OUM BUSINESS SCHOOL

May / 2015

BMSV 5103 – SERVICE MARKETING

Dr.Shishi Kumar Piaralal.

MATRICULATION NO : CGS00895201

IDENTITY CARD NO. : 900308-08-5279

TELEPHONE NO. : 011-26299615

E-MAIL : hesanrajarani@gmail.com

LEARNING CENTRE : Greenhill Learning Centre

ACKNOWLEDGEMENT

I would like to take this opportunity to express my heartfelt appreciation to my

facilitator Dr.Shishi Kumar Piaralal.

Without his identification of the assignment strength, guidance and advice on the

assignment development, it would be almost impossible to complete the task as schedule.

Under his supervision and motivation, I am able to perform well in conducting this study.

In addition, i would also like to thank to the Tesco Malaysia ,Starbucks Malaysia as

well AirAsia which provides me valuable information as the guidance of the assignment.

Lastly, I stress that I have fully committed and contributed immensely to achieve my

project goals. I have overcome many difficulties during the development of the assignment

and eventually the result is upon satisfactory level completing this study in such a great style.

Thousand thanks again are given to those who have helped me making this assignment can be

done successfully and meet the time frame.

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Table of Contents

Contents Page

Chapter 1-Introduction

Chapter 2-Type of Customer

Chapter 3-Type of Business of Industry

Chapter 4 Type & Implementation of Service Marketing Strategies

Chapter 5 –Conclusion

Chapter 6 – Referencing

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Chapter 1-Introduction

1.0 AirAsia

In 1994 AirAsia was established and operations was began on the of 18 th November

1996. It was been originally founded by government owned company, subsequently, with the

debt of RM40 Million. DRB-Hicom was heavily-indebted airline was bought over by the

former Regional Vice President Warner Music Group (South East Asian) with the sum of one

Malaysian ringgit (USD 0.26 at the time) with the RM 40 million worth of debts. Tony

Fernandes turned the company around to a producing profit business and pay off the debts.

Launching new routes from its main hub in Kuala Lumpur, breaking up the former monopoly

airline operator Malaysia Airlines (MAS) with the promotional fares as low as one ringgit

and introduce the slogan with “Now Everyone Can Fly”.

Fernandes turned the company around, producing a profitable in 2002 and launching

new routes from its hub in Kuala Lumpur, undercutting former monopoly operator Malaysia

Airlines with promotional fares as low as RM 1 (US$0.27).

Figure 1.0 AirAsia Logo

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In 2003, AirAsia opened a second hub at Senai International Airport in Johor

Bahru near Singapore and launched its first international flight to Bangkok. AirAsia has since

started a Thai subsidiary, added Singapore itself to the destination list, and started flights

to Indonesia. Flights to Macau began in June 2004, and flights to mainland China (Xiamen)

and the Philippines (Manila) in April 2005. Flights to Vietnam and Cambodia followed later

in 2005 and to Brunei and Myanmar in 2006, the latter by Thai AirAsia. In August 2006,

AirAsia took over Airline’s Rural Air Service routes in Sabah and Sarawak, operating under

the FlyAsianXpressbrand. The routes were subsequently returned to MASwings a year later,

citing commercial reasons.

At the end of 2006, Fernandes unveiled a five-year plan to further enhance AirAsia's

presence in Asia. Under the plan, AirAsia proposed strengthening and enhancing its route

network by connecting all of its the existing destinations throughout the region and

expanding further into Vietnam, Indonesia, Southern China (Kunming, Xiamen, Shenzhen)

and India. Through its sister companies, Thai AirAsia and Indonesia AirAsia, the plan called

for a focus on developing its hub in Bangkok and Jakarta. With increased frequency and the

addition of new routes, AirAsia increased passenger volume to 13.9 million in its 2007 fiscal

year.

On 27 September 2008, the company announced 106 new routes to be added to its then-

current list of 60. The number of old routes discontinued has not been publicly disclosed. In

August 2011, AirAsia agreed to form an alliance with Malaysia Airlines by means of a share

swap. The alliance was struck down by the Malaysian government, in effect voiding the

agreement of both airlines.

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Mission & Vision

Mission

To be the best company to work for whereby employees are treated as part of a big

family.

Create a globally recognized ASEAN brand.

To attain the lowest cost so that everyone can fly with AirAsia.

Maintain the highest quality product, embracing technology to reduce cost and

enhance service levels

Objectives Provide full fledge training and development to AirAsia pilot, aircraft engineers, cabin

crew and guest service staffs

Develop the academy as an aviation training ground towards fulfilling AirAsia’s

aspiration in becoming a regional aviation training hub

Serves as a platform to keep AirAsia on track with the latest industry development and to

incorporate best practice into their operations

Vision To be the largest low cost airline in Asia and serving the 3 billion people who are

currently underserved with poor connectivity and high fares.

Financial Analysis

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Balance Sheet

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1.1 Tesco Malaysia

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Tesco is founded in the year of 1919 while Sir Jack Cohen applied his skill

throughout the marketer program inside the initial world warfare to trade goods coming from

a marketplace not work inside the eastern side conclusion of London.

Figure 1.1 Tesco Logo

Tesco merchants (Holdings) Ltd were sailed around the London Stock Exchange

which has a share price of twenty five pence before 70’s. Tesco have been operating in 12

countries all over the world with 530,000 workers been hired to serve 10 millions of

customers each week. UK stores of Tesco are segmented into six formats that are Tesco

Extra, Tesco Superstars, Tesco Metro, Tesco Express, One Stop and Tesco Homeplus

(Tescoplc 2009). Further in investment, Tesco have widened the scope into the online trading

service with sell almost 70,000 products including its own brand-value which consists 50% of

sales. Besides, Tesco have ventured into independent petrol retailers and Tesco personal

financing.

Tesco merchants Malaysia Sdn. Bhd. Tesco merchants (Malaysia) Sdn. Bhd. Was

founded in the year of 2001 on the 29th of November. As being a ideal alliance among Tesco

Plc British isles along with nearby conglomerate,

Sime Darby Berhad has attained about 30% in the Tesco Merchants Malaysia (TMM).

In the year of February 2002, TMM have launched its first operations outlet at Puchong,

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Selangor.TMM consist of 15,000 employees and operates 46 outlets in 2 classification outlets

type. The TMM businesses are divided into two types:

Tesco Hypermarkets (TH)

TH offers a wide range offer towards its customers with a holistic shopping

experience in just one spot. From freshly grown products to apparels. TH have provided as

one stop hypermarket which allows all buyers to find everything needs by the buyers. Tesco

Hypermarkets carry over 60,000 lines of products, including nearly 3,000 Tesco Brands food

and non-food products.

Tesco Extra (TE)

Tesco Extra caters to small businesses, families as well as individual customers by

providing a comprehensive selection of products and services. These value-added services

include bigger pack sizes, special trolleys and checkouts, and a dedicated business

development team to support small business owners with their orders.

Vision and Mission

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Mission

“We make what matters better, together”.

Vision

Wanted and needed around the world

A growing business, full of opportunities

Modern, innovative and full of ideas

Winners locally whilst applying our skills globally

Inspiring, earning trust and loyalty from customers, our employees and communities

Financial Analysis ( Year 2014)

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Financial Analysis ( Year 2013)

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1.3 Starbucks

Starbucks Corporation is one of the largest food and beverages multinational

enterprises which consists restaurants, retail coffee and tea, beverages, entertainment and etc

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and operates in over 50 countries worldwide as well has more than 17,000 outlets . Its first

store is been established in Seattle’s Pike Place Market in the year of 1971.

Its been founded by Jerry Baldwin, Gordon Bowker and Zev Siegl,with the vision to

spread the beauty and taste of fine coffees. It’s been to expand when Howard Schultz took

over in the 1987. His idea is to re-make the Italian espresso bar concept experience in

America by creating relationship between consumers and coffee. Within years, they grew

from a small, regional business into the undisputed leader in the speciality coffee industry by

buying only the best quality coffee and providing an unmatched store experience (Stanley,

2002).

Figure 1.3 Starbucks Logo

After 25 Years of operating, Starbucks ventures its first outlet of North America in

Japan .Starbucks in the largest coffeehouse in the world.

In this competitive era, business corporations tend to be globalised in order to

maintain their competitive strength. However, every market has their own culture and policy

which has become barriers for the multinational enterprises (MNEs) when they are entering

overseas markets. Starbucks in Malaysia is jointly owned by Berjaya Corporation and

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Starbucks Coffee International and has enjoyed a healthy growth within the Malaysian

market since it’s first outlet opened in 1998. At present, there are 119 stores thru out

Malaysia (Starbucks

“To inspire and nurture the human spirit - one person, one cup, and one neighborhood

at a time.”-Starbucks Mission

Financial Analysis

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Profit and Loss Statement

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Chapter 2-Type of Customers

Batra and Kazmi (2004) stated that “Consumer buying behavior is the mental and

emotional processes and the observable behavior of consumers during searching purchasing and

post consumption of a product and service”. Organizational marketing activities largely depend

on the buying behavior of the customers. Customers may become highly involved or lowly

involved with organizational products and services and it depends on tangible and intangible

value of the products. Generally four kinds of buying behaviors:

Type 1:

Complex buying behavior: Buyers are highly involved and spend a lot of time

before buying the products and services. Generally these products or services are precious and

buyers ask others or expertise before buying products or services. These products or services

have significant impact on buyers, For example, purchasing a flight ticket or car.

Type 2 :

  Variety seeking behavior: here buyers have low involvements and there are a lot of

options for same kind of product or services. Buyer may check those products. For example,

there are lots of wine in the market and people may buy different wine in different times only for

the taste. Manufacturers have to give different offers to retailers to sell their products and to

attain competitiveness. 

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Type 3

 Dissonance buying behavior: customers are highly involved here but there are only

few products options in the market .For Example, Choosing a floor tiles which have few options

for the current trend.

Type 4

Habitual buying behavior: here buyers have low involvement and there is lot of

same quality products available in the market but those products are very essential for our

everyday life. For example, buying groceries from the stores.

Organization: AirAsia

Type 1- Complex buying behavior

Passengers are reluctant to board a no-frills airline for a long-haul flight. The longer

the route, the less price-sensitive the passenger becomes. Mostly passenger would not like to be

crammed into an aircraft for 6 to 8 hours as when there a limited in-fight services. AirAsia have

worked on the basis of an average man able to afford the air fares and customers who have not

consider in flying or would not fly as often as they as do now .

Outbreak of the Severe Acute Respiratory Syndrome (SARS) or noted accidents has

scare people to fly. AirAsia committed to its "Safety First"; which complies with all regulatory

agencies, set and maintain consistently high standards; ensure the security of staff and guests.

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Organization: Starbucks Malaysia

Type 2 -Variety seeking behavior

The initial target market sector for starbucks will be the existing clientele of the retail

Starbuck outlets

Starbucks targeted office workers from middle to high income customers who have a

vital on the quality, taste and ambience and the consumpation experinces. In depth, starbucks will

focus on creating a new demand from its existing customers to who havent tried a gourmet

instant coffee based.

Customers had a desire to purchase premium products. Schultz wanted Starbucks to

become the ‘Third Place’, the place between home and work where people could gather, relax

and interact with one another.

Organization: Tesco Malaysia

Type 4 - Habitual buying behavior

Current trends specify that buyers have moved towards the one stop and volumetric

due to a variety of social changes. In Further Tesco have increase the amount of non-consumable

items in the store . As the demographics in Malaysia is changing with the aging population,

reducing home meal preparation as well increased employed female. Tesco have focused on the

value added products and services.

Tesco also allows on their major local brand products supplied by entrepreneurs to

support Malaysian brands. The type of goods and services demanded by consumers is an

indicator of their social conditioning and their consequent beliefs and attitude. Customers have

becoming increasingly healthy concerned. For example, Tesco have increase on the organic

supplies as well green products

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Chapter 3-Type of Business of Industry

Organization: AirAsia

Type - Airline/Transportation Industry

Initially, AirAsia have it own humble beginning since its incorporation until today.

AirAsia have been well- perceived as the Low Cost Carrier organization due to its nature core

of business. Loads of achievements have been experienced by AirAsia due to its outstanding

and remarkable services in the Airline/Transportation Industry. From a small private-owned

company since its establishment,

AirAsia had consistently growth to become one of the multinational companies in

Airline/Transportation Industry. This had shown that the services provided to its prospects

had been well-accepted and recognized. Moreover, AirAsia is a public listed company that

listed on the stock exchange of Bursa Malaysia under the name AirAsia Group Berhad. With

the well projected business mission and goals, AirAsia had owned numbers of subsidiaries

namely such as AirAsia X , Tune Hotel, Tune Talk and newly created business in Football

Club And Lotus F1-Racing .

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Organization: Starbucks Malaysia

Type -Fast food industry

Starbucks can be categorized in fast food industry. This is the widest and concentrated

industry that Starbucks have competes in. For example, McDonalds and CostaCoffee.

However, this industry has a major affect on decisions that Starbucks makes in order to stay

competitive against these different types of restaurants. Starbucks still sees potential for

growth in this market due to several social and economic phenomena, such as the growing

consumer trend towards eating healthier foods and the growing percentage of disposable

income.

Starbucks has now moved beyond just competing with specialty coffee retailers.

Starbucks not only sells coffee, they also sell baked goods and accessories. This includes

pastries, breakfast items and coffee paraphernalia. In this market they have stronger

competition.

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Organization: Tesco Malaysia

Type : Retail Industry

Major retail outlets have seen tremendous growth since 1980s. There are around 400

such outlets in Malaysia. After making their debut in 1990s, foreign-owned hypermarkets are

fast gaining popularity in Malaysia, attracting customers with their one-stop and all-under-

one roof concepts. Since their arrival, foreign retailers have been expanding rapidly. The

Malaysian economy has demonstrated resilience in the face of external uncertainties. It is

expected to remain strong despite the slowing of the global economy

Tesco serves the requirements of small businesses , households along with individuals

just about all in one place by giving an extensive range of products along with companies

centered regarding small businesses such as even bigger group dimensions , special trolleys

along with checkouts as well as a committed organization team of developers to aid small

enterprises using their purchases .

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Chapter 4 Type & Implementation of Service Marketing Strategies

4.0 AirAsia

7P’s of Service Marketing

Figure 1 – The 7P’s of Service Marketing

This concept is one of the most popular and useful marketing tools in every business

world especially for the introductory marketing course. In order to capture the distinctive

nature of service performances, the modification the original terminology and speak instead

of product elements, place and time, price and other user outlays, and promotion and

education. This is then extended to the mix of other four service delivery elements which are

the physical environment, process, people and productivity and quality. These seven elements

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which is known as the 7P’s of service marketing is to create viable strategies for meeting

customers need profitably in market place.

A) Product Elements

The term ‘product’ is refers to tangible or physical products however ‘service’ is an

intangible and do not have physical presence. In this context, a well-designed service is very

important and it consists of a core product that responds to the customers’ needs and others

supplementary services are to help customers to use the core product effectively as well as

adding value through welcomed enhancements.

Guest Convenient

By providing convenient services will to the customers makes travelling much way

easier and achieve customers satisfaction .AirAsia had made a lot of changes in delivering

their products especially the new invention where guests can make booking through

combination of ways such as Online Method.

The Company had become the first airline in the world which offer guests to book and

pay for the AirAsia seat, check flght schedule as well as to obtain latest update on AirAsia

promotions through short messaging service or commonly known as SMS.Besides that,

AirAsia also practicing the airlines’ online programme where guests can book tickets through

online.

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Frequent Flights

AirAsia practices a quick turnaround of 25 minutes, which is known as the fastest

throughout the region, and resulting in high aircraft utilization, lower cost and higher

productivity. This is to ensures guests convenience and satisfaction is met.

Ticketless Services

This concept was launched on 18 April 2002 with the idea of complements the airline’s

booking through internet and call centre service. The guests are no longer need to the hassle

of getting printed tickets.

B) Price

Price refers to the value or worth of a product or service that attracts the buyer to exchange

money and also assess the outlays of their time and effort

Low fare, no frills

AirAsia is practicing a significantly lower price than those of other airline operators.

This service is targeting to those who will take flight without frills of meals, airport lounges

and so on. The airlines have no complements for meals and drinks but recently the AirAsia

has introduced the ‘snack- attack’ on board at a very affordable price. Guests are now have

their choice to purchase any meals offered.

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C) Place and Time

Distribution is about how the service is being delivered to the customers, looking at location

and where a service is delivered. These shows whether the guests need to collect it or the

company deliver it to the customers.

Internet Booking

One of the criteria for those low-cost companies is the direct booking through internet

because this can avoid being extra charged through commissions or credits to travel agents.

Raja Azmi claims that over half of AirAsia bookings are done via internet while the rest are

through sales office, the internet, as booking tool for travelling has remains an exotic

curiosity for a sophisticated few.

As Asia first online airline, the AirAsia allows guests to book seat online through its

website http://www.airasia.com/ . On 10 May 2002, the website is available in 7 languages

namely English, Bahasa Malaysia, Mandarin, Tamil, Bahasa Indonesia , Thai and Tagalog.

Reservation and Sales Office

This is convenient for the walk-in customers and it is available at airport and town centers.

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D) Promotion and Education

In service marketing, the education communication plays a vital role

especially for the new customers. The company needs to educate these customers about

the benefits of the service that they can obtain and generate a positive customer response.

One of the recent example is the AirAsia had an advertising deal with Time. This is done

by having the local mobile phone operator’s logo on one of AirAsia’s plane. Besides that,

there will be more promotions on pull-down trays. In addition, it is also obvious that

AirAsia starting offered low fares or sometimes the ‘Zero-fares’ makes people lining up

for hours. (AirAsia berhad, 2008) As a conclusion, this has brought a lot of public to

AirAsia and they got more publicity out of that.

E) People

The people are one of the important key for Airasia to run their business

successfully by influencing customer’s perceptions on their service quality. However,

Airasia do not refer to them as their ‘employees’, they are Allstars for Airasia. The

philosophy at AirAsia is to attract the best, train and retain them. A Corporate Culture

Department was set up in 2004 and came up the same values and vision among the

Allstars with an emphasis on ‘One People, One Culture, One AirAsia, One Family’.

Training will also be provided in order to improve quality of services and also to monitor

the workers’ performance. For example, Airasia is providing a NGL (Next Generation

Leaders) programme for those who are highly organized, creative and always prepare for

challenge before they join Airasia. Besides, Airasia also has training partnership with

CAE Company and Aviation Australia.

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In addition, all top managers will share experiences through internet social

media such as blogs, mails and twitters. Even the Group Chief Executive Officer, Tan Sri

Tony Fernandes will check in guests at the counters or handles baggage on the ramp to

keep in touch with all the activities that are happening on the ground and in the air. These

are how the employees in Airasia workto keep the AirAsia brand flying. This company

will always recruit someone who is able to fit into the Allstar culture, which is to care

about safety, being innovative and creative, working hard and having fun.

F) Process

AirAsia is set to take low-cost flying philosophy which requires its operations

to be simple and efficient. Customers can place their order through visiting reservations

and sales offices or online booking. Customers can visit Airasia homepage then select the

language that they want. After that, they may join member if they want to. No fees will be

charged to join member and customers can save their time by avoiding filling up their

personal information each time they online booking a ticket since the information has

already been saved in the system when they joined member. Select departure and arrival

places following by selecting which routes that they prefer. Finally, email of confirmation

for the booking will send to customers’ email address or phone number after they have

made their payment by credit card or online transferring.

The process of online booking ticket is simple since AirAsia has upgraded its

latest booking innovation in the form of New Skies. This has benefited all the customers

to manage their online bookings easier. Besides, they also can check-in through the web

without queuing up at the counter. AirAsia Group Chief Executive Officer, Tan Sri Tony

Fernandes says, “Of course, the self check-in options will still be made available for

international flights to further enhance the travel experience and avoid congestions or

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long queues at the counters. AirAsia would still encourage all our guests to conduct self

check-in, especially those without any check-in baggage, as well as guests traveling to

domestic destinations.

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G) Productivity and Quality

From 2001 to 2010, Airasia had came up with the result for more than 100

million guests are placing their faith in AirAsia and choosing them as the airline of

choice. AirAsia’s revenue increased from RM3.13 billion in 2009 to RM3.95 billion in

2010. In 2009, and they had grown their fleet from 84 to 90 aircraft. Several methods

have been taken for leading them to the way of succeed. One of the main factors would

definitely be the practicing of low-cost philosophy and passengers could customize their

choices of services without compromising on quality and services. Airasia have created a

brand ‘Now everyone can fly’ in order to increase their reputation and gain loyalty and

satisfaction from the customers.

Nevertheless, “Airasia practices a quick turnaround of 25 minutes, which is

the fastest in the region, resulting in high aircraft utilization, lower costs and greater

airline and staff productivity”. While on 1st March 2002, Airasia came up with the idea of

“Easy to Book, Easy to Pay & Easy to fly”, and they were the first airline in Malaysia

that allowed customers order their bookings through phone and paid by credit cards. The

most important factor that makes Airasia becomes so success is definitely the Allstars.

They really provide a very good service and friendly enough to satisfy all the customers’

needs.

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H) Physical Environment

Physical environment is carefully handle by Airasia too as this can have

profound impact on customer impressions. For example, the Allstars are all wearing red

colour uniform which is matching the theme colour of Airasia-Red. This colour makes

them look smart and professional and thus the customers can feel the passionate of them.

On the other hand, entertainment such as portable players and Premium FlatBed seats is

only applicable in AirAsia X Flight subject to a fee; however the in-flight reading

material Travel 3 Sixty, food and beverages and newspapers are available on all the

flights.

AirAsia X Premium Flat Bed thoughtfully features a universal power socket, a

personalized reading light, and a foldaway table for maximum productivity and

convenience in order to let their passengers to enjoy more comfortability. Passengers

could also spend their time in flight by purchasing AirAsia Merchandise and duty-free

goodies, which range from electrical accessories to personal care items, and chocolates to

watches through magazine.

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Type & Implementation of Service Marketing Strategies

4.1 Starbucks

A) Product

Starbucks product can be categories into either standardize or differentiate. Besides

that, Starbucks always implement their product with standardization, but some other

countries of Starbucks are slightly not standardizing the product due to other reasons or

factors.

New Flavour

In order to fulfill the customer’s requirement and satisfaction, Starbucks has created

some special product with different flavor and taste to suit different type of consumers. For

examples:

As Starbucks had been actively to expanding in China, therefore, it is using a

differentiated strategy to create a new product line “Chinese Tea” as flavor, such as Mudan

White Tea, Oriental Oolong Tea, Jinxuan Tea, Biluochun Green Tea to match the local

customers Furthermore,Starbucks also provide their own “zongzi” during the Dragon Boat

Festival and “moon cakes” during the Mid-Autumn Festival .

Strategic logo

In additional, the previous and existing logos of Starbucks used in packaging are not

suitable for branches near to holy mosque in Saudi Arabia and Mecca due to religion and

government. Muslim consumers over there believe that naked siren is “morally

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inappropriate”. According to And FarAway, the following picture had shown the Starbucks

logo design in the world and Saudi Arabia.

Figure Above Shows the Logo Implementation

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B) Price

The value of product is relying on price and quality and to distinguish Starbucks from

other competitors 'premium price' is one of the main factor. Therefore, price of Starbucks are

slightly higher than competitor. Customer are willing to spend the budget for their service

and products, because Starbucks provide the high quality products, comfortable environment,

unique tastes and conveniences for customer to 'take a break' in their busy life .

Premium Pricing

Besides that, Starbucks in Malaysia are created a new flavor product, called

“Frappuccino”, it only offer at happy hour (5pm to 7pm) on weekdays and available from

April until May 2011. During that time customer can enjoy the half price offer to own it

Based on this case, Starbucks are using “penetration pricing” strategic, in order to capture

market share price for a new product are set below average cost in special time.

However, Starbucks also come out another new product, called “VIA Ready Brew”,

and this product launched by a difference pricing strategic. Instant coffee product in Malaysia

market is not truly with "premium style" compare to Nescafe's Gold Blend. Therefore,

Starbucks used a “skimming pricing strategy” for settle this product. For example, 20 sachets

with 20g each of Nescafe's Gold Blend is selling RM 12.95, compare with Starbucks is

offering 3 sachets is RM8 and 12 sachets is RM28 .Average price Nescafe's Gold Blend is

RM 1.54 and Starbucks VIA is around RM 2.33 till RM 2.66, obviously it is higher than

other competitors.

C) Promotion

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Promotion is via marketing activities such as encouraging the action of buyer to

purchase the product in order to achieve its target market sale. The advertisement cost of

Starbucks is slightly lower than other competitor such as McDonald, Subway, KFC .

Information Technology

Information Technology (IT) plays an important role in a strategy of promotion via

website, included Starbucks Gossip, My Starbucks Idea, Starbucks Newsroom, Starbucks

Melody and Starbucks home page in each country, a lot of new products will be displayed on

these kinds of websites rather than television. Customers will get to know the new products

and would try to own it. Starbucks can easily collect the consumers’ responses via the

website; it is the biggest marketing sources for Starbucks. For example, the new product

instant coffee “VIA Ready Brew” promotes in Malaysia is through the Social networks

whereas in US is using free sample and taste .

Loyalty Card

Starbucks Cards is one of the promotions used in Starbucks. Starbucks Cards had

presented the customer brand loyalty and a lot of promotion. Starbucks can promote their

products and free advertisement via a card. Moreover, Starbucks also provide a card to MNEs

sales, they can use these kinds of cards to a gift their client or reward their employee. In

Malaysia, when customer are purchased 8 packets of 250g whole bean coffee or 12-pack

VIA® Ready Brew, they can get the a complimentary250g whole bean coffee or a 12-pack

VIA® Ready Brew, it can bring new customers .

D) Place (Distribution)

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Starbucks store can be obviously found in any surrounding crowd in high-traffic and

highly visible locations, such as suburban retail centers and downtown, airport terminals, and

office building. Starbucks are provided a good environment for customers to enjoy their

reading, listening to music, free WIFI and meeting.

Furthermore, Starbucks also concern about the services in their coffee shops

Starbucks. Chief Executive Howard Schultz believe that baristas can provide a Starbucks

experience for their customers, therefore, they are focus on their staffs training in order to

provide more higher quality services. As demand grew, Starbucks enable to keep their

competitive position through manage the grown crowd and traffic and provide a good

services in the stores.

E) People

' We treat our customers as we treat one another, with respect and dignity .

Starbucks supports the concept “we are not employees & we are partners” because

passionately share common goals and mutual success”, as it realizes that “happy customers”

start with “happy staff”.

Starbucks spends much time and efforts to train their staff, they go through coffee

making, serving, tasting (staff must know what to advise the customers when those are

confused with the wide choice), communication skill.)

 

Diversity.

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Diversity within the company, diversity of customers, partners and everyone

Starbucks interacts with.  It is a truly international environment welcoming people from all

over the world and treating them equally. This is important as Malaysia itself is a welcoming

country for people from different countries, it supports multinational environment.  And

that’s great as Starbucks would find enough people among locals and internationals searching

for a full-time and part-time job. They just need to have the skills and characteristics

important for Starbucks service:  ready to be everywhere, active and getting the things fast,

customer-oriented, open-minded and friendly.

F) Process

Starbucks does its best to improve the process of giving services from coffee bins to

friendly. Quality of service and quality of coffee are key aspects of Starbucks’ business. The

company realizes that customers actually are not interested in the details of how Starbucks

runs the business; what they care about is that the system works well and they get products

and service of high quality for considerable price. For Example, Starbucks takes care about

their customers not to be stressed in the queue and recently the company has introduced new

payment services. Contactless payment provided by Creditcards allows paying for the drink

by simply holding the card over the terminal without any pin codes and long authorization.

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G) Physical evidence.

Physical evidence is a key component of building customer relationship especially in

service sector, people perceive things much better when they can experience them, thus

everything customers could see and touch forms the perception of the company and

everything it does.

Starbucks offers a combination of product and service and giving customers the best

experience, so that they want to try it again and again. Customers pay not just for cup of

coffee or tea, but for overall enjoying their time. When the café environment is clean and

cozy environment with a bright menu as well staff in green uniform with warm welcome

attracts more customers.

Type & Implementation of Service Marketing Strategies

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4.2 Tesco Merchants Malaysia

A) Product

The retail industry experiences superfluous capacities both innovative services and the

products, being the basic competitive advantage. Thus, the innovation should be a major

factor for Tesco product development. For example, recently, Tesco Malaysia launched their

latest addition to the Tesco family ‘Tesco Loves Baby’ which is a baby range that has been

carefully developed and formulated by Tesco’s product development team. The ‘Tesco Loves

Baby’ products consists of diapers, wet wipes and toiletries, which come in a variety of

quantities to suit customers’ needs and wants whilst ensuring their satisfaction.

Tesco Home brand products is divided into 4 categories:

Tesco Value

Tesco Value products are made to meet customer essential needs. Because these products

serve their most basic purposes in a no-frills manner, they can be attractively priced to help

them spend less.

Tesco Choice

Tesco Tesco Choice products were preferred by more than 80% of Tesco customers. This

is because Tesco Choice products are manufactured with quality in mind. Customers can

sample Tesco Choice products at the Tesco Brand Counter in the store. Switching to Tesco

Choice can help customers save more without compromising on quality.

Tesco Light Choices

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Tesco Light Choices products are specially made for consumers who are undergoing diet

plans, health-conscious or careful about their nutrition intake due to medical reasons. With

lower levels of fats and other undesirable components, Tesco Light Choices is a definite

choice for a healthier living.

Tesco Finest

Tesco Finest is created for those who seek the finer things in life. These fully-imported

goods deliver top-notch quality in taste, aroma and dining experience.

B) Price

Tesco should provide the fair trade products at lower rate in comparison to its

competitors. It is essential to provide the products at value added price, so as to lure the

attention of the customers. Price has always been an important element of the marketing mix

but in retailing the importance is even more significant considering that on average the

margins are around the 1% of net sales.

In the light of this, price is fundamentally linked to the concept of promotion and

competitors are frequently surrounded by an environment of price wars as it is exemplified

between Tesco and Giant in 2012 where Tesco put TWO RED slashes on Giant’s Low Price

Leader Signboard and the next day Giant fought back with an Advertisement to claim that

“Even Tesco Acknowledge that our priced have been The Lowest for Years. Although

aggressive promotions can be the consequence of price conscious customers as a result of the

financial crisis it is also a dangerous strategy if Tesco want to preserve the core purpose of

the company. It is difficult to earn lifetime loyalty breaking promises as Tesco did when

failed to beat Asda prices and had to refund money to customers .

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C) Distribution channels

Tesco has a multi-channel approach so that customer can shop as desired, be that at

home, in store, through their mobile, from the Tesco Direct catalogue. Tesco has different

shop formats to suit customer needs. Some like to drive to a bigger store, others like to shop

for their fresh food on their local high street, and some find it easier to shop online and order

their shopping straight to their door. Now that Tesco offers online shopping, consumers can

make fewer trips to Tesco to stock up on daily necessities. The service is something that

would come in handy for busy mums because it enables consumers to shop in the comfort of

their own home.

Figure Above Distribution Channel

D) Promotion

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Marketing objectives of Tesco include profit maximization in short-term and long-

term perspectives and increasing the value of the brand image. This objective is achieved

through media advertisements, sponsorships of events and charitable causes, point-of-sales

marketing strategies, regular announcement of promotional offers and discounts.

Importantly, apart from contributing to the levels of customer loyalty through

discounts on purchases, Clubcard is used by Tesco as an effective tool to collect valuable

information about consumer behavior and this information can be used to further increase the

value of the brand. The term Promotion encompasses all of the various ways Tesco can

communicate with customers and includes advertising, public relations and publicity (PR),

sales promotion, direct mail, the internet and direct communications as well as sponsorship.

Together all of these communication tools are referred to as the promotional mix.

E) People 

Importance of people element of the marketing mix is paramount in retail industry

because incompetent sales assistants can compromise the effectiveness of other elements of

the marketing mix. Tesco aims to attract and retain highly competent employees through a set

of programs and initiatives such as Colleague Privilege card, Save As You Earn, and Buy As

You Earn schemes

F) Process

Process element of marketing mix in relation to Tesco operations relate to the process

of delivering the service and a set of relevant factors such as customer waiting times on the

queue, the levels of helpfulness of sales assistants .Tesco management addresses this vital

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element of the marketing mix by attempting to ensure the presence adequate numbers of sales

assistants on shop floors at all times and responding to consumer queries and concerns in

effective manners.

G) Physical evidence 

As the last element of the marketing mix, physical evidence relates to tangible aspects of

Tesco stores such as design of stores, packaging quality, size and quality of car parks,

existence wheelchair access facilities etc. Physical evidence element of marketing mix is

developed in Tesco stores in highly standardized formats, and they reflect visual elements of

brand in multiple levels.

Chapter 5 –Conclusion

All the three organization never compromised on their quality and service standards

and maintained their customer relationships with utmost care. This report analyzed the target

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markets and service marketing strategy of companies while it was launched. Also, it shows

how the service marketing mix variables along with services supported their positioning.

Today, these organizations are in cities all over the global. The level of success achieved by

these three organization holds some important lessons and some much needed inspiration to

the business world.

This organization has enlightened us with an enthusiastic and critical strategic

movement to run a business efficiently. The suitable business environment and highly

efficient and productive employees have ensured their success.

In addition, it has very clear and direct mission where each of the employee or

employers of the organization will put more effort to achieve the vision and mission which

have been approved and have been achieved for both long term and short term is strongly

facing the consequences in the term of operation and always overcome by new strategies and

good planning.

Chapter 6 – Referencing

Online

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