Everything you need to know about service marketing. A service is an act, deed, performance or a rendering offered by one person to another.
In a literal sense a service does not involve the transfer of any tangible commodity. Service is integral part of human life in modern day.
In the light of liberalization, privatization and globalization, services have been commercialized and have become more professional in nature. Services can be defined as human efforts, which provide succour to the needy.
It may be food to a hungry person, water to a thirsty person, medical services to an ailing person, education to a student, loan to a farmer, transport to a consumer, communication aid to two persons who want to share a thought, pleasure or pain.
Services refer to social efforts which include government to fight five giant evils, which are wants, disease, ignorance, squalor and illness in the society.
Services are activities, benefits or satisfactions which are offered for sale or are provided in connection with the sale of goods.
Services include a wide range varying from education, transportation, hospitality, finance, real estates, accounting, banking, insurance, taxation, consultancy, health care etc. These services are together called the services sector or the tertiary sector.
1. Introduction to Service Marketing 2. Meaning of Service Marketing 3. Basic Concept 4. Definitions 5. Evolution of Services 6. Characteristics 7. Classification 8. Examples
9. Importance 10. Service Marketing Mix 11. Extended Marketing Mix 12. Trends 13. Role of Distribution in Services 14. Strategies 15. Strategies Based on the Size of the Market 16. Problem Areas.
What is Service Marketing: Meaning, Concept, Classification, Examples, Importance, Strategies and Other Details
- Introduction to Service Marketing
- Meaning of Service Marketing
- Basic Concept of Service Marketing
- Definitions of Service Marketing
- Evolution of Services
- Characteristics of Service Marketing
- Classification of Service Marketing
- Examples of Service Marketing
- Importance of Service Marketing
- Service Marketing Mix
- Extended Marketing Mix
- Trends in Service Marketing
- Role of Distribution in Services
- Strategies Adopted in Service Marketing
- Strategies Based on the Size of the Market
- Problem Areas in Service Marketing
What is Service Marketing – Introduction
Services constitute a very significant portion of the business market. There has been an enormous growth of the service sector. It is the largest sector in most of the economies and it is the fastest growing sector in many of them. The developed economies are primarily service economies in the sense that the service sector generates bulk of the employment and income. The contribution of services to GDP and employment is substantially high in, particularly, the developed economies.
Although the share of services in the GDP of developing economies is lower than in the developed ones, the service sector has been growing very fast in the developing world. During 1980-1990 the average annual growth rate of value added in the service sector in the developing economies was 3.5 per cent compared to the GDP growth rate of 3 per cent. During 1990-98 these were respectively 3.7 and 3.3.
The service sector of India grew at 6.9 per cent and 7.9 per cent during the above periods, compared to the corresponding GDP growth rates of 5.8 per cent and 5.9 per cent. The share of services in the GDP of India increased from 36 per cent to 48 percent in 2001.
It is not easy to estimate the share of the industrial services in the services sector. It is, however, common knowledge that it is quite substantial. The industrial services market has been growing very fast.
Some of the important developments which contributed to the growth of the services market are the following.
As Berry observes, while a product is an object, devise or physical thing, a service is a deed, performance, or effort. “As with products, every industrial service represents a bundle of need satisfying attributes. These attributes are provided to a buyer through the service experience. The term experience is used to connote all aspects of person-to-person customer service interaction. In providing a particular need-satisfying experience to a customer, the marketer is said to be ‘delivering’ a service’.”
Pyne defines service as – “an activity which has some element of intangibility associated with it which involves some interaction-with customers for property in their possession, and does not result in a transfer ownership. A change in the condition many occur and production of the service may or may not be closely associated with a physical product.”
On the basis of the extent of service component involved in a company’s offer to the market place, Kotler distinguishes the following five categories of offer –
1. A pure tangible good, like screw or lubricant, with no service accompanying the product.
2. A tangible good with accompanying service, like CNC lathe.
3. A hybrid, where the offer consists of more or less equal parts of goods and services such as – restaurants which are patronised both for their food and service.
4. A major service with accompanying minor goods and services. For example, airline passengers are provided with some food and drinks etc., during the air travel.
5. A pure service, like consultancy.
What is Service Marketing – Meaning
A service is an act, deed, performance or a rendering offered by one person to another. In a literal sense a service does not involve the transfer of any tangible commodity.
Service is integral part of human life in modern day. In the light of liberalization, privatization and globalization, services have been commercialized and have become more professional in nature. In the past, a service was considered as a service performed without expecting any returns (social service), however over the years it has been commercialized. In the present context a service is an activity performed by a person to another for a charge (commercial service).
Services include a wide range varying from education, transportation, hospitality, finance, real estates, accounting, banking, insurance, taxation, consultancy, health care etc. These services are together called the services sector or the tertiary sector.
Everything that grows also changes its structure and change is inevitable. A human being passes through different phases-infancy to old age and during which he constantly changes in terms of perception, attitude, physical and mental attributes etc.
Similarly a growing economy changes the proportions and interrelations among its basic sectors namely agriculture, industry, and services and between other sectors like rural and urban, public and private, domestic-and export-oriented etc. All growing economies are likely to go through these stages.
A service is a set of consumable and perishable benefits delivered by a service house to a customer to ensure customer satisfaction.
Goods and services are produced in every economy. In a crude way, a good is something one can take with him after purchase, whereas a service cannot be taken as it is intangible. Example when a person goes to a dentist he use the services of the dentist and returns with a relief. In the process he does not get any physical commodity but still he has consumed a service.
Core goods providers provide a significant service component as part of their businesses. For example, automobile manufacturers provide extensive spare parts distribution services to support repair centers at dealers. Core service providers must integrate tangible goods with intangible services.
For example, a cable television company must provide cable hookup, repair services and also high-definition cable boxes. Pure services, such as may be offered by a financial consulting firm, may need little in the way of facilitating goods, but what they do use such as textbooks, professional references, and spreadsheets are critical to their performance.
The recent services are the ones related to IT, BPO, KPO, BT etc. These sectors are growing phenomenally.
A commercial service is a type of economic activity that is intangible, cannot be stored and does not result in any ownership. A service is consumed at the point of sale itself. Services are one of the two key components of economics, the other one being goods.
Sometimes services are difficult to identify because they are closely associated with a good; such as the combination of a diagnosis with the administration of a medicine. No transfer of possession or ownership takes place when a service is sold.
The American Marketing Associations defines services as “(1) activities, benefits or satisfaction which are offered for sale, (2) are provided in connection with the sale of goods”. The services described in the second half of the definition are those included in the sale of goods to the customer, viz., pre-sale and after sale services, e.g., services on installation of machinery, its maintenance and repairs, credit and delivery services etc.
The first part of the said definition, viz., “activities, benefits or satisfactions which are offered for sale.” The marketing of these kinds of services usually does not include the sale of goods to the customer. Such activities, benefits or satisfactions offered for sale are intangible in nature, i.e., they are not concrete objects which can be seen, tasted, felt, moved and so on.
There is a regular market for such services represented by activities, benefits and satisfactions offered for sale by providers of services. These services may be labour services, personal services, professional services or institutional services such as offered by transport, banking, insurance, warehousing, advertising and such other services organisations.
When a customer buys a service in the service market be buys the time, knowledge, still or resources of someone else who is the provider or supplier of a service. The buyer receives satisfactions or benefits from the activities of the provider who be an individual, a firm or a company, i.e., and institution specialising in selling certain benefits or satisfaction.
What is Service Marketing – Basic Concept
There are two main segments in the consumers market. One is the ‘products segment’ and the other one is the ‘services segment’. The products segment is the basic and old and hence well-known and understood by its consumers. Main players in the consumers market of the products segment are the industries and business organisations.
The consumers who buy these products are the general public and the industries. There are plenty of suppliers in the home as well as international markets for variety of quality products with varying prices. These factors of supply, quality and price create a competitive environment in the market, which necessitate the marketing efforts for promotion and sale of products made by the organisations.
Thus, the marketing activities and its concept in the products segments are understood and well known since long for its purpose and intent.
However, for the services sector, the marketing concept was not recognised earlier due to following reasons not warranting the needs of marketing efforts:
i. Services sectors were initially in the limited areas like, Banks, insurance, hospitals,
ii. These were mostly in government sectors,
iii. Number of players was very small; hence there was no competition environment.
With the passage of time, services sector improved and developments started with the additions of more players and new areas, especially in the information technology, telecommunications, hospitality, tourisms and recreations etc.
This has created a competitive environment amongst the players in the services sector. Therefore, the marketing activities have become equally important and necessary in the services sector too in line with the products segment. Marketing activities have to be initiated in the areas of innovations, quality improvement and customer relationships management, services after sales, so as to promote the business.
Thus, marketing of services has become utmost necessary in the present competitive business scenario in the services sector.
Till recently many organisations selling products and services were product and sales oriented. The focus was internal. Let us produce what we think, the market wants and the sales department will manage to sell the output’. However, since 1960, service organisations, particularly, banking, transport and insurance companies are developing the marketing organization which is both internally and externally oriented.
Under the marketing concept a marketer adopts consumer-oriented attitude, viz., the creation of customer needs and wants. Profit is now regarded as a reward for creating a satisfied customer. A business that applies the marketing concept or consumer oriented marketing approach, centres all plans, policies programmes and operations on consumer need. Market segmentation and market demand identification receive great emphasis. Management knows that its primary function is marketing rather than production.
What is Service Marketing – Definitions: By Philip Kotler, Zeithmal and Bitner, Regan, Christian Gronross and a Few Others
The most comprehensive definition of a service has been given by Philip Kotler, who defines a service as an act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.
Zeithmal and Bitner define services as ‘deeds, processes and performances’. Here, deeds are the actions of the service provider, processes are the steps in the provision of service, and performance is the customer’s understanding of how the service has been delivered.
A comprehensive definition of services must include the following elements:
i. Lack of physical output or construction
ii. Benefit to the receiver from the service rather than the product offered
iii. The intangible nature of services
iv. The possible combination of a service with the production of goods
v. Marketing of an idea or a concept.
Services are economic activities that bring about a desired change in, or on behalf of, the service recipient, thereby creating value and providing benefits for the customers. Thus, the focus remains on customer satisfaction, just as in goods, but in services, emphasis is on the personal reception of these benefits.
The interrelation of the nature of services, understanding of customer requirements, and the techniques of services marketing.
Adam Smith, the father of Economics, first time distinguish between tangible and intangible output. But in his opinion, the services of these intangible intermediaries are unproductive. But Alfred Marshall, a Neo – classical economist, modified the thinking of Adam Smith and said “a person providing of a services performed in order to are not make them available to consumers”. He said, tangibles get value only when intangibles exist. Therefore, service is a value addition process.
American Marketing Association (1960) – “activities, benefits or satisfactions which are offered for sale provided in connection with the sale of goods”.
Regan in 1963 – “Services represents either intangibles yielding satisfactions directly (transportation, housing) or intangibles yielding satisfaction jointly when purchased either with commodities or other services (credit, delivery)”.
Philip Kotler in 1984 – “any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything”.
Christian Gronross – in 1990 “A services is an activity or series of activities of more or less intangible nature that normally, not necessarily, take place in interactions between the customer and services employees and / or systems of the services provider, which are provided as solution to customer problems.”
The above definitions make it very clear that, anything that comes / provided along with the product is called services. These cannot be seen only experienced as they are intangible. But, without these, tangible goods may loss value. Services value. Services add value to the goods. As there is no ownership assigned, it cannot be transferred. Services are to be used, as most of them cannot be postponed to future-period. Ex Door delivery services, if not used at the time of purchase, it cannot be offered second time.
Therefore, services such as – demonstration, door delivery, installation, pre and post sales services, repairs, maintenance, credit facility, installment payments, regular visits, etc., go a long in the list.
What is Service Marketing – Evolution of Services as Value Contributors
Adam Smith, a well-known economist of the late eighteenth century, has defined the important concept of value generation.
In his original theory, he proposed the following schematics:
Production → Tangible Output → Value generation
Thus, he proposed that the production of goods leads to tangible output. This output or the finished product is consumed by the users. Consumption leads to value generation, as the customer’s overt or latent needs are satisfied. However, Smith dismissed the contribution of services to the process of value generation. He emphatically stated that the generation of services is unproductive and thus devoid of any value creation.
It is indeed difficult to convey the concept of value generation when no tangible ownership of a product seems to have been transferred. Alfred Marshall, another famous economist, in the late nineteenth century, corrected this notion of the role of services.
Doubts about the ability of the services sector to contribute significantly to the economic development and well-being of societies, however, continued to exist till the twentieth century. Today we are aware that both goods and services satisfy different needs of customers, and hence, both are value contributors.
Today, the services sector is recognized as a crucial field for economic well-being. Consumption of services is deemed essential today. For example, consumption of services such as education, health care, civic services, transport and communication, tourism, entertainment, and sports are considered vital.
Event management and media services involving important sports and cultural events keep billions of people spellbound, generate huge revenues, and add dramatically to the economic growth of the countries and states hosting such events. Thus, the consumer focus has shifted largely from more and more consumption of physical goods (more food, bigger houses, or more clothes) to greater consumption of services.
Indeed, once the basic needs are met, consumers seem to seek more services than goods, and a higher standard of living usually means increased consumption of services rather than higher consumption of goods only.
There seems to be a physical limit to the number of products that can be humanly consumed. No matter how much money you have, you cannot consume more than a certain amount of food (1,200 to 2,000 calories) per day. You may have a TV in each room of the house and even in the car; still, you will be able watch only one at a time. There seems to be an upper limit to the per capita consumption of goods. So far, there seems to be no such upper limit in the consumption of services.
The world over, due to gains in productivity, the working hours of both employers and employees have been reduced significantly. Even in fields such as agriculture, which are relatively technologically backward, the advent of the tractor and the electric and diesel pumps has reduced the workload considerably. This has led to more spare time, a large bulk of which is being used for pursuing various hobbies and recreational activities.
Indeed, the very definition of development has undergone a change. Today, developed and advanced societies are those that have higher per capita consumption of services than goods. Statistics such as per capita food grain or steel consumption are no longer considered to be the indices of development for societies or countries.
Even in India, this is the trend. The country has undergone a tremendous change in the last few decades, with services gaining greater importance as regards the national economy and employment scenario.
What is Service Marketing – 6 Main Characteristics: Intangibility, Perishability, Inseparability, Simultaneity, Variability and Ownership
The characteristics of the services differentiate the services from the tangible goods.
The following are the characteristics of services:
Services are intangible and therefore cannot be touched, handled, smelt or tasted (physical senses). This is because service itself is an activity. A service however, can be experienced. A service also gives a certain amount of satisfaction to the consumers. On account of the intangibility, there is no ownership created in case of services. A service can only be generated and used and can never be owned.
A service has to be consumed simultaneously with its production. A service cannot be stored like a tangible commodity. Services are perishable in terms of delivery and time. An empty seat on a plane never can be utilized and charged after departure. Revenue once lost is lost forever.
When the service has been completely rendered to the requesting service consumer, this particular service irreversibly vanishes as it has been consumed by the service consumer. Example – after the passenger has been transported to the destination, he cannot be transported again to the previous location at the previous point of time.
Commodities once produced can be sold at a later point of time but in case of services it is not possible. Examples – In the cases of services of a doctor to his patient, teacher to his student, the simultaneous presence of both-the producer of the service and the consumer of the service at that point of time is absolutely necessary.
The service provider is indispensable for service delivery as he must promptly generate and render the service to the requesting service consumer. Therefore the service provider, the service itself and the service consumer are inseparable.
Services are generated and consumed during the same period of time. As soon as the service consumer has requested the service (delivery), the particular service must be generated from scratch without any delay. The service consumer instantaneously consumes the rendered benefits to satisfy his wants. Therefore the production and consumption of services are always simultaneous.
Each service is unique. Services lack homogeneity. Example – a doctor treats two patients with similar ailments on the same day. The level of satisfaction in the minds of these patients after the treatment will never be the same. The difference is caused by factors such as the mood of the doctor, the fatigue level of the doctor, the way the service is perceived by the individual patient etc. There will a difference in the service even if the same doctor treats the same patient on two different occasions.
This is because the moods of the doctor and the patient do not remain the same on both the occasions. No two units of service are identical even if they are generated by the same person. Factors like quality control, standardization etc. which can be very successfully implemented in case of production of tangible goods cannot be applied in case of services. Services always vary with each other.
No ownership is created in case of services. At the time of creating a service or delivering a service, the service provider does not own the service. He only owns the physical infrastructure necessary to create the service. Similarly at the time of consumption or after the consumption, the service consumer does not own the service. He only consumes the service.
After the consumption, the consumer has only the experience but the service itself would have become non-existent. A service cannot be owned by anybody because it is basically an intangible product.
What is Service Marketing – Classification: On the Basis of End User, On the Basis of Tangibility, On the Basis of Specialization and a Few Others
Services span a large number of areas in the present context. Everyday a new service is being introduced.
Though it is really difficult to classify all the services, the following classifications have been accepted:
i. Consumer services – These are directly provided to end users like hair; dressing, laundry, package holiday, counseling etc.
ii. Business to business services – These are provided to businesses like consultancy, marketing research, advertising etc.
2. On the Basis of Tangibility:
i. Tangible services – These are services which are connected to the period to which the products are purchased from the seller like televisions, laptops, cars, watches etc.
ii. Intangible services – These are the services which do not provide customers with any tangible products. Examples- consultancy, services at a spa and massage centres.
3. On the Basis of Specialization:
i. Professional services – These are services which can be provided only by sufficiently qualified and experienced persons. Some of such service providers also have recognition by the required authorities. Examples – counseling, audit, legal services, health care etc.
ii. Nonprofessional services – These are services which can be provided even by persons not possessing any educational or professional qualifications. Examples – domestic servants, gardening, painting etc.
4. On the Basis of Profit Orientation:
i. Commercial services – These are the services offered on business lines with an intention of earning profit. Examples- private banking, beauty parlors etc.
ii. Social services – These are the services offered on philanthropic lines without any intention of earning profit. These are provided with the intention of serving the society and are therefore also called social services. Examples – services rendered by orphanages, charitable trusts etc.
5. On the Basis of Labor Intensiveness:
i. People based services – These are services which involve human labour of a high degree. These services are actually provided by these human beings. Examples – repairs of auto mobiles, catering, event management, security services etc.
ii. Equipment based services – These are services where certain equipments play a dominant role. The role played by labourers is either minimal or totally absent. Examples- vending machines, ATMs, self-activating machines.
6. On the Basis of Contact and Interaction between the Service Provider and the Service Consumer:
i. High contact services – These are the services where the contact or the interaction between the service provider and the service consumer, is very high. The service cannot be provided in the absence of such contact or interaction. Examples – Psychiatric counseling, surgery etc.
ii. Low contact services – These are the services where the contact or the interaction between the service provider and the service consumer is very low. The service can be provided even without such a contact or interaction. Examples – tailoring, diagnostic services etc.
What is Service Marketing – Examples of Services: Food Services, Hotels, Car Service Firms, Entertainment Services, Transport Services and a Few Others
1. Food Services:
Restaurants, cafeterias and hotels are offering food services to numerous individuals and families who have firmly developed the habit of eating out. These eating places are ever-growing as the service they sell is definitely wanted by the public. Small eating places offer simple and cheaper meals.
Five-star hotels offer elegant and costly food with superb services and royal comforts. Increasing tourism has also boosted the development of the hotel industry. We also have caterers who specialise in supplying food and service for dinners and parties at our residences on ceremonial and special occasions.
2. Hotels and Motels:
Lakhs of people, every day, use lodging and boarding services all over the country. Tourism, hotels and motels are growing in numbers every year. Modern hotels provide a luxurious life to travellers and tourists. Tourism is now considered as a major source of foreign exchange in all countries. Modern hotels provide numerous amenities, comforts, refined and elegant services.
3. Personal Care Services:
Rising standards of living brought about the development in the personal care services (helping a customer to be well groomed). These services are offered by health and fitness centres, beauty parlours, barber shops, laundries, drycleaners, garment repair shops, shoe repair shops and so on.
Health and fitness organisations are growing in importance and their popularity in all countries due to an ever increasing demand for improving individual personality and efficiency. In the anti-fat modern culture and lifestyle, figure consciousness and weight reduction (due to obesity) have assumed unique importance. People have money and they do not mind spending on themselves.
4. Car Service Firms (Garages):
Lakhs of car owners are dependent on car service centres. Petrol pumps sell both goods and services because of which they are now called service stations. There are also numerous garages and repair shops specialising in repairs and maintenance of cars, trucks, motorcycles and scooters.
5. Entertainment Services:
Increasing purchasing power and more leisure time are responsible for the steady growth of entertainment services. Movies, sports, amusement parks, circuses, car racing, cricket, billiards, music, dancing and drama are such popular forms of organised entertainment today.
6. Transport Services:
Railways, buses, ships and aeroplanes provide transport services for moving people and goods from one place to another. The fastest growth has taken place in air transport. A person can have a round-the-world trip in just one fortnight. Air transport has become very popular in international tourism.
7. Communication Services:
Nowadays, we have the latest means of communication such as the internet, mobile, telephone, telegraph, telex and postal services at our disposal. We also have television, mobile and satellite communications all over the world. The current technology has contributed tremendously to the rapid growth of all types of communication services.
8. Insurance Services:
Insurance gives protection against risk, e.g. accident, fire, death, theft, sickness, unemployment and so on. People can save for their children’s education, daughter’s marriage or for their retirement. Security of life and property provided by insurance gives us freedom from anxiety and peace of mind.
9. Financial Services:
Many consumers require the service of banks for financing their purchases of durable goods usually through installment sales. In foreign countries, they even have easy house financing through bank loans. Home owning is made easy with the help of mortgage loans. The modern high standard of living has become a reality for masses due to a customer-oriented marketing approach adopted by banks recently.
What is Service Marketing – Importance
The significance of the services may be discussed under the following headings:
1. Support to Primary and Secondary Sector- Primary sectors and secondary sectors are always in need of various services in order to function smoothly on a regular basis. Thus, services form an important part for the efficient functioning of these sectors.
2. Creates Employment Avenues- Service sectors create a lot of employment opportunities in various sectors like BPOs, hospitality, retail, tourism, entertainment, brokerages, software, aviation and more. This in turn promotes and develops the overall growth of the nation.
3. Contribution to National Income- Due to the growth and development of the service sector, the other sectors in the market are also witnessing an equal growth and development. Moreover, because of this rapid growth and development of all the sectors in the market, it automatically contributes to the overall national income of the country.
4. Provision for Basic Services- Service sectors provide the country with the basic services like hospitality, transport, educational institutions, courts, telecommunications, insurance companies, banks, post offices and a lot more. This facilitates the daily living of a common man like us.
5. Adds to Comforts and Leisure- Service sectors provide ample comforts and leisure to the life of a common man. By providing various services, it definitely makes our lives easy and smooth.
6. Improvement in India’s Image- Various services in the Indian market like telecommunications, BPOs, software development, Information Technology Enabled Services (ITES) has helped in improving the image of our country in the eyes of the entire globe. Other nations have started considering India at par with them when it comes to its service sectors.
7. Increase in Exports- Due to the increase in the service sectors and the quality of the same, there has been a tremendous increase in the exports of the country. This in turn is adding rapid growth and development to the country in the form of earnings and ranking.
8. Increase in Number of Working Woman- Due to the increase in the service sectors and the employment opportunities in the same, it has given ample work opportunities to women too. This has marked the increasing number of working women in the country which helps in the overall upliftment of the entire economy.
What is Service Marketing – Service Marketing Mix: Product, Price, Place and Promotion
In today’s competitive environment, organisations are trying their best to succeed and sustain in the market. They are busy innovating ways and means to increase the quality of the service which will make them stand out from the crowd. Many organisations consider their employees as a part of the service process.
Employees are known as the face of the company and thus their satisfaction and efficiency will directly impact the quality of the service being offered in the market. It is important to control and maintain the good behaviour of the employees so that they can put in their heart and soul into the services rendered.
Based on the above mentioned information, Bernard H. Booms and Mary J. Bitner worked together in developing the traditional familiar marketing mix, in the year 1981. An American professor of marketing named Jerome McCarthy has developed the traditional marketing mix; however Booms and Bitner added the extension to the same thus making it as the 7 Ps of the marketing mix.
This service marketing mix is also known as the 7 Ps model. This extension of further 3 Ps to the already existing ones helps in the useful application of the same to the knowledge intensive environments and service companies.
The initial four Ps of the marketing mix are meant for the product industry whereas the extended version of it is meant for the service sectors in the market. People, process and physical evidence are known as the extended elements of the marketing mix to the traditional one.
Since, service is an intangible product and has unique characteristics like heterogeneity, intangibility, perishability and inseparability, the new elements of the marketing mix were closely worked upon to match the service sectors in a valuable manner.
The service marketing mix depends upon either of the elements or may be a mixture of all to match the service sectors. Though the initial four elements of marketing mix were meant for the product-oriented industry and the recent three elements are meant for the service-oriented industry; however, depending upon the positioning of the product/service, any elements can be utilised for the same.
These elements are basically useful to communicate the brand and organisational message to its customers. Hence, it is totally a company’s call as to how and which elements of the marketing mix should be utilised to serve the above mentioned purpose successfully.
One of the most basic concepts in marketing is the marketing mix elements by which an organisation controls, satisfies or communicates with customers. The traditional marketing mix is composed of the four Ps: Product, Price, Place and Promotion. These elements are the core decision variables in any marketing plan.
The notion of a mix implies that all of the variables are interrelated and depend on each other to some extent. Further, the marketing mix implies that there is an optimal mix of the four factors for a given market segment at any given point in time.
Careful management of the 4 Ps will, clearly, also be essential to the successful marketing of services. However, the strategies for the four Ps require some modifications when applied to services. For example, traditionally promotion is thought of as involving decisions related to sales, advertising, sales promotions, and publicity.
In services, these factors are also important, but because services are produced and consumed simultaneously, service delivery people like delivery boys, clerks, conductors, doctors, cleaners, are involved in promotion of the service, even if their jobs are being carried out in terms of the operational function they perform. Pricing also becomes very complex in services where unit costs need to be calculated, prices may be difficult to determine, and where the customer frequently uses price as a cue to quality.
Products are the means by which firms seek to satisfy consumer needs. A product in this sense is anything which the firm offers to potential customers, whether it is tangible or intangible. After initial hesitation, most marketers talk about an intangible service as a product.
Thus bank accounts, insurance policies and holidays are frequently referred to as products including stars and politicians as even they .are referred to as a product to be marketed. Product mix decisions facing a services marketer can be very different from those dealing with goods.
Fundamentally pure services can only be defined using process descriptions rather than tangible descriptions of outcomes. Quality becomes a key element defining a product. Other elements of the product mix such as design, reliability, brand image, and product range may sound familiar to a goods marketer.
There is a significant difference with goods wherein new service developments cannot be protected by patent.
Price mix decisions include strategic and tactical decisions about the average level of prices to be charged, discount structures, terms of payment and the extent to which price discrimination between different groups of customers is to take place. Differences do however occur where the intangible nature of a service can mean that price in itself can become a very significant indicator of quality.
The personal and non-transferable nature of many services presents additional opportunities for price discrimination within service markets, while the fact that many services are marketed by the public sector at a subsidised or no price can complicate price setting.
The traditional promotion mix includes various methods of communicating the benefits of a service to potential consumers. The mix has been traditionally consisting of advertising, sales promotion, personal selling and public relations.
The promotion of services often needs to place particular emphasis on increasing the apparent tangibility of a service. Also, in the case of services marketing, production personnel can themselves become an important element of the promotion mix.
Place refers to the ease of access which potential customers have to a service. Place decisions can involve physical location, decisions about which intermediaries to use in making a service accessible to a consumer and non-location-decisions which are used to make services available.
For pure services, decisions about how to physically move a good are of little strategic relevance. However, most services involve movement of goods of some form. These can either be materials necessary to produce a service or the service itself as its whole purpose is the movement of goods.
What is Service Marketing – Extended Marketing Mix: Process, Physical Evidence and People
Because services are usually produced and consumed simultaneously, customers are often present in the firm’s location, interact directly with the firm’s personnel and are actually part of the service production process. As services are intangible, customers will often be looking for any tangible cue to help them understand the nature of the service experience.
These facts have led marketers to conclude that they can use additional variables to communicate with and satisfy their customers. For e.g. in banks the design, layout and decor of the branch as well as the appearance and attitudes of its employees will influence customer perceptions and experiences.
Acknowledgment of the importance of these additional variables has led services marketers to adopt the concept of an expanded marketing mix for services to include –
b. Physical evidence and
The actual procedures, mechanisms, and flow of activities by which the service is delivered comprise the service delivery and operating systems.
The actual delivery steps up the customer experiences or the operational flow of the service will also provide customers with evidence on which to judge the service. Some services are very complex, requiring the customer to follow a complicated and extensive series of actions to complete the process.
Highly bureaucratised services frequently follow this pattern, and the logic of the steps involved often escapes the customer. Another distinguishing characteristic of the process that can provide evidence to the customer is whether the service follows a production line, standardised approach or whether the process is an empowered or customised one.
None of these characteristics of the service is inherently better or worse than another but these process characteristics are another form of evidence used by the consumer to judge service.
Processes are often of critical concern to consumers of high contact services where the consumers can be seen as a co-producer of the service. A customer of a fast food joint is affected by the manner by which the staff serves them and the amount of waiting which is involved during the production process.
The boundary between the producer and consumer in terms of the production functions like customers to collect their meal from a counter, or to deposit their own rubbish; it is not specific and varies as per service provider. Hence, with services, a clear distinction cannot be made between marketing and operations management.
Within the service sector, customer service is the total quality of the service as perceived by the customer. This element of the marketing mix cannot be isolated within a narrowly defined customer services department, but becomes a concern of all production personnel, for both those directly employed by the organisation and those employed by suppliers.
Managing the quality of the service offered to the customer becomes closely identified with policy on the related marketing mix, elements of product design and personnel.
To use this screen, just mark the area where problems exist in a service firm, formulate a plan and then action the activities to ensure resolution. This screen is useful to solve case studies and monitor the operations of the service firm.
b. Physical Evidence:
The intangible nature of a service means that customers are unable to judge a service before it is consumed, increasing the risk inherent in a purchase decision. An important element of marketing planning is therefore to reduce this level of risk by offering tangible evidence of the nature of the service.
At its simplest, a brochure can describe and give pictures of important elements of the service product- a pictorial evidence of students, faculty, and infrastructure, in which the service is delivered and where the firm and students interact, and any tangible components that facilitate performance or communication of the service.
The physical evidence of service includes all of the tangible representations of the service such as letterheads, business cards, report formats, signage etc. In some cases it includes the physical facility where the service is offered e.g. the retail bank branch facility while in telecommunication services; the physical facility may be irrelevant.
In case of repairs, tangibles such as billing statements and appearance of the car after repair may be important indicators of quality. Since consumers have little knowledge on how to judge the actual quality of service, they will rely on these cues or they rely on the cues provided by the people and the service process.
A clean and bright environment used in a service outlet can help reassure potential customers at the point where they make a service purchase decision. Hence, fast food and photo processing outlets use red and yellow colour schemes to convey an image of speedy service.
Physical evidence cues provide excellent opportunities for the firm to send consistent and strong messages regarding the organisation’s purpose, the intended market segments and the nature of the service.
For most services, people are a vital element of the marketing mix. All of the participants who play a part in service delivery influence the buyer’s perceptions, namely, the firm’s personnel, the customer and other customers in the service environment.
The participants in the delivery of a service provide clues to the customer regarding the nature of the service itself. How these people are dressed, their personal appearance, and their attitudes and behaviours all influence the customer’s perceptions of the service.
Gummeson calls everyone “part-time marketer”, in that their actions have a direct effect on the output received by customers. In fact for services like consulting, counselling, training, teaching and other professional relationship based services, the provider is the service.
In other cases, the contact person plays what appears to be a relatively small part in service delivery like a courier delivery boy. Even these providers may be the focal point of service encounters that can prove critical for the firm.
In many service situations, customers themselves can also influence service delivery thus affecting service quality and their own satisfaction. In case of weight loss customers, it greatly affects the quality of service they receive when they either comply or don’t comply with health regimens prescribed by the service provider.
Customers not only influence their own service outcomes, but they can influence other customers as well. In a classroom, customers’ students influence the quality of service received by others – either enhancing or detracting from other customers’ experiences.
People management in improving the quality of people planning, assumes greater importance within the service sector. This is especially true for those services where staff have a high level of contact with customers. For this reason, it is therefore essential that services firms clearly specify what is expected from personnel in their interaction with customers.
To achieve these specified standards, methods of recruiting, training, motivating and rewarding staff are not personnel decisions but they are important marketing mix decisions. People planning within the marketing mix also involves developing a pattern of interaction between customers themselves, which can be very important where service consumption takes place in public.
An important way in which a corporate executive will judge a club might be the kind of people who frequently visit it. An empty club may convey no atmosphere while a bubbly one may convey that this is just the place. Marketers must also develop strategies for producing favourable interaction between its customers; for example by excluding certain groups and developing a physical environment which affects customers’ behaviour.
Given the strong influence they can have on service quality and service delivery employees, the customer and other customers are included within the people element of the services marketing mix.
Need for Additional Three Marketing Mix Elements in Service:
The concept of marketing mix is not actually based on any type of a theory; in fact it is based on the requirement of the marketing managers to put down their decision-making process into some valuable and productive actions. The familiar 4Ps of marketing mix that is the product, price, promotion and place is known to put limitations when it comes to applying these concepts in services.
Hence, the need was identified to expand the concepts of marketing mix in order to assist valuable utilisation of the same.
Following are a couple of problems that were limiting the usefulness of the familiar 4P’s into services:
1. At first, the concept of old marketing mix was initiated to define the manufacturing sectors. Thus, this concept suited well only to this sector where the product is tangible. However, with the growth of services sector, the usage of these concepts became practically difficult as service is an intangible product. Thus, the usage of place and product were the most inappropriate Ps from the old marketing mix.
2. Another reason was that there is a vast difference between service products and physical goods. This difference was not allowing the old marketing concepts and models to match up with the changing needs of the service sectors. Hence, this created a need for separate marketing models and concepts which will also concentrate on the service sector needs.
3. The marketing managers of the service sectors found it difficult to match up their needs with the old marketing mix. The basic characteristics of physical goods and service goods did not match with each other at any level. This was creating ample problems in proceeding ahead with the concepts of service sector in terms of marketing mix. Thus, the need of these marketing managers gave development to the extension of the marketing mix to match up to their needs.
What is Service Marketing – Trends: Customer as the Only Centre of Attention, Services as Key Differentiators and Emergence of Automation and New Technologies
A. Customer as the Only Centre of Attention:
‘Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others.’ (Philip Kotler)
‘Marketing is a total system of business activities designed to plan, price, promote, and distribute want-satisfying products to target markets to achieve organizational objectives.’ (Stanton, Etzel, and Walker)
Most such definitions of marketing have ‘customer need’ and ‘need satisfaction’ as key words. Thus customer needs have been recognized as central in the role for marketing. However, the process of satisfying customer needs has evolved over a period of time.
For example, Henry Ford, the legendary founder of Ford Motor Company in the early twentieth century is rumoured to have said, ‘My customers can have a car in any colour they want, as long as it is black’. Even then it was recognized that the customers may ask for different coloured cars and that it was the duty of the manufacturer or marketer to provide them with the colour they wanted.
The only reason Ford could not do that was that he believed in mass production of cars on the new assembly line technique at a very low cost. This in turn helped reduce car prices so that a large volume of customers could now afford cars. In short, even his non-variant policy of single colour availability was linked to the larger customer need of affordable cars.
From the time of Henry Ford, focus started to shift more and more towards the customer. During the course of the twentieth century, it was noted that manufacturing or services companies that did not focus on customer needs and wants did not survive long. These included even giant airlines such as Pan American.
With no attention paid to customer satisfaction, they ended up selling seats at cut-throat prices with poor margins. Eventually, it took slight increases in fuel prices or interest rates to end their existence.
The traditional organizational structure, where the policies and orders flow from the top management to the customers, with a modern, evolved structure that is considered essential for meeting customer expectations.
Almost all the government owned companies such as railways, posts and telegraphs, and telecommunications are good examples of the traditional view. This is why most customers find their services non-responsive and unsatisfactory. In contrast, companies such as HDFC Bank, ICICI Bank, and SBI Credit Cards subscribe more to the modern, customer-oriented view. This is obvious that it has helped their phenomenal growth in recent years.
While in the traditional diagrams the orders flow downwards, in the modern view, the bottom up approach places the customer on the top of the order. Customer demands push the management, and organizations are subservient to the customers’ wishes. In this way, customers are driving organizations towards the fulfilment of their desires. Here, the function of the management is to make it easier for the frontline employees to deliver customer satisfaction profitably.
For service organizations, customer centricity is very vital. In the case of products or goods marketing organizations, customer interaction is often remotely provided through an agent or a retailer. The customer does not come in direct contact with the producer. In service organizations, however, the customer is involved in making the service specifications, and usually receives the service personally.
This interaction is direct rather than of remote nature. The customer and organization interaction is one of the key ingredients of customer satisfaction, and this makes customer focus an inevitable part of the organization.
B. Services as Key Differentiators Even for Manufacturing Firms:
It has been recognized that, in the present state of technological development, no single company can dominate the market for a long period merely through unique and advanced product offerings. Many competitors are in a position to offer similar competing products within a short period.
Thus, the differentiation between competing products based on advanced design or features is getting progressively reduced. Today, television sets, washing machines, motor cars, or VCD players made by different manufacturers are quite similar, and have similar features.
Product design, promotion, advertising, and pricing, the conventional marketing tools, do not produce adequate differentiation. This problem becomes more acute in the case of mature markets. Unless you can extend the product life cycle by developing newer uses or more market segments, volume growth in mature markets becomes a difficult task.
Therefore, availability of a long-term warranty (e.g., up to five years for a refrigerator compressor, or three years for a television picture tube), prompt after-sales service (e.g., availability on call), and hassle- free replacement policy (no questions asked) are things that separate one brand from another.
Increasingly, the marketers of products are relying on bundled services to stand out against competition. Previously, a computer could be marketed based on memory size, speed of the main processor, etc. Today, almost all the personal computers have more than adequate processing speed and both flash and media memory for even the most serious users.
Therefore, this differentiation is inadequate. Marketers have been forced to use after-sales service as the major differentiator, and hence, the warranty period, the on-site versus off-site warranty, and additional services at reasonable price beyond the warranty period are important marketing tools.
Similarly, expensive theatre systems are now set up in the consumer’s premises by the technical installation staff. The staff would advise on best speaker locations, minimizing effects of sunlight, most effective seating arrangement for best sound enjoyment, etc. Thus the consumer is helped by way of service to get the best value for the purchased product which does a lot to differentiate between two competing brands.
C. Emergence of Automation and New Technologies:
The process of product innovation based on scientific advances gathered momentum during the first half of twentieth century. There were enormous developments in products such as automobiles, aircraft, and telephones that appeared at the turn of the century, leading to phenomenal comforts for the human race as a whole.
Initially, the emphasis was on development of existing and new products. Production processes thus benefited from computer controls, automation, robotics, etc., which led to large gains in productivity and reduction of manual labour. For example, robots could work in hazardous areas where danger to human life was large. However, services production and delivery did not benefit in the same proportion.
It is only towards the end of the twentieth century that new technologies made huge impacts in the field of services provision. The definition of services, the process of service production and delivery, and the methods of informing customers about service availability have all changed enormously.
Traditionally service includes a person who provides service and a customer who receives it, and there is an interaction between the two during the process. However as the services sector developed, this human element, which provides the personal touch to transactions, has also been recognized as a reason for inconsistent quality in the service delivery.
This variation of quality in delivery is the major source of problems in the services industry. Some basic questions that come up in this context are – Can the same service that is now provided by a human be delivered through automation? Will it lead to greater or lower customer satisfaction?
What is Service Marketing – Role of Distribution in Services
In general, the role of place or distribution in the marketing is crucial.
Marketing channels serve the following:
i. Make the products or services available to the customers in their geographic vicinity.
ii. Make the service more widely available without greater business capital.
iii. Develop and put into effect promotional efforts.
iv. Gather data about the current and potential customers, competitors, and other important players who shape the market place.
v. Provide local knowledge for dealing effectively with customers in line with local expectations and practices.
vi. Arrange the buy/sale transactions.
vii. Provide funds for physical facilities (offices, shops, warehouses), inventories, and for promotional efforts including sales personnel.
viii. Be the visible presence of the parent company or franchiser.
ix. Assume and share a number of business risks with the marketer.
Distribution is the last link between the marketer and the end user. Therefore, the distribution or place strategies are an important part of the marketing mix. Unlike in the case of products, where the physical goods have to be obtained, stocked, and then the title passed on to the customers, in the case of services there are usually no goods that require distribution.
However, since the customers receive a number of services across the table, the face-to-face or physical contact between the last distribution channel member and the customer is stronger. Therefore, a variety of channels are used to offer services to both individual and institutional buyers or customers.
Peter Mudie and Angela Cottam in their book The Management and Marketing of Services have proposed a classification of services based on two parameters that determine the type of distribution outlet needed for effective distribution of a particular service.
The two parameters are:
(a) Personal interaction and customization, and
(b) Labour intensity.
According to the authors, the type of channel chosen for each service depends upon the relative intensity of the above parameters.
Labour intensity is the extent of service personnel requirement for successful service delivery Personal interaction is the extent of one- to-one interaction.
What is Service Marketing – 8 Interesting Strategies Adopted: Service Standardization, Use of Technology Investment and a Few Others
In order to create a strong and sustained position for a service provider within a market, companies try to achieve the long-term growth goals using various types of strategies. These distinctive strategies are used to create specialized appeal for the prospective consumers. We will look at some of the more interesting strategies to learn about their benefits and adoption.
These are the strategies offered by the service provider across the board wherever the service is offered.
Service providers such as McDonald’s fast food restaurant chain or the Indian chain called Dosa Diner adopt a service standardization strategy. At each of their locations, the menu, the method of preparation, the display, the seating arrangement, the taste, and the packaging or presentation are standardized. A customer walking into any of their outlets within India, or, for that matter, anywhere in the world, can feel familiar.
Such standardization provides a number of advantages to the service provider:
i. It provides automatic guarantee of a standardized quality service irrespective of the location.
ii. A standardized and limited-options menu enables speedy preparation. The delivery of freshly prepared food can be made in very short time. Most McDonald’s locations would not take over 1 minute to serve the food to the customer while none of the food being served is over 10 minutes old. This is the very essence of the fast food restaurant business.
iii. An economy of scale can be achieved in the purchase of materials, inputs, and supplies, including that of the furniture and uniforms. The procurement costs and the periods for procurement are drastically reduced leading to substantial savings. Thus, companies can offer competitive rates yet remain profitable in the market.
iv. The chain of such restaurants is operated through franchisees and yet remains popular all over.
2. Use of Technology Investment:
Reliance Industries Ltd through the division of Reliance Infocom has invested well over Rs. 10,000 crores over the years in the creation of telecommunications infrastructure. Such heavy capital investment on an unprecedented scale has enabled the telecommunications start-up company to attain critical mass in its quest for growth. Thus, it has been able to achieve the leadership in the field of telecommunications in a short space of six months.
It managed to introduce WLL mobile telephony in 17 telecommunication circles covering 22 states and 673 cities in India at the same time. This approach is quite different from the gradual introduction approach of most other mobile telephony companies. It managed to acquire well over 2,000,000 users in the first three months after the introduction. In 1 year it has a customer base of 6,000,000.
The investment in the technology and infrastructure has enabled the company to offer other value added services such as Internet access directly through mobile phone, SMS, high-speed access to computers using the mobile phone as the modem, etc.
It is also planning to leverage this advantage of technological advancement by introducing cordless land line telephones, broadband access using cordless land lines, and eventually the cable television access to every urban household through broadband network. Thus, the field of entertainment and telecommunications services can be linked through the technology.
This bouquet of value added services has enabled the company to achieve strong market position in the very first year of introduction. By middle of the year 2003, India as a whole had 12 million mobile telephone users of which 2 million or 15% of the users were already Reliance customers. By the end of 2003, Reliance had a market share of over 35% in mobile telephony.
3. Use of Customer’s Labour to Achieve Cost Reduction:
The Indian retailing industry has been dominated by unorganized retailing. Bulk of the unorganized retailing outlets use service provided by salesmen or the owner himself. The format of retailing where the customers help themselves is catching up. A number of retail chains are growing on self-service models.
This format promoted by chains such as Foodworld, Pyramid, Shopper’s Stop, and Planet-M enables the service provider to have very few sales persons, thereby making considerable cost savings. Part of this cost reduction advantage can be passed on to the customer through low prices.
In addition, the customers feel free to make a more thorough and detailed choice by spending considerable amounts of time on their own in the merchandise area of their interest without feeling awkward by the presence of a salesperson.
4. Use of Franchising for Service Provision:
The use of franchising as a model for achieving service growth. In the field of computer education, successful companies such as NIIT and APTECH have led the way in the country. Franchising has brought about the bulk of the rapid growth of these companies.
The particular advantages of franchising have been:
i. Very rapid geographic area expansion – The wider the geographic coverage, better is the recruitment potential for the student population. The franchisees have achieved the coverage very rapidly with the emergence of national education brands. In larger cities as many as five to eight franchisees could operate simultaneously without cutting into each other’s territories.
ii. Lower investment – The investment in the place, furniture, interior decoration, instructors, are all made by the franchisee.
iii. Faster brand equity development – The wide geographic coverage has enabled the company to have rapid growth in the brand equity.
This model of growth has been very successful in the computer education industry. The training institutes have proliferated both in the urban as well as semi-urban areas for the benefit of the principals and the students.
5. Use of Superior Technology for Service Delivery:
Federal Express, a courier company, introduced the concept of overnight parcel delivery within United States. While the concept itself was new and untested at that time, the service caught on because the business users could see the utility of an overnight delivery. It speeded up documentation, improved the cash collection process, and gave greater satisfaction to customers. The price charged for overnight delivery was of course premium.
Why is it that no one else had foreseen this possibility? The time utility was foreseen by a number of courier companies. However, others did not think of the technological means required to achieve the overnight delivery.
The use of aircraft for carrying the cargo, development of three hubs within the United States where all the overnight parcels could be brought together, re-sorted, and forwarded on the return flights, the mechanical and electronic equipment required to sort millions of parcels in less than two hours, including the mechanical conveyance, all contributed to its success. In addition, the company also offered the package tracking system for the first time for the customer benefit.
6. Use of Organic Growth:
The companies and institutions grow by following different strategies. Some companies use acquisitions, partnerships, and mergers to acquire fresh volumes of business. In contrast to this, some service organizations use organic growth or internal resources to offer greater services to satisfy higher number of customers. Many educational institutions have grown by using this route. One of the examples of such organic growth is Symbiosis Group of institutions.
The group began with a college for a mix of both foreign and local students to offer a unique experience. However, over a period of 20 years, by carefully studying the demand patterns and steadily offering a number of extensions of the original programmes, the institution has grown into a commerce college, law college, business management school, and advertising management school all in the same premises.
In addition, the institution runs a number of primary and secondary schools, a management institute for defence personnel and specialized management institutions for Human Resources, General Management, Telecommunications Management, International Business, and Information Technology Management. The law college and the management institute were recently offered the status of a deemed university.
The educational services are aimed at the minds of the customers. It requires trust and credence to be successful in the field of education. Organic growth is based on internal resources. Thus, the customers can be persuaded to rely on the faith and credence for extended patronage.
7. Creation of Image through Advertising:
The Sahara group of companies including the airline and the television channels are new entrants to the services marketing field. However, to most customers, it seems to be a common name and the brand has a very large visibility in the country. Even though it is the smallest of the domestic airlines, it has been able to offer continuous services on its routes and aircrafts.
Similarly, by using sponsorships including that of the Indian Cricket and Hockey teams, and advertising campaigns based on patriotic themes, the group has sustained the foray into cable entertainment business.
8. Use of Internet-Based Technologies for Success:
The various ways in which the Internet technology contributes to the services offerings.
Two companies who have used the Internet for creating unique offerings are:
(a) Amazon(dot)com, a bookseller from USA, offers both new and second-hand books in its collection. The company fully uses Internet- based technologies whereby the customers can locate books of relevant topics, find out the source and price of the books, browse through the books to find out about their content, and finally buy and make payment for them. The books are delivered to the buyers’ address.
(b) Similarly, in the Indian context, Bazee(dot)com has been able to attract a large number of buyers as well as sellers (new product dealers as well as those offering used products) to its site to exchange goods and pay the requisite commission to the site owner.
What is Service Marketing – Strategies Based on the Size of the Market
In general, the strategies used for gaining marketing advantages depend on the current circumstances with regard to size of competitors, their relative specialization, and the volume of growth.
A company that is already a market leader has a large market share. Therefore, it usually does not benefit substantially by attracting or wooing away the customers from the competition alone. Therefore, it needs to follow a set of strategies to benefit. The fundamental strategy for such a company is to expand the size of the market itself. Since the company is already dominating in the market place, the expansion in the size of the market benefits the company enormously.
The usual strategies followed for this purpose are as follows:
i. New Users:
For example, a telephone company may want to attract large numbers of new users. When Bharat Sanchar Nigam Ltd wanted to follow this strategy, it reduced the deposit amount required for a new telephone. This lowered the capital barrier for having a telephone connection. It promoted use of telephone among the lower middle class and lower income segments.
ii. More Usage:
In order to promote more usage, the recently introduced differential pricing policy of BSNL for different segments has the effect of increasing the phone usage in order to benefit from the lower tariff.
A service offering company that is not a market leader but a new entrant usually has to follow different strategies to succeed. If it is a small company with limited resources, it usually cannot afford to be completely different from what the competition is offering.
Therefore, it will resort to some of these strategies:
The company tries to follow the model used by the dominant competitor or competitors. Imitation is considered as the best form of flattery! Thus, new entrants unashamedly offer the same type of service as that offered by the successful competitor. A number of unaccredited business schools have been successful in India. The new entrants have invariably followed the same strategies for selection, training, and placement to imitate success of the more illustrious and recognized business schools.
The follower would try to copy most of the successful strategies of the dominant and existing marketer. However, due to limited financial resources or different business philosophies, the companies would try to modify or adapt to the different marketing situations.
Thus, a new landline telecommunication operator like Hughes Telecommunication has adapted most of the landline phone features from Bharat Sanchar Nigam Ltd. Strategies have, however, to suit its size and capital strength.
A smaller company that is not seeking large turnover in the short run could adopt strategies of a niche. The obvious limitation of the coverage of a niche can also work to its advantage. For example, a niche player, though covers a small area of the market, can, however, cover this area with an intensity that larger and bigger companies may not be able to bring about.
The end use of the product or the service can be very limited and a niche company can offer it with much advantage. Thus, we saw the example of Dr. Shouldice’s hernia treatment hospitals. They are able to offer this service at a great advantage as they bring all their resources into the success of this single area of surgical medicine.
i. Niche Area of Operation:
The niche can also be found in a particular geographic area. Instead of a small player in a big pond, the service provider can become a strong and big player in a small pond or the area of operation.
ii. Customer Size Specialists:
The niche company can choose only one type of customers with whom it can develop unique advantages. Financial advisory services companies including stockbrokers can offer their services to selective clients ranging from a single individual to corporate clients. Some of the companies choose portfolio management as the area of chosen expertise.
The number of individual customers in this category may be very less. The company can, however, offer specialist advice to these high-net-worth individuals and succeed. Profitability can be built up from small volume and large number of customers as well as large volume and small number of customers.
iii. Product or Product Line Specialization:
By specializing in one area of expertise, good word-of-mouth publicity is enjoyed by the service provider. This ensures continued patronage of specialized clientele that is usually prepared to pay a premium price for the level of expertise.
Thus, one may find motor car garages that specialize in imported motor car repairs. Similarly, in Pune, Mandke’s Hearing Aid Service specializes in sales, servicing, and adoption of hearing aids for those with impaired hearing. There are booksellers/retailers who specialize in imported or rare books only. Booksellers specializing in medicine, engineering, or law can also be found.
What is Service Marketing – Problem Areas: Role Ambiguity, Role Conflict and Organizational Conflict
There would be a number of situations when the employees would be placed in awkward or conflicting situations which may prevent them from carrying out their assigned tasks successfully.
Area # 1. Role Ambiguity:
Using the above example of the receptionist, in the absence of an available bellboy, if the hotel guest requests the receptionist to assist him with the baggage, she would be placed in an awkward position. Courtesy and adaptability demand that the guest be helped. Yet, it is truly not the job of the receptionist to do this work. This search for true role can bring mental pressure on employees, thereby restricting their ability to do the best.
In a number of government hospitals in India, sometimes, accident and other emergency cases are brought to the emergency room. The emergency room staff can see that the patient is under distress and needs immediate attention. Yet, they feel that they cannot give the treatment without completion of admission formalities. This sort of ambiguity is a source of frustration for the conscientious employees.
Area # 2. Role Conflict:
The employees themselves are human beings with unique personalities, ego and self-esteem, aspirations, etc. When the job performance demands that they ignore or suppress some of their individual traits for the sake of a customer, it can lead to role conflict.
In the opinion of the ground staff or airhostess, the new uniform provided by the airline may be too immodest and unbecoming of their personality. The length of the skirt or the shape of the garments may not meet with their personal dressing standards. The airline may insist that the hostesses should not wear bangles or kumkum while on board which may clash with the religious beliefs of the airhostesses.
The state transport buses that ply in India usually have a driver and a conductor on board. The corporation rules state that whenever no porter is available, the conductor should help the passenger to load and unload the baggage from the roof-top carrier. This task is seen as demeaning by a number of conductors who feel it is below their dignity to carry it out. When the passenger insists on it, there is usually a dispute between him and the conductor, which inevitably leads to arguments.
Area # 3. Organizational Conflict:
There may be rules of the organization that need to be overlooked from time to time to secure customer satisfaction. The rules and the common sense action may be at variance or conflict with each other.
The hotel rule may demand full payment of room rental for another day if the room is kept beyond 12 noon of the following day. Yet, the customer may request extension of the rental period till evening 5 o’clock without additional payment. The receptionist knows that there is no great demand for the rooms during this period.
Usually, business visitors check in either early in the morning or late in the evening after the office hours. In order to please the customer, if the receptionist grants the leeway, the management may penalize the employee for loss of revenue.
The public hospitals in India are always overcrowded and understaffed, reflecting scarcity of resources. The doctors are under pressure to perform a very high number of operations or surgical procedures per day in order to cope with the caseload. In addition, the number beds in the hospital are also limited, thereby putting additional pressure to release them quickly to free the beds.
This quick surgical procedure and insistence on rapid discharge may be in conflict with the doctor’s judgement about what is the right thing for the patient. Thus, the ideal quality of the work and the quantity to be delivered can create a conflict between the administration and the doctor.
In the short term, how should an employee deal with a confrontational situation? What can he do when an irate customer brushes off attempts to defuse the situation?
A number of common sense measures can be employed such as:
i. Move the person away from the other customers as soon as possible. For example, when customers are accused of shoplifting, usually they would respond not only with total ignorance but usually make a scene to put off the accusers. Their hope is that this aggressive posture would make the shop owners back off as this drama has a bad effect on other customers.
ii. Many a time, the superiors can arbitrate in the matter with a view to resolve it. The intervention by another party makes the customers feel that they are important and hand them only a hollow victory which they believe is moral.
iii. The third method is to give the customers more time or an opportunity to reflect on their problem and then approach them for an amicable settlement.