Marketing MixMarketing Mix

Services MarketingServices Marketing

1.PRODUCT

Marketing science is product oriented Product marketing principle is not

applicable to services marketing. It will be like saying apples are just like

oranges except for their appleness With regard to marketing mix we use all

the four of them in services though with a considerable difference.

We will also consider another three-People,Physical evidence & Process

1.PRODUCT

There are four levels of service1. Generic: The basic benefit the

serviceprovides Ex: In a restaurant, serving space,

food & the service providers In a Bank, banking space, loanable

funds, safety of deposits

1.PRODUCT2. Expected: The benefit expected by the Customer from the service provider Ex: Restaurant: Cleanliness, timely service

and polite & courteous service Ex:Bank-Correct transaction, timely service,

banking hours, minimum courtesy 3. Augmented: To add something to the

expected which will please the customer Ex: Restaurant - Sparkling floor, smiling

employees, welcome note Ex: Bank: Congenial waiting room, friendly

employees, quicker service, admission of fault

1.PRODUCT

4. Potential - Beyond the usual & expected - pleasant surprise

Ex: Restaurant - welcome flowers choicest wine, manager’s word of thanks

All purchases have tangibles & intangibles. Hence proper mix is necessary to satisfy the customers

The mix may lead to segmentation of the market

AIRLINES TRAVEL1. Economy Travelers: Want travel at the

lowest cost. Focus is transport Tangible service element- Aircraft Intangible service element- Transport

2. Business Professional :Want convenient timing. Focus is service schedule & transportation

Tangible: The appearance of flight assistants

Intangible: Punctuality

Economy Class - They want convenience in preflight and post flight arrangements

Their focus is transportation & pre & post flight

service Tangible : Aircraft & agent Intangible: Comfort & personal care

AIRLINES TRAVEL

Airlines Travels

Business Class: They want exquisite travel. Their focus is food, beverages Tangible-Space, seats Intangible-Comfort & personal care

3. Cargo : Punctuality, pre & post Delivery facilities.Their focus is delivery & service

2.PRICE1. It is difficult to price services. 2. Since the services are perishable it is

difficult to calculate the unit cost. Hence service provider uses some unit to calculate the price

Ex : A doctor fixes the rate for each kind of surgery.

Ex:A lawyer fixes the rate per hour he devotes to the client or for each appearance in the court.

3. Since services are perishable it is very difficult to price a service keeping in mind the demand fluctuation & the inflexibility of supply

2.PRICE There are cases where price is administered &

in other cases it is meter driven Ex: Bus fare, Electricity charges Hence the common method for pricing services

is the cost plus method Variable cost, overhead & a determined margin Value-in-use Pricing: Establishing a price based a price based

on a product's value to the customer as opposed to the on a product's value to the customer as opposed to the manufacturer's cost of production. This method of manufacturer's cost of production. This method of pricing is effective only when consumers have no pricing is effective only when consumers have no effective substitutes.effective substitutes.

3.PLACE - DISTRIBUTION

Since services are often inseparable from the provider, direct marketing is commonHence, franchising is gaining importanceCritical factors to choose a location a) Convenience - It is important for retail

stores, banks, repair services, theatres b) Cost of operating - Where convenience is

not a critical factor, cost becomes the critical factor.

Ex: Specialty stores, wholesalers

3.PLACE - DISTRIBUTIONc) Proximity to competition -For shopping services it is better to be close to thecompetitor Ex: Fast food, Tailors, Designersd) Availability of support system-Tourism, Resorts,

Hotelse) Geographic & environmental factors

Entertainment, Holidaying etc these factors become important

Hill stations, heritage of sterling resorts, gambling resorts

3.PLACE - DISTRIBUTION

f) Communication network - It is very crucial for many services.

Ex: Merchant banking, Financial services and software

Transport facilities- These are crucial for wholesalers, couriers, mail order houses

4.PROMOTION A) Services are intangible so it is good to provide some tangibility, likeumbrella for Insurance, LIC symbol, UTI’s

Kumbham

Since services are intangible, consumers can not see & build a mental picture,so we should go for frequent advertising

B) Since credibility & experiential qualities dominate service it is important to use opinion leaders

The word of mouth promotion is very effective for services

4.PROMOTIONC) Since producer & seller can not be

separated, they should emphasize qualities & experiences (even their pictures may be used)

Useful to create awareness (brochures, newsletters, news releases can be used also)

D) Supply is inflexible in short run & its difficult to meet seasonal demand

Useful to de-market a service during peak season and promote it in lean season

4.PROMOTION Direct response advertising is becoming popular.

After creating awareness through advertising, sellers can phone / brochures / persons for solicitation.

Ex: Investment companies, travel resorts

Good method to evaluate cost per order & very personalized.

For Institutional sellers, it is less of advertising and more of personal selling.

Where a service requires the consumers (not customers) physical presence, more advertising is useful.

5.PEOPLE People means all humans who play a part in service delivery & who influence buyer’s perception

Ex: Employees, customers, other customers in the service encounter

All of them give cues to the customer regarding the nature of the service through their dress,

appearance& attitude

Service provider is very importantIn some cases he himself is the service

There are two types of People – 1. Direct contact with customer Ex: Lawyer, Psychiatrist, Consultant

2. Indirect or no contact with customer Ex: Airline baggage handler, telephone

installer (not important people but their behavior affects service quality)

5.PEOPLE

6.PHYSICAL EVIDENCEAs services are intangible, customers rely ontangible cues / physical evidence to evaluateservice o before purchase, o during consumption &o after consumption

Physical evidence is to Service what Packaging is

to a Product - the silent salesperson – givingconfidence & favorable impression

6.PHYSICAL EVIDENCEAll the more important for communicating about Credence (credibility) service – Auto repair Experiential (experience based) service - Hotels

Facility (exterior) – Exterior design, parking, landscapeFacility (interior) - Interior design, signage, layout, equipt.

Other tangibles - Business cards, employee dress, stationar

billing statement

Physical evidence is called Servicescape

Variation in form & use of Physical Evidence

Servicescape Usage

Elaborate Physical Evidence

LimitedPhysical Evidence

Self-ServiceCust Only

Super market ATMPost Office

Remote Service

Telephone CoInsurance Co

Telephone mailOrder

Interpersonal Service

Hotels, HospitalBank

Dry cleanersHair salon

Servicescape effects on Behavior

Stimulus>Organism>ResponseBehaviors in Servicescape - Response Human behavior is influenced by the

physical setting in which it occurs We act to physical setting in two ways -

Approach or Avoidance Consumers come to servicescapes with

a goal Physical setting helps in that goal

Internal Response to the Servicescapes - Organisms

Employees & Customers respond to physical surrounding

cognitively, emotionally & physiologically & these responses

influence their behavior

Effect on cognition is BeliefEx: Type of office furniture & decor & the apparel worn

by the lawyer may influence one’s belief about his

success

Effect on emotionEx: Feel happy, light hearted, relaxedCoolers & music may lead to pleasurable environment people spend money

Effect on physiology - Noise may cause physical

discomfort, temperature, aircraft seatsEnvironmental Dimensions - Stimuli Ambient conditions - Temperature, light

music and colorEx:Non AC movie theatre may influence your

view of the movie Inanimate Objects Other Physical Evidence - Signs, symbols &

artifactsEx: Signs outside, white table clothes in a hotel

Internal Response to the Servicescapes - Organisms

7.PROCESS

Process - actual procedures and flow of activities by which the service is delivered

Process is often inseparable from customer as he / she experiences the process

Within the control of service firm and influences purchase decision

Various steps a customer goes through to receive service provides evidence on which service is judged

7.PROCESS

A person looks if a service is standardized or customized

If the process empowered If it is very complex, requires complicated &

extensive actions to complete a transaction Ex: Bank loan

1. Product : Selection & production of appealing menu

2. Price : Pricing of menu offerings3. Place : Creation of viable network of

outlets supporting facilities - warehouses4. Promotion : In the media & backed by point

of sale merchandising5. People : Friendliness, prompt response to

dinners, their fulfilling orders & handling of payments, ability to keep the line moving, ability to be enthusiastic & smiling.

Using 7 Ps In a Fast Food Restaurant

6. Physical Evidence: Essential for convenience of service, enjoyment of meal & efficiency to

serve Large numbers of in a short time

Using 7 Ps In a Fast Food Restaurant

7. Process :The task schedules, supervision of activities involved in meal preparation, packaging & serving.

Design of order forms, pre-programming cash

registers, forecasting the demand for menu

Ideal cooking, handling of food, disposal of waste and coping with the customer complaints

Using 7 Ps In a Fast Food Restaurant