.NO CONTENT NO.OF

PERIODS
Introduction to Services Marketing: Scope and Definition- 12

Services Marketing Environment- Definition- Goods and
Services- Components of Service- Characteristics- Service
Delivery as a System- Service Facility Design and Layout- HRM
1
Issues- -Building Services Aspirations- Tracking Customer
Behavior-.
Services Marketing Planning process – Developing an effective 10

service Strategy – Market segmentation – Positioning and
2 differentiation of services..
Customer Expectations of service: Service expectations, types of 12

expectations, factors that influence customer expectations of
3 service. Issues in involving customers service expectations,
Customer defined service standards.
Management of Services Marketing: Introduction- Marketing 12

Mix- Developing a Package- Product Attractiveness-
Components of Promotion Mix- Strategic Services Marketing-
Service Target Segments- Positioning the Services- Creating and
4
Maintaining Value Relationship- Market Leadership Strategies.
Service Marketing Practices- Marketing of Financial and 12

Insurance Services- Marketing of Hospitality, Travel and
5 Tourism Products- Marketing of Educational and Professional
Services- Marketing of Healthcare Services.
TOTAL 58

UNIT- 1
Introduction
Every day we interact with various economic activities like - getting courier delivered at the
requested address, making phone call to friend, relative, or client, having coffee at coffee shop, or
taking metro to commute office. Such activities are called services because they involve deed or
act and offered by one party to another for sale.
Services differ from goods in many ways. The way a product is produced, distributed,
marketed, and consumed is not the way a service is. Hence, a different marketing approach is
necessary for the marketing of services.
Today, in this post we are going to explain – What services are? What are the
characteristics of services? How services are marketed?
Definition of Services
According to American Marketing Association services are defined as “activities,
benefits or satisfactions which are offered for sale or provided in connection with the sale of
goods.”
According to Philip Kotler and Bloom services is defined as “any activity or benefit that
one party can offer to another that is essentially intangible and does not result in the ownership of
anything. Its production may or may not be tied to a physical product.”
Types of services
Professional Services
Which serve the business market segments in which advisory & problem solving
provide by a qualified professional known for their specialty... e.g. Financial services, advertising,
business and management consultancy, engineering, medical etc
Consumer oriented Services
The ones which the consumer is more acquainted with, such as holiday tour
companies, entertainment, travel, healthcare, social services etc.

Characteristics of Services
1. Intangibility – Services are cannot be touched or hold, they are intangible in nature. For
example – you can touch your Smartphone. But, you cannot hold or touch the services of
your telecom service provider.
2. Inseparability – In case of services the production, distribution, and consumption takes place
simultaneously. These three functions cannot be separated.
3. Variability – It is impossible to provide similar service every time. You’ll experience some
change every time you buy a particular service from a particular service provider. For
example – Yesterday you had a coffee at CCD. Today, you are again at CCD to have a
coffee, but you have got different place to sit today; the person served you coffee is different
today; other people having coffee are also different today. Hence, your experience of having
coffee today is different as compared to yesterday.
4. Perish-ability – You can store goods, but it is not so in the case of services. Services get
perished immediately.
5. Participation of customer – Customer is co-producer in production of services. For delivery
customer involvement is as important as is of the service provider. For example – if you
went to a parlor for haircut, how it cannot be possible without your presence and
involvement.
6. No ownership – In the sale of services, transfer of ownership not take place. It means to say
that consumer never own the services.
Marketing of Services
A different marketing approach is necessary for services marketing, because services differ
from goods in many respects.
Difference between Services and Goods
Basis Services Goods
Tangibility Services are intangible in nature. Goods are tangible in nature. They
They cannot be touched or can be touched and hold.
hold.
Separability Services are inseparable in nature. Function of distribution and
Production, distribution, and consumption of goods can be

consumption of service take separated from the function of
place simultaneously. production.
Ownership Services cannot be owned. They Goods can be owned.
can be hired for a specific time
period.
Perish-ability Services get perished after a Goods can be stored for future use.
specific time period. It cannot
be stored for future use.
Heterogeneity Services are more heterogeneous. Goods are less heterogeneous. It is
It is very difficult to make each possible to make each goods
service identical. identical.
Customer Service in a service firm is highly interactive in nature. Customer interacts with
the firm physical facilities, personnel, and tangible elements like the price of the service. The
success of any service firm depends on how its performance is judged and perceived by the
customer. Today, Service Firms are becoming highly competitive, so, it is essential for service
firms to provide high quality services for their survival.
An expanded marketing mix for services was proposed by Booms and Biter (1981),
consisting of the 4 traditional elements–product, price, place, and promotion and three additional
elements–physical evidence, participants, and process. These additional variables beyond the
traditional 4 P's distinguish‘ customer service’ for service firms from that of manufacturing firms.
Importance of Marketing of Services
Given the intangibility of services, marketing them becomes a particularly challenging

and yet extremely important task
 A key differentiator: Due to the increasing homogeneity in product offerings, the attendant
services provided are emerging as a key differentiator in the mind of the consumers. Eg: In
case of two fast food chains serving a similar product (Pizza Hut and Domino’s), more than
the product it is the service quality that distinguishes the two brands from each other. Hence,
marketers can leverage on the service offering to differentiate themselves from the
competition and attract consumers.

 Importance of relationships: Relationships are a key factor when it comes to the marketing
of services. Since the product is intangible, a large part of the customers’ buying decision will
depend on the degree to which he trusts the seller. Hence, the need to listen to the needs of the
customer and fulfill them through the appropriate service offering and build a long lasting
relationship which would lead to repeat sales and positive word of mouth.
 Customer Retention: Given today’s highly competitive scenario where multiple providers
are vying for a limited pool of customers, retaining customers is even more important than
attracting new ones. Since services are usually generated and consumed at the same time,
they actually involve the customer in service delivery process by taking into consideration his
requirements and feedback. Thus they offer greater scope for customization according to
customer requirements thus offering increased satisfaction leading to higher customer
retention.
“SERVICES” in modern economy

The notion of “service” is a very important one, with an increasing role in an expanding
economy which becomes the condition of sustainable and long-term development.
1 At the same time, technical services constitute an important marketing tool. Thus, we can
appreciate that, when the product characteristics and the price of different officers’ are more or
less alike, the buyer will choose the goods according to the services that are offered. In
conclusion, the marketing researcher must find out the services that buyers want and what it is
being offered by the competitive part. This information permits the calculation of the marketing
cost, the formulation of the marketing plan, the choice of the distribution networks,
2 professional users with productive goods. In addition they also provide services that encourage the
buying process. Natural persons and governmental or non-governmental bodies whose duty is to
offer conciliation to the users in view of directing their activity are valuable missionaries of
services.
3 obtain from the producer, in order to direct the first in his research for achieving a productive
activity in permanent evolution. At the same time, the producer offers the distributor a totality of
technical and commercial knowledge that he owns in order to help and encourage him
4 Services characteristics influence promotional activities. The use of new promotional techniques -
based on the utilization, during promotional activities, of some components of the system of
services creation and delivery - reflects the strong relationship between the product and
promotion on the one hand, and the very complex role of services, on the other hand.
5 In all companies the commercial function includes a series of activities that concentrate on
“obtaining an optimal market quota, achieving benefits indispensable for an efficient activity, and
meeting consumers and users' requirements”.
6 customers as a consequence of the services offered, more sales as a result of the growth in the
services number).The symmetry between’s domestic and foreign marketing activities’ the
processes of attaining “customer services” and “employee services” performances’ the internal
customer's behavior (the employee) and the external one's(the customer emphasizes the
opportunity of some researches regarding customers' contribution to services productivity, the
interdependence between the main elements of services marketing, and the one between the main
strategies of the services organizations and the components of services Marketing.
a) The stage that precedes the selling;
b) The stage during the selling that have in view purchasing facilities;
c) The after-selling stage.

7All these stages must assure the continuity of the activity of services, of the means and methods of
selling (without being mistaken with selling promotion).As in the case of any other field, a
certain job feeling must be obvious inactions which must be organized on the basis of general
ideas in order to be constructive and efficient.
MARKETING ENVIRONMENT
Marketing activities are influenced by several factors inside and outside a business firm.
These factors or forces influencing marketing decision-making are collectively called marketing
environment. It comprises all those forces which have an impact on market and marketing efforts of
the enterprise. According to Philip Kotler, marketing environment refers to “external factors and
forces that affect the company’s ability to develop and maintain successful transactions and
relationships with its target customers”.
The marketing program me of a firm is influenced and shaped by a firm’s inwardly

need to begin its business planning by looking outwardly at what its customers require, rather than
inwardly at what it would prefer to produce. The firm must be aware of what is going on in its
marketing environment and appreciate how change in its environment can lead to changing patterns
of demand for its products.
It also needs to assess marketing opportunities and threats present in the surroundings.
An environment can be defined as everything which surrounds and impinges on a system. Systems of
many kinds have environments with which they interact. Marketing can be seen as a system which
must respond to environmental change.
Just as the human body may have problems, it fails to adjust to environmental change. Similarly,
businesses may fail if they do not adapt to external changes such as new sources of competition or
changes in consumers’ preferences.
Importance of Environment Analysis:

The following are the benefits of environment analysis:
1. It helps in marketing analysis.
2. It can assess the impact of opportunities and threats on the business.

3. It facilitates the company to increase general awareness of environmental changes.
4. It is possible to develop effective marketing strategies on the basis of analysis.
5. It helps to capitalize the opportunities rather than losing out to competitors.
6. It facilitates to understand the elements of the environment.
7. It helps to develop best strategies, in the light of analyzing “what is going around the company”.
Need for Environment analysis:

Environmental analysis attempts to give an extensive insight as to the current market
conditions as well as of impact of external factors that are uncontrollable by the marketers. These
variables play an important role in convincing potential customers regarding changes in market
trends, market conditions etc.
Facilitating the corporation’s strategic response to the changes taking place in

environmental factors is the ultimate purpose of environment analysis. The firm has to come up with
alternative programmers’ and strategies in line with environmental realities. This is possible only
with proper environment analysis.
It helps strategic response by highlighting opportunities, the pursuit of which will help the
firm to attain its objectives. It helps to assess the attractiveness and probability position of these
opportunities, and helps to prepare a shortlist of those which are relevant to the firm and which can
be pursued by it
Spotting the opportunities and threats is the central purpose here. It is in the environment
that the firm finds its opportunities; it is in the environment that it finds the treats it has to encounter,
and, it is by tapping the opportunities present and countering the threats embedded therein that the
firm achieves its growth objective. The starting point is thus to spot the opportunities and threats.
Concept of Micro and Macro Environment:

A marketing oriented company looks outside its premises to take advantage of the
emerging opportunities, and to monitor and minimize the potential threats face by it in its businesses.

The environment consists of various forces that affect the company’s ability to deliver products and
services to its customers.
The marketing environment is made up of:

1. Micro-environment and
2. Macro-environment.
We discuss them in detail:

1. Micro-environment:
The micro-environment of the company consists of various forces in its immediate environment that
affect its ability to operate effectively in its chosen markets.
This includes the following:

(a) The company
(b) Company’s Suppliers
(c) Marketing Intermediaries
(d) Customers
(e) Competitors
(f) Public
Brief explanations are given below:

The Company:
In designing marketing plans, marketing management takes other company groups into
account – Finance, Research and Development, Purchasing, Manufacturing, Accounting, Top
Management etc. Marketing manager must also work closely with other company departments.
Finance in concerned with funds and using funds to carry out the marketing plans.
The R&D Department focuses on designing safe and attractive product. Purchasing
Department is concerned with supplies of materials whereas manufacturing is responsible for

producing the desired quality and quantity of products. Accounts department has to measure
revenues and costs to help marketing know-how. Together, all of these departments have impact on
the marketing plans and action.
Internal Environment (Within the Co.):

The marketing management, in formulating plans, takes the other groups into account:
1. Top Management
2. Finance
3. R&D
4. Manufacturing
5. Purchasing
6. Sales Promotion
7. Advertisement etc.
Environmental forces are dynamic and any change in them brings uncertainties, threats
and opportunities for the marketers. Changes in the environmental forces can be monitored through
environmental scanning, that is, observation of secondary sources such as business, trade and
Government, and environmental analysis, that is, interpretation of the information gathered through
environmental scanning.
Marketers try to predict what may happen in the future with the help of tools like
marketing research and marketing information or marketing intelligence system, and continue to
modify their marketing efforts and build future marketing strategies. The company should think
about the consumer and work in harmony to provide customer value and satisfaction.
Company’s Suppliers:
Suppliers provide the resources needed by the company to product its goods and
services. They are important links in the company’s overall customer “value delivery system”.
Supplier developments can seriously affect marketing. Marketing managers must watch supply
availability – supply shortages or delays, labour strikes and other events can cost sales in the short
run and damage customer satisfaction in the long run. Marketing Managers also monitor the price
trends of their key inputs. Rising supply costs may force price increases that can harm the company’s
sales volume.
In business-to-business marketing, one company’s supplier is likely to be another

company’s customer and it is important to understand how suppliers, manufacturers and
intermediaries work together to create value. Buyers and sellers are increasingly co-operating in their
dealings with each other, rather than bargaining each transaction in a confrontational manner in order
to make supply chain management most effective and value-added products are sold to the target
markets.
Marketing Intermediaries:
Intermediaries or distribution channel members often provide a valuable link between an
organization and its customers. Large-scale manufacturing firms usually find it difficult to deal with
each one of their final customers individually in the target markets. So they chose intermediaries to
sell their products.
Marketing intermediaries include resellers, physical distribution firms, marketing service

agencies, and financial intermediaries. They help the company to promote, sell, and distribute its
goods to final buyers. Resellers are distribution channel firms that help the company to find
customers for goods. These include whole-sellers and retailers who buy and resell merchandise.
Selecting and working with resellers is not easy. These organisations frequently have enough power
to dictate terms or even shut the manufacturer out of large markets.

Physical distribution:
Firms help the company to stock and move goods from their points of origin to their
destinations. Working with warehouse and transportation firms, a company must determine the best
ways to store and ship goods, and safety marketing services agencies are the marketing research
firms, advertising agencies, media firms, and marketing consulting firms that help the company
target and promote its products to the right markets.
When the company decides to use one of these agencies, it must choose carefully because
those firms vary in creativity, quality, service and price. Financial intermediaries include banks,
credit companies, insurance companies, and other businesses that help finance transactions or insure
against the risks associated with the buying and selling of goods. Most firms and customers depend
on financial intermediaries to finance their transactions.
Customers:
Consumer markets consist of individuals and households that they buy goods and services
for personal consumption. Business markets buy goods and services for further processing or for use
in their production process, whereas reseller markets buy goods and services to resell at a profit.
Government markets are made up of government agencies that buy goods and services to
produce public services or transfer the goods and services to others who need them. Finally,
international markets consist of the buyers in other countries, including consumers, producers,
resellers and governments. Each market type has special characteristics that call for careful study by
the seller.
Competitors:
No single competitive marketing strategy is best for all companies. The company’s
marketing system is surrounded and affected by a host of competitors. Each firm should consider its
own size and industry position compared to those of its competitors. These competitors have to be
identified, monitored and outmaneuvered to gain and maintain customer loyalty.
Industry and competition constitute a major component of the micro-environment.

Development of marketing plans and strategy is based on knowledge about competitors’ activities.
Competitive advantage also depends on understanding the status, strength and weakness of
competitors in the market.

Large firms with dominant positions in an industry can use certain strategies that smaller
firms cannot afford. But being large is not enough. There are winning strategies for large firms, but
there are also losing ones. And small firms can develop strategies that give them better rate of return
than large firms enjoy.
Public:
General public do take interest in the business undertaking. The company has a duty to satisfy
the people at large along with competitors and the consumers. A public is defined as “any group that
has an actual or potential interest in or impact on a company’s ability to achieve its objectives.
Public relations is certainly a broad marketing operation which must be fully taken care of
Goodwill, favorable reactions, donations and hidden potential fixture buyers are a few of the
responses which a company expects from the public. Kotler in this regard has viewed that
“companies must put their primary energy into effectively managing their relationships with their
customers, distributors, and the suppliers, their overall success will be affected by how other publics
in the society view their activity. Companies would be wise to spend time monitoring all their
public’s understanding their needs and opinions and dealing with them constructively”.
Every company is surrounded by seven types of public, as shown below:

1. Financial—banks, stock-brokers, financial institutions.
2. Media—Newspaper, magazines, TV.
3. Government—Government departments.
4. Citizen—Consumer Organizations; environment groups.
5. Local—neighborhood residents, community groups.
6. General—General Public, public opinions.
7. Internal—Workers, officers, Board of Directors.

Macro Environment:
The macro-environment consists of broader forces that not only affect the company and the
industry, but also other factors in the micro-environment.
The components of a macro-environment are:

(a) Demographic Environment
(b) Economic Environment
(c) Physical Environment
(d) Technological Environment
(e) Political Environment
(f) Legal Environment
(g) Social and Cultural Environment
A. Demographic Environment:
Demography is the study of population characteristics that are used to describe consumers.
Demographics tell marketers who are the current and potential customers, where are they, how many
are likely to buy and what the market is selling. Demography is the study of human populations in
terms of size, density, location, age, sex, race, occupation and other statistics.
Marketers are keenly interested in studying the demography ethnic mix, educational level and
standard of living of different cities, regions and nations because changes in demographic
characteristics have a bearing on the way people live, spend their money and consume.
For example, one of the demographic characteristic is the size of family. With the number of
small families increasing in India, the demand for smaller houses and household items has increased
significantly. Similarly, the number of children in a family has reduced significantly over the years.
So, per child spending in a family has increased significantly.
According to the World Health Organisation, young people in the age group of 10-24 years
comprise 33% of the population and 42% of our population consists of age group, 0-24 years. Teen-

agers in the age group below 19 years comprise 23%. The senior citizen age group above 65 years
comprise only 8% of total population. About 58% of the working population is engaged in
agricultural activities, with highest, that is 78% in Bihar and Chattisgarh and lowest 22% in Kerala.
Since human population consists of different kinds of people with different tastes and
preferences, they cannot be satisfied with any one of the products. Moreover they need to be divided
in homogeneous groups with similar wants and demands. For this we need to understand the
demographic variables which are traditionally used by marketers, to segment the markets.
Income:
Income determines purchasing power and status. Higher the income, higher is the purchasing power.
Though education and occupation shapes one’s tastes and preferences, income provides the means to
acquire that.
Life-style:
It is the pattern of living expressed through their activities, interests and opinion. Life-style is
affected by other factors of demography as well. Life-style affects a lot on the purchase decision and
brand preferences.
Sex:
Gender has always remained a very important factor for distinction. There are many companies
which produce products and services separately for male and female.
Education:
Education implies the status. Education also determines the income and occupation. With increase in
education, the information is wider with the customers and hence their purchase decision process is
also different. So the marketers group people on the basis of education.
Social Class:
It is defined as the hierarchical division of the society into relatively distinct and homogeneous
groups whose members have similar attitudes, values and lifestyle.
Occupation:

This is very strongly associated with income and education. The type of work one does and the tastes
of individuals influence one’s values, life-style etc. Media preferences, hobbies and shopping
patterns are also influenced by occupational class.
Age:
Demographic variables help in distinguishing buyers, that is, people having homogenous needs
according to their specific wants, preferences and usages. For instance, teenagers usually have
similar needs. Therefore, marketers develop products to target specific age groups.
The youth are being targeted through advertisements and promotional campaigns, stores are being
designed with ‘youthful’ features, youth events are being sponsored, and even new technology is
developed with their tastes in mind.
The age groups that attract the attention of marketers can be classified as:
(i) Infants:
The population of India is growing at an alarming rate. The rate of infant deaths has declined
considerably due to the advancement in medicine. Although infants are consumers of products, their
parents are the decision makers. The size of a family is decreasing and the average income of family
is increasing.
(ii) School going teens:

In this segment, there is a great demand for school uniforms, bags, shoes, books, stationary,
confectioneries, food, albums, bicycles and other similar products.
(iii) Young Adults:

Marketers target the young adults in the age group 18-30 years with products like motorbikes, music
systems, clothes, sports cars etc. Two-wheeler manufacturers in India target this segment of people.
In the last five years, various companies like, Bajaj, Hero-Honda, Kinetic, TVS etc. have introduced
a large number of models to attract young adults.
(iv) Adults (35-45):

Consumers, in this age group, are more health conscious and look for stability and financial
independence. The industries that are benefited by them are: Pharmaceuticals, personal products,

fitness products, gym equipment’s, cars, home appliances, consumer durables, banks, insurance
companies, etc. Marketers push products specifically designed for this age group.
(v) Senior Citizens:

This consumer group boosts the demand for health care services, select skin care products, financial
planning etc.
(vi) Women:
Women constitute nearly 50% of India’s population. They are actively taking up professions.
This shift in their role has generated a greater demand for childcare and convenience products that
save time in cooking, cleaning and shopping.
Marketers are trying to come up with products that are easier to handle, less heavy,
convenient to use etc. The change in the role of women is paving the way for a change in the role of
men. Advertisements portray men cleaning, cooking and caring for their children, which was
unthinkable in the past.
B. Economic Environment:
Economic environment is the most significant component of the marketing environment. It
affects the success of a business organization as well as its survival. The economic policy of the
Government, needless to say, has a very great impact on business. Some categories of business are
favorably affected by the Government policy, some adversely affected while some others remain
unaffected. The economic system is a very important determinant of the scope of private business
and is therefore a very important external constraint on business.
The economical environmental forces can be studied under the following categories:
(i) General Economic Conditions:
General Economic Conditions in a country are influenced by various factors. They are:
1. Agricultural trends
2. Industrial output trends
3. Per capita income trends
4. Pattern of income distribution

5. Pattern of savings and expenditures
6. Price levels
7. Employment trends
8. Impact of Government policy
9. Economic systems.
(ii) Industrial Conditions:

Economic environment of a country is influenced by the prevalent industrial conditions as well as
industrial policies of a country.
A marketer needs to pay attention to the following aspects:

1. Market growth
2. Demand patterns of the industry
3. Its stage in product life cycle.
(iii) Supply sources for production:

Supply sources required for production determines inputs which are available required for
production.
They are:
1. Land
2. Labor
3. Capital
4. Machinery and equipment etc.
Economic environment describes the overall economic situation in a country and helps in analysis
GNP per capita rate of economic growth, inflation rate, unemployment problems etc.

C. Physical Environment:
The physical environment or natural environment involves the natural resources that are
needed as inputs by marketers or those that are affected by marketing activities. Environmental
concerns have grown steadily in recent years. Marketers should be aware of trends like shortages of
raw materials, increased pollution, and increased governmental intervention in natural resources
management. Companies will have to understand their environmental responsibility and commit
themselves to the ‘green movement’.
Potential shortages of certain raw materials, for examples, oil, coal, minerals, unstable cost of energy,
increased levels of pollution; changing role of Government in environment protection are a few of
the dangers the world is facing on physical environment forces. Other aspects of the natural
environment which may increasingly affect marketing include the availability and cost of raw
materials, energy and other resources, particularly if those resources and energy come from non-
renewable sources.
D. Technological Environment:
The technological environment is the most dramatic force now facing our destiny.
Technological discoveries and developments create opportunities and threats in the market. The
marketer should watch the trends in technology. The biggest impact that the society has been
undergoing in the last few years is the technological advancement, product changes and its effects on
consumers.
Technology has brought innumerable changes in human lives, be it in the field of science,
medicine, entertainment, communication, and travel or office equipment. Name any field, and one
can see changes in product or efficiency and faster services.
One of the most dramatic forces shaping people’s lives in technology. Technology has
released such wonders as penicillin, open-heart surgery and birth control pill. It has released such
horrors as the hydrogen bomb, nerve gas, and the sub-machine gun. Every new technology is a force
for “creative destruction”. Transistors hurt the vacuum tube industry, xerography hurt the carbon
paper business, autos hurt the railroads, and television hurt the newspapers.

Instead of moving into the new technologies, many old industries fought or ignored them and their
business declined. Yet it is the essence of market capitalism to be dynamic and tolerate the creative
destructiveness of technology as the price of progress.
Technology essentially refers to our level of knowledge about ‘how things are done’. That
is understanding this aspect of the marketing environment is much more than simply being familiar
with the latest hi-tech innovations. Technology affects not only the type of products available but
also the ways in which people organize their lives and the ways in which goods and services can be
marketed.
Computer-aided design (CAD) and computer-aided manufacturer (CAM) have shortened the time
required for new products to reach the market and increased the variety of products that can be
produced cost effectively. The benefits of CAD/CAM are clearly evident in the car industry. Mass
production is in standardized models. Computer systems have also contributed substantially to the
growth of various forms of direct marketing such as direct mail, direct response marketing etc.
E. Political Environment:
The political environment consists of factors related to the management of public affairs and
their impact on the business of an organization. Political environment has a close relationship with
the economic system and the economic policy. Some Governments specify certain standards for the
products including packaging.
Some other Governments prohibit the marketing of certain products. In most nations, promotional
activities are subject to various types of controls. India is a democratic country having a stable
political system where the Government plays an active role as a planner, promoter and regulator of
economic activity.
Businessmen, therefore, are conscious of the political environment that their organization faces. Most
Governmental decisions related to business are based on political considerations in line with the
political philosophy following by the ruling party at the Centre and the State level.
Substantial number of laws has been enacted to regulate business and marketing to protect companies
from each other, to protect consumers from unfair trade practices, to protect the larger interests of

society against unbridled business behavior. Changing Government agency enforcement and growth
of public interest groups also bring in threats and challenges.
F. Legal Environment:
Marketing decisions are strongly affected by laws pertaining to competition, price-setting,
distribution arrangement, advertising etc. It is necessary for a marketer to understand the legal
environment of the country and the jurisdiction of its courts.
The following laws affected business in India:

1. Indian Contract Act 1872
2. Factories Act 1948
3. Minimum Wages Act 1948
4. Essential Commodities Act 1955
5. Securities Contracts Regulation Act 1956 (SEBI Act)
6. The Companies Act 1956
7. Trade and Merchandise Act 1958
8. Monopolies and Restrictive Trade Practice Act 1969
9. The water (Prevention and Control of Pollution) Act 1974
10. The Air (Prevention and Control of Pollution) Act 1981
11. Sick Industrial Companies (Special Provisions) Act 1985
12. Environment Protection Act 1986
13. Consumer Protection Act 1986
14. Securities and Exchange Board of India Act 1992
15. Different Taxation Laws.

G. Social and Cultural Environment:
Socio-cultural forces refer to the attitudes, beliefs, norms, values, lifestyles of individuals
in a society. These forces can change the market dynamics and marketers can face both opportunities
and threats from them. Some of the important factors and influences operating in the social
environment are the buying and consumption habits of people, their languages, beliefs and values,
customs and traditions, tastes and preferences, education and all factors that affect the business.
Understanding consumer needs is central to any marketing activity and those needs will
often be heavily influenced by social and cultural factors. These cover a range of values, beliefs,
attitudes and customs which characterize societies or social groups. Changes in lifestyle of people
affect the marketing environment.
As health problems in people have increased because of significant changes in their lifestyle, they
have become concerned about their food. They prefer to eat low fat, low or no cholesterol food. This
is especially true for people above 40 years. To a great extent, social forces determine what
customers buy, how they buy, where they buy, when they buy, and how they use the products.
In India, social environment is continuously changing. One of the most profound social
changes in recent years is the large number of women entering the job market. They have also
created or greatly expended the demand for a wide range of products and services necessitated by
their absence from the home. There is a lot of change in quality-of-lifestyles and people are willing to
have many durable consumer goods like TV., fridge, washing machines etc. even when they cannot
afford them because of their availability on hire-purchase or installment basis.
Culture influences every aspect of marketing. Marketing decisions are based on recognition of needs
and wants of the customer, a function of customer perceptions. These help in understanding of
lifestyles and behavior patterns as they have grown in the society’s culture in which the individual
has been groomed. Thus a person’s perspective is generated, groomed and conditioned by culture.
Marketing environment can also be classified as:

(i) Controllable Forces and
(ii) Uncontrollable Forces.
(i) Controllable forces:

Controllable forces consist of marketing policies and marketing strategies. Marketing
policies are framed by the firm depending on its marketing philosophy. The top management is
responsible for framing broad policies. Marketing strategies are developed by middle level
management.
Internal forces are inherent to the firm and can be controlled by the management. Marketing mix
elements are the tools often used to harmonies the internal variables with that of external variables.
The controllable factors are well within the grip of the firm and comparably easy to adjust them to
suit the changes.
These factors are combined into what we have referred to earlier as Marketing Mix. For instance, if
the price appears to be on the higher side a decision to reduce it for a short term or even a long term
is possible and could be implemented as quickly as possible. Off-season prices or discounts are
examples in this connection.
(ii) Uncontrollable forces:

Various elements called uncontrollable variables affect an organisation and its marketing
efforts. It is now recognized by all that even a well conceived marketing plan may fail if adversely
influenced by uncontrollable factors. The offering of the firm and the impact of the uncontrollable
environment interact to determine the firm’s level of success or failure in reaching its objectives.
The external forces are divided into micro-environment and macro-environment. The micro-
environment consists of the suppliers, marketing intermediaries, customers etc. while the macro-
environment consists of the demography, socio- cultural, political, economical, technical, legal
environments etc.
Examples of Threats are:

1. Electronic type-writer with memory replaces manual type-writer.
2. Twin blade shaving system replaces razor shaving system.
3. Fuel efficient small cars against old model cars.
4. Entry of MNCs into Indian market increased competition.

Examples of opportunities are:
1. Marketing opportunities to produce cheap small cars.
2. Marketing opportunities to introduce fully automatic washing machines in the areas where
husbands and wife’s are working.
3. Marketing opportunities to start business in low cholesterol food items.
4. Dismantling of price controls and introduction of market-driven price policy.
Components of a Service
1. The Physical Product:

The physical product is whatever the organization transfers to the customer that can be
touched. It is tangible and physically real. Examples include houses, automobiles, computers, books,
hotel soap and shampoo, and food. As with the rest of the service offering, product design must be
customer- oriented. There is a well-developed method for ensuring that product design matches
customer needs, called Quality Function Deployment (QFD), or more popularly, the House of
Quality.
The procedure was developed in Japan in the 1970s as a way to help marketing managers
and engineers to talk to each other and to work toward a common goal of meeting customer needs.
By linking engineering design features to specific customer needs QFD assures that design
improvements improve the product’s value to customers.

At the same time, it helps the firm to avoid costly engineering improvements that “better
engineering” but do not meet customer needs. Spending time and effort on unnecessary engineering
is known as “over-engineering,” and it is seen most often in technology- driven companies.
2. The Service Product:

The service product is the core performance purchased by the customer, the flow of events
designed to provide a desired outcome. It refers to that part of the experience apart from the transfer
of physical goods and typically includes interactions with the firm’s personnel’. For example, at
some car dealer showrooms customers are allowed to look at the cars in the showroom without being
approached by sales representatives.
Only when shoppers ask to speak to someone will a sales rep speak to them. To further
reduce anxiety, actual sales prices, set to be competitively low, are posted on the cars, so that
customers don’t have to worry about negotiating the price, as at most other auto dealerships.
The cars come with strong service guarantees, and dealer personnel are trained and
empowered to make exceptional efforts to keep customers happy and solve their problems. All of
these aspects of the firm’s interaction with customers must be planned, and they help determine the
nature of the overall service experience.
The service environment is the physical backdrop that surrounds the service, sometimes
referred to as a “services-cape.” For example, going to see a movie is more enjoyable if the theater is
clean, has comfortable seats, and has a spacious, well-lit parking lot. Even though the customer
doesn’t take any of that home it has an important impact on the service experience.
3. The Service Environment:

The service environment (Table 2.4) can also signal the intended market segment and
position the organization. For example, a restaurant near a university campus might signal that it is
catering to college students by putting college memorabilia and pictures of students on the walls. A
car dealer might use its service environment to position it as upscale by decorating its showroom in
the service environment: the ambient conditions, the spatial layout, and the signs and symbols.
The ambient conditions include things such as the lighting and background music. What may
be appropriate for some businesses may be inappropriate for others, depending upon the market

positioning. For example, bright lighting is appropriate for fast food restaurants, but would be
inappropriate for an expensive, romantic restaurant.
The spatial layout can also influence customer satisfaction. For example, Disney World
found that long waiting lines seem shorter if the lines go around frequent turns, and there is some
entertainment along the way. Signs and symbols are also important.
4. The Service Delivery:

T he service delivery refers to what actually happens when customers buy the service. The
service product defines how the service works in theory, but the service delivery is how the service
works in actual practice. We often hear the adage, “Plan your work, and work your plan.”
The service product is the result of “planning your work,” and the service delivery is the
result of “working your plan.” For example, the service design may be that a fast-food customer is
greeted cheerfully within ten seconds, but the actual service delivery may be hindered by the counter
employee joking in the back of the store for five minutes with other employees. What is designed
does not always occur.
SERVICE AS A SYSTEM
The types of relationships a service business has with its customers (and the kinds of
misbehaviors that will be encountered during service delivery) depend to a great extent on the level
of contact customers have with the firm. Whether a service is high, medium, or low contact becomes
a major factor in defining the total service system, which includes the service operations system
(where inputs are processed and the elements of the service product are created), the service delivery
system (where final "assembly" of these elements takes place and the product is delivered to the

customer), and the service marketing system (which embraces all points of contact with customers,
including advertising, billing, and market research)
Parts of this system are visible (or otherwise apparent) to customers; other parts are hidden in
what is sometimes referred to as the technical core, and the customer may not even know of their
existence. Some writers use the terms "front office" and "back office" in referring to the visible and
invisible parts of the operation.
Others talk about "front stage" and "backstage," using the analogy of theater to
dramatize the notion that service is a performance. We like this analogy sometimes referred to as "dra
maturgy" and will be using it throughout the book. The extent to which theatrical elements exist
depends largely on the nature of the service process.
Table summarizes the drama implications for the four categories of service processes
identified in Chapter.
Service operations system: that part of the total service system where inputs are processed and the
elements of the service product are created.
Service delivery system: that part of the total service system where final “assembly" of the elements
takes place and the product is delivered to the customer; it includes the visible elements of the service
operation.
Service marketing system: that part of the total service system where the firm has any form of
contact with its customers, from advertising to billing; it includes contacts made at the point of
delivery.
Front stage: those aspects of service operations and delivery that are visible or otherwise apparent to
customers.
Backstage (or technical core): those aspects of service operations that are hidden from customers
Service Operations System

Like a play in a theater, the visible components of service operations can be divided into
those relating to the actors (or service personnel) and those relating to the stage set (or physical
facilities, equipment, and other tangibles). What goes on backstage is of little interest to customers.

Like any audience, they evaluate the production on those elements they actually experience during
service delivery and on the perceived service outcome.
Naturally, if the backstage personnel and systems (e.g., billing, ordering, account keeping)
fail to perform their support tasks properly in ways that affect the quality of front stage activities,
customers will notice. For instance, restaurant patrons will be disappointed if they order fish from the
menu but are told it is unavailable or find that their food is overcooked.
Other examples of backstage failures include receiving an incorrect hotel bill due to a
keying error, not receiving course grades because of a computer failure in the college registrar's
office, or being delayed on a flight because the aircraft has been taken out of service for engine
repairs.
The proportion of the overall service operation that is visible to customers varies according
to the level of customer contact. Since high-contact services directly involve the physical person of
the customer, customers must enter the service "factory" (although there may still be many backstage
activities that they don't see) or service workers and their tools must leave the backstage and come to
the customers' chosen location.
Examples include roadside car repair by automobile clubs and physical fitness trainers who
work with clients at their homes or offices. Medium-contact services, by contrast, require customers
to be less substantially involved in service delivery. Consequently, the visible component of the
service operations system is smaller.
Low-contact services usually strive to minimize customer contact with the service
provider, so most of the service operations system is confined to a remotely located backstage
(sometimes referred to as a technical core); front stage elements are normally limited to mail and
telecommunications contacts. Think for a moment about the telephone company that you use. Do you
have any idea where its exchange is located? If you have a credit card, it's likely that your
transactions are processed far from where you live.
Service Delivery System
Service delivery is concerned with where, "when, and how the service product is delivered to
the customer. As, this subsystem embraces not only the visible elements of the service operating
system buildings, equipment, and personnel but may also involve exposure to other customers.
Service providers traditionally had direct interactions with their customers. But to achieve
goals ranging from cost reduction and productivity improvement to greater customer convenience,
many services that don't need the customers to be physically present in the factory now seek to
reduce direct contact.
Service Marketing System
In addition to the service delivery system described above, other elements also contribute
to the customer's overall view of a service business. These include communication efforts by the
advertising and sales departments, telephone calls and letters from service personnel, billings from
the accounting department, and random exposures to service personnel and facilities, news stories
and editorials in the mass media, word-of-mouth comments from current or former customers, and
even participation in market research studies.
Collectively, the components just cited plus those in the service delivery system add up to
what we call the service marketing system. This represents all the different ways the customer may
encounter or learn about the organization in question. Because services are experiential, each of these
elements offers clues about the nature and quality of the service product. Inconsistency between
different elements may weaken the organization's credibility in the customers' eyes. Depicts the
service marketing system for a high-contact service like a hotel, dental office, or full-service
restaurant.
As you know from your own experience, the scope and structure of the service marketing
system often vary sharply from one type of organization to another. How things change when we are
dealing with a low-contact service, such as a credit card account. The significance of this approach to
conceptualizing service creation and delivery is that it represents the customer's view, looking at the
service business from the outside, as opposed to an internally focused operations perspective.
Physical Evidence
Many service performances are hard to evaluate. As a result, customers often look for
tangible clues about the nature of the service. For instance, what impression is created in your mind if
you see a damaged vehicle belonging to an express delivery service broken down by the side of the
road? Or observe a poorly groomed flight attendant traveling to (or from) the airport wearing a
frayed and dirty uniform? Or visit a friend in a hospital where the grounds and buildings are
beautifully maintained, the interior decor cheerful rather than institutional, and the friendly staff
wearing smart, spotlessly clean uniforms?

The content of each element will naturally vary from company to company and is in
essence the service strategy of the company. But all elements must be considered and in place.)
1. Service Culture is built on elements of leadership principles, norms, work habits and vision,
mission and values. Culture is the set of overriding principles according to which management
controls, maintains and develops the social process that manifests itself as delivery of service and
gives value to customers. Once a superior service delivery system and a realistic service concept
have been established, there is no other component so fundamental to the long-term success of a
service organization as its culture.
2. Employee Engagement includes employee attitude activities, purpose driven leadership and HR
processes. Even the best designed processes and systems will only be effective if carried out by
people with higher engagement. Engagement is the moderator between the design and the
execution of the service excellence model.
3. Service Quality includes strategies, processes and performance management systems. The
strategy and process design is fundamental to the design of the overall service management
model. Helping the client fulfill their mission and supporting them in the pursuit of their
organizational purpose, must be the foundation of any service provider partnership.

4. Customer Experience includes elements of customer intelligence, account management and
continuous improvements. Perception is king and constantly evaluating how how both customer
and end-user perceive service delivery is important for continuous collaboration. Successful
service delivery works on the basis that the customer is a part of the creation and delivery of the
service and then designs processes built on that philosophy – this is called co-creation.
Layout
Layout Arrangement of a facility to provide; working, service, reception, storage and
administrative areas
Facility layout
Facility layout can be defined as the process by which the placement of departments, workgroups
within departments, workstations, machines, and stockholding points within a facility are
determined.
This process requires the following inputs:
• Specification of objectives of the system in terms of output and flexibility
• Estimation of product or service demand on the system
• Processing requirements in terms of number of operations and amount of flow between
departments and work centers
• Space requirements for the elements in the layout
•Space availability within the facility itself
The layout facility is the physical location of the various departments/units of the
facility within the premises of the facility.
The departments may be located based on the considerations such as:
 Less walking distance
 Logical sequence of the processing requirements of the product
 Emergency services, etc
Factors affecting Layout
 Material
 Product
 Machinery
 Labor
 Location
 Managerial Policies
 Type of Industry
Scope of Facility Layout
Related to material
 Less material handling and minimum transportation cost.
 Less waiting time for in-process inventory
Related to work place
 Safe working conditions from the point of ventilation, lighting, etc.
 Least chances of accidents, fire, etc.
 Minimum movement of workers
 Proper space for machines, worker, tools, etc.
Performance related objectives
 Simpler plant maintenance
 Increased productivity, better product quality, and reduced cost .
 Least set-up cost and minimal change-over 
 Objective related to flexibility.
 Scope for future expansion.
Types of Layouts
1) Process Layout
• Suitable when product having standard features is to be produced in large volumes.
• the specialized machines and equipments are arranged one after another in the order of
sequence required in the production process.
Advantages of Process Layout:

•Greater Flexibility
•Better and more efficient supervision possible through specialization
•Capacity of different product line can be expanded easily.
•Better utilization of men and machine.
Disadvantages Process Layout:
•More floor space
•More work in progress
•More distance travelled by the product.

2) Product Layout
•It is appropriate for producing one standardized product, usually in large volume. It is
also called as flow-shop layout or straight line layouts. The machines are arranged
according to the progressive steps by which the product is made.
•Example: chemical, paper, rubber, refineries, cement industry.
Product Layout Advantages:
•Mechanization of materials is possible and material handling cost can be reduced.

•It requires less floor area.
•It facilitates better production control.
•Production bottlenecks are avoided.
Product Layout Disadvantages:
•Expansion of product line is difficult.
•There is difficulty is supervising.
•Breakdown of equipment disrupts the production.
3) Grouping Technology Layout
Grouping technology layout of cellular manufacturing layout is made for a single part
family i.e parts with common characteristics. In this layout dissimilar machines are
grouped into cells and each cell functions like product layout.

Advantage and Disadvantages:
It reduces material handling cost and simplifies machine changeovers.
It reduces in-process inventory and automate the production but reduces the flexibility.
4) Fixed Position Layout
When due to size, shape and other characteristics constraints, the products cannot be
moved, the machine and operators move around the product.
Example: construction of a building, assemble of an aircraft or ship.
Advantage: Less investment is required in this layout and less transport cost as bulky
machines are not moved.
SERVICE FACILITY DESIGN
• Service operations can be affected directly by the design of the facility.
• Good design and layout enhance the service, from attracting customers to making them
feel more comfortable to ensuring their safety (e.g., adequate lighting, fire exits, and
proper location of dangerous equipment)
• The physical environment or services cape of the supporting service facility influences
both customer and employee behavior and should be designed with an image and feel that
is congruent with the service concept.
• The services cape for a self-service operation plays a central role in guiding customer
behavior through the use of signage and intuitive design of interfaces. •
Offices of professional services such as those of lawyers and physicians, however, should
project competence and authority.
• An organization’s service facility reflects its values and is instrumental in executing its
strategy. Without words, a building communicates a message to both its customers and
employees. For example, the building may communicate modernity and progressiveness
or other features such as pleasantness, safety, and convenience.
SERVICE FACILITY DESIGN
• A well-conceived services cape will encourage an approach behavior for both employees
(e.g., commitment and desire to remain with the firm) and customers (e.g., exploration,
spending money, and returning).
• Because the physical environment elicits an emotional response and influences behavior, the
design of the service facility can intentionally mould the behavior of the participants to
support the organization’s goals.
Environmental Dimensions of Services capes
 Ambient Conditions
 Spatial Layout and Functionality
 Signs, Symbols, and Artifacts’
Factors Influencing Service Facility Design
• Nature and objectives of the service organization
• Land availability and space requirements
• Flexibility

• Security
• Community and environment
Tracking customer behavior

Tracking customer behavior has been a pet rock of mine since I started working in customer
success several years ago. I believe in a Sass model it is critical to know how your customers use
your software for several reasons:
1. Know what features to develop
2. Intelligently engage customers based on what they do
3. Identify patterns in usage to find potential upgrades and at-risk customers
4. Measure Customer Success / on boarding Employee performance
The question though is who should develop this functionality. Is it something you build in-house or
out source. I was curious to know what other companies are doing so I posted a poll in The
Customer Success Management Forum (a great group on LinkedIn). I have to admit I was a little
surprised by the results.
High customer expectations mean that it’s becoming ever more important for marketers
to be able to optimize every touch point along the customer journey, and to deliver seamless
brand messaging.
In addition, marketers are under mounting pressure to attribute sales to all the pre-
purchase online and offline research that customers engage in. But how can we link up the offline
world when it’s so difficult to capture in the first place?
Luckily there are a number of sophisticated techniques that allow us to capture offline
data and attribute it correctly at the point-of-sale. Here’s an overview of five of them.
QR Codes
QR codes are unique barcodes that get added to product packaging, poster ads, and
various in-store print media, and are a great way to track how offline browsing behavior and
marketing activity is affecting your online sales. It also encourages show roomers to buy from
you online, and not from one of your competitors.
Give customers browsing in-store an incentive to scan the QR code on their mobile: for
example, you could offer free delivery for a product they are interested in, with the QR code
linking them directly to the specific product page on your website.
Coupons
Coupons and discount codes allow retailers to advertise online for a discount on in-store
sales, and track the results of that online-to-offline campaign. It works by creating unique coupon

codes for each of your PPC ads, which offer some kind of incentive if the user buys in-store.
Each code that consequently becomes an offline sale can then be linked back to the ad to
calculate your ROI.
When using this method, make sure the discount codes are memorable so that
customers can easily use them offline. For larger campaigns, it’s also good practice to keep track
of your custom discount codes in a spreadsheet, so that you don’t forget where you used
particular codes.
Call Tracking
Integrating the contact centre into your multichannel strategy means relying on call
tracking software to generate unique numbers online. Dynamic phone numbers are generated for
individual users looking at your website and clicking your PPC ads, and allow calls to be linked
back to previous online interaction. For example, you can see what keywords they entered, what
ads and clicks inspired the call, as well as what they did after the call (if they don’t purchase over
the phone).
According to a report from Response Tap, a call tracking provider, this is one of
the most difficult offline channels to integrate, as 52 percent of marketers say they don’t have a
complete view of how their online and offline marketing activity is driving phone sales.
Loyalty Schemes
Loyalty or members’ schemes are an ideal strategy for marketers who want to
attribute an in-store sale to that user’s previous online interactions with the company.
Once a customer is signed up to the scheme, or has downloaded the app, their
unique ID gets scanned at the point-of-sale. This then gets tracked back to previous actions taken
on both the website and the app (provided the user is logged in). If you are using Sass-based
loyalty platforms, like Sweet Tooth, the sale can also be added to a user’s account via POS
integrations, making the purchasing experience much more efficient.
Beacons
Beacons allow you to target customers on their mobile as soon as they walk into
your brick-and-mortar store. When they move within reach (standard beacons have a range of 70
meters), you can communicate with customers via Bluetooth on their Smartphone. Not only does
this mean purchasing incentives can be sent to the shopper in real time, but it also allows
marketers to measure what percentage of their online customer base actually walks through their
doors.
House of Fraser, for example, introduced beacon-equipped
mannequins that activated as soon as a customer walked within 50 meters. Push notifications
were then sent out to their mobile with information about the clothes the mannequin was wearing,
the price, and links to specific product pages on the website.
HRM Issues
The most pressing competitive issues facing firms:
 Going global
 Embracing technology
 Managing change
 Developing human capital
 Responding to the market
 Containing costs

Going global
Globalization
The trend toward opening up foreign markets to international trade and investment.
 Impact of Globalization
 Partnerships with foreign firms
 “Anything anywhere, anytime” markets
 Lower trade and tariff barriers
 NAFT,EU,APEC,trade agreements
 WTO and GATT
Impact of HRM
 Different geographies, cultures, laws, and business practices
 Issues
 Identifying capable expatriate managers
 Developing foreign culture and work practice training programs
 Adjusting compensation plans for overseas work
Embracing New technology
 Knowledge Workers
Workers whose responsibilities extend beyond the physical execution of work to include
planning, decision-making, and problem solving.
Influence of technology in HRM
Human Resource Information System (HRIS)

 Computerized system that provides current and accurate data for purposes of control
and decision making.
 Benefits
 Store and retrieve of large quantities of data
 Combine and reconfigure data to create new information
 Institutionalization of organizational knowledge
 Easier communications
 Lower administrative costs, increase productivity, and response times
Managing change
Types of Changes
 Reactive change
Change the occurs after external forces have already affected performance
 Proactive change
Change initiated to take advantage of targeted opportunities
Formal change management programs help to keep employees focused on the success of the
business.

Managing change through HR
 Why change efforts Fail:
 Not establishing a sense of urgency
 Lacking leaders who have a vision
 Lacking leaders who communication the vision
 Not removing obstacles to the new vision
 Not systematically planning for and creating short term “wins”
Developing Human Capital

 Human capital
The knowledge ,skills and capabilities of individuals that have economic value to an
organization
Human capital and HRM
 Creation of knowledge
 Utilization of knowledge
 Application of knowledge
Responding to the Market

 Total Quality Management
A set of principles and practices whose core ideas include understanding customer needs ,
doing things right the first time, and striving for continuous improvement.
 Six Sigma
A process used to translate customer needs into a set of optimal tasks that are performed in
concert with one another
 Reengineering
Fundamental rethinking and radical redesign of business processes to achieve dramatic
improvements in cost, quality, service and speed.
 Require that managers create an environment for change
 Depends on effective leadership and communication process
 Requires that administrative system be reviewed and modified
Containing costs
 Downsizing
The planned elimination of jobs(“head count”)
 Hidden costs of layoff
 Severance and rehiring costs
 Pension and benefits payoffs
 Loss of institutional memory and trust in management
 Accrued vacation and sick day payouts
 Benefits of NO-layoff policy

 Higher customer satisfaction
 A fiercely loyal ,more productive workforce

 Outsourcing
Contracting outside the organization to have work done that formerly was done by internal
employees
 Employee Leasing
This process of dismissing employees who are then hired by a leasing company(Which
handles all hr related activists) and contracting with that company to lease back the
employees

\

Unit- 2
Services marketing planning process
INTRODUCTION
Service marketing management represents marketing concept in action .The service firm
must be customer oriented & must develop a competitive marketing strategy, that strategy
formulation consists of two steps.
 Identifying target markets and their needs

 Developing a marketing mix that satisfies the unique needs of these target markets
ORGANIZING MARKETING PLANNING
Developing a marketing strategy requires market planning and market planning is usually
preceded by market analysis. Before making any strategic plan the manager has to go through
some self questioning. The answers of these critical questions are the beginning of the
development of strategic plan.
How can competitive advantage and more cost efficient operations be achieved

What efforts must be used to develop and test new product service offerings
What role can be assigned to planning and research
The marketing information for planning purposes can be gathered through

marketing research and marketing intelligence. Market research is more structured and
quantifiable while marketing intelligence gathering concentrates on intangible ideas and
trends.
ANALYZING MARKETING OPPORTUNITIES
Analyzing market opportunity is to identify target markets and determine the

changing needs of customers and their bases for choosing among the many alternatives
offered.
Marketing orientation requires organizations to monitor their environment to adjust

their offering so that customer needs are fulfilled. There are some other imp. Factors to be
considered to analyzing the marketing opportunities, they are:
 The internal environment

 The immediate external environment
 The uncontrollable external environment:
 Economic Factors
 Social Factors
 Political and legal factors
 Technical factors
SELECTING TARGET MARKET
The process of identifying and evaluating marketing opportunities gives rise to many new ideas, each
of these opportunities must be studied relevance to the company’s resources.
This steps involves:
 Segmenting & Targeting

 Positioning
Services marketing can not be separated from market segmentation. There are some
segmentation methods which are used by service organization:
 Demographic variant
 Psychographic variant .
After this process market targeting is focused, deciding on which of the market segment to
target is a challenging one & after this process the service provider decides upon the number of
segments to serve such as :
 Undifferentiated marketing
e.g. Mass banking
 Differentiated marketing
e.g. bank products for products for corporate clients and individual clients
 Concentrated marketing
e.g. special agricultural banks or industrial credit banks.
DEVELOPING THE SERVICE MARKETING MIX
The marketing mix which is these sence of every marketing strategy& includes
tangible dominant products, they are:
 Service Product
 Place
 People
Price
 Demand oriented method

 Cost oriented method

 Competitor based pricing
Process
Physical Evidence
MANAGING AND CONTROLLING MARKETING EFFORT
The service firm must mobilize its people and resources e.g. money equipment, physical facilities
with in the organization to put the strategic plan to work. Another key issue that relates to the
implementation program me is the organizational framework.
Hackett lays out a link of activities that emphasizes on the interrelation of various activities of
the organization. This interdependence between marketing, operations, & human resources is termed
as service management trinity.
There are some strategies to control service performance:
 Establishing customer service divisions

 Performance Control
 Profitability Control
 Strategic Control

7 Steps to Developing a Customer Service Strategy
1. Create a Customer Service Vision
The first step in creating a customer service strategy is communicating the customer
service vision to employees. Employees need to understand what the vision and organizational goals
are for customer service and understand their responsibility to help achieve that vision.
An organization that shares a customer service vision, and teaches customer service skills, will
provide a better customer service experience than an organization that leaves the front-line
employees untrained and unprepared for dealing with customer issues.
2. Assess Customer Needs
Organizations often fail, and waste valuable resources, creating products and services that
they thought the customer wanted, only to find out it was not what the customer wanted at all. The
trick is to find out what it is the customer wants and put together plans to meet those needs.
Organizations can’t meet the needs of their customers without understanding what they
want. The first step in a customer improvement initiative is to talk to the customers to find out their
perception of the services being provided and determining what their needs and expectations are.
A customer needs assessment is done by soliciting feedback throughfocus

groups, satisfaction surveys, or customer comment cards, and developing a comprehensive plan to
meet and exceed the customer needs.
There are lots of survey software available. One I like is Survey Gizmo which is an easy to
use online survey tool. It’s a pretty fun tool and you can play with it for free. You should try it and
see what your customers tell you!

Keep in mind that customer needs and expectations are a moving target. What a customer
wants today will be very different from what the customer wants a year or five years down the road.
As things change, expectations and needs change also.
3. Hire the Right Employees
Hiring with the customer in mind is another step in an overall strategy for strong customer
service.
Screening employees and ensuring that they possess the disposition and skill set to help support a
strong customer service environment is important.
Skills can be taught but attitude and personality cannot. It’s a sad fact but not everyone should
interact with customers.
4. Set Goals for Customer Service
Once customer needs and expectations are identified and customer satisfaction is measured, it
is time to create goals for achieving customer satisfaction.
Employees need to understand what the target is so they can help the organization reach their
corporate objectives.
For example, if you operate a customer call center, a goal might be to answer all calls within X
number of minutes and hold employees accountable to that standard.
If the standard can’t be met, figure out why and fix it.
5. Train on Service Skills
If you hire right, your employees will have a natural ability to serve your customers well.
However, everyone can benefit from practical teaching on the organization’s approach to customer
service.

The training should explain how the organization would like the employee to behave in every
situation and should help employees understand how to respond to their customers. Employees need
to know what you want them to do.
For example, teach them how to respond to customer complaints, how to be responsive to customers,
how to meet customer needs, when to perform service recovery, how to answer the phone and your
organizations standards for service.
6. Hold People Accountable
Employees should have a good understanding of how their service to the customer affects
the organization’s overall performance and need to be held accountable for achieving customer
satisfaction goals. This is part of a comprehensive performance management system and should
be part of the cultural norm.
For example, share customer satisfaction data with your employees and confront employees when
they are not demonstrating the desired behaviors.
7. Reward and Recognize Good Service
There should be a well thought out system for acknowledging and rewarding employees for
good customer service. Employees need positive reinforcement and should be rewarded when they
demonstrate the desired behaviors of a strong customer service culture.
Having a strong vision and strategy for customer service is a critical component to the success of any
organization. Organizations need to identify who their customers are, what they want and develop
strategies to achieve those customer requirements. A strong customer service strategy is what
separates the successful organizations from the rest.
Market Segmentation: Meaning, Nature and Bases for Market Segmentation
Today, companies have recognized that they cannot appeal to all buyers in the marketplace, as they
are too widely scattered and too varied in their needs and buying practices. Most of the companies
have moved from mass marketing towards market segmentation and targeting. Instead of scattering

their marketing efforts, firms are focusing on buyers who have greater interest in the values they
create best.
Meaning and Definition:
At its most basic level, the term ‘market segmentation’ refers to subdividing a market along some
commonality and similarity. That is, the members of a market segment share something in common.
The purpose of segmentation is the concentration of marketing energy and force on the subdivision
(or the market segment) to gain a competitive advantage within the segment. The concentration of
marketing energy (or force) is the essence of all the marketing strategies, and market segmentation is
the conceptual tool to help achieve this focus.
In today’s competitive business world, it is not possible to sell everything to everyone. There are
different types of customers, each with different needs, wants, tastes, preferences, different
purchasing power, and so on. Again, in each category of customers, there can be various subgroups.
The marketing people select the type of customers representing the most desirable market and
accordingly make every possible effort to induce and encourage them to buy the goods or services.
Thus, market segmentation enables a firm to frame different marketing mixes for different groups of
customers.
Normally, the market is made up of people with:
a. Different characteristics
b. Different needs and wants
c. Different purchasing power
d. Differences in the degree of willingness to buy
e. Differences in eligibility to buy.
If marketers wish to do an effective marketing job in such diverse and heterogeneous markets, then
they must identify the differences in the different groups of people in the market. This is because one
marketing mix will not satisfy them. In other words, different marketing mixes have to be designed
to satisfy different marketing groups. Thus, there is a need for market segmentation (Figure 2.1).
Thus, market segmentation refers to subdividing a larger market into smaller markets.
Some selected definitions of market segmentation are as follows:
1. According to Philip Kotler, ‘market segmentation is a process of identifying groups of buyers with
different desires or requirements’.
2. According to Skinner, ‘market segmentation is a process of dividing a total market into groups of
consumers who have relatively similar product needs’.
3. According to Carl McDaniel, ‘market segmentation is defined as the process of identifying and
evaluating various strata or layers of market’.
4. According to William Stanton, ‘market segmentation is the process of dividing the total, hetero-
geneous market for a product into several sub markets or segments, each of which tends to be
homogeneous in all significant aspects’.
Nature of Market Segmentation:
1. Systematic process:
Segmentation of market demands a systematic process.
The process consists of the following steps:
a. Defining the market.

b. Data collection to analyse the characteristics of the potential customers.
c. Identifying the bases of segmentation.
d. Defining the market segments.
e. Evaluating the market segments.
f. Selecting the appropriate market segments.
2. Serves many benefits:
Market segmentation brings many benefits to the marketer for selecting target market and using an
appropriate combination of the four P’s.
3. Subject to certain limitations:
Market segmentation is subject to limitations such as:
(a) Difficulties in data collection,
(b) It is a time-consuming process, and
(c) It is expensive.
4. Facilitates customer satisfaction:
Through market segmentation the customers get goods and services of their choice, which helps in
satisfying their needs and wants.
5. Operates as promising marketing strategy:
Market segmentation is better than market aggregation, as the current marketing trend is shifting
from mass marketing strategy to target marketing strategy.
Bases for Market Segmentation:

The variables are the characteristics of individuals, groups, or organizations that the marketing man-
agers use to divide a total market into segments. The choice of segmentation basis is critical because
segmenting on the basis of an unsuitable variable reduces an organization’s chances of satisfying its
consumers’ needs and desires.
Top 4 Bases for Segmenting Consumer Market
The four bases for segmenting consumer market are as follows: A. Demographic Segmentation B.
Geographic Segmentation C. Psychographic Segmentation D. Behavioural Segmentation.
A. Demographic Segmentation:
Demographic segmentation divides the markets into groups based on variables such as age, gender,
family size, income, occupation, education, religion, race and nationality. Demographic factors are
the most popular bases for segmenting the consumer group. One reason is that consumer needs,
wants, and usage rates often vary closely with the demographic variables. Moreover, demographic
factors are easier to measure than most other type of variables.
1. Age:
It is one of the most common demographic variables used to segment markets. Some companies offer
different products, or use different marketing approaches for different age groups. For example,
McDonald’s targets children, teens, adults and seniors with different ads and media. Markets that are
commonly segmented by age includes clothing, toys, music, automobiles, soaps, shampoos and
foods.
2. Gender:
Gender segmentation is used in clothing, cosmetics and magazines.
3. Income:
Markets are also segmented on the basis of income. Income is used to divide the markets because it
influences the people’s product purchase. It affects a consumer’s buying power and style of living.
Income includes housing, furniture, automobile, clothing, alcoholic, beverages, food, sporting goods,
luxury goods, financial services and travel.

4. Family cycle:
Product needs vary according to age, number of persons in the household, marital status, and number
and age of children. These variables can be combined into a single variable called family life cycle.
Housing, home appliances, furniture, food and automobile are few of the numerous product markets
segmented by the family cycle stages. Social class can be divided into upper class, middle class and
lower class. Many companies deal in clothing, home furnishing, leisure activities, design products
and services for specific social classes.
B. Geographic Segmentation:
Geographic segmentation refers to dividing a market into different geographical units such as
nations, states, regions, cities, or neighbourhoods. For example, national newspapers are published
and distributed to different cities in different languages to cater to the needs of the consumers.
Geographic variables such as climate, terrain, natural resources, and population density also
influence consumer product needs. Companies may divide markets into regions because the
differences in geographic variables can cause consumer needs and wants to differ from one region to
another.
C. Psychographic Segmentation:
Psychographic segmentation pertains to lifestyle and personality traits. In the case of certain
products, buying behaviour predominantly depends on lifestyle and personality characteristics.
1. Personality characteristics:
It refers to a person’s individual character traits, attitudes and habits. Here markets are segmented
according to competitiveness, introvert, extrovert, ambitious, aggressiveness, etc. This type of
segmentation is used when a product is similar to many competing products, and consumer needs for
products are not affected by other segmentation variables.
2. Lifestyle:
It is the manner in which people live and spend their time and money. Lifestyle analysis provides
marketers with a broad view of consumers because it segments the markets into groups on the basis

of activities, interests, beliefs and opinions. Companies making cosmetics, alcoholic beverages and
furniture’s segment market according to the lifestyle.
D. Behavioural Segmentation:
In behavioural segmentation, buyers are divided into groups on the basis of their knowledge of,
attitude towards, use of, or response to a product. Behavioural segmentation includes segmentation
on the basis of occasions, user status, usage rate loyalty status, buyer-readiness stage and attitude.
1. Occasion:
Buyers can be distinguished according to the occasions when they purchase a product, use a product,
or develop a need to use a product. It helps the firm expand the product usage. For example,
Cadbury’s advertising to promote the product during wedding season is an example of occasion
segmentation.
2. User status:
Sometimes the markets are segmented on the basis of user status, that is, on the basis of non-user, ex-
user, potential user, first-time user and regular user of the product. Large companies usually target
potential users, whereas smaller firms focus on current users.
3. Usage rate:
Markets can be distinguished on the basis of usage rate, that is, on the basis of light, medium and
heavy users. Heavy users are often a small percentage of the market, but account for a high
percentage of the total consumption. Marketers usually prefer to attract a heavy user rather than
several light users, and vary their promotional efforts accordingly.
4. Loyalty status:
Buyers can be divided on the basis of their loyalty status—hardcore loyal (consumer who buy one
brand all the time), split loyal (consumers who are loyal to two or three brands), shifting loyal
(consumers who shift from one brand to another), and switchers (consumers who show no loyalty to
any brand).

5. Buyer readiness stage:
The six psychological stages through which a person passes when deciding to purchase a product.
The six stages are awareness of the product, knowledge of what it does, interest in the product,
preference over competing products, conviction of the product’s suitability, and purchase. Marketing
campaigns exist in large part to move the target audience through the buyer readiness stages.
Market Segmentation: Top 10 Benefits of Market Segmentation
The top ten benefits of market segmentation are as follows: 1. determining market opportunities 2.
Adjustments in marketing appeals 3. Developing marketing programmes 4. Designing a product 5.
Media selection 6. Timing of marketing efforts 7. Efficient use of resources 8. Better service to
customers 9. Helps in fixing prices 10. Assist in distribution strategies.
Segmentation of target markets has several advantages.
1. Determining market opportunities:
Market segmentation enables to identify market opportunities. The marketer can study the needs of
each segment in the light of current offerings by the competitors. From such study, the marketer can
find out the current satisfaction of customers.
Segments with low level of satisfaction from present offering may represent excellent market
opportunities. For example, customers may not be satisfied with the current offering of water
purifiers in terms of product or after-sale service. Such situation enables a marketer to launch a new
range of water purifiers and market them well.
2. Adjustments in marketing appeals:
Sellers can make best possible adjustments of their product and marketing appeals. Instead of one
marketing programme aimed to draw in all potential buyers, sellers can create separate marketing
programmes designed to satisfy the needs of different customers. Proper advertising and sales
promotional appeals can be made depending on the target audience.

3. Developing marketing programmes:
Companies can develop marketing programmers and budgets based on a clearer idea of the response
characteristics of specific market segments. They can budget funds to different segments depending
on their buying response.
4. Designing a product:
Market segmentation helps in designing products that really match the demands of the target
audience. Products with high market potential can be designed and directed to meet the satisfaction
of the target market.
5. Media selection:
It helps in selection of advertising media more intelligently and in allocating funds to various media.
The funds are allocated to various media depending on the target audience, impact of the media,
competitor advertising, and so on.
6. Timing of marketing efforts:
It helps in setting the timings of the promotional efforts so that more emphasis is placed during those
periods when response is likely to be at its peak. For instance, consumer goods can be heavily
advertised to Christians during Christmas season and to Hindus during Diwali time.
7. Efficient use of resources:
By tailoring marketing programme to individual market segments, management can do a better

marketing job and make more efficient use of the marketing resources. For example, a small firm can
effectively use its limited resources – money, sales force, etc. – in one or two segmented markets
rather than unsuccessfully aiming at a wider market.
8. Better service to customers:
Market segmentation enables a company to concentrate its marketing efforts in a particular market
area, thereby, providing a better service to the target customers. Proper marketing segmentation can
facilitate customer satisfaction.

9. Helps in fixing prices:
The marketing segmentation also enables to fix prices of the goods and services. Since different
market segments have different price perceptions, it is necessary to adopt different pricing strategies
for the markets. For instance, the prices for lower-income groups have to be lower and the product
and promotional efforts are adjusted accordingly.
10. Assist in distribution strategies:
Segmentation also assists in adopting suitable distribution strategies. Different market segments may
require different distribution mix. For example, if the product is of very high quality intended to
target the upper class, then it must be distributed at prestigious outlets located at selective places.
Targeting
Once the marketer creates different segments within the market, he then devises various
marketing strategies and promotional schemes according to the tastes of the individuals of particular
segment. This process is called targeting. Once market segments are created, organization then
targets them.
Targeting is the second stage and is done once the markets have been segmented.
Organizations with the help of various marketing plans and schemes target their products amongst
the various segments.
Nokia offers handsets for almost all the segments. They understand their target audience well and
each of their handsets fulfils the needs and expectations of the target market.
Tata Motors launched Tata Nano especially for the lower income group
There are five patterns of target market selection, which was first put forward by D. F.
Abell:
1. Single Segment Concentration
2. Selective Segment Specialization
3. Product Specialization
4. Market Specialization
5. Full Market Coverage.

1. Single Segment Concentration:
In this case the organisation focuses on just one segment. That is, the marketer prefers to go for
single segment. The company targets a segment and goes for a larger market share instead of a small
share in larger market segment. Through concentrated marketing, the company gains a strong
knowledge of the particular single segment’s need, thus it achieves a strong market position in the
segment and enjoys operational economies, through specializing its production, distribution and
promotion.
For example, the Allahabad Law Book Agency (Specialized only in law books), BPB Publications
(specialized only in computer books) etc. are good examples. Concentrated marketing strategy may
involve more than normal risks. At the same time, the strategy provides higher returns and therefore,
it is possible that competitors might be attracted to find their place in the segment, which may deter
the company to continue with this strategy.
2. Selective Segment Specialization:
In Selective specialization, the firm selects a number of segments, each objectively attractive and
appropriate, as per the company’s objectives and resources. There may be little or no synergy among
those segments, but each segment promises to be a money-maker. This market coverage strategy has
the advantage of diversifying the firm’s risk.

Even if one segment becomes unproductive, the firm can continue to earn money on other segments.
For example, a company X produces television as well as Walkman, the two different types of
products obviously for two different types of markets, and then it can be cited as example of selective
specialization.
3. Product Specialization:
Under product specialization, the firm concentrates on making a certain product that it sells to several
segments, for example, a microscope manufacturer sells microscopes to university-laborites,
Government laboratories and commercial laborites. It makes different microscopes for these different
consumer groups, but does not manufacture other instruments that these laboratories might use.
Product specialization promises strong recognition of customers within the product areas.
4. Market Specialization:
Here the organisation concentrates on satisfying the range of needs of a particular target group. An
example of this would be an agro-chemical Manufacturer whose principal target market is farmers.
For instance, X Company can implement market specialization strategy by producing all sorts of
home appliances-Television, Washing Machines, Refrigerators, Micro Ovens, Fans, and Flasks etc.
for middle class people. The firm gains a strong reputation to serve this consumer groups of middle
class segment.
5. Full Market Coverage:
When a firm attempts to serve all consumer-groups, with all the product that they might need, it is
called the Full Market concept. Only very large firms can adopt this strategy. Examples are IBM
(Computer Market). General Motors (Vehicle Market) and coca Cola (drink market).
Positioning
Positioning is the act of designing the company’s offering and image to occupy a distinctive place in
the target market’s mind. The end result of positioning is the successful creation of a market- focused
value proposition, a cogent reason why the target market should buy the product.
Market Positioning

This is the act of designing a company’s offering and image to occupy a distinctive place in the target
market’s mind. I.e. The act of creating a difference between a company’s offer from those of
competitors.
Positioning is the process of establishing and maintaining a distinctive place in the market for the
organizations’ product or brands. Positioning starts with the product, but positioning is not what you
do to a product. Positioning is what you do to the mind of the customer. You should concentrate on
the perception of the customer and not the reality of the product. Positioning then is how the product
is perceived and evaluated by the target market, relative to competing products. To the consumer
perception is reality. That is why it is said that a marketing battle is fought in the minds of
consumers. Marketers who attain a superior position in customers’ minds have won the marketing
battle.
A difference is worth establishing to the extent that it satisfies the following criteria.
1) Important: - The difference delivers a highly valued benefit to a sufficient number of

buyers.
2) Distinctive:- The difference is delivered in a distinctive way
3) Superior: The difference is superior to other ways of obtaining the benefit.
4) Pre-emptive: The difference cannot be easily copied by competitors.
5) Affordable - The buyer can afford to pay for the difference.
6) Profitable - The Company will find in profitable to introduce the difference.
Positioning strategies:-
1) Attribute positioning -A company positions itself on an attribute e.g. size, number of years
in existence.

2) Benefit positioning -The product is positioned as the leader in a certain benefit.
3) Use or application positioning -Positioning a product as the best for some use or
application.
4) User positioning -Positioning a product the best for some user group e.g. Bic pen, food for
consumption.
5) Competitor positioning -The product claims to be better in some way then a named
competitor.
6) Product category positioning -The product is positioned as the leader in a certain product
category
7) Quality or price positioning. -The product is positioned as offering the best value
As companies increase their number of claims for their brands, they risk disbelief and loss of clear
positioning. Companies must avoid four major positioning errors.
1. Under Positioning -When buyers have only a vague idea of the brand
The brand is seen as just another entry in a crowded marketplace. E.g. When Pepsi introduced its
clear crystal Pepsi in 1993 (U.S.A.) customers were distinctively unimpressed. They didn’t see
‘clarity’ as an important benefit of a soft drink.
2. Over Positioning -Buyers may have too narrow a image of the brand. These buyers might think
that suits at Sir Henry’s start at 15000/= when in fact it offers affordable suits started at 3000/=
3. Confused Positioning -Buyers might have a confused image of the brand resulting from the
company making too many claims or changing the brands positioning too frequently e.g. Omo, Zain
4. Doubtful Positioning -Buyers might find it hard to believe the brand claims in view of the
products features, price or manufacturers.

Positioning process:
The various steps of developing effective positioning are:
Market positioning
Psychological position
Positioning approaches
Market positioning:
The marketing positioning is defined as the process of identifying and selecting markets or segments
that represents business potential to determine the criteria for competitive process success. This must
be told on following factor.
Through knowledge of needs, wants and perceptions of the target market. Benefits offered by the
service offered.
Psychological positioning:
This step involves the use of communication to convey the firms or its offerings identify and
image of the target market. It converts the needs and positions the offering in the customer mind.
Psychological positioning:
Objective positioning
Subjective positioning
a. Objective positioning:
The objective positioning relates to the objective attributes of the physical project of objectives
positioning depends upon the uniqueness of features.
Ex : A picture of restaurant which looks like any other restaurant.
b. Subjective positioning:
Subjective positioning relates to the subjective attributes of the service offering. It is the mental
perceptions image and other attributes perceived by the tourist and not the physical aspects of the
offering.
Positioning approaches:
There are several approaches to positioning of project and service offerings. The following
positioning approaches level information collected during market protection and psychological
positioning.

Service attributes:
A company can position service alternative such as the facilitating services and the supportive
services.
Service benefits:
A strategy focuses up on the distinctive [attribute such as the facilitating services and the
services] benefit consumer can get with the one of the service.
Service application positioning:
Service application in positioning the basis of the reason for its use
Ex : Hotel inter congenital New Delhi
Competitive positioning:
The positioning may be against the competition or away from the competitive
Quality positioning:
The positioning focus on quality leadership of the firm.
Price positioning:
The positioning is to communication the best value for the price the consumer pay.
Excellence positioning:
The positioning on the perform and the efficiency of the firm.
New service development:
A service can be termed as a new service when it is totally innovative and is created and
offered by the company to the world for the 1st time.
Some new services are adoptive replacement they are the improved versions of the existing
service products, either in technology style status or performance.
● New to the world products
● New product lines
● Additions to the existing product lines
● Improvements & versions of existing products

● Re-positioning
● Cost reductions
 Post introduction
 Enrolment
 Launch
 Marketing
 Testing
 Service
 Department Business
 Analysis
 Testing the
 Concept Idea
 Screening
 Idea
 Generation
Idea generation:
The type of new service will depend on organization goals, vision, capabilities & growth plans.
By the new service strategy the org will be in below position to being generating specific ideas.
Idea screening:
This stage identifies those ideas that are potential and premising to be successful services. The
various services ideas are put screening by the evaluation of the idea with the company mission,
image and compatibility.
Testing the concept:
When the new service idea passes the screening stage. It is subject concept testing. It involves
translations the service idea into service concept with specific need satisfying aspects.
Business analysis:
The proposed idea is now viewed as a business proposal. This stage will decide whether the
project has both financial feasibility. The business analysis focuses on estimation of future growth,
major competitor’s price, elasticity of demand.
Service development:
The business proposal must then be converting into the actual service that will be to customer.
All tangible elements as well as the service delivery process must be designed.

Marketing testing:
Marketing testing helps the service firm to re-mix the marketing mix elements in order to
reduce the risk of launch, many service firms resort to testing within the org to its employees and
other benefits.
Post introduction evaluation:
A most service firms conduct market testing under simulated
Services Differentiation:
When the physical product cannot be differentiated, the companies resort to service differentiation
through addition of new services or modification of older ones or the combination of both.
i. Ordering ease:
It refers to how easy it is for the customer to place an order with the company. For example, Dell
Computers made the ordering of computers so simple that customers who are not aware of new
developments in the field can find various options to select from and get the deliveries in adequate
time.
ii. Delivery:
It refers to how well the product-service is delivered to the customer. For instance, DTDC or Fast
Flight is known for speed and efficiency in handling and delivering products. Domino’s Pizza is
known to deliver products within half an hour.
iii. Guarantees.
These can often be used as a differentiator and can be leveraged as a form of competitive advantage.
Companies can differentiate their offerings through guarantees by following certain guidelines:
a. The service guarantee associated with the product should be unconditional
b. The guarantee should be comprehensible and communicative
c. The guarantee should be meaningful and reassure the customer on those aspects that matter to him.

d. Customers should be able to invoke the guarantee easily and without any hassles.
iv. Installation:
It refers to the work done to make a product operational in its planned location. For example,
software application providers come along with step-by-step instructions on how to install software
in the system.
v. Customer training:
Some companies also train their customers or the customer’s employees to use the equipment. For
example, HPCL trains its dealers’ employees regarding handling of the equipment and in the
necessary soft skills to serve customers more efficiently. Some firms
also provide a hot line or a toll-free number for customer assistance and for further information about
new products and services.
vi. Financial arrangement:
Some companies tie up with financial institutions that offer loans to help customers purchase new
products through easy installment schemes, e.g. Maruti Udyog Ltd. has tied up with eight financial
institutions, Citicorp Maruti, Maruti Countrywide, ICICI, HDFC Bank, Standard Chartered, ABN-
AMRO, Kotak Mahindra and Sundaram Finance to help its customers with car finance.
vii. Customer consulting:
It refers to data, information systems and advising services that the seller offers to buyers.
viii. Maintenance and repair:
Companies provide after-sales maintenance and repair services for their products. Subsequent
business from the customer depends to a large extent on whether his experience of maintenance and
repair services from the company has been good or bad. For example, LG provides free service and
replacement of accessories for its hand sets up to one year to customers of Reliance India Mobile.
ix. Disposal:

Companies can also differentiate their products on the basis of disposability of the product after use.
For instance, some companies use plastic containers or wrappers to pack their product. They invite
the customer to return the empty packs to the company in exchange for another pack of the same
product. This strategy helps the firm in increasing its sales as well as establishing itself as an
environment-friendly organization. For example, Hewlett Packard asks its customers to send back
empty cartridges, which it claims it will reuse.
x. Miscellaneous services:
McMillan and McGrath suggest that the companies have opportunities to differentiate at every stage
of the consumption chain through miscellaneous services like improved warranty, maintenance
contract or reward system along with the above mentioned options

UNIT-3
Consumer Expectations
Pre-trial beliefs about a service that function as standards against which

performance is judged.
Customer Expectations of Service
• Recognize that customers hold different types of expectations for service performance
• Discuss controllable and uncontrollable sources of customer expectations
• Distinguish between customers’ global expectations of their relationships and their

expectations of the service encounter
• Acknowledge that expectations are similar for many different types of customers
• Delineate the most important current issues surrounding customer expectations
Types of Expectations
Desired service -- the level of service the customer hopes to receive

Adequate service -- the level of service the customer will accept.

Dual Customer Expectation Levels
The Zone of Tolerance

The extent to which customers recognize and are willing to accept variation in service performance
Zones of Tolerance for Different Service Dimensions
Zone of Tolerance and Importance of Service Dimensions

 as a service dimension becomes more important zone of tolerance will narrow and desired
and adequate levels will increase
Zones of Tolerance for First-Time and Recovery Service

 Consumers have a narrower zone of tolerance and a higher set of expectations for a service
recovery than for the first time service experience.
Factors that Influence Desired Service
Personal Needs --- states or conditions essential to the physical or psychological well being ---
physical, social, psychological, and functional
Enduring Service intensifiers --- individual stable factors that lead the customer to a heightened
sensitivity
 derived service expectations

 personal service philosophy
Factors that Influence Adequate Service Expectations
Are short-term in nature and fluctuate more than the factors that influence desired expectations.
Temporary Service Intensifiers
 Short-term individual factors that make a customer more aware of the need for service
Perceived Service Alternatives
 Other service providers that may perform the same or similar services
Self-perceived service role
 Customer involvement in the delivery of the service
Situational Factors

 Usually factors beyond the control of the service provider
Situational Factors
 Reason for purchase

 Consumer mood
 Weather
 Time constraints
 Emergency
Self Perceived Service Role --- how well the customer perceives they are performing their own role
in service delivery.
Factors that Influence Desired and Predicted Service
• Explicit Service Promises

• Implicit Service Promises
• Word of Mouth
• Past Experience
 particular service
 within the same industry
 related services
• More experience the narrower the Zone of Tolerance
• Four factors that influence the desired and adequate service expectations are as follows:
1. Explicit service promises 2. Implicit service promises 3. Word-of-mouth
communications 4. Past experience.
• When consumers are interested in purchasing services, they are likely to seek or take in
information from several different sources. For example, they may call a store, ask a
friend, or deliberately track newspaper advertisements to find the needed service at the
lowest price.
• They may also receive service information by watching television or hearing an

unsolicited comment from a colleague about a service that was performed well. In
addition to these active and passive types of external search for information, consumers
may conduct an internal search by reviewing the information held in memory about the
service.
• 1. Explicit service promises
• 2. Implicit service promises
• 3. Word-of-mouth communications, and
• 4. Past experience.
• 1. Explicit service promises:

• Explicit service promises are personal and non-personal statements about the service
made by the organization to customers. The statements are personal when they are
communicated by salespeople or service or repair personnel; they are non-personal when
they come from advertising, brochures, and other written publications. Explicit service
promises are one of the few influences on expectations that are completely in the control
of service provider.

• Promising exactly what will ultimately be delivered would seem a logical and appropriate
way to manage customer expectations and ensure that reality fits the promises. However,
companies and the personnel who represent them often deliberately overpromise to
obtain business or inadvertently overpromise by stating their best estimates about
delivery of a service in the future.
• Explicit service promises influence both the levels of desired service and predicted
service: They shape what customers desire in general as well as what they predict will
happen in the next service encounter from a particular service provider or in a certain
service encounter.
• 2. Implicit service promises:

• Implicit service promises are service-related cues other than explicit promises that lead to
inferences about what the service should and will be like. These quality cues are
dominated by price and the tangibles associated with the service.
• In general, the higher the price and the more impressive the tangibles, the more a
customer will expect from the service. Consider a customer who shops for insurance,
finding two firms charging radically different prices.
• She may make the inference that the firm with the higher price should and will provide
higher quality service and better coverage. Similarly, a customer who stays at a posh
hotel is likely to desire and predict a higher standard of service than from a hotel with
less impressive facilities.
• 3. The word-of-mouth communication:

• The importance of word-of-mouth communication is shaping expectations of service is
well documented. These personal and sometimes non-personal statements made by
parties other than the organization convey to customers what the service will be like and
influence both predicted and desired service.
• Word of mouth tends to be very important in services that are difficult to evaluate before
purchase and direct experience of them. Experts (including consumer Reports, friends

and family) are also word-of-mouth sources that can affect the levels of desired and
predicted service.
• 4. Past experience:
The customer’s previous exposure to service that is relevant to the focal service, is
another force in shaping predictions and desires. The service relevant for prediction can
be previous exposure to the focal firm’s service.
For example, you probably compare each stay in a particular hotel with all previous stays in that
hotel. But past experience with the focal hotel is likely to be a very limited view of your past
experience. You may also compare each stay with your experiences in the other hotels and hotel
chains.
Customers also compare across industries: hospital patients, for example, compare hospital stays
against the standards set by telephone service, one reason why cable service is often judged to be
poor. In a general sense, past experience may incorporate previous experience with the focal brand,
typical performance of a favorite brand, experience with the brand last purchased or the top-selling
brand, as well as the average performance a customer believes represents a group of similar brands.
Examples of Customer Expectations
Customer expectations are the base assumptions that customers make about your brand, services
and products. When expectations aren't met for one reason or another customers may be either
positively or negatively surprised. The following are illustrative examples.
Sensory Perception
A customer who tastes a confection such as a macaron is expecting a smell, taste and texture.
Quality
A customer of a luxury hotel may be expecting interior designs finished with high quality materials.
A customer of a budget hotel may be expecting a clean, comfortable and quiet room.
Fee Structure
A customer of an airline may expect meals and drinks to be free on an international flight.
Security & Privacy
A customer of a messaging app may expect that their messages to friends and family are private.

Customer Service
Customers of a hotel may expect staff to be courteous, amiable, professional and diligent.
Usability
Customers accustomed to touch screen interfaces may expect a tap zone around each element such
that things don't need to be tapped with unreasonable precision.
Terms
A customer who purchases a product that is delivered with qualitydefects may expect that they are
entitled to a refund if they return it in a reasonable period of time.
Personalization
A customer who returns to the same hotel frequently may expect the hotel to remember their room
preferences.
Performance
A customer expects their bank's website to load within seconds.
Types Customer expectations
Customer satisfaction reflects the expectations and experiences that the customer has with a product
or service. Consumer expectations reflect both past and current product evaluation and user
experiences.
Think about any major purchases you’ve made recently. Did you research your purchase? Did you
collect information from advertising, salespersons, friends, associates, or even test the product?
This information influences our expectations and gives us the ability to evaluate quality, value, and
the ability of the product or service to meet our needs and expectations.
Customers hold both explicit and implicit performance expectations for attributes, features, and
benefits of products and services. The nature of these expectations will dictate the form and even the
wording of customer satisfaction survey questions. Let me repeat this: the nature of these
expectations will dictate the form and even the wording of your satisfaction questions.
Understanding the following 7 customer expectations form the definitions below is

critical before you set out to measure customer satisfaction and increase customer loyalty.

1. Explicit Expectations
Explicit expectations are mental targets for product performance, such as well-identified performance
standards.
For example, if expectations for a color printer were for 17 pages per minute and high-quality color
printing, but the product actually delivered 3 pages per minute and good quality color printing, then
the cognitive evaluation comparing product performance and expectations would be 17 PPM – 3
PPM + High – Good, with each item weighted by the associated importance.
2. Implicit Expectations
Implicit expectations reflect established norms of performance. Implicit expectations are established
by business in general, other companies, industries, and even cultures.
An implicit reference might include wording such as “Compared with other companies…” or
“Compared to the leading brand…”
3. Static Performance Expectations
Static performance customer expectations address how performance and quality are defined for a
specific application. Performance measures related to quality of outcome may include the evaluation
of accessibility, customization, dependability, timeliness, accuracy, and user-friendly interfaces.
Static performance expectations are the visible part of the iceberg; they are the performance we see
and—often erroneously—are assumed to be the only dimensions of performance that exist.
4. Dynamic Performance Expectations
Dynamic performance customer expectations are about how the product or service is expected to
evolve over time. Dynamic expectations may be about the changes in support, product, or service
needed to meet future business or use environments.
Dynamic performance expectations may help to produce “static” performance expectations as new
uses, integrations, or system requirements develop and become more stable.
5. Technological Expectations
Technological customer expectations focus on the evolving state of the product category.

For example, mobile phones are continually evolving, leading to higher expectations of new features.
Mobile service providers, in an effort to limit a consumer’s ability to switch to new technology
phones, have marketed rate plans with high cancellation penalties for switching providers, but with
liberal upgrade plans for the phones they offer.
The availability of low profile phones with email, camera, MP3, blue tooth technology, and increased
storage will change technology expectations as well as the static and dynamic performance
expectations of the product.
These highly involving products are not just feature based, but raise expectations that enhance
perceptions of status, ego, self-image, and can even evoke emotions of isolation and fear when the
product is not available.
6. Interpersonal Expectations
Interpersonal customer expectations reflect the relationship between the customer and the product or
service provider.
Person to person relationships are increasingly important, especially where products require support
for proper use and functioning.
Support expectations include interpersonal sharing of technical knowledge, ability to solve a

problem, ability to communicate, reduced time to problem resolution, courtesy, patience, enthusiasm,
helpfulness, assurance that they understood my problem and my situation, communication skills, and
customer perceptions regarding professionalism of conduct, often including image and appearance.
7. Situational Expectations
In building a customer satisfaction survey, it is also helpful to evaluate why pre-purchase

expectations or post-purchase satisfaction may or may not be fulfilled or even measurable.
The following conditions may be considered:
 Expectations may not include unanticipated customer service attributes that are new to that
consumer.
 Expectations may be based on vague images, thereby creating wide latitude of acceptable
performance and expected satisfaction.

 Product performance expectations and evaluations may be sensory and not cognitive, as in
expectations of taste, style or image. Such expectations are not only difficult to evaluate and
understand, but may change over time and with consumption.
 The product use may attract so little attention as to produce no conscious affect or cognition
(evaluation). When measured, this results in meaningless satisfaction or dissatisfaction
information.
 There may have been unanticipated benefits or consequences of purchasing or using the
product (such as a uses, usage situations, or features not anticipated with purchase).
 The original expectations may have been unrealistically high or low.
 The product purchaser, influencer and user may have each been a different type of individual,
each having different expectations.
Your research study may also benefit from considering expectations related to perceived quality and
value.
Issues in involving customers service expectations

Customer defined service standards
Introduction
A tangible product is only one aspect of the supplier/customer relationship. The other aspect is
service; indeed, in many businesses, there is no physical product. The only relationship is service.
Service standards are important for customers, potential customers, employees and management of a
business. They help to define what a customer can expect and to remind management and
employees of the challenge and obligations that they face.
Defining service standards
Service standards are usually defined in terms of:
 timeliness
 accuracy
 appropriateness
‘Delivery in three days’ or ‘calls answered in 20 seconds’ are phrases that give the essence of a
service standard that involves a timeline.
These statements need to be defined precisely before they can be considered as true service
standards. ‘When does the clock start?’, ‘Are we expecting 100% success in the timeframe?’, ‘Is
measurement based on working days or calendar days?’, ‘Does this apply to all locations
worldwide?’ and ‘Does this apply 24 hours/day, 7 days/week?’ are some of the questions that
have to be asked in the process of defining the standard.
So an initial definition of ‘answer the phone within three rings’ may be implemented as ‘Between
8am and 6pm on workdays, 95% of calls will be answered by a human in 15 seconds and 100%
in 40 seconds’.
Similarly, an initial definition of ‘delivery within two days’ could become ‘For addresses in the UK
mainland, parcels will be delivered two working days after receipt of the order’.

Accuracy
Customers expect accurate information and accurate deliveries – only 100% is acceptable as a
standard under this heading. ‘We got most of your order right’ is a response that is not
appreciated by a customer.
Examples of service standards reflecting the accuracy of a service are ‘the information quoted in a
telephone conversation is 100% accurate’ or ‘the parcel received by the customer contained all
the goods ordered by the customer’.
Appropriateness
How often do you hear the exclamation ‘they didn't answer the question!’ It happens often
when politicians are being interviewed on TV but it shouldn't happen in the commercial world.
Appropriateness is about ensuring that the customers' expectations have been met,
particularly in an enquiry situation.
An example
A customer writes to an organisation with a three-part enquiry. The customer receives a

response that is on time, totally correct in what it says – but fails to address one of the three topics
in the original enquiry. Such a response would fail the appropriateness standard – again based on
a 100% expectation.
‘100% of the customer's questions were addressed’ would be a good starting point for such a
standard.
Customer Defined Standards
 Operational Standards based on pivotal customer requirements identified by customer.
Examples-: -Customer requirement
-Priorities
-Expectation Level

-efficiency
-effectiveness
Types of Customer – Defined Service
SOFT STANDARDS AND MEASURES
Opinion-based measures that cannot be observed and must be collected by talking to customers
(perceptions, beliefs)
HARD STANDARDS AND MEASURES
Things that can be counted, timed, or observed through audits (time, numbers of events)
One Time Fixes
 What aspect of services need to be changed requirement can something be met using one
time fixes.
 Technology
 Policy
 Procedures
 Equipments
 Furnishing

Process for Setting Customer-Defined Standard
1. Identify existing or desire service standards.

2. Translate customer explanation in to behavior and actions.
3. Determine appropriate standards
4. Develop measurement for standards.
5. Establish target level for standards
6. Track measure against standards.
7. Provide feedback about performance to employees.
8. Update target levels and measures.

06. Track measure against standards.
07. Provide feedback about performance to employees.
08. Update target levels and measures.
Developing Service Performance Index
Customer define standards are service performance index
Purpose
•Identify of the customer most important requirements.
•Requirement link with tangible and measurement aspect.
•Using feedback from Index
•Identify and improve service problems.
Implementation of Service Standards
 Ownership
 visibility
 Commitment.

Ownership
It starts at the top. The chief executive and top management team must be sponsors and
champions. They must ‘walk the talk’, own the communication process and ensure initial and on–
going focus on standards in every employee briefing.
Each service standard must have a management owner, who is accountable for the delivery of the
service. Performance against standard will normally be a feature of that individual's annual review.
The management owner will also have the authority to implement process and other changes to
improve operational performance. But there is no copyright on ideas, so all colleagues should be
encouraged to make suggestions for performance improvement.
Visibility
‘How well are we doing?’ should be a question that employees don't have to ask. Customer
service standards and the current performance against those standards should be communicated to all
employees on a timely basis.
Notice boards, memos, email, team briefings, newsletters and the organization’s intranet are
appropriate methods.
Employees really appreciate the opportunity for discussion. Employees who are based out of the
office are frequently overlooked, so they should get special consideration.
Commitment
The mission or values of an organization are a good place to anchor the commitment to
customer service.
The chief executive, all levels of management and all employees must be committed to
delivering the promise to customers regardless of external or internal influences. It's not easy but
remember: service is your best salesman.

UNIT-4
SERVICE MARKETING MIX – 7 P’S OF MARKETING
The service marketing mix is also known as an extended marketing mix and is an integral
part of a service blueprint design. The service marketing mix consists of 7 P’s as compared to the
4 P’s of a product marketing mix. Simply said, the service marketing mix assumes the service as
a productitself. However it adds 3 more P’s which are required for optimum service delivery.
The product marketing mix consists of the 4 P’s which
are Product, Pricing, Promotions and Placement. These are discussed in my article on product
marketing mix – the 4 P’s.
The extended service marketing mix places 3 further P’s which include People, Process
and Physical evidence. All of these factors are necessary for optimum service delivery. Let us
discuss the same in further detail.
1) Product
The product in service marketing mix is intangible in nature. Like physical products such
as a soap or a detergent, service products cannot be measured. Tourism industry or the education
industry can be an excellent example. At the same time service products
are heterogenous, perishable and cannot be owned.
The service product thus has to be designed with care. Generally service blue printing is
done to define the service product. For example – a restaurant blue print will be prepared before
establishing a restaurant business. This service blue print defines exactly how the product (in this
case the restaurant) is going to be.
2) Place
Place in case of services determine where is the service product going to be located. The
best place to open up a petrol pump is on the highway or in the city. A place where there is
minimum traffic is a wrong location to start a petrol pump. Similarly a software company will be
better placed in a business hub with a lot of companies nearby rather than being placed in a town
or rural area. Read more about the role of business locations or Place element.
3) Promotion
Promotions have become a critical factor in the service marketing mix. Services are easy
to be duplicated and hence it is generally the brand which sets a service apart from its
counterpart. You will find a lot of banks and telecom companies promoting themselves
rigorously.

It is because competition in this service sector is generally high and promotions is
necessary to survive. Thus banks, IT companies, and dotcoms place themselves above the rest by
advertising or promotions.
4) Pricing
Pricing in case of services is rather more difficult than in case of products. If you were a
restaurant owner, you can price people only for the food you are serving. But then who will pay
for the nice ambiance you have built up for your customers? Who will pay for the band you have
for music.
Thus these elements have to be taken into consideration while costing. Generally service
pricing involves taking into consideration labor, material cost and overhead costs. By adding a
profit mark up you get your final service pricing. You can also read about pricing strategies.
Here on we start towards the extended service marketing mix.
5) People
People is one of the elements of service marketing mix. People define a service. If you
have an IT company, your software engineers define you. If you have a restaurant, your chef and
service staff defines you. If you are into banking, employees in your branch and their behavior
towards customers defines you. In case of service marketing, people can make or break an
organization.
Thus many companies nowadays are involved into specially getting their staff trained in
interpersonal skills and customer service with a focus towards customer satisfaction. In fact many
companies have to undergo accreditation to show that their staff is better than the rest. Definitely
a USP in case of services.
6) Process
Service process is the way in which a service is delivered to the end customer. Lets take
the example of two very good companies – Mcdonalds and Fedex. Both the companies thrive on
their quick service and the reason they can do that is their confidence on their processes.
On top of it, the demand of these services is such that they have to deliver optimally
without a loss in quality. Thus the process of a service company in delivering its product is of
utmost importance. It is also a critical component in the service blueprint, wherein before
establishing the service, the company defines exactly what should be the process of the service
product reaching the end customer.
7) Physical Evidence
The last element in the service marketing mix is a very important element. As said before,
services are intangible in nature. However, to create a better customer experience tangible
elements are also delivered with the service. Take an example of a restaurant which has only
chairs and tables and good food, or a restaurant which has ambient lighting, nice music along
with good seating arrangement and this also serves good food. Which one will you prefer? The
one with the nice ambience. That’s physical evidence.
Several times, physical evidence is used as a differentiator in service marketing. Imagine
a private hospital and a government hospital. A private hospital will have plush offices and well
dressed staff. Same cannot be said for a government hospital. Thus physical evidence acts as a
differentiator.
So next time some one asks what do you mean by service marketing mix or What are the 7 P’s, then
you know the answer. This is the service marketing mix (7p) which is also known as the extended
marketing mix.
PACKAGING
INTRODUCTION

• Packaging is a process of covering, wrapping of goods into a package. Packaging involves
designing and producing wrapper for a product.
• Packaging is essential for offering goods in safe and secured position to consumers.
• Packaging’s role is threefold:
 To facilitate the use of the product
 To protect the product
 To sell the product
TYPES OF PACKAGING
1. CONSUMER PACKAGING
• Designed for consumers convenience and appeal, marketing consideration and display.
• The main emphasis is on marketing.
2.INDUSTRIAL PACKAGING
• It is designed to focus on the handling convenience and protection during transportation.
• The main focus is on logistic.
The classification of packaging can also be based on level of packaging done on the product.
• Primary : -Direct contact with product. & Maintain product quality.
• Secondary : -It contains product and primary pack presentation , protection
• Tertiary : -Transport shipping , warehouse storage, bulk handling.
REASONS FOR PACKAGING DESIGN
• Product quality must be maintained.
• Customers must be able to easily access and use the product without harming themselves or
contaminating the product.
• All aspects of a pack development that may give rise to quality problems must be identified and
minimized by good design.
• This packing design coordinator must be fully aware of the involvement required by marketing,
quality assurance and production.
• Once it has fulfilled its role of attracting the consumer’s attention and setting up the expectations
which have encouraged purchase of the product, packing then has a vital role to play in assisting
the product to meet those expectations.
• In addition to containing, protecting and preserving, all of which will almost certainly be taken for
granted.
• Packing works in practical terms by delivering the product into its intended market and to the end
user , in such a way that it is convenient and safe to use.
FUNCTIONS OF PACKAGING

• Presentation: Presentation of a product should be attractive and eye catching.
• Protection: Protection increases life cycle of a product.
• Preservation : It preserves original colors, quality, flavor, etc.
• Economy : Packaging of a product should be economically feasible.
• Convenience : Packaging should be light to handle.
SECONDARY FUNCTIONS
• Containment : Premeasured, pre-weight and then placed in box.

• Identification: Packaging helps to identify the products easily.
• Labeling : Its helps to promote the sale of goods.
• Handling : When packaging is light in weight it facilitate easy to handling of cargo.
• Suitability : It should be match with the product.
Package Development
Package Development is a manufacturer of custom thermoformed and printed

packaging and displays, providing high quality design, engineering, production and fulfillment for
all thermoformed and printed packaging needs.
10 Best Practices for Managing the Packaging Development Process

If you’ve ever gone through the packaging development process, you know how many
variables and unknowns there are to coordinate. The project can quickly leave you feeling like you’re
wrestling a three-headed monster. Once you knock out one area, several others rear their ugly heads
causing you to have to keep forging ahead with a swinging sword.
Although difficult, there are a few best practices you can implement to make this process more
bearable.
Here are 10 of our favorite ways to design a package and its various components and still meet your
product’s brand and operational requirements today and in the future.
1. Coordinate Suppliers
From the packaging material supplier to the machinery suppliers and contract fillers, you
are juggling a lot of critical tasks from the outside world. This can make communication a nightmare
if you don’t get everyone on the same page early on.

Loop in your suppliers from the start. This will help you reduce risks and ensure critical
requirements, such as label design specifications, handling, and label application, are followed.
2. Work with Distributors Early On
The packaging development process has a lot of moving parts. That we’ve covered. Each of
these parts costs money. That’s something that’s often neglected until it’s too late.
When it comes to finding the right manufacturer and distributor, up front cash requirements are
critical to consider. Bottle manufacturers, in particular, require large minimum order quantities
(MOQs). For small companies, buying the minimum can still put a strain on the overall budget.
Large companies also run into this dilemma often during product launches.
What many people don’t realize is that distributors often have bulk inventory on hand. They’re able
to sell this stock for a significantly lower cost than the MOQs required by manufacturers. Even
though the per unit cost is a little bit higher, the overall bill is quite a bit lower.
Talking to your distributor early on could save you money and time getting your product to market.
3. Eliminate the Fluff (Middleman)
Working directly with your manufacturers can help you get what you need faster and easier.
Although it’s tempting to loop in other experts, cutting out the middleman can prove beneficial in the
long run if they don’t provide additional added value like an inventory program or a broader
expertise like a general contractor would.
4. Protect Your Branded Containers
Have a custom container shape? You’re not alone. This is an excellent way to grab buyer’s
attention, but be warned. There are many custom containers these days. One major packaging
distributor has reported that custom containers are up 45% over the past year. You might want to
apply for a patent to protect your design before it’s copied by others.
5. Protect Your Designs
Your label designs are just that – yours. Just like with your container shapes, it’s a smart
practice to protect your label creative. By working with a creative brand designer, you’ll get
exclusive rights to your design, which can prove beneficial when you seek quotes from suppliers.
6. Minimize Renovations
Are you renovating, or changing your packaging design? If so, you’re going to run into a
variety of problems with designers, label producers, and other suppliers. Minimize the need for any
container renovations by planning a bulk change on the entire brand portfolio at once. This way, you
won’t need to go through multiple iterations and can get everything updated in one fell swoop.
7. Keep Customer-Centric
It’s easy to get caught up in the details that you forget to focus on the customer when
designing your label and producing your product. This is dangerous. Every attribute of your product
should enhance the customer’s end experience. From making your container easy to grab and hold to
offering answers to customer questions on your labels, it’s important to keep the customer at the
forefront of all your decisions.

8. Keep the Process in Mind
As you start making decisions, don’t lose sight of the overall process. Each step will need to
feed into the other. Work hard to assemble an efficient supply chain among your suppliers and
distributors from the get go so you’re not trying to widen process bottlenecks once everything gets
going.
9. Remember Your Constraints
While designing your prototypes and deciding on containers or labels, remember your constraints.
 Do you have required information, such as nutrition facts, that you must disclose on your labels?
 Does your manufacturer have certain regulations about container size or shape you must follow?
 Do you have to go through specific tests before your product shape, size, and label can be approved?
 Is your label design printable?
Understand what constraints you’ll face during the process so you can prepare yourself for success in
the future instead of setbacks.
10. Consider All Channels
Every channel where you’ll be offering your product (grocery stores, drug stores, hotel
chains, etc.) has a different strategy. One channel might sell using smaller packaging while another
focuses on selling bulk supplies. One channel might sell only using photographs of the products
while another sells in an environment where the customer can pick up and feel the product before
buying.
PRODUCT ATTRACTIVENESS

Promotion Mix
Elements of promotional mix are also called as tools, means, or components. Basically,
there are five elements involved in promotional mix. Some authors have considered more elements,
too. However, we will consider five elements as shown in Figure 1.
1. Advertising:
Advertising is defined as any paid form of non-personal presentation and promotion of ideas,
goods, and services by an identified sponsor. It is a way of mass communication. It is the most
popular and widely practiced tool of market promotion. Major part of promotional budget is
consumed for advertising alone. Various advertising media – television, radio, newspapers,
magazines, outdoor means and so forth – are used for advertising the product.
Characteristics of advertising are as follow:
i. Adverting is non-personal or mass communication. Personal contact is not possible.
ii. It is a paid form of communication.
iii. It is a one-way communication.
iv. Identifiable entity/sponsor-company or person gives advertising.
v. It is costly option to promote the sales.
vi. It can be reproduced frequently as per need.
vii. Per contact cost is the lowest.
viii. Various audio-visual, print, and outdoor media can be used for advertising purpose.
ix. It is a widely used and highly popular tool of market promotion.
2. Sales Promotion:
Sales promotion covers those marketing activities other than advertising, publicity, and
personal selling that stimulate consumer purchasing and dealer effectiveness. Sales promotion mainly
involves short-term and non-routine incentives, offered to dealers as well consumers. The popular
methods used for sales promotion are demonstration, trade show, exhibition, exchange offer,
seasonal discount, free service, gifts, contests, etc.
Characteristics of sales promotion are as follows:

i. The primary purpose of sales promotion is to induce customers for immediate buying or dealer
effectiveness or both.
ii. Excessive use of sale promotion may affect sales and reputation of a company adversely.
iii. It is taken as supplementary to advertising and personal selling efforts.
iv. It involves all the promotional efforts other than advertising, personal selling, and publicity.
v. It consists of short-term incentives, schemes, or plans offered to buyers, salesmen, and/ or dealers.
vi. It in``11volves non-routine selling efforts.
3. Personal Selling:
Personal selling includes face-to-face personal communication and presentation with
prospects (potential and actual customers) for the purpose of selling the products. It involves personal
conversation and presentation of products with customers. It is considered as a highly effective and
costly tool of market promotion.
Characteristics of personal have been listed below:

i. Personal selling is an oral, face-to-face, and personal presentation with consumers.
ii. Basic purpose is to promote products or increase sales.
iii. It involves two-way communication.
iv. Immediate feedback can be measured.
v. It is an ability of salesmen to persuade or influence buyers.
vi. It is more flexible way of market communication.
vii. Per contact cost is higher than advertising.
viii. It involves teaching, educating, and assisting people to buy.
4. Publicity:
Publicity is also a way of mass communication. It is not a paid form of mass communication
that involves getting favorable response of buyers by placing commercially significant news in mass
media. William J. Stanton defines: “Publicity is any promotional communication regarding an
organization and/or its products where the message is not paid for by the organization benefiting
from it.”
It is the traditional form of public relations. Publicity is not paid for by the organisation. Publicity
comes from reporters, columnists, and journalists. It can be considered as a part of public relations.
Publicity involves giving public speeches, giving interviews, conducting seminars, charitable
donations, inauguration by film actor, cricketer, politician or popular personalities, stage show, etc.,
that attract mass media to publish the news about them.
Main characteristic of publicity include:

i. Publicity involves obtaining favorable presentation about company or company’s offers upon
radio, television, or stage that is not paid for by the sponsor.
ii. It is a non-paid form of market promotion. However, several indirect costs are involved in
publicity.
iii. It may include promotion of new product, pollution control efforts, special achievements of
employees, publicizing new policies, etc., for increasing sales. It is primarily concerns with

publishing or highlighting company’s activities and products. It is targeted to build company’s
image.
iv. Mostly, publicity can be carried via newspapers, magazines, radio or television.
v. Company has no control over publicity in terms of message, time, frequency, information, and
medium.
vi. It has a high degree of credibility. Publicity message is more likely to be read and reacted by
audience.
vii. Publicity can be done at a much lower cost than advertising. Company needs to spend a little
amount to get the event or activity publicized.
viii. Frequency or repetition of publicity in mass media depends upon its social significance or the
values for news. Mostly, it appears only once.
5. Public Relations:
The public relations is comprehensive term that includes maintaining constructive relations
not only with customers, suppliers, and middlemen, but also with a large set of interested publics.
Note that public relations include publicity, i.e., publicity is the part of public relations.
William Stanton defines:

“Public relations activities typically are designed to build or maintain a favourable image for an
organisation and a favourable relationship with the organization’s various publics. These publics may
be customers, stockholders, employees, unions, environmentalists, the government, and people in
local community, or some other groups in society.” Thus, public relations include organization’s
broad and overall communication efforts intended to influence various groups’ attitudes toward the
organisation. Some experts have stated that the public relations are an extension of publicity.
Main characteristic of publicity are as under:

i. Public relations is a paid form of market promotion. Company has to incur expenses.
ii. Public relations activities are designed to build and maintain a favourable image for an
organisation and a favourable relationship with the organization’s various publics.
iii. It is an integral part of managerial function. Many companies operate a special department for the
purpose, known as the public relations department.
iv. It involves a number of interactions, such as contacting, inviting, informing, clarifying,

responding, interpreting, dealing, transacting, and so forth.

v. Public relations covers a number of publics – formal and informal groups. These publics may be
customers, stockholders, employees, unions, environmentalists, the government, people of local
community, or some other groups in society.
vi. Public relations activities are undertaken continuously. It is a part of routine activities.
vii. All the officials, from top level to supervisory level, perform public relations activities.
viii. In relation to modern management practices, the public relations is treated as the profession.
Service Marketing Strategies
Definition of Marketing Strategy
The process of adjusting controllable marketing factors to cope with or exploit

uncontrollable environmental forces.
Definitions of Reactive and Proactive Strategies

• Reactive strategy is a slow response to environmental changes.
• Proactive strategy is a rapid response to environmental changes.
• Defensive strategies – rapid responses to protect the organization from environmental
threats.
• Offensive strategies – rapid responses employed to capture opportunities.
Planning the Services Marketing Strategy
• Planning the strategy

• Determination of the service's objectives and manner in which they will be
accomplished.
• Designing the strategy
• Careful specification of what it is that the organization hopes to accomplish.
• Implementing the strategy
• Developing a detailed timetable and itemized budget.
• Controlling the strategy
• Continuous assessment and modification of the success of strategies.
Types of Service Marketing Strategies

Marketing a service differs from promoting a tangible product because consumers often need
to be educated about a service. Service marketing often requires more explanation as to why the
customer needs the product, how it works and why you are the best entity to deliver the service. If
you're a solo entrepreneur, selling a unique skill you have, you're even more under the gun to explain
what you do. Using a multi-pronged educational approach for marketing a service will be your best
bet to boost sales.
Referrals
One of the best ways to market an intangible is through word of mouth. A happy customer
will not wait to be asked about a service from friends and will often want to share her experience
and tell people why she likes the service. Some service providers use referral programs as an
integral part of their marketing. You can offer clients a cash bonus for each referral they send to
you, offer them a free service for each lead or offer their friends a reduced rate on service if they
mention the customer.
Education
Another way to market a service is to provide customer education. You can do this by
offering free seminars, lunch-and-learns or other educational meetings. You can write articles for
magazines and newspapers and give talks at trade shows and conferences. With an educational
marketing strategy, you do not emphasize your product features or prices, but the benefits of
using the service. For example, if you own a dog grooming business, you might write articles for
local newspapers discussing the effects of pet ticks and fleas on a family’s health and a pet’s
well-being, showing how regular grooming can alleviate these problems.
Demonstrations
Customers might be gun shy about trying a service if they aren’t sure what they are
getting. Offering free demonstrations helps ease their concerns and can result in immediate sales.
For example, if you offer personal training, you might contact a large company with a wellness
program and offer to give an employee talk and free exercise class. If you offer public relations
services, you might offer meet with a business owner, discuss his current marketing strategy and
suggest PR initiatives he could try and outline the cost to do so.
Social Media
Social media are hard to escape, with millions of people sending texts and emails to
friends when they see interesting items they want to share. They can also be an inexpensive way
for smaller businesses with few advertising dollars to make an impact. A social media marketing
strategy lets service providers take advantage of free tools such as Facebook and Twitter to
educate consumers and get them to spread the word to their network of contacts. With Facebook,
for example, you can create a free business page that lets you detail your service. Put customer
testimonials and case histories on your page or run contests offering a cash prize or a free session
or visit. Place place Facebook "Like" buttons on your website pages to encourage visitors to share
what they find with friends. Send Twitter messages that give customers free tips. For example, a
landscaper might tweet, "Watering your lawn more than once per week isn't necessary. Once a
week for 30 minutes is all you need."
Segmentation and Targeting of Services
Meaning of segmentation
Market segmentation is the process of dividing an entire market up into different
customer segments. Targeting or target marketing then entails deciding which potential customer
segments the company will focus on. It comes before targeting, which helps a company to be
more selective about who they are marketing their products to. Marketing segmentation and
targeting are equally important for ensuring the overall success of a company. Today,
Segmentation, Targeting and Positioning (STP) are a familiar strategic approach in modern
marketing. The STP model is useful to creates marketing communications plans since it helps
marketers to develop strategies and then create and deliver personalized and relevant messages to
engage with different audiences.
The above diagram shows how STP model works. STP is relevant to digital marketing too,
where applying marketing personas can help develop more relevant digital communications as shown
by these alternative tactical customer segmentation approaches. In addition, STP focuses on
commercial effectiveness, selecting the most valuable segments for a business and then developing a
marketing mix and product positioning strategy for each segment.
Importance of segmentation of services
Focus of the Company
 Increase in competitiveness
 Market expansion
 Customer retention
 Have better communication
 Increases profitability
As already stated, 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.

1) Focus of the Company – It is an effective method to enhance the focus of a firm on market
segments. If marketers have better focus, obviously he will have better returns. A number of
automobile companies have started focusing on small car segments. This is nothing else but a
company changing its focus for better returns. Thus companies develop their strategy based on a
new segment which increases its profitability.
2) Increase in competitiveness – Once marketer’s focus increases, their competitiveness in that
market segment will increase. Segmentation increases the competitiveness of companies. For
example, if you are focusing on youngsters, your brand recall and equity with youngsters will be
very high. Your market
share might increase and the chances of a new competitor entering might decreases. The brand
loyalty will definitely increase. Thus market segmentation also increases competitiveness of a
firm from a holistic view.
3) Market expansion- In segmentation expansion is immediately possible. Suppose you have your
market strategy on the basis of geography, then once you are catering to a particular territory, you
can immediately expand to a nearby territory. In the same way, if you are targeting customers
based on their demography (Ex – Reebok targets fitness enthusiasts) then you can expand in
similar products (Ex – Reebok expanding with its fitness range of clothes and accessories).
Segmentation plays a vital role in expansion.
4) Customer retention – By using segmentation, customer retention can be cheered through the life
cycle of a customer. You can take an example of Hospitality segment whether there are hotels,
airlines, or hospitals. Hospitality services is the growing sector in India, where a customer have
an ample number of choices starting from a local Dhabi to a luxurious hotel catering services on
the basis of customer demands.
5) Have better communication – One of the Ps of marketing mix which is absolutely dependent on
STP is Promotion or communication. The communications of a company needs to be spot on for
its target market. Thus if you need a target market, you need segmentation. Communication
cannot be possible without knowing your target market. Imagine if you had to make someone
across a curtain understand what politics is. You would go on about ruling parties, states,
countries and politicians. And when the curtain is taken aside, you find that the person across the
curtain is a 5 year old kid. Is there any use talking to him about politics? This shows why
communication needs segmentation. If you don’t know your market segment, what is their
demography, what is their psychology, where they are from, then how can you form a
communication message.
6) Increases profitability – Segmentation increases competitiveness, brand recall, brand equity,
customer retention, and communications. Thus if it is affecting so many factors of your business,
then definitely it affects the profitability of the firm. We never see people negotiating in a Nike,
Gucci or BMW showrooms. One of the USP’s of this brand is their segmentation. They are in
fact targeting segments which have no need of bargaining or negotiation. Thus their profitability
is high.
Targeting of services
A target market is that selected market (customers), that a company wants to sell its
products and services to, and to whom it directs its marketing efforts. Firstlymarketer needs to
identify the target market and thereafter develops its marketing plan. A target market can be
separated from the market as a whole by geography, buying power and psychographics. Once the
segments have been evaluated the market to be targeted can be selected on the basis of :
Undifferentiated marketing: The undifferentiated marketing strategy emphases on an entire target
market rather than a segment of it. This strategy employs a single marketing mix - one product,
one price, one placement and a single promotional effort to reach the maximum number of
consumers in that target market.
"Marketing," by William M. Pride and O. C. Ferrell, gives commodities says sugar and salt are
examples of products that might be marketed effectively through an undifferentiated strategy, as
many consumers in the overall market have similar needs for the products.
Differentiated marketing: This is a customized approach and satisfies customers according to their
needs. A differentiated marketing strategy targets different market segments with specific
marketing mixes designed especially to meet those segments needs. Each mix includes a product,
price, placement and promotional program customized specifically for a particular segment. For
example, a company that manufactures vitamin supplements might identify gender-based market
segments. It could produce one multivitamin formula for women and another for men. It could
further differentiate by segmenting the gender groups by life stage and creating different
marketing mixes around each one. Differentiated marketing is best suited for markets with
readily identifiable segments, each with distinctive needs.
Concentrated marketing :The concentrated strategy provides a third-way solution that allows
marketers to target a single market segment with a single marketing mix. The ability to specialize
to this degree has the advantage of allowing a company to focus its resources on meeting the
needs of a single, well-defined and well-understood market, which makes it more competitive
against larger companies. On the downside, a concentrated marketing strategy can pigeonhole a
company into a single product and market and leave it vulnerable to the effects of changing
conditions within that market.
Micro marketing :Micro marketing is a marketing strategy in which advertising efforts are focused
on a small group of highly-targeted consumers. Micromarketing requires a company to narrowly
define a particular audience by a particular characteristic, such as ZIP code or job title, and tailor
campaigns for that particular segment. It can be a more expensive technique due to customization
and lack of an economy of scale.
Positioning the Services
Product positioning involves a number of steps including the following: Determining levels of
positioning Identification of key attributes of importance to selected segments Location of
attributes on a positioning map Evaluating positioning options Implementing positioning.
Process of Positioning
Product positioning involves a number of steps including the following:
Determining levels of positioning
Identification of key attributes of importance to selected segments
Location of attributes on a positioning map
Evaluating positioning options
Implementing positioning.
Determining levels of positioning

The first step in positioning is to determine which level(s) –service level, product sector level, and
corporate level –are to receive explicit positioning attention. Some examples will illustrate the
choices that are made by some service organizations. The level or levels of positioning to be
undertaken are usually fairly clear out, although some organization, have placed different
emphasis on these levels at different points in time.
Identification of attributes Once the level of positioning has been determined it is necessary to
identify the specific attributes that are important to the chosen market segments. In particular, the
way in which purchasing decisions are made should be considered. Individuals use different
criteria from making a purchase decision of a service.
Location of attributes on positioning map
The positioning process involves the identification of the most important attribute and
location of various companies‟ services, for these attributes attribute identified, statistical procedures
exist for combining these attributes into aggregate dimensions. Such dimensions are referred to by
various names such as principal components, multi-dimensional scales, factors etc. depending upon
how the data were elicited and which statistical procedures were used. Usually two dimensions are
used on positioning maps and these often account for a large proportion of the „explanation‟ of
the customer’s preference.
Products or services are typically plotted on a two dimensional positioning man such as show
in the following figure. The positioning map can be relation to the selected attributes. The analysis
can be further developed by drawing separate positioning maps for each market segment. Customers
in each market segment may perceive the service and its benefits differently and different map will
show these different positions.

Fig. 6.1 Illustrative positioning man
Positioning maps can be based on either objective attributes or subjective attributes Maps can also
use a combination of objective and subjective attributes.
Evaluation positioning options
Strengthening current position against competitors to avoid head-on attack.
Identifying an unoccupied market position that was not filled by a competitor
Repositioning the competition.
Once a company had identified where it is positioned at present, it then needs to

determine how to enhance or sustain its position relative to its competitors.
Criteria for good positioning
The positioning should be meaningful.

The positioning must be believable.
The positioning must be unique.
Implementing positioning and the marketing mix
How a company and service is positioned needs to be communicated throughout all of its implicit
and explicit interactions with customers. This suggests that all elements of the company, its staff,
policies and image, need to reflect a similar image which together conveys the desires position to
the market place. This means that a company must establish a strategic positioning direction,
which is followed through in all of its tactical marketing and sales activities.
A successful positioning strategy should make the service clearly distinguishable by features which
are desirable and important to the target customer segment. This means that the positioning
strategy should be examined from time to time to ensure that it does not become outdated and
that it is still relevant to the target market segment.
The marketing mix is the key to implementing a positioning strategy. The design of the marketing
mix to implement the positioning must be based on the key salient attributes relevant to the target
segment. These attributes should be identified in the context of analysis of competitors, whose
positions should be assessed to discover their vulnerability. All the elements of the marketing mix
can be utilized to influence the customer’s perception and hence The marketing mix can be used
to develop a coherent totality that creates the positioning in the customer’s mind.
Importance of Positioning
Positioning involves both launching new brands into the marketplace (new brand positioning), and
repositioning old brands. It is concerned with the differentiation of products and services and
ensuring that they do not degenerate into a commodity. To maximize its potential a company
should position itself in its core market segments, where it is objectively or subjectively
differentiated in a positive way over competing offerings.
Positioning is particularly import for services in the market. As a result of competitive pressure the
consumer is becoming increasingly confused by the huge offering of services within each market
sector. These offering are communicated by a vast number of advertising messages promoting

different features of the services. The key to a successful positioning strategy is to promote the
feature which the company is best and which exactly matches the needs of the customer.
Because of intangibility and other features associated with services, consumers find that
differentiation of services can be more difficult and complex. Successful positioning makes it
easier for the customer to see a company’s services as being different from others and exactly
what is wanted.
METHODS OF POSITIONING
Services can be positioned in 6 different ways. They can be positioned by service attributes, use of
application, price/ quality relationship, service class, service user, or competitor.

Market Leadership Strategies
Market leadership is not simple task. Other firms continually challenge the leader’s strengths or try to
take advantages of its weaknesses. The leader firm might become weaker or old-fashioned against
new entrants as well as existing rival firms. It firm can use one or a combination of three strategies to
retain its leadership .

1. Expand the total market strategy:
Market leader firms can normally gain the maximum when the total market expands. The
focus of expanding the total market depends on where the product is in its life cycle. This strategy
can be used when a product is in the maturity stage. For example, the Japanese increased their car
production to enter new countries.
Market leaders can look for new users, new uses, and more usage of its products when the
product is in the maturity stage of the product life cycle. ICICI Bank, for instance, entered into rural
banking and agric business financing when it felt the heat of competition in the overcrowded and
super-saturated urban market. Marti Udyog started True Value car division—used cars certified by
Marti engineers—to expand their market in the rural and urban markets well.
2. Defending market share strategy:
When the leader tries to expand the total market size, it must also continuously defend its current
business against enemy attacks. For example, Coca-Cola must constantly maintain its guard against
Pepsi-Cola. Similarly, Hero Honda should constantly maintain its guard against Bajaj, Honda, Suzuki
and TVS in the two-wheeler market. In this strategy, the leader firm must keep its costs down, and its
price must be consistent with the value that customers see in the product.
There are six ways that a market might use to protect its market position:
(i) Position defense:
This strategy involves allocating maximum resources into the current successful brands. To
overcome a position defense an attacker therefore typically adopts an indirect approach rather than
the head-on attack that the defender expects. For example, HUL increased its ad-spend on Clinic Plus
and Sun silk shampoos and gave heavy promotions through price reduction.

(ii) Flanking defense:
This strategy both guards the market position of leading brands and develops some flank market
niches to serve as a defensive corner either to protect a weak front or to establish an invasion base for
counterattack, if necessary. An ideal example is how HUL successfully nourished its first Rs.100
core Indian-made brand Vim in a competitive dish wash market. It was able to check the attack of
competitors through product innovation, attractive public campaigns, road shows and public
relations.
(iii) Pre-emptive defense:
This defense strategy man oeuvre involves the launching of an offence against an enemy before it
starts an offence. For example, Titan launched more brands and sub-brands to corner the market
share of HMT watches in the early 1990s.
(iv) Counter offensive defense:
This is a strategy of identifying a weakness in an attacker and aggressively going after that market
niche so as to cause the competitor to pull back its efforts to defend its own territory .When a leader
is attacked, he may base his counterattack in the attacker’s territory.
The attacker has to deploy resources to this territory for defense. When Ceat tyres attacked TVS
Srichakra in Tamil Nadu markets, TVS decided to expand its coverage to Ceat tyre’s hub in the north
and west of India through innovative campaigns like road rallies, road shows and attractive public
campaigns.
(v) Mobile defense:
This strategy involves the leader broadening and expanding its territories to new market areas
by diversifying. The leader takes innovation works in both these directions. For instance, a five-star
hotel can become a foreign exchange dealer, inbound and outbound tour operator, flouriest and so on.
Such diversification into related areas comes under mobile defence strategies.
(vi) Contraction defense:
This strategy involves retrenching into areas of strength and is often used in later stages of a product
life cycle or when the firm has been under considerable attack. For example, HUL decided to
concentrate on its core business areas, that is, soaps and detergents, and has emerged as the clear
leader in the toilet industry.
3. Expanding the market share strategy:
Market leaders can improve their profitability by increasing their market shares, like HUL,
Procter and Gamble, McDonald’s and Titan. In conclusion, market leaders who stay on top have
learned the art of expanding the total market, defending their current territory, and increasing their
market share and profitability.

Competing with highly aggressive market leaders presents a formidable challenge to all
newcomers. Take the case of the tea or coffee industry. No newcomers dare enter in to the market as
the top brands of Tata, HUL, and Nestle guard their share so successfully.
In todays world, there is a rise in both, the number of products and the number of competitors
in the market. Naturally everyone wants to be ahead of the competition. But is everyone successful?
Definitely not. Any market will have one single market leader and not several market leaders!!! So
what is it that market leaders do correctly to ward off their competitors? We look at some strategies
which are common for every market leader

UNIT-5
INTRODUCTION TO INSURANCE
Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain
loss.
Insurance is nothing but a system of spreading the risk of one onto the shoulders of many.
Risk Management, the practice of appraising and controlling risk, has evolved as a discrete of field
of study and practice
EVOLUTION OF INSURANCE SECTOR
1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning.
1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business.
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance
business.
1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the
interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and
nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs 5
crore from the Government of India.
The 1st general insurance company was developed by britishers in 1850.
Benefits of Insurance Services

Financial Stability for household and firms.
Mobilization of Resources and channel savings.
Relieve pressure on Government budget.
Minimization of total risk.
Quality Work Life (QWL).
Increased Social Stability.
Organization System of Insurance
Organizations providing Insurance in India are broadly classified into three groups
Departmental Organizations.
Corporations Organizations.
Government Companies
Marketing orientation and customer sensitivity are two important considerations for an insurance sector.
Marketing Mix of Insurance Sector
Product Mix- Fire Insurance
Marine Insurance

Misc. Insurance
Pricing Mix- Important factor that influences the price decisions of insurance business is risk. Tariff advisory
committee was constituted as per Insurance Act 1968. Fixation of rates as per the risk is devised by this
committee.
Place Mix- Door to door Marketing.
Through agents.
Internet Based Marketing (ICICI Lombard)
Promotion Mix Direct Marketing.
Internal Marketing- Personal Sales Force
External Marketing- Electronic & Print Media
Persuasive Advertising
Sales Promotion and Publicity
Contemporary Mixes
People Mix- Customers
Agents
Advisors
Process Mix- Hospitality Marketing
Interactive Marketing
Physical Evidence Mix- Insurance Certificates.
Premium payments Receipts.
Emerging Services in Insurance Sector
Electronic Clearance Services (ECS):- A policy holder having an account in any bank which is a member of
the local clearing house can opt for ECS debit to pay premiums.
Call Centre & SMS Services:- 24 x 7 Interactive Voice Response System (IVR) .
LPG Concept:- Liberalization, Privatization & Globalization
Consolidation of Insurance Operations
Closer ties between insures & banks:- Tie-ups between insurers & banks through banc assurance ( Bank +
Insurance) or conglomerates ( financial groups).
Off shoring:- Offshore centers aim to attract international insurance business through attractive concessions
& liberal incorporations requirements
Increased public Awareness
Claim settlement services
Current status of GATS on insurance services
Identifying sectors for further liberalization:- intermediation, risk assessment services, reinsurance etc..
Identifying nature of commitments
Liberalization of trading norms.
Ascertaining transparency issues in trade of insurance.
Identifying cross-cutting issues:- normalization of regulatory barriers.
Customer Relationship Management (CRM).
Consolidated insurance services :- a type of insurance service covering all the aspects of risk right from life
insurance to all other general insurances such as fire, marine, wealth-assurance, children's education plans
etc.
Basic tenet of idea:- cumbersome policy availing procedures n premium payment services are burden on the
part of customer. So to ease this we have come up with an idea of “Synergy Insurance Services” i.e.
(SES).
Tourism
Tourism is the travel for recreational (fun), leisure (rest), family or business purposes, usually of a limited
duration.
Temporary, short-term movement of people to destination outside their resident places.

Tourism is commonly associated with trans-national travel, but may also refer to travel to another location
within the same country.
FORMS OF TOURISM
Outbound Tourism: Outbound tourism refers to residents to travel outside their home country.
Inbound Tourism: Incoming tourism is also known as 'inbound tourism.
Incoming tourism means travelers arriving in different countries from their own.
Domestic Tourism: Domestic tourism is tourism involving residents of one country traveling only within that
country.
MARKETING IN TOURISM
As the production and consumption experiences are inseparable, it is impossible to sample a

tourism service before purchase.
Marketing of tourism is based on ◦ Trust
◦ Relationship
◦ Delivering value
DIFFERENT TYPES OF TOURISM IN INDIA
Beach Tourism
Spiritual Tourism
Pilgrimage Tourism
Cultural Tourism
Eco System
Medical Tourism
Adventure Tourism
History Tourism
ELEMENTS OF TRAVEL AND TOURSIM INDUSTRY

The 3 major sub industries in travel & tourism development are- I Tour Operators & Travel agents
II Hotels and caterers
III Transportation
The other peripheral elements include- I. Insurance
II. Entertainment
III. Shopping
TRAVEL AND TOURISM AS A SERVICE
The industry is multi- segment one and essentially includes 3 elements-
Attraction of the destination
Facilities at the destination
Accessibility and transportation to the destination

Intangibility
Service oriented industries like travel and tourism, strive towards converting the intangible product into an
experience that customer will value and cherish.
Variability
Offering the same quality of service each time a customer interacts with the service marketing brand (which
helps in image building)
Inseparability
Tourism is a service in the true sense, because of its unique features.
Prospective customers have to travel to the destination to experience the place; and a trail or sampling or test
drive is not possible before purchase.

Marketing of Educational Services
• Education is the process by which society deliberately transmits its accumulated knowledge, skills and
values from one generation to another through institutions.
• The act or process of imparting or acquiring general knowledge and of developing the powers of reasoning
and judgment.
Need for Marketing Educational services
• Need to “market” their services has not really been felt by the educational sector
• This is because there is always Demand>Supply
• But in the recent years, there is a shift in trends
• Large number of institutions for specialized fields have been set up in the recent years for fields like
Management and computer education
• This has lead to increase in competition
Marketing StrategiesBefore Deciding on the Marketing Mix, Educational Institutes should answer certain
basic Questions::::
• What Business are we in?
• Who are our customers and What benefits they seek?

Professional Services
Professional services include a range of different occupations which provide support to businesses of all sizes
and in all sectors.
Professional Services Marketing

Professional services marketing consists of organized activities and programs by professional services firms
that are designed to retain present clients and attract new clients by sensing, serving, and satisfying their
needs through delivery of appropriate services on a paid basis in a manner consistent with creditable
professional goals and norms
Effective Marketing Strategy for Professional Firm
• Expanding Service to Existing Clients
• Identifying and Cultivating High Potential Prospective Clients
• Widening and deepening personal referral sources
• Favorable awareness programs
• Service and Market specialization
• Replacing Clients
Marketing of healthcare services

THE INDUSTRY “The healthcare industry (also called the medical industry or health
economy) is an aggregation and integration of sectors within the economic system that provides goods
and services to treat patients with curative, preventive, rehabilitative, and palliative care”.
One of the world's largest and fastest-growing industries, consuming over 10 percent of gross domestic
product (GDP) of most developed nations.
PRODUCT
• Emergency and/or Casualty Services: state-of-the-art ambulances, the CCUs on Wheels, hi-tech
telecommunication for such situations.
• Ambulance Services: linked by state-of-the-art telecommunications and fully equipped with doctors.
• Diagnostic Services: offer a wide range of facilities for instance, Oncology, Orthopedics, Neurology,
Plastic surgery and so on.
Pharmacy Services: facility available for 24 hours for in and out patients and also general public.
• Health Diagnosis Programmer" - a complete, comprehensive, periodic health check up. It consists:
Master health check up
Executive Health check up
Diabetics health check ups etc.
Generally, the service offering in a hospital comprises of the following levels:
1. Core level – the basic treatment facilities and services offered by the hospital like diagnostic services,
emergency services, casualty services etc.
2. Expected level – cleanliness and hygiene levels maintained in the hospital.
3. Augmented level – dress code for staff, air conditioning of the hospital, use of state of art technology,
services of renowned consultants.
Pricing
• Pricing strategy not dependant on competitor’s pricing as for the purpose of serving the society and not profit
maximization. It includes:
Initial deposit :The amount depends and extends on : • the category of room
• General ward - lower classes
•Deluxe suite - middle and upper classes
• the treatment or surgical procedure planned
PROMOTION
• Do not normally undertake aggressive promotion, rely a lot on favorable word of mouth.
• To crease the clientele, introduction of different health services like the acupressure clinic, master health
programmes and diabetes health checkups apart from annual health checkups.
• Camps in rural areas to give medical check ups at a reasonable price.
• Sponsor frequent visits to the spastic society, old age homes, etc.
• Advertise in health and fitness magazines, other print and electronic media, through awareness programmes,
text messages,etc.
PLACE
• Contact point between the customer and the hospital or health clinic. • Involves two factors:
Accessibility refers to the ease and convenience with which a service can be purchased, used or received.
Availability refers to the extent to which a service is obtainable or capable of being purchased, used and
received.
• Factors influencing the placing decision:
market size and structure by geographical regions,
number and types of competitors in the region,
location of potentially attractive consumer segments,
local infrastructure,
good road access facilities and public transportation network.
PEOPLE
• The behavior and attitude of the personnel offering service will influence the customer's overall perception
of the service.

• It is necessary that the staff in hospital are trained to offer quality patient care with human touch using state
of the art technology.
• Ways to motivate the employees:
Concessions to the employee's near ones.
Regular liaison with them at all times and knowing what the employees want .
Active participation of the employees in the activities of the hospital.
PROCESS
In a hospital, the process is divided into four phases:
1. The Joining Phase
Arrival of the patient, Registration.

2. The Intensive Consumption Phase
Diagnosis, Treatment & Information about further actions
3. The Detachment Phase
Discharge of the Patient, Payment
4. Feedback
PHYSICAL EVIDENCE
• Good ambience
• Appearance and behavior of staff
• Hygiene and Cleanliness
• Well organized
MEDICAL TOURISM
Medical tourism (also called medical travel, health tourism or global health care) is the rapidly growing
practice of traveling across international borders to obtain healthcare.
• Services typically include elective procedures as well as complex specialized surgeries such as joint
replacement (knee/hip), cardiac surgery, dental surgery, and cosmetic surgeries.
• Main purpose being providing and availing better quality healthcare services at comparatively low cost.
• Ex-Foreign patients travelling to India to seek medical treatment in 2012, 2013 and 2014 numbered 171,021,
236,898, and 184,298 respectively.
MARKETING OF FINANCIALSERVICES
INTRODUCTION
Financial services refer to services provided by the finance industry. The finance industry
encompasses a broad range of organizations that deal with the management of money. Among these
organizations are banks, credit card companies, insurance companies, consumer finance companies, stock
brokerages, investment funds and some government sponsored enterprises.

BANK MARKETING
 Provides services
 Aimed to satisfy customer’s needs and wants.
 Needs and wants may be non financial in nature
 Competitive element efficiency and effectiveness,
 Organizational objectives are still the driving force
 Commercial objective to make
 profit Social Objectives
Banking marketing concept emerged in the west in 1950’s in the form of advt & promotion.
The evolution of bank marketing in india can be classified in 3 phases:
1.TRADITIONAL BANKING PERIOD: bankers were concerned with maintenance of a/c’s &
transaction of buss’ with customer in lines with the rules & regulations. In spite of this, a strong bond
between banker-customer existed with some selected customers. It was also called “CLASS
BANKING”
2. DEVELOPEMENT BANKING PERIOD: 14 major commercial banks in 1969 was nationalised. The
socio-economic objective of nationalization drove the public sector banks to expand banking activities
& extend it to larger groups of customers. Thus called “MASS BANKING”.
Bankers adopted selling concept to mobilize deposits, they didn’t find the needs of the
customers but offered what was available.
However, in 1972 SBI came out with market segmentation scheme & innovative loan plans.
3. BANK MARKETING PERIOD: What caused banking marketing?
A .Rising customer needs & expectation due to improvement in general standard of living.
B .Entry of foreign & private sector banks in India.
C . Economic liberalization of Indian economy.
D . Phenomenal growth of competition due to economic liberalization.
E .Rise in the Indian middle class with considerable resources.
f. Government intervention in protecting the interest of consumers.
BLENDING OF 7 P’S WITH FINANCIAL SERVICES:
PRODUCT:
• convenience of paying dues.
• Keeping records.
• Transferring funds.
• Various deposits.• Loans & advances.
• Consultancy services.
• International banking,
• Safe deposits
• Credit card.
• So on…..
Bankers have to identify the core &supplementary product services as it has more market implications.
Core product: it’s the fundamental benefit that the customer buys from the bank. Customers donot buy
product but buy benefit. A particular bank differentiates itself from other bank through augmented
product.
Augmented product: a basic product with which some ancillary is attached to it. Eg: Suvidha a/c with
CITIBANK, ATM card is free.
Bankers need to add more innovative services with their product in order to have competitive advantage.
Product related strategy include:
i. Introduction of new schemes: DEMAT a/c.
ii. ii.Modification of product through technological development: online banking.
iii. iii.Change in the product line or package: from corporate banking to personal banking, or deleting
an existing service line.
PRICE:
• In India, banks adopt administered pricing structure to some extent as the deposit & lending rates are
prescribed by RBI.
PROMOTION:
• All the promotional tools are essential right from the stage of new product. The objective is to make the ppl
aware of new product, to persuade customers, to remind customers, build image of the bank.
• An advertisement in banking is a promise. Eg: newspapers, radio, television, magazines & hoardings. Sales
promotion: brochures , calenders, diaries, penstand.
• Publicity : customers tends to believe a news item rather than an advertisement. WOM an important
promotional tool.
PLACE:
• Making the banking service available & accessible to the customer. Selection of suitable location for the
branch. Should have sound availability of transportation, communication, electricity & other necessary
facilities for the smooth functioning of the branch
PEOPLE:
• Banking product cannot be separated from the ppl who markets them.
• Banks adopts internal marketing in order to make the whole business customer- oriented.
• The product is known to the employees before they are effectively marked to the customers.
PROCESS:
• Accounting procedure for putting through a transaction. Through automation of transactions, accounting
procedures & data handling.
Eg: loan application , clearance of cheque.
PHYSICAL EVIDENCE:
• Imaginative designs of bank brochures , flashy cheque books.
• Attractive brand names, logos, symbols.
• Customers perception of service quality.

HOSPITAL SERVICES
• ISO 9002 certification: quality assurance is a structured & user friendly set of systems, which make the
most complex tasks easy & efficient. Its makes the senior management free from evryday stress in
observing & monitoring task which have to be completed on daily basis.
PRODUCT:
A. Emergency services.
B. Ambulance services.
C. Diagnostic services.
D. Pharmacy services.
E. Casualty services.
• Generally the service offering in a hospital comprises of the following levels:
a.Core level: basic treatment facility & services , like, diagnostic services, emergency services, casualty
services.
b. Expected level: cleanliness & hygiene levels .
c.Augmented level: dress code of a staff, AC, renounced consultants.
PRICE:
• Usually depends on treatment & facilities offered to the patient.
• It does not believe in profit maximization but aims at providing quality service to the customers at a
reasonable price.
PROMOTION:
• Transmission of message to present, past & future customers. Includes advertising, sales promotion, personal
selling & publicity.
• Relies on favourable WOM & doesnot depend on extensive advertising.
• Conducts campaigns in rural areas.
• Advertises in health & fitness magazines.
PLACE:
• Refers to the contact point of between the service provider & the customer.
• Accessibility & availability are the 2 main issues:
Accessibility refers to the ease & convenience with which a service can be purchased, used or received.
Availability: refers to the extend to which a service is obtainable or capable of being purchased , used &
received.
Hospital must be ideally located.
PEOPLE
 The behavior attitude of the personnel providing services will influence the customers overall
perception of the service.
 Staff in the hospital must be trained to provide quality patient care with human touch using state of art
technology.
 Warm ambiences with cheerful & efficient staff help make the experience of the public a
memorable one.
• The objective of providing quality service to the patients can be achieved by:
A . Motivating employees to be efficient, dedicated & loyal to the organisation.
B . Provide on-the job training to ensure continuous improvement in health care.
C .Utilizing services of professionally competent medical consultants.
D . Use of latest technology.
PROCESS• Its a set of activities that take an input, convert it & add value to the input & finally create an
output. Processes are designed by blue prints, which sets a standard for action to take place & to
implement the service.
• In a hospital the process is divided into 4 phases:
 JOINING PHASE
 INTENSIVE CONSUMPTION PHASE
 DETACHMENT PHASE

 FEEDBACK
JOINING PHASE-
• Arrival of patient.
• Registration.
INTENSIVE CONSUMPTION PHASE-
• Diagnosis.
• Treatment.
• Information about further action.
DETACHED PHASE-
• Discharge of the patient.
• Payment.
FEEDBACK-
• Fill an evaluation form, get patients suggestions, & make improvements.
PHYSICAL EVIDENCE
• Is the environment in which the service is delivered with tangible commodities & where the firm & the
customer interact.
• The dress code of the staff, trained to be understanding, warm & comforting because the customers are
usually disturbed or unhappy.
• Should be well organized, segregated into different departments, air conditioned with good lighting, well
ventilated.
• A good atmosphere will make the customers feel the difference.
TOURISMMARKETING
PRODUCT:
• Panoramic view of the location.
• Travel to the destination.
• Accommodation & facility.
• Entertainment.
It’s a composite product- combination of attraction, facilities & transportation. Each of the
components has its own significance in the product mix.
ATTRACTION OF THE DESTINATION:
i. Natural sites- hill stations, beach so on.
ii.Places of historic interest- monuments, archaeological sites, museums.
iii.Events- trade fairs, music festivals, traditional festivals.
iv.Cultural attraction- folklore, art, theater.
FACILITIES: make tourist stay & enjoy the attraction
i. Accomodation.
ii.Food.
iii.Local transport.
iv.Recreational facilities.
ACCESSIBILITY: tourist arrives at the location-
i. Infrastructure- roads, airport & railways.
ii.Equipment- size & speed of vehicle.
The three levels of service package for tourism products are:
CORE PRODUCT: comprises of essential need or benefit sought by the customer.
Eg: relaxation, fun or entertainment.
TANGIBLE PRODUCT: comprises of formal offer of the product as given in the brochure stating what
will be provided .
Eg : breakfast, television, telephone, swimming pool, Gym so on.
AUGMENTED PRODUCT: provides vital opportunity to the service providers to differentiate their own
products from competitors. Augmented product must be designed & developed around the core
product.

Eg: Complimentary wine, free entrance ticket so on.
PRICE
• Pricing of tourist product is a complex matter because of its composite nature. Geographical location of
the destination affects the pricing decision.
• An important way in which the travel & tourism business responds to their highly complex pricing
circumstances, is to operate prices at 2 levels.
1.1st level corresponds with the marketing strategy, which concerns with product positioning, value for
money & long run return on investment.
2.Corresponds to the marketing operation or tactics where the prices are manipulated to match the current
demand & competition.
COST BASED PRICING:
for a buss’ to survive in the long run, the average prices charged must be sufficient to cover
fixed & variable cost & assure a reasonable ROI. There exist a high level of fixed cost in tourism pdts
& services, the org’ thus resorts to price fixation at marginal cost to attract more visitors when the
capacity is underutilized.
DEMAND BASED PRICING:
Tourism is greatly affected by seasonal characteristics. High dd=high pricing & vice versa.
COMPETITION BASED PRICING: fear of customers switching the product.
Travel & Tourism prices are often subject to government regulation. For reasons of public health & safety,
to ensure consumer protection, Governments in all countries frequently intervene or influence pricing
decisions.
PROMOTION:
Advertising & sales promotion activities in tourism can be very effective when supplemented by publicity,
personal selling & Public relation. PR & publicity include regular articles & photographs of the tour
attraction, use of TV, radio holiday programme & travel journalists for promotion.
WOM promotion is important tool in tourism
Giving incentives to customers-
• Price cuts.
• Discount voucher.
• Free gifts.
• Price draw. They are used for a short period of time during off season.
Brochures: includes picture & words & positioning of the product & the organization.
PLACE
• Infrastructural facilities, transportation, communication are important for the development of the tourist
center.
• The uniqueness of tourism industry is the predominant position of intermediaries.
• 2 major functions performed by the distribution system :
i. To extend the no. of points of sale, away from the location at which services are performed or delivered.
ii.To facilitate the purchase of service in advance.
• The middlemen may be tour operators, who are whole sellers, buys tourism products in bulk & makes
them available to travel agents who are the retailer.
• The range of tourist products which are bought by the tour operators are airline seat, hotel accomodation,
bus for local sight seeing, they may sell it directly to the customers.
PEOPLE
• The sales personnel are responsible for dealing with the customers behind the counter.
• The airline & transportation crew, Resort or Hotel representative, Tourist guide- elements of tourism
marketing.
• Contact personnel must be trained on interpersonal skills as well as product knowledge.
• The IATA( International Air Travel Association) & non IATA agents provide self assessment of their
staff.
• The assessment is made on 6 selective functional areas:
i. Customer service.
ii.Liaison with customers.

iii. Counter sales.
iv.Product knowledge.
v.Market intelligence.
vi.Development of new customers.
PROCESS
The operation process of tourism firm will depend on the size of the firm. The steps
involved in the delivery of tourist product are:
1. Provision of travel information- information should be provided at a convenient location where the
potential tourist seeks clarification about his proposed tour.
2. Preparation of itineraries- a series of operation that are required to plan a tour.
3. Liaison with providers of services-contracts have to be entered with the providers of various services
including transportation companies, hotel accommodation so on.
4. Planning & Costing tours- this will depend on the tour selected as well as individual requirements.
5. Ticketing- the computerized reservation system.
6. Provision of foreign currency & insurance.
PHYSICAL EVIDENCE
• Tourist attraction is an experience which can be tangibleilised with the help of tangible items, like,
comfortable seats while travelling, layout & design of the resort/ hotel, the sign posts that indicate
directions, route maps, rules & regulations, sign regarding the public utilities.
• Provide an elaborate brochures.
MARKETING OF EDUCATIONALSERVICES
• Education is a service that is geared primarily to the consumer market, therefore, it can be classified as a
consumer service rather than an industrial service.
INTANGIBLE
• It can be monitored by judging service content (curriculum, course material, student workload, faculty
members).
• EDUCATION CANNOT BE SEEN OR TOUCHED & IS OFTEN DIFFICULT TO EVALUATE:
marketer has to build “service differentiation” in the basic product to enable competitive positioning.
PERISHABILITY
• PRODUCTION & CONSUMPTION ARE SIMULTANEOUS ACTIVITIES:
face to face teaching necessitates simultaneous production & consumption. However, the open &
distance learning systems which makes use of technology have made it possible for the production &
consumption of the service to be carried out at different times, designed to meet the challenge posed
by the perishable character of services.
• NO INVENTORIES CAN BE BUILD UP:

unutilized services cannot be stored if there are no students. Better match between supply &
demand would need to be made. Course design & course offered needs to be preceded by a need
analysis of the target population before the decision to launch them is made.
INSEPARABILITY
• Transfer of knowledge is directly from the provider to the learner. However, open learning systems have
overcome the characteristics of inseparability.
HETEROGENEITY
• The course can be of same standards but different institutions faculty performance differs. The
heterogeneous characteristic necessitates careful personnel selection, planning, constant & careful
monitoring of standards which can provide cues to the prospective customers to aid choice of
institutions.

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LECTURE NOTES

MBA II YEAR I SEMESTER

DEPARTMENT OF MANAGEMENT STUDIES

Mrs A SUJATHA, Asst. Prof., Dept. of MBA, CREC Page 1

MBA II year Third Semester, Academic Year: 2018-19

Course Name : Services Marketing (17CE00311)

Course Objectives: Students will be to understand

Unit- I Introduction to Services Marketing Classes: 15

Unit - II Services Marketing Planning Classes: 15

Services Marketing Planning process – Developing an effective service Strategy – Market

Unit - IV Management of Services Marketing Classes: 15

Management of Services Marketing: Introduction- Marketing Mix- Developing a Package- Product

Mrs A SUJATHA, Asst. Prof., Dept. of MBA, CREC Page 2

Service Marketing Practices- Marketing of Financial and Insurance Services- Marketing of

Mode of Evaluation: Assignments (20%), Seminars (20%), Written Examinations (60%)

Mrs A SUJATHA, Asst. Prof., Dept. of MBA, CREC Page 3

Subject: Services Marketing, Subject Code: 17CE00

Class: II MBA, Branch: MBA, Semester: III, Academic Year: 2018-19

Name of the faculty: Mrs A SUJATHA

Mrs A SUJATHA, Asst. Prof., Dept. of MBA, CREC Page 4

22 12-09-2018 Introduction to Customer Expectations of service

18-10-2018 Vijaya Dasami

06-11-2018 Naraka Chaturdhi

Mrs A SUJATHA, Asst. Prof., Dept. of MBA, CREC Page 5

Course Instructor Head of the Dept. Principal

Mrs A SUJATHA, Asst. Prof., Dept. of MBA, CREC Page 6

SUBJECT NAME: Services Marketing (17CE00311)

S.NO CONTENT NO.OF

Introduction to Services Marketing: Scope and Definition- 12

Services Marketing Planning process – Developing an effective 10

Customer Expectations of service: Service expectations, types of 12

Management of Services Marketing: Introduction- Marketing 12

Service Marketing Practices- Marketing of Financial and 12

Mrs A SUJATHA, Asst. Prof., Dept. of MBA, CREC Page 7

Consumer oriented Services

Mrs A SUJATHA, Asst. Prof., Dept. of MBA, CREC Page 8

Mrs A SUJATHA, Asst. Prof., Dept. of MBA, CREC Page 9

Importance of Marketing of Services

Given the intangibility of services, marketing them becomes a particularly challenging

Mrs A SUJATHA, Asst. Prof., Dept. of MBA, CREC Page 10

“SERVICES” in modern economy

Mrs A SUJATHA, Asst. Prof., Dept. of MBA, CREC Page 11

The marketing program me of a firm is influenced and shaped by a firm’s inwardly

Importance of Environment Analysis:

2. It can assess the impact of opportunities and threats on the business.

Mrs A SUJATHA, Asst. Prof., Dept. of MBA, CREC Page 12

4. It is possible to develop effective marketing strategies on the basis of analysis.

5. It helps to capitalize the opportunities rather than losing out to competitors.

6. It facilitates to understand the elements of the environment.

Need for Environment analysis:

Facilitating the corporation’s strategic response to the changes taking place in

Concept of Micro and Macro Environment:

Mrs A SUJATHA, Asst. Prof., Dept. of MBA, CREC Page 13

The marketing environment is made up of:

We discuss them in detail:

This includes the following:

(b) Company’s Suppliers

(c) Marketing Intermediaries

Brief explanations are given below:

Mrs A SUJATHA, Asst. Prof., Dept. of MBA, CREC Page 14

Internal Environment (Within the Co.):

In business-to-business marketing, one company’s supplier is likely to be another

Marketing intermediaries include resellers, physical distribution firms, marketing service