MARKETING SERVICE UNIT 2

8/7/2019 MARKETING SERVICE UNIT 2

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MARKETING SERVICE UNIT 2Types of New Services Major Innovations: are new services for markets as yet identified. Ex. Vatika

Towers, Gurgaon.

Start up Businesses: consist of new services for a market that is already served

by existnig products that meet the same generic need. Ex. SAB TV, DTH.

New Services for the currently served market: represent attempts to offer

existing customers of the organizations a service not previously available from thecompany. Ex. VAS in telecom

Service line extensions: represent augmentation of the existing service line. Ex.

Dominos adding Mexican Wrap to its Menu

Service improvements: represents change in features of a service already

offered. Ex. 12 hours banking by ICICI Bank

Style changes: modest innovation but highly visible. Ex. Changing the interiors

of a restaurant

Types of service redesignService redesign has the potential of increasing customer benefits or reducing customercosts.

Self Service

Direct Service

Pre Service: focus is on front end processes. It affects the customer experience

Bundled service

Physical Service: changing customer experience through the tangiblesNew service development process

1. Idea Generation

brainstorming - thinking about it

creating a new service based on some observed need

thinking of a new service based on some accident or chance circumstance

2. Screening

getting opinions from

employees

potential customers

media

government

what are the weaknesses of existing service that are similar

is there any competition for a new product

What are the industry sales and market trends the service idea is based on. Idea Evaluation / Concept Development

estimate costs, revenue, profit,

do market research

target market segmentation

describe the main group of people who will be the first customers4. Development of Service / Business Analysis

physically design and manufacture the service
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estimate likely selling price based upon competition and customer feedback

estimate sales volume based upon size of market

produce prototype or mock-up

test the service (and its packaging) in typical usage situations5. Commercialization

"make enough to sell"

launch "promotion campaign

The challenge that companies always have coming up with new services people like using the old services - especially that take some time to learn

people don't like the expense of a new service

people don't like it when parts or tech support is not available for an old service so

the resent companies always churning out new services

people want to wait until the new service has been on the market for some time so

they can evaluate whether it is useful to switch or not

one of the prime reasons companies feel compelled to come out with newmodels is because of the competitive environment - their competition will

see what is selling, and make a new version with better features, so theoriginal manufacturer has to come up with a "new and improved" model

or customers will switch to the competition

Pricing of ServicesKey differences between customer evaluation of pricing for services and

goods1. Customers often have inaccurate or limited reference prices for services2. Price is a key signal of quality in services

3. Monetary price is not the only price relevant to service customers.

Three key ways service prices are different for consumersCustomers Knowledge of Service Prices

A reference price is a price point in memory for a good or a service, and can consist of

the price last paid, the price most frequently paid, or the average of all prices customershave paid for similar offerings.

Service heterogeneity limits knowledgeService firms have great flexibility in the configurations of services they offer. Infinitepermutations and combinations are available, leading to complex pricing structures

Providers are unwilling to estimate pricesMany providers are unable or unwilling to estimate price in advance. Because providers

themselves do not know what services will be involved.Individual customers need varyConsider the services of a hairstylist or a car garage

Price information is overwhelming in services Customers are overwhelmed with the information they need to gather. Example of

a retail store

Prices are not visibleCustomers know less than expected, they dont understand what are they paying for.


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What do you know about pricing of services?Cost?

Dental checkup

General medical check up

Dental braces

Haircut Bike or Car service

The role of Nonmonetary Costs Other sources of sacrifice perceived by consumers when buying and using a

service.

Time costs

Search costs

Psychological costs

Convenience costs

CostsTime Costs-Services require participation of the customers.Search costs-efforts in identifying and selecting a service

Convenience costs-?

Psychological Costs-Fear of not understanding, fear of rejection, fear of uncertainityApproaches to pricing services Cost Based Pricing-Price determination from expenses on raw materials and labor

plus profit.

Problems: a) Costs are difficult to trace.

b) Labor is difficult to price than materials

c) Cost may not equal value

Examples of cost based pricing strategies used in services Cost plus pricing-In products, its simple but in services its complicated because

tracking and identification of costs are difficult.

Fee for service- Strategy used by professionals, it represents the cost of the timeinvolved in providing the service.

Competition based pricing Predominantly used in two situations:

(a) where services are standard across providers

(b) In oligopolies where there are a few large service providers.

Problems in competition bases pricing Small firms may charge too little to be viable

Which of the following would you select if you

needed a filling in a tooth?

Dentist A Rs 100, 15 kms from home, 3weeks appointment and 3 hrs in the waiti

room.

Dentist B-Rs 150, 15 kms from home, 1

week appointment, 30 mins in the waitinroom.

Dentist C- Rs 200, 3 kms from office, onweek appointment and no time in the

waiting room.

Dentist D- Rs. 300, 3 kms from office, on

week appointment, no time in the waitingroom and nitrix oxide used so no pain.


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Heterogeneity of services limits comparability

Prices may not reflect customer value

Examples of competition based pricing in service industriesPrice signaling occurs in markets with a high concentration of sellers. In this type of

market, any price offered by one company will be matched by competitors to avoid

giving a low cost seller a distinct advantage. Example- airline industry, telecom operatorsGoing rate pricing-charging the most prevalent price in the market. Example- taxi

services

Demand based pricing Involves setting prices consistent with customer perceptions of value: prices are

based on what customers will pay for the services provided.

Problems: a) Monetary price be adjusted to reflect the value of nonmonetary costs.b) Information on service costs is less available to customers, hence price may not be a

central factor.

Four customer definitions of value Value is low price

Value is everything I want in service

Value is the quality I get for the price I pay

Value is all that I get for all that I give

Value is low priceEquating value with low price

For dry cleaning Value means the lowest price

For a fast food restaurant When I can use coupons, I feel that the service is a

value

Value is whatever I want in a product or serviceValue consumers receive from a service or product as the most important component of

value For medical services Value is high quality

For a music show Value is the best performance

Value is the quality I get for the price I payValue as a trade-off between the money they give up and the quality they receive

For a hotel for vacation Value is the price first and quality second

For a hotel for business travel Value is the lowest price for a quality brand

Value is what I get for what I giveAll the benefits they receive as well as all sacrifice components (money, time, effort)

when describing value

For a hairstylist Value is what I pay in cost and time for the look I get

For executive education Value is getting a good educational experience in the

shortest time possible

Perceived ValueIt is the consumers overall assessment of the utility of a service based on perceptions of

what is received and what is given

Physical EvidenceCustomers asses the firm and its services on the basis of physical evidence


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Elements Facility Exterior-exterior design, signage, parking, landscape, surrounding

environment.

Facility Interior- Interior design, equipment, signage, layout, air quality /

temperature

Other tangibles-Business cards, Stationery, Billing statements, reports, employeedress, uniforms, brochures, web pages, virtual service scape

Types of Service ScapeServicescape Use-

Self service

remote service,

interpersonal service

Implications Who should be consulted in making servicescape and other evidence decisions?

What organizational goals might be targeted through serviescape design?

How complex is the set of decisions regarding the servicescape?Roles of service scape Package

Facilitator

Socializer

Differentiator

What role do employees play in service delivery?Employees are the Service and the Brand

Employees are The service

Organization in the eyes of the customers

The Brand

The marketers

The Right EmployeesHire the right employees

Compete for the Best People

Hire for Service Competencies and Service Inclination

Be the preferred employer

Training Technical and Interactive Skills

Empower Employees and give them a sense of ownership

Conflicts faced by front line employees Person / role conflict

Organization / Client Conflict

Interclient conflict

The Services Marketing Triangle


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COMPANY MANEGEMENT

Customers stop doing business with you because: 1% Die

3% move away

5% seek alternatives or develop other business relationships.

9% begin doing business with the competitors

14% QUIT for pricing reasons 68% are upset with the treatment they have received.

REASONS FOR POOR SERVICE: Uncaring employees

Poor employee training

Negative attitude of employees toward customers

Differences in perception between what businesses think customers want and

what customers actually want

REASONS FOR POOR SERVICE Differences in perception between the product or service businesses think they

provide and what customers think they receive. Differences in perception between the way businesses think customers want to be

treated and the way customers really want to be treated, or are actually treated

Importance of Customers in Service DeliveryLevel of customer participation across different services

Low: Consumer presence required during service delivery Products are standardized

Internal

Marketing

Interactive Marketing

External

Marketing

Customers

enabling

promises

keeping promises

setting

promises


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Service is provided regardless of any individual service

Payment may be the only required customer inputEnd consumer examples

Airline travel, fast food restaurant

Business to business customer examples

Uniform cleaning servicePest Control

Moderate: consumer inputs required for service creation Clients inputs customize a standard service

Provision of service requires customer purchase

Customer inputs are necessaryEnd consumer examples

Haircut, full service restaurantB to B customer examples

Freight transportation, agency created advertising campaign

High: customer cocreates the service product Active client participation guides the customized service

Active participation and inputs of customer necessaryEnd consumer examples

Marriage counseling, weight reduction programmeB to B customer examples

Management consulting, management seminar, installation of computer network

Customers roles Customers as productive resources

Customers as contributors to service quality and satisfaction

Customers as competitors

Self service technologies Are produced entirely by the customer without any direct involvement or

interaction with the firms employees

ATM, Electronic BP sugar machines, distance education, online auctions, internetbanking, online insurance, courier tracking, automated investment transaction.

Key intermediaries for service delivery Franchising

Agents and brokers

Electronic Channels

Strategies for effective service delivery through intermediaries

Control strategiesMeasurement & review

Empowerment strategies

Support & develop systems

Partnering Strategies

Goal alignment, consultation & cooperation

Key reasons for service communication problems Inadequate management of customer expectations


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Inadequate management of service promises

Inadequate customer education

Inadequate internal marketing communications

Exceeding customer expectationsUnderstand types of expectations

Desired

AdequateExceeding adequate customer expectations is unlikely to produce delight in customers

Know which customer expectations to exceed

Documents

MARKETING SERVICE UNIT 2