M.O.S.-Unit 1

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Marketing of Services :

Marketing of Services

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What is a Service :- A service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. According to Philip Kotler “A service is any act or performance that one party offers to another, that is essentially intangible, does not result in the ownership of anything. Its production may or may not be tied to any physical product .”

Examples of services:

Examples of services Turning on a light Listening to Radio Talking on telephone Taking a Bus Getting a Hair Cut What about an Institute, Counseling, Library Facility …..?

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Therefore it can be said that services are those activities which satisfy wants. Some services are offered individually while some services are offered as a supplement to a product purchased or a major service consumed by the customer. Essentially services are intangible but sometimes they may involve the use of some tangible goods.

Difference between Product & Service Marketing:

Difference between Product & Service Marketing Consumer do not obtain the ownership of services Service products are ephemeral & cannot be inventoried Intangible elements dominate value creation Customer may be involved in the production process Its easy to evaluate product but difficult to evaluate services

Difference between Product & Service Marketing:

Difference between Product & Service Marketing The time factor assumes great importance. Distribution channels take different forms.

Characteristics of a Service:

Characteristics of a Service There are four characteristics to a service which will be discussed below:- Intangibility Inseparability Perish ability Heterogeneity

Contribution of the Service Sector to the Economy:

Contribution of the Service Sector to the Economy Year Primary Sector (Agriculture, mining, fisheries) Secondary Sector(Industry & Manufacturing) Tertiary Sector Growth over pervious period in service 1970-71 44.5 23.6 31.9 + 9.6 1908-81 38.1 25.9 36.0 +12.9 1090-91 30.9 30 39.1 +8.6 1999-2000 27.5 24.6 47.9 +22.5

Classifications of the services:

Classifications of the services It is essential to differentiate between diff. services in order to formulate appropriate strategies for marketing them. Classification based on degree of involvement of the customer Classification based on Service Tangibility Classification based on skills & expertise required. Class. Based on the Business Orientation of Service Provider. Classification based on the type of End-User

Classification based on degree of involvement of the customer:

Classification based on degree of involvement of the customer 1. People Processing :- Customer is highly involved & need to be physically present in order to experience the service. E.g. School, Dance Training class, Beauty saloon, Fitness Centre, health Care. Possession Processing :- The Customer doesn’t require to be present to exp. the service but has to submit his property to the service provider for the latter to deliver the service. E.g. service of your car, Laundry & dry-cleaning services, postal service, courier service & freight transportation. Contd…..


Contd. Mental Stimulus processing :- The attention of the customer must be directed on the service in order to experience the service. In this case the service is directed at the mind of the customer. E.g. Career Counseling, Consultancy services, advertising & entertainment. Information Processing :- This type of service requires service personnel to collect information, analyze it , interpret & offer appropriate advice to the client. E.g. Marketing research company, Legal services, Accounting & Insurance etc.

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Highly Tangible :- Customer obtains a tangible product in Hand. E.g. Projector on Rent, Dj on rent. Service linked to tangible goods:- Some organization offer a warranty period to customers who purchases product from them. E.g. Car, T.V., Water Filters, Photocopying machine. Tangible goods linked to services :- e.g. refreshments & magazines while availing Air-Services . Highly Intangible:- No tangible product is involved e.g. Massage Parlor. Classification based on Service Tangibility

Classification based on Skills & Expertise requirement:

Classification based on Skills & Expertise requirement Professional Services which requires the service provider to be formally trained to deliver the services. E.g. Doctor, Pilot, It Consultant, Trainer. Non Professional services:- Baby Sitting, house Keeping etc.

Classification based on the Business Orientation of Service Provider:

Classification based on the Business Orientation of Service Provider Non profit Organizations :- Government schools, NGOs Commercial Organizations:- Main objective is to earn revenues & make profits.

Classification based on the Type of End User:

Classification based on the Type of End User Consumer Services which are purchased by individual customers for their own consumption. E.g. Beauty Care, Physiotherapy. Business to Business Services:- These services are purchased by Organizations. E.g. Market research, consultancy, advertising etc. Industrial Services:- Generally based on a contract between organizations & Service providers. Machine installation, Plant Maintenance.

Customer Relationship management:

Customer Relationship management Expected Service Perceived Service Customer Gap

Level of recommendation:

Level of recommendation 1 happy customer shares his or her positive experiences with “only” 4 other people 1 unhappy customer shares his or her bad experiences with 8 to 10 other people (potential customers) 12 positive actions are needed in order to adjust a negative situation

Focus on your customer:

Focus on your customer © CAS Software AG February 9, 2009 Do you know your customers ? Do you have a complete set of data about your customer? Who has this information? Does your customer know your company and your company’s complete portfolio? Is your customer satisfied with your company? Is your customer impressed about your company? Would your customer recommend you to other companies?

Customer Relationship Management:

Customer Relationship Management The technique which deals with the formation & nurturing of long term relationship through paying individual attention is called customer relationship management.

For Service Organizations, Customer Centricity is very vital. Why ?.......:

For Service Organizations, Customer Centricity is very vital. Why ?....... In case of Product Marketing , customer interaction is remotely provided by an agent or a retailer. So customer does not come in the direct contact of the producer. In Service Organizations , however the customer is involved in making the service specifications, & usually receives the services personally. Organizations can only profit by becoming totally customer oriented. The higher the customer orientation, higher are the chances of continued patronage & success.

Customer Satisfaction :

Customer Satisfaction “Discovery of a problem is a chance for improvement” Value provided Level Complaints Satisfaction Customer expectations Value provided

What is Customer Satisfaction:

22 What is Customer Satisfaction Customer Satisfaction = Performance – Expectations Setting high quality standards for products and services Measuring and managing customer expectations. Dissatisfied Customer Quality/ Service Actual Quality/ Service Delivered Satisfied Customer Quality/Service Expected by Customer A Quality/Service Expected by Customer B

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A customer is the most important visitor on our premises. He is not dependable on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is a part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so. - Mahatma Gandhi A Customer is ……………..

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Importance of Customer Satisfaction Retention Acquisition Current Market Share Target Market Share In Service industry besides acquiring new customers it is imperative to retain old customers so that company can make profits

Customer Expectation :

Customer Expectation Major Challenge for service Industry. Known to change constantly. Are based on customers experience with products & services Feedback received from friends, colleagues & relatives may be based on their present need The Satisfaction level of customers change when either of the two takes place – change in the customer expectation or change in the performance of the service provider.

Dimensions of Service Quality :

Dimensions of Service Quality Reliability : Ability to perform as promised Tangibles: Appearance of physical facilities, equipment, personnel, & communications material Responsiveness : Willingness to help customers and provide prompt service Assurance : Ability to gain customer trust and confidence Empathy: Caring, individualized attention to customers Customer Service expectations can be measured along five dimensions of Service Quality. Where all the dimensions are associated with service process except the one i.e. Reliability, which is associated with service outcome.

Three Pillars of service Reliability:

Three Pillars of service Reliability Service Leadership Service Reliability Through Service Testing Infrastructure for Error-free Service

Doing it Right:

Doing it Right Service reliability – performing the service dependably and accurately – is the heart of services marketing excellence We want pilots to be dependable Surgeon to know their stuff Reliability is of paramount importance to service customers Doing it right the First Time sets off customer relations on good footing

Structure of Customers Expectations:

Structure of Customers Expectations Two Levels of Expectations A Desired Level : What a customer hopes to receive. An Adequate Level : Min. level of services which is acceptable by customer. A zone of tolerance separates the desired level and what is deemed adequate. Performance level above the tolerance zone will surprise customers & increase loyalty

Two Levels of Expectations:

Two Levels of Expectations Desired Level of Service Zone of Tolerance Adequate Service Zone of tolerance varies For each customer & for the same customer it differs in different situations.

Zone of Tolerance:

Zone of Tolerance Consider a bank customer who wishes to cash a check in 3 minutes ( desired level) In the past, customers have waited for up to 10 minutes ( adequate level) The range between 3 minutes to 10 minutes is Range of Tolerance Service time below3 minutes will thrill customers Service time above 10 minutes will annoy customers

Changes in Expectation Levels:

Changes in Expectation Levels Customers’ expectation levels are dynamic & fluctuate in response to a variety of factors Desired level of service tends to change more slowly and in smaller amounts Adequate service level appears to move readily up and down – into zone to tolerance

Changing Expectation Levels:

Changing Expectation Levels Expectation Levels Desired Service Desired Service Adequate Service Adequate Service Tolerance Zone Tolerance Zone Outcome Dimension Process Dimension

Factors Influencing Expectation Levels:

Factors Influencing Expectation Levels For Desired service Level: Personal Needs:- Customers differ in their expectations of desired service depending on their most vital need. Enduring Service Intensifiers:- 1. Derived service expectations (Where customers expectations are influenced by the expectations of those who are dependant on the customer to provide them with a good service experience. E.g. Office Outing 2. Customer’s philosophy:- Customer’s attitude & service provider conduct. A customers philosophy regarding the service tends to be stronger if he is in some way associated with service industry.

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Adequate Service Level are influenced by :- Transitory Service Intensifiers :- includes emergencies, failure of service provider to offer quality service for first time or factors that push customers to take the help of a service. Perceived Service Alternatives:- e.g. home loan in urban area & in rural area Self-perceived Service Role Situational Factors:- Customer makes a compromise when he knows that the service delivery is not under the control of provider. E.g. Non-availability of Cable services because of Electricity cut. Predicted service Expectations

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Factors influencing both Desired level & Adequate level:- Explicit Service Promises Implicit Service Promises Past Experiences Word of Mouth Communications

Criteria to evaluate a service based on customers service expectations:-:

Criteria to evaluate a service based on customers service expectations:- A customers service Experience is controlled by his sensory impressions coupled with his intentions & mood at the time of the service counter. Criteria on which customers evaluate their service experience are :- Speed (Opting for travel Agent who can make immediate bookings) Certainty (Courier delivery) Ease Personal Recognition (Name by Just Dial) Knowledge of the factors that influence customer expectations & evaluation criteria will help service provider to take measures to manage customer Expectations.

Managing Customer Expectations:

Managing Customer Expectations By Managing Promises Reliability- Getting it right the first time Effective Communication Service Companies have an opportunity to differentiate themselves from their competitors on the basis of the Reliability of Service Delivery. On the other hand , to gain an edge over competitors , service companies should surpass their competitors in the process dimensions of the service i.e. Assurance, Empathy, responsiveness & tangibles. These factors also allow to exceed their customer expectations & to make them delighted

Market Segmentation in Services:

Market Segmentation in Services Earlier Homogenous products & services to minimize production & marketing expenditure Expectations changed over a period of time & demand raised for customised products & services. Similarities exists in certain customer group but customers differs in terms of age ,economic positions, lifestyles, occupations & expectations etc.

Market Segmentation:

Market Segmentation Kotler & Armstrong defined a Market Segment as “a group of consumers who respond in a similar way to a given set of marketing stimuli & Market Segmentation as “the process of dividing a market into distinct groups of buyers with different needs, characteristics , or behaviour who might require separate products or marketing mixes.

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Market Segmentation helps in the clear understanding of customer Needs, and in keeping track of changes in customer Expectations. Market Coverage Strategies 1. Undifferentiated Marketing Approach- Also known as Mass Marketing. Major challenge is how to design & market a single product or service that will satisfy all the customers.

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2. Differentiated Marketing Approach- Product-variety marketing Approach. A company aims to tap the entire market by serving each segment & thus become a market leader. 3. Concentrated Marketing Approach- Single Segment strategy. Reduces production, distribution & promotional costs due to specialization of Operations.

Basis for Market Segmentation :

Basis for Market Segmentation Age Sex Size & Structure of the family Income Education Level Nations States Localities Lifestyle Personality Benefits Purchase Occasion User Status User Rate (Non- use,ex & potential user) Loyalty Buyer Readiness & marketing Factors Demographic Geographic Psychographic Behaviouristic

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Measurability Accessibility Actionability Substantiability Effective Segmentation Requirements for Effective Segmentation

Process of Market Segmentation:

Process of Market Segmentation Identify Customer Segments. Developing Measures for Structural Attractiveness ( Analysing the segment on the basis of their size, growth potential, profitability & the purchasing power). Selecting Customer Segment

Identifying Customer Segment:

Identifying Customer Segment Identifying the customer segments helps the marketers in designing, promoting, delivering or pricing the service for each segment. It basically helps them in identifying the marketing mix for each segment.

Market Targeting in Services:

Market Targeting in Services The process of estimation & comparison of the previously identified segment for selecting one or more segments that fetch the best results for the business. The chosen segments should be the most profitable for the company & should also help in delivering superior value to the chosen customer database

Criteria to evaluate segments for Targeting:

Criteria to evaluate segments for Targeting Segment Size & Growth Potential Structural Attractiveness Company Objectives & Resources

Structural Attractiveness:

Structural Attractiveness It involves analysing the present & potential competitors, substitute of products & services available in the market & the relative power of suppliers & buyers.

Targeting Strategies:

Targeting Strategies Single Segment Strategy (Targets only one segment, develops a single marketing mix & eventually gain specialization in that segment) Selective Specialization (Targets more than one segment, services may or may not be linked with each other) Product Specialization (Conference Hall) Market Specialization (Purpose is to meet the various needs of a target segment. Educational institute providing diff. Courses to Graduates) Full Market coverage ( to offer various products or services to the entire market)

Thank You :

Thank You

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