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Marketing Project

T. Y. B. Com (Banking & Insurance) [V Semester]


Characteristics of Services:

1. Intangibility:
• Services are not physical objects, and cannot be touched or directly perceived by the
physical senses.
• While selling or promoting a service, one has to concentrate on the satisfaction and
benefit a customer can derive from the service.

2. Perishability:
• Services have a high degree of perishability.
• The element of time assumes a significant position. If a service is not successfully sold
today, the potential earnings from that are lost forever. It cannot be stored.
• Unutilised services are an economic waste. e.g. an unoccupied building, an unemployed
person, vacant seats in transport, etc.

3. Inseparability:
• Services are created and supplied simultaneously. There is no clear separation between
the creation and consumption of the service, and services and service providers are
closely associated.
• Donald Cowell states “Goods are produced, sold, and consumed, whereas services are
sold, and then produced and consumed.”
4. Heterogeneity:
• The quality of services cannot be standardised.
• Consumers rate the services in different ways. This is due to the difference in
perception and expectations of inviduals at the level of providers and users.

5. Ownership:
• The very nature of services precludes transfer of ownership, as in the case of goods.
• Users only gain access to services. They cannot own the services.
e.g a customer can use a hotel room or swimming pool, however the ownership
remains with the service providers.

6. Simultaneity:
• Services cannot move through channels of distribution and cannot be delivered to
potential customers. Either are brought to the services, or service providers go to the
users.
• Thus, the consumption and production of services happens at the same place
simultaneously.

7. Quality Measurement:
• It is very complicated to accurately quantify the value of services, in monetary terms.
• Quality measurement of services is subjective, and may vary with various factors like
expectations and perception of consumers, brand value of service provider, etc.
• e.g. We can easily quantify the food served in a restaurant, but it's difficult to do the
same to measure the performance of the restaurant staff.

8. Nature of Demand:
• Demand for many services is generally fluctuating.
• e.g. During holiday season, the demand for transport and tourism services increases
drastically.
Service Triangle:

• Service marketing involves 3 types of marketing:

1. EXTERNAL MARKETING
2. INTERNAL MARKETING
3. INTERACTIVE MARKETING

• The three types of service marketing can be depicted and explained by a 'Service Triangle'.
1. External Marketing: “Setting the Promise”
• Marketing to END-USERS.
• Involves pricing strategy, promotional activities, and all communication with
customers.
• Performed to capture the attention of the market, and arouse interest in the service.

2. Internal Marketing: “Enabling the Promise”


• Marketing to EMPLOYEES.
• Involves training, motivational, and teamwork programs, and all communication with
employees.
• Performed to enable employees to perform the service effectively, and keep up the
promise made to the customer.

3. Interactive Marketing: (Moment of Truth, Service Encounter)


• This refers to the decisive moment of interaction between the front-office employees
and customers, i.e. delivery of service.
• This step is of utmost importance, because if the employee falters at this level, all prior
efforts made towards establishing a relationship with the customer, would be wasted.
• Moment of Truth:
 The conceptual framework of 'Moments of Truth' was devised by Richard Norman.
Subsequently, Scandinavian Airlines adopted it, and implemented it in their business
strategy. Within 3 years, SAS was transformed from a loss-making company, to
'Best Airline of the Year'.
 Interactive marketing takes place outside the marketing mix. It takes place at the
very moment of interaction between the buyer and seller. These interactions are
called SERVICE ENCOUNTERS.
 In this process, the customer is able to directly judge the quality of service provided
by the service provider. The customer evaluates the service on two aspects:

1. Technical Quality:
 This refers to the technical competence and quality offered by the service
provider, in the form of production facilities, skill, etc. in the delivery of
service.
 Since technical quality is easily quantifiable, customers tend to give more
weightage to this aspect. But customers are not interested only in what is
being delivered, but also in how it is delivered.
2. Functional Quality:
 This refers to the behavior of employees and how the production facilities are
used. It includes the attitude and performance of personnel. For example, the
rude behavior of the receptionist can reverse the good impression formed by
the high technical quality, and cause loss of customers.

 The customer can make judgements on technical and functional quality, during
decisive moments of interaction, called 'SERVICE ENCOUNTERS'. Service
encounters may be classified into:

1. Remote Encounter:
 No human contact.
 The tangible evidence of the service becomes the basis for judging quality, as
there is no human contact in service delivery.
 e.g. ATM, vending machines, automated online services.

2. Phone Encounter:
 Indirect human contact.
 Here, the service quality can be judged on the basis of several factors like
promptness in answering the call, tone of voice, and efficiency in handling
issues.
 e.g. Telemarketing.

3. Face-to-Face Encounter:
 Direct human contact.
 In this situation, there is direct, face-to-face contact between the customer and
the employee.
 Determining service quality in such a situation is very complex, as it will be
influenced by the behaviour of the customer and employee in that moment.

• Thus, interactive marketing is the decisive stage where value is created and delivered to
the customer. At this stage, all efforts of internal and external marketing will be
reflected.

Classification & Types of Services:


10 P's of Service Marketing:
1. Product:

• A PRODUCT is anything that can be offered to the market, for attention, acquisition,
and consumption, in order to satisfy a want or a need.
• Product Levels:
2. Price:

• The price of the service is primarily determined by 3 factors, viz.:


1. Cost of Production
2. Demand
3. Competition

• This is depicted by a PRICING TRIPOD.


3. Place:
• PLACE includes the location of the service provider, channels of distribution and the
intermediaries involved.

• 6-Market Model:
1. Existing and prospective customers.
2. Existing customers who refer to other prospects.
3. Consumer groups, business press, media, govt.
4. For attracting right employees.
5. Suppliers of raw materials, their standards and quality.
6. Internal departments and staff.

SERVICE CHANNEL OF
DISTRIBUTION
Shares, Real Estate Service Brokers
Insurance, Travel, Shipping, Loan Service Agents
Telemarketing, E-Marketing, Mail-order Direct Marketing
Fast-food / Supermarket / Cyber-cafe chains Franchising
4. Promotion:
• Advertising.
• Sales promotion.
• Sampling of services.
• Using customers as customer-inductors.
• Offering discounts to existing customers.
• Developing customer-loyalty & rewards programs.

5. Physical Evidence:
6. Process:
• Process depends on 6 factors:
1. The service itself (i.e. if it is process-dependent).
2. Level of customer-participation.
3. Degree of customer contact.
4. Degree of divergence (degree of standardization).
5. Location of service.
6. Complexity of service.

• Process includes all of the value-creating activities involved in production and delivery
of the service.

7. People:
• The role of people is of utmost importance in a service organization.

• Servuction Model: (Developed by Eric Langeard & Pierre Eiglier)


 People work in various sections in the organization, and not all employees need
to be in direct contact with clients.

 HIGH CONTACT - Front Line - Front Office


LOW CONTACT - -
NO CONTACT - Backstage - Back Office

 Customers receive benefits by interacting with visible elements of service


system.

 Visible elements include:


1. All contact personnel employed by the service provider.
2. Aspects of the inanimate environment.
3. Other customers within the service system.
 Example:
• Role of People:
In order to have a result-oriented approach, the service firm must:
1. Hire the right person for the right job.
2. Train people to deliver quality services.
3. Delegate authority and responsibility.
4. Promote teamwork.
5. Provide a good support-system to employees.
6. Retain the best employees and implement techniques to prevent attrition.
8. Positioning:
• Positioning is deduced & planned by analysing positioning strategies.
• Positioning Strategies: 1. Boston Consulting Group Matrix

• Boston Consulting Group Matrix:


Cash Cow High market share. A business unit that has a large
Low growth rate. market share in a mature, slow
growing industry.

Cash cows require little


investment and generate cash that
can be used to invest in other
business units.
Star High market share. A business unit that has a large
High growth rate. market share in a fast growing
industry.

Stars may generate cash, but


because the market is growing
rapidly they require investment to
maintain their lead. If successful, a
star will become a cash cow when
its industry matures.
Question Mark Low market share. A business unit that has a small
High growth rate. market share in a high growth
market.

These business units require


resources to grow market share,
but whether they will succeed and
become stars is unknown.
Dog Low market share. A business unit that has a small
Low growth rate. market share in a mature industry.
A dog may not require substantial
cash, but it ties up capital that
could better be deployed
elsewhere.

Unless a dog has some other


strategic purpose, it should be
liquidated if there is little prospect
for it to gain market share.

As a particular industry matures and its growth slows, all business units become either cash cows or dogs. The
natural cycle for most business units is that they start as question marks, then turn into stars. Eventually the
market stops growing thus the business unit becomes a cash cow. At the end of the cycle the cash cow turns into a
dog.
9. Perception:
• Perception refers to the point of view of an entity in the service system. Perception is
largely responsible for setting standards, and creating & fulfilling expectations.

10. Planning:
• Clearly define the goal.
• Identify all the main issues to be addressed.
• Review past performance.
• Decide budgetary requirement.
• Focus on matters of strategic importance.
• What are the requirements and how will they be met?
• What will be the likely length of the plan and its structure?
• Identify shortcomings in the concept.
• Implement the plan.
• Review periodically.