SERVI

CES
MARKETING
Cour
seObj
ect
ives:

 Tounder standthemeaningofservicesandthesi
gni
ficanceofmarket
ingthe
servi
ces.
 Toi ntroduceandapplyskil
l
sf orthe7Psofservi
cesmar keti
nganddesign
the mar ketpl
an
 Toanal yzethefact
orscont
ribut
ingt ocust
omersat
isfacti
oninaserv
ice
Organization
 MODULE-
1
I
NTRODUCTI
ONTOSERVI
CEMARKTI
NG:
-
Servicesaret hecent reofal leconomi cactivi
ti
esi nthesociety .Therearenumer ous
serviceindustrieswhi char epr esent
lywor ki
ngandt hisservi
cesect ori
soneoft he
fastestgr owing sect ors.Var i
ous types ofser vi
ces are pr ovi
ded by v arious
organisati
ons,l ikegov ernmentpr ov
idesusser vicesinthef orm ofcour ts,police,
mi l
i
taryservices, fi
redepar tment ,
hospital
s,empl oymentexchangesandmanymor e.
Similarl
yprivatesect oral sopr ovi
desusser v i
cessuchasai rl
ines,hotels,insurance
compani es,ent ertai
nmentsect orandmanymor e.Inpresentwor l
d,i
tisv erydif
ficult
toidentifyservicesf rom t hegoodsaswhenacust omerpur chasesagoodser vi
ce
elementi sincludedi nit.Forexampl e,amealeat enatar estaur anti
sacombi nat i
on
ofbot hgoods, i.e.foodeat en, andservices,i
.e.preparat
ionoff ood, i
tsdeliv
ery,etc.

CHAR./FEATURESOFSERVI
CEMARKETI
NG:
-
Servi
ceMar keti
ngisacomparati
vel
ynewerconceptthantheconceptofmarket
ing
i
tsel
f.Whiley ouhavebeenthroughashortint
roducti
onintheprevi
oussegment,
here ar
e some charact
eri
sti
cs ofser
vice market
ing t
o hel
py ou hav
e a bet
ter
underst
andi
ngoft het
opic.

I
ntangi
bil
i
ty:

Servi
ceMar keti
ngfocusesonani ntangi
bleperformancemor ethanany t
hingel se.A
serv
iceisaper f
ormancer atherthanapr oductt
hatcanbeconsumed.Mor eover,itis
anintangibl
ecommodi tythatt hemassesav ailthem of.Invisi
bleandi ntangibl e,
serv
icesar esimplydiffer
entt hanapr oduct.Thiscall
soutf oradifferentkindof
marketi
ng strategi
es thatpr omote an unseen ser v
ice yett hr
ough the l ens of
perf
ormance, marketer
sdot hatwell.Thus,servi
cemar keti
ngi snothi
ngmor ethana
repr
esentati
on ofan i nt
angible perf
ormance t hatt he common masses av ail
themsel
v esofi ntheirday -
to-dayliv
es.Forexampl e,thehot
elindust
ryhasno
product
st osellbutserv
ices.So,t heindust
rypromotesandper
for
msani nt
angi
ble
servi
cethroughvari
ousadv er
tisingmeanst oreachoutt
othemasses.

NoOwner
shi
pInv
olv
ed

Unl
ikepr oductmarketi
ngwher ei
nt heaudienceissubj ectedtoproductowner ship,
ser
vicemar keti
ngdoesnotr ef
lectonsuchpr omi ses.Thi sisbecauseaser vicecan
beconsumedandnotowned.Onecan,f orexampl e,consumet hedi ningexperience
atar estaur
antascompar edtoapenci lthatonecanowni nthecaseofpr oduct
marketing.Thi
scharacter
ist
icinpar t
icul
arhighli
ghtst heamountofhar dwor kthat
ser
vicemar ket
ingoff
ici
alshavetoputi nordertoattractthecustomer s.

Per
ishabl
ePr
oduct
s

Unlikeproduct sthatlastlong,aservi
ceispr onetoperishwithinav er
yshortper i
od
oftimet hatmakesi ttobet ermedasaper i
shableproduct.Thisisbecauseasl ong
asacust omeri spresentatt hevenue,aservicelast
sf ort
hatamountoft i
me.Af ter
that,itsi
mpl ybecomesamemor ythatonecanonl ythinkof!Sinceaser vi
ceisan
easilyperishableproduct,manypeopl efrom theaudiencear enotconv i
ncedeasily.
Stil
l
, t
heser vicemar ket
ingfeatur
esper i
shableproductsandpr omotesthem insome
wayt ocal loutforthetargetaudi
ence.

CostofConsumpt
ion

Unli
ket hecostofpr oduct sthati sbr
oadlystandardized,thecostofconsumpt i
onof
aser v
icei snotst andar di
zedatal l
.Wecanunder standt hiswiththehel pofan
exampl e.A1-starrest aurantislikel
ytoprovi
dei t
sser vicesatal owpricewithcheap
quality.Howev er,atthesamet imea5- st
arrestaurantwi l
lprovidethesameser vices
withar efi
nedqual i
tyandbet terexperi
ence.Thedi ff
erencebet weentheser v
icescan
bev ariedandv ast.Per hapst hereisnostandardizedcostofconsumpt i
oninserv i
ce
mar keting.Thisi swhyser vicesar enotstandardizedi ntermsofcost .Thecostof
consumpt ioninser vicemar ket i
ngbecomesamaj orhighlightinordert opr
omot ea
service.

I
nsepar
abl
yInt
erest
ing

Awayt opr omot easer vi

cei sawayt opr omot ey ourbr and.Thi smeanst hata
servi
cei sinseparablyi nter
est i
ngt hatcannotbesev eredf r
om t heproducer .Yetit
call
sfort het ar
getaudi encet oav ailthem ofaspeci ficserviceandenj oyt ot hei
r
ful
lest
.Ascompar edt oapr oductt hatcanbephy sicall
yownedbyt hecust omer ,a
servi
ceisani nsepar ableentitythatshoul dseem i nterestingenoughf ortheaudi ence
to consume.Fori nstance,aser v i
ceatabeaut ysal on isi nseparablef rom its
producers.Sinceyouv i
sitthev enueandav ailoft
heser vi
cesatt hesalonitself,
there
i
snot hingy out akeawayf rom t hesal oni nphy sicalt er
ms.Thus,t heser vi
cei s
i
nseparable.Yett heser vi
ceseemst oi nterestyoubecausei ti sacommodi tythat
l
eadsy out oabet terlifestyl
e.Ther efore,ser vi
cemar keti
ngf eatur esaserv i
ceasan
i
nsepar
abl
yint
erest
ingcommodi
ty.

SERVI
CECOMPAREDTOGOODS:

Meani
ng Goodsarethemateri
ali
temsthatcanbe Ser vi
cesareamenit
ies,f
aci
li
ti
e
seen,t
ouchedorfel
tandarereadyforsal
e benefit
sorhel
pprovidedbyoth
tot
hecustomers. people.

Nat
ure Tangi
ble I
ntangi
ble

Tr
ansf
erof Yes No
owner
shi
p

Ev
aluat
ion Ver
ysi
mpl
eandeasy Compl
i
cat
ed

Ret
urn Goodscanber
etur
ned. Serv
icescannotberetur
nedba
oncetheyareprov
ided.

Separ
abl
e Yes,
goodscanbesepar
atedf
rom t
he No,
ser
vicescannotbesepar
ate
sel
ler
. f
rom t
heservi
ceprovi
der.

Var
iabi
l
ity I
dent
ical Di
ver
sif
ied

St
orage Goodscanbest
oredforusei
nfut
ureor Ser
vicescannotbest
ored.
mult
ipl
euses.

Product
ionand Ther
eisati
mel agbet
weenproduct
ion Product
ionandConsumpti
ono
Consumpti
on andconsumpti
onofgoods. servi
cesoccur
ssimult
aneousl
y

EMERGENCEOFSERVI
CEECONOMY:
Changemanagementi sasy stemati
cappr oacht odeali
ngwi ththet r
ansi
ti
onor
transf
ormati
onofanor ganization'
sgoals,pr ocessesortechnologi
es.Thepurpose
ofchangemanagementi stoimpl ementstrategiesforef
fecti
ngchange,contr
oll
ing
changeandhel pi
ngpeopl etoadaptt ochange.Suchst rat
egiesincl
udehav i
nga
struct
ured proceduref or requesti
ng a change,as wel las mechani sms for
respondingt
or equest
sandf ollowingthem up.

Tobeef
fect
ive,t
hechangemanagementpr
ocessmustt
akei
ntoconsi
der
ati
onhow
anadj ust
mentorr eplacementwi lli
mpactprocesses,syst
ems,andempl oyeeswithi
n
theor ganizati
on.Ther emustbeapr ocessf orplanni
ng and test
ing change,a
processf orcommuni cat i
ngchange,apr ocessf orscheduli
ngandi mplementi
ng
change,apr ocessfordocument i
ngchangeandapr ocessforevaluat
ingitseff
ects.
Document ationisacr i
ticalcomponentofchangemanagement ,notonlyt
omai ntai
n
anaudi ttrailshoul
dar oll
backbecomenecessar ybutalsot oensurecompl i
ance
withinter
nal andext
er nal cont
rol
s,i
ncl
udingregulat
orycompli
ance.

Theserviceort ert
iarysectoristhethir
dpi eceofat hree-parteconomy .Thef irst
economicsector ,t
hepr imarysector,coversthefar ming,mi ning,andagr i
cultural
busi
nessactivi
ti
esi ntheeconomy .Thesecondar ysectorcov ersmanuf actur
ingand
busi
nessact i
vi
tiest hatfacil
i
tatethepr oducti
onoft angiblegoodsf r
om ther aw
materi
alsproducedbyt heprimarysector.Theservicesect or,thoughclassifi
edas
the t
hir
d economi csect or,isresponsibl
ef orthe largestpor t
ion ofthe global
economy ’
sbusinessactivi
ty.

Whatdoesal awyer
,adoctor,aweddingplanner,ashoesalesman,aninvest
ment
banker,acomedian,
awaitr
ess,andacoll
egepr of
essoral
lhaveincommon?Theyall
worki ntheservi
ceeconomy .Inthesimplestofterms,aser v
iceeconomyi san
economywher ethepri
maryeconomicacti
vi
tyistheprovi
sionofser
vicesr
athert
han
theproducti
onofgoods.

Ser
viceMar
ket
ingChal
l
enges
Therear
esomei nherentchallengesinmar ket
ingaser vi
cebusiness, buttheycanbe
over
come.Whenmar ketingser vi
ces,youappl ythesamemar ket
ingmi xprinciples
usedforproduct s:place,pr i
ce,promoti
onandpr oduct– whi chi sy ourserv i
ce.
Addedtothi
smi xareemphasesonpeopl e,processandphy sicalevidence.Develop
aplanthatcarefull
yconsi derstheseessent i
alssoy oucani dentifythechallenges
anddevi
sestrategiestoov ercomet hem.

I
ntangi
bil
i
tyChal
l
enges:

Challengesofi ntangibi
li
tyintheser v
iceindust
ryareoneoft hehardestthingst o
overcome,say s 
Fift
yFi v
eandFi ve.Peoplecant ouchandseeapr oductandar e
exchangi ngmoneyf orsomethingtheyneedandcant akehomet ouse.Conv ersely
,
peopleonl yseether esult
sofaser vi
ce,whichmaynotal waysbei mmedi ate.It
requiresf ai
thont hecustomers’partthattheywil
lgetthedesir
edresultsfort hei
r
money .

Forexample,i
fyouownacl eani
ngservi
ce,youhav et
oconv inceyourcust
omer sto
tr
ustyouthattheirhomeswi l
lbecl
eanedt othei
rsati
sfacti
on.Providi
ngbeforeand
aft
ertesti
monialsorpict
uresmaybeanot herwayofov er
comi ngthechal
lengesof
i
ntangibi
l
ityi
nser vi
cemarketi
ngandgainingtr .
ust

Demonst
rat
ingEmpat
hy
Conv ince yourcust
omersiny ourmar ket
ing effor
tst haty ou understand their
problemsandar eoffer
ingasol
ut i
on.Dothi
susi ngpeople,processesandphy sical
evidence.Forexample,i
fyouandy ouremploy
eeshav ef amil
iesandwor kful
ltime,
thi
si denti
fi
eswithworki
ngfamil
ieswhohavenot i
mef orhousecleaning.

Bef ore-
and- aft
erpi ctures i
ny ourmar keting material
s,such as y ourwebsi t
e,
brochur esand adv erti
sing,areal lphy sicalev i
dence.Fi nal
ly
,you mayneed t o
i
nter actper sonall
ywi thcustomer smul t
iplet i
mesaspar tofthemarketi
ngprocess
toest ablishar el
ationshipandconv incet hem y ouunderstandthei
rneeds.Promot e
yourbusi nesst other i
ghttargetcust omer si ntherightplacetohavet hehighest
effect.Forexampl e,wi th a cleaning busi ness,you maywantt ot ar
gety our
adv erti
sing to high end of f
ice buil
dings t hathav eal otofhigh-earni
ng,busy
prospect s.

Compet
it
ivePr
ici
ng

How y oupr i
cey ourser vicesi sani mpor tantmar ket
ingelement.Youneedt obe
compet i
ti
ve,so r esear ch sev eralcompet itor
s’pr i
ces t o gauge what y our
prospecti
vecust omer sexpectt opay .Thenassessy ourcosts– y ourov er
head
suchasr ent,insur
ance,sal ari
esandsuppl ies–t odetermineifyoucanmeety our
costsandmakeapr ofi
twi t
ht hatpr i
cing.Considerbundl i
ngextraf eat
ureswi th
yourservicest odifferentiateyourcompanyandgar nerahi gherpr i
ce;perceived
valuebycust omersi sv eryimpor tant,accordingtoInc.Forexampl e,youcanof fer
towaxf l
oor saspar tofy ourserv i
ce,ordol aundryaspar tofabonuspackage.

I
mpl
ement
ingPeopl
e:

Asaser vi
cescompany ,mar keti
ngy ourpeople,includi
ngy ou,ispar amount .A
servi
ceisconsumedwheni t
’spurchasedorpr oduced–j ustther esult
soref fects
l
inger,andsomet i
mest emporari
ly.Forexampl e,y ourcust
omer ’
shomewi llget
dir
tyagain,sot heresultofy ourcleaningdeli
veryi stempor
ary .Theclientmayor
maynotcal ly
ouagai nbasedont heov eral
lexperi
ence.Howy ourpeopl eper f
ormed
thatservi
ceand i nteracted wit
hy ourclient
swi l
limpactrepeatbusi ness.The
rel
ati
onshipisimpor t
ant; f
oll
owupwi thyourcustomerwi t
hper sonali
zednot esora
tel
ephoneremi nderaspar tofyourmar keti
ngtactics.

Ser
viceEncount
er
From t hecustomer’spointofv i
ew,themostv ivi
di mpr essionofser vi
ceoccursin
the servi
ceencounters or“MomentOfTr uth,”whent hecust omerinteract
swiththe
servicefir
m.Thi sisthefoundati
onto“Satisf
acti
onof  ServiceQuality
”— itiswhere
thepr omisesarekeptorbr oken.Theconceptof servi
ceencount er
 wasputfort
hby
RichardNor man,taki
ngthemet aphorfr
om BullFi
ght i
ng.Mostser vi
cesareresul
tsof
socialacts,whichtakepl
acei ndir
ectcontactbet
weent hecust omerandt heservi
ce
prov i
der.Atthi
sstagethecustomerreali
zestheper cei
vedser v
icequali
ty.

Ev
ery“
MomentofTr
uth”i
sImpor
tant—accor
dingt
oScandi
nav
ianAi
rl
ines,
eachone
ofthei
r10mi ll
ioncust
omer
scomeincont
actwit
h5empl oy
ees.Thustheai
rl
ines
saythere50mi l
li
onmoment
softr
uth—eachoneismanagedwelland“
Theyprove
theyaretheBEST”.

Ty
pesofser
viceencount
er:

A servi
ce encount
eroccurs everytime a customeri nt
eracts wi
ththe serv
ice
organi
zati
on.There arethree generaltypes ofser v
ice encount
ers– r emote
encounter
s,phone encounter
s,and f ace-
to-
face encount
ers.A customermay
experi
enceanyofthesety
pesofser vi
ceencounters,oracombinati
onofal
lthreein
his/
herrel
ati
onswithaserv
icefi
rm.

1.Remot eEncount er:Encount ercanoccurwi thoutanydi recthumancont acti s

calledasRemot eEncount er
s.Suchas, whenacust omeri nteractswi t
habank
throught heATM sy stem,orwi thamai l
-orderser vicethroughaut omat eddi al
-i
nor dering.Remot eencount er
sal sooccurwhent hef ir
m sendsi tsbi l
li
ng
statement sorcommuni catesot her st y
pesofi nformationt ocust omer sby
mai l. Althought her eisnodi recthumancont actint heser emot eencount ers,
eachr epresentsanoppor tunityforaf i
rmt or einforceorest abli
shper ceptions
i
nt hecust omer .Inremot eencount ert hetangi bleev i
denceoft heser viceand
thequal i
tyofthet echnicalpr ocessandsy st em becomet hepr i
mar ybasesf or
j
udgi ngqual i
ty.Ser vi
cesar ebei ngdel iv
er edt hr ought echnology ,par ti
cularly
witht headv entofI nternetappl ications.Ret ailpur chases,ai rl
inet icketing,
repairandmai nt enancet roubleshoot ing,andpackageandshi pmentt racking
arej ustaf ew exampl esofser vicesav ailablev i
at heI nter
net .Al loft hese
typesofser vi
ceencount erscanbeconsi der edr emot eencount ers.

2.Phone Encount er s:
- In many or gani zations,t he most f requent t y pe of
encount erbet weenacust omerandt hef irm occur sov ert het elephonei s
cal
ledasphoneencount er.Al mostal lfirms( whet hergoodsmanuf act urersor
servi
cebusi nesses)r elyonphoneencount er sint hef or
m ofcust omer -ser vi
ce,
generali nqui ry,oror der -t
aki ngf unct ions.Thej udgmentofqual i
tyi nphone
encount ersi sdi fferentf rom r emot eencount ersbecauset her ei sgr eater
potentialvar iabili
tyint heint eraction.Toneofv oice,empl oyeeknowl edge, and
eff
ectiveness/ ef f
iciency i n handl i
ng cust omeri ssues become i mpor tant
cri
teri
af orj udgi ngqual ityint heseencount er s.
3.Face-to-FaceEncount er s:
 At hir
dt y peofencount eri st heonet hatoccur s
betweenanempl oyeeandacust omeri ndi rectcont actiscal l
edasFace- to-
Face Encount er .I n a hot el,f ace—t o—f ace encount ers occur s bet ween
customer s and mai nt enance per sonnel ,r ecept ionist,bel l
boy ,f ood and
beverageser versandot hers.Det ermi ningandunder st
andingser vi
ceequal it
y
i
ssuesi nf ace—t o—f acecont exti st hemostcompl exofal l
.Bot hv erbaland
non-verbalbehav iorsar ei mpor tantdet ermi nant sofqual i
ty,asar et angi ble
cuessuchasempl oyeedr essandot hersy mbol sofser vice( equi pment ’s,
i
nformat ionalbr ochur es,phy sicalset tings).I nf ace—t o—faceencount erst he
customeral sopl ayani mpor tantr olei ncr eat i
ngqual i
tyser vicef orher sel f
thr
oughhi s/ herownbehav iordur i
ngt hei nt eract i
on.Forexampl e,at  Disney
 themepar ks,f ace-t
o-f
aceencount ersoccurbet weencust omerandt i
cket-
takers,mai ntenanceper sonnel,act or
si nDi sneychar actercost
umes,r i
de
personnel,f ood and bev erage servers,and ot hers.Fora companysuch
as, 
IBM,i nabusi ness-t
o-businessset ti
ngdi r
ectencount ersoccurbetween
thebusi nesscust omersandsal espeopl e,del
iverypersonnel,maint
enance
representati
v es,andprofessionalconsultants.

Ser
viceBl
uepr
int
Aser v
icebl ueprintisadi agram t hatvi
suali
zest her el
ationshipsbetweendi ffer
ent
ser v
icecomponent speople,pr ops(physi
calordigitalevidence),andpr ocessesthat
aredi rectl
yt iedt otouchpoi ntsinaspeci ficcust omerj ourney.Thinkofser v
ice
blueprintsasapar tt wot ocust omerj ourneymaps.Si mil
art ocustomer -j
ourney
maps,bl uepr i
ntsar einstrument alincompl exscenar iosspanni ngmanyser vi
ce-
related offerings.Bl uepri
nti
ng i s an idealappr oach t o experi
ences t hatar e
omni channel ,inv
olvemul ti
plet ouchpoints,orrequireacr ossf unct
ionaleffort(t
hat
i
s, coordinationofmul tipl
edepar tments).

Aser vi
cebluepri
ntcorrespondst oaspeci fi
ccust omerj ourneyandt hespecif
icuser
goalsassociat
edt othatjourney.Thisjourneycanv aryinscope.Thus,f orthesame
serv
ice,youmayhav emul t
iplebluepri
ntsiftherear eseveraldiff
erentscenari
osthat
i
tcan accommodat e.Forexampl e,wi t
har estaurantbusi ness,you mayhav e
separateservi
cebluepri
ntsf ort
het asksofor deri
ngf oodf ortakeoutver
susdiningin
therestaur
ant.

Firsti
ntr
oducedin1984byG.LynnShost
ackintheHar
var
dBusinessRevi
ew,
servi
ce
bluepri
ntdi
agramsv i
sual
lymapoutthestepsi
naservi
ceprocess,maki
ngi
teasi
er
todesignanewpr ocessort
odocumentandimprov
eanexist
ingone.

Whilesimpl ert
hanUML( Unifi
edModel li
ngLanguage)andBPMN( Busi
nessPr ocess
Modeland Not ati
on),service blueprints off
era f l
exi
bl e,focused l ook atan
organizat
ion’sservi
cepr ocessesandi ncludethecust omer ’
sper specti
ve.Howev er
,
servi
cebl uepri
ntsaren’tj
ustanothercust omerj ourneymap.Bot hdoincludesi mil
ar
i
nformat i
on––t hey draw from cust omerr esearch and aggr egat
ef i
ndings into
sampl escenarios––butser v
icebluepr i
ntshav eawi derscope.Acust omerj ourney
mapf ocusonwhatcust omer sexper iencewhent heyi nteractwi t
haser v i
ceor
business,from specif
icacti
onsort ouchpoi nt
st opainpoi nts.Servi
cebl uepri
ntsgo
severalstepsdeeperandcombi net hecust omer ’
sexper i
encewi thal lempl oyee
acti
onsandsuppor tprocessesthatmayormaynotbev i
sibletot hecustomer .

Ser
viceTr
iangl
e

Theservi
cemarketi
ngtri
angl
eort heServ
icet r
iangl
easi ti
scommonl ycal
led,
under
li
nestherel
ati
onshi
psbetweent hevar
iouspr ovi
der
sofser
vices,and t
he
cust
omerswhoconsumetheseser
vices.

Asweknow,r
elat
ionshi
psar
emosti
mpor
tanti
ntheser
vicessect
or.Theser
vice
tr
iangleoutl
i
nesallt
herelat
ionshi
pst hatexi
stbet
weenthecompany,theemploy
ees
andt hecustomers.Fur
thermore,italsooutli
nesthei
mpor t
anceofsy stemsina
servi
cesindust
ryandhowt hesesystemshelpachiev
ecustomersat
isf
action.

Asthenamesuggest s,t
heser
vicemarketi
ngtri
anglecanalsobeusedt omarketthe
serv
icetoconsumers.Themar ket
ingcompletel
ydependsont heint
eract
iongoing
onbet weenthecustomerandt heser
viceprovi
der.Wewi l
llookateachoft hese
i
nteracti
onsindet
ail
,andal
soreadonhowt omarkettoyourcustomerbasedont he
i
nteracti
on.

6mai
nrel
ati
onshi
pinser
vicet
ri
angl
e:

1)Companyt
oCust
omer
s

Oneoft hecr it
icalt
hingistocommuni catet
heservicestrat
egytothecustomer s.
Mostoft heE- commer cecompani esar enowadaysempl oyedinconvinci
ngt he
customerst obuyf rom thei
rportalonl y.Forthi
sbuy i
ng,theyarecommuni cat
ing
vari
ous service advant
ages which t he customers have.Communicati
on oft he
servi
cestrategytocustomersisi
mpor tanttobuil
dthetrustofcust
omersandhence
toconvertthecustomerst obel
oyal tothecompany .

2)Companyt
oempl
oyees:

Anotherimport
antrelationshi
pintheser
vicetri
angleisthatbetweenthecompany
andt heemployees.Imagi neanAirl
i
newheret hefli
ghtattendantst
hemsel
vesar e
fr
ustrat
edwi t
ht hecompany .You,asacust omer,willlandupwi ththepoorest
serv
ices.Hence,t r
aining employ
ees,bui
ldi
ng value and trust
,and empowering
employeesaresomeoft hewaysthatt
hecompanycanmaket hei
remployeesa
posi
tivei
nfl
uencingforcef ort
hecust
omers.

3)Companyt
osy
stems

Tokeepcustomershappy,ef
fi
cientandproduct
ivesy
stemsneedtobedevel
oped.
I
magineyourbankinthe1960’
swher eev
erythi
ngwasdonebypaper.I
fyouwant
ed
totransfermoney,youwil
lhavet ofi
llmanyf or
ms, andthereci
pienthadt ofi
llmany
forms.Ul t
imatel
yitwasat ediousprocess.Howev er
,duet oadv ancedsy st
ems,
nowaday sy oucannotonl yt ransf
ermoneyt oot herssit
ti
ngathome,y oucan
practi
call
ydo80%oft hebankingwor ksit
tingathomef r
om yourlaptop.That’
sthe
i
mpor tanceofsystemsinaserv i
cemar ket
ingtr
iangle.

4)Cust
omer
stosy
stems

Althoughbui l
dingsy st
emsar eimpor tant,thesesy stemsshouldbemostusef ulto
customer s.Takingt hesameexampl eofbanki ngsy stemsabov e,iti
ssur prisingthat
event odaywheny ougot oabank,t herei saqueue.Lookatr etai
lstores.Ther e’
s
alway sabi glinet ocheckout .Thei nteracti
onbet weencust omerandsy stem is
cri
ticaltobuil
dt heser vi
cebr and.Takingt heexampl eofE-commer cesy stems, when
thecust omerispr omi sedv ari
ousser viceadv antages,andwhenhef ailst or etur
na
productduet osy stem errorsorl ogisti
cser rors,hebecomesdi ssati
sfiedwi ththe
service.Foracompany ,i
tisimpor tantnotonl ytobui l
dsystems, butensur et hatthe
systemscompl ytot hecustomer sandgi veexcel l
entexper
iencet ocustomer s.

5)Empl
oyeest
osy
stem

Notonl ydosy st emsl eav ecustomersf rustrated,t heyal sol eavet heempl oyees
frustrated.I magi neaMcDonal d’
swher eor der st akenatt hef rontdeskar enot
reachi ngtheki t
chen.Ori magi neaservicecent re,wher ealthoughy ouhav eent ereda
grievance,t heempl oyeei snotget t
ingy ourcompl aintandhencenotcal l
i
ngy ou.
Ultimat elyiti stheempl oyeeonwhom y ouar egoi ngt ogetangr y.
Inoneoft he
consumerdur ablecompani esiknow,thesy stemswer etopoft heli
ne,butt heyhad
somanypr ocesseswi thr egardstoout st
andi ngandi nv
ent ory,thatasi mpl eor der
processi ngt ook20mi nutes.Thissamecompanyhadatl east1l akhdeal er sand
distri
but ors.Soi magi net hecont i
nuousdel ayi nor derpr ocessi ngandt hepr essure
onempl oyeesduet othissy stem i
ssue.Thesy st
em waswor kingexcellently,butit
was cr eating fricti
on bet ween the employ ees and t he sy stem.Bot h,Empl oyee
mot ivation, andtheempower mentofempl oyeesdependsont hetypeofsy stem y ou
handov ertoy ourempl oyees.Ifthesystemsar ev erygoodandy ourempl oyeesar e
ablet omakegooduseofi t,y
ouwi l
lgetveryhappyandsat i
sfiedcust omer s.

6)Themosti
mpor
tantr
elat
ionshi
pint
heser
vicet
ri
angl
e–Empl
oyeet
oCust
omer
s

Theempl oyeet ocust omeri nteracti

oni sal
soknownast he“ momentoft ruth”or
“cri
ti
cali ncidents”.A si nglecust omercanbecomedi ssati
sfi
edwi ththewayt he
empl oyeet reatedhi m.Ort hatsinglecustomercanbuyal otofmat eri
alfrom the
samest ore,becauset heempl oyeet r
eatedhi
m orherl ikeaki ngorqueen.That ’
sthe
dif
ferencey ourempl oyeescancr eatewhent heyinteractwi t
hcust omers.Thereare
compani eswhi char ehi ghint hecust omersatisfacti
oni ndex,justbecauset hei
r
empl oyeesar ewel l-
trainedandar eempower edt otaket heirowndeci si
ons.Mor e
i
mpor t
ant l
y,theseempl oy eesar eingrai
nedwi t
ht hehabi tthat“Customeri sking”
.
Oncey ourempl oyeesst art
st reati
ngt hecustomerasi ftheyar ereal
lyking,the
wholeser vi
cet ri
angleget scompl et
ed,andy ouwi l
lgett hebestr esult
sf rom al
l
processesempl oyed.
Ther
ear
e3t
ypesofmar
ket
ingwhi
chhappenwi
thi
ntheser
vicemar
ket
ingt
ri
angl
e

I
nter
nal
mar
ket
ing–Mar
ket
ingf
rom t
hecompanyt
otheempl
oyees

Ext
ernal
mar
ket
ing–Mar
ket
ingf
rom t
hecompanyt
othecust
omer
s

I
nter
act
ivemar
ket
ing–Mar
ket
ingbet
weent
hecust
omer
sandt
heempl
oyees

1)I
nter
nal
mar
ket
ingi
ntheser
vicet
ri
angl
e:

Holistic 
mar ket i
ng i s most used when i nternal mar keti
ng i s i n ef fect.
An adv ert
ising fi
rm alwayst r
iest okeepi tsownempl oyeesmot ivat ed.Theyar e
givenahel llotofpar t
iesandoutingsjustsot hatt heyarei naj ovi
almood.Andt hey
needt obei naj ovialmoodbecauset her estoft het i
mest heyar eusingt heircreati
ve
brainsv eryhar dt ogivetheulti
mat eserv icet otheircustomer s.Fur thermor e,these
sameadv er ti
singcompani esempowert hei rempl oyeestot aket herightdeci sionsin
fr
ontofcust omer s.Thisempower mentgoesal ongwayi nbui ldi
ngmot iv
at i
onand
conf i
dence.Andt hat’
swhati nt
ernalmar ketingbasedont heser vicet r
iangleisal l
about .Buildingconf i
denceandmot ivationi ny ourempl oyees,sot hatt heybui l
d
excellentrelationshipswitht
heendcust omer sandt hecompanyget st hemoney .

2)Ext
ernal
Mar
ket
ing

Market
ingfrom thecompanyt othecustomers.Thisisthemostcommont y
peof
market
ingwhi chwe,ascust omers,encounterinthemar ket.Thevar
iousty
pesof
ser
vice marketi
ng can be advert
isi
ng,sales promoti
ons,publ i
crel
ati
ons,dir
ect
market
ing,ormor epr
ominently
,int
ernetmarketi
ngintoday’sage.

3)I
nter
act
ivemar
ket
ing

Themar ket
ingwhichhappensonar et
ailstore,i
narestaurant,inamal l
,i
nabank,or
i
nanyf ormatwher ethecustomercomesi ntouchwi t
ht heempl oyee,i
sknownas
i
nteracti
v emarketi
ng.Thismar keti
ngwi thintheservicet r
ianglehappensbet ween
thecust omersandt heempl oyees.Interacti
vemar keti
ngi sal soast r
ongwayt o
i
nfluencecust omers.Itismostcommonl yused t o help customer scomet oa
decisi
onwi thregardstothei
rpur chasedeci si
on.Ifar etai
lexecut i
vehasrecei
ved
ordersthathehast oli
qui
datest ockofSamsung,hewi llonlyt ellyoutheposi
ti
ve
thi
ngsaboutSamsungandt rytoconv er
ty ourdecisi
onintobuy ingSamsung.

Ser
viceScape

Servi
cescapeisdefinedast hephysi
calenv
ironmentwhereaservi
cecant akepl
ace.
I
thel pst oanaly
zeandi denti
fytheimpactofagoodenv i
ronmentont heservi
ce-
basedi ndust
ry.Ser
vicescapedealsinthesetti
ngswhereaservi
ceisconsumedor
del
iveredandt hepl acewherebot hthecompanyandcust omerinter
act i
onswith
eachother .Ithasapower fuli
mpactont heassessment , percept i
on,andr esponseof
thecustomer .Ser
vicescapei samodel thatput sit
sonusonexpl ai
ningt hebehav iour
ofcustomer sandcl i
entswi t
hintheser vi
ceenv i
ronment .Itisapopul arconceptf rom
BoomsandBi t
nerthatcategoricall
ystatest hatambi ancehasadi rectimpactont he
customer s.Whenaconsumerv i
sit
sapl acef orapar ti
cul arser vi
ceorpr oduct,itis
thesurroundi ngsthatencour ageordi scour ageshi mf rom f ollowingasetcour seof
acti
on.Iti st hefi
rstaspectofser vi
ceper ceivedbyt hecl ientorcust omerandt he
i
mpr ession t hatf orms pav et he way f orf urtherser vices.The f ounder s of
Servi
cescapehav eexpl ainedt heconceptasanecessi tyify ouar eint erest
edi n
i
mpr ovi
ngy ourr el
ationshipwi thcust omer st of eli
citatebet tersal esf iguresand
l
argerrev enues.

El
ement
sofser
vicescape:

Thev
ari
ousel
ement
sinf
luenci
ngser
vicescapear
e

Faci
l
ityExt
eri
or

 Landscape

 Ext
eri
ordesi
gn

 Sur
roundi
ngenv
ironment

 Par
king

 Si
gnage

Faci
l
ityI
nter
ior

 Music
 Layout
 Equipment
 Airquali
tytemper
atur
e
 Int
eriordesign

Ot
her
s

 Vi
rt
ualservi
cescape
 Br
ochures
 Employ
eedr ess
 Bi
ll
i
ngSt at
ement s
 Webpages
  Unif
orms
 Reports
 Stat
ionary
 Busi
nesscards

Rol
esofSer
viceScape:

1.Faci
l
itat
or

Serv
icescapeactsasaf acil
i
tat
orto hel
p peoplei
nt hei
rsurroundings.A wel
l
-
desi
gnedpl acecreat
esapl easur
abl
eambiancethatrel
atestopeaceandhar mony,
whereasani nef
fi
cientdesigncancausefrust
rat
ionandpessimisti
c att
it
ude 
i
nthe
mindsofbot hemployeesandcustomer
s.

2.Soci
ali
ser

Theser v
icescapedesignact sasaper fectsocial
iserbetweenbothcustomer sand
employees.I tal
sohel
pstodepi cttheexpectedbehav i
ourandrol
esli
keanempl oyee
canunder standhisposit
ioninat eam throughhiscubiclepl
acement,t
hequal it
yof
off
icefurnishingsandofficeassignments.Thedesi gnalsosuggest
stocust omers
wheretheyar enotal
lowedandwher etheyar eencouragedandwelcomedt hrough
ser
v i
cescape.

3.Package

Theservi
cescapehelpstoconveyt
heinter
nalimaget
hroughitsout
wardappearance.
Productpackagesareoneofit
sprimaryexampleswhereyoucaneasi
lyknowabout
thewrappedproductbyviewi
ngandreadingthematt
er.Itact
sasav i
sualmetaphor
forbui
ldi
ngaspecifi
cimage.

4.Di
ff
erent
iat
or

Ser
vicescapeact
sasadiffer
enti
atorbysepar
ati
ngdesignsofacompanyf
rom i
ts
competit
or.I
thel
pst
oreposit
ionacompanyandattr
actnewsegment
s.

Funct
ionsofSer
viceScape:

1.I
mage,
dif
fer
ent
iat
ion,
andposi
ti
oni
ng

Servi
cescapeisanint
egralpartofval
uepr
oposit
ionandser
viceexper
ienceasitcan
att
ractattent
ionveryeasil
y.Itdeliv
ersl
eisur
easwel lasacont actservi
ce,for
i
nstance,i
nshoppingmal l
s,thestaf
fandt
heenv ir
onmentj
oint
lymakesanef f
ortto
pl
easeitscustomers.
2.Faci
l
itat
ingser
viceencount
erandi
ncr
easi
ngpr
oduct
ivi
ty

designi
ngplaysani mpor t
antpar tinser v
icescapeify ouwanttof acil
itateser
vice
encounterandmaximi zepr oducti
vi
ty.Sev eralshoppingmallshavei ncludedsmall
play
houset y
peofencl osureswi t
hinitsinnov at
ivedesignsothatmot herscanav ai
l
theservi
ces,keept
heirchil
dov erthere,andpeacef ul
lycont
inuewit
ht heirshoppi
ng.

Ser
viceMar
ket
ingMi
x

1.Product :Incaseofser vi
ces,the‘ product
’isint
angibl
e,heterogeneousand
perishable.Moreover
,it
sproductionandconsumpt ionareinseparabl
e.Hence,
thereisscopef orcust
omi zi
ngtheof feri
ngaspercustomerr equir
ementsand
theact ualcust
omerencount ert hereforeassumespar ti
cularsigni
fi
cance.
Howev er,toomuchcust omizati
onwoul dcompromisethest andarddeli
very
oftheser v
iceandadversel
yaf f
ecti t
squalit
y.Henceparti
cularcarehastobe
takenindesi gni
ngtheservi
ceof f
ering.

2.Prici
ng:  
Pricingofser vicesi stoughert hanpr icingofgoods.Whi l
et hel atter
canbepr i
cedeasi lybyt akingint oaccountt her awmat eri
alcosts,incaseof
servicesat tendantcost s-suchasl aborandov erheadcost s-alsoneedt obe
factoredi n.Thusar estaurantnotonl yhast ochar gef orthecostoft hef ood
servedbutal sohast ocal culateapr i
cef ortheambi enceprovided.Thef inal
pricefort heser vi
cei sthenar r
ivedatbyi ncludingamar kupforanadequat e
profitmar gin.
3.Place: Sinceser vi
cedel iveryisconcur r
entwi t
hi tspr oducti
onandcannotbe
stored or t ransported,t he l ocati
on of t he ser v i
ce product assumes
i
mpor tance.Ser vicepr ov i
dershav et o gi v
especi alt houghtt o wher et he
servicewoul dbepr ov i
ded.Thus,af inedi ner estaurantisbetterlocat edina
 busy ,upscal emar ketasagai nstont heout skirtsofaci ty .Simi larly,ahol iday
resor ti sbet tersi tuatedi nt hecount r
y sideawayf rom t her ushandnoi seofa
city.
4.Pr omot ion:  
Since a ser v ice of fer i
ng can be easi lyr epl i
cat ed pr omot ion
becomes cr uciali n differ enti
ating a ser v
ice of fer
ing i nt he mi nd oft he
consumer .Thus,ser vicepr ovider sof feringident icalser v i
cessuchasai r
li
nes
orbanksandi nsurancecompani esi nv estheav il
yi nadv ertisingt hei rser vices.
Thi si scr ucialin at tracting cust omer si n asegmentwher et heser vi
ces
prov ider shav enear lyident icalof ferings.
5.Peopl e: Peopl ear eadef iningf act ori naser vicedel i
v er ypr ocess,si ncea
ser vicei si nsepar ablef rom t heper sonpr ovidingi t
.Thus,ar est aur anti s
knownasmuchf oritsf oodasf ort heser vi
cepr ov i
dedbyi tsst af f.Thesame
i
st rueofbanksand depar tmentst ores.Consequent l
y ,cust omerser vice
trainingf orst affhasbecomeat oppr i
or i
tyformanyor gani zat i
onst oday .
6.Pr ocess:  
Thepr ocessofser vi
cedel iveryi scr uci alsincei tensur est hatt he
samest andar dofser v i
cei sr epeat edl ydel iveredt othecust omer s.Ther efor e,
mostcompani eshav easer vi
cebl uepr i
ntwhi chpr ov i
dest hedet ail
soft he
ser vicedel iverypr ocess,of tengoi ngdownt oev endef i
ni ngt heser vicescr i
pt
andt hegr eet i
ngphr asest obeusedbyt heser vicest aff.
7.Phy si calEv i
dence:  Since ser vi
ces ar ei ntangibl ei n nat ur e mostser vice
prov ider sst rivetoi ncor por atecer taint angibleel ement si ntot hei rof feringt o
enhancecust omerexper ience.Thus,t herear ehai rsal onst hathav ewel l
desi gnedwai ti
ngar easof tenwi thmagazi nesandpl ushsof asf orpat ronst o
readandr el
axwhi letheyawai tt hei rtur n.Simi l
ar ly,r
est aur ant si nv estheav il
y
i
nt hei ri nteriordesi gn and decor ations t o of fera t angi bl
e and uni que
exper iencet ot heirguest s.

MODULE-
II
SERVQUALmodeli st
hemodelofser vi
cequali
tyt
hatisusedformeasuringservice
qual
ityand cust
omersatisf
acti
on.American market
ing gur
us Valar
ie Zei
thaml,
LeonardBerr
y,andA.Parasuramansuggestedthi
sSERVQUALmodeli nthey ear
1988t oanal
yzedimensi
onsofser v
icequalit
yaswel laspercept
ionsofser vice
qual
ity
.

TheSERVQUALmodelwhi chi sshortf ortheServiceQual i

tymodeli sther esearch
met hod t o captureand anal y
zeconsumerexpect ati
onsand per cept
ionsoft he
service.Thi selabor
atemodelhel psbr i
dget hegapbet weencust omerexpect ati
ons
and needs.The cur rentfive dimensionsoft he SERVQUAL modelar e used to
measur eservicequali
t y
.Originall
yitwasmeasur edkeepi ngi nmind10component s-
responsi veness,rel
i
abi l
it
y,compet ence,access,courtesy,communi cati
on,credibi
li
ty,
secur it
y,under st
andingt hecust omer ,andt angi
bles.Al lthesecomponent swer e
event uall
ymer gedandnow t heSERVQUALmodeldeal swi t
hf ivecomponent s-
Reli
abi li
ty,Assurance,Tangi bles,Empat hy,andResponsi veness.Hencei tisal so
knownast heRATERmodel .

Di
mensi
onsofSERVQUALModel
 /Ser
viceQual
i
ty

Thet
enor
igi
nal
dimensi
onsoft
heSERVQUALmodel
orser
vicequal
i
tymodel
are-

1.Tangibl
es
2.Rel
iabil
i
ty
3.Responsiveness
4.Communi cation
 5.Credi
bil
it
y
6.Securi
ty
7.Competence
8.Court
esy
9.Underst
andi
ng
10.
Access

5RATERDi
mensi
onsofSer
viceQual
i
ty

Whil
et heSERVQUALmodelhadt endimensions,it
ssi mpli
fi
edmodel -theRATER
modelhasf iv
eparamet ersunderwhichthecustomerev al
uationi
smeasur ed.They
areunderstoodasser vicequalit
ydimensionsusedt of i
ndoutper ceiv
edser v
ice
qual
it
yont hemulti
ple-it e.Thesedi
em scal mensionssuggestani t
em scalefor
measuringthequal
it
yofser vi
ceasperthecustomerper cepti
ons.Theyalsohelpin
knowi
ngt hecust
omer, andt hati
swhytheyareintegral
partsofserv
icesmarketi
ng.

1.Rel
i
abi
l
ity

Thi
sistheabi
l
ityofthefi
rmt operf
ormtheserv
iceef
fect
ivel
yandaccur
atel
y.I
t
measur
eswhet
herthefi
rml
iveduptoit
spr
omisesornot
.

2.Assur
ance

Thisdimensiondependsontheemployeesoft
hefi
rm.Itist
hei
rski
ll
toproducetr
ust
and credibi
l
ityin minds ofthe consumer.Itrequi
res pr
operknowledge and
dedicat
ion.

3.Tangi
bles

Thi
s dimensi
on r
efers t
o phy
sical f
aci
l
iti
es, equi
pment
, per
sonnel
, and
communi
cati
onmat
eri
al.

4.Empat
hy

Thisdi
mensionrefer
st otheatt
enti
onandpr
ior
it
ytheor
gani
zat
iongi
vest
othe
needsandr
equestsofthecust
omers.

5.Responsi
veness

Thi
sdimensi
onisrel
atedtot
hef
ir
m anditsabil
i
tyandwi l
l
ingnesstoaidcust
omer
s
andpr
ovideaptser
viceaspr
omi
sed.Thesearethefi
vedimensionsthathel
pafi
rm
tot
endtoit
sconsumersandmai
ntai
naposit
iverel
ati
onshipwitht
helatt
er.

HowSERVQUALModel
measur
esSer
viceQual
i
ty?
Asi ti sbasedonconsumerr el
ati
ons,asampl esur veyi sconductedinor dert o
under st
andcust omerneedf ora product orservi
ce.Origi
nallySERVQUALconsi sted
of22quest ions.Post-debat
eandmodi fi
cati
onsoft hesequest ionsweref i
nalized
thataddr essedcust omerfeedback.Init
iall
y,fourser
viceindust r
ieswerelookedat -
 
banki ng,creditcards,repair
sandmai ntenance,andt elephonecompani es.Thi s
SERVQUALquest i
onnairewasspl i
tintotwomai npart
s:Respondent swereenqui red
aboutt hei
rexpectat i
onsoft hei dealser vi
cef i
rm int hatser vi
cecategoryand
respondent sweret henaskedaboutt heser v
icequali
tydel i
veryofspeci
ficfir
msi n
thatindustry.

Thef
iveGapsofSer
viceQual
i
ty

Thecor
respondencebetweent heclientandtheser
vice-
prov
idi
ngassoci
ati
on,j
ust
astheassociat
ion’
sinnercorrespondence,i
soffundamentalsi
gni
fi
canceforthe
degr
eeofnatureoftheassi
stance.

I
tisacceptabl
ewhenf i
rmsr eal
i
zet hepatternsofthei
rcli
ents.Consequentl
y,the
SERVQUAL Modelr ecognizes f
ive gaps thatcan emerge between the cl
ient’
s
necessi
ti
esandthehelpthatanorganizat
ionoffer
s.

1.Knowl
edgeGap

Agapemer geswhenaf ir
m’sinformati
ononconsumerneedsisnotenough, keeping
them from pr eci
sel
ymov i
ngt owardcustomers.Alsoknownast hemanagement
perceptiongap.Whent heorganizati
on’
sassumpt i
onsofcustomerper cepti
onar e
diff
erentf r
om thecustomers,thisgapari
ses.Thisoccur
sasar esul
tofi nsuf
fici
ent
andcar elessresear
ch.Ithi
ntstowardsaproblem wi
thmarketunder
standing.

Causes-Lack ofqual i
ty mar
ket
ing,poor
lyi
nter
pret
ed infor
mati
on,unf
ocused
research on customerneeds,Too much mi
scommunicati
on bet
ween f
ront
li
ne
empl oyeesandtop-l
evel
management.

Forexample-Ifacof fee 
brand 
misreadscustomerneedf
oraffordablecof
feeand
i
nstead 
markets i
tsel
fasv eryexpensiv
e.Whi l
ether
eare 
people who wil
lbuyit
,
coff
eei sanev erydayneedf orthemaj or
it
yofpeopleandhencet heypref
eran
aff
ordabl
ebrandov eranexpensiveone.

2.St
andar
dsGap

Thef i
rm hasf r
amedi t
st houghtregardi
ngwhatt hecli
entant i
cipatesfr
om its
administ
rat
ion.Inthe 
event 
thatthi
st houghtisn’
tr i
ghtfrom t hebegi nni
ng and
doesn’
tr el
atetowhatcl i
entsexpect,thereisahugedangert hatt hefi
rm wil
l
i
nterpr
etitwrongl
yintoaqualit
yapproachandcompar i
ngrules.Itisalsoknownas
thequali
tyspeci
fi
cat
iongap.Servi
cedesignand 
performance standardsarerequi
red
tofi
llt
hisgap.
Causes-Absenceofpropergoal
,i
nsuffi
cient
 planni
ng,absenceofquali
tyser
vice,
not
esti
matingthefeasi
bil
it
yoft heser
vice,overalli
nadequateapproachtowardstask
standar
dizat
ion.

Forexample-Themajori
tyofhot
elsdonotcleanther
oomsonthedayofcheckout.
Theydonott akei
ntoconsi
derat
ionl
atecheckout
s.Hencei
gnor
ingt
heexpectat
ions
ofthecust
omer .

3.Del
i
ver
yGap

Agapcanl ikewisehappenwhent hef i

rm off
ersaser vicethatisnotthesameas
whatt hecust omerhadant ici
pated.Thisadditi
onall
yincludesoff-
baseusage.For
exampl e,i
nt hemanneri nwhichwor ker
scompl ete 
str
ategy.Thisgapisalsoknown
ast heservicedeliver
ygap.Hence  cust
omerexper i
ence wit
hapar ti
cul
arservi
ceor
productmustbet akenintoaccountforimprov
ement .Thisisusuall
ydoneinform of
feedbacks.

Causes-I
nef
fecti
verecrui
tment,rol
econf
li
ct,coul
dnotmat ch 
demand and 
suppl
y,
l
ackofteamwork,employee0t
echnol
ogyfi
tinef
fect
ive,
inadequat
eplanni
ng.

Forexample-Manyti
mes whi
l
e del
i
ver
ing f
ood,t
he or
der
s ar
e wr
ong ort
he
packagi
ngi
snotpr
oper
.

4.Communi
cat
ionsGap

Thisgapoccur swhent heor ganizat

ionpromisesservi
cesthattheyarenotcapable
to del
iver.The communi cations thatthe fir
m sends outcan cr eate wrong
expect
ations.I
tisthediffer
encebet weenconsumerexper i
enceandexpect ati
ons.I
t
i
s also known as t he mar ketcommuni cati
on gap.As t he majorit
y of the
communi cati
onisdonebyt hemar keti
ngteam, t
hisi
softenafaultontheirpar
t.The
fi
rmsoftenexagger at
et heresultstheydeli
verandthi
s,intur
n,leavesthecustomer
unhappyanddi ssat
isf
ied.

Causes-f
ail
uretomanageconsumerdemand,f
ail
uret
operf
orm promi
sedser
vices,
poorcommunicati
on,
over
-est
imat
ingonbehal
fofthemar
ket
ingteam.

Forexample-Vari
ousfai
rnesscr eamspromiseali
ght
erski
ntonein5-
6weeksbut
oft
enfailt
oment i
onextr
apr ecauti
onsl
ikescarv
esandhat
sthatneedt
obewornto
shi
eldfr
om thesun.

5.Sat
isf
act
ionGap

Thisisacombi nat
ionofknowledgegapandcommuni cat
iongap.Itistheoveral
l
dif
ferencebet
weent heper
cei
vedservi
cebythecust
omerandt heexperi
enceofthe
customerwiththeservi
ceandthefi
rm.Unl
esscustomersati
sfact
ioniskepti
ntact
,
thefir
mi satri
skoflosi
ngcredi
bil
i
tyandr
eput
ati
oni
nthemar
ket
.Al
soknownas
percei
vedser
vicequal
i
tygap.

Causes-onlineinfor
mati
on,revi
ews,feedbacksbyothercust
omer
s, 
wor
dofmout h,
cul
turalbackground,per
sonali
ty,andothervar
iousf
actor
scancauseasat
isf
act
ion
gapbetweent heconsumerandt heprovider
.

Whi l
et her
earevarioussolut
ionstofil
l
ingthesegaps,thef i
rstandf or
emostst epis
effect
ive communi cat
ion.The maj ori
ty ofthe problem can be sol ved i
ft he
organizati
onisclearwi t
hitsagendaandcommuni catest hesamecl earl
ywithits
consumer s.Anot
herwayt ofil
lthegapist oensur
epr operf eedbackistakenf r
om
thecust omer
sandt hosepointer
simplementedforbett
er  
customerserv i
ce.

Appl
i
cat
ionsofSERVQUAL

SERVQUALr emainsani nt
egr
alpartandi
sbecominganimportantresearchtopi
c
where servi
ce quali
tyisimport
antwithrel
ati
on t
o cost
, 
profi
tabi
li
ty,
 cust
omer
ret
ent
ion,andsati
sfacti
on.

Someoft hepubli
shedstudiesregardi
ngSERVQUALi ncludeinthefi
eldsofHot el
,
tr
avel,touri
sm,carser vici
ng,business schools,accounti
ng f
irms,archi
tect
ural
serv
ices,air
li
necat
ering,
mobi l
etel
ecom services.

Adv
ant
agesandDi
sadv
ant
ages

SERVQUALhasbecomeani
ntegr
alpar
tofcust
omermoni
tor
ingandhasal
otof
advant
ages.

Theserangef r
om enabli
ngassessmentofservi
cequal
i
tytotracki
ngcustomer
expect
ati
onsandper cept
ionsovert
ime.SERVQUALal
soenabl
escomparingwith
competi
torsonsimi
l
araspects.

Thedi
sadvant agesoft
hisi
ncl
udethatSERVQUALr emainsthatuni
for
mityoft
hisfor
al
ltheserv i
cesectorsremai
nunsureandi tdoesnotmeasur eservi
ceoutcome
per
cept
ions.Theuseofmeasur i
ngexpectat
ionsinser
vicequali
tyhascomeundera
l
otofcr
iti
cisms.

Cr
it
ici
sms 
ofModel
ofSer
viceQual
i
ty

Iti
scr it
ici
zedt hatthe5di mensionsofSERVQUALorRATERast heyar
ecall
ed.
Thesedi mensionsorRATERSar enotuniver
salandt hatist
hereasonwhythere
remains li
ttl
e ev i
dence that customer
s access servi
ce qual
i
tyi nterms of
expectat
ionsandper cept
ions.
SERVQUALal sofacescri
ti
cismsonthegroundsthatthi
sform onl
yfocusesonlyon
servi
cedeli
veryandnotont heout
comes.Thereisalsoahighdegreeofcorr
elati
on
betweenthe5di mensionsofSERVQUALandt husthescoresobtai
nedcannotbe
exact.

Thusthoughbei
nganeffi
cientmethod,
SERVQUALfacesi
tscri
ti
cismsmai
nlyont
he
groundsofl
ackofcust
omerpercepti
onandthusr
emainsdebat
ed.

Ser
vicePr
oduct

Theser viceproductisaser v
icet hatcanbesol dandt hatisperfor
medwi t
hin
CustomerSer vi
ce( f
orexample,inspecti
onofy ourcar).Youcanuset hesalesorder
andtheser vi
ceordertoprocesstheseser vi
cetasks.Servi
ceasapr oductrepr
esents
awider angeofintangi
bleproductsofferi
ngsthatcustomersv al
ueandpayforinthe
marketplace.Servi
ceproductsar esol dbyser vi
cecompani esandbynon- serv
ice
compani essuchasmanuf acturer
sandt echnologycompani es.

Lev
elsofSer
vicePr
oduct
:

Coreorgeneri
c:
Forconsumerorindustr
ialproductsthi
sconsist
softhebasicphysicalpr
oduct
, i
.e.2
kgofsugar,apacketofsel f
-tappi
ngscr ews,oracamera.Thecor eelementsfora
camera,forexampl e,consi st
s oft he camera body,the viewer,the winding
mechanism,thel
ensandt heothercorebasicphysi
calcomponent swhichmakeup
thetr
ansact
ional
util
it
yinthef orm ofdeposi
tsandwit
hdrawals.
Expect
ed:

Thi
sconsistsofthegener
icproducttoget
herwi t
ht hemi nimalpurchaseconditions
whi
chneedt obemet .Whenacust omerbuysav ideocasset terecordertheyexpect
aninst
ruct
ionbookwhichexpl
ainshowt oprogrammei t
,awar rantyforareasonable
per
iodshouldi
tbreakdown,andaserv i
cenetworksot hatitcanber epair
ed.

Augment
ed:

Thisi
st heareawhi chenablesoneof f
ertobedi ff
erenti
atedformsanother.For
example,I
BM hasar eput
ati
onforexcel
lentcustomerservicealt
houghtheymaynot
havethemostt echnol
ogi
call
yadvancedcorepr oduct.Theydiff
erent
iat
eby‘adding
val
ue’tothecor
e, i
ntermsofserv
icerel
i
abili
tyandresponsiveness.

Pot
ent
ial
:

Thisconsistsofal
lpot
entialaddedfeaturesandbenefit
st hatar
eormaybeofuti
li
ty
tosomebuy er
s.Thepotenti
alforr edefi
nit
ionofthepr oductgiv
esadvant
agesin
att
racti
ngnewuser sor‘
lockingin’exist
ingcustomers.Thiscoul
dmakeitdif
fi
cul
tor
expensiv
ef orcust
omerstoswi t
cht oanothersuppl
ier.

NewSer
viceDev
elopment

Oneoft heser iouschal l

engesser vi
cef i
rmsf acei nr ecenttimesi snew ser vi
ce
processdev elopment .Accor dingtoPhili
pKotler
,ev er
ycompanymustdev el
opnew
products.New pr oductdev elopmentshapes t he future oft he company .The
developmentofnewser v
icecanl eadt obett
erunder standingofmar ket’spar t
icular
requirements,maki ngiteasiert ospotf ur
theroppor tuniti
es.Cust omerwantnew
productsandcompet i
torsdot heirbesttosurpassthecompany .Theincr easedl evel
ofcompet i
ti
on,t her apidpaceofchangei ntechnologyandi nnovation,gr owing
consumerawar enessandhei ghtenedconsumerexpect ati
on,established,bey ond,
doubt ,t
heneedf orintr
oducingnewser vi
cesmustf astert hanthecompet it
orsi nthe
mar ket.Thefast erofferprovidesgreatermill
agef orfirmst ofacecompet it
ionand
winconsumer s.

Aser vicecanbet ermedasanewser vi

cewheni ti
sinnovati
ve,cr
eatedandoffered
byt hecompanyt otheworldforthefi
rstti
me.Somenew ser v
icesareadaptive
replacements.Theyar ethei
mprovedver
sionsoftheexi
stingservi
ceproductei
ther
i
nt echnology,st
yle,st
atusorper
for
mance.(K.RamaMohanaRao)

Cat
egor
iesofnewser
vice:

 St
y l
e:Itrepresent
sthesi
mpl
esttypeofinnov
ati
on,i
nvol
vi
ngnochangesin
ei
therprocessesorper
for
mance.Howev
ertheyof
tenarehi
ghl
yvi
sibl
e,cr
eat
e
 excitement,andmayservetomot i
vat
eemployees(Chri
stopherLovel
ock).For
exampl e,changi
ngthecolorschemeofarestaurant
,revi
singthelogoforan
organizati
on,redesi
gni
ng awebsi t
e,orpainti
ng ai
rcraftadi f
fer
entcol or
.
(Valari
eA.Zeithaml)

 Serviceimpr
ovement
s:Iti
sthemostcommont y
peofinnovat
ion.I
tinv
olves
modest changes in the perfor
mance of curr
ent pr
oducts, i
ncl
udi
ng
i
mprov ement
st o ei
therthe core pr
oductorto exi
sti
ng suppl
ementary
ser
vices.

 Supplementaryserviceinnovati
ons:Ittakethef or
m ofaddingnewf acil
itati
ng
orenhancingserv i
ceel ementstoanexi sti
ngcoreser vi
ceorofsi gnif
icantl
y
i
mpr ovinganexi sti
ngsuppl ement aryser vi
ce.Mul t
ipl
ei mprovementsmay
havet heeffectofcr eati
ng whatcust omer sper cei
veasan ent i
rel
ynew
experi
ence,event houghitisbuiltaroundt hesamecor e.Forexampl e,cafes
are design to keep cust omers ent ertai
ned with aquariums,wat erfal
ls,
monkey sandcompl etewi t
hlight
ening.(Christ
opherLovelock).

 Serv
ice-li
neextension:I
trepresentaugmentat
ionsoftheexist
ingserv
iceline,
suchasr estaurantaddingnewmenui tem,ai
rli
neoffer
ingnewr out
es,al aw
fi
rm offer
ingadditi
onallegal
servicesandanuniver
sit
yaddingnewcour sesor
degrees.(
Valari
eA.Zei t
haml)

 Majorpr
ocessinnovat
ions:I
tconsi
stsofusingnew processest
odel
i
ver
exi
sti
ngcor
eproduct
sinnewway swi
thaddi
ti
onalbenef
it
s.

 Maj orser
viceinnovat
ions:Thesear enew cor epr
oductsformarket
st hat
have notbeen pr evi
ously def
ined (Chri
stopherLov
elock)
.Forexampl e,
ret
ailer
saddingacof feebarorchi l
dren’
spl ayar
ea,andai r
li
nesoff
ering
phoneandinter
netservi
cesdur i
ngfl
ights.

 Star
tupbusinesses:Thi sconsistsofnew ser v
icesforamar ketalr
eady
serv
edbyexist
ingpr oductsthatmeetthesamegener i
cneeds.Forexample,
onli
nebanki
ngf orf
inancialt
ransact
ions.
(Val
ari
eA.Zeit
haml)

Reasonsf
ornewser
vicedev
elopment
:

Forserv
icefi
rmtosur
viv
eint
hecompet
it
iveenv
ironment
,cont
inuesi
nnov
ati
onsand
new servi
cedevel
opmentar
econsi
der
ednecessary.Thereasonsfori
ntr
oduci
ng
newofferi
ngsar
e:-

 Bui
l
drecogni
ti
onasani
nnov
atori
nthemar
ket

 Pr
ovi
deanewser
viceof
fer
ingt
odev
elopamar
ket
  Proacti
veterri
tor
ialexpansi
on t
hrough new ormodi
fi
ed of
fer
ings att
he
exist
ingser
vicepl
ace

 Def
ensi
veact
ionst
ochal
l
engecompet
it
ors

 I
nit
iat
ethesuccessofanot
heror
gani
zat
ion

 Takeadv
ant
ageoft
het
echnol
ogi
cal
breakt
hrough

 Tor
eposi
ti
oni
.e.f
itconsumerr
equi
rement
smor
eaccur
atel
y

Newser
vicedev
elopmentst
ages:

1.IdeaGener at i
on:Themai npoi ntofi deagener ationi stof i
nd,i nast ructur ed,
goalor i
ent edmanner , newway st oser vicet hecust omeri nameani ngf ulway .
Ani nnov ativeor ganizationconduct saf or malsear choft hemar ketf ornew
service i deas. The i deas may come f r
om management ,empl oy ees,
unsat isfied need ofcust omer s,compet it
ors,gov ernmentr egulat i
ons.For
exampl e,gl obalizati
onbr oughtmanyser vi
cei ndust ri
est hr oughf ranchi sing,
j
oint-v entureset c.(M. K.Rampal )
.Int hemsel ves,i deasar enei thergoodnor
bad;i ti st hei rappli
cat ionandexecut iont hatmaket hem so.Thef ront line
peopl e,i ndi rectcont actwi thcust omer sandi nvolv edi nser v i
cepr oduct ion,
are cr i
ti
calf act orto dev elopmentofnew i deas.I n or dert o mot iv ate
Empl oy eesCompanyshoul dr ewar dnewser vicei deas.Whi l
ecol lectingi deas,
theconcer nedmanagershoul dhav eanopenmi ndandnotbeev aluat i
v eat
thispoi nt.Theyshoul dlookf ormaxi mum numberofi deasf rom v arious
sources;pool i
ng ofi deasshoul d bet heonl yobj ective.Ser vi
ceat tribut e
analysi si sonet echniquet hathel pst heser vi
ceor gani zationt oi mpr ov et he
existi
ng pr ocess.Undert hi s appr oach,each oft he at tri
butesf acili
tat ing
serviceat tributesandsuppor tingser viceat tributes-i sscr uti
nizedf orany
possi blei mpr ov ement s.Thepoolofnew i deast husgener atedneedst obe
evaluat edusi ngspeci ficcri
t eri
at hrought hepr ocessknownasscr eening.( K.
RamaMohanaRao)

2.Screeni ng:Many oft he ideas mi ghtl ook i nt

erest i
ng butt hey mustbe
screened agai nst ser
v i
ce obj ectives,ser vice pol icy and or ganizat i
on’s
resour ces.Onlyasmal lpercent ageofi deawi l
lsur viveani niti
alscr eening
exerciset oassesswhet hertheyar esuf ficientlycommer ci
altopr ogress.The
typeofquest i
onsaskedatt hisst ager elatespot enti
almar ket
s,howt heidea
fi
tsint oexisti
ngser vi
ceof f
eringsandl ikelyl evelofr esourcest odev elopt he
i
dea.( M.K.Rampal )Theobj ectiveofscr eeni ngnew i deasi stoal l
ocat enew
resour cesbetweent hev ari
ouspr ojects.I nthescr eeningpr ocess,t wot ypes
oferr orsarelikelytooccur:goer rorsanddr oper rors.Goer r
orsoccurwhen
badi deai sfor
war dedforfurtherpr ocessing.Thi ser r
orr esulti
nmonet aryand
oppor tunit
ycost stot he organi zati
on as al lt he ef fort
st o pr ocess and
 i
mpl ementthisideay i
eldsnor esul
t.Dr
oper r
orsoccurwhengoodi deai s
droppedduet oanimpr opereval
uati
oncri
ter
ionandmechanism,causi
ngt he
companytol ooseitforever
.Theideasshort
li
stedt
hroughscreeni
ngneedt o
beconceptuali
zed.Ideasaregeneralandvagueinnatur
e,whereasconcepts
arespeci
fi
candconcr ete.

3.Concept Dev elopment and Test ing:Concept Dev elopment means t he

translation ofan i dea i nt o descr iption f orm i n accur at et erms.Concept
Dev elopmenti sespeci allydi fficultf orser v i
cef i
rm becauseoft hespeci f i
c
char acteristi
csofser vice.A cl ear l
ydef i
ned ser v i
ceconcepti ncludest he
element sofbasi cser vicepackage,cust omerempl oyeei nteract i
onandt he
servicedesi gndocument .A popul arlyusedt echni quef ordev elopmentof
serviceconcepti s‘ servicebl uepr i
nting’.Itpr ov idesacl earpi ctur eofser v ice
processt odifferentpeopl ei nvol vedi nser vicepr oduct i
onandconsumpt ion.
Theser viceconceptdev elopedi st est edbypr esent ingt heconceptt ot arget
consumer sandseeki ngf eedback.Besi descust omer s,theconcepthast obe
tested wi th empl oyees of t he or gani zation so as t o assess t heir
under standi ng,abi li
ty,andwi l
li
ngnessi nper formi ngt heser vice.Ther esul ts
ofconceptt est i
ng hel pt he managementf ind outt he need-gap l ev el,
purchase i ntent i
on l evel ,t he br oad and st rong consumerappeal s,t he
shor tcomi ngsi nt heconcept ,thepr efer entialor derofv ariouspr ocessesand
soon.I tpr ovidesanoppor tunityt odev elopaser v i
cepackaget hatmat ches
closel ywi tht argetconsumerexpect ations.Af tersuccessf ult estingoft he
concept ,apr eliminar ymar ket i
ngst rategyhast obedev eloped.Theser v ice
planshoul dcl earlyi dent ifyt het argetconsumer ,t hemar ketsi zeandt he
compet itors.Thepl anshoul dout l
inet heposi tioni ng,pricinganddi st
ri
but i
on
strategies.Thest rategicpl anshoul dal sosett ar getsf orlongt erm sales,t he
expect edmar ketshar eandpr ofit-bot hlongandshor tterm.

4.Busi nessAnal ysis:Thei deaswhi chappearat tr acti

vet ot hemar ketarethen
subj ectt omor edet ail
edanal ysis.Thisal lowst hecompanyt oassesst he
mar ketsi ze,pot enti
alsal es,andr evenueagai nstdev elopmentandl aunch
cost s.Theuseofsensi ti
vit
ycost i
ngwi llbeappl iedatt hisstage,wher ea
seriesofadj ustment sar emadet of actorssuchaspr i
ce,packagingand
cust omert ake-up,and r evenue impl i
cati
ons ev aluat ed.On t his basis
mini mum andmaxi mum r evenuepot ent i
alwi l
lbepr oject ed.(M.K.Rampal )
Mar ketcompet it
iveness and t he abili
ty oft he company t or espond t o
variat ionsi nt hedemandf ornewser v
icear eal soanal yzed.Busi nessanalysis
helpsmanager st or ankt hescr eenideas.Busi nessAnal y sis:Theideaswhi ch
appearat tr
act i
v et ot hemar ketaret hensubj ectt omor edetail
edanal ysis.
Thisal lowst hecompanyt oassesst hemar ketsize,pot enti
alsales,and
revenueagai nstdev elopmentandl aunchcost s.Theuseofsensi t
ivi
tycosting
willbeappl iedatt hisst age,wher easer i
esofadj ustment saremadet o
factor s such as pr ice,packagi ng and cust omert ake-up,and r evenue
i
mpl icat ions ev aluated.On t his basis mi nimum and maxi mum r evenue
potent ialwi llbepr oj ect
ed.( M.K.Rampal )Mar ketcompet i
ti
venessandt he
abil
it yoft hecompanyt orespondt ov ariati
onsi nt hedemandf ornewser vice
areal soanal yzed.Busi nessanal ysi
shel psmanager stor ankt hescreenideas.
 5.Serv i
ceDev elopment :Dur i
ngt hisst age,t heor gani zationdet er
mi neswhet her
i
ti spossi blet opr ov idet heser viceatcostandquant it
yt hatwi llmaket he
serv i
cepr i
ceat tractivet ot hecust omer .Theel ement soft heserv icet hatwill
bepar t
icularlyi mpor tantt otheconsumer smustbei dentifi
edatt hisstage
andcl ear l
yhi ghlighteddur i
ngser vi
cedesi gn.Thi si sal sot hestageatwhi ch
promot ion, di stri
but ion and pr ici
ng st r
ategi es ar e dev eloped. The
dev elopmentst age i nv olves pr oduction ofpr ot otype orsampl e ofnew
offering.Forexampl e,i nbanki ng sect or,thedev el
opmentphaseofnew
sav i
ngspr oductwoul dr equi r
et hemodi ficationofsav ingscomput ersy st
em
bypr ogr ammi ngst af f,t hedesi gnoff or msanddocument stobeusedi n
settingupt heaccount s,br anchst afftof oll
ow i ncompl etingthef ormsand
processi ngt hem.( M. K.Rampal )Thi sstepi sanact ion-orientedone, i
nvolvi
ng
expendi ture.Itisacl earshi f
tfrom deskwor kt ot heexecut i
onoft heconcept .
Thesuccessoft hest epr epresent stheef f i
ciencyoft hemanagementi n
tr
ansf ormi ngat heor etical designi ntopr act i
calreal it
y .

6.TestMar keting:Nowt heservicesar ereadyf orsal e.Toknowhowt heser vice

offercouldr eall
ypr ovidesat i
sfactoryexper iences,itisnecessar yt otesti t
amongdi f
ferentgroupsofcust omer s.Basedonear l
yresponses,appr opriate
changes can be made t o make t he offermor e qual
itati
ve.Ser vi
ce firm
generall
yinv it
eempl oyees’fami l
iesandsel ectt hecust omert oknow t heir
responses.(K.RamaMohanaRao)Usual l
ytheor ganizat
iont r
iesoutthenew
offeri
ngint hemar ket.Iftheof f
eringi stestedi nmor ethanonegeogr aphi c
mar ket,
thedi ff
erentpr omotionalappr oachesi neachmar ketareusedt ot est
theirrel
ati
vei mpact .Thetestmar ketingist i
meconsumi ngandexpensi ve.As
thereisdangerofqui ckimitati
onbyt hecompet i
torsthet estmarketingper i
od
shouldbekeptmi nimum.

7.Commer cial
izat
ion:Thenewservicedev elopedisnowofferedf orthesale.At
thisstaget heservicef i
rmshav
et oi ncurhugecosts,part
icularlyinexternal
mar keti
ng.Themaj ortaski
stocreateawar enessint
hemar ketandper suade
thet argetmar kett ouset heserv i
ce.Consumereducat ion,gui danceand
trai
ning,ifnecessary,aretobeor ganizedtomaket heconsumerpar ti
cipat
e
welli ntheser vi
cepr ocessandal sot omaket hem perceivet hequal i
tyof
service.

8.Evaluation:Thisisthef inalstagei ndevel

opinganew ser vi
ceof f
eri
ngand
i
nv olv
est heuseofpr i
mar yandsecondar yresearchtomoni t
orthepr ogr
ess
ofnew ser v
ice offer
ing i nrelat
ion to organi
zat
ion’
s goals.No ser vi
ce
dev el
opmentpl aniscompl et
eifitfail
stoinduceasy st
em formonitor
ingthe
result
soft heplan.Effecti
vemoni tori
ngenablestheserviceprov
idertotake
remedi alacti
onwher eneeded,aswel lasacquireadditi
onalknowledgef or
successf ulmanagementofser vi
celifecy
cle.

Ser
viceBr
andi
ng

Br
andi
ngi
snot
hingbutpr
ovi
dingani
dent
it
yandbui
l
dingadi
sti
ncti
mageoft
he
productora ser vice.Iti s allaboutdi f
ferent
iating an organizati
on f r
om its
compet it
ors.Brandingi nvolvescreati
ngment alstructuresandhel pingconsumer s
organizetheirknowl edgeaboutpr oduct
sandser vicesi nawayt hatclarif
iest
heir
decisi
onmaki ng,andi nthepr ocessitprov
idesv aluet othefirm.Inot herwords,
brandingisendowi ngser viceswiththepowerofabr and.(
K.RamaMohanaRao)
Branding ofser vi
ces ist he diff
icul
ttask because i tcall
sf ormai ntenance of
consistentservicequal i
ty.Additi
onall
y,abrandcannotbephy sical
lyattachedtoa
l
abel ortoaser viceitsel
f.

El
ement
sofBr
andi
ng:

Mar keter sbel i

evet hatbr andi ngi snotsimplyt henami ngofpr oduct ,butsomet hing
bey ondt hat.Thev i
sualdi stinct i
venessofabr andmaybecombi nationofany thing
followi ng:name,l ett
er,number ,asy mbol,asi gnature,ashape,asl ogan,acol our .
Butnamei sthemosti mpor t antelementofbr andasi t
susei nthel anguagepr ovides
auni ver salreferencepoi nt.Thenamei ssuchanel ementoft hebr andt hatshoul d
nev erchangeunl esssomeext r
aordinar
ycondi ti
onsdemandt hechange.Thekeyt o
creat i
ngabr andi sabili
tyofaser vi
cecompanyt ochooseat t
ributessuchasname
l
ogot hati dentif
yt heser viceanddi st
inguishi tfrom theot hers.Thesedi fferent
component sofbr andar ecal ledbr andelement s.Creati
ngasuccessf ulbr andent ail
s
blendi ngal lthesebr andel ement stogetherinauni queway–t heser vicehast obeof
highqual it
yandappr opri
at et oconsumerneeds,t hebrandnamemustbeappeal ing
andi nt unewi ththeconsumer s’percept
ionoft heproduct ,
thepackagi ng,promot ion,
pricing and al ldi f
ferentiati
on.Consumer sv i
ew br ands bey ond t heirfunctional
attributesandbenef i
ts.Theyal sol ookfornonf unctionalandsy mbol i
cqual ities.
Thisqual it
yofser vi
cedet ermi nest hesuccessoft heimage.

At
tri
but
esofBr
andi
ng:

Whichbrandbecomesstrongorweaki sadebatabl
equesti
onalway
s.Thetheori
es
donotexactl
ytogetdesi
redresul
ts.Brandi
ngismoreanartt
hansci
ence.K.
L.Kel
l
er
i
denti
fi
ed10at t
ri
but
esofthestrongbrandinthewor
ld,
whichareasf
oll
ows:-

 Thebr
andexcel
satdel
i
ver
ingt
hebenef
it
sconsumer
str
ulydesi
res

Thebr
andst
aysr
elev
ant

Thepr
ici
ngst
rat
egyi
sbasedonconsumerper
cept
ionv
alue.

Thebr
andi
spr
oper
lyposi
ti
oned.

Thebr
andi
sconsi
stent
.
Thebr
andpor
tfol
i
oandhi
erar
chymakessense.

Thebrandmakesuseofandcoor
dinat
est
hef
ullr
eper
toi
reofmar
ket
ingact
ivi
ti
es
t
obui
ld equi
ty.

Br
andmanager
sunder
standwhatt
hebr
andmeanst
oconsumer
s.

Thebr
andi
sgi
venpr
oper
,sust
ainedsuppor
t.

Thecompanymoni
tor
ssour
cesofbr
andequi
ty

Benef
it
sofBr
andi
ng:

Brandi
ngoff
ersmanybenefi
tst
oser v
icepr
ovider
saswel
lasser
viceconsumer
s.
Thefol
lowi
ngaret
hebenef
it
sofbrandi
ngser
vices:
-

1.Pr
ovi
descor
por
atei
dent
it
yandr
ecogni
ti
on

2.Pr ov
ides an oppor
tuni
tyt
o di
sti
ngui
sh t
he ser
vice f
rom t
hatofcompet
it
ive
ser
vices

3.Hel
pscust
omer
sdev
elopv
alueper
cept
ions

4.Hel
psi
ndev
elopi
ngcust
omerr
elat
ionshi
ps

5.Bui
l
dsupl
ong-
ter
m equi
tyt
otheconcer
n

6.Makesmar
ketpenet
rat
ioneasy

7.Newser
viceof
fer
sgetqui
ckr
esponses

Ser
vicePackagi
ng

AccordingtoWill
i
am JSt ant
on,“Packagi
ngmaybedef i
nedast hegeneralgr oupof
acti
vit
iesinproduct/serv
iceplanningwhichi nvolv
esdesi gni
ngandpr oduci ngthe
contai
nerorwr apperofser vi
ce.”Packagesmi ghtinclude up tothree levelof
material
.Well
-defi
ned packagescan bui ld brand equi
tyand der iv
essal es.The
packageisthebuyer’
sf ir
stencounterwit
hthepr oductandi scapableofturningthe
buyeronoroff.Packagingalsoaffect
sconsumer ’slat
erproductexperi
ences.
Theserv
icepackageisdef
inedasabundleofgoodsandser
vicest
hati
spr
ovi
dedi
n
someenvi
ronment.Thi
sbundleconsi
stsoft
hefoll
owi
ngfourf
eatur
es:
-

1.Suppor
tingFacili
ty-Thephy
sicalresourcest
hatmustbeinplacebef
oreaservi
ce
canbeoffered.Examplesareagolfcourse,askil
i
ft,
ahospi
tal
,andanair
plane.

2.Facili
tat
ingGoods-Themat eri
alpurchasedorconsumedbyt hebuy er
,ort he
i
tems provided by the customer .Exampl es ar
e gol fclubs,ski s,food it
ems,
repl
acementaut oparts,l
egaldocuments,andmedi calsuppli
es.Oper at
ionsdataor
i
nformati
ont hatisprov i
dedbyt hecust omert oenabl eeffi
cientandcust omi zed
serv
ice.Exampl es i
nclude pat
ientmedi calrecords,seat s avai
lable on a f
li
ght,
customerprefer
encesf r
om pri
orvisi
ts,
andl ocat
ionofcust omert odispatchataxi.

3.ExplicitServi
ces-Thebenef
it
st hatarereadil
yobservabl
ebyt hesensesandthat
consistoft he essenti
alorintr
insicf eat
ures ofthe ser
vice.Examples ar
et he
absenceofpai nafteratoot
hisrepaired,asmoot h-
runni
ngaut omobi
leaft
eratune-
up,andt heresponseti
meofaf i
redepar tment.

4.Impl i
citSer vices-Psy chologicalbenef i
tst hatt he customermaysense onl y
vaguelyort heext ri
nsicfeaturesoft heser v
ice.Exampl esar ethestatusofadegr ee
fr
om anI vyLeagueschool ,thepr ivacyofal oanof fice,andwor ry-
fr
eeaut orepai
r.All
ofthesef eaturesar eexperiencedbyt hecust omerandf ormt hebasisofhi sorher
percepti
onoft heser vi
ce.I tisi mportantt hatt heser v
icemanagerof ferat otal
experi
encef ort hecust omert hati sconsistentwi tht hedesiredserv i
cepackage.
Take,forexampl e,abudgethot el
.Thesuppor t
ingf acili
tyi
saconcr ete-bl
ockbuil
ding
withausteref urnishi
ngs.Facili
tatinggoodsar ereducedt othemi ni
mum ofsoapand
paper.Theexpl icitser
v i
ceisacomf or
tablebedi nacl eanroom, andimplici
tserv
ices
mightincludeaf ri
endlydeskcl erkandt hesecur it
yofawel l-
li
ghtedparkingarea.

Reasonsf
orUsi
ngPackagi
ngasMar
ket
ingTool

Vari
ousf
act
orshav
econt
ri
but
edt
othegr
owi
nguseofpackagi
ngasamar
ket
ing
tool
:
-

1.Sel f-
Service-Anincr
easingnumberofservicesaresol
donself-
servicebasi
s.The
effectivepackagemustper f
orm manyofsalestasks;at
tr
actat
tenti
on,descri
bethe
product sf eatur
es,creat
econsumerconf idence,and makea f avourabl
eov er
all
i
mpr ession.

2.ConsumerAf f
luence-Ri
singconsumeraffl
uencemeansconsumer sar
ewi l
li
ngto
payal i
tt
lemor efort heconveni
ence,appearance,dependabi
l
ity
,andprest
igeof
bet
terpackages.

3.CompanyandBr
andI
mage–Packagescont
ri
but
etoi
nst
antr
ecogni
ti
onoft
he
companyorbrand.I
nthest
ore,packagesforabrandcancreateavi
sibl
ebil
l
board
eff
ect
,suchasGarni
erFr
uct
isandtheirbr
ightgr
eenpackagi
nginahai
rcareai
sle.

4.Innovati
on Opport
unity
-I nnovati
ve packagi
ng can br i
ng lar
ge benef
it
st o
consumersandprofi
tstopr oducer
s.Compani esareincor
porat
inguni
quemat er
ial
andfeat
uressuchasresealablespoutsandopenings.

Ser
vicePr
ici
ng

Pri
ceist hemedi um forexchangeofv al
uebetweenabuy erandasel l
er.Iti
san
i
nfl
uencing factorinconsumerdeci sionmaki ng,related to purchase.(K.Rama
Mohana Rao) .Pri
ce repr
esents one oft he i
mpor t
antt radit
ionalmar keti
ng mi
x
var
iabl
es,becausei tisonlypricewhi chgeneratesinflow ofrevenuest ocompany
whil
eallothervari
ablesareassociat
edwi t
hacost .

According to D.D.Shipley and D.Jobber s,‘I

fef f
ecti
ve productdev elopment,
promot i
onanddi stri
but
ionsow t heseedsofbusi nesssuccess,effect
ivepr i
cingis
thehar vest
.’Pri
cei sakeydet er
mi nantofperf
ormance,soi tiscriti
calelementi n
compet i
tivestr
ategy.Pri
ceisthemeasur ebywhichcustomerjudget hev alueofan
offeri
ng,andi tstrongl
yimpact sbr andssel
ecti
onamongcompet ingalternativ
es.
Sev er
alservi
cesuseddiffer
entterminologytodenotepr i
ce.

Forexample,foreducat ionalinsti
tut
ions,itistuit
ionfees;i
nt hebank,itisinterest
.
Theconceptofpr i
ci
ngappl icabletoproduct sappliesequall
yt oservice.Howev er,a
serv
icemar keterneedst obeext racarefulinapproachingpricingdecisionsbecause
theserv
icechar act
eri
st i
cshav esomei nterferi
ngef f
ects.Pr
icingdecisioninservices
i
snotamat terofputtingamonet aryfi
guref ortheserv i
ceuse.Amar keterneedst o
becareful
ast owhat‘ otherovertones’thepr i
cehasf orabuy er.

Obj
ect
ivesofSer
vicePr
ici
ng:

Thefi
rstprocessinthepri
cingprocessistodeci
detheobjecti
vesofprici
ng.These
obj
ecti
vesprovidecompanydi r
ecti
onf oract
ionwhensetti
ngpr i
ces.Theseshould
befl
exibl
eandchangeov ertheti
mei ntunewithenv
ironmentalcondi
ti
ons.Dif
fer
ent
obj
ecti
vesare-:

1.Revenue:ori
ent
edObjecti
ves:Pr
iceisdet
erminedbyconsideri
ngtheprofi
tand
sal
esmaximizat
ionobj
ecti
ve.Pri
ceshoul
dcoverbothcosti
ncurredontheprov
isi
on
ofser
vice.

2.Operat ion:or
ient
edobj ect
ives:Someservi
ceor gani
zat
ionsareconstr
ainedby
capaci
ty.Theyt r
ytomat chwithdemandandsupplyi nor
dertoensureopt
imum use
ofthei
rpr oducti
vecapacit
yatanygi venti
me.Ser
vicesfi
rmsneedt ochangepri
ces
fr
equentlytomat chdemandandsuppl y.
3.Patronage-ori
entedObj
ecti
ves:Pr
icemaybeusedeff
ectiv
elytodev el
oployal
ty
andrel
ationshi
pwithcust
omers.Manycompani
esnowpr ef
erpatronagebuil
dingt
o
prof
itmaximizat
ionasafut
ure-ori
ent
edst
rat
egi
copti
on.
(Chri
stopherLovel
ock)

Appr
oachest
oPr
ici
ngofSer
vice:

Theapproachesforservi
cesprici
ngar emoreorl esssameast hatofprici
ngof
goods.Ther
earethreepri
cingapproacheswhichamar ket
ercanchoosedependi
ng
uponthemarketcondi
ti
on.Theseapproachesareasfol
lows:-

1.CostBasedPr ici
ng:I tisat r
adit
ionalandsi mplemet hod.Thecompany
determinestheex penseincurr
ed-eitherdirectorindir
ect-onpr oductionand
addsadesi redprofitmargi
nt oarri
veapr i
ce.Thepopul arit
yoft hi
smi ghtbe
att
ributedtopthesimplici
tyofitsappl i
cati
on,thef actthatisconsideredfai
r
forbothcust omersandcompet it
ors,andt hepri
cest abili
tythatittendsto
establi
shinani ndustr
y.Ther at
ionaleoft hismethodi stoaddaper centage
mar k-uptocostofpr oducinganddel iveri
ngt heservice.(
K.RamaMohana
Rao)Thebasi cformulaforcostbasedpr ici
ngi s

Pr
ice=Di
rectCost+Ov
erheadCost+Pr
ofi
tMar
gin

HereinDir
ectcosti
nvol
vedthemater
ialandl
abourassoci
atedwi
thdel
i
v er
ing
theservi
ce,over
headcostaretheshareoffixedcostandprof
itmarginis
percent
ageofful
lcost
.

2.Compet it
ion-basedPr i
cing-:Thismet hodusesant ici
pat
edorobser vedprice
l
evelofcompet it
orsasapr imar ysourcef orsett
ingthepri
ce.Ther earetwo
si
tuati
onsi nwhi chcompet i
tionbasedpr i
cingismostsui t
abl
e-whenal lthe
serv
icespr ovidesoffertheser vi
cesmor eorlessoft hesamest andard,or
whent heol i
gopolycompet i
ti
v esit
uati
oni spresentinthemarket.Compani es
havethreemai nchoicesundert hi
sappr oach:pri
cingabovethe7compet i
ti
on,
bel
ow t hecompet it
ionoratparwi ththecompet i
ti
on.Thedecisiondepends
upontheext enttowhi chserv i
cesdiff
ersfrom thoseofthei
rcompet it
ors,the
i
ntensityofcompet i
tionandt hecompany ’sposit
ioninthemarket.

3.Thismet hodiscustomer :
-orient edpri
cingbecauset hi
sappr oacht akesi nto
consider
ation the customer ’
s sensi ti
vit
yt o non- monet ary costs,t he
customer’spercepti
onoft hev alueandcust omer’sacceptabil
ityofserv i
ceat
pri
ce.Thismet hodpr omot es“ ValuePrici
ng’’conceptwhi chusest hev alue
thataser vi
cedeliv
erstot hecust omersasmai nf act
orforset ti
ngpr ice.(K.
RamaMohanaRao) .Her
ei nthi smet hodthereischal l
enget odet erminet he
valuetocustomer sofeachoft henon-monet aryaspectsi sinvolved.Under
thi
smet hodpr i
ceisbasedonwhatcust omer swel lpayf ort heser vices
provi
ded.
St
rat
egi
est
oser
vicepr
ici
ng:

1.Mar ketpenet rat ionst rat egy :

 Setpr icesl owt ogr owmar ketshar e.Theni ncrease
yourr at esov ert i
measy ourcust omerbasegr ows.Admi tt
edl y,t hisi sn’tacommon
pricingst r
at egyf orser vicebusi nesses, buti tcanhel py ougr owy ourcust omerbase
quickly .Thebi gpr obl em wi tht hisappr oachi st hatsomecust omer smayassoci ate
thel owerpr i
cewi thani nf er iorlev elofser vice.Youwi l
l alsohav et owor kal othar der
tocov ery ourcost s.
2.Pr i
ceski mmi ng:  
Theopposi teofamar ketpenet rat i
onst rategy .Her ey ouseta
highpr i
ceandl oweri tov ert ime.Agai n,thi sisn’ ty ourt ypicalpr ici
ngst rategyf ora
servicebusi ness.Buti tmaywor ki fy ouhav esomet hingspeci alt oof f
er .Thepr os
aret haty ou’ l
lmaxi mi zey ourpr ofit
supf r
ontandgr owamor esust ainabl ebusi ness.
Thebi gdr awback,howev er ,ist hati fy oucan’ tjust ifyt hepr ice,y ou’ llst ruggl etoget
yourbusi nessof ft hegr ound.
3.Pr emi um pr i
cing:  Char gehi gherpr icesbecausey ouhav esomet hi ngt hatmakes
youuni que.Forexampl e,doy ouof ferawar rant yorser v i
ceguar ant eet haty our
compet itor sdonot ?Doy ouuseexcl usivet ool sort echnol ogyt hatmakesy our
businesseasi ertowor kwi thanddel i
v erresul tst hatst andout ?
4.Economypr i
cing:  
Setl ow pr i
cesbecauseov erheadsar el ow.Yourcost smaybe
l
ow f orsev eralr easons.Per hapsy ouuse  softwar et oor gani zeandmanagey our
business  i
nst eadofhi ri
nganassi stant .Ormay bey ouhav easpeci alar rangement
withoneofy oursuppl ier swhi chal l
owy out ogeti nexpensi vesuppl i
es.
5.Cost -pluspr i
cing:Cal cul at ethecostt odel i
v ery ourser vi
cesandaddamar gi
nf or
apr ofit.Forexampl e,ify ouknowy ourt i
meandmat erialscost$200, andy ouwantt o
makea20% pr of itmar gi n,si mpl ychar ge$240.Thi si sast raight forwar dpr icing
strategy ,buti tcancosty oumoneybecausey oumayendupset t
ingal owerpr ice
thanwhatcust omer sar eact uallywi lli
ngt opay .
6.Psy chol ogi calpr icing:  Pr icesbasedont hepsy chol ogicali mpactt heyhav e.For
exampl e,i t’sbel iev edt hatoddpr icesl i
ke$19. 97ar emor eat tract ivet hanr ound
number slike$20. 00.
7.Compet i
tivepr icing:  Char geaccor dingt owhatt hecompet iti
onchar ges.Whi l
e
compet itor scan gi vey ou a good i dea ofwher et o st art ,remembert haty our
businessi suni que.Justbecausesomeonei schar gingaspeci ficpr icedoesn’ tmean
youshoul dmat chorunder cutt hem.
8.Bundl edpr i
cing:Al soknownaspackagedpr icing,t hisst r
at egyi nv olvesbundl ing
variousser vi
cest oget herand char ging onepr i
ce.Bundl ed ser vicesar eusual l
y
cheapert han i fcust omer swer et o pur chaseeach ser vicei ndiv idual l
y .Ifdone
cor r
ect l
y ,t hist echni quei sagr eatwayt oupsel lmor eser v i
cesandboosty our
profits—asDav eMoer manof  
Rev iveWashi ng  not es:

“Ourhousewashi ngpackageisourmostr equestedandmostpr of

it
ableser v
ice.
Thisisaf ullsof
twashofsi di
ng,wi ndows,andgut ters)
.Homeowner sli
ket his
packagebecauseittakescareofallservi
ceswithonedet ai
ledvi
sit
…Forourcr ewto
beprofi
tabl
e;wehav etodoacertai
namountofr evenueperday.Smallj
obsar eokay
tosloti
n,butwel iketohaveagood- sizehousewashf oreachcrew foreachday .
From aprof
it
abil
it
yperspecti
ve,i
t’
smuchbet ter.
”

9.Good,bet
ter
,bestpr
ici
ng:
 Al
soknownastier
edpri
cingorpr
icebracket
ing.Of
fer
cl
ient
stheopti
onofchoosingbetweendi
ff
erentl
evel
sofserviceorpackages.In
window cleaning,f orexampl e,youcanof ferabasi cpackagef or$99( out
side
cl
eaning only )
,a st andard package f or$149 ( i
nside and outside),ora deluxe
package f or $199 ( i
nside,out side,t racks and si l
ls).Each package of fers
i
ncrement all
ymor ev alue,andt hediff
erencei npri
cegi v
est heconsumerachancet o
considerwhatt heyar ewi l
l
ingt ospend.
10.Value-basedpr i
cing: Char geaf latfeebasedont hev al
ue( benefit
s)yourser
v i
ce
provi
des.Val ue,forexampl e,couldmeansav i
ngthecust omert i
meorgi vi
ngthem
peaceofmi nd.Befor equot ingacl ient,makesur ey ou’r
ecl earont hebenefi
tsyour
servi
ceprov i
desand, i
nt urn,whatt hey’
r eactuall
ypayingfor.

Forexampl e,parent
swhousehousecl eani
ngservi
cesar
enotreall
ypay i
ngforthe
serv
iceitsel
f,buttheti
meitfreesupsot heycanspendwit
hthei
rchil
dren.Char
ging
foryourservicesbasedonv al
ueletsyouchargeapr emi
um andprotect
sy ouf
rom
theall
-t
oo-commonpr i
cehaggli
ngthatoccurswit
hsomecustomers.

E.
. Hour l
y-basedpri
cing:
 Est
imat
ehow longaj obwi l
ltakeandmulti
plyi
tby
yourhour lyrat
e.Al t
houghthispri
cingstrategymaybesui tabl
ewhen
starti
ngabusiness,douseitwit
hcautionasithasitsdownf
all
s:
 Youar en’
trewardedforbecomingbett
erandfasteratwhatyoudo

 Cl
i
entsmayf
eely
ou’
repur
posef
ull
ytaki
ngy
ourt
imeonaj
obsoy
oucanear
n
more

 Thefocusi
sonthecostoft
heser
vicer
athert
hant
hev
alue,
whi
chopensy
ou
uptopri
cehaggl
i
ng

Ser
vicePr
omot
ion

Thesef ourty
pesofpr omoti
on arethetradit
ionalmarketer-
dominat
ed waysof
i
nfluenci
ngsalesforservi
ceproduct
s.Betweent hem t
heyof f
ertheorgani
zat
iona
widerangeofpossibi
l
iti
esforpr
omotingser
vicesinthemarketpl
ace.

(a)Adver
ti
sing – def
ined as anypai
df or
m ofnon-per
sonalpr
esent
ati
on and
promot
ionofserv
icesbyanidenti
fi
edi
ndi
vi
dualoror
gani
zat
ion.

(b)Personalsel
li
ng – def
ined as t
he personalpresentat
ion ofserv
ices i
na
conver
sati
onwithoneormor eprospect
ivepurchaser
sf orthepurposeofmaking
sal
es.

(c)Publici
ty–def
inedast henon-per
sonalsti
mulati
onofdemandf oraserv
iceby
obtaini
ng commer ci
all
y si
gnif
icantnews aboutitin any medium orobtai
ning
favourablepr
esentat
ionofi tinanymedi um thatisnotpaidforbytheservice
sponsor.
(d)Salespr omoti
on–marketingacti
vit
iesotherthanadv
ert
isi
ng,
personalsel
l
ingor
publici
tyt hat st
imul
ate customer purchasing and use and enhance deal
er
effecti
veness(e.
g.compet
iti
ons,coupons).

Howevertwoimportantquali
fi
cat
ionsshoul
dbenoted.Fi
rst
,servi
ceorgani
zati
ons
promotethemsel
vesandt hei
rservi
ceproduct
sinotherwaysthanthefourfor
ms
consi
deredher
e.

Second,t hereisincr easing resear

ch ev i
dence thati n some kinds ofservices
marketsthesemar keterdomi natedway sofi nfl
uencingsalesforserviceproducts
maynotnecessar i
lybet hemostef f
ectiv
e.Forexampl e,ast udycov er
ingeight
dif
ferentt y
pes ofr etailservi
ces (dry cl
eaning,hai r
dressi
ng,carl oan fi
nance,
denti
stry
,photography ,carpetshampoo, carrepair
,gynaecologi
calservi
ces)showed
thatcustomersofr etailserv
icesdonotr eplyont hemor etr
aditi
onalinf
ormation
sources.

I
nst ead,t
heyprefertousemor epersonalsour
cesofinformat
ionf rom fr
iendsand
othercontact
s.Al solocati
onisakeyf act
orinthefinalpurchasedecision.The
i
mpor t
anceofpersonalrecommendationshasbeenconfir
medi nt heli
feinsur
ance
mar kettoo.Customersi nthismarkethav ebeenshownt or el
yheav i
lyont he
opinionsandi
nfluencesofother
sthr
oughwor dofmouthcommuni cati
on.

Obj
ect
ivesofSer
vicePr
omot
ion:

Thegeneralpurposesofpromoti
oninservi
cesmarketi
ngar
emucht hesameasi n
otherki
ndsofmar ket
ingto:
(a)Buil
dawarenessandinter
esti
ntheser
vicepr
oductandt
heser
viceorgani
zat
ion

(
b)Di
ff
erent
iat
etheser
viceof
ferandt
heser
viceor
gani
zat
ionf
rom compet
it
ors

(
c)Communi
cat
eandpor
trayt
hebenef
it
soft
heser
vicesav
ail
abl
e

(
d)Bui
l
dandmai
ntai
ntheov
eral
li
mageandr
eput
ati
onoft
heser
viceor
gani
zat
ion;

(
e)Per
suadecust
omer
stobuyoruset
heser
vice.

Ult
imatel
yt hepurposeofanypr omot
ionaleff
ortisto sel
ltheser v
iceproduct
thr
oughinformi
ng,persuadi
ngandremi
nding.Cl
earl
ythesegeneralobj
ecti
vesvary
accor
dingtothenatur
eofeachser
v i
cei
ndustr
yandservi
ceproduct.

Forexampl e,t
hekindsofpromoti
onalobject
ivesthatareconsideredt
ober
elev
ant
i
nt hetranspor
tanddist
ri
buti
onbusinessincl
ude:
(a)Creati
ngawarenessofthefi
rm’
sser v
iceamongpot enti
alusers
(b)Generati
ngdetail
edknowledgeoft
hef i
rm’sproductandserv
icei
ncl
udi
ngdet
ail
s
ofcost-benefi
trel
ati
onshi
p,pri
ceandotherpert
inenti
nformat
ion

(
c)Improv
ingthefi
rm’simageamongexi
sti
ngandpotent
ialuser
ssoast oimpr
ove
t
hefir
m’star
getgr
oupt owar
dsbei
ngmorerecept
ivet
othenewser v
icewhi
chwil
lbe
l
aunchedi
nthenearfutur
e

(
d)El
i
minat
ingper
cei
vedmi
sconcept
ions

(
e)Advi
singexi
sti
ngandpot
ent
ialcust
omer
sofspeci
alof
fer
sormodi
fi
cat
ionsof
t
heser
vice

(
f)Adv
isi
ngt
hemar
ket
placeofnewchannel
s.

Cl
earlythespecifi
cobj
ect
iveforanyparti
cularser
viceinanyservi
ceproduct
/market
si
tuati
onwillvary.Sot
oowillusemadeoft heelementsofthepromoti
onmi x.Bel
ow
we summar i
zes a wide array of possi
ble object
ives r
elat
ing t
o customers,
i
ntermediar
ies,andcompet
itors.

Possi
bleobj
ect
ivesofconsumerpr
omotionsf
orserv
ices:
1.Obj
ecti
vesTar
getedatCustomer
s:
a.I
ncr
easeawarenessofaneworexist
ingser
vice

b.Encour
aget
ri
alofaser
vice

c.Encour
agenonusersto:
I.At
tendademonstrat
ionoft
heser
vice

I
I.Maket
ri
aluseofanex
ist
ingser
vice

I
II
.Applytojoi
n orsubscri
beto aser
vicein whi
ch admissi
on,accept
ance,or
i
nstal
l
ati
onoft
echni
calhookupsi
saprer
equisi
tet
orecei
vetheserv
ice

d.Persuadeexist
ingcust
omersto:
I.Conti
nuepurchasi
ngtheser
viceandnott
ermi
nat
euseoft
heser
viceorswi
tcht
oa
compet i
ngal
ternati
ve

I
I.I
ncr
easet
hei
rpur
chasef
requencyoft
heser
vice

II
I.Committopurchasi
ngtheserv
icef
oranex tendedtimeper
iod(
thust
aki
ngt
he
consumeroutoft
hemar ketf
orcompet
ingal
ter
natives)

e.Changet
het
imi
ngofcust
omerdemandf
ort
heser
vice

f
.Rei
nfor
ceadv
ert
isi
ngf
ort
heser
viceanddr
awaudi
enceat
tent
iont
oit

g.Obtai
nmarketresear
chi
nfor
mat
ionabouthow,when,andwher
etheser
vicei
s
pur
chasedandused
h.Pr
omotetheservi
ceaspartofabroaderproductline(
orl
i
nki
ttosal
esofa
compl
ement
aryser
vicemar
ket
edbyanotheror
ganizat
ion)

i
.Encouragecust
omerstochanget
hewayi
nwhi
cht
heyi
nter
actwi
tht
heser
vice
del
i
verysyst
em,suchas

I
.Per
for
mtaskst
hemsel
ves(
sel
f-
ser
vice)

I
I.Useanewt
echnol
ogy
,e.
g.,
theWeb

2.Obj
ect
ivesTar
get
edatI
nter
medi
ari
es:

a.Per
suadei
nter
medi
ari
est
odel
i
veraneworr
e-l
aunchedser
vice

b.Per
suade exi
sti
ng i
nter
mediari
es to pr
ovi
de addi
ti
onalpush f
ort
he ser
vice,
i
ncl
udi
ngpoint- of-
salemerchandi
sing

c.I
nsul
atei
nter
medi
ari
esf
rom consumerpr
icenegot
iat
ionatt
hepoi
ntofpur
chase

d.I
nsul
ateint
ermedi
ari
esf
rom anyt
empor
arysal
esr
educt
iont
hatmi
ghtr
esul
tfr
om
apri
cei
ncrease

3.Obj
ect
ivesTar
get
edatCompet
it
ion:

Move off
ensi
vel
y ordef
ensi
vel
y on a t
empor
ary basi
s agai
nstone ormor
e
compet
it
ors.

Ser
viceDel
i
ver
yChannel
s:

Dist
ri
buti
on-
meani
ng:Iti sthe avai
labi
l
ity ofand accessi
bil
i
ty ofa servi
ce to
consumers.Two ser
vice mar
keters ar
ei nvol
ved i
n deliv
eri
ng ser
vice t
hrough
i
ntermedi
ari
es.

1.Di
rectChannel
s:

Someser vicecompanypr efer

st oprovideserv i
cesdirectl
yt ocustomersthrough
thei
rownchannel s.Theser vi
cecompanydev elopsnat i
onalchainswithmul t
ipl
e
servi
ceout l
etsatvar
iouslocati
ons.Company -ownedchannel ssuchast hebranch
network ofbanks,insurance companies,post alservices and ret
ailchai
ns are
common i n servi
ce di
stri
buti
on.Thist ype ofchannelof fer
s manybenef i
tst o
companyi nthefor
m ofcontrol
,consi
stencyandmai nt
enanceofi mage.
2.Franchising:I tisat ypeofcont r
actualverti
calmar keti
ngsy stem thatinv olvesa
continuingr elati
onshi pinwhi chafranchisor(Par entcompany )provi
dest her ight
touseat rademar kpl usv ar
iousformsofmanagementassi stanceinr eturnf or
thepay mentf ormf ranchisee( t
heowneroft hei ndivi
dualbusi nessunit).Itisa
met hod ofexpandi ng busi ness rapi
dlywi th,l ow capitalinv estments.( M. K.
Rampal )
.I ti
smul ti-sit
edi str
ibut
iongrowt hstrategyinwhi chthirdpartyagr eest o
establi
shandoper ateaser vi
cefacil
it
yaccor dingt of r
anchiser‟sspeci f
ications.
Mostf ranchi seecont ractsallowthef r
anchisertomai ntai
nt i
ghtcont r
olsov ert he
franchisee‟ soper ati
on( DavidL.Kur t
z)Fr anchisingi smost lyusedi nser vices
businessessuchaseducat i
onalinsti
tut
ions,f i
lmpr ocessingcompani es,hot els
and r est aurants.Agr eement s and cont racts ar e essentialdocument si n
franchising.

Gener
all
y,agr
eement
sandcont
ract
sincl
udeacl
eardescr
ipt
ionoft
hef
oll
owi
ng:

 Nat
ureofser
vice

 Geogr
aphi
cter
ri
tor
y

 Percentageshar
etobepai
dtot
hef
ranchi
seront
her
evenueoft
he
fr
anchisee

 Ti
meper
iodofagr
eement

 I
nst
ruct
ions,
int
eract
ionsandcondi
ti
ons

 Suppor
ttobepr
ovi
dedbyt
hef
ranchi
ser

 Rol
esandr
esponsi
bil
i
tiesoft
hef
ranchi
see

 Rul
esandr
egul
ati
onsoft
ermi
nat
ionofagr
eement
(K.RamaMohana
Rao)

Ty
pesofFr
anchi
singTher
ear
etwot
ypesoff
ranchi
singwhi
char
easf
oll
ow:
-

(a)Productortradenamef r
anchising- :Iti
sadi str
ibuti
oncontr
actunder
whichaf r
anchi
sor(suppl i
er)author
izest hefranchiseetosellaproductl
ine
usi
ngt hefr
anchi
sorfir
m’ stradenamef orpur
posesofpr omoti
on.I
tfocuses
on„ Whatissol
d‟.Thef ranchiseeagr eestobuyf rom f r
anchi
sorandalsois
boundbyspecif
icpoli
cies.

(
b)Busi
nessf
ormatf
ranchi
sing-
:Thi
sfor
matcov
erst
heent
ir
emet
hodf
or
 t
hebusinessoper
ati
ons.Asuccessfulretai
lbusinesssellsri
ghttooperat
or
t
he same business in di
ffer
ent geographicallocati
ons.For exampl e,
McDonald,
KFCaretheexamplesofbusinessformatfranchisi
ng.Thef
ocusin
t
hisf
ormatis„Howt hebusi
nessisr
un‟

3.I
nter
netChannel
s:

Dist
ribution ofser vices t hrough elect r
onic channel s withoutanydi r
ecthuman
i
nteractionbecauseser vicesar edist r
ibutedt hroughaser vi
cedistri
buti
onsy stem.
Thesechannel sar ebecomi ngmor eandmor epopul arint hedistri
buti
onsy stem.
Theexampl esoft heel ectronicchannel sar etelev i
sion, t
elephone,andi nt
ernetande
-commer ceandsoon.Thi schannelr equiresapr e-desi gnedser viceandasy st
em
todeliveri t
.Deliv
eryofser vicesthroughal t
ernat echannel s,li
keATMs,cal lcentres,
theInterneti sgrowingatanev er-increasingpace.Theonl i
neshoppi ngmar ketis
sharedbypur eplayersandmul ti
plechannelr etail
er s.Purepl ay
ersar ecompani es
thatdonothav eanupf r
ontst orepr esenceandsel lproduct sonlyviatheinternet.
Multi-channelr et
ailers,al so call
ed “ bri
cks and cl i
cks”r et
ail
ers,supplement
conventional stor
eswi t
hon-l i
neservices.

4.Agent
s:

Usinganagentorar eferralisoneoft hebestex amplest hatchannel sofdistri

buti
on
aredifferentf ordiff
erentpr oduct s.Let’
ssayt hatyoumakeal ivingasamar keti
ng
guruwhoat t
endsconf er encesandt raini
ngsessi ons.Howev er,youmaynotenj oy
themar ketingeffortitt akest ogai npr of
itablecli
ents.Youcant akeadv antageof
professionalagent swhosej obi stof indwor kthatmat chesy ourt al
ents.These
agentswoul dtakeacommi ssionof fthewor kyoubook,andcanev enkeepy our
namer elevantwithinthei ndustrythroughmar keti
ng.Youcanal sot akeadvantageof
referr
alst hroughi ndustrypr ofessionals.Forex ampl e,i
fy ou’reaweddi ngplanner,
youcoul dest abl
ishar eferr
alpr ogram wi t
haweddi ngphot ographeroraweddi ng
gownbout i
quei nwhi chy ouof fercross-promot i
onst hatbenef itbot hy ourservi
ce
businesses.

Channel
Conf
li
ctsandResol
uti
on
The ChannelConf l
i
ctar iseswhen t he channelpartnerssuch asmanuf actur
er,
wholesal
er,di
str
ibutor
,ret ail
er,etc.Competeagai nsteachotherf orthecommon
sal
ewi ththesamebr and.I not herwords,thereisaconf l
ictamongt hechannel
part
nerswhenonepr event st heotherfrom achievi
ngi t
sobject
ive.Itresult
si na
hugelossforal
lthepartner sinthechannel.

Ty
pesofChannel
Conf
li
ct:

1.Vert
icalChannelConfl
i
ct:Thi
stypeofconfl
ictar
isesbetweenthedi
ff
erentl
evel
sin
thesamechannel.
E.g.
The confl
ictbetween t
he manufact
urerand the wholesal
err
egardi
ng pr
ice,
 quant
it
y,mar
ket
ingact
ivi
ti
es,
etc.

2.Horizont
alChannelConfl
ict
:Thistypeofconf l
ictari
sesbetweenthesameleveli
n
thesamechannel.
E.g.Theconfli
ctbet
weent woretai
l
er softhesamemanuf acturerf
acesdi
spar
ityi
n
termsofsalestar
get
,areacover
age, promoti
onalschemes,et
c.

3.Mul ti
channelConf l
i
ct:Thistypeofconf l
ictar isesbet weent hediff
erentmar ket
channelspartici
pati
nginthecommonsal eforthesamebr and.
E.g. I
famanuf actur
erusestwomar ketchannels, fi
rstistheof f
ici
alwebsit
et hr
ough
whi chthepr oductsandservicesaresold.Thesecondchanneli sthet r
adit
ional
channeli .
e.throughwholesal
erandr etai
l
er.Ift hepr oductisavail
ableatamuch
l
owerpr i
ceonawebsi t
ethani sav
ail
ablewitht her etail
er,themulti
channelconfli
ct
arises.

Causesofchannel
conf
li
ct:

 Goali
ncompati
bil
i
ty:
 
Dif
fer
entpar
tner
sint hechannelofdist
ributi
onhav
edi f
fer
ent
goal
sthatmayormaynotcoi
nci
dewitheachotherandthusresulti
nconf
li
ct.
E.
g. 
Themanuf act
urerwant stoachievethelar
germar ketsharebyadopti
ngthe
marketpenet
rati
onst rat
egyi.e.off
eri
ngapr oductatlow priceandmakingthe
pr
ofit
sinthel
ongr un,whereasthedeal
erwant
st osel
ltheproductatahi
ghcosti
.e.
marketski
mmingst r
ategyandearnhugeprof
it
sintheshortrun.

 AmbiguousRol
es:
 
Thechannelpar
tner
smaynothaveaclearpictur
eofthei
rrol
ei.
e.
whattheyar
esupposedt
odo,whichmarkett
ocater,whatpr
icingstr
ategyi
stobe
adopt
ed,et
c.
E.g.
 Themanufact
urermayselli
tspr
oduct
sthroughi
tsdi
rectsal
esf
orceint
he
samear eawheretheaut
hor
izeddeal
eri
ssupposedtosel
l
;thi
smayresul
tint
he
confli
ct.

 Dif
fer
entPercept
ions:
 
Thechannelpar
tner
smayhav edif
fer
entper
cepti
onsabout
themarketcondi
ti
onsthathamper
sthebusinessasawhol
ether
ebyleadi
ngt
ot he
confl
i
ct.
E.
g. 
Themanufact
urerisopti
mist
icaboutthechangeinthepri
ceofthepr
oduct
whereast
hedeal
erfeel
sthenegat
ivei
mpactofpr
icechangeont
hecust
omer
s.

 Manufacturer dominating the I nter

mediar
ies:
 
The i nt
ermediari
es such as t
he
wholesal
er,distr
ibut
or,ret
ail
er ,etc.Carr
ytheprocessofdi st
ri
but i
onofgoodsand
ser
vicesforthemanuf actur
er .Andi fthemanuf act
urermakesanychangei nthe
pri
ce,product ,marketing act i
vi
tyt he same has t o be i
mpl ement
ed wit
h an
i
mmedi ateeffecttherebyreflecti
ngt hehugedependenceofi ntermedi
ari
esonthe
manufacturer
.
E.
g. 
Ifthemanufact
urerchangest hepr
omoti
onalschemeofapr oductwit
ht he
i
ntent
iontocutt
hecost,theretai
l
ermayf i
ndi
tdif
fi
cultt
osel
ltheproductwi
thout
 anypr
omot
ional
schemeandhencet
heconf
li
ctar
ises.

 LackofCommuni cat
ion: 
Thisisoneoft hemajorreasonst hatl
eadtot heconf
li
ct
amongthechannelpartner
s.Ifanypartneri
snotcommuni catedaboutanychanges
onti
mewill
hampert hedistr
ibut
ionprocessandwil
lresul
tindispar
it
y.
E.g.
 I
fretai
l
erurgent
lyr
equi
rest
hestockandthewhol
esalerdi
dn’
tinf
orm hi
m about
theavail
abi
li
tyofti
memayleadtot
heconfli
ctbet
weenthetwo.

Managi
ngt
hechannel
conf
li
ct:

 Subordinat
eGoal s:
 
Thechannelpar
tner
smustdecideasi ngl
egoali
ntermsofei
ther
i
ncreased mar ketshare,survi
val
,profi
tmax i
mi zat
ion,high qual
i
ty,cust
omer
sat
isfacti
on,et
c.Wi t
hthei
ntent
iontoavoi
dconf
li
cts.

 Exchangingempl oyees:
 oneoft hebestway stoescapechannelconfl
ictistoswap
empl oyeesbetweendi f
ferentlev el
si.e.twoormor eper
sonscanshi f
tt oadealer
l
ev elfr
om t hemanufacturerl
ev elandf rom whol
esal
elevelt
ot heret
ailerlev
elona
tempor arybasi
s.Bydoingso, ev ery
oneunder st
andsther
oleandoper ationsofeach
othertherebyreduci
ngther ol
eambi guit
ies.

 Tradeassociati
ons: 
Anotherwayt oover
comet hechannelconfl
ictistoformthe
associ
ation between the channelpartner
s.This can be done t hr
ough j
oint
member shi
pamongt heinter
mediari
es.Everychannelpar
tnerworksasoneentity
andworksunanimousl y
.

 Co-optat
ion:
 Underthis,anyl
eaderoranexper ti
nanotheror
gani
zati
onisi
ncl
udedi
n
theadv i
sorycommi ttee,boardofdirect
ors,orgriev
anceredr
essalcommit
teest
o
reducetheconfli
ctsthroughthei
rexpertopi
nions.

 Diplomacy,Mediat i
onandAr bi
tr
ation: 
whent heconfl
i
ctbecomescr it
icalthen
partner
shav etor esorttooneoft hesemet hods.I
nDi plomacy ,
thepartnersin
the confli
ctsend one per son f
rom each si de tor esol
v ethe confli
ct.In
Medi at
ion,the third person i
si nvolved who tr
ies tor esolvethe conf l
i
ct
throughhisskil
lsofconci li
ati
on.InAr bi
tr
ati
on,whenbot hthepart
iesagr eeto
presenttheirar
gument stothearbitr
atorandagreetohi sdecisi
on.

 Legalr
esour
ce: 
Whentheconfl
i
ctbecomescr uci
alandcannotberesol
ved
thr
oughanyabovementi
onedways,
thechannelpar
tner
smaydecidetofi
l
ea
l
awsuit
.

MODULE-
II
I
Cust
omerRel
ati
onshi
pManagementi
nSer
viceMar
ket
ing

Theter
m CRM wasf i
rstcoinedduri
ngthedecadeof1990swit
ht hel
it
eralmeaning
ofmanagingrel
ati
onswi t
ht hecustomer
s.Gradual
l
ytheterm hasbecomev astin
scope and i
ncorpor
ates the eff
ecti
ve use of t
echnol
ogy in managing such
rel
at ionshipswhi chmayaccr uel ongt erm pr of it
abi l
i
t y
.CRM act i
v i
tiesaremor ethan
whatanysal esandmar keti
ngdepar t
mentdoest opl easei tspot enti
alconsumer s.
Thesear eof tendi sassociat
edwi tht hesal esandmar ketingdepar t
mentanddone
befor eoraf terthepur chaseisbei ngconsi der edbyaconsumer .Mar keterscanpl an
personal ized messages t o be sentt ot he consumer s on t heirbi r
thday and
anni versary ,prov i
decust omizedser vicet ot hem,ant ici
patingneedsandof fer i
ng
serv i
ceov erandabov ewhatmaybeexpect edbyaconsumerf ort hepur poseof
delighting t hem.Cust omerRel ationshi p Managementi sa pr ocessofpr oviding
cust omi zed ser vi
ces t oi t
s exi sting orpr ospect i
ve consumer s and use t he
i
nfor mat iongener atedf ortargetedmar ketingef forts.Oneoft hemosti mpor tant
reasonsf ort akingupCRM act ivi
tiesi st oat tractnew consumer sandr etai
nt he
existingconsumer sfornewsal easwel lasf orar eferralsale.Thisai mst oenhance
thecompany ’
spr ofit
abili
tybydev elopingaposi ti
v eBr andi magei nt hemar ket.
Theseday s,technologyi sincreasi nglybei ngusedt oof ferav arietyofpl ansand
activiti
est oat tractandr et
aintheconsumer s.

Pr
ocessofCRM:

a)Ident i
fyi
ngt hev aluableconsumer sThef i
rstandt hemosti mpor tantst epi n
dev elopingaCRM pr ogrammei sident ify
ingt hoseconsumer swhoar emost
valuabl et ot he or ganizati
on.Val uable consumer s mean t hose act ualor
potent ialconsumer s who may gi ve a bi g busi ness themsel ves t ot he
organi zationorwhomaypr ovideast r
ongr efer r
alsalet othemar keter.Anew
phrasei nt heSer vi
cei ndustr
yi s“Cust omerdat ai sasi mportantasf inanci al
data” .Itisi mpor t
antt oidenti
fysuchsegmentoft heconsumer ssot hatt he
CRM pr ogr amme may be i nit
iat
ed t owar ds t hem f ora mor er ecept ive
attention and act i
on.Forexampl e,a beaut ycl inicownerwant st o bui l
d
cust omerr elationswi thsomeofhercust omer s,shemayl i
ketof i
rstgener ate
al i
stoft hosecl i
ent swhohav ebeenaf requentv i
sit
ortot hepar lour .Itis
i
mpor tantt onot ethatshemayuseacomput erpr ogrammet oident i
fyt he
fr
equent lyv isi
tingclientsfrom herdailyappoi nt mentschedul e,whichi sause
oft echnol ogy ;ormaydosomanual l
yfr om ar egisterthatisbeingmai ntained;
ormaymakear andom recalloftheclientsandt husdev el
opal i
st.

b)DesigningaCRM Vi sionHav ingidentifi

edt hev al
uabl ecustomer s,thenext
stepinCRM i st odesignasui tableCRM act ivi
tyt opleaset hesecust omer s.
Themar ket ermusti dentif
yt heat t
ri
buteswhi chaconsumermayper ceiveas
usefulforthem aswel lasf ort heor ganisation.Theact i
vityshouldbesuch
thatisconsi deredaswor thf ort hecust omer stobondwi ththeor ganisation
andatt hesamet i
menotexer thighfinancialbur denont hemar keter.Int he
aboveexampl e,ift
hebeaut ycl i
nicownerwant stopl easehercust omer s, she
mayei therof ferthem somegi f
tv oucheroraconcessi ononsubsequent
servi
cesormayev enpl anaf itnesssessi on.Thechoi ceofanyoft het hree
opti
onswi llrestwhati sitthatt heconsumer swillli
ketor eceiveandsecondl y
whetheriti saf for
dablef ort hemar keter.Gi vi
ngadi scounti sany t
imel ess
burdensome f ort he mar ket eras compar ed to planni ng CHECK YOUR
PROGRESS

1.“CRM,isabroadt
ermthatcov
ersconcept
susedbycompani
est
omanage
thei
rrel
ati
onshi
pswi
thcust
omers.”Doyouagree?Why
/Whynot
?
2.Def
ineCRM i
nSer
vicef
ir
ms,
wit
hthehel
pofanexampl
e.

3.Di
ff
erent
iat
ebetweenor
igi
nalandmoder
nCRM out
look?Descr
ibewi
tht
he
hel
pofanexample.

4.I sspendi
ng moneyinbuil
ding r
elat
ionshi
pswithcust
omer
swor th?a
fi
tnesssessi
on,whi
chwil
lincl
udealotofcosti ni
nvi
ti
ngandar
rangi
ngthe
sessional
ongwit
hthepay
mentt ot
hetrai
ner.

c)Rest ructur
ing:I nthepur suitofdev el
oping str
ong cust omerr el
ations,
somet i
mes,ser v
ice or ganizations may ev en need t or estructuret heir
hierarchicalst
ructuretosui ttheneedsofi tsfew buti mpor tantcust omer s.
The ser vi
ce providermay l ike t o adaptt he organizationalst r
ucturet o
smoot henthebuildingofcust omerr elati
ons.Forexampl e,abi gpr ofessional
servicef ir
ml i
keanAdv ert
isingagencyoraChar teredaccount antf i
rm may
prefert omodi fyit
sexi sti
ngLi neandSt afforgani
zationalstructur eandmay
rathercust omizei tsel
fasat eam st ructuretocat ert ot heneedsofbi g
customer s.Such t eams mayconsi stofper sonneldr awn f rom di fferent
backgr oundstoof ferabasketofv ari
edski l
lsandbackgr ounds.

d)FollowupofCRM i ni
ti
atives:Hav ingor gani zedandsuccessf ull
yconduct ed
aCRM act i
onpl anisnott heendoft hepr ocess.Whati simpor tantnowi st o
havear egularfoll
owupoft hei nit
iati
vebei ngt akenup.Thecust omersshoul d
notf eelthatonce cont act ed,t he mar ket eri s notbot hered aboutt hem
anymor e.Hence,whati smor ei mpor tantt hanst arti
ngaCRM pr ogrammei s
toconsi st
entlymai ntaint hesamewi t
ht hesamev igor.Forexampl e,i fa
Servi
ceMar keterintendst ost artthepr act i
ceofwi shingt hecust omerson
thei
rbi r
thdayandanni versar y,itmustmakesur et hati tisdoneev eryy ear
.
Havingdonei tthef i
rstyearandnotwi shi
ngt henexty earwi l
lleav eanegat i
ve
i
mpr essionast hecust omer smi ghtfeel t
hatsi ncet hecompanyi sdoinggood
busi
nessnow, itisnotconcer nedaboutt heexi sti
ngcust omer s.

e)Meet i
ngenhancedser viceexpectat ions:
Everyservicemar keterwantsits
CRM act i
on plan tol eavei ts positiveimage amongstt he exi st
ing and
potentialconsumer s.Ifdesignedandexecut edef fi
cientl
yi tmi ghtaswel l
resultinahi gherBrandper cepti
onoft heorganizat
ion.Howev er,havingbuil
t
personalr elat
ionships and customi zed servi
ces fort he consumer s,itis
extremelyimpor tanttoensur eahi gherqual i
tyservi
cei nfutur e,tomeett he
enhancedser vi
ceexpect ati
onsasar esul
tofCRM act ivi
ti
es.I ftheserv i
ce
deli
v eryafterthesuccessf ulexecut ionofCRM act ivit
iesisnotofhi gher
qualitymeasur e,theent i
reCRM pr ogr ammemaynotonl ygowast eitmay
evenbackf i
rewithnegat i
vewor dofmout h.

f)Measur ingtheCRM pr ogr am:Asdi scussed,ther

ei sacosti nvol
vedinthe
designi
ngandi mpl ementationofaCRM pr ogram.Hence,i tisimperati
vefor
theserviceorganisati
ontocheckt heret
urnoni nvestment( ROI)oftheCRM
acti
onpl an.Often,thereasonf ortaki
ngupaCRM i ni
tiati
vei stobeabl eto
assesst hecost–benef i
tanal ysi
sofcer t
aincustomerr elatedpromoti
onal
programmesoft heorganization.Ifanorganizati
onfail
st oidentif
ytheROIfor
anyofi t
spr ogr
am i tmayendupwast ingitsresourcesandnotbei ngableto
 achievet hepr ofi
tabil
it
ywhi chi sthekeyobj ecti
vebehi ndi mpl ement i
nga
CRM pr ogram.Ther emayev en bei ndivi
dualcust omercostanal ysisfor
checking cust omerpr of
itabil
ity whi
le measur i
ng t he CRM pr ogram cost
effecti
veness.Thef i
nancialbenef i
tsofaCRM pl ancanbecal culatedthrough
i
ncr easedbusi nessofacust omerhi mself,orthroughhisr eferr
alsort hrough
co-creati
ngorco- market
ingt heservice.Measur ement sal sof acili
tatethe
organisationsintakingadeci sionabouthowmuchpr omotionalbudgett obe
al
locatedf ordesigni
ngamessagef ordev el
opingr el
ati
onswi tht heexisti
ng
consumer sandhowmuchshoul dbeear markedf orthepur poseofat tracti
ng
newcust omers.

g)Redef i
ningt heCRM Vi sion:Manyat i
mesasaser vicemar keterev olvesa
CRM pr ogram andi ssuccessf ul,hemayi nt
endt or edefineahi gherser vice
l
ev eland t husdesi gn anew CRM pr ogram wi th ar edefined Vi sion.For
exampl e,aBankmayi nitiateaCRM pr ogram bydev elopinganI nformat ion
system ofev erycust omer .Fort histhemanual dataregisterswer et ransferred
onlineforget t
ingonecl icki nformat ionaboutt heprofil
eoft heaccounthol der
alongwi thhi sphot ographandsi gnaturesandt heaccountdet ai
ls.Howev er
,
withduecour seoft i
me,t heBankmov esaheadandi mpl ement sasy stem of
retri
evi
ngacust omer ’
sdet ail
edt r
ansactionsi nsavingandcur r
entaccount ,
ATM andcr editcardordebi tcar dt r
ansaction,hisloanori nsur ancepol icy
detail
s,fixeddeposi tsandl ockerf acil
ityetc.Whi l
et hispr ocessofmov ing
aheadwi tht hei nf
or mat ionsy stem maysoundsi mple,itmayact ual l
yt akea
l
ongper i
odi nbui l
dingadat abankf orabi gser v
iceorganizat i
onwi t
hmul ti
ple
productsonof fer.

I
mpl
i
cat
ionsofCRM:
Whileitmaybeaconv i
ncingar gumentt oof feraneffecti
v eCRM pr ogr
am fort he
l
ongt erm profitabili
tyoft heor ganizati
on,t heremaybemor et hanonlymoney
neededtobr i
ngaboutt hechangesi nt heserv i
ceorganization.Themosti mportant
i
st hecommi tmentoft het opl evelmanagementt oi nit
iateandsust ai
naCRM
progr
am.Besi dest hemonet arypart,theservicemar ketermayneedt otakeonadd
onresponsibi
li
tiesf orthepur poseofsust ai
ningaCRM i niti
at i
ve.Someofthesenew
rol
esandresponsi bi l
i
tiesrelatedtothedesi gningandi mplement ingoftheCRM fora
l
ongt er
mi ncl
udet hefollowing:

 Devel
opingaVisiont
oguidetheCRM str
ategi
esandt
act
icsi
nrealt
imeand
redef
ini
ngtheVisi
on,
onceaccompl
ished.

 Coll
ect
ionofcomplet
ecustomerrel
ateddat
aatasi
ngl
elocat
ionwi
than
easyandcust
omizedr
etr
iev
alpr
ocess.

 Provi
ding t
he necessaryfunds and organi
sati
onalresour
ces i
ncl
udi
ng
t
echnologyf
oraneffect
ivedev
elopmentandimplementat
ionoft
heCRM pl
an.

 Taki
ngtheopi
nionoft
hefr
ontdeskser
viceper
sonnelfort
hedesi
gningoft
he
CRM pl
an,si
ncetheyar
etheoneswhoar emostfrequent
lyi
ntouchwitht
he
 customersandmaybeabletopr
ovi
dev
aluabl
einsi
ght
sint
othecust
omer
s
percei
vedval
uabl
evar
iabl
es.

 Est
abli
shingquanti
fi
abl
eperf
or mancest andardsrelat
edt oCRM f ort
heHR
wit
hthepur poseofali
gni
ngtheiractualperformancewi ththevisi
onofthe
CRM program.Theremaybeani ndi
v i
dualoragr oupr ewardorincent
ivef
or
meeti
ngt heseperf
ormancestandardsformot i
vat
ingt heemployeesofthe
CRM t
eam.

 Communicati
ngandt
rai
ningt
heorgani
zat
ionalHRinthevi
sionofCRM and
themeanstodel
i
vert
hesamebef
oreputti
ngthepl
anintopr
acti
ce.

 Regulareval
uat
ionandmonit
ori
ngoftheCRM pl
antoensur
eiti
sbeing
del
iveredwit
hthesameint
enti
onswi
thwhicht
heprogr
ammewasini
ti
all
y
desi
gned.

Rel
ati
onshi
pMar
ket
ing

Relati
onshipMar ketingisast rat
egyofCust omerRel ati
onshipManagement( CRM)
thatemphasi zescust omerr et
ent i
on,sati
sfaction,andlifeti
mecust omerv al
ue.Its
purposeist omar kettocur r
entcustomersv ersusnewcust omeracquisit
ionthr
ough
salesandadv ert
isi
ng.Agoodr elati
onshipmar keti
ngstrategyisrootedi nbuil
ding
customerl oy
alt
yand l asti
ng,long-ter
m engagementwi thyourcust omerbase.
Benef i
tsi ncl
ude i ncreased positiv
e wor d-of -
mouth,r epeat business,and a
will
ingnessont hecust omer'sparttoprovidev aluabl
efeedbacktot hecompanyand
theirpeers.

Relationship mar keting 

isaf orm ofmar keti
ng dev el
oped f rom  directr esponse
mar ket i
ng campaigns t hatemphasi zes customerr et
ent ion and satisfact
ion  r
ather
thansal est r
ansactions. I
tdi ff
er enti
atesf r
om ot herformsofmar ket i
ngi nt hati t
recogni ses t he l ong- t
erm v al
ue of  
customer r el ati
onshi ps and ext ends
communi cati
onbey ondi ntrusive advertising 
andsal espr omot i
onalmessages.  With
the gr owt h oft he I nt
ernetand mobi l
e platforms,r elationship mar keting has
continued t o ev ol
v e as t echnol ogy opens mor e col l
aborat i
ve and soci al
communi cati
onchannel ssuchast oolsf ormanagi ngr elat i
onshipswi thcust omer s
thatgobey onddemogr aphicsandcust omerser vicedat acol l
ect i
on.Rel ationship
mar ket i
ng ext ends t o i nclude i nbound mar keti
ng,a combi nation of  search
optimi zati
on andst rategiccont ent,
 publicr el
ati
ons,soci almedi aandappl i
cation
development .

Scopeofr
elat
ionshi
pMar
ket
ing:

 Additi
onal
l
y,r el
ati
onshi
p mar
ket
ing has been st
rongl
y i
nfl
uenced by
reengi
neer
ing.
  Accor ding to process reengi neeri
ng t heory,or gani
zations should be
str
ucturedaccordingt ocompletet asksandpr ocessesr atherthanfunct
ions.
Thuscr oss-
functi
ont eamsshoul dber esponsibl
ef orawhol eprocessfrom
beginning t
o end r atherthan hav ing the work go f rom one f unct
ional
departmentt o another,whereast radi
tionalmar ketingusest hefunct
ional
departmentappr oachwher est agesofpr oducti
onar ehandledbydi ff
erent
departments.

 Relat
ionshi
pmarket
inglooksatcreat
inganappr
oachandstrat
egythatwil
l
generatecust
omerr et
enti
on.Itmakesashiftfrom t
radi
ti
onalmarket
ing
whichhadasingl
esalesstr
ategy
.

 Relati
onshi
pmarketi
ngt
reat
ssal esasthebegi
nningofrelat
ionshi
pwi
ththe
customer.The pr
ofi
tfrom thi
sr el
ati
onshi
pi s a measure ofcompany’
s
success.Sal
eal
onedoesnotdetermi
nesuccessofthecompany .

 Relati
onshi
pmar ket
ingl
ookstocreateacontinuousrel
ati
onshi
pwiththe
customer.Thiscoul
dbet hr
oughprof
ici
entaf
tersalesser
viceorpr
ovidi
ng
addonf eat
ures.

 Relat
ionshipmarketi
ngtal
ksaboutdeli
ver
ingv al
uet
othecust
omerr
ather
thanhighl
ight
ingthesal
i
entfeat
uresoft
heproduct
.

 Relat
ionshi
pmarket
ingbel
iev
esthecust
omeri
sthecent
eroft
hebusi
ness
rat
herthanit
spr
oductandoff
eri
ngs.

 Rel
ati
onship market
ing deal
s wi
th cust
omerbyconsi
der
ing a l
ong t
erm
per
specti
verathert
hanashortter
m one.

 Rel
ati
onshi
p market
ing l
ooksto del
iverarobustcust
omerser
vicewhi
ch
i
ncl
udespre-
sal
es,salesandaf
tersal
esact
ivi
ti
es.

 Relat
ionship marketi
ng puts emphasis on under
standi
ng cust
omer
expectat
ion.Af
terunder
standi
ngcompanyshowshi
gh

 Rel
ati
onshi
pmarketi
ngiscommit
tedtowar
dst ot
alqual
it
ymanagement.Thi
s
commitmentt
owardsqual
it
yisdi
spl
ayedateachlev
elandacr
ossfunct
ions.

 Rel
ati
onshi
pmarket
ingbeli
evespri
cingofproductshoul
dnotbedet
ermi
ned
byt
hecompeti
ti
veforcesbutthr
oughnegot
iati
onandconsensus.

 Relat
ionshi
p market
ing encour
agesmarket
ing campaign t
ofocuson t
he
tar
getcustomermarket,
tail
ori
ngtot
hespeci
ficneedsofthei
ndi
vi
dual
.

 Relat
ionshi
pmarketi
ngpreparesthecompanytolaunchpr
oduct
swhichser
ve
probl
em solvi
ngcapabi
l
ityaddressi
ngcur
rentaswellasf
utur
eneeds.

Appr
oachesofRel
ati
onshi
pMar
ket
ing:

Sat
isf
act
ion:Rel
ati
onshi
pmar
ket
ingr
eli
esont
hecommuni
cat
ionandacqui
sit
ionof
consumerr equirement ssol elyf r
om exi st
ing cust
omer si namut ual
lybenef i
cial
exchangeusuallyinvolvingper missionf orcontactbyt hecust omert hroughanopt -i
n
system.Wi thpar t
icularr el
evancet ocust omersatisfact i
on,t her elati
vepriceand
qualit
yofgoodsand ser vi
cespr oduced orsol dt hrough a companyal ongside
customerser vi
ce gener all
ydet ermine t he amountofsal es r elativetot hatof
compet i
ngcompani es.Al t
houghgr oupst ar
getedthr oughr elat
ionshipmar ket
ing
maybel ar
ge,accur acyofcommuni cati
onandov erallr el
evancet ot hecust omer
remainshigherthant hatofdi rectmar keti
ng.Howev er ,rel
ationshipmar ket
inghas
l
esspot ent
ialforgener atingnew l eadst handi r
ectmar keti
ngandi slimit
edt oviral
marketingforacquiringcust omers.

Retenti
on:Apr i
ncipl
eofr elati
onshipmarket ingi
st heretent
ionofcust omer sinorder
toensur erepeatedtradef rom preexistingcust omer sbysat i
sfyi
ngr equir
ement s
abovet hoseofcompet i
ngcompani esthr oughamut uall
ybenef i
cialrel
ati
onshi p.
Thistechniquebalancesnewcust omersandoppor t
uniti
eswithcur rentandexisting
customer stomaxi miseprof i
tandcounter actstheleakybuckett heoryofbusiness,
wherenew cust omer sinol derdir
ectmar keti
ng-ori
entedbusi nessesar egainedat
theexpenseoft helossofol dercustomer s.Thispr ocessof' churni
ng'isless
economi cal
lyvi
ablethanr etaini
ngallorthemaj ori
tyofcustomer susi ngbothdirect
and relati
onshi
p managementbecause secur ing new cust omer sr equi
res mor e
i
nvestment .

At echniquetocal
cul
atetheval
uetoafi
rm ofasustainedcust
omerrel
ati
onshi
phas
been dev el
oped.This cal
cul
ati
on ist
ypi
call
ycal l
ed customerli
fet
ime val
ue,a
predict
ionofthenetpr
ofitofacust
omer
'sr
elat
ionshipwithacompany.

Retenti
onst r
ategiesmayal soincludebui l
dingbar r
ierst ocustomerswi t
chingby
productbundl ing( combi ni
ngsev eralproductsorser vi
cesi nt
oonepackageand
offer
ingt hem atasi ngl
epr i
ce),cross-
sell
ing( sel
li
ngr elat
edpr oduct
st ocur r
ent
customers) ,cross-promot i
ons( givi
ngdiscountsorot herpromot i
onali
ncenti
vest o
purchasersofr elatedpr oducts),loyal
typr ogr
ams( givi
ngi ncenti
vesforfrequent
purchases), i
ncreasingswi tchi
ngcost s(addingt er
minat i
oncostssuchasmor tgage
terminat
ionf ees),andi nt
egr at
ingcomput ersystemsofmul ti
pleorgani
zat
ions.

Rel
ati
onshi
pVal
uewi
thCust
omer
s:

Relati
onshipmar ketingisstrategythatemphasi zescust omerretenti
on,sati
sfact i
on,
andl i
feti
mecust omerv al
ue.Relati
onshipmar ketingcanbedef i
nedasmar ket i
ngto
currentcustomer sv s.new customeracqui si
tiont hroughsalesandadv er
tising.As
opposedt ot ransactionalmar ket
ing’
sf ocusonone- offsal
es,agoodr el
at i
onship
mar keti
ngst rat
egyi srootedi nbuildi
ngcust omerl oy
alt
yandl ast
ing,long- t
erm
engagementwi thy ourcust omerbase.Benef i
tsi ncludeincr
easedwor d-
of -
mout h,
repeatbusi ness,and a wi lli
ngnesson t he cust omer ’
spartt o provi
de v aluable
feedbackt othecompany .

Cust
omerPr
ofi
tabi
l
itySegment
Servi
cecompanyt odayar ebeginningtor ecognisethatnotal lcustomersareworth
att
racti
ngandkeepi ng.compani esmaywantt otreatal lcustomerswithsuperi
or
servi
ce,buttheyf inditisneitherpr act
iocalnorpr ofi
tabletomeetal lcustomers
expectat
ions.Tobui ldandi mproveupont r
aditi
onalsegment ati
on,companiesare
nowt r
ayingtoidentifysegmentsormor eappr opri
atelytier
sofcust omersthatdi
ff
er
i
ncur r
entand/orf utureprof
it
abili
tytofir
m.

Thisappr oachgoesbey ondusageorv olumesegment ati

onbecausei tt
rackscost s
andr evenuesf orsegment stherebycapt uri
ngt heirfi
nancialwor
tht ocompani es.
Customerpr of
itabil
it
ysegmentsar ethepr ofi
tabil
i
tyt i
ersinthecustomerpy r
ami d.
Thissegmentdi ffer
enti
atebet
weenv ari
oust ypesofcust omersonthebasi softheir
profi
tabil
ityt ot he fi
rms.Diff
erentpr ofi
tabi
lit
y segment s ar
el i
kelyto deser ve
di
fferentlevelsofat t
enti
on,andt oresponddi f
ferentl
ytomar keti
ngandser vi
ce
i
niti
atives.

Expandedcust
omerpy
rami
d:

Neartheturnofthemill
eni
um, r
esearcher
sVal ar
ieA.Zeit
haml,Kat
heri
neN.Lemon,
andRolandT.Rustpubl i
shedabookcal ledDr i
vingCustomerEquit
y:How CLVi
s
Reshapi
ngCor porat
eStrat
egy.Inthebookt heydef i
neacustomerpy r
ami
dmodel
wit
h4t ypesofcustomerst
hataresegment edbypr of
it
abi
l
ity
.
Pl
ati
num Ti
er
Atthetopofthepyrami dy ouhavetheplat
inum ti
er.Theseareyourmostprofit
able
customerswhicharealsot hemostcommi t
tedtothecompany .Theycosttheleast
tomaintai
nandarelikelytobeadvocatesforthecompanyt othei
rfr
iendsandfami l
y.
Thesecustomersareal readycommi t
tedtot hecompanyandt heylovethebrand.
Youshouldn’
texcessivelymarkettothesecustomer sastheyrequi
reaspecialkind
oftr
eatment.

Gol
dTi
er
Thet i
erbel
ow Plati
num istheGoldti
er.Thesecustomer ’
sprofit
abil
i
tyl
evelsaren’t
ashighast hePlati
num ti
ers.Theymightwantpricediscount
s,butarenotasl oyal
asthePlati
num tier
.Thesecustomersof t
enneedal i
tt
lebitext
rat omoveupt othe
Pl
atinum ti
er.Thiscouldcomei nthef orm ofserv
iceguaranteesorpersonali
zed
off
erstomaket hem feel
special
.

I
ronTi
er
Thet hi
rdti
eristheI r
ontier.Thesearecustomerswhoprovi
deessentialrev
enueand
volumet othebr and.Theirloy al
tyandprofi
tabi
l
ityar
en’
tsubstant
ialenoughtot he
companyt owar rantthespeci altr
eatmentli
ketheGoldti
er.However,customersin
thisl
evelrequi
rel otsofresearcht odet
erminehowt omovethem upi nthepyramid
sincetheyprovi
del otsofvolume.

LeadTi
er
Thelowestl
evelinthepy
ramidistheLeadtier
.Thesear ecustomerswhoar e
act
uall
ycost
ing t
hecompanymoney .Cust
omersint helead t
ierarethemost
di
ff
icul
ttodobusinesswit
h.Buteventhoughthesecustomersarecosti
ngt he
companymoneytheyar
esti
llani
mport
antpar
tofthecust
omermi x.Theymightbe
cost
ingyoumoneyt oday,butwit
hresear
chandtest
ingtheyhav
ethepot
ent
ialt
o
movetohighert
ier
sinthecustomersegment
ati
onpyr
amid. 

Cust
omerLi
fet
imeVal
ue

Customerlif
eti
mev al
ue(CLV)isoneoft hekeyst at
st otrackaspar tofacust omer
experi
enceprogram.CLVi sameasur ementofhow v aluableacust omeri st
oy our
company ,not just on a pur chase-
by-purchase basis but across t he whole
rel
ati
onship.Customerlif
etimevalueisthetotalworthtoabusi nessofacust omer
overthewholeper i
odoftheirr
elati
onshi
p.It’
sani mportantmetri
casi tcostslessto
keepexist
ingcustomer sthani
tdoest oacquirenewones, soincreasingt hevalueof
yourexi
sti
ngcustomer sisagreatwayt odriv
egr owt
h.

KnowingtheCLVhelpsbusi
nessesdev el
opstr
ategi
estoacqui
renew cust
omer
s
andretai
nexi
sti
ngoneswhi
l
emai nt
aini
ngprof
itmargi
ns.

CLVisdi
sti
nctfr
om t
heNetPromoterScor
e( NPS)thatmeasur
escustomerl
oyal
ty,
andCSAT thatmeasur
escustomersati
sfacti
onbecausei ti
stangi
blyli
nkedto
rev
enuer
athert
hanasomewhatint
angi
blepromiseofloy
alt
yandsat
isf
acti
on.

Met
hodsandst
epst
ocal
cul
ateCLV:

Histori
cCLV:  cust
omerlif
eti
mev aluecalcul
ati
on-
Histori
cCLVmeasur esthev alueoftransact
ionsorthesum ofgr osspr of
itf
rom al
l
pastpur chasesmadebyani ndivi
dualcustomer.Thi
scalculati
onrequiresaccessto
existi
ngcust omerdatainvol
vingpurchasesfrom aspecif
ictimeperiod.Tocalcul
ate
thehistori
ccust omerl
if
etimev al
ue,youcanuset hefol
lowingformula:

Cust
omerLi
fet
imeVal
ue(
Hist
ori
c)=(
Transact
ion1+Tr
ansact
ion2+Tr
ansact
ion
3….
+Tr
ansact
ionN)*AGM

Wher
e N 
i
sthel
astt
ransact
ionmadebyt
hecust
omeraty
ourst
ore.

Calculati
ngtheCLVpr edi
cti
oninthismanner( basedonnetpr ofi
t)gi
vesbusi nesses
theact ualpr
of i
tthatacustomercontributestot hebusiness.Thehistori
c customer
l
ifeti
mev al
ue accountsforcustomerser vi
cecost ,costofretur
ns,acquisiti
oncost,
mar keti
ngcost ,et
c.Thedownsidetocal culati
nghistori
cCLVi sthatdeterminingthe
valueonani ndivi
dualbasiscangeti ncredibl
ycompl ex,soi ti
sbet t
ertoconsi der
groupsofcust omer sortocreat
easy stem tomanagedat a.

Predicti
ve customerl if
eti
mev alueformula-
Thepr edictiveCLVi sagreatindicatorofthet otalvalueacustomerwi l
leventuall
y
giveabusi nessov erthei
rwhol eli
feti
me,asi tusesmor ecol
lecteddata.Inpractice,
determiningt heexactpr edi
cti
v eCLVcanbedi ff
icultwhenconsi der
ingfluct
uations
i
npr i
ce,di scounts,etc.Fort hisreason,therear eacoupl eofway stocalculate
predict
iveCLVt hatv aryi
ncompl exit
yandpr ecisi
on.Tocal culat
ewi ththepredicti
ve
CLVmodel ,businessesmustuset ransacti
onhi storyandbehav i
ouralpatt
ernst o
forecasthowacust omer’
svaluewi ll
evolveov ert
ime.  

Si
mpl
epr
edi
cti
veCLVcanbecal
cul
atedusi
ngt
hef
ormul
a:

Cust
omerli
fet
imeval
ue=((Aver
agemonthl
yt ransact
ions*Av
erageor
derv
alue)
Aver
agegr
ossmargi
n)*Av
eragecust
omerli
fespan

Thi
sequati
onbecomesgr
ossmar
gincont
ri
but
ionpercust
omerl
i
fespan(
GML)
.
Ther
efor
e,

Customer li
fet
ime value= Gross margin contr
ibuti
on * ( Mont
hly r
etent
ion
rat
e/(1+Mont
hlydi
scountrat
e-Mont
hlyr
etent
ionrat
e)) 
         

Li
fespan  customervaluecalcul
ati
onst eps-
Anot herwi del
yusedmet hodtocal culatetheCLVist hel
if
espancust
omerv alue
calculat
ion.Thismet hodrequir
esy out ohav et
hecustomerval
ueandmul t
ipl
ythat
byt hecust omerli
fespan.ThisCLVcal cul
ati
onmethodconsi
stsoff
ivesteps.They
are:

1.Calculatetheaver agepurchasevalue: 
Thisnumbercanbeder i
vedbydividi
ngt he
revenueoft heorganizati
onbyt het otalnumberofpur chasesinthey ear.This
ti
mespanshoul dbeofaf i
xedtime,li
keoney earortwoyears.
2.Calculatetheav eragef r
equencypur chaser at
e: 
Thisnumbercanbeder i
vedby
div
idingt henumberofpur chasesbyt heuniquecustomersthatmadeapur chase
overthatt i
meper iod.
3.Calculatethecust omerv al
ue: 
Theav er
agecust omervaluecanbeder ivedby
mul t
iply
ingtheav eragepurchasevalueandt heaveragef
requencypurchaserate.
4.Cal culat etheav eragecust omerlifespan: 
The customerl i
fespan 
canbederiv
edby
averagi ngthenumberofy earsacust omerbuysfrom abusi ness.
5.Thel astst epwoul dbet omul ti
plyt hecustomerv alueandt heav er
agecustomer
l
ifespant ogether .Thi
scanhel pcal cul
atehow muchr evenueacust omercan
contributeint heirli
fecycl
ewi thy ou.
Thel i
fespancust omerv aluecalculationissimil
artot hepredicti
ve 
customerl
if
eti
me
valuecal culati
on i
nt hattheyarebot hpopul arpr
edictivemodel s.Al
thoughext
ensiv
e,
thelif
etimeCLVshoul dn’tbeconsider edaconclusive resear
chmet hod.

Cohor
tAnalysis-
Thecohortanalysi
smet hodcol l
ectscurr
entcust
omerswit
hsimil
archar
acteristi
cs
andgr
oupst hem toget
her .Cohortanal
ysi
scanhelpor
gani
zati
onsdrawconclusions
bet
weengr oupsofpeopl e.Tokeepcohor tanal
ysi
sconcl
usi
ve,or
gani
zati
onsmust
beawareofanychangesi nmar ketdynamics.

Therear eafew thi

ngstokeepinmi ndwhencal culati
ngcohortanaly
sis,incl
uding
deter
mi ni
ngwhatshouldbemeasured(subscripti
onstart/
canceldat
es),thespecifi
c
cohortsthatarerel
evantandhow fartheyshouldbesegment ed(measur i
ngst ar
t
datesandt hedi
ffer
encesbet
weeneachsubscr ipt
ionplantypes),
andwhi chmet hod
shouldbeusedt operf
ormtheanal
ysis(excel
oranot herpl
atfor
m).

Indivi
dual i
zedCLV-
Organi zati
onsmayf ind t
heindivi
dual
i
zed CLV usefulforconsider
ing abr oader
perspect iv
e.Thisv al
uepr i
maril
yhelpstomanageROIbyev aluati
ngdi str
ibut
ion
met hods, marketi
ngmet hods,
landi
ngpages,campaigns,
etc.Onewayt hatt
hisCLV
calculationcanbeusedi stocomparethespendofsoci almedi
amar keti
ngt othe
spendofdi gi
talmarketi
ng.

These CLV calcul

ati
on methods are used by a var
iet
y of busi
nesses and
organi
zat
ions,
dependi
ngontheir
 dat
acoll
ecti
onmethods 
andrepor
ti
ngobject
ives.

Theabov emet hodsforcal

culati
ngCLVgi vebusinessesinsi
ghtint
owhi choftheir
channel sarethemosteffi
cient,
whot heyshouldbetarget
ing,wherethei
rmarketi
ng
strategyfal
lsflat
,andhowtheycandi r
ectthei
rcustomerservi
ceresourcestopropel
theirprofi
tsandgetabetterunderst
andingofthei
rcustomerbase.

However
,noneoft hesei nsi
ghtscanbepossi bl
ewi t
houtasoli
ddat acoll
ect
ion
st
rat
egy.Thankful
l
y,thet eam hereatQuest
ionProisheretohel
p!Masterthebest
waystounderst
andy ourcustomerbaseorcoll
ectyourdat
ainonedashboar
d. 

Rel
ati
onshi
pDev
elopmentSt
rat
egi
es

1.Net
wor
king

Net
wor ki
ng,onli
neandoff,canbeapower fulrelati
onshipmarketi
ngtechni
que.This
i
sn’
tjustforjobseeker
s!Thinkabouttheintereststhatyouhav easabusiness,and
t
henjoingroupsthatshar
ey ouraf
fi
nit
ies.Thisnotonl yhel
psy ourbr
andawar eness,
butal
soexpandsy ourpotenti
alcustomerbase.It
’sawin-
win.Nott
omenti
onthat
theonl
ytoolyou’l
lneedforthisisy ourbr
ain.Pi
cksomethi
ngyouli
keandkeepin
mindwhatpeoplesimi
lart
oy oumi ghtenj
oy.

2.Cher
ishEachCust
omer

Notj ustinthewayt hatev erycompanysay sthattheydo.Makesur ethatev ery

i
nteraction you have wi thy ourcust omers shows t hem thatt hey arev al
ued.
Spont aneousrecogniti
onofy ourcurrentcustomerscangoal ongway .Whenpeople
feelvalued,theyletothersknow.Del ightyourcustomer swiththeunexpected( i
na
goodway )andbet herefort hem nomat t
erwhat .Socialmonitoringtools,such
as Brandwat ch,canhel py ougaugey ouri
mpact .Part
icular
lywit
ht y i
ngaphy sical
campai gntodi gi
tal
gai ns.

3.Li
stent
oYourCust
omer
s

Listentoy ourcust omers!Ev erybusi nesssay stheydo,butnotal lfol

lowthroughor
appl ywhatt hey ’
vehear d.Ev enl i
steningandr espondingt ocompl imentscanbe
benef i
cial
.Peopl el oveknowi ng they ’
vebeen hear d.Ev en compl aint
scan bea
blessingindi sgui
se.Peopl eof tenjustwantsomeonet oshar et heirconcernswith.
Byl ist
eningtot heseconcer ns,y ouensur et haty ourcustomer sf eelval
ued.Plus,if
youl earnwhatpeopl eloveanddi sl
ikeabouty ou,y oucanl everaget hefeedbackto
i
mpr ovey ourbusi ness.Ify ouuseMi crosoftDy namicsCRM,PowerSur veyand
PowerSur veyPlusar egr eattoolst hatall
owy out ogett hiskindoff eedback.They
alsoal l
owf oranony mousr esponses, meaningy oucansur veytheweb.

4.Bui
l
daBr
andI
dent
it
y

Amemor abl
ebr andwi l
lmakeiteasyforcustomerstofi
ndyouandy ourproduct(
s).
Customerswi llgrav
itatetowar
dwhatt heyfindthatismemorable.Ifyourbrand
resonat
es,theywilll
i
kelyremembery ouandy oucandevel
optherel
ati
onshipfurt
her.
Oncey ouhav east r
ongbr andidenti
ty,t
hosethatwishtobecomear avi
ngf anwill
knowwhaty oustandforandwhyt heyshouldcare.

5.Gi
veYourCust
omer
sFr
eeI
nfor
mat
ion

What '
sbetterthanf ree?Notmuch.Yourcust omer sareseekinginformationabout
yourproduct(s).Theyhav equestions.Givethem answer s!I
dentifythet opicsand
i
nterestsyourcustomer shave.Then,creat
esomet hi
ngcoolaroundthoset opicsand
giv
ei ttothem freeaccess.Peopleknowt haty ouarejusttr
yingtogett heircontact
i
nformat i
ontosel ltothem i
fy ougateit.Youcancer tai
nlygenerateleadst hisway,
butyou’l
lwanttoal sogiveawaysomest ufff
orf r
ee.Answerthepeopl e!

6.Loy
alt
yRewar
ds

No, I
'
m nottalki
ngst
ri
ctlyaboutloyal
tycardsandperkspr ogr
ams.Thoughthoseare
great,i
fyouwantt otrulysucceedatr elat
ionshi
pmar keti
ng,andyoushould,you
needt oexpandbeyondt hetr
aditi
onaltypesofprograms.Peopleloveget
tingst
uff
andpeoplelovebeingrecogni
zed.Combinet
het
woal ongwithsomeofwhatwe’
ve
beenmentioning.Cher
ishyourl
oyalcust
omer
sandrewardthem!Youcancr
eat
ethe
perf
ectl
oyaltyprogr
am andmanagei twi
that
ool
li
ke Bi
gDoor.

7.Communi
cat
eOf
ten

Rel
ati
onshipsar ebasedoncommuni cat
ion.Yourcust omersanduser swantt o
communicatewi thy ou,sobesuretocommuni catewiththem of t
en.Relationship
market
ingwor kswel lwhenyoustri
vetobet her
ef ory
ourcust omer s.Soci
almedi a,
email
,adverti
sing,andcontentar
eallwayst ocommuni catetoy ourcustomer sthat
wanttor ecei
vemessagest hatway .Besur etosendf ol
low-upcommuni cati
ons
whereappropri
ate.

8.Speci
alEv
ent
s

Holdi
ngaspeci alev entforyourexi
stingorpr ospecti
vecustomer sisagr eatwayto
buil
drelati
onshi
ps.Ify ouputonagr eateventaboutat opi
cthatyourcustomerscare
about,t
heywi l
lremembert hatexperi
ence and remembery ourbusiness.Likel
y,t
hey
wil
lraveaboutt heev entyouhel dandhow gr eati
twas.Youcanal sol ever
age
excl
usivit
yher ebyhol di
nganev entf oryourt opcustomers.It’
sawayt oadd
i
ncentiv
e, buti
tisalsoawayt osi
mpl ythankyourcust omers.

9.Face-
To-
FaceTi
me

Simil
artoalotofwhatwe’ vebeenment ioning,itcomesbackt oint
eract
ions.Whil
e
el
ectroni
c communi cat
ion is gr
eat,and of ten preferred,havi
ng a face-t
o-f
ace
meet i
ngcanhel pthecustomerfeelvalued.Consi derstoppingbyy ourcustomer’
s
pl
aceofbusi ness,orwor kinsomef ace-to-facet i
mebyhol di
ngaspeci alevent.
Whichevermet hod you choose,you can be sur et hatitwi l
lbring a l
evelof
personal
iz
ati
ont oyourr
elati
onshi
pmar keti
ngst rategy.

Rel
ati
onshi
pChal
l
enges
I. LossofCont rol:Theor ganisat i
onl ossescont rolov ertheacti
vit
ies,
i
nt entions,and r esour ces whi ch ar et he i mportantf act
ors due to
relati
onshi pmar keti
ng
I
I. Expendi tureonnew t echnologi es:r elat
ionshipmar keti
ngmayr esul
t
i
nt oi nv estmenti n new t echnol ogies like customerdat abase or
electronicequi pmentf rom timet otime.suchhugei nv
estmentsmay
notbef easibl
ef oralltypeofor ganisation.
II
I. Changes i n or ganisati
onalcul ture:bef oret he impl ementat
ion of
strategiesi nrelati
onshi pmar ket ingitmayber equiredt omakesome
changesi npr evail
i
ngor ganisation’scul t
ur e.Thismaysoundeasybut
i
nact ual i
tisverydiffi
culttoimpl ementsuchchanges.
I
V. Cost l
yaf fair
:Tobui l
dandmai ntain
V. Unexpect edDemands:
VI. Stoppagef rom otheroppor tunities:

e-
CRM
Cust omerRel ati
onshi pManagement( CRM)i sawayt oidentify
,acqui re,andr etai
n
cust omer s– abusi ness’gr eat estasset .Bypr ovidi
ngt hemeanst omanageand
coor dinat ecustomeri nteractions,CRM hel pscompani esmaxi mi set hev alueof
ever ycust omeri nteract ionandi nturni mpr ovecor porateperfor mance.E- CRM,or
Elect ronic CustomerRel ationshi p Management ,i s an integr ated onl i
ne sal es,
mar ket ing and ser vice st rategyt hati s used toi dentify
,at tractand r etain an
organi sat i
on’
s cust omer s.I tdescr ibes impr oved and i ncreased communi cat i
on
bet ween an or ganisat ion and i t
s clients by cr eati
ng and enhanci ng cust omer
i
nt eract i
ont hroughi nnov ativet echnology .E-CRM sof twar epr ovidespr ofi
lesand
histor i
esofeachi nteract i
ont heor gani sati
onhaswi t
hi tscustomer s,maki ngi tan
i
mpor tanttoolforal lsmal landmedi um busi nesses.E- CRM alsoal lowsext ensi v
e
conf igur at
ionofr ol
es, sot haty oucanensur eselectedmember shav eaccessonl yto
thei nfor mati
ont heyneed.

Feat
uresofe-
CRM:

 Cust
omer Management
: 
Prov
ides access t
o al
l cust
omer i
nfor
mat
ion
i
ncl
udi
ngenqui
ryst
atusandCor
respondence
 Knowl
edgeManagement
: 
A cent
ral
i
sed knowl
edgebaset
hathandl
esand
shar
escust
omerI
nfor
mat
ion
 AccountManagement
: 
Accesst
ocust
omeri
nfor
mat
ionandhi
stor
y,al
l
owi
ng
sal
est
eamsandcust
omerser
vicet
eamst
ofunct
ionef
fi
cient
ly
 CaseManagement
: 
Capt
uresenqui
ri
es,escal
atespr
ior
it
ycasesandnot
if
ies
managementofunr
esol
vedi
ssues
 Back-
endi
ntegr
ati
on:
 
Blendswi
thot
hersy
stemssuchasbi
l
li
ng,
inv
ent
oryand
l
ogi
sti
cst
hroughr
elev
antcust
omercont
actpoi
ntssuchaswebsi
tesandcal
l
cent
res
 Repor
ti
ng and anal
ysi
s: 
Repor
t gener
ati
on on cust
omer behav
iour and
busi
nesscr
it
eri
a

Benef
it
sofanE-
CRM sy
stem
Ser
vicel
eveli
mpr
ovements:
 Usi
ngani
ntegr
ateddat
abaset
odel
i
verconsi
stentand
i
mprovedcust
omerr
esponses

Revenuegr owth:
 
Decreasi
ngcostsbyfocusi
ngonr
etai
ningcust
omer
sandusi
ng
i
nteract
iveserv
icetool
stosel
laddi
ti
onalpr
oduct
s

Pr
oducti
vi
ty:
 
Consi
stentsal
es and ser
vice pr
ocedur
es t
o cr
eat
e ef
fi
cientwor
k
pr
ocesses

Customersati
sfact
ion:
 Automati
c cust
omertracki
ng and detect
ion wi
l
lensure
enquir
iesar
emetandi ssuesaremanaged.Thi
swilli
mprov
et hecustomer
’sov
eral
l
experi
encei
ndeali
ngwiththeorgani
sati
on.
Aut
omat
ion:
 
E-CRM sof
twar
ehel
psaut
omat
ecampai
gnsi
ncl
udi
ng

 Telemarketi
ng
 Telesal
es
 Dir
ectmai l
 Leadt r
acki
ngandr esponse
 Oppor t
uni
tymanagement
 Quotesandor derconfi
gurat
ion

ConsumerBehav
iouri
nSer
vice

Ther
ear eseveralinformat
ionsourcesaboutconsumerbuy erbehavi
ourwhenit
comest othepur chaseofaphy si
calproduct
,buttheuniquecharact
eri
sti
csof
ser
vicepr
oductsrequireadi
ffer
entstr
ategyfr
om market
ers.

Themosti mportantcharacteri
sti
cofaser vi
ceproductisi t
si ntangi
bili
ty.Where
physical(
tangibl
e)productsar epromot ed,customerscanbeent icedt obuy i
ngthe
productbygi v
ingoutsampl es,ort heycanl ookatandt r
youtt hepr oduct-allof
theseplayar oleinthedecisionmaki ngpr ocess.However,wit
haser viceproduct
,
theseoptionsarenotav ail
able.I
ncer taincases,cl
ientscanbeshownapi ct
ureto
maket heservicemor etangi
ble,forinstancewhent ry
ingoutanewhai rcut,orthey
canf orm animpressionoft heser v
icebyl ookingatanar chi
tect'
ssket cheswhen
buil
dinganewhouse.

Thei nt
angibi
l
ityofaser v i
cepr oductmakesi smor epr onet osubjectivi
tywhen
consumershav etodecideonaspeci f
icser viceprovi
der ,ov eranother,andwor d-of-
mouthpl aysani mportantr ol
ei nthedeci sionmaki ngpr ocess.Mar ketersofa
servi
ceproductneedtomakeconsumer sawar eoftheav ai
labi l
i
tyoftheser vice, and
i
tsprovider
.Ther angeoff eatur
es,adv antages,andbenef itst hatuserswi llder ive,
andt heconvenienceoft heserv i
cear eallt ypesofi nformat i
ont hataconsumer
wouldwantt oknow bef oremaki ngt hebuy ingdecision.Asaf fl
uencei ncr eases,
servi
cesbecomemor eaffordabl
eandl eisuret imebecomesmor eval
uable, andt hi
s
causesconsumer stopurchaseaser vicerathert hatperformi ngataskt hemsel v es-
washingyourcaratacar -
washi sagoodexampl eofthis.

Theper cei
ved professionali
sm and compet enceoft hef irm ar
eal so important
consi
derati
onsfordeci dingwhi chserviceproductt ouse,becauseitisoftendi f
fi
cult
foraconsumert odistinguishoneser vi
cepr oviderfrom another.Ther efor
e,t he
i
mageofapar ti
cularser vicefirm mightbet heonl yfactorthatmakesi tpr ef
erable
overanotheri
nt heconsumer '
smi nd.Goodser vi
cer eputati
onandt ransparencyar e
twopower f
ulmet hodsf orserviceprovi
derstodi f
ferenti
atethemselves.

Manyconsumer smayper ceivetheriskofbuyingaser vi

cetobehi gherthanfor
consumerspurchasi
ngphysicalgoods.Becauseoftheintangi
bil
i
tyandsubjecti
vit
y
i
nvolved i
n making t
he buying deci
sion,consumers cannotrelyas heavil
yon
gatheri
ngi
nfor
mat i
onthanisthecasef orphysi
calpr
oducts.Consumersmightalso
 perceiv
et heriskofbuy i
ngaser v
icegreater
,becauseserv
icesarenotstandardi
sed
andt heout comecanbedi ffer
entever yti
met heservi
ceisused( forexamplea
hai
rcut).Also,ifyouhav epurchasedaser vi
ce,andarenothappywiththeoutcome,
youcan' tsimplyr et
urnitaswi thphysicalproduct
s.Theconsequencesofabadl y
perfor
medser vicecanbesev er
e( f
orexampl eifyouhadyourcarrepair
edandar e
unhappywi ththeout come.)

Pricei sanimpor t
antt ypeofi nformati
onthatser vi
cemar ket
erscansuppl yto
consumer sint hebuy i
ngpr ocess.Butitisimpor t
anttokeepi nmindthatpr i
ce
affectsaprospecti
vebuy er'
sexpectat
ionsoftheservi
ce.Someconsumersmi ghtbe
willi
ngtopaymor ef oraser v
icebecausetheyprobablyassoci
atehi
gherpr
iceswith
higherquali
ty,andt hust heythinktheycanr educether i
skinvol
vedinbuy i
nga
servicepr
oduct.

I
thasbeenf oundthatcompani
eswhichprovi
degener
alser
viceinfor
mat
ionpr
ovi
de
pri
ce inf
ormati
on and provi
des a ser
vice guar
ant
ee,signif
icant
lyl
owersthe
percei
vedri
skinbuyi
ngthei
rproduct
s.

Ser
vicef
ail
ureandr
ecov
ery

Somet i
mescust omerser vicef ail
sbecauseofdoi ng somet hing,atot hert imes
because ofnotdoi ng any thi
ng.A ser vi
ce fail
ur e,si mply def i
ned,i s ser vi
ce
performancet hatfail
st omeetacust omer’sexpect ati
ons.Ty pical l
y,whenaser vi
ce
fail
ureoccur s,acustomerwi l
lexpectt obecompensat edf ort hei nconv eniencein
thef orm ofanycombi nationofr ef
unds,credit
s,di scount s,orapol ogies.Ser vi
ce
fail
ureist heoppositeofcust omersat isf
acti
on.Ser vicefailurecanr angef r
om bad
qualitytor udebehaviort ol atedel iv
ery.Theseexampl esal lresul tinthecust omer
notr eceivi
ngt heper formancet hatt heywer epr omi sed.Ev ery onef acesser vi
ce
fail
urenow and t hen.Oneoft heser vi
cef ail
urest hatIexper i
enced wasata
restaurantwhenIhador der edadi sh,andIfoundal onghai rinit.WhenInot i
fiedour
server,het ookbackt hedi sh,addedsomemor efoodi nit,andpr esentedi ttome.
Butt hehairwasstillt
her e!Si ncethenInev erwentbackt ot hatrest aurant.Andt hat’
s
whatcust omer sdowhent heirserv i
cefail
ureisnothandl edpr oper ly.

The maj orr easons  forser vice f ai

lures i nclude st rat
egy oft he management ,
l
eader shipqual i
tyofmanager s,andnat uralinstinctsofempl oyees.
 Strategyoft hemanagement :Managementshoul dbeabl etopl anandst r
ategize
companypol iciesandoper ati
onsso t hatev er yaspectoft hebusi nessiswel l
-
organi zedt or educet hechancesofser v i
cef ai
lur e.
 Leader shipqual ityofmanager s:Manager sshoul dbeabl et oapplyt hei
rleadership
skil
lsi nmot iv ati
ng,super v
ising,andcor rectingt heoperationsandact i
onsi nthe
organi zat i
ont oensur ehighercust omersat isfact ionandmi nimum ser vi
cefail
ure.
 Na turali nsti
nct sofempl oyees:Al argepar tofser vi
cereliesont heempl oyeesas
theyar et heonet opr ov
ideser viceandi nteractwi tht
hecust omer s.The behavior
 of
l
eader ship and managementt owar ds empl oy ees is often incongruentwi ththe
cust omerser vicei ni
ti
ati
ve.Thus, empl oyeesmustbewel l-
skill
edandt rai
nedt owor k
effi
ci entlyandef fect
ivel
y
Forev eryser vicefailurether ear e4st epsofser vicer ecov ery,andt heyar e:
Step1:  
Apol ogizeandAskf orFor giveness:Af teraser vi
cef ai l
ure,l i
stent ot he
cust omer sanddon’ tinterrupt .Apol ogizeforthef ailurei nagenui neandsi ncer et one.
Also, pr ovidet hem wi t
ht hef ul linformat i
onregardi ngt hecauseoft heser vicef ai
lur e.
Step2:  GoOv ertheCompl aintwi thYourCust omer :Alway sgot hrought hecompl aint
asy oumi ghtbemi ssingsomet hing.Thi salsohel psust oactuallyunder standwho’ s
atf aultbecausesomet i
mest hecust omer smayal sobewr ongormaygi vef alse
compl aint.Wecanal sol ocat et heexpect ati
onsoft hecust omer saf tert hef ailure
hasoccur red.
Step3:  Fixt hePr oblem andThenFol l
owUp:I nthet hi
r dst epofser vicer ecov ery, t
r y
tofixt hepr obl em wi t
ht hebestal t
ernativeandf ollow- upwi tht hecust omer .I nt he
caseofSout hwestAi r
lines, amanhadpai d$8f ort heWi -Fiser v
icesi nt hef l
ightbut
didn’tgett heser vice.Lat er,theamountwasr efundedbyt heai r
line,andt hishel ped
todev elopal oyalcust omerf orSout hwestAi r
li
nes.
Step 4:  Documentt he Pr obl em i n Detail
:The l astst ep ofser vi
ce r ecov er yi s
recor dingt hecompl aintsandpr oblemsandt rainingt hest affmember sf orsi mi l
ar
probl emst hatmayoccuri nt hef uture.Theonl ywayt oprev entser i
ouspr oblems
from r ecur ringi stodocumentt hepr oblem forcaref ulanal ysislater.

Fi
nanci
alser
vices

Financialservi
cesar et heeconomi cser vi
cespr ov i
dedbyt hef inancei ndustry,which
encompassesabr oadr angeofbusi nessest hatmanagemoney ,includingcr edit
unions, banks, cr edit-card compani es, i nsur ance compani es, account ancy
compani es,consumer -f
inance compani es,st ock br okerages,i nvestmentf unds,
i
ndiv i
dualmanager s,andsomegov ernment -sponsor edent erpr i
ses.I ndia’sdiverse
andcompr ehensivef i
nanci alservi
cesi ndust ryi sgr owi ngr api dly,owi ngt odemand
drivers(hi
gherdi sposabl eincomes,cust omi zedf inanci alsol utions,et c.)andsuppl y
drivers(new ser vicepr ov i
dersi n existing mar kets,new f inanci alsol uti
onsand
products,et c.
).TheI ndi anf i
nancialser v i
cesi ndustr ycompr isessev eralkeysub
segment s.Thesei nclude,butar enotl imi t
ed t o-mut ualf unds,pensi on funds,
i
nsur ancecompani es, stock-brokers,weal thmanager s, f
inanci al adv i
sorycompani es,
andcommer cialbanks-r angingf r
om smal ldomest icpl ayerst ol argemul ti
nati
onal
compani es.Theser vicesar epr ovi
dedt oadi versecl ientbase-i ncludingi ndi
viduals,
privatebusinessesandpubl icorganizations.

Ty
pesofFi
nanci
alSer
vices:

1.Banki
ng

2.Pr
ofessi
onal
Adv
isor
y
 3.Weal
thManagement

4.Mut
ual
Funds

5.I
nsur
ance

6.St
ockMar
ket

Educat
ionSer
vices

Education services isaf unction thatut i

li
zes customert raini
ng and l earni
ng
opportunit
ies to driv e productusage and engagement ,leading t oi ncreased
customeradopt ion ofa pr oductorser vi
ce.Previously,the r ol
e ofest abli
shed
education servi
ces or ganizations was f ai
r l
y cl
ear—itf unctioned as a r evenue
generatingP&L.TSI A’ sEducat ionSer vi
cesBenchmar kSur veydat ashowst hatin
2010,60%ofeducat ionor ganizationssaidthatrevenuewast hepr i
mar yobj ecti
ve.
Now,al mostei ghty earslater,t hatpercentageisdownt o20% andadopt i
onand
customersat i
sfacti
onar eont her ise,
at41%, and23%, respectively
.Eighty earsago,
adoption,at10%,wasbar elyont heradarscreenandcust omersat isfacti
on,at0%,
wasanaf t
ert
hought ,atbest .

Tour
ism Ser
vices

Thet our i
sm industr
yasawhol esur vi
vesbecauseofv ar
ioustourism pr
oductsand
services.Tour i
sm indust
ryisflexibl
e.Thepr oduct
soft ouri
sm cannotbeeasi l
y
standar di
zedast heyarecr
eatedforthecustomersofvari
edi nter
estsanddemands.
Ast het ouri
sm productsaremainlythetour
ist
s’experi
ence,theycanbest or
edonly
i
nt het ouri
sts’memor i
es.
 geogr
aphi
c demogr
aphi
c

Atthev eryfundament all

evelthetourist Touri
st-consumerbehav i
ouri s defi
ned
consumersar edefinedaspergeogr aphic onthebasi sofgender
,age,social
,famil
y
l
ocation,presumi ng that the locati
on life cycle,income and v ari
ous other
whereindivi
dualliveshasgreaterimpact f act
ors
onhis/herbehaviour

psy
chogr
aphi
c behav
iour
ist
ic

Itisconsider
ed t
hatper
sonal
it
yorlif
e The mai nf ocus r emains on certai
n
styl
eaffect
sthebuyi
ngbehavi
ouroft
he tour
ist product
sf or the analysi
s of
tour
ist
-customer tour
istconsumer s behav i
ourand t he
marketis segment ed on the basi
s of
behavi
ouraldiff
erencessuchasdegr ee
of loyalt
y, benefits sought, buy i
ng
patt
ernsetc.

[
Classi
csegment
ati
ont
echni
que]

I
TES

I
Tenabl edSer vi
ces( ITeS),alsocal l
edwebenabl edser v i
cesorr emot eser vi
cesor
Tel e-
wor ki
ng,cov erst he ent ir
e gamutofoper ati
ons whi ch exploitinformati
on
technol ogyf orimpr ov i
ngef fici
ency ofan organization.Theseser vi
cespr ovi
dea
wi der angeofcar eeropt ionst hati ncl
udeoppor tunit
iesi n callCent re,medical
transcripti
on,medi calbill
ing and codi ng, 
backof fi
ceoper ations,r evenueclai
ms
processi ng,legaldat abases,cont entdev el
opment ,payroll
s,
 l
ogisticsmanagement ,
GI S(Geogr aphicalInformation System) ,
 
HRser vi
ces, webser viceset c.

I
nf ormat i
onTechnol ogy 
thatenabl
esthe business 
byimprovi
ng
the qualit
y of 
servi
ce i
sITenabledservi
ces.Themosti mportantaspectis
the Value addit
ionofITenabledservi
ce.Thev al
ueaddi
tioncoul
dbei nthefor
m of-
 
Cust omerr el
ati
onshipmanagement ,
 i
mpr oveddatabase,i
mprovedlookandfeel,
etc.
The out come ofanI Tenabledserv
iceisi
nt het wofor
ms:

 Di
rectI
mprovedServi
ce
 I
ndir
ectBenef
it
s.
Wher
easdir
ectbenefi
tscanber
eal
i
zedi
mmedi
atel
y,i
ndi
rectbenef
it
scanaccr
ue
ov
eraper
iodoft
ime,
andcanbehar
nessedv
eryef
fect
ivel
y,i
fpl
annedwel
lupf
ront
.

I
nformati
on Technol
ogy Enabl
ed Ser
vices (
ITeS) Pr
ocesses and
Serv
ices
ITeSprovidear angeofI T-i
ntensivepr
ocessesandser vices,whichincl
udes 
business
process out sourcing (BPO)  
and knowledge process outsourcing (
KPO),pr ov
ided
from adistantlocat i
onanddel i
veredov er
 t
elecom net
wor ks.I
TeSf ocusonv ert
ical
s
such as  cont ent management , f inance and account s, r esearch
and anal
ytics segment .ITeSincludes:

 Cust omer  
Inter act i
on ser vi
ces -incl
uding callcent r
ef acil
it
ies with adequat e
tel
ecom i nfr ast ruct ure, t r
ained consul t
ants, access t o r equi si
te
databases,  
Inter net  and ot her onl i
ne i nfor
mat i
on infrast
ructuret o pr ov i
de
inf
or mationandsuppor tt ocustomer s
 Ba ck of fi
ce oper ations - data entry, data conv ersion including finance
and account i
ng  andHRser vi
ces.
 Tr anscripti
on/ Tr ansl ationser vi
ces
 Co ntentdev elopment /animat i
on/ engineeri
ng/designandGI S
 Ot her ser vices i
ncluding r
emot e education, data
search, mar ket resear ch, network consultancyandmanagement
Thef avoured appl icat ion  areasar ear easwher ethereishugeamountofdat at hat
needst obepr ocessedandut il
isedf ordel iv
eri
ngt her esult
s,ort hedat ai st he
outcomeoft heser vice.I nal lcases,wi t
houtuseofI Tthet askwoul dot her
wisebe
unmanageabl e.Someoft hemosti mpor tantareaswher eITenabl edser vi
cescanbe
deployedar e:

 Telemarketi
ng
 Helpdesk
 CustomerSuppor tCentr
es
 DataWar eHouse
 Transcri
pti
onCent r
es
 GISMappi ngforTransportt
racki
ng
 El
ectroni
cDi st
ri
bution.

Tel
ecom Ser
vices

Intelecommuni cat i
on,at elecommunicationsser v
iceisaser vi
ceprovidedbya
tel
ecommuni cations pr ov
ider,ora speci fi
ed setof user-informat
ion transf
er
capabil
it
iesprov idedt oagr oupofusersbyat elecommunicationssystem.The
tel
ecommuni cationsser vi
ceuseri sresponsiblefortheinf
ormat i
oncontentoft he
message.Thet el ecommuni cati
onsservi
cepr ovi
derhast her esponsi
bil
it
yf orthe
acceptance,
transmi ssi
on,anddeliv
eryofthemessage.

Tel
ecom serv
icesnow incl
udef
ixed-
net
wor kser
vices(
dat
aret
ail
,Int
ernetr
etai
l
,
voi
ceret
ail
andwholesal
e)andmobil
eser
vices.

Fi
xed-dat
aser v
ices—Incl
udesal
ldedi
cat
ed/
pri
vat
eline,
packetandci
rcui
t-
swi
tched
access ser
vices (f
orexample,fr
ame rel
ay,asynchr
onous tr
ansf
ermode,I P,
I
nt egrat
edSer vicesDigit
alNetwork,DSL, multichannelmul t
ipointdistri
butionser vi
ce
[
MMDS]andsat ell
it
e)retailr
evenue.Nodi ff
erent i
ati
oni smadebet weent hetypeof
traffi
corappl icati
oncar ri
edbyt heseser vices.Al ltypesoft ransmi ssions— non
voicedat a,i
mage, v
ideo,fax,i
nter
activeservi
cesandev envoice—canbecar r
iedby
theseser v
icesr egardl
essofwhet hert hesour cef ormati sanal ogordi gi
tal.Al l
revenuer efl
ectsserviceprovi
derannual i
zedret ai
lrevenue—pai dforbyt hebusi ness
andr esidenti
alenduseroft heservice;nowhol esaleorcarrier-
to-carr
ierrevenuei s
i
ncl uded.

Fixed-voiceservices— Thisref
lectsretai
lvoi
ceser v
icer ev enueforallservi
cesthat
aresol dassucht oenduser sandi ncl
udesthepr ovi
sionofl ocalandlong-di
stance
servicesr el
atedt ovoice(call
i
ngchar ges,li
ner ent
al /subscripti
onandconnect ion
fees ar ei ncl
uded int his category)
,enhanced v oice ser vi
ces,dat a and fax
transmissionov erthecir
cuit
-switchedPSTN,andr etailvoiceov erIPrevenue—pai d
forbyt hebusinessandr esi
dentialenduseroftheser vi
ce; nowhol esal
eorcar r
ier
-t
o-
carri
err evenuei
si ncl
uded.

Heal
thSer
vices

HealthcarehasbecomeoneofI ndia’
slargestsect or,bothi ntermsofr ev enueand
employ ment .Heal thcare compr i
ses hospi tal
s,medi caldev i
ces,cl i
nicalt r
ials,
outsourcing, t
elemedi cine,medi caltour
ism,healthi nsuranceandmedi calequi pment .
TheI ndianheal thcaresect ori sgrowingatabr iskpaceduet oi t
sst rengt hening
coverage, servi
cesandi ncreasingexpendi t
urebypubl icaswel lpri
vateplayer s.
Indi
anheal t
hcar edel i
verysy stem iscategorisedi ntotwomaj orcomponent spubl i
c
and pr i
vate.The Gov ernment ,i.
e.publ i
c heal t
hcar e system,compr i
ses l imited
secondar yandt erti
arycar einstit
uti
onsi nkeyci ti
esandf ocusesonpr ovidingbasi c
healt
hcar ef aci
lit
iesi nthef orm ofpr i
maryheal thcarecent res(PHCs)i nrur alareas.
Thepr ivatesect orpr ovidesmaj ori
tyofsecondar y,tert
iary,andquat ernar ycar e
i
nstit
utionswi t
hmaj orconcent rati
oninmet rosandt i
erIandt i
erI
Icit
ies.
Cour
seOut
comes:

Upont
hesuccessf
ulcompl
eti
onoft
hiscour
sest
udent
swi
l
lbeabl
eto:

1.Bet
terunderst
andaboutt
heser
vicemar
ket
ing(
B1:
Remember i
ng)

2.Bet
terunderst
andaboutthedi
ffer
encebet
weengoodsandser
vices,
componentsofser
vices,
servi
cequali
tymodel
s.
(
B2:Under
standi
ng)

3. Understandaboutt
hei
mplicat
ionofmodelsofserv
ice
marketi
ngandcustomersati
sfact
ioni
ntheservi
ce
i
ndustry.(B3:Appl
i
cat
ion)