MARKETING OF

SERVICES - I

Marketing Strategy and

the Marketing Mix
 Introduction
2 Marketing Planning Process
Step 1: Collecting Organization’s External Environment Information
Step 2: Collecting Organization’s Internal Environment Information
Step 3: Identifying the Strengths, Weaknesses, Opportunities and
Threats (SWOT)
Step 4: Formulating Basic Assumptions about key determinants of
marketing success
Step 5: Formulating Organizational Objectives based on Steps 1 to 4
Step 6: Developing Strategies for achieving the Objectives
Step 7: Devising detailed Plans and Programs to accomplish the
Strategies and Objectives
Step 8: Evaluating progress towards achievement of Objectives
Step 9: Reviewing and Amending the Plan based on the Evaluation

MARKETING OF SERVICES - I
 Developing a Marketing Strategy
3 1. Target Market
• The consumers (sharing similar characteristics) a
company wants to sell its products and services to,
and to whom it directs its marketing efforts.
• Identifying the target market is an essential step in the
development of a marketing plan.
• After identifying the target market, analyze the target
population (which may be divided in market segments)
based on the following:
 Demographics: Age, Location, Gender, Income level,
Education level, Marital or family status, Occupation,
Ethnic background, etc.
 Psychographics: Personality, Attitudes, Values,
Interests or hobbies, Lifestyles, Spending Habits, etc.

MARKETING OF SERVICES - I
 Developing a Marketing Strategy
4 2. Marketing Mix
1. According to Philip Kotler “Marketing Mix is the set of
controllable variables that the firm can use to
influence the buyer’s response.”

2. The controllable variables in this context refer to the

4Ps [product, price, place (distribution) and promotion].

3. Each firm strives to build up such a composition of

4Ps, which can create highest level of consumer
satisfaction and at the same time meet its
organizational objectives. Thus, this mix is
assembled keeping in mind the needs of
target customers.

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 Marketing Strategy and Services
5 Following are some unique aspects of services that give direction to
service marketing strategy formulation:
1. The intangibility aspect restricts consumers’ freedom of choice
and makes it difficult for them to choose which competitor’s
offering is better.
2. The Inseparability aspect also restricts consumers’ freedom of
choice as well as localizes service marketing.
3. The Perishability aspect adds uncertainty and risk to service
marketing.
In general, the marketing strategy formulation process is same
for both tangible and intangible products. However, differences
may arise in the analytical stage prior to developing the marketing
strategy, where managers have to answer the pertinent questions in the
areas such as: Service Business, Customer, Competition,
Operational Efficiency, Service Design and Testing, and Decisions

MARKETING OF SERVICES - I
 Marketing Strategy and Services
6 SERVICE BUSINESS
1. Do we fully understand the type of service business we
are in? To what extent are we people-based or machine-
based?
2. How do we render our services?
3. What type of equipment is required to effectively render
the service?
4. What type of people/professionals are required to
effectively render the service? Do they have the required
skills?
5. What sort of buyer-seller relationship do we maintain?
6. What kind of ambience do we need to project?

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 Marketing Strategy and Services
7 CUSTOMER
1. Who are our customers?
2. How can we identify them?
3. What benefits are they seeking?
Service marketers need to understand the basis of consumer decision-
making and their choice for services. The following two solutions are
helpful in this regard:
1. Working on perceived differences between goods and services, as
there is research-based evidence that consumers are able to
perceive the differences between the two.
2. Working on the perceived differences between services, as
consumers distinguish between them based on such dimensions
as: total amount of time required in delivering the service;
customer control over the service delivery situation; amount of
effort required by the customer in availing the service; customer
dependence upon others; efficiency of service; amount of human
contact involved; risk of something going wrong; etc.
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 Marketing Strategy and Services
8 COMPETITION
1. How can we defend our business from competitors?
• Service marketers defend their business from competition on the
basis of service differentiation.
• Service Differentiation: This creates a distinct image of the
service organization and its services in the eyes of the
consumers in relation to competitors in the market. This
leads to distinctive positioning in the market
(Consumers’ perception of the comparative positioning of different
services in the market).
• Strong competitive positions can be developed by:
 Developing a reputation through the kind of service provided
in a people-based service (Customer Service Excellence is the
key).
 Using cutting-edge technology in an equipment-based
service.
MARKETING OF SERVICES - I
 Marketing Strategy and Services
9 OPERATIONAL EFFICIENCY
1. How can we obtain more Cost-effective Operations?
• Labour intensive service organizations improve the efficiency of their
operations through automation, specialization, use of appropriate
technology and use of systems approach to service design.
SERVICE DESIGN AND TESTING
1. What efforts will be used to develop and test new service offerings?
• There is a great deal of imitation rather than innovation in the service
industry (e.g. airlines and banking).
• A well-organized and planned approach to research and development
must be followed to design novel services. Introduction of cutting-edge
procedures for developing new services is indeed a challenge.
• Service development may be accomplished through acquisition, but it can
be risky to acquire people-based businesses. In such a case, the acquiring
firm must make sure that it can attract and keep skilled service-oriented
managers to run the operations.
• Testing people-based services also poses challenges, as service
deliverers’ moods and behaviour may not be the same when the actual
service is offered after successful testing.
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 Marketing Strategy and Services
10 DECISIONS
1. How do Decisions about Marketing Strategy influence Strategic
Decisions in other areas of the Service Organization and vice versa?

• Marketing strategies, production strategies and personnel

strategies cannot be separated from each other in service
organizations.
• In service organizations, the inter-relationships between different
functional parts are much stronger. This is predominantly due to
their interdependence in delivering the service effectively (concept of
inseparability).
• For example, introducing equipment in place of people to
improve production efficiency can have a negative impact upon
the marketing efficiency. Customers may perceive such a
change as a decrease in the amount of personal service given to
them and as such may no longer be happy with the standard of
service. They may interpret the change as a change in the
nature of the service and may not get a good impression of it.
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 Marketing Mix for Services
11 1. The 4 Ps of marketing mix was intended for the
manufacturing companies, which are not comprehensive
enough for service marketing.
2. Marketing mix for services includes three other elements
or Ps to cater for the characteristics of services. The seven
elements in the marketing mix for services are:
a. Product
b. Price
c. Place
d. Promotion
e. People
f. Physical evidence
g. Process

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 Marketing Mix for Services
12 PRODUCT
The service product requires these considerations:
1. Range of services provided
2. Quality of services provided
3. Level of services provided
4. Use of branding, warranties and after-sales service
However, these considerations may be different for
different service organizations. For instance, the services
of a fast food may differ from those of a five star hotel.
PRICE
The price considerations include: levels of prices;
discounts, allowances and commissions; terms of
payment and credit.
Pricing is also used for differentiating one service from
another. Customers are able to form perceptions of the
quality of the service based on its price.
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 Marketing Mix for Services
13 PLACE
The place considerations include: the location of the
service providers and their accessibility to the consumer.
Accessibility includes:
• Physical accessibility to the service provider
• Other means of communication and contact
• Types of distribution channel used (e.g. travel agents)
and their coverage.

PROMOTION
The promotion considerations includes the various methods
of communicating with markets, such as: advertising,
personal selling activities, sales promotion activities,
direct forms of publicity and indirect forms of
communication like public relations.

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 Marketing Mix for Services
14 PEOPLE
All humans who play a role in service delivery and who
influence the perceptions of customers.
• Service delivery employees (front-line staff)
• The general staff of the service company
• The customer
• The other customers that are present in the
servuction and delivery process

MARKETING OF SERVICES - I
 Marketing Mix for Services
15 PHYSICAL EVIDENCE
It reflects the image of the service organization and
influences the consumer’s judgment of the service. It
involves elements like the:
• Physical environment such as furnishings, colour,
layout noise, décor, etc.
• Facilitating goods that enable the service to be
provided such as the cars used by a car rental company,
hair dryers, cutting scissors, hair colour and beauty
products used by a beauty salon.
• Other tangible clues like tickets, labels used by an
airline or packaging of cleaning goods used by a dry
cleaning company.

MARKETING OF SERVICES - I
 Marketing Mix for Services
PROCESS
16 The actual procedure, mechanisms and flow of activities through which a
service is delivered.
The efficiency and effectiveness of a process are based on these four dimensions:
1. Behaviour: People’s behaviour in the service organization is critical. Cheerful,
attentive and empathetic staff can help in compensating for some service
delivery issues.
2. Length: The number of steps that participants have to follow in order
to implement or execute the service delivery process.
3. Duration: The time that elapses from the first to the last activity of the
service delivery process.
4. Logistical effectiveness: The degree of smoothness in the flow of the
steps of the service delivery process.
Service delivery process concerns include: policies and procedures
adopted; degree of automation; amount of discretion the employees have;
customer involvement in the service delivery process, appointments and the
waiting system, capacity levels available, information flow; etc. All these
have a direct impact on the customers’ perception of the value of the
service and are thus importing marketing management considerations.
MARKETING OF SERVICES - I