WHAT IS A SERVICE / SERVICE PRODUCT

 An activity / performance given by a service provider to a service User

to solve his problem and give satisfaction and at the same Time help the
company to achieve its commercial and financial Objectives.
 A service product is mostly intangible in nature and the purchase Of a
service product does not result in ownership by the user. A Service is
not a thing
 E.G:
 Renting a room
 Transportation by any mode
 Seeing a movie
 Getting advice from a doctor / lawyer
 Education
 Banking services
 Buying insurance
 Hiring a taxi
 Performance by an actor / artist
 MAJOR BUSINESS OBJECTIVES
( VIA CS/CD )

COMMERCIAL FINANCIAL
Sales (volume, value) Profit
Market share Return on investment
Growth rate (RoI)
Ranking
Retaining existing and
Developing new customers
ECONOMIC ACTIVITIES

WHAT?
National wealth (GDP) creating activities
CLASSIFICATION OF EA’s
PRIMARY EA’s
Agriculture, forestry, mining& fishing
SECONDARY EA’s
Manufacturing & construction
TERTIARY EA’s
Services
 SECTORS OF ECONOMY
a) AGRICULTURE SECTOR, TREND
b) MANUFACTURING AND CONSTRUCTION SECTOR, TREND
c) SERVICES SECTOR, TREND

UNO CLASSIFICATION OF COUNTRIES

 THREE BASES
1. more developed countries (MDCS)
2. less developed countries (LDCS)
3. less least developed countries (LLDCS)
 TREND TOWARDS SERVICE ECONOMY IN MDCs.
CHANGING TREND IN MDCs
 since the WW II, services sector of economy (all types of
services) has grown fast in MDCs, EG: USA, we and JP.
 PAKISTAN:
a. agriculture sector 40%,
b. manufacturing + construction sector 35%,
c. services sector 25%.
fast growth rate 8%, best jobs, high income, best talent
 future of services sector is bright.
PROBLEMS IN ASSESSING THE SIZE OF SERVICES SECTOR

 THREE PROBLEMS
1. different definition of a “service product”. what is included /
not included in services sector.
2. different bases of measuring the size of services sector.
a) employment basis
b) output basis
c) expenditure on services
d) role in export
3. poor quality of official / secondary data
 FEATURES OF EMPLOYMENT IN SERVICES SECTOR
 more employment
 gender composition of workforce in services sector is
changing. more women work in services organizations
 better paid jobs, talent, and careers (ba, it)
 more part-time workers

SERVICE ECONOMY
AN ECONOMY IN WHICH:
a) a greater portion of the national wealth(GDP) is created by
the services sector of economy (t.eas),
b) most people are employed in services
c) most expenditure is on services and
d) export of services plays an important role.
CRITERIA USED TO JUDGE THE IMPORTANCE OF
SERVICES IN THE ECONOMY

1. output of wealth
2. employment
3. consumer expenditure
4. role of services in export trade
REASONS FOR THE GROWTH OF SERVICES IN ECONOMY
1) low labor productivity in services which has led to shift in
employment.
labor productivity = output per employee
why low productivity in services?
a) decline in hours worked per person
b) less/poorly trained manpower in services sector
c) less/ slow use of technology in services.
has not benefited from EOS.

2) OVERALL GROWTH OF DEMAND FOR SERVICES FROM

COMPANIES
financial, insurance, legal, research, advertising, training
services etc.

4) DEREGULATION AND PRIVATIZATION OF SERVICES BUSINESS

(BIA, COM etc)
3) OUTSOURCING OF BUSINESS SERVICES
business services previously carried-out by the COS themselves, are being
outsourced today.
COS can now hire many types of services without owning them at less
cost.
THUS, SERVICES COs HAVE BEEN SET-UP.
EG: MRAS, ADAS, engineering maintenance COS, training institutions,
5) transport
GROWTH&OF food providers,
DEMAND FORjanitorial
SERVICESservices
FROM COS etc.
CONSUMERS. WHY?
a) society is getting wealthier, thus, the lifestyle is changing
- transfer of certain kinds of household jobs to others
- people have turned to services expenditure
b) life expectancy is increasing
c) life is becoming complex
d) more complex products
6) GROWTH OF DEMAND FROM CERTAIN PROFESSIONS
7) GLOBALIZATION OF BUSINESS
8) GROWTH OF GOVERNMENT SIZE
GLOBALIZATION OF BUSINESSES

 INCREASED DEMAND FOR :

 COMMUNICATION SERVICES
 TRAVEL SERVICES
 INFORMATION SERVICES
 LEGAL SERVICES
 HOSPITALITY SERVICES
REASONS FOR INCREASE IN SERVICES EXPENDITURE AND
NEEDED SERVICES
REASONS
 want more leisure time SERVICES NEEDED
 travel, hotels,
 more working women
 day-care nurseries, female servants
 increased life expectancy
 health-care services, old-age hostels
 complexity of products
 skilled labour / mechanics for
 complexity of life maintenance and repair

 increase in new products /  professional / consultants & advisers,

technologies adult educational centers
 EG: computers, TVS, fax, internet etc.
 need for new services
 SERVICES DEVELOPED DURING THE LAST 30 YEARS
(A) CONSUMER SERVICES (B) BUSINESS SERVICES
1) day-care nurseries 1) contract maintenance
2) mobile phone services, ATM services 2) consultant firms
3) TV/COMPUTER/FAX equipment
3) warehousing
repair services.
4) professionals/ consultants and
4) MRAS, ADAS,
advisers 5) contract r and d services,
5) car rental services 6) franchising services
6) travel agencies 7) janitorial services
7) adult education centers 8) office transport and food
8) credit card services services
9) physical fitness centers
10) beauty parlors
11) consumer leasing cos.
HISTORICAL CHANGES IN UNDERSTANDING A
SERVICE PRODUCT
HOW HAS THE DEFINITION OF THE TERM “SERVICE”CHANGED
OVER YEARS?
 EARLIER DAYS:
ADAM SMITH
services are barren and unproductive activities which perish instantly. do not add wealth
to a nation.
 LATER ON:
i. J.B. say
rejected ADAM smith’s views.
accepted that services are useful activities, which satisfy customers’ needs. are
productive and add wealth to a nation.
ii. ALFRED marshal
useful and need satisfying activities which get destroyed at the moment of their creation.
iii. different researchers
business activities which do not change the physical form of a good but which are
needed in moving products from the manufacturer to the end users. EG. WHLS, RETS,
ECT
 TODAY
 CHARACTERISTICS OF SERVICES

1) INTANGIBILITY
2) PERISHABILITY
3) INSEPARABILITY
4) HETROGENEITY / VARIABILITY / INCONSISTANCY
5) NO OWNERSHIP BY THE USER

 distinguish them from goods

 these characteristics create both challenges and opportunities in the
marketing of services and affect their m-mix
HOW PEOPLE JUDGE QUALITY OF A SERVICE PRODUCT

1) reputation of the service provider. reliability

2) present customers
3) physical environment
4) facilitating equipment
5) price
6) processes
methods used in creating and delivering services
 INTANGIBILITY
 five senses
 what?
 cannot be seen, ------------- before purchase.
 therefore, difficult to judge their quality before hand.
however, opinion about their quality can be obtained from
others.
 buyers have faith in the s. provider

 PROBLEMS CREATED:
cannot be packaged, displayed, demonstrated, sampled,
patented, makes choice difficult etc.
 STRATEGIES TO OVERCOME PROBLEMS CREATED
BY INTANGIBILITY
a) show visuals of the benefits of a service product in promotional
campaigns so that customers can see and judge quality before purchase.

e.g.
airlines:
show a traveler enjoying legroom
educational institutional:
show learning environment in a class room
hotel:
show a decorated hotel room, a restaurant.
plastic surgery:
make drawings after the service has been applied
b) create a strong organization image.

c) provide tangible “clues "which enable him to judge quality.

d) stimulate “WOM communication" to overcome “display problem”

e) use brand names to overcome “patent problem”.

f) adopt post purchase communication.

 HOW RELEVANT IN TANGIBILITY IN SERVICES?

 although intangibility is a key characteristic of services

but very few services are purely intangible
EG: teaching, nursing etc.
 most services also consist of some tangible elements
EG: air travel, banking, telecommunication etc.
 thus, tangibility is relevant to many services
 PERISHABILITY
 what ?
produced, delivered and consumed at the same time. cannot be
stored. cannot be produced before hand. therefore, if not used at
the time a service is produced, it gets destroyed for ever.
loss of revenue

 PROBLEMS CREATED
since services cannot be stored, cannot be produced
before hand and since their demand fluctuates too often,
therefore, planning their demand and supply is relatively
difficult.
• e.g.
1) public transport
2) hotel rooms (holiday places)
3) telephone service
 STRATEGIES TO OVERCOME PROBLEMS CREATED
BY PERISHABILITY
a) demand side
 offer flexible / differential pricing strategy at different times of
the year, days of the week, day / night*
 intermittent promotion, not continuous
 offer group discount*
 organize special shows, introduce a new product during idle time
 introduce reservation system

*short term steps. habitual

b) supply side
 use part-time employees
 temporary increase in equipment
 introduce self-service in stores.
 INSEPARABILITY
 what?
cannot be separated from service provider or the source and often
from the service user

 PROBLEMS CREATED
1) requires the presence of the service provider and the service user
mostly produced, delivered and consumed at the same time.
lot of interaction and customers’ participation. encounter points.

2) limits the scale of operation. mass production not possible

3) affects quality.
professional and entertainment services are needed from a specific
service provider. quality depends on both service provider and
service user.

4) direct sales is the main channel of distribution (except TAS, EAS).

this is an opportunity. some services can be delivered
 STRATEGIES TO OVERCOME PROBLEMS CREATED
BY INSEPARABILITY

1) WORK IN LARGE GROUPS

2) WORK FAST
3) TRAIN MORE SERVICE PROVIDERS
4) USE AUTOMATED MACHINES
5) USE MULTISITE LOCATIONS
 HETROGENEITY / VARIABILITY / INCONSISTANCY
 what?
each unit of service may differ in quality. customers are aware of it.
examples
 doctors (who, when, where)
 PIA (different flights)
 franchise operations
 bank branches
 quality depends upon:
a) service provider
b) customer(s)
c) when provided
d) where provided
e) facilitating equipment
f) process of creating and delivering a service product

 PROBLEMS CREATED
1) variation in quality
STRATEGIES TO OVERCOME PROBLEMS CREATED
BY HETROGENEITY
 DIFFICULT TO STANDARDIZE EACH UNIT OF SERVICE.

1) standardize service creation, production and delivery

processes
2) standardize physical environment / timing
3) constant training of s. providers
4) mechanize services
5) monitor CS periodically
6) standardize customers specifications
 NO OWNERSHIP

 does not become owner, can use the service / facility. no

transfer of ownership title.
payment is made for using the service / facility.

 PROBLEM CREATED
some time no evidence of purchase and use

 STRATEGY TO OVER COME PROBLEM

provide a physical clue
MARKETING DIFFICULTIES / CHALLENGES WHICH ARISE
DUE TO CHARACTERISTICS OF SERVICES
CHARACTERISTIC DIFFICULTIES / CHALLENGES

INTANGIBILITY CANNOT SAMPLE, DEMONSTRATE, DISPLAY & PACKAGE

CANNOT JUDGE QUALITY BEFORE HAND

MAKES PRICING DIFFICULT

CANNOT BE PATENTED. EASILY COPIED

PERISHABILITY CANNOT STORE

MAKES PLANNING OF SUPPLY AND DEMAND DIFFICULT
INSEPARABILITY REQUIRES THE PRESENCE OF S. PROVIDER & ALSO OFTEN OF THE CUSTOMER(S)

MOSTLY SOLD DIRECTLY

LIMITED SCALE OF OPERATION

EACH UNIT OF SERVICE MAY DIFFER.
HETROGENITY
DIFFICULT TO STANDARDIZE QUALITY

NO OWNERSHIP NO EVIDENCE OF PURCHASE AND USE

FRAMEWORKS TO HELP UNDERSTAND SERVICES AND PHYSICAL
PRODUCTS

 PSS, SSP
 few products are either pure tangible or intangible
 most products are combination of both tangible and
intangible elements.
 customer satisfaction comes from both tangible and
intangible elements of a product.
EG: restaurants:
CS comes from both food and the services given.
courtesy, speed, environment, convenience etc.
 GOODS-SERVICES CONTINUUM MODEL
a model, which based on tangible and intangible elements,
shows the range of products offered from pure tangibles to
pure intangibles, for CS, in the market.

DEG OF TEACHING
INTANG. AIR
Es RESTAURANT TRAIVAL

DEG OF BALANCE
TANG. BETWEEN
Es TANGIBLE AND
INTANGIBLE
ELEMENTS
CAR
TOOTHPASTE
FIVE CATEGORIES OF PRUDUCTS BASED ON G-S
CONTINUUM
 pure tangible products
no PSS / accompanying services
 tangible products + PSS
 pure intangible service products
 service product + SSP
accompanying minor tangible products
 tangible product + service product, in the same ratio.
hybrid
 SHOSTACK’S MOLECULAR MODEL OF A PRODUCT

 this model suggests to think of a product as a molecule

,having tangible and intangible elements.
based on whether the dominant elements are tangible or
intangible, this model helps to visualize both a service
product and a tangible product.

B. TANGIBLE / PHYSICAL
A. SERVICE PRODUCT
PRODUCT
the molecule, including the
nucleus of a S.PRODUCT, the molecule, including the
is dominated by nucleus, is dominated by
intangible elements, no tangible elements.
ownership of the source ownership of the physical
which produces the product.
service.
SHOSTACKS MOLECULAR MODEL OF A PRODUCT

AIR TRAVEL CAR

KEY
ELEMENTS OF A PRODUCT
= TANGIBLE ELEMENTS
= INTANGIBLE ELEMENTS
 FUNCTIONAL DIFFERENCES
BETWEEN PHYSICAL PRODUCTS AND SERVICES
SERVICES PHYSICAL PRODUCTS
 cannot be felt before purchase.  can be……..
 show lack of use of packaging  mostly in a package
 difficult to sample / demonstrate  can be easily sampled / displayed
/ display
 patent not possible  patient is possible
 difficult to judge price & quality  can judge
before hand
 requires presence of service
provider  not necessarily
 simultaneous production &
consumption  at different times
 direct sale, rarely middleman is
needed. short d. channel if at all  mostly sold via m. men
needed.
 limited scale of operation.
absence of mass production  mass production

 precise standardization of quality

 possible
is difficult (who, when & where
provided)
 cannot be stored, inventory not  can be stored. can produced
possible, cannot produce before before hand
hand
 demand fluctuation is often &  less often. easy to match
difficult to even-out
 cannot be owned  can be owned
 an activity  a thing
CLASSIFICATION OF SERVICES, SECTORS OF
SERVICE PORVIDERS
 CLASSIFICATION OF SERVICES

no strict bases of classification. different authors have used

different bases

A. BASIC SOURCE OF SERVICE

1) PEOPLE-BASED SERVICES
i. rendered by professionals / consultants
ii. rendered by skilled labour
iii. rendered by unskilled labour
2. EQUIPMENT- BASED SERVICES
i. automated equipment
ii. equipment operated by professionals or skilled
people
iii. equipment operated by unskilled people
B. buyer related bases

1. customer's presence necessary or not

2. buyer’s purchase motive

1. consumer services or business / industrial
services

3. shopping habit
how a buyer purchases a service in terms of efforts,
time spent and frequency
i. consumer convenience services frequently
used, low price, widely available
ii. consumer shopping services quality – price
comparison
iii. consumer specialty services strong liking
for a s. provider
iv. consumer unsought services
C. SELLER RELATED BASES
i. S. PROVIDER’S MOTIVE
– profit (business services)
– not-profit (charity services)
ii. SECTOR WHICH PROVIDES THE SERVICE
– Govt. sector services
federal, provincial and local government
– business sector services
– private non profit sector services

D. FUNCTION PERFORMED BY SERVICES

– communication, transportation, educational, financial,
health services etc.
 CHARACTERISTICS OF VARIOUS TYPES OF
CONSUMER SERVICES
CHARACTERISTICS C. CONVENIENCE C. SHOPPING C. SPECIALITY
SERVICES (TAXI) SERVICES (AIR SERVICES
TRAVEL) (MEDICAL ADVICE)
TIME & EFFORTS VERY LITTLE SOMEWHAT CONSIDERABLE
SPENT

S. PROVIDERS NO / LITTLE STRONG VERY STRONG

PREFERENCE

PRIOR PLANNING NO / LITTLE YES YES

FOR PURCHASE

PRICE LEVEL LOW HIGH HIGH

PRICE QUALITY NO YES NO

COMPARISON

PURCHASE FREQUENTLY INFREQUENTLY INFREQUENTLY

FREQUENCY
 SERVICE PRODUCT CATEGORIES
1. transportation and communication services.
2. Utility services needed for household operations
3. banking and insurance services
4. rental and housing, hotels & estate agents services
5. personal/health-care services
6. recreation and leisure services
7. professional and consultant services
8. distribution services
9. public administration and defense services
10. educational services
11. construction and engineering services
12. ecology services
13. tourism
 SECTORS OF SERVICE PROVIDERS

(1) GOVERNMENT SECTOR SERVICE PROVIDERS.

courts, hospitals, educational institutions, security agencies,
Pakistan railway, post office, PTCL,

(2) BUSINESS SECTOR SERVICE PROVIDERS

banks, insurance company, transportation companies, educational
institutions, hospitals, motion pictures , real estate agents.

(3) PRIVATE NON-PROFIT SECTOR SERVICE PROVIDERS

charity organizations, hospitals, educational institutions.
MARKETING AND TYPES OF MARKETING IN A
SERVICE COMPANY
 MARKETING OF SERVICES INTRODUCTION
 however, due to some
 order of adoption of marketing
 marketing is less developed in
services businesses. it started in
1975 when:
a) marketing people moved
from manufacturing
companies to services
companies
b) development of services
marketing literature
c) teaching of services
marketing
Pakistan 1995
 basically services are marketed
in the same manner as the
goods.
principles, concepts, processes
etc are same.
characteristics of services,
marketing of services is
somewhat different and
difficult.
for example
i. services marketing mix
consists of 7 variable
elements and not 4
ii. much more customer /
employee interaction
iii. patent protection is
impossible due to
intangibility. thus,
product differentiation is
short lived.
 ORDER OF ADOPTION OF MARKETING

A. IN THE BUSINESS SECTOR

1) consumer nondurable goods manufacturing companies
2) consumer durable goods manufacturing companies
3) industrial equipment and RMS manufacturing companies
4) consumer services companies (BIA, hotels).

B. CHARITY ORGANIZATIONS
 DIFFERENCE BETWEEN THE MARKETING CONCEPT AND
MARKETING MANAGEMENT
 TWO VIEWS ABOUT MARKETING

a) MARKETING CONCEPT b) MARKETING MANAGEMENT

 everybody is customer focused.  not so in marketing management.

 decisions in all departments are  isolated function.
customer focused.  CS the is responsibility of the
 coordinated function marketing department only.
 PURPOSE OF BUSINESS
 to continuously create, win and retain sufficient number of satisfied
customers, profitably.

 to achieve it, a company needs to use the marketing concept.

 CRITERIA TO ASSESS
HOW CUSTOMER ORIENTED A COMPANY IS ?

1) attitude and behavior of everybody towards the customers.

2) coordination at two levels:
a) within the marketing department
b) between marketing and all other departments.
3) whether or not key managers are in contact with customers.
4) how accurately the needs of tm customers have been
identified
5) external marketing. CS level (h, m, l). should keep increasing
6) internal marketing
7) interactive marketing
 EXAMPLES OF MARKET-ORIENTED OR
NOT MARKET-ORIENTED SERVICE ORGANIZATIONS.

 MARKET- ORIENTED
COMPANIES.
1) DHL
2) CITIBANK
3) MARRIOTT HOTELS  NOT MARKET- ORIENTED
4) SINGAPORE AIRLINE COMPANIES
comply with criteria of a market- 1) PTCL
oriented company. 2) KESC
3) NBP
do not comply with criteria of
a market-oriented company.
 STEPS NEEDED TO IMPLEMENT THE MARKETING
CONCEPT
A. ROLE OF TOP MANAGEMENT
1) be first to change to
“customer focused”
attitude and behavior. role
model. if they don’t do so,
others will not do so.
2) set objectives and
incentives which are
customer-focused.
3) promote market-oriented
executives in all
departments.
B. TRAINING IN CUSTOMER-
ORIENTATION AND BASIC
MARKETING
to create “customer focused
attitude and behavior” in
everybody. customer-
oriented culture.
C. stating in everybody’s job
description how his / her job
affects cs.
 WHEN MARKET-ORIENTATION
MAY BE INAPPROPRIATE

 prevention by law
 professionally marketing is considered unethical
 in times of scarcity
STATUS OF MARKETING IN SERVICES COMPANIES
 TWO CONFLICTING VIEWS
a) marketing is less used / developed in services
REASONS
1) problems created due to specific
characteristics of services.
2) opposition to marketing from some professions
3) many services organizations are small and in direct
contact with customers, therefore, such businesses do
not need marketing
4) demand is greater than supply.
5) some services COS have monopoly or
no / little competition.
5) prevented by law.
6) poor quality of management personnel in some services
cos. they are not trained in marketing.
7) overall lack of availability of “marketing know-how” about
services marketing.
b) SERVICES COMPANIES USE / HAVE DEVELOPED MARKETING

REASONS
1) positive change in attitude towards marketing in services COS
during the last 30 years. EG: BIA, hotels, car rental COS etc..
2) are successfully fighting competition.
3) have successfully introduced new s. products. EG: credit
cards, consumer financing schemes, new insurance policies,
different educational courses etc.
4) removal of legal / professional barriers.
5) movement of marketing personnel from manufacturing
businesses to services cos.
6) development of services marketing know-how and teaching
services marketing in business schools
 STATUS OF MARKETING
IN SERVICES COMPANIES

CONCLUSION
use of marketing in services COS is slow, less spread and
poorly structured but it is developing.
 THREE TYPES OF MARKETING IN A SERVICE COMPANY

1) EXTERNAL MARKETING
find needs of tm and make an appropriate m-mix to serve /
satisfy the customers.win and retain them
2) INTERNAL MARKETING
select, train, coach, develop, motivate and compensate
employees to serve customers well.
create ability, willingness and job matching personality
3) INTERACTIVE MARKETING
teach customers’ serving skills (touch skills) such as
courteously, concern, gracefulness etc. actual delivery of
service takes place during interactive marketing
 THREE TYPES OF MARKETING IN A SERVICE COMPANY

COMPANY

INTERNAL
MARKETING
EXTERNAL
MARKETING

EMPLOYEES CUSTOMERS
INTERACTIVE MARKETING
MARKETING-MIX IN SERVICES AND
MARKETING STRATEGIES
 MARKETING-MIX IN SERVICES BUSINESS

WHAT
marketing-mix means a combination of seven variable and
controllable elements of marketing, determined by keeping in
mind the marketing environment and the tm, to achieve
company’s commercial and financial objectives, in the most
efficient way, via customer satisfaction
 different companies choose different marketing- mix,
according to their tm.
 changing one element of marketing mix, affects the other
elements.
EXTERNAL UNCONTROLLABLE FACTORS WHICH MAKE
THE MARKETING ENIRONMENT
 political/legal factors
 economic factors
 cultural/social factors
 demographic factors
 geographic factors
 technological factors
 competitive factors
a) influence CB, m-mix, all companies
b) not knowing the m e is like a bird without FEATHERS(SAADI)
c) it is useless to tell a river to stop running.
best is to learn swimming in the direction it is flowing (Chinese
proverb)
 MARKETING-MIX IN SERVICES BUSINESS

 seven elements
4 traditional + 3 new ones
 ignoring any of them can lead to failure.
 customers heavily rely on price, people and physical
environment/ evidence to judge the quality of a service
product.
 REASONS FOR EXPANDING M-MIX FOR SERVICES

1. traditional m-mix not sufficient to make customers buy and

satisfy them
2. heterogeneity characteristic necessitates inclusion of
processes
3. inseparability characteristic necessitates inclusion of people.
a) people who create and deliver the service. service
provider
b) people who receive the service. The customer, other
customers
4. need for quality service also necessitates inclusion of physical
environment and physical evidence
 WHY MARKETING STRATEGIES FORMULATION IS
DIFFICULT IN SERVICES
 UNIQUE CHARACTERISTICS OF SERVICES :
 unlike goods, intangibility characteristic of services
makes consumer’s choice of different competing
products difficult. opinion can be obtained from
others.
 inseparability makes marketing strategy of services
localized. relatively difficult to sell services on
nationwide basis.
 perishability makes storage of services impossible,
thus, planning supply and demand of services is difficult
 heterogeneity makes ensuring of uniform quality
difficult.
CUSTOMER SATISFACTION (CS)
 CUSTOMER SATISFACTION (CS)
 WHAT IS CS?
a feeling of pleasure created in the mind of a customer, when
the actual product or brand performance matches with the
buyer’s expected product performance, on use, and which
makes a customer re-purchase the product.
 satisfied customers are an appreciating asset.
 they should be the goal of marketing and also they should be
used as a tool in promotion.
SALES AND PROFIT IS NOT THE
OBJECTIVE OF MARKETING,
IT IS THE BYPRODUCT AND
REWARD OF
CUSTOMER SATISFACTION.
 LEVEL OR DEGREE OF CS
1) JUST SATISFIED CUSTOMERS
APP = EPP
show loyalty towards the product or brand and they may
repeat purchase.
2) HIGHLY SATISIFIED OR DELIGHTED CUSTOMERS
APP > THAN EPP
show high loyalty towards the product or brand due to
both emotional and rational affinity. they will repeat
purchase.
3) DIS-SATISFIED CUSTOMERS
APP IS <THAN EPP
customer switches to another product or brand
 BENEFITS OF CS
A SATISFIED CUSTOMER
 buys again
 talks favorably to others.
 pays less attention to competing brands and to their
promotion.
 buys other products of the same company.
 makes easy to increase price by a reasonable margin.
CHAIN OF EVENTS RESULTING FROM CV AND CS
CV

FIRST TIME PURCHASE

APP
MATCHES / EXCEEDS EPP

BRAND LOYALTY

REPEATS PURCHASE

INCREASE IN SALES AND MS

(COMMERCIAL OBJECTIVES)

EOS
(TOTAL UNIT COST REDUCES)

INCREASE IN PROFIT, ROI, DIVIDEND

(FINANCIAL OBJECTIVES)
 METHODS OF TRACKING CS
 track both own and major competitors’ CS level
 FOUR METHODS:
1) complaint and suggestion system
- through a form, toll-free telephone number, fax, e-mail etc., the
company motivates customers to give feedback (likes / dislikes),
on using the product.
- often used by restaurants, hotels, airlines, petrol stations, hospitals
etc
- less than 5% customers complain / give suggestions. think won’t
do any good
- switch if not satisfied.
- not a good method.
2) customer satisfaction survey
- periodically.
- the company interviews
customers in person, over telephone or mails a questionnaire to a random sample of tm
customers, to get feedback on their level of CS, both on own and competitors’ brands.

3) ghost or mystery shopping

- a ghost shopper is a hired customer.
- shopping by a ghost shopper, both of company’s and competitors’ products. his report,
containing findings, forms basis of CS level.

4) lost customer analysis and interview with ex-customers

a) the company monitors trend in customer loss rate and
b) interviews ex-customers
 SERVICE PRODUCT

a) product mix and product mix dimensions

b) quality
c) quantity
d) branding
e) reliability
f) warranty
 THE SERVICE PRODUCT
 the first and the most important element of the m-mix in services. no
amount of promotion or price advantage will be helpful if the S.PRODUCT
is bad and does not conform to the customer’s requirements.
 S.PRODUCT may be
a) consumer service product
b) business service product
c) people- based
d) equipment-based

 to analyze and plan a service product in details, it is better to divide it

into 5 levels.
 each level adds both:
a) customer value(benefits) and
b) cost
 FIVE LEVELS OF A SERVICE PRODUCT
consumer
p. e
nvi benefit
ple ron
peo me concept
nt
or core
cr
del product level

brn
comp
service
primary and concept or
additional basic
benefit(s) expected
xs sought co product level

qlty

fs
service
a nty
rr offer or
wa augmented
pro product
service c es level
s
delivery f. equipment potential
system product
level
 CONSUMER BENEFIT CONCEPT
CORE PRODUCT LEVEL
 this level shows primary and additional benefits which
tm customers want.
FOR EXAMPLE: a hotel guest wants:
1.rest, comfort
2.sleep
3.facilities for personal preparation
4.room service
5.availability of snacks
6.pleasant view etc.
as benefits, when he rents a hotel room.
 thus, benefits should be central or the main
focus in designing a hotel room or any S.PRODUCT.
 main and additional reasons for purchase
 CONSUMER BENEFIT CONCEPT
CORE PRODUCT LEVAL
 primary and additional benefits may change overtime, thus,
need for updating a S.PRODUCT periodically.
 benefits may be:
a) rational
b) emotional
 SERVICE CONCEPT
BASIC EXPECTED PRODUCT LEVEL
 means the basic service product expected by the customer,
based on primary and additional benefits sought. it includes
composition/ components, brand name, company name, features,
quality etc.

FOR EXAMPLE
“rest, sleep and facilities for personal preparation”
would mean a hotel room having:
- comfortable bed, bed sheets etc.
- suitable furniture
- ALMIRAH
- bathroom with necessary facilities
- quiet environment
 give CS
 SERVICE OFFER
THE AUGMENTED PRODUCT LEVAL
 the service product offered by the company or the actual S.PRODUCT
which the customer gets.
 service offer is made up of:
a) service concept / the basic expected product plus
b) extra unexpected services offered by the company and
c) SSP
- used as CAS/DAS for product positioning and for CUSTOMER’S
DELIGHT.
EXAMPLES:
A) HOTEL ROOM
free stay of children, complimentary breakfast, late check-out, TV,
fresh flowers, air port pick-up and drop, in house movies, credit facilities
B) FLIGHT
movies, music, duty free merchandize selling, air to ground
telephone facilities, anniversary celebrations etc.
 TWO ASPECTS OF SERVICE OFFER
AUGMENTED PRODUCT LEVEL

1. service elements
2. service quality and quantity
 ELEMENTS OF SERVICE OFFER AGUMENTED
PRODUCT LEVEL
 two types of elements
A) INTANGIBLE ELEMENTS
FOR EXAMPLE:
in air travel, the intangible elements are:
punctual, frequents & convenient flights,
pre-flight services, in-flight services.

B) TANGIBLE ELEMENTS (IN AIR TRAVEL)

comfortable seat, good food / drinks,
magazines, news papers, duty-free merchandize etc.

 attention must be paid to both types of elements. both must be controlled.

tangible elements are easy to manage / control.
 ELEMENTS OF SERVICE OFFER AGUMENTED
PRODUCT LEVEL
 not all the elements are provided by the company. some
elements are provided by the customers themselves. these are
difficult to control, EG other guests / passengers’ behavior in a
restaurant or on a flight.

 affect quality of service product and reputation of the company.

 SERVICE QUALITY AND QUANTITY

 it means quality and quantity of benefits as judged by the customer.

 QUALITY OF SERVICE
- degree or level of primary and additional benefits
of the service offer.
- problem to standardize and maintain quality in
people-based services. quality affects size of demand
and product positioning.
 QUANTITY OF SERVICE
- amount of service benefits given,
FOR EXAMPLE:
amount of attention given to a guest in a restaurant.
 POTENTIAL PRODUCT LEVEL

 means all the possible features/ benefits which can be added in

the current product, in future
 THE SERVICE DELIVERY SYSTEM
how a S.PRODUCT is delivered to the customer?
the system used to deliver the S.PRODUCT to the customer. important
and integral component of a service product. the two (sp and SDS) are
inseparable. affects quality and cs.
 element of service delivery system
a) people involved
1) company’s own staff
 customer contact staff
 customer non-contact staff
2) customers (their behavior, appearance)
 the customer
 other customers
b) physical evidence (environment / setting)
 place where service is delivered
 building, interior lay-out, décor etc
c) facilitating equipment
d) process used
 FACTORS WHICH INFLUENCE
A SERVICE COMPANAY’S PRODUCT LEVELS

1) primary and additional benefits sought by the

customers
2) composition of intangible and tangible elements of a
service product
3) quality of sp elements
4) quantity of sp elements
5) cost of S.PRODUCT
6) service delivery system
 DIFFICULTIES ARISING IN TRANSLATING
“SERVICE CONCEPT” INTO “SERVICE OFFER”

1) which extra intangible and tangible elements to provide

2) difficulties in controlling various elements, particularly

those provided by the customer (s).

3) cost keeping rising with each extra service / SSP

DIMENSIONS OF PRODUCT MIX
 PRODUCT-MIX AND PRODUCT-LINE

 few companies rely on a single product, most sell many

products.

 product-mix:-
a company’s assortment of products, new and old, offered to
tm customers for CS / CD and to achieve company’s objectives.

 product-line:-
a group of closely related products which have similar uses /
functions, tm customers, prices and which are distributed
through the same channel.

 each product-line is usually handled by a separate team of

executives (group pm, PMS/BMS)
 DIMENSIONS OF PRODUCT-MIX
 three dimensions of product-mix
1) product-mix breadth / width
i. this means number of product - lines carried by a company.
ii. takes a long time to develop and add a product-line.
iii. mix extension.
iv. costs lot of money. risky
v. decision at highest level.
2) product-line length
this means number of different brands in a product line

3) product line depth

variants of brands within a product-line.
both number 2) and 3) are line-extensions.
take less time and investment.
less risky. decisions at mm / GPM level
 SERVICE PRODUCT-MIX OF A HOTEL
PRODUCT-MIX WIDTH OR BREADTH

AUTO
MEETING RENTAL CURRENCY
GUEST RESTAU- OUT-DOOR EXCHANGE
ROOMS RANTS ROOMS SERVICES CATERING SPORTS

•tennis •TCS
• normal • Pakistani •seminar hall •food •squash
rooms • Chinese •training rooms •CNS
•arrangements •swimming
single • continental •personnel •indoor
double • Thai games
PRODUCT- •executive • Japanese •cars •golf
LINE LENGTH single •coaches
AND double
DEPTH • suites
• e-rooms
• honeymoon
rooms
 DIMENSIONS OF PRODUCT-MIX

 a company can expand its product-mix and grow by adding new

product-lines or by increasing product-line length or depth.

 a company can also prune/contract its product-mix by

eliminating a product-line or a product/brand / variant
 FACTORS TO CONSIDER
WHEN EXPANDING THE PRODUCT-MIX
1) size and growth rate of segment / market
2) match with company’s
 objectives
 resources
 management know-how
3) will the NSP complement the existing S.PRODUCTS
4) will it give optimum product-mix range.
width, length and depth.
litmus test :
increase in profitability
5) will it have distinct positioning
6) less price sensitivity, bargaining power
7) less availability of substitutes
 FACTORS TO CONSIDER
WHEN PRUNING THE PRODUCT-MIX

 GIVE NO IMPORTANCE TO SENTIMENTS.

1) can we revitalize it
2) can we sell it abroad
3) will it improve profitability
4) resources saved can be allocated to more successful
products
5) no disruptive effect on overall operation
NEW SERVICE PRODUCT
 A NEW SERVICE PRODUCT
 SEVERAL WAYS TO DEFINE A NSP
1) me-too product
new to the company but already available from another
company.
2) adapted product
already available but adapted for a new market segment.
EG: telephone booths
3) innovation
NSPS showing substantial improvement over the
existing sp to better satisfy needs.
EG: mobile telecommunication
4) invention
a totally new service product, not previously available
and which meets an unsatisfied need. creates a new
product class
EG: satellite TV communication.
5) an existing service but delivered through a new SDS.
EG: banking services through ATMS.
 SOURCES OF NEW SERVICE PRODUCTS

 acquisition
 through new product development process
 WHY SERVICES COMPANIES NEED
TO DEVELOP NEW SERVICE PRODUCTS

1) cannot continue to rely on existing s. products for success.

2) to increase sales, ms, profit and the need to remain competitive by
meeting changing requirements of customers.
3) to replace outdated s. products.
4) to utilize unused capacity/facilities. examples: unused space/
facilities in a sports centre.
5) to smooth-out seasonal demand. Examples: marriage halls for
meetings / examination centre during off-season.
6) to reduce dependency on too-few products banks have many service
products
7) to exploit opportunities when a competitor may drop-out or new
needs of customers may come-up.
8) to maintain reputation of being leaders in brand
 WHY LACK OF NSPs IN SERVICE COMPANIES

 most services companies, except BIA do not have a product

development department.

reasons:
 many services companies are in the public sector, with little
competition / monopoly. lack of motivation to innovate.
 lack of resources financial,
management. etc. mostly small companies.
 cannot be patented
less incentive to develop a NSP. focus on me-too
products.
 concept testing is difficult home-
use tests are also difficult
 high cost of new service product development
 high failure rate of NSPS
 FAILURE OF NEW SERVICE PRODUCTS

 70-80% FAILURE RATE

REASONS:
1) the basic service product expected by the customer, is not well
designed. not based on the benefits sought by the tm
customers.
2) lack of company-client interface during the development
process of a NSP.
3) wrong criteria used in market segmentation and product
positioning. these are not customer wanted criteria.
4) good NSP but market potential has been overestimated.
5) faulty pricing, promotion, distribution or SDS
6) inaccurate / unhealthy spread of image of a NSP by customers
7) competitors fight harder than expected
 STAGES IN NEW SERVICE PRODUCT
DEVELOPMENT PROCESS
1. IDEAS GENERATION
starting point, create as many new ideas as possible ideas may
come either from inside or outside the company, via:
a) brainstorming session
b) suggestion box
c) marketing research, focus group, individual interviews
d) visit to other countries.
 most ideas usually come from customers.
2. IDEAS SCREENING BY A MANAGEMENT TEAM separate workable
ideas from non-workable ideas by a management team, on the
following criteria, to justify use of resources
 additional manpower, space, machines required.
 commercial aspects.
 development time.
 survived idea(s).

3. concept development and concept testing.

a) concept development
develop a meaningful verbal and pictorial description of the
survived business proposal
b) concept testing
test the product concept with a suitable number of tm
customers, using verbal and pictorial description, to judge their
understanding and liking / disliking.
4. DETAILED BUSINESS ANALYSIS OF THE PRODUCT BASED ON THE
SELECTED IDEA
a) estimated sales, costs and profit for three consecutive years
b) probability of success or failure of NSP.
c) possible response / reaction of competitors.

5. DEVELOPMENT OF THE NEW S. PRODUCT FOR TRIAL

translate the NSP idea/proposal, as passed by the tm customers,
into the new service product this means:
i. investment
ii. hiring and training of staff
iii. construction of operational facility
iv. designing SDS.
6. MANAGEMENT’S FINAL DECISION
GO / NO GO

7. TEST MARKETING

8. COMMERCIALIZATION OF NSP
a) when
b) where
c) how
stage 1,2,3 and 4 do not involve much costs. many s. products fail
at these stages. other stages involve lot of costs.
 NEW SERVICE PRODUCT CONCEPT TESTING

 usually, concept testing is ignored in services.

 PROBLEMS IN CONCEPT TESTING :

1) concept testing is difficult of a service product because describing
something which is mostly intangible, is very difficult.
2) results vary too-much, which depend on :
– service provider
– physical environment
– the customer
3) home-use tests are not possible.

 BENEFITS OF CONCEPT TESTING :

1) opportunity to evaluate a s. product before its creation and introduction.
2) opportunity to get input on the specifications (intangible and tangible
elements) of a new s. product, from the users.
 DIFFICULTIES FACED
IN INNOVATING SERVICE PRODUCTS
 research and development is not well developed in services
companies as compared to in manufacturing companies.

REASONS:
1) developing the desired specifications of a new S.PRODUCT is
difficult, particularly of people- based services.
2) testing of new services is difficult.
3) great risk of being quickly copied. cannot be patented.
Examples:
a) airlines (films, duty free items)
b) banks (various kinds of accounts)
4) lack of new ideas in service innovation
QUALITY IN SERVICES COMPANIES
 QUALITY IN SERVICES COMAPANIES

TWO TYPES OF QUALITY

1) quality of the service product

2) quality of the service delivery system, particularly the

appearance and behavior of customer contact staff,
quality of customers and quality of physical environment.
 SIGNS OF QUALITY SERVICE

1) people
 own
customers contact staff
customers non-contact staff
 customers
the customer
other customers
2) physical environment and evidence
3) facilitating equipment
4) processes
5) price
 SERVICE QUALITY MODEL
five gaps that cause quality problems and, thus, these must be closed.
1) gap between consumer expectations and management’s
understanding

2) gap between management’s understanding and service-quality

standards.

3) gap between service-quality standards and the actual service delivery

4) gap between the actual services delivery and the promotional claims

5) gap between the actual service and the expected service

 SERVICE QUALITY MODEL

EXPECTED SERVICE

5
ACTUAL SERVICE PROMOTIONAL
DELIVERED CLAIMS
1 4
3

MANAGEMENT’S
SERVICE QUALITY
STANDARDS

2
MANAGEMENT’S
UNDERSTANDING
OF CONSUMERS
EXPECTIONS
HOW TO MAINTAIN QUALITY IN A SERVICE BUSINESS
1) be customer focused. know tm customers and their needs

2) top management’s commitment to quality

they must act as a role model of quality management can
show its commitment to quality by:
a) by setting objectives and incentives based on quality
job done and not on quantity job
b) promote quality oriented people in all departments
c) provide TQM training to everybody

3) set high quality standards

EG:
i. Swissair- 96% CS
ii. Citibank – phone call answered within 10 seconds
iii. customers letter answered within two days
4) have a system for monitoring service performance
i. own
ii. major competitors
via ghost shopping, customer surveys, suggestions and
complaint form / toll free telephone number

5) have a system to resolve complaints quickly

6) satisfy both employees and customers

7) state in everybody’s job description how his job affects

customer satisfaction
HOW TO DEFEND MARKET POSITION?
 HOW TO DEFEND MARKET POSITION

• CREATE DIFFERENTIATION TO DEFEND

• WHAT IS DIFFERENTIATION ?
• DESIGNING AND BUILDING MEANINGFUL, BELIEVABLE,
AFFORDABLE AND SUSTAINABLE DIFFERENCES IN THE M-
MIX ELEMENTS, APPLICABLE TO MOST CUSTOMERS, FOR
COMPETITIVE ADVANTAGE,POSITIONING AND FOR
CUSTOMER SATISFACTION
 HOW TO DEFEND MARKET POSITION

• EIGHT WAYS TO CREATE DIFFERENTIATION :

1) OFFER EXTRA SERVICES AND SSPs.
EXTRA SERVICES / SSPs CAN BE EASILY COPIED.
2) HAVE BETTER SERVICE DELIVERY SYSTEM
BETTER TRAINED, MOTIVATED AND MORE EXPERIENCED PEOPLE,
P. ENVIRONMENT/ EVIDENCE, FACILITATING EQUIPMENT AND
PROCESSES.
MAKE PROCESSES AUTOMATED / MECHANIZED FOR UNIFORMITY
IN QUALITY
3) EXTENSIVELY USE A SYMBOL OR A LOGO OR A BRAND NAME TO
FIX THE IMAGE OF THE COMPANY.
EG HOTELS.
 HOW TO DEFEND MARKET POSITION

4) MAKE EASY FOR THE CUSTOMER TO ORDER / GET THE

SERVICE.
5) OFFER SERVICE WARRANTY
6) ADD FEATURES
7) PERSONAL INVOLVEMENT BY HIGHER MANAGEMENT.
FREQUENT FOLLOW-UP CONTACTS BY CUSTOMER CONTACT
STAFF
8) ON-TIME COMPLETION OF WORK
MANAGING PRODUCTIVTIY IN SERVICES
 MANAGING PRODUCTIVITY IN SERVICES

• VARIOUS COSTS ARE GOING-UP AND AN INCREASE IN PRICE

IS LIMITED BY COMPETITION AND GOVT. REGULATIONS.
THUS, NEED FOR PRODUCTIVITY TO KEEP THE COSTS
DOWN.
• FOUR METHODS TO IMPROVE PRODUCTIVITY
1) HIRE AND DEVELOP MORE SKILLFUL WORKERS.
2) S. PROVIDER TO WORK WITH A BIG GROUP
EXAMPLES:
A DOCTOR HANDLING MORE PATIENTS, EACH GETTING LESS
TIME.
QUALITY MAY SUFFER TO SOME EXTENT.
 MANAGING PRODUCTIVITY IN SERVICES

3) USE AUTOMATED EQUIPMENT AND STANDARDIZED PROCESSES.

EXAMPLE:
SOUTH - WEST AIRLINE USES AUTOMATED EQUIPMENT FOR TICKET
PURCHASING AND BOARDING PASSES.
4) INTRODUCE SELF-SERVICE TO REPLACE SERVICE FROM THE CO’s
STAFF.
EXAMPLE:
KFC-SALAD BAR
BRANDING, WARRANTY AND
AFTER SALE SERVICES
 BRANDING

• SERVICE PRODUCT BRANDING

BRANDING MEANS GIVING A NAME, SYMBOL AND A NUMBER TO A PRODUCT IN
ORDER TO DIFFERENTIATE ONE PRODUCT FROM ANOTHER.
IN THE PAST, BRANDING WAS MAINLY USED IN CONSUMER GOODS. TODAY IT IS
ALSO BECOMING POPULAR IN SERVICES.
• BRAND, BRAND NAME ,TRADEMARK
EXAMPLEX
MOAVAN ACCOUNT (FAYSAL BANK)
IZAFA TERM CERTIFICATES (FAISAL BANK)
INDIGO (MOBILINK)
DJUICE (TELE NOR)
JAZZ (MOBILINK)
SMART (TELENOR)
BAHBOOD SAVING CERTIFICATES (NATIONAL SAVINGS)
 SERVICE PRODUCT WARRANTY

AN UNDERTAKING BY A SELLER THAT THE SERVICE SOLD IS

FIT FOR USE OR WILL PERFORM AS SPECIFIED. IMPORTANT
IN CERTAIN SERVICES.
FOR EXAMPLE
– MUTUAL FUNDS
– TERMS CERTIFICATAES ISSUED BY BANKS
– GOVERNMENT SECURITIES
BUILDS CONFIDENCE IN THE SP / CO.
 AFTER SALE SERVICES

• GIVING SOME EXTRA SERVICE AFTER HAVING USED THE MAIN SERVICE.
• POPULAR IN SOME SERVICES
FOR EXAMPLE,
AIRLINES HELPING PASSENGERS IN HIRING TRANSPORT / BOOKING HOTEL
ACCOMMODATION.
PRICE
 MARKETING-MIX IN SERVICES

PRICE
• DEFINING PRICE
• IMPORTANTACE OF PRICE FOR THE COMPANY AND THE CUSTOMER
• PRICING OBJECTIVES
• FACTORS WHICH AFFECT PRICE DETERMINATION
• PRICING METHODS
• PRICING STRATEGIES
• PRICE LEVELS
• DISCOUNTS
• PAYMENT MODES AND TERMS (MOP, TOP)
 PRICING
• DEFINITION:-

A) AMOUNT OF MONEY NEEDED BY A

CUSTOMER TO OBTAIN A PRODUCT. IT
GENERALLY INCLUDES THE PRICE OF
PSS OR SSP OFFERED BY THE
COMPANY.
B) WORTH OR VALUE OF BENEFITS OF A
PRODUCT IN THE MIND A CUSTOMER,
MEASURED IN SOME MONETARY UNITS.
 PRICE UNDER VARIOUS NAMES
IN SERVICES MARKETING

• TUITION FEE
• INTEREST RATE
• RENT
• FARE
• FEE
• PREMIUM
• SALARY
• WAGE
• BRIBE
• INCOME TAX
• TOLL TAX
• HONORARIUM
 CHARACTERITCS OF PRICE
1) AN ELEMENT OF M-MIX. IT MUST BE
CUSOMTER-ORIENTED
2) UNLIKE OTHER Ps OF M-MIX, PRICE GENERATES REVENUE,
OTHER ELEMENTS INCUR COSTS.
3) UNLIKE OTHER Ps OF M-MIX, PRICE CAN BE CHANGED
QUICKLY. IT IS THE MOST FLEXIBLE ELEMENT OF M-MIX
4) SETTING PRICE AND FIGHTING PRICE COMPETITION IS
NUMBER ONE PROBLEM FACING THE MARKETING
EXECUTIVES.
 PRICING OBJECTIVES
1. MAXIMIZATION OF CURRENT PROFIT
2. HIGH CURRENT SALES VOLUME AND MS
3. TO REFLECT PRODUCT QUALITY LEADERSHIP
4. TO BE ENSURE SURVIVAL OF THE COMPANY. SHORT TERM OBJECTIVE.
5. TO MAINTAIN STATUS QUO OF THE CURRENT PRICE LEVEL IN THE
MARKET AND TO AVOID A PRICE WAR

• MANAGEMENT MUST DECIDE PRICING OBJECTIVES BEFORE SETTING THE

PRICE

THE CLEARER A FIRM IS ABOUT ITS PRICING OBJECTIVES,

THE EASIER IT IS TO SET THE PRICE.
 FACTORS WHICH INFLUENCE
PRICE DETERMINATION
A) INTERNAL FACTORS:-
1. PRICING OBJECTIVES.
2. PRODUCT POSITIONING AND M-MIX STRATEGIES.
3. PLC
4. PRODUCTION CAPACITY
5. TOTAL PRODUCT COST.
A COMPANY SHOULD TRY TO BE A LOW-COST PRODUCER
IT SETS THE FLOOR PRICE OF THE PRODUCT.
 FACTORS WHICH INFLUENCE
PRICE DETERMINATION
AT A CERTAIN LEVEL OF PRODUCTION, THE TOTAL
COST OF A PRODUCT IS MADE-UP OF:
1. VARIBLE PRODUCT COSTS (VPC)
THEIR TOTAL VARIES WITH THE QUANTITY PRODUCED OR SOLD. EG:
CONSUMABLES, RMs, PMs ETC.
2. FIXED COSTS OR OVERHEADS (FC)
THEIR TOTAL DOES NOT VARY WITH LEVEL OF PRODUCTION OR SALES.
EG: SALARIES OF EXECUTIVES, RENT, DEPRECIATION ETC.

• TOTAL COST IS THE SUM TOTAL OF FIXED AND VARIABLE COSTS FOR A
CERTAIN LEVEL OF PRODUCTION.
 FACTORS WHICH INFLUENCE
PRICE DETERMINATION
B) EXTERNAL FACTORS:-
1) CUSTOMERS’ PERCEIVED VALUE (CPV). IT
SETS THE CEILING PRICE OF A PRODUCT
CPV INDICATES:-
A) PRODUCT’S WORTH OR VALUE IN THE MIND
OF TM CUSTOMERS.
B) PAYING CAPACITY OF TM CUSTOMERS.
CPV IS DETERMINED VIA MARKET RESEARCH ON A
REPRESENTATIVE SAMPLE OF TMCs,

• EFFECTS OF CUSTOMER PERCEIVED VALUE (CPV):

1) PRODUCT PRICE > CPV CUSTOMER DOES NOT BUY
2) PRODUCT PRICE < CPV CUSTOMER BUYS
2) PRODUCT PRICE = CPV BUYS OR BARGAINS.
 FACTORS WHICH INFLUENCE
PRICE DETERMINATION

2) ESTIMATED VOLUME DEMAND AT DIFFERENT PRICES.

3) ELASTIC OR INELASTIC DEMAND.
4) MAJOR COMPETITORS’ PRICES AND THEIR EXPECTED REACTION.
5) STAGE IN THE ECONOMY CYCLE AND THE PREVAILING ECONOMIC
CONDITIONS (INFLATION, INTEREST RATE, EXCHANGE RATE)
6) POSSIBILITY TO CHANGE THE PRICE IN FUTURE.
7) POSSIBILITY OF GOVT. INTERVENTION.
8) FAIR PROFIT TO RESELLERS TO GAIN THEIR SUPPORT.
 MAJOR METHODS OF SETTING PRCIE

1) COST-PLUS, MARK-UP OR COST-BASED PRICING METHOD.

2) BREAK-EVEN ANALYSIS OR TARGET RETURN PRICING
METHOD.
3) COMPETITION-BASED PRICING METHOD OR GOING RATE
PRICING METHOD.
4) CUSTOMER PERCEIVED VALUE PRICING METHOD.
5) VALUE PRICING METHOD
6) SEALED-BID PRICING METHOD.
 MAJOR METHODS
OF SETTING PRICE OF A SERVICE PRODUCT
1. COST - PLUS OR MARK-UP PRICING METHOD
ADDING A CERTAIN MARK-UP TO THE TOTAL COST OF PRODUCING ,
MARKETING AND DELIVRING A SERVICE PRODUCT TO CUSTOMERS.
• IT HAS THREE STEPS
1) CALCULATE TOTAL VARIABLE AND FIXED COST PER UNIT
2) DECIED MARK-UP AND
3) ADD MARK-UP TO THE TOTAL UNIT COST, USING THE FOLLOWING FORMULA
PRICE = TOTAL UNIT COST
1.0 - % MARK-UP
 MAJOR METHODS
OF SETTING PRICE OF A SERVICE PRODUCT
COST- PLUS PRICING METHOD IS FURTHUR
DIVIDED INTO:
a) PROFIT-ORIENTED COST-PLUS PRICING
b) GOVERNMENT CONTROLLED COST-PLUS PRICING
 MAJOR METHODS
OF SETTING PRICE OF A SERVICE PRODUCT
2. MARKET- BASED OR COMPETITION-BASED PRICING
MEATHOD
FIXING THE PRICE OF A SERVICE KEEPING IN MIND THE
PRICE OF STRATEGIC COMPETITORS
• POPULAR, WHY?
• SIMPLE, COLLECTIVE WISDOM
 MAJOR METHODS
OF SETTING PRICE OF A SERVICE PRODUCT
• SERVICE PROVIDER’S PRICE MAY BE:
a) SAME AS THAT OF MAJOR COMPETITORS. NO PRODUCT
DIFFERENCES. COST NOT CONSIDERED.
b) BELOW THAT OF MAJOR COMPETITORS. TWO
DRAWBACKS:
– PRICE WAR
– SERVICE USER PERCEIVES LOW QUALITY OF SP.
c) ABOVE THAT OF MAJOR COMPETITORS
– DISTINCT BENEFITS, DISTINCT OR EXTRA SERVICES AND SSPs
– S.PROVIDER HAS HIGH IMAGE/ PRESTIGE/ SDS
 MAJOR METHODS
OF SETTING PRICE OF A SERVICE PRODUCT
3) CUSTOMER PERCEIVED VALUE PRICING METHOD
SET PRICE CLOSE TO THE WORTH OF SP AS PERCEIVED BY TM
CUSTOMERS. FIND VIA MR.
COST IS CONSIDERED.
• IT HAS FOUR STEPS :
• FIND TOTAL PER UNIT COST
• FIND OUT CPV VIA MARKETING RESEARCH
• KNOW STRATEGIC COMPETITORS’ PRICE
• FIX PRICE OF THE SERVICE PRODUCT CLOSE TO THE CPV, KEEPING THE
MIND THE PRICE OF STRATEGIC COMPETITORS.
 PRICING STRATEGIES

1. DIFFERENTIAL / FLEXIBLE DISCRIMINATORY PRICING

STRATEGY
TWO OR MORE PRICES OF THE SAME SERVICE TO ACCOMMODATE
DIFFRENCES IN CUSTOMERS, LOCATIONS AND TIMINGS, etc
 PRICING STRATEGIES

• THREE SUCH PRICING STRATEGIES, EACH FOR A

DIFFERENT PURPOSE.
a) CUSTOMER- SEGMENT FLEXBLE PRICING STRATEGY
b) LOCTION FLEXIBLE PRICING STRATEGY
c) TIME FLEXIBLE PRICING STRATEGY
– MAJOR DISADVANTAGE:
CUSTOMERS GET HABITUAL, DELAY PURCHASES
 PRICING STRATEGIES

2. DISCRETE PRICING STRATEGY

QUOTING A PRICE WITHIN THE FINANCIAL AUTHORITY OF A DECISION
MAKER WHO HAS SYMPATHTIC ATTITUDE TOWARDS A SERVICE
PROVIDER.
3. DIVERSIONARY PRICING STRATEGY
OFFERING A LOW PRICE OF ONE OF THE MANY SERVICE PRODUCTS IN
ORDER TO DEVELOP AN IMAGE OF A LOW PRICE COMPANY AND TO
INCREASE CUSTOMERS TRAFFIC.
4. GUARANTEED PRICING STRATEGY
PAYMENT IS MADE BY A CUSTOMER ONLY IF CERTAIN RESULTS ARE
GUARANTEED OR DELIVERED BY THE SERVICE PROVIDER
 PRICING STRATEGIES

5. FIRST LOSS-ORDER PRICING STRATEGY

REDUCING PRICE FOR THE FIRST ORDER WITH THE HOPE OF GETTING
FUTURE BUSINESS AT A BETTER PRICE
6. OFFEST PRICING STRATEGY
THE PRICE OF THE BASIC SP IS LOW BUT EXTRA SERVICES OR SSP CARRY
HIGHER CHARGES
7. BUNDLE PRICING STRATEGY
OFFRING ONE PRICE OF A BUNDLE OF SERVICES WHICH IS LOWER THAN
THE SUM TOTAL OF INDIVIDUAL PRICES
8. TWO-PARTS PRICING STRATEGY
a) FIXED PART
b) VARIABL PART
 PRICE VS NON-PRICE COMPETITION
(A) PRICE COMPETITION
• PRICE IS THE PRIMARY BASIS FOR FIGHTING COMPETITION.
IT IS USED WHEN PRODUCTS ARE SIMILAR. PRICE IS SET AS
LOW AS POSSIBLE TO GAIN VOLUME SALES AND MS.
MINIMUM PSS ARE OFFERED.
• POSSIBILITY OF PRICE WAR. MOST COMPANIES WANT TO
AVOID IT AND, INSTEAD, PROMOTE THEIR PRODUCT ON
THE BASIS OF BETTER AVAILABILITY AND SPTs.
• CONSUMERS BENEFIT ON SHORT TERM BASIS. THEY BUY AS
LONG AS A BRAND’S PRICE IS LOWEST.
 PRICE VS NON-PRICE COMPETITION

(B) NON-PRICE COMPETITION

• PRICE IS NOT THE PRIMARY BASIS OF FIGHTING
COMPETITION.

• THE SELLER HAS A GOOD PRICE AND INCREASES

VOLUME SALES AND MS BY EMPHASIZING ON THE OTHER Ps
OF M-MIX
 ADDITIONAL CLASSFIFCATION BASIS OF
SERVICES FOR PRICING PURPOSE
• BASIS:
WHO REGULATES / CONTROLS THEIR PRICE
• THREE CATEGORIES OF SERVICES FOR PRICING PURPOSE:
1) SERVICES SUBJECT TO GOVERNMENT PRICE CONTROL
2) SERVICES SUBJECT TO FORMAL PRICE REGULATION BY TRADE BODIES
3) SERVICES SUBJECT TO PRICE REGULATED BY MARKET FORCES
DISCOUNTS
 DISCOUNTS

• PERCENTAGE REDUCTION IN THE LIST PRICE OF A PRODUCT.

• TYPES OF DISCOUNTS.
1. TRADE DISCOUNT:
FOR PERFORMING CERTAIN DISTRIBUTION
FUNCTIONS.
2. CASH DISCOUNT:-
FOR PAYING BILL WITHIN A SPECIFIED
PERIOD. E.G 2 \ 10 , NET / 30.
 DISCOUNTS

3. QUANTITY DISCOUNTS
TO ENCOURAGE CUSTOMERS TO BUY LARGE
QUANTITIES / AMOUNT. CAN BE ON:-
(a). NONCUMULATIVE BASIS
DISCOUNT BASED ON THE SIZE OF
EACH INDIVIDUAL ORDER.
ENCOURAGES LARGE ORDERS.
(b) CUMULATIVE BASIS
DISCOUNT BASED ON TOTAL VALUE OR
VOLUME PURCHASED IN A CERTAIN
PERIOD.
CUSTOMER IS TIED UP WITH THE SELLER.
E.G FFPs, FGPs
 DISCOUNTS

4. SEASONAL DISCOUNT:
SLACK / OFF-SEASON TO EVEN-OUT DEMAND
AND SUPPLY, TO AVOID INVENTORY COST.
5. PROMOTIONAL ALLOWANCE
FOR PROMOTIONAL SERVICES PERFORMED
BY THE MM.
EG: DISPLAYS, RETAILERS’ AD SHOWING SELLER’S
PRODUCT.
PLACE
 MARKETING-MIX IN SERVICES

PLACE
• LOCATION. ACCESSIBILITY
VIA PHYSICAL AND COMMUNICATION MEANS
• DISTRIBUTION CHANNELS
• DISTRIBUTION COVERAGE
 PLACE
DISTRIBUTION
• TWO ASPECTS/ DECISIONS
A. LOCATION OF SERVICES PROVIDER
SINGLE OR MILTI-SITE LOCATIONS
• FACTORS TO BE CONSIDERED IN LOCATION
1) DOES THE CUSTOMER GO TO THE SERVICE PROVIDER OR DOES
THE SERVICE PROVIDER GO TO THE CUSTOMER
2) ACCESSABLE VIA PHYSICAL AND COMMUNICATION MEANS
 PLACE
DISTRIBUTION
B. DISTRIBUTION CHANNEL STRUCTURE AND EXTENT OF
COVERAGE.
1. DIRECT DISTRIBUTION CHANNAL IS USED MOST OFTEN
2. INDIRECT DISTRIBUTION CHANNEL. USED LESS
3. EXTENSIVE, SELECTIVE OR EXCLUSIVE DISTRIBUTION
COVERAGE
PROMOTION
 MARKETING-MIX

PRODUCT PRICE PLACE PROMOTION

SALES
PERSONAL ADVERTISING PROMOTION PUBLIC PUBLICITY
SELLING TOOLS RELATIONS

MARKETING TOOLS FOR CS.4,5 OR 7

INTEGRATED / COORDINATED FOR IMC
 MARKETING-MIX IN SERVICES

• PROMOTION
TO INFORM, CONVINCE OR REMIND
STRESS ON AVAILABILITY, CONSISTENT SERVICE QUALITY,
PEOPLE, AND PHYSICAL ENVIRONMENT / EVIDENCE AND
LOCATION
• PROMOTIONAL-MIX:
1) PERSONAL SELLING
2) ADVERTISING
3) SALES PROMOTION TECHNIQUES
4) P. RELATIONS AND PUBLICITY
5) MAILING
 PROMOTION
DEFINITION

PURPOSE
TO COMMUNICATE WITH (TO INFORM, PURSUADE OR REMIND) AND
TO INFLUENCE TM CUSTOMERS TO USE COMPANY`S PRODUCT(S).

DEFINITION
PROMOTION IS TO INFORM, PERSUADE OR REMIND TARGET MARKET
CUSTOMERS OF A PRODUCT OR A COMPANY, THROUGH VARIOUS
METHODS OF PROMOTION, IN ORDER TO ACHIEVE MARKETING
OBJECTIVES.
 PROMOTIONAL METHODS

• FIVE MTHODS, EACH WITH DIFFERENT FEATURES AND

SUITABLE IN DIFFERENT PROMOTIONAL SITUATIONS.
1) PERSONAL SELLING (PS)*
2) ADVERTISING (AD)*
3) SALES PROMOTION TOOLS OR TECHNIQUES (SPTs)
4) PUBLIC RELATIONS (PR)
5) PUBLICITY (PB)
*PRIMARY METHOD .
• IMC
METHODS MUST BE COORDINATED FOR GREATEST IMPACT
a) SEQUENSE
b) SAME MESSAGE
 PROMOTIONAL METHODS
1) PERSONAL SELLING
• DIRECT PRESENTATION OF A PRODUCT TO A CUSTOMER OR A GROUP OF
CUSTOMERS, THROUGH A REPRESENTATIVE, EITHER IN A FACE TO FACE
SITUATION OR OVER PHONE (TELEMARKETING)
• DIRECTED AT INFLUENCERS, END-CUSTOMERS OR ON MIDDLEMEN.
MAJOR PROMOTIONAL METHOD FOR COMPLEX PRODUCTS, BUYER IS A
PROFESSIONAL.
• WORD OF MOUTH COMMUNICATION
• PERSUADE SATISFIED CUSTOMERS TO TALK TO OTHER CUSTOMERS
• ENCOURAGE POTENTIAL CUSTOMERS TO TALK TO SATISFIED CUSTOMERS
 PROMOTIONAL METHODS

2) ADVERTISING:
• NON-PERSONAL, MASS PROMOTION OF A PRODUCT OR A COMPANY,
THROUGH FIVE ADVERTISING MEDIA. PAID
• PRINT, BROADCAST & FILM, ELECTRONIC, DISPLAY AND TRANSIT MEDIA
• MAJOR PROMOTIONAL METHOD FOR SIMPLE PRODUCTS
 PROMOTIONAL METHODS
3) SALES PROMOTION TOOLS OR TECHNIQUES
• TEMPORARY AND SHORT TERM INCENTIVES, GIVEN TO SALES
REPRESENTATIVES, INFLUENCERS, MIDDLEMEN OR TO CONSUMERS,
IN ORDER TO ENCOURAGE QUICKER AND BIGGER SALE OR PURCHASE
OF A PRODUCT, DURING A SPECIFIED PERIOD.
• COMPARE SALE BEFORE, DURING AND AFTER A SALES PROMOTION
TOOL HAS BEEN USED, TO JUDGE EFFECETIVENESS OF SPTs
• SUPPORTIVE PROMOTIONAL METHOD TO PERSONAL SELLING OR
ADVERTISING.
 PROMOTIONAL METHODS
• THREE KINDS OF SALES PROMOTION TOOLS:
a) SALES FORCE INCENTIVES
b) TRADE INCENTIVES
c) CONSUMER INCENTIVES
• CHARACTERISTICS OF SALES PROMOTION TOOLS
1) YIELD FAST RESULTS
2) WORK BEST WITH A SUPERIOR PRODUCT.
3) BECOMING VERY POPULAR. WHY?
a) CUSTOMERS AND MM ARE BECOMING INCENTIVE / DEAL ORIENTED
b) COMPETITORS’ PRESSURE
c) MANAGEMENT’S PRESSURE ON PM & SALES EXECUTIVES
 PROMOTIONAL METHODS
4) PUBLIC RELATIONS
A VARIETY OF COMMUNICATION EFFORTS, MADE BY A COMPANY, TO CREATE A FAVOURABLE
ATTITUDE / OPINION OF VARIOUS PUBLICS * TOWARDS THE COMPANY OR ITS PRODUCTS SO THAT
SELLING BECOMES EASY. BUILDS RELATIONS.
• USUALLY, NO SPECIFIC PRODUCT PROMOTIONAL MESSAGE IS COMMUNICATED IN PUBLIC
RELATION EFFORTS.
• PR MODES / TOOLS:
NEWSLETTERS, LOBBYING (INFLUENCING VIA PERSONAL CONTACTS), SPONSORING EVENTS
(LITERARY, CHARITY, SPORTS, SCIENTIFIC), HOUSE MAGAZINE,RELEASING NEWS ABOUT COMPANY,
PEOPLE OR PRODUCTS ETC.
• USED AS A SUPPORTIVE PROMOTIONAL METHOD TO MAJOR METHODS OF PROMOTION.
*PUBLICS : STOCKHOLDERS, EMPLOYEES, CUSTOMERS, SUPPLIERS, PRESSURE GROUPS, SOCIETY,
GOVERNMENT, MEDIA PEOPLE, POLITICIANS ETC.
 PROMOTIONAL METHODS
5)PUBLICITY
• A SPECIAL FORM OF PUBLIC RELATIONS. INVOLVES RELEASING
NEWS, ARTICLES, PHOTOGRAPHS, HOLDING PRESS CONFERENCES
ETC., ABOUT A PRODUCT OR THE COMPANY, TO THE MASS MEDIA,
FOR PUBLICATION / BROADCASTING AS A “NEWS” ITEM. IT IS NON-
PAID
• HAS HIGH CREDIBILITY
• USED AS A SUPPORTIVE PROMOTIONAL METHOD TO MAJOR
METHODS OF PROMOTION
 PROMOTIONAL MIX
• AN APPROPRIATE COMBINATION OF PERSONAL SELLING, ADVERTISING,
SALES PROMOTION TECHNIQUES, PUBLIC RELATIONS AND PUBLICITY, IN
ORDER TO ACHIEVE PROMOTIONAL AND MARKETING OBJECTIVES.
• PROMOTIONAL OBJECTIVES
AWARENESS, KNOWLEDGE, LIKING, PREFERENCE, BUY, LOYALTY AND TO
HAVE BRAND NAME ON THE TOP OF MIND.
• MARKETING OBJECTIVES:
SALES, MS, GR, RANKING,RETAINING EXISTING AND DEVELOPING NEW
CUSTOMERS AND PROFIT.
 WHAT TO EMPHASIZE IN PROMOTION?
a) UNIFORM HIGH QUALITY SERVICE PRODUCT
b) CONVENIENT LOCATION
c) CONFORTABLE AND CLEAN PHYSICAL ENVIRONMENT
d) QUALITY OF SERVICE PERSONNEL COURTESY AND
ATTENTIVENESS
e) PERSONAL ATTENTION
f) EXTRA SERVICES
g) SSP
h) EASE OF PURCHASE
i) WHAT SATISFIED CUSTOMERS SAY
j) HIGH REPUTATION OF THE SERVICE COMPANY
PEOPLE
 MARKETING-MIX IN SERVICES

• PEOPLE
PLAY A CENTRAL ROLE IN BUILDING CS BY CREATING AND
DELIVERING THE SERVICE, PARTICULARLY “THE CUSTOMERS’
CONTACT STAFF”
• TWO CATEGORIES OF PEOPLE
a) CO’S STAFF
• CUSTOMERS’ CONTACT STAFF
• CUSTOMERS’ NON-CONTACT STAFF
b) CUSTOMERS
i. THE CUSTOMER
ii. OTHER CUSTOMERS
THEIR APPEARANCE AND BEHAVIOUR
INVOLVE THEM IN SERVICE PRODUCTION AND DELIVERY
PROCESS
 TYPES OF STAFF

CUSTOMER-CONTACT CUSTOMER - NONCONTACT

STAFF STAFF
• CONNECTS CO TO CUSTOMER • PROVIDES MANAGEMENT SUPPORT
• CONNECTS CUSTOMER TO THE COMPANY.
AND VARIOUS RESOURCES
• THEREFORE, HE IS “THE COMPANY”
• BACKBONE OF CO, CRITICAL FACTOR. WHY?
 CUSTOMER CONTACT STAFF DIFFERENTIATORS

HIRE, TRAIN, COACH,DEVELOP,MOTIVATE, SELL

THE JOB AND COMPENSATE BETTER CUSTOMER
CONTACT STAFF THAN THAT OF MAJOR
COMPETITORS.

• STAFF DIFFERENTIATORS
1. GRACEFULL AND COURTEOUS
2. GOOD COMMUNICATION
3. COMPETENT / SKILLFUL
4. RESPONSIVE/ CUSTOMER FOCUSED
5. EMPOWERED
6. MOTIVATED
7. TRUSTWORTHY
PHYSICAL ENVIRONMENT AND EVIDENCE
 TWO ASPECTS
OF PHYSICAL ENVIRONMENT AND EVIDENCE

A. PHYSICAL ENVIRNMENT
A PLACE WHERE THE SERVICE IS CREATED OR DELIVERED OR
WHERE THE INTERACTION BETWEEN THE SERVICE PROVIDER
AND THE SERVICES USER TAKES PLACE.
PAY ATTENTION TO:
1) LAYOUT OF BUILDING
2) NOISE LEVEL
3) COLOURS USED, DECOR, FURNITURE, TEMPERATURE etc.
4) FACILITATING EQUIPMENT
 TWO ASPECTS
OF PHYSICAL ENVIRONMENT AND EVIDENCE

B. TANGIBAL CLUE
A DOCUMENT WHICH SUPPORTS THAT THE
CUSTOMER HAS PURCHASED AND USED THE SERVICE.
IT ALSO REFLECTS THE IMAGE OF THE SERVICE
PROVIDER
 TWO ASPECTS
OF PHYSICAL ENVIRONMENT AND EVIDENCE
• BANKS, HOTELS , RESTAURANTS, AIRLINES etc, SPEND LOT
OF MONEY ON PHYSICAL ENVIRONMENT AND THE
TANGIBLE CLUE.
• THESE ITEMS SHOULD MATCH WITH THE PRODUCT
POSITIONING
• POOR PHYSICAL ENVIRONMENT AND TANGIBAL CLUE CAN
HURT A SERVICE COMPANY AND CONVEY A NEGATIVE
MASSAGE AND IMAGE
PROCESSES
 MARKETING-MIX IN SERVICES

• PROCESSES
• WHAT
INDIVIDUAL SMALL,SEQUENTIAL, SPECIFIC AND VALUE ADDING STEPS
CARRIED OUT TO PRODUCE AND DELIVER A SERVICE OR COMPLETE A
TASK.
– WRITTEN
– MECHANIZE
– CUSTOMERS’ INVOLVEMENT
• KINDS:
PRODUCTION AND DELIVERY PROCESSES
EXAMPLES:
RESERVATION / APPOINTMENT SYSTEM, SELF SERVICE IN
STORES, RESTAURANTS etc.
 PROCESS
• WHAT
SMALL, SEQUENTIAL, SPECIFIC AND VALUE ADDING STEPS TO COMPLETE A TASK
• EXAMPLE FROM McDONALDS
STEPS:
1) GREETING BY THE COUNTER ATTENDANT.
“GOOD AFTERNOON”
2) ASK THE CUSTOMER TO GIVE HIS ORDER
“ MAY I TAKE YOUR ORDER”
3) REPEAT BACK THE ORDER TO AVOID MISTAKES
4) ASK IF THERE IS SOMETHING ELSE THE CUSTOMER
WOULD LIKE
“WOULD YOU LIKE TO ORDER FRENCH FRIES”
5) ASK FOR PAYMENT
6) ANNOUNCE, ASSEMBLE THE ORDER AND PRESENT IT
WITH COURTESY.
THANK AND ASK THE CUSTOMER TO COME AGAIN.
SPECIALITY TO COMMODITY CONTINUUM MODEL
 SPECIALITY TO COMMODITY CONTINUUM
MODEL
• SPECIALITY, A COMMODITY PRODUCT,TOP, MOP, PLC
• AS A SPECIALITY PRODUCT MOVES THROUGH ITS PLC, IT BECOMES A
COMMODITY PRODUCT. THIS SPECIALITY TO COMMODITY SLIDE RESULTS
IN:-
A) LOW PRODUCT IMAGE
B) LOW PRICE
C) INCREASED COMPETITION
D) LOW PROFIT

• COMPETITION OF A SPECIALITY PRODUCT IS FOUGHT ON PERFORMANCE

QUALITY, FEATURES, BENEFITS, OPTIONS, DURABILITY, OUTLOOK,
REPAIRABILITY, PACKAGE, PSS ETC
• COMPETITION OF A COMMODITY PRODUCT IS PRIMARILY BASED ON
PRICE AND MODE / TERMS OF PAYMENT.
 SPECIALITY TO COMMODITY CONTINUUM

LOW COMPETITION HIGH

HIGH HIGH
SPECIALITY
PRODUCT

PRICE PROFIT

COMMODITY
PRODUCT
LOW LOW
HIGH PRODUCT IMAGE LOW
MARKRT SHARE GROWTH STRATEGIES
 MARKET SHARE

IT MEANS PERCENTAGE OF A MARKET OR OF A PRODUCT CLASS

CONTROLLED BY A COMPANY OR BY A PRODUCT / BRAND
 CURRENT USER STATUS

USERS COMPETITORS` USERS NON-BELIEVERS OF PRODUCT

•. SHIFT / SWITCH, OM CLASS
• INFREQUENT, FREQUENT • FORGET
• LOYAL , RETAIN

• USE MORE OFTEN, OM

• INTRODUCE NEW
USES NON-USERS
OF
• RM PRODUCT– CLASS
• CONVERT THEM TO USERS, OM
 MARKET SHARE GROWTH STRATEGY
PRODUCT–MARKET EXPANSION MATRIX
ANSOFF’S MATRIX
CURRENT PRODUCTS NEW PRODUCTS

CURRENT 1. MARKET 3. PRODUCT

MARKET PENETRATION DEVELOPMENT
STRATEGY STRATEGY

2. MARKET 4. DIVERSIFICATION
NEW DEVELOPMENT STRATEGY
MARKET STRATEGY
 MARKET PENETRATION STRATEGY

THIS STRATEGY CONSISTS OF INCREASING SALES AND

MS OF A CURRENT PRODUCT IN THE CURRENT MARKET
THROUGH DIFFERENT AND MORE AGGRESSIVE
MARKETING-MIX STRATEGIES AND TACTICS
 MARKET PENETRATION STRATEGY

• THREE MARKETING TACTICS TO INCRESE MARKET SHARE

1. ENCOURAGE CURRENT USERS TO REMAIN LOYAL AND USE MORE

FREQUENTLY, IF THEY ARE INFREQUENT USERS.
DO SOMETHING DIFFERENT AND INNOVATIVE, E.G.
OFFER INCENTIVES, DO ENTERTAINMENT, ORGANIZE
EVENTS etc.
2. SHIFT COMPETITORS’ USERS.
MAKES SENSE IF THERE ARE MAJOR WEAKNESSES IN
COMPETITORS’ PRODUCTS, PRICING, DISTRIBUTION, PROMOTION
OR THEY LACK FUNDS.
3. CONVINCE NON-USERS OF THE PRODUCT-CLASS, IF STILL UNDECIDED.
 MARKET DEVELOPMENT STRATEGY

• CONSISTS OF INCRESING SALES AND MARKET SHARE OF A

CURRENT PRODUCT BY ENTERING INTO A NEW
GEOGRAPHIC OR DEMOGRAPHIC MARKET OR A NEW USE-
AREA.

• TACTICS
A) URBAN TO RURAL, OTHER COUNTRIES
B) ADULT TO CHILDREN
C) GENDER SHIFT
 PRODUCT DEVELOPMENT STRATEGY

• THIS STRATEGY CONSISTS OF INCREASING SALES AND

MARKET SHARE OF A PRODUCT BY DEVELOPING EITHER A
NEW PRODUCT OR IMPROVED VARIANTS, FOR THE
CURRENT MARKET

  TACTICS
a) DEVELOP A NEW PRODUCT
b) OFFER BENEFITS VIA NEW PRODUCT FEATURES.
 DIVERSIFICATION STRATEGY
• ENTER A NEW MARKET WITH A COMPLETELY NEW
PRODUCT, BOTH UNRELATED WITH THE CURRENT
BUSINESS. Eg
PIA : HOTEL BUSINESS, SPEEDEX
SAS: HOTEL BUSINESS, AUTO RENTAL SERVICES
ALFALAH : WARID
THIS STRATEGY IS ADOPTED WHEN GROWTH IS NOT
POSSIBLE FROM THE OTHER THREE STRATEGIES.
RISKY, COSTLY AND LONG-TERM STRATEGY. TOP
EXECUTIVES MAKE THIS DECISION.
 PROFITABILITY

• PROFIT = REVENUE – COSTS

= (UNITS X PRICE) – (VPCs + FCs)

• FOUR WAYS TO INCREASE PROFITABILITY

1) INCREASE VOLUME (UNITS)
2) INCREASE PRICE
3) REDUCE VPCs VIA BETTER PURCHASE OF
INPUTS.
4) REDUCE FCs VIA EFFECTIVENESS AND
EFFICIENCY OF PEOPLE THROUGH TRAINING
AND UPTO DATE USE OF TECHNOLOGY IN
OPERATION.
 LONG-TERM PROFITABILITY
PRODUCT OR BRAND

INCREASE INCREASE
VOLUME PRODUCTIVITY

PRODUCT MARKET MARKET COST * IMPROVE FF

DEVELOPMENT DEVELOPMENT PENETRATION REDUCTION AND LABOUR
EFFECTIVENESS
& EFFICIENCY

ENTER NEW
ENTER NEW GEO. OR DEMO. OPERATION MARKETING
USE-AREAS SEGMENTS

INCREASE WIN WIN

USAGE RATE COMPETITORS’ NON-USERS
& QUANTITY CUSTOMERS OF P-CLASS

* VPCs AND FCs

WHY DO COMPANIES NEED VOLUME GROWTH?

1. TO INCREASE LONG-TERM PROFITABILITY

2. TO COMPENSATE INCREASING COSTS VS PRICE INCREASE.

3. TO OFFER A CHALLENGE TO PEOPLE.

4. TO IMPROVE COMPANY’S MARKET RANKING.

 GROWTH STRATEGIES

• NINE WAYS TO GROW :

1. INCREASE PRODUCT-LINES (INCREASE P-MIX WIDTH)
2. INCREASE PRODUCT-LINE LENGTH AND DEPTH.
3. MARKET PENETRATION STRATEGY (MORE USAGE)
4. MARKET DEVELOPMENT STRATEGY(MORE USERS)
5. PRODUCT DEVELOPMENT STRATEGY
(BANKS: CREDIT CARDS).
6. PRODUCT DIVERSIFICATION STRATEGY
EG: AIRLINES HAVING OWN HOTELS
 GROWTH STRATEGIES

7) FORWARD INTEGRATION
GOING INTO A NEW BUSINESS IN WHICH THE “OUTPUT” OF THE
CURRENT BUSINESS CAN BE GAINFULLY USED AS AN “INPUT” TO
PRODUCE AN OTHER PRODUCT
EG : DRYCLEANING EQUIPMENT MANUFACTURING
COMPANIES GOING INTO DRYCLEANING
BUSINESS.
8) BACKWARD INTEGRATION
GOING INTO A NEW BUSINESS IN WHICH THE “OUTPUT” OF THE NEW
BUSINESS CAN BE GAINFULLY USED AS AN “INPUT” FOR THE CURRENT
BUSINESS
EG : DRYCLEANING COMPANIES ACQUIRING EQUIPMENT
MANUFACTURING COMPANIES.
9) HORIZONTAL INTERRATION
ACQUIRING / MERGIING WITH A SIMILER COMPANY
DIVISIONS OF A SERVICE ORGANIZATION
 DIVISONS OF A SERVICE ORGANAIZATION
A) INVISIBLE PART
- CONSISTS OF:
1. INTERNAL AREAS
2. INTERNAL STAFF
PROVIDES RESOURCES AND MANAGEMENT SUPPORT TO
THE CUSTOMER CONTACT STAFF
3. INTERNAL PROCESSES
B) VISIBLE PART
- CONSISTS OF :
1. CUSTOMER CONTACT STAFF
2. THE CUSTOMER
3. OTHER CUSTOMERS
4. PHYSICAL SETTING
5. FACILITATING EQUIPMENT
6. DELIVERY PROCESS
DIVISIONS OF A SERVICE ORGANIZATION

SERVICE ORGANIZATION THE

CUSTOMER
A

INVISIBLE PART VISIBLE PART

• INTERNAL AREAS • CUSTOMER CONTACT STAFF

• INTERNAL STAFF
• PHYSICALSETTING
(NON-CUSTOMER CONTACT STAFF)
• FACILITATING EQUIPMENT
• INTERNAL PROCESSES
• PROCRSS TO DELIVER
OTHER
CUSTOMERS
B,C,D….
MIS AND MARKETING RESERACH
 NEED FOR INFORMATION FOR DECISION MAKING DURING
VARIOUS STAGES OF MANAGEMENT

• CHARACTERISTICS OF INFORMATION
1) RELEVANT
2) ADEQUATE
3) TRUE / ACCURATE
4) UPDATED
5) ON TIME
• INFORMATION IS AVAILABLE BOTH FROM INSIDE AND OUTSIDE A
COMPANY, THROUGH MR.
• UNLESS INFORMATION IS USED, IT IS WORTHLESS.
 MARKETING INFORMATION SYSTEM
MIS
Marketing Management Tasks

• MARKET &
•ANALYSIS
CUSTOMERS
•PLANNING 1 ICR MKT. I S • ME
•ORGANIS-
•CO’s PER-
ING 2
FORMANCE
•IMPLEMEN-
ATION • REACTIONS
3 MDSS MR TO M-MIX
•MONITOR/
CONTROL
•ACTIONS

DATA / INFO ABOUT

•MIS BEGINS AND ENDS WITH MARKETING MNGT.

•ASSESS INFO NEEDS THROUGH INTERVIEWS
•DEVELOP NEEDED INFO USING SUITABLE COMPONENT OF MIS
•DISTRIBUTE INFO TO RIGHT MANAGERS FOR GOOD DECISION MAKING.
 WHAT IS MARKETING RESEARCH ?

• IT IS A SYSTEMATIC PROCESS OF DESIGNING, GATHERING, ANALYSING

AND REPORTING RELEVANT, ADEQUATE, TRUE, UPDATED AND TIMELY
INFORMATION ON A SPECIFIC MARKETING TASK, FOR DECISION
MAKING, TO THE RELEVANT MARKETING PEOPLE.
• OVERALL OBJECTIVES OF MARKETING RESEARCH
i. TO REDUCE UNCERTAINTIES IN DECISION MAKING.
ii. TO MONITOR / CONTROL PERFORMANCE OF MARKETING ACTIVITIES.
 STATUS OF USE OF MR IN SERVICES BUSINESS

• OFTEN USED IN AIRLINES, BANKS, INSURANCE COs. FIVE STAR

HOTELS, FAST FOOD RESTAURANTS etc.
IN SUCH COs, MARKETING RESEARCH IS A COMPONENT OF MIS.
• IN MANY SERVICE BUSINESSES, IT IS NOT USED DUE TO VARIOUS
REASONS.
• RECOMMENDED SPENDING :
1-2% OF SALES
• SMALL COs.
CAN ENGAGE STUDENTS FOR MR.
 THE MARKETING RESEARCH PROCESS

• MR PROCESS IS MUCH THE SAME IN ORGANIZATIONS

MARKETING A PHYSICAL OR A SERVICE PRODUCT.
• EIGHT STEPS OF MR PROCESS:
1. DEFINE THE MARKETING TASK/ PROBLEM
• BE SPECIFIC
EG :-
» COPY TESTING
» PRICE RESPONSIVENESS
» CUSTOMER SATISFACTION LEVEL
» CONCEPT TESTING.
 THE MARKETING RESEARCH PROCESS

2. DECIDE DATA / INFO SOURCE :

i. PRIMARY DATA
NEW DATA GATHERED INTERNALLY OR EXTERNALLY. EXPENSIVE AND
TIME CONSUMING.
ii. SECONDARY DATA
ALREADY AVAILABLE INSIDE OR OUTSIDE.
INEXPENSIVE
SOURCES :
CO’S INTERNAL RECORDS OR REPORTS FROM
OUTSIDE SOURCES
– GOVT. PUBLICATIONS
– TRADE / PROFESSIONAL BODIES
– MR FIRMS
– INSTITUTIONS
 THE MARKETING RESEARCH PROCESS

3. DECIDE RESEARCH APPROACH FOR GATHERING P. DATA

i. SURVEY METHOD
ii. OBSERVATION METHOD
iii. EXPERIMENTAL METHOD
• CHOICE OF METHOD DEPENDS UPON THE NATURE OF TASK, TIME
AVAILABLE AND THE COST.
 HOW TO GATHER PRIMARY DATA
PRIMARY DATA GATHERING METHODS

SURVEY METHOD OBSERVATION METHOD EXPERIMENTAL

GATHERING DATA/ PEOPLE’S ACTIONS, METHOD
INFO BY ASKING Qs BEHAVIOUR, HEARING SEEING RESULTS
WHAT THEY SAY BY CHANGING ONE
VARIABLE

INTERVIEW TELEPHONE POSTAL

PERSON(S)

PERSONAL ELECTRONIC
OBS OBS

INDIVIDUAL FOCUS GROUPS

 THE MARKETING RESEARCH PROCESS

4. PREPARE A QUESTIONNAIRE TO RECORD RESPONSES /

OBSERVATIONS, TO QUESTIONS.
5. DECIDE SAMPLE PLAN FOR P. DATA
i. WHICH TM TO SURVEY ?
ii. HOW MANY?
iii. WHICH ONES ?
6. COLLECT DATA
i. OWN OR OUTSIDE STAFF
ii. ACTIVE PHASE, EXPENSIVE PHASE, PRONE TO ERROR
7. ANALYSE DATA AND MAKE A REPORT
i. TABULATE THE DATA, AVOID PRESENTING LOT OF DATA
ii. EXTRACT FINDINGS FROM THE DATA USING VARIOUS STATISTICAL
TECHNIQUES.
8. PRESENT FINDINGS IN WRITING TO THE MANAGEMENT.
 QUESTIONNAIRE
• IS A SET OF APPROPRIATE QUESTIONS, PRESENTED TO A
RESPONDENT FOR RECORDING ANSWERS, RESPONSES
OR OBSERVATIONS.

• USED COMMONLY
 QUESTIONNAIRE
• CHARACTERISITCS OF A GOOD QUESTIONNAIRE
A) SIMPLE WORDS
B) SHORT AND SIMPLE QUESTIONS
C) SEQUENTAL QUESTIONS.
D) PERSONAL QUESTIONS TOWARDS THE
END.
E) ONE SPECIFIC IDEA PER QUESTION.
F) NOT TOO MANY QUESTIONS. 10 – 12 QUESTIONS
ARE SUFFICIENT.
 QUESTIONNAIRE
G) INCLUDE BOTH OEQs AND CEQs
1) OEQs (DICHOTOMOUS, MULTIPLE CHOICE, SCALING,
DIRECT AND INDIRECT).
- GENERALLY, MAKE THE RESPONDENT THINK
- ANSWERED IN RESPONDENT’S OWN WORDS
- REVEAL MORE INFO.

2) CEOs (DICHOTOMOUS, MULTIPLE CHOICE,

SCALING, DIRECT AND INDIRECT).
- GENERALLY, DO NOT MAKE THE
RESPONDENT THINK
- RESPONDENT MAKES HIS CHOICE OF ANSWER
FROM THE PRE-SPECIFIED ANSWERS.
TEST THE QUESTIONNAIRE BEFORE ITS USE
ON A LARGE SCALE.
 SUB-CLASSIFICATION OF OEQs AND CEQs
1) DICHOTOMOUS QUESTION
GIVES CHOICE BETWEEN TWO ANSWERS
2) MULTIPLE CHOICE QUESTION
GIVES CHOICE BETWEEN MORE THAN TWO ANSWERS
3) SCALLING QUESTION
GIVES CHOICE OF ANSWER ON A NUMERICAL SCALE (MINIMUM TO
MAXIMUM)
4) DIRECT QUESTION
A QUESTION WHICH CONTAINS THE WORD “YOU” OR “YOUR” TO
MAKE IT A PERSONALIZED QUESTION
5) INDIRECT QUESTION
A QUESTION WHICH CONTAINS THE WORDS “OTHER PEOPLE” IN
ORDER NOT TO MAKE IT A PERSONALIZED QUESTION
 PROBLEMS IN MR
IN SERVICES ORGANIZATIONS
THREE PROBLEMS
1. RELUCTANT ATTITUDE TOWARDS MR IN SERVICE
ORGANIZATIONS.
ALTHOUGH THE USE OF MR HAS GROWN IN SERVICES
BUSINESS, YET THERE IS RESISTANCE TO ITS VALUE IN SOME
QUARTERS.
REASONS ARE :-
a) REGARD MR UNETHICAL
EG: PROFESSIONAL SERVICES.
b) SMALL COMPANY SIZE AND BEING LOCAL IN OPERATION DOES
NOT JUSTIFY EXPENDITURE ON MR. EG: REPAIR WORKSHOPS,
BEAUTY PARLOURS.
c) MONOPOLY IN BUSINESS.
DEMAND IS MUCH GREATER THAN SUPPLY.
 PROBLEMS IN MR
IN SERVICES ORGANIZATIONS
d) LACK OF MANAGERIAL KNOW-HOW IN MR AND ITS AWARENESS
IN S. COMPANIES.
e) CLAIM THAT THE STAFF IS CLOSE AND IN DIRECT CONTACT WITH
CUSTOMERS. THUS, NO NEED TO SPEND ON AN EXTERNAL MR
AGENCY.
DRAWBACKS OF SUCH CONTACTS
i. TOO UNPLANNED
ii. TOO INFORMAL

THUS, THE RESULTS ARE OFTEN WRONG.

2. POOR QUALITY AND QUANTITY OF SECONDARY DATA.
 PROBLEMS IN MR
IN SERVICES ORGANIZATIONS
3. PROBLEMS RESULTING FROM THE
CHARACTERISTICS OF A SERVICE PRODUCT
CHARACTERISTIC EFFECTS ON MR
1) INTANGIBILTY • REDUCES INCENTIVE FOR R&D (INNOVATION)
THUS, DIFFICULT TO OBTAIN PATENT THUS, FUCUS ON “
AND RISK OF BEING COPIED QUICKLY ME-TOO SERVICES”
2) INSEPARABILITY
THE PRESENCE OF SERVICE PROVIDER IS • HOME-USE TESTS ARE NOT POSSIBLE.
NECESSARY • CREATES PROBLEMS IN CONCEPT TESTING
.
3) QUALITY STANDARDIZATION IS • MR RESULTS MAY BE VERY WRONG OR
DIFFICULT. DIFFERENT.
QUALITY DEPENDS UPON THE
S. PROVIDER, P.EVIDENCE, THE CUSTOMER AND
OTHER CUSTOMERS PRESENT.
 MARKETING RESEARCH
PUBLIC SECTOR OBJECTIONS
• MR IS MUCH LESS DEVELOPED IN THE PUBLIC SECTOR THAN IN THE
PRIVATE SECTOR.
REASONS :
1) MONOPOLY IN MANY SERVICE CATEGORIES.
2) MARKETING AND MR IS REGARDED UNNECESSARY
3) PUBLIC SECTOR SERVICES ARE FOR THE WHOLE COMMUNITY, NOT FOR
A PARTICULAR SEGMENT OF SOCIETY. GENERALLY, NO
DISCRIMINATION.
THIS IS UNLIKE IN THE PRIVATE SECTOR WHERE DISCRIMINATION IS
DONE VIA MARKET SEGMENTATION.
4) UNLIKE THE PROFIT CRITERION USED IN THE PRIVATE SECTOR
SERVICES, NON-PROFIT EVALUATION CRITERIA ARE USED IN JUDGING
A PROPOSAL IN THE PUBLIC SECTOR SERVICES.
 MARKET AND ENVIRONMANTAL ANALYSIS

WHAT IS MARKET AND ENVIRONMANTAL ANALYSIS ?

GATHERING AND ANALYSING DATA / INFO ABOUT THE MARKET AND THE
MARKETING ENVIRONMENT (ME), MAKING CONCLUSIONS (IDENTIFYING
Os and Ts) AND THEIR IMPACT ON THE M-MIX.
MARKET AND ENVIRONMANTAL ANALYSIS IS DONE VIA MARKETING
RESEARCH AND MARKETING INTELLIGENCE SYSTEM (FOR ME).
MARKET AND ENVIRONMANTAL ANALYSIS A IS THE SAME BOTH FOR
PRODUCTS AND SERVICES
 MARKET AND ENVIRONMANTAL ANALYSIS
MAJOR QUESTIONS WHICH MUST BE ANSWERED IN A
MARKET AND ENVIRONMANTAL ANALYSIS

1. DO NEEDS / WANTS FOR A PARTICULAR SERVICE EXIST ?

2. TO WHAT EXTENT THESE HAVE BEEN SATISFIED OR ARE
UNSATISFIED?
FIND VIA MR.
3. SIZE OF DEMAND / MARKET.
 MARKET AND ENVIRONMANTAL ANALYSIS

4. PRICE WHICH THE CUSTOMER IS READY TO PAY.

5. COST OF PRODUCING AND DELIVERING THE SERVICE BY THE COMPANY.
6. PROFITABILITY.
7. STRATEGIC COMPETITORS
THEIR NUMBER, SIZE, AGGRESSIVENESS, THEIR M-MIX AND THE TYPE
OF COMPETITION.
8. MAJOR CHANGES IN THE EXTERNAL UNCONTROLLABLES
STEPS OF MARKETING PLANNING PROCESS
 THE MANAGEMENT PROCESS
FIVE PHASES OF MANAGEMENT
1)
5) TAKING ACTIONS
4) LEADING, DIRECTING,
MONITORING,EVALUATING
CONTROLLING, MOTIVATING
SITUATION ANALYSIS
GATHERING, STUDYING
AND ANALYSING FACTS
ABOUT PAST & PRESENT
PERIODS. 2) PLANNING
MAKING CONCLUSIONS • SETTING OBJECTIVES,
AND PREDICTING THEIR • MAKING STRATEGIES / TACTICS
EFFECTS ON FUTURE • DETERMING RESOURCES
• DECIDING MONITORING
MECHANISM AND ITS TIMING
3) ORGANIZING AND IMPLEMENTING
ORGANIZATION STRUCTURE, STAFFING,
GIVING RESPONSIBILITIES,
EMPOWRING,TRAINING; COACHING
COMMUNICATING AND EXECUTING THE
PLAN
 KEY PLANNING TERMS / CONCEPTS
DEFINITIONS

CONCEPT DEFINITION AND CHARACTERISTICS

THE PURPOSE FOR WHICH A COMPANY IS ESTABLISHED, EXPRESSED IN TERMS OF
COMPANY
CUSTOMERS’ NEED, PRODUCTS AND TARGET MARKET. WHAT BUSINESS THE COMPANY
MISSION
IS IN?

OBJECTIVE WHAT A PERSON OR A COMPANY WANTS TO ACHIEVE . END RESULTS SELECTED AFTER
EVALUATING ALTERNATES. QUANTITATIVE AND QUALITATVE. MUST BE :-
1) WRITTEN 2) SMART 3) PURE
4) MUTUALLY AGREED
5) MATCH WITH COMPANY’S OBJECTIVES 6) PRIORITIZED

STRATEGY HOW A PERSON OR A COMPANY INTENDS TO ACHIEVE THE OBJECTIVE (S).

OVERALL AND NON-SPECIFIC ACTION, METHOD OR A GAME PLAN.
• GENERATE AND EVALUATE ALTERNATE STRATEGIES BEFORE SELECTING THE
FINAL STRATEGY
• INVITE PARTICIPATION
• LOOK FOR CREATIVITY
• LONG-TERM

TACTICS DETAILED AND SPECIFIC ACTIONS WHICH WILL BE TAKEN TO IMPLEMENT

THE CHOSEN STRATEGY IN ORDER TO ACHIEVE THE OBJECTIVE (S).
• INVITE PARTICIPATION • LOOK FOR CREATIVITY • SHORT TERM
 WHAT IS PLANNING?
• ONE OF THE STAGES OF MANAGEMENT PROCESS DURING WHICH:-
A MANAGER AFTER HARD THINKING AND INTENSIVE CONSULTATION:-
1) SETS OBJECTIVES / GOALS
2) ESTABLISHES STRATEGY
a) TM
b) SCAs IN THE MARKETING-MIX
c) PRODUCT POSITIONING
3) DEVELOPS A DETAILED PLAN OF SPECIFIC ACTIONS / TACTICS
4) DETERMINES NEEDED RESOURCES
5) DECIDES A MONITORING OR CONTROLLING MECHANISM AND ITS TIMING
• NEEDED IN ALL COMPANIES, IN ALL BUSINESS FUNCTIONS AND AT ALL LEVELS.
• A PLAN IS THE RESULTANT DOCUMENT PRODUCED AT THE END OF THE PLANNING STAGE

• A PLAN GIVES A CLEAR ROAD MAP TO FOLLOW.

• IT IS A WORKING DOCUMENT
STEPS IN PLANNING PROCESS
SITUATIONAL ANALYSIS

SET GOALS FROM

ALTERNATIVES

DECIDE TM

DECIDE SCAs FOR TM

DECIDE PRODUCT POSITIONING

ESTABLISH
MARKETING MIX STRATEGIES
AND TACTICS FROM ALTERNATIVES

DECIDE RESOURCES

DECIDE MONITORING MECHANISM

AND ITS TIMING
 STEPS OF MARKETING PLANNING PROCESS

1. SITUATION ANALYSIS
a) STUDY COMPANY’S, COMPETITORS’ AND MARKET’S PERFORMANCE FOR
THREE YEARS (CURRENT, -1YEAR AND -2 YEARS).
THIS WILLSHOW COMPANY’S TREND IN PERFORMANCE COMPARED TO
THE COMPERTITORS AND MARKET PERFORMANCE.
KNOW REASONS FOR GOOD / BAD RESULTS.

b) GATHER, STUDY AND ANALYSE INFO ON THE ME AND MARKET FOR THE
BUDGET YEAR.

c) IDENTIFY MAJOR Ss AND Ws IN THE M-MIX, PARTICULARLY IN PRODUCT(s)

AS WELL AS IN THE COMPANY AND Os AND Ts IN THE ME AND MARKET.
SWOT ANALYSIS.
 MARKETING ENVIRONMENT (ME)

• ACTORS AND FORCES, OUTSIDE THE MARKETING

DEPARTMENT, WHICH AFFECT MARKETING ACTIVITIES OR
DECISIONS ABOUT MARKETING-MIX OR MARKETING
PERFORMANCE.
• DIVIDED INTO MACRO AND MICRO EXTERNAL
UNCONTROLABLE FORCES / ACTORS
 MACRO EXTERNAL UNCONTROLLABLE FORCES

1. POLITICAL AND LEGAL FORCES

2. ECONOMIC FORCES
3. CULTURAL AND SOCIAL FORCES
4. GEOGRAPHIC AND NATURAL FORCES
5. DEMOGRAPHIC FORCES
6. TECHNOLOGICAL FORCES
7. COMPETITIVE FORCES
 LOCATION
OF
STRENGTHS AND WEAKNESSES
(OWN AND COMPETITORS’)

• VARIOUS Ps OF M-MIX • HUMAN RESOURCE AND THEIR

• PRODUCT SUPPORT SERVICES SKILLS (QUANTITY & QUALITY)
• COMPANY PERFORMANCE • NON-HUMAN RESOURCES
A) SALES (QUANTITY & QUALITY)
B) MS, GR, RANKING • COMPANY IMAGE
 QUALITATIVE SWOT ANALYSIS
•STRENGTHS
• ------------------------------
• ------------------------------
•-------------------------------
• ------------------------------
•OPPORTUNITIES
• -----------------------------
• -----------------------------
•------------------------------
• ------------------------------
•WEAKNESSES
• ------------------------------
• ------------------------------
•-------------------------------
• ------------------------------
•THREATS
• ------------------------------
• ------------------------------
•-------------------------------
• ------------------------------
 BASIC PRINCIPLE FOR SUCCESS
• MUST HAVE A SUSTAINABLE COMPETITIVE ADVANTAGE (s) (SCA)

• WHAT IS A SCA?
SOMETHING BETTER IN ANY OF THE ELEMENTS OF MARKETING-
MIX, NECESSARY FOR LONG -TERM ABOVE AVERAGE SUCCESS
OF A COMPANY.
• CHARACTERISTICS OF A SCA
(a) MEANINGFUL/ IMPORTANT
(b) BELIEVABLE
(c) AFFORDABLE
(d) DIFFERENT
(e) SUSTAINABLE

IF YOU DO NOT HAVE A SCA, DO NOT COMPETE

 STEPS OF MARKETING PLANNING PROCESS

2. FORMULATE CRITICAL ASSUMPTIONS MADE FOR THE

ACHIEVEMENT OF THE PLAN.
EG: PRICING ASSUMPTIONS, LAW AND ORDER SITUATION.
3. OBJECTIVES SETTING
a) KNOW COMPANY OBJECTIVES
b) SET OBJECTIVES
KEEP a,b AND c UNDER STEP 1 AND a) UNDER STEP 3 IN MIND
i. QUANTITATIVE (WRITTEN, SMART). SALES, PROFIT
etc.
ii. QUALITATIVE (PURE)
 STEPS OF MARKETING PLANNING PROCESS

4. ESTABLISH STRATEGIES AND TACTICS :

i. SELECT TM
VIA SEGMENTATION
ii. CREATE SDAs
iii. DEVELOP DISTINCT PRODUCT POSITIONING
iv. DEVELOP AN APPROPRIATE M-MIX TO ACHIEVE CS
v. DECIDE RESOURCES
vi. DECIDE MONITORING MECHANISM AND ITS TIMING
 STEPS OF MARKETING PLANNING PROCESS

5. IMPLEMENT THE PLAN :

i. CREATE AN APPROPRIATE ORGANIZATION.
ii. RECRUIT STAFF WITH ABILITY / TALENT,
WILLINGNESS / MOTIVATION AND SUITABLE PERSONALITY.
iii. EXECUTE THE PLANNED STRATEGIES AND TACTICS.
 STEPS OF MARKETING PLANNING PROCESS

6. MONITOR / EVALUATE / CHECK

ACTUAL RESULTS
VS
PLANNED RESULTS
7. TAKE NEEDED ACTIONS :
i. RECOGNIZE, APPRECIATE / REWARD.
ii. HELP, REPRIMAND, GIVE WARNING, REPLACE
iii. CHANGE OBJECTIVES / STRATEGIES / TACTICS
VERY OFTEN THE MISTAKE LIES IN THE EXECUTION OF
STRATEGIES AND TACTICS
 REPRIMAND

SERVERE VERBAL DISAPPROVAL OF A BIG WRONG

ACT OF AN EXPERIENCED SUBORDINATE, BY HIS
SENIOR
 BENEFITS OF PLANNING
• GIVES DIRECTION VIA GOALS
• SETS YARDSTICK OR STANDARDS
• REDUCES / AVOIDS UNCERTAINTY OR HAZARDS BY
LOOKING AHEAD, ANTICIPATING CHANGE AND ITS
IMPACT; AND RESPONDING TO CHANGE
• IMPROVES EFFECTIVENESS AND EFFICIENCY DUE TO
WELL THOUGHT SPECIFIC ACTIONS
• MAKES OTHER STAGES OF MANAGENENT RUN EASY
AND SMOOTH
• ENSURES COORDINATION BETWEEN VARIOUS
PEOPLE AND DEPARTMENTS
 WHAT PLANNING WILL AND
WILL NOT DO
A) WILL DO
a) PLANNING FORCES PEOPLE TO THINK.
b) PLANNING ENHANCES CREATIVITY.
c) GUIDES EFFORTS
d) GIVES A YARDSTICK
e) PLANNING MINIMISES UNCERTAINTY AND SURPRISE.
f) MAKES OTHER MANAGEMENT PHASES / TASKS EASY.
g) IMPROVES EFFECTIVENESS AND EFFICIENCY DUE TO WELL THOUGHT
SPECIFIC ACTIONS

B) WILL NOT DO
PLANNING WILL NOT GIVE A “PERFECT CRYSTAL BALL.” IT WILL NOT
PREDICT FUTURE WITH 100% ACCURACY
 PLANNING PROCESS

WHERE ARE WE
NOW ?

HOW WILL WE KNOW

IF WE HAVE ARRIVED WHERE DO WE
OR NOT ? WANT TO Go TO ?

HOW WILL WE
GET THERE ?
 WHAT IS A MARKETING PLAN ?
• A PLAN IS THE RESULTANT DOCUMENT OF THE PLANNING PHASE OF
MANAGEMENT PROCESS .
IT CONTAINS:
1) EXECUTIVE SUMMARY,
2) SA,
3) OBJECTIVES,
4) STRATEGY AND TACTICS,
5) NEEDED RESOURCES
6) MONITORING MECHANISM AND ITS TIMING
7) PROFIT / LOSS
8) KEY SUCCESS FACTORS / ASSUMPTIONS
FOR THE BUDGET / PLANNING YEAR, TO GUIDE MANAGERS DURING THE
REMAINING PHASES OF MANAGEMENT .
IT IS A WORKING DOCUMENT
 PERIOD OF PLANNING
A) STRATEGIC PLANNING / PLAN
1) LONG-TERM
MORE THAN 5 YEARS
TOP MANAGERS
2) MEDIUM-TERM
2-5 YEARS
B) OPERATIONAL OR TACTICAL PLANNING / PLAN
– SHORT-TERM, USUALLY 1 YEAR
– DERIVED FROM THE STRATEGIC PLAN
– MOSTLY ALL MANAGERS
• MANY COMPANIES OPERATE WITHOUT FORMAL PLANS.
• NOT GOOD, NOT DO WELL.
 WHY MARKETING STRATEGIES FORMULATION IS
DIFFICULT IN SERVICES
a) UNIQUE CHARACTERISTICS OF SERVICES :
• UNLIKE GOODS, INTANGIBILITY CHARATERISTIC OF SERVICES MAKES
CONSUMER’S CHOICE DIFFICULT. OPINION CAN BE OBTAINED FROM
OTHERS.
• INSEPARABILITY MAKES MARKETING STRATEGY OF SERVICES
LOCALIZED. RELATIVELY DIFFICULT TO SELL SERVICES ON NATIONWIDE
BASIS.
• PERISHABILITY MAKES STORAGE OF SERVICES IMPOSSIBLE, THUS,
PLANNING SUPPLY AND DEMAND OF SERVICES IS DIFFICULT
• HETROGENEITY MAKES ENSURING OF UNIFORM QUALITY DIFFICULT.
 SITUATION ANALYSIS
AND
PLANNING PHASE

• SITUATION ANALYSIS AND PLANNING PHASE IS HOMEWORK FOR

A MANAGER.

• THE BETTER IS THE HOMEWORK DONE, THE MORE EASY IT

BECOMES TO CARRY-OUT THE REMAINING PHASES OF
MANAGEMENT
 WHO DOES PLANNING IN A COMPANY?

TOP
STRATEGIC
MANAGERS
PLANNING

TOP
MANAGERS MIDDLE
LEVEL
MANAGERS

OPERATIONAL FIRST
PLANNING LEVEL
MANAGERS