services marketing

WHAT IS A SERVICE / SERVICE PRODUCT

An activity / performance given by a service provider to a service User to solve his problem and give satisfaction and at the same Time help the company to achieve its commercial and financial Objectives.

A service product is mostly intangible in nature and the purchase Of a service product does not result in ownership by the user. A Service is not a thing

E.G: Renting a room Transportation by any mode Seeing a movie Getting advice from a doctor / lawyer Education Banking services Buying insurance Hiring a taxi Performance by an actor / artist

MAJOR BUSINESS OBJECTIVES( VIA CS/CD )

COMMERCIAL FINANCIALSales (volume, value)Market shareGrowth rateRankingRetaining existing and Developing new customers

ProfitReturn on investment (RoI)

ECONOMIC ACTIVITIES

WHAT? National wealth (GDP) creating activitiesCLASSIFICATION OF EA’sPRIMARY EA’sAgriculture, forestry, mining& fishingSECONDARY EA’sManufacturing & constructionTERTIARY EA’sServices

UNO CLASSIFICATION OF COUNTRIES

THREE BASES1. more developed countries (MDCS)2. less developed countries (LDCS)3. less least developed countries (LLDCS) TREND TOWARDS SERVICE ECONOMY IN MDCs.

SECTORS OF ECONOMYa) AGRICULTURE SECTOR, TRENDb) MANUFACTURING AND CONSTRUCTION SECTOR, TRENDc) SERVICES SECTOR, TREND

CHANGING TREND IN MDCs

since the WW II, services sector of economy (all types of services) has grown fast in MDCs, EG: USA, we and JP.

PAKISTAN: a. agriculture sector 40%,b. manufacturing + construction sector 35%, c. services sector 25%.

fast growth rate 8%, best jobs, high income, best talent future of services sector is bright.

PROBLEMS IN ASSESSING THE SIZE OF SERVICES SECTOR

THREE PROBLEMS

1. different definition of a “service product”. what is included / not included in services sector.

2. different bases of measuring the size of services sector.a) employment basisb) output basisc) expenditure on servicesd) role in export

3. poor quality of official / secondary data

FEATURES OF EMPLOYMENT IN SERVICES SECTOR

more employment gender composition of workforce in services sector is

changing. more women work in services organizations better paid jobs, talent, and careers (ba, it) more part-time workers

SERVICE ECONOMYAN ECONOMY IN WHICH:

a) a greater portion of the national wealth(GDP) is created by the services sector of economy (t.eas),

b) most people are employed in services c) most expenditure is on services and d) export of services plays an important role.

CRITERIA USED TO JUDGE THE IMPORTANCE OF SERVICES IN THE ECONOMY

1. output of wealth2. employment3. consumer expenditure4. role of services in export

REASONS FOR THE GROWTH OF SERVICES IN ECONOMY1) low labor productivity in services which has led to shift in

employment.labor productivity = output per employee

why low productivity in services? a) decline in hours worked per personb) less/poorly trained manpower in services sectorc) less/ slow use of technology in services.

has not benefited from EOS.

2) OVERALL GROWTH OF DEMAND FOR SERVICES FROM COMPANIESfinancial, insurance, legal, research, advertising, training services etc.

4) DEREGULATION AND PRIVATIZATION OF SERVICES BUSINESS (BIA, COM etc)

3) OUTSOURCING OF BUSINESS SERVICES business services previously carried-out by the COS themselves, are being outsourced today. COS can now hire many types of services without owning them at less cost.THUS, SERVICES COs HAVE BEEN SET-UP.EG: MRAS, ADAS, engineering maintenance COS, training institutions, transport & food providers, janitorial services COS etc.5) GROWTH OF DEMAND FOR SERVICES FROM CONSUMERS. WHY?

a) society is getting wealthier, thus, the lifestyle is changing- transfer of certain kinds of household jobs to others

- people have turned to services expenditureb) life expectancy is increasingc) life is becoming complex d) more complex products

6) GROWTH OF DEMAND FROM CERTAIN PROFESSIONS7) GLOBALIZATION OF BUSINESS 8) GROWTH OF GOVERNMENT SIZE

GLOBALIZATION OF BUSINESSES

INCREASED DEMAND FOR : COMMUNICATION SERVICES TRAVEL SERVICES INFORMATION SERVICES LEGAL SERVICES HOSPITALITY SERVICES

REASONS FOR INCREASE IN SERVICES EXPENDITURE AND NEEDED SERVICES

REASONS want more leisure time

more working women

increased life expectancy

complexity of products

complexity of life

increase in new products / technologies

EG: computers, TVS, fax, internet etc.

SERVICES NEEDED travel, hotels,

day-care nurseries, female servants

health-care services, old-age hostels

skilled labour / mechanics for maintenance and repair

professional / consultants & advisers, adult educational centers

need for new services

SERVICES DEVELOPED DURING THE LAST 30 YEARS

(A) CONSUMER SERVICES1) day-care nurseries2) mobile phone services, ATM services3) TV/COMPUTER/FAX equipment

repair services.4) professionals/ consultants and

advisers5) car rental services6) travel agencies7) adult education centers8) credit card services9) physical fitness centers10) beauty parlors11) consumer leasing cos.

(B) BUSINESS SERVICES1) contract maintenance2) consultant firms3) warehousing4) MRAS, ADAS, 5) contract r and d services, 6) franchising services 7) janitorial services 8) office transport and food

services

HISTORICAL CHANGES IN UNDERSTANDING A SERVICE PRODUCT

HOW HAS THE DEFINITION OF THE TERM “SERVICE”CHANGED OVER YEARS?

EARLIER DAYS:ADAM SMITH

services are barren and unproductive activities which perish instantly. do not add wealth to a nation.

LATER ON:

i. J.B. sayrejected ADAM smith’s views.accepted that services are useful activities, which satisfy customers’ needs. are productive and add wealth to a nation.

ii. ALFRED marshaluseful and need satisfying activities which get destroyed at the moment of their creation.

iii. different researchersbusiness activities which do not change the physical form of a good but which are needed in moving products from the manufacturer to the end users. EG. WHLS, RETS, ECT

CHARACTERISTICS OF SERVICES

1) INTANGIBILITY2) PERISHABILITY3) INSEPARABILITY4) HETROGENEITY / VARIABILITY / INCONSISTANCY5) NO OWNERSHIP BY THE USER

distinguish them from goods these characteristics create both challenges and opportunities in the

marketing of services and affect their m-mix

HOW PEOPLE JUDGE QUALITY OF A SERVICE PRODUCT

1) reputation of the service provider. reliability

2) present customers

3) physical environment

4) facilitating equipment

5) price

6) processes

methods used in creating and delivering services

INTANGIBILITY

five senses what? cannot be seen, ------------- before purchase. therefore, difficult to judge their quality before hand.

however, opinion about their quality can be obtained from others.

buyers have faith in the s. provider

PROBLEMS CREATED: cannot be packaged, displayed, demonstrated, sampled, patented, makes choice difficult etc.

STRATEGIES TO OVERCOME PROBLEMS CREATED BY INTANGIBILITY

a) show visuals of the benefits of a service product in promotional campaigns so that customers can see and judge quality before purchase.

e.g. airlines: show a traveler enjoying legroomeducational institutional:show learning environment in a class roomhotel:show a decorated hotel room, a restaurant.plastic surgery:make drawings after the service has been applied

b) create a strong organization image.

c) provide tangible “clues "which enable him to judge quality.

d) stimulate “WOM communication" to overcome “display problem”

e) use brand names to overcome “patent problem”.

f) adopt post purchase communication.

HOW RELEVANT IN TANGIBILITY IN SERVICES?

although intangibility is a key characteristic of services but very few services are purely intangible EG: teaching, nursing etc.

most services also consist of some tangible elements EG: air travel, banking, telecommunication etc.

thus, tangibility is relevant to many services

PERISHABILITY what ?

produced, delivered and consumed at the same time. cannot be stored. cannot be produced before hand. therefore, if not used at the time a service is produced, it gets destroyed for ever.loss of revenue

PROBLEMS CREATED since services cannot be stored, cannot be produced before hand and since their demand fluctuates too often, therefore, planning their demand and supply is relatively difficult.

• e.g.1) public transport

2) hotel rooms (holiday places)

3) telephone service

STRATEGIES TO OVERCOME PROBLEMS CREATED BY PERISHABILITY

a) demand side offer flexible / differential pricing strategy at different times of

the year, days of the week, day / night* intermittent promotion, not continuous offer group discount* organize special shows, introduce a new product during idle

time introduce reservation system

*short term steps. habitual

b) supply side use part-time employees temporary increase in equipment introduce self-service in stores.

INSEPARABILITY what?

cannot be separated from service provider or the source and often from the service user

PROBLEMS CREATED1) requires the presence of the service provider and the service user

mostly produced, delivered and consumed at the same time.lot of interaction and customers’ participation. encounter points.

2) limits the scale of operation. mass production not possible

3) affects quality. professional and entertainment services are needed from a specific service provider. quality depends on both service provider and service user.

4) direct sales is the main channel of distribution (except TAS, EAS). this is an opportunity. some services can be delivered electronically.

STRATEGIES TO OVERCOME PROBLEMS CREATED BY INSEPARABILITY

1) WORK IN LARGE GROUPS2) WORK FAST3) TRAIN MORE SERVICE PROVIDERS 4) USE AUTOMATED MACHINES5) USE MULTISITE LOCATIONS

HETROGENEITY / VARIABILITY / INCONSISTANCY what?

each unit of service may differ in quality. customers are aware of it.examples

doctors (who, when, where) PIA (different flights) franchise operations bank branches

quality depends upon:a) service providerb) customer(s)c) when providedd) where providede) facilitating equipmentf) process of creating and delivering a service product

PROBLEMS CREATED1) variation in quality2) difficult to standardize quality

STRATEGIES TO OVERCOME PROBLEMS CREATED BY HETROGENEITY

DIFFICULT TO STANDARDIZE EACH UNIT OF SERVICE.

1) standardize service creation, production and delivery processes

2) standardize physical environment / timing 3) constant training of s. providers4) mechanize services5) monitor CS periodically6) standardize customers specifications

NO OWNERSHIP

does not become owner, can use the service / facility. no transfer of ownership title. payment is made for using the service / facility.

PROBLEM CREATEDsome time no evidence of purchase and use

STRATEGY TO OVER COME PROBLEMprovide a physical clue

MARKETING DIFFICULTIES / CHALLENGES WHICH ARISE DUE TO CHARACTERISTICS OF SERVICES

CHARACTERISTIC DIFFICULTIES / CHALLENGES

INTANGIBILITY CANNOT SAMPLE, DEMONSTRATE, DISPLAY & PACKAGE

CANNOT JUDGE QUALITY BEFORE HAND

MAKES PRICING DIFFICULT

CANNOT BE PATENTED. EASILY COPIED

PERISHABILITY CANNOT STORE

MAKES PLANNING OF SUPPLY AND DEMAND DIFFICULT

INSEPARABILITY REQUIRES THE PRESENCE OF S. PROVIDER & ALSO OFTEN OF THE CUSTOMER(S)

MOSTLY SOLD DIRECTLY

LIMITED SCALE OF OPERATIONEACH UNIT OF SERVICE MAY DIFFER.DIFFICULT TO STANDARDIZE QUALITY

HETROGENITY

NO OWNERSHIP NO EVIDENCE OF PURCHASE AND USE

FRAMEWORKS TO HELP UNDERSTAND SERVICES AND PHYSICAL PRODUCTS

PSS, SSP few products are either pure tangible or intangible most products are combination of both tangible and

intangible elements. customer satisfaction comes from both tangible and

intangible elements of a product.

EG: restaurants:

CS comes from both food and the services given.

courtesy, speed, environment, convenience etc.

TOOTHPASTECAR

RESTAURANTAIR

TRAIVAL

TEACHING

BALANCE BETWEEN TANGIBLE AND INTANGIBLE ELEMENTS

DEG OF INTANG. Es

DEG OF TANG. Es

GOODS-SERVICES CONTINUUM MODELa model, which based on tangible and intangible elements, shows the range of products offered from pure tangibles to pure intangibles, for CS, in the market.

FIVE CATEGORIES OF PRUDUCTS BASED ON G-S CONTINUUM

pure tangible products no PSS / accompanying services

tangible products + PSS pure intangible service products service product + SSP

accompanying minor tangible products tangible product + service product, in the same ratio.

hybrid

SHOSTACK’S MOLECULAR MODEL OF A PRODUCT

this model suggests to think of a product as a molecule ,having tangible and intangible elements.

based on whether the dominant elements are tangible or intangible, this model helps to visualize both a service product and a tangible product.

A. SERVICE PRODUCT

the molecule, including the nucleus of a S.PRODUCT, is dominated by intangible elements, no ownership of the source which produces the service.

B. TANGIBLE / PHYSICAL PRODUCT

the molecule, including the nucleus, is dominated by tangible elements. ownership of the physical product.

SHOSTACKS MOLECULAR MODEL OF A PRODUCT

AIR TRAVEL CAR

ELEMENTS OF A PRODUCT

= TANGIBLE ELEMENTS

= INTANGIBLE ELEMENTS

FUNCTIONAL DIFFERENCES BETWEEN PHYSICAL PRODUCTS AND SERVICES

SERVICES cannot be felt before purchase. show lack of use of packaging difficult to sample / demonstrate

/ display patent not possible difficult to judge price & quality

before hand requires presence of service

provider simultaneous production &

consumption direct sale, rarely middleman is

needed. short d. channel if at all needed.

PHYSICAL PRODUCTS can be…….. mostly in a package can be easily sampled / displayed

patient is possible can judge

not necessarily

at different times

mostly sold via m. men

limited scale of operation. absence of mass production

precise standardization of quality is difficult (who, when & where provided)

cannot be stored, inventory not possible, cannot produce before hand

demand fluctuation is often & difficult to even-out

cannot be owned an activity

mass production

possible

can be stored. can produced before hand

less often. easy to match

can be owned a thing

CLASSIFICATION OF SERVICES, SECTORS OF SERVICE PORVIDERS

CLASSIFICATION OF SERVICES

no strict bases of classification. different authors have used different bases

A. BASIC SOURCE OF SERVICE

1) PEOPLE-BASED SERVICESi. rendered by professionals / consultantsii. rendered by skilled labouriii. rendered by unskilled labour

2. EQUIPMENT- BASED SERVICESi. automated equipmentii. equipment operated by professionals or skilled

peopleiii. equipment operated by unskilled people

B. buyer related bases

1. customer's presence necessary or not

2. buyer’s purchase motive1. consumer services or

business / industrial services

3. shopping habit how a buyer purchases a service in terms of efforts, time spent and frequency

i. consumer convenience services frequently used, low price, widely available

ii. consumer shopping services quality – price comparison

iii. consumer specialty services strong liking for a s. provider

iv. consumer unsought services

C. SELLER RELATED BASES i. S. PROVIDER’S MOTIVE

– profit (business services)– not-profit (charity services)

ii. SECTOR WHICH PROVIDES THE SERVICE– Govt. sector services

federal, provincial and local government– business sector services– private non profit sector services

D. FUNCTION PERFORMED BY SERVICES– communication, transportation, educational, financial,

health services etc.

CHARACTERISTICS OF VARIOUS TYPES OF CONSUMER SERVICES

CHARACTERISTICS C. CONVENIENCE SERVICES (TAXI)

C. SHOPPING SERVICES (AIR

TRAVEL)

C. SPECIALITY SERVICES

(MEDICAL ADVICE)

TIME & EFFORTS SPENT

VERY LITTLE SOMEWHAT CONSIDERABLE

S. PROVIDERS PREFERENCE

NO / LITTLE STRONG VERY STRONG

PRIOR PLANNING FOR PURCHASE

NO / LITTLE YES YES

PRICE LEVEL LOW HIGH HIGH

PRICE QUALITY COMPARISON

NO YES NO

PURCHASE FREQUENCY

FREQUENTLY INFREQUENTLY INFREQUENTLY

SERVICE PRODUCT CATEGORIES

1. transportation and communication services.

2. Utility services needed for household operations

3. banking and insurance services

4. rental and housing, hotels & estate agents services

5. personal/health-care services

6. recreation and leisure services

7. professional and consultant services

8. distribution services

9. public administration and defense services

10. educational services

11. construction and engineering services

12. ecology services

13. tourism

SECTORS OF SERVICE PROVIDERS

(1) GOVERNMENT SECTOR SERVICE PROVIDERS. courts, hospitals, educational institutions, security agencies, Pakistan railway, post office, PTCL,

(2) BUSINESS SECTOR SERVICE PROVIDERSbanks, insurance company, transportation companies, educational institutions, hospitals, motion pictures , real estate agents.

(3) PRIVATE NON-PROFIT SECTOR SERVICE PROVIDERScharity organizations, hospitals, educational institutions.

MARKETING AND TYPES OF MARKETING IN A SERVICE COMPANY

MARKETING OF SERVICES INTRODUCTION

order of adoption of marketing marketing is less developed in

services businesses. it started in 1975 when:

a) marketing people moved from manufacturing companies to services companies

b) development of services marketing literature

c) teaching of services marketing

Pakistan 1995 basically services are marketed

in the same manner as the goods. principles, concepts, processes etc are same.

however, due to some characteristics of services, marketing of services is somewhat different and difficult.

for example

i. services marketing mix consists of 7 variable elements and not 4

ii. much more customer / employee interaction

iii. patent protection is impossible due to intangibility. thus, product differentiation is short lived.

ORDER OF ADOPTION OF MARKETING

A. IN THE BUSINESS SECTOR1) consumer nondurable goods manufacturing companies2) consumer durable goods manufacturing companies3) industrial equipment and RMS manufacturing companies 4) consumer services companies (BIA, hotels).

B. CHARITY ORGANIZATIONS

DIFFERENCE BETWEEN THE MARKETING CONCEPT AND MARKETING MANAGEMENT

a) MARKETING CONCEPT

everybody is customer focused. decisions in all departments are

customer focused. coordinated function

TWO VIEWS ABOUT MARKETING

b) MARKETING MANAGEMENT

not so in marketing management. isolated function. CS the is responsibility of the

marketing department only.

PURPOSE OF BUSINESS

to continuously create, win and retain sufficient number of satisfied customers, profitably.

to achieve it, a company needs to use the marketing concept.

CRITERIA TO ASSESSHOW CUSTOMER ORIENTED A COMPANY IS ?

1) attitude and behavior of everybody towards the customers. 2) coordination at two levels:

a) within the marketing departmentb) between marketing and all other departments.

3) whether or not key managers are in contact with customers.4) how accurately the needs of tm customers have been

identified5) external marketing. CS level (h, m, l). should keep increasing 6) internal marketing7) interactive marketing

EXAMPLES OF MARKET-ORIENTED OR NOT MARKET-ORIENTED SERVICE ORGANIZATIONS.

MARKET- ORIENTED COMPANIES.

1) DHL

2) CITIBANK

3) MARRIOTT HOTELS

4) SINGAPORE AIRLINE

comply with criteria of a market-oriented company.

NOT MARKET- ORIENTED COMPANIES

1) PTCL

2) KESC

3) NBP

do not comply with criteria of a market-oriented company.

STEPS NEEDED TO IMPLEMENT THE MARKETING CONCEPT

A. ROLE OF TOP MANAGEMENT1) be first to change to

“customer focused” attitude and behavior. role model. if they don’t do so, others will not do so.

2) set objectives and incentives which are customer-focused.

3) promote market-oriented executives in all departments.

B. TRAINING IN CUSTOMER-ORIENTATION AND BASIC MARKETING to create “customer focused attitude and behavior” in everybody. customer-oriented culture.

C. stating in everybody’s job description how his / her job affects cs.

WHEN MARKET-ORIENTATION MAY BE INAPPROPRIATE

prevention by law professionally marketing is considered unethical in times of scarcity

STATUS OF MARKETING IN SERVICES COMPANIES

4) demand is greater than supply.5) some services COS have monopoly or

no / little competition.5) prevented by law.6) poor quality of management personnel in some services

cos. they are not trained in marketing. 7) overall lack of availability of “marketing know-how” about

services marketing.

TWO CONFLICTING VIEWSa) marketing is less used / developed in services

REASONS 1) problems created due to specific

characteristics of services.2) opposition to marketing from some professions3) many services organizations are small and in direct

contact with customers, therefore, such businesses do not need marketing

REASONS1) positive change in attitude towards marketing in services COS

during the last 30 years. EG: BIA, hotels, car rental COS etc..2) are successfully fighting competition.3) have successfully introduced new s. products. EG: credit

cards, consumer financing schemes, new insurance policies, different educational courses etc.

4) removal of legal / professional barriers.5) movement of marketing personnel from manufacturing

businesses to services cos.6) development of services marketing know-how and teaching

services marketing in business schools

b) SERVICES COMPANIES USE / HAVE DEVELOPED MARKETING

STATUS OF MARKETING IN SERVICES COMPANIES

CONCLUSION use of marketing in services COS is slow, less spread and poorly structured but it is developing.

THREE TYPES OF MARKETING IN A SERVICE COMPANY

1) EXTERNAL MARKETINGfind needs of tm and make an appropriate m-mix to serve / satisfy the customers.win and retain them

2) INTERNAL MARKETINGselect, train, coach, develop, motivate and compensate employees to serve customers well.create ability, willingness and job matching personality

3) INTERACTIVE MARKETINGteach customers’ serving skills (touch skills) such as courteously, concern, gracefulness etc. actual delivery of service takes place during interactive marketing

THREE TYPES OF MARKETING IN A SERVICE COMPANY

INTERACTIVE MARKETING

EXTERNAL MARKETING

COMPANY

INTERNAL MARKETING

EMPLOYEES CUSTOMERS

MARKETING-MIX IN SERVICES AND MARKETING STRATEGIES

MARKETING-MIX IN SERVICES BUSINESS

WHATmarketing-mix means a combination of seven variable and controllable elements of marketing, determined by keeping in mind the marketing environment and the tm, to achieve company’s commercial and financial objectives, in the most efficient way, via customer satisfactiondifferent companies choose different marketing- mix,

according to their tm.changing one element of marketing mix, affects the other

elements.

EXTERNAL UNCONTROLLABLE FACTORS WHICH MAKE THE MARKETING ENIRONMENT

political/legal factors economic factors cultural/social factors demographic factors geographic factors technological factors competitive factorsa) influence CB, m-mix, all companiesb) not knowing the m e is like a bird without FEATHERS(SAADI)c) it is useless to tell a river to stop running.

best is to learn swimming in the direction it is flowing (Chinese proverb)

MARKETING-MIX IN SERVICES BUSINESS

seven elements4 traditional + 3 new ones

ignoring any of them can lead to failure. customers heavily rely on price, people and physical

environment/ evidence to judge the quality of a service product.

REASONS FOR EXPANDING M-MIX FOR SERVICES

1. traditional m-mix not sufficient to make customers buy and satisfy them

2. heterogeneity characteristic necessitates inclusion of processes

3. inseparability characteristic necessitates inclusion of people.a) people who create and deliver the service. service

providerb) people who receive the service. The customer, other

customers4. need for quality service also necessitates inclusion of physical

environment and physical evidence

WHY MARKETING STRATEGIES FORMULATION IS DIFFICULT IN SERVICES

UNIQUE CHARACTERISTICS OF SERVICES : unlike goods, intangibility characteristic of services

makes consumer’s choice of different competing products difficult. opinion can be obtained from others.

inseparability makes marketing strategy of services localized. relatively difficult to sell services on nationwide basis.

perishability makes storage of services impossible, thus, planning supply and demand of services is difficult

heterogeneity makes ensuring of uniform quality difficult.

CUSTOMER SATISFACTION (CS)

WHAT IS CS? a feeling of pleasure created in the mind of a customer, when the actual product or brand performance matches with the buyer’s expected product performance, on use, and which makes a customer re-purchase the product.

satisfied customers are an appreciating asset. they should be the goal of marketing and also they should be

used as a tool in promotion.

SALES AND PROFIT IS NOT THE OBJECTIVE OF MARKETING,

IT IS THE BYPRODUCT AND REWARD OF

CUSTOMER SATISFACTION.

LEVEL OR DEGREE OF CS

1) JUST SATISFIED CUSTOMERSAPP = EPPshow loyalty towards the product or brand and they may repeat purchase.

2) HIGHLY SATISIFIED OR DELIGHTED CUSTOMERSAPP > THAN EPPshow high loyalty towards the product or brand due to both emotional and rational affinity. they will repeat purchase.

3) DIS-SATISFIED CUSTOMERSAPP IS <THAN EPPcustomer switches to another product or brand

BENEFITS OF CS

A SATISFIED CUSTOMER buys again talks favorably to others. pays less attention to competing brands and to their

promotion. buys other products of the same company. makes easy to increase price by a reasonable margin.

CHAIN OF EVENTS RESULTING FROM CV AND CSCV

FIRST TIME PURCHASE

APPMATCHES / EXCEEDS EPP

BRAND LOYALTY

REPEATS PURCHASE

INCREASE IN SALES AND MS(COMMERCIAL OBJECTIVES)

EOS(TOTAL UNIT COST REDUCES)

INCREASE IN PROFIT, ROI, DIVIDEND (FINANCIAL OBJECTIVES)

METHODS OF TRACKING CS track both own and major competitors’ CS level FOUR METHODS:

1) complaint and suggestion system- through a form, toll-free telephone number, fax, e-mail etc., the

company motivates customers to give feedback (likes / dislikes), on using the product.

- often used by restaurants, hotels, airlines, petrol stations, hospitals etc

- less than 5% customers complain / give suggestions. think won’t do any good

- switch if not satisfied.- not a good method.

2) customer satisfaction survey- periodically.- the company interviews

customers in person, over telephone or mails a questionnaire to a random sample of tm customers, to get feedback on their level of CS, both on own and competitors’ brands.

3) ghost or mystery shopping - a ghost shopper is a hired customer. - shopping by a ghost shopper, both of company’s and competitors’ products. his report,

containing findings, forms basis of CS level.

4) lost customer analysis and interview with ex-customersa) the company monitors trend in customer loss rate andb) interviews ex-customers

SERVICE PRODUCT

a) product mix and product mix dimensions b) quality c) quantityd) brandinge) reliabilityf) warranty

THE SERVICE PRODUCT the first and the most important element of the m-mix in services. no

amount of promotion or price advantage will be helpful if the S.PRODUCT is bad and does not conform to the customer’s requirements.

S.PRODUCT may be

a) consumer service product

b) business service product

c) people- based

d) equipment-based

to analyze and plan a service product in details, it is better to divide it into 5 levels.

each level adds both:

a) customer value(benefits) and

b) cost

FIVE LEVELS OF A SERVICE PRODUCT

primary and additional benefit(s)

sought

compbrn

warranty

consumer benefit conceptor core product level

serviceoffer or augmented productlevelservice

delivery system

service concept or basic expected product levelxs

potential product level

peoplep. environment

f. equipment

process

CONSUMER BENEFIT CONCEPT CORE PRODUCT LEVEL

this level shows primary and additional benefits which tm customers want.

FOR EXAMPLE: a hotel guest wants:1. rest, comfort2. sleep3. facilities for personal preparation4. room service5. availability of snacks6. pleasant view etc.

as benefits, when he rents a hotel room. thus, benefits should be central or the main focus in designing a hotel room or any S.PRODUCT. main and additional reasons for purchase

CONSUMER BENEFIT CONCEPT CORE PRODUCT LEVAL

primary and additional benefits may change overtime, thus, need for updating a S.PRODUCT periodically.

benefits may be:a) rationalb) emotional

SERVICE CONCEPTBASIC EXPECTED PRODUCT LEVEL

means the basic service product expected by the customer, based on primary and additional benefits sought. it includes composition/ components, brand name, company name, features, quality etc. FOR EXAMPLE “rest, sleep and facilities for personal preparation” would mean a hotel room having:

- comfortable bed, bed sheets etc.- suitable furniture- ALMIRAH- bathroom with necessary facilities- quiet environment

give CS

SERVICE OFFER THE AUGMENTED PRODUCT LEVAL

the service product offered by the company or the actual S.PRODUCT which the customer gets. service offer is made up of:

a) service concept / the basic expected product plusb) extra unexpected services offered by the company andc) SSP - used as CAS/DAS for product positioning and for CUSTOMER’S

DELIGHT. EXAMPLES:

A) HOTEL ROOMfree stay of children, complimentary breakfast, late check-out, TV,

fresh flowers, air port pick-up and drop, in house movies, credit facilitiesB) FLIGHT

movies, music, duty free merchandize selling, air to ground telephone facilities, anniversary celebrations etc.

TWO ASPECTS OF SERVICE OFFERAUGMENTED PRODUCT LEVEL

1. service elements2. service quality and quantity

ELEMENTS OF SERVICE OFFER AGUMENTED PRODUCT LEVEL

two types of elementsA) INTANGIBLE ELEMENTSFOR EXAMPLE:

in air travel, the intangible elements are:punctual, frequents & convenient flights,pre-flight services, in-flight services.

B) TANGIBLE ELEMENTS (IN AIR TRAVEL)comfortable seat, good food / drinks,magazines, news papers, duty-free merchandize etc.

attention must be paid to both types of elements. both must be controlled. tangible elements are easy to manage / control.

ELEMENTS OF SERVICE OFFER AGUMENTED PRODUCT LEVEL

not all the elements are provided by the company. some elements are provided by the customers themselves. these are difficult to control, EG other guests / passengers’ behavior in a restaurant or on a flight.

affect quality of service product and reputation of the company.

SERVICE QUALITY AND QUANTITY

it means quality and quantity of benefits as judged by the customer.

QUALITY OF SERVICE- degree or level of primary and additional benefits of the service offer.- problem to standardize and maintain quality in people-based services. quality affects size of demand and product positioning.

QUANTITY OF SERVICE- amount of service benefits given, FOR EXAMPLE:amount of attention given to a guest in a restaurant.

POTENTIAL PRODUCT LEVEL

means all the possible features/ benefits which can be added in the current product, in future

THE SERVICE DELIVERY SYSTEM

element of service delivery systema) people involved

1) company’s own staff customer contact staff customer non-contact staff

2) customers (their behavior, appearance) the customer other customers

b) physical evidence (environment / setting) place where service is delivered building, interior lay-out, décor etc

c) facilitating equipmentd) process used

how a S.PRODUCT is delivered to the customer?the system used to deliver the S.PRODUCT to the customer. important and integral component of a service product. the two (sp and SDS) are inseparable. affects quality and cs.

FACTORS WHICH INFLUENCE A SERVICE COMPANAY’S PRODUCT LEVELS

1) primary and additional benefits sought by the customers

2) composition of intangible and tangible elements of a service product

3) quality of sp elements4) quantity of sp elements5) cost of S.PRODUCT6) service delivery system

DIFFICULTIES ARISING IN TRANSLATING “SERVICE CONCEPT” INTO “SERVICE OFFER”

1) which extra intangible and tangible elements to provide

2) difficulties in controlling various elements, particularly those provided by the customer (s).

3) cost keeping rising with each extra service / SSP

DIMENSIONS OF PRODUCT MIX

PRODUCT-MIX AND PRODUCT-LINE

few companies rely on a single product, most sell many products.

product-mix:-a company’s assortment of products, new and old, offered to tm customers for CS / CD and to achieve company’s objectives.

product-line:-a group of closely related products which have similar uses / functions, tm customers, prices and which are distributed through the same channel.

each product-line is usually handled by a separate team of executives (group pm, PMS/BMS)

DIMENSIONS OF PRODUCT-MIX

three dimensions of product-mix1) product-mix breadth / widthi. this means number of product - lines carried by a

company.ii. takes a long time to develop and add a product-line. iii. mix extension.iv. costs lot of money. riskyv. decision at highest level.

2) product-line length this means number of different brands in a product line 3) product line depth

variants of brands within a product-line.both number 2) and 3) are line-extensions.take less time and investment. less risky. decisions at mm / GPM level

SERVICE PRODUCT-MIX OF A HOTELPRODUCT-MIX WIDTH OR BREADTH

PRODUCT-LINE LENGTH

AND DEPTH

GUESTROOMS

RESTAU-RANTS

AUTO RENTAL

SERVICESOUT-DOOR CATERING

SPORTSCURRENCYEXCHANGE

• normal rooms single double•executive single double• suites• e-rooms• honeymoon rooms

• Pakistani• Chinese• continental• Thai• Japanese

•seminar hall•training rooms

•cars•coaches

•food•arrangements•personnel

•tennis•squash•swimming•indoor games•golf

•TCS•CNS

MEETING ROOMS

DIMENSIONS OF PRODUCT-MIX

a company can expand its product-mix and grow by adding new product-lines or by increasing product-line length or depth.

a company can also prune/contract its product-mix by eliminating a product-line or a product/brand / variant

FACTORS TO CONSIDERWHEN EXPANDING THE PRODUCT-MIX

1) size and growth rate of segment / market2) match with company’s

objectives resources management know-how

3) will the NSP complement the existing S.PRODUCTS4) will it give optimum product-mix range.

width, length and depth. litmus test : increase in profitability

5) will it have distinct positioning6) less price sensitivity, bargaining power7) less availability of substitutes

FACTORS TO CONSIDER WHEN PRUNING THE PRODUCT-MIX

GIVE NO IMPORTANCE TO SENTIMENTS.1) can we revitalize it2) can we sell it abroad3) will it improve profitability4) resources saved can be allocated to more successful

products5) no disruptive effect on overall operation

NEW SERVICE PRODUCT

A NEW SERVICE PRODUCT SEVERAL WAYS TO DEFINE A NSP

1) me-too product new to the company but already available from another company.

2) adapted product already available but adapted for a new market segment. EG: telephone booths

3) innovation NSPS showing substantial improvement over the existing sp to better satisfy needs. EG: mobile telecommunication

4) invention a totally new service product, not previously available and which meets an unsatisfied need. creates a new product class EG: satellite TV communication.

5) an existing service but delivered through a new SDS. EG: banking services through ATMS.

SOURCES OF NEW SERVICE PRODUCTS

acquisition through new product development process

WHY SERVICES COMPANIES NEED TO DEVELOP NEW SERVICE PRODUCTS

1) cannot continue to rely on existing s. products for success.2) to increase sales, ms, profit and the need to remain competitive by

meeting changing requirements of customers.3) to replace outdated s. products.4) to utilize unused capacity/facilities. examples: unused space/

facilities in a sports centre.5) to smooth-out seasonal demand. Examples: marriage halls for

meetings / examination centre during off-season.6) to reduce dependency on too-few products banks have many service

products7) to exploit opportunities when a competitor may drop-out or new

needs of customers may come-up. 8) to maintain reputation of being leaders in brand

WHY LACK OF NSPs IN SERVICE COMPANIES

most services companies, except BIA do not have a product development department.

reasons: many services companies are in the public sector, with

little competition / monopoly. lack of motivation to innovate.

lack of resources financial, management. etc. mostly small companies.

cannot be patented less incentive to develop a NSP. focus on me-too products.

concept testing is difficult home-use tests are also difficult

high cost of new service product development high failure rate of NSPS

FAILURE OF NEW SERVICE PRODUCTS

70-80% FAILURE RATE

REASONS:

1) the basic service product expected by the customer, is not well designed. not based on the benefits sought by the tm customers.

2) lack of company-client interface during the development process of a NSP.

3) wrong criteria used in market segmentation and product positioning. these are not customer wanted criteria.

4) good NSP but market potential has been overestimated.5) faulty pricing, promotion, distribution or SDS6) inaccurate / unhealthy spread of image of a NSP by customers7) competitors fight harder than expected

STAGES IN NEW SERVICE PRODUCT DEVELOPMENT PROCESS

1. IDEAS GENERATIONstarting point, create as many new ideas as possible ideas may come either from inside or outside the company, via:a) brainstorming session b) suggestion boxc) marketing research, focus group, individual interviewsd) visit to other countries.

most ideas usually come from customers.

2. IDEAS SCREENING BY A MANAGEMENT TEAM separate workable ideas from non-workable ideas by a management team, on the following criteria, to justify use of resources

additional manpower, space, machines required. commercial aspects. development time. survived idea(s).

3. concept development and concept testing.a) concept development

develop a meaningful verbal and pictorial description of the survived business proposal

b) concept testing test the product concept with a suitable number of tm customers, using verbal and pictorial description, to judge their understanding and liking / disliking.

4. DETAILED BUSINESS ANALYSIS OF THE PRODUCT BASED ON THE SELECTED IDEA

a) estimated sales, costs and profit for three consecutive years b) probability of success or failure of NSP.c) possible response / reaction of competitors.

5. DEVELOPMENT OF THE NEW S. PRODUCT FOR TRIAL translate the NSP idea/proposal, as passed by the tm customers, into the new service product this means:

i. investmentii. hiring and training of staffiii. construction of operational facilityiv. designing SDS.

6. MANAGEMENT’S FINAL DECISION GO / NO GO

7. TEST MARKETING

8. COMMERCIALIZATION OF NSPa) when b) where c) how

stage 1,2,3 and 4 do not involve much costs. many s. products fail at these stages. other stages involve lot of costs.

NEW SERVICE PRODUCT CONCEPT TESTING

usually, concept testing is ignored in services.

PROBLEMS IN CONCEPT TESTING :1) concept testing is difficult of a service product because describing

something which is mostly intangible, is very difficult.2) results vary too-much, which depend on :

– service provider– physical environment– the customer

3) home-use tests are not possible.

BENEFITS OF CONCEPT TESTING :1) opportunity to evaluate a s. product before its creation and introduction.2) opportunity to get input on the specifications (intangible and tangible

elements) of a new s. product, from the users.

DIFFICULTIES FACED IN INNOVATING SERVICE PRODUCTS

research and development is not well developed in services companies as compared to in manufacturing companies.

REASONS:1) developing the desired specifications of a new S.PRODUCT is

difficult, particularly of people- based services.2) testing of new services is difficult.3) great risk of being quickly copied. cannot be patented. Examples:

a) airlines (films, duty free items) b) banks (various kinds of accounts)

4) lack of new ideas in service innovation

QUALITY IN SERVICES COMPANIES

QUALITY IN SERVICES COMAPANIES

TWO TYPES OF QUALITY1) quality of the service product

2) quality of the service delivery system, particularly the appearance and behavior of customer contact staff, quality of customers and quality of physical environment.

SIGNS OF QUALITY SERVICE

1) people own

customers contact staffcustomers non-contact staff

customersthe customerother customers

2) physical environment and evidence3) facilitating equipment 4) processes5) price

SERVICE QUALITY MODELfive gaps that cause quality problems and, thus, these must be closed.1) gap between consumer expectations and management’s understanding

2) gap between management’s understanding and service-quality standards.

3) gap between service-quality standards and the actual service delivery

4) gap between the actual services delivery and the promotional claims

5) gap between the actual service and the expected service

SERVICE QUALITY MODEL

EXPECTED SERVICE

ACTUAL SERVICEDELIVERED

MANAGEMENT’S SERVICE QUALITY

STANDARDS

MANAGEMENT’S UNDERSTANDING OF CONSUMERS

EXPECTIONS

PROMOTIONALCLAIMS

HOW TO MAINTAIN QUALITY IN A SERVICE BUSINESS

1) be customer focused. know tm customers and their needs

2) top management’s commitment to qualitythey must act as a role model of quality management can show its commitment to quality by:

a) by setting objectives and incentives based on quality job done and not on quantity job

b) promote quality oriented people in all departmentsc) provide TQM training to everybody

3) set high quality standardsEG:

i. Swissair- 96% CSii. Citibank – phone call answered within 10 secondsiii. customers letter answered within two days

4) have a system for monitoring service performancei. ownii. major competitors

via ghost shopping, customer surveys, suggestions and complaint form / toll free telephone number

5) have a system to resolve complaints quickly

6) satisfy both employees and customers

7) state in everybody’s job description how his job affects customer satisfaction

HOW TO DEFEND MARKET POSITION?

HOW TO DEFEND MARKET POSITION

• CREATE DIFFERENTIATION TO DEFEND• WHAT IS DIFFERENTIATION ?• DESIGNING AND BUILDING MEANINGFUL, BELIEVABLE,

AFFORDABLE AND SUSTAINABLE DIFFERENCES IN THE M-MIX ELEMENTS, APPLICABLE TO MOST CUSTOMERS, FOR COMPETITIVE ADVANTAGE,POSITIONING AND FOR CUSTOMER SATISFACTION

• EIGHT WAYS TO CREATE DIFFERENTIATION :1) OFFER EXTRA SERVICES AND SSPs.

EXTRA SERVICES / SSPs CAN BE EASILY COPIED.2) HAVE BETTER SERVICE DELIVERY SYSTEM

BETTER TRAINED, MOTIVATED AND MORE EXPERIENCED PEOPLE, P. ENVIRONMENT/ EVIDENCE, FACILITATING EQUIPMENT AND PROCESSES. MAKE PROCESSES AUTOMATED / MECHANIZED FOR UNIFORMITY IN QUALITY

3) EXTENSIVELY USE A SYMBOL OR A LOGO OR A BRAND NAME TO FIX THE IMAGE OF THE COMPANY. EG HOTELS.

4) MAKE EASY FOR THE CUSTOMER TO ORDER / GET THE SERVICE.

5) OFFER SERVICE WARRANTY6) ADD FEATURES7) PERSONAL INVOLVEMENT BY HIGHER MANAGEMENT.

FREQUENT FOLLOW-UP CONTACTS BY CUSTOMER CONTACT STAFF

8) ON-TIME COMPLETION OF WORK

MANAGING PRODUCTIVTIY IN SERVICES

MANAGING PRODUCTIVITY IN SERVICES

• VARIOUS COSTS ARE GOING-UP AND AN INCREASE IN PRICE IS LIMITED BY COMPETITION AND GOVT. REGULATIONS. THUS, NEED FOR PRODUCTIVITY TO KEEP THE COSTS DOWN.

• FOUR METHODS TO IMPROVE PRODUCTIVITY 1) HIRE AND DEVELOP MORE SKILLFUL WORKERS.2) S. PROVIDER TO WORK WITH A BIG GROUP

EXAMPLES: A DOCTOR HANDLING MORE PATIENTS, EACH GETTING LESS TIME. QUALITY MAY SUFFER TO SOME EXTENT.

MANAGING PRODUCTIVITY IN SERVICES

3) USE AUTOMATED EQUIPMENT AND STANDARDIZED PROCESSES. EXAMPLE:SOUTH - WEST AIRLINE USES AUTOMATED EQUIPMENT FOR TICKET PURCHASING AND BOARDING PASSES.

4) INTRODUCE SELF-SERVICE TO REPLACE SERVICE FROM THE CO’s STAFF.EXAMPLE:KFC-SALAD BAR

BRANDING, WARRANTY AND AFTER SALE SERVICES

BRANDING

• SERVICE PRODUCT BRANDING BRANDING MEANS GIVING A NAME, SYMBOL AND A NUMBER TO A PRODUCT IN ORDER TO DIFFERENTIATE ONE PRODUCT FROM ANOTHER. IN THE PAST, BRANDING WAS MAINLY USED IN CONSUMER GOODS. TODAY IT IS ALSO BECOMING POPULAR IN SERVICES.

• BRAND, BRAND NAME ,TRADEMARK EXAMPLEXMOAVAN ACCOUNT (FAYSAL BANK)IZAFA TERM CERTIFICATES (FAISAL BANK)INDIGO (MOBILINK)DJUICE (TELE NOR)JAZZ (MOBILINK)SMART (TELENOR)BAHBOOD SAVING CERTIFICATES (NATIONAL SAVINGS)

SERVICE PRODUCT WARRANTY

AN UNDERTAKING BY A SELLER THAT THE SERVICE SOLD IS FIT FOR USE OR WILL PERFORM AS SPECIFIED. IMPORTANT IN CERTAIN SERVICES. FOR EXAMPLE – MUTUAL FUNDS – TERMS CERTIFICATAES ISSUED BY BANKS – GOVERNMENT SECURITIES

BUILDS CONFIDENCE IN THE SP / CO.

AFTER SALE SERVICES

• GIVING SOME EXTRA SERVICE AFTER HAVING USED THE MAIN SERVICE.• POPULAR IN SOME SERVICES

FOR EXAMPLE, AIRLINES HELPING PASSENGERS IN HIRING TRANSPORT / BOOKING HOTEL ACCOMMODATION.

MARKETING-MIX IN SERVICES

PRICE• DEFINING PRICE• IMPORTANTACE OF PRICE FOR THE COMPANY AND THE CUSTOMER • PRICING OBJECTIVES • FACTORS WHICH AFFECT PRICE DETERMINATION • PRICING METHODS• PRICING STRATEGIES• PRICE LEVELS • DISCOUNTS • PAYMENT MODES AND TERMS (MOP, TOP)

PRICING• DEFINITION:-

A) AMOUNT OF MONEY NEEDED BY A CUSTOMER TO OBTAIN A PRODUCT. IT GENERALLY INCLUDES THE PRICE OF PSS OR SSP OFFERED BY THE COMPANY. B) WORTH OR VALUE OF BENEFITS OF A PRODUCT IN THE MIND A CUSTOMER, MEASURED IN SOME MONETARY UNITS.

PRICE UNDER VARIOUS NAMES

IN SERVICES MARKETING

• TUITION FEE• INTEREST RATE• RENT• FARE• FEE • PREMIUM• SALARY• WAGE • BRIBE• INCOME TAX• TOLL TAX• HONORARIUM

CHARACTERITCS OF PRICE

1) AN ELEMENT OF M-MIX. IT MUST BE CUSOMTER-ORIENTED

2) UNLIKE OTHER Ps OF M-MIX, PRICE GENERATES REVENUE, OTHER ELEMENTS INCUR COSTS.

3) UNLIKE OTHER Ps OF M-MIX, PRICE CAN BE CHANGED QUICKLY. IT IS THE MOST FLEXIBLE ELEMENT OF M-MIX

4) SETTING PRICE AND FIGHTING PRICE COMPETITION IS NUMBER ONE PROBLEM FACING THE MARKETING EXECUTIVES.

PRICING OBJECTIVES

1. MAXIMIZATION OF CURRENT PROFIT2. HIGH CURRENT SALES VOLUME AND MS3. TO REFLECT PRODUCT QUALITY LEADERSHIP4. TO BE ENSURE SURVIVAL OF THE COMPANY. SHORT TERM OBJECTIVE.5. TO MAINTAIN STATUS QUO OF THE CURRENT PRICE LEVEL IN THE

MARKET AND TO AVOID A PRICE WAR

• MANAGEMENT MUST DECIDE PRICING OBJECTIVES BEFORE SETTING THE PRICE

THE CLEARER A FIRM IS ABOUT ITS PRICING OBJECTIVES, THE EASIER IT IS TO SET THE PRICE.

FACTORS WHICH INFLUENCE PRICE DETERMINATION

A) INTERNAL FACTORS:-1. PRICING OBJECTIVES.2. PRODUCT POSITIONING AND M-MIX STRATEGIES.3. PLC4. PRODUCTION CAPACITY5. TOTAL PRODUCT COST.

A COMPANY SHOULD TRY TO BE A LOW-COST PRODUCERIT SETS THE FLOOR PRICE OF THE PRODUCT.

AT A CERTAIN LEVEL OF PRODUCTION, THE TOTALCOST OF A PRODUCT IS MADE-UP OF:1. VARIBLE PRODUCT COSTS (VPC) THEIR TOTAL VARIES WITH THE QUANTITY PRODUCED OR SOLD. EG:

CONSUMABLES, RMs, PMs ETC.2. FIXED COSTS OR OVERHEADS (FC)

THEIR TOTAL DOES NOT VARY WITH LEVEL OF PRODUCTION OR SALES. EG: SALARIES OF EXECUTIVES, RENT, DEPRECIATION ETC.

• TOTAL COST IS THE SUM TOTAL OF FIXED AND VARIABLE COSTS FOR A CERTAIN LEVEL OF PRODUCTION.

B) EXTERNAL FACTORS:-1) CUSTOMERS’ PERCEIVED VALUE (CPV). IT

SETS THE CEILING PRICE OF A PRODUCT CPV INDICATES:- A) PRODUCT’S WORTH OR VALUE IN THE MIND OF TM CUSTOMERS. B) PAYING CAPACITY OF TM CUSTOMERS. CPV IS DETERMINED VIA MARKET RESEARCH ON A REPRESENTATIVE SAMPLE OF TMCs, • EFFECTS OF CUSTOMER PERCEIVED VALUE (CPV):

1) PRODUCT PRICE > CPV CUSTOMER DOES NOT BUY 2) PRODUCT PRICE < CPV CUSTOMER BUYS 2) PRODUCT PRICE = CPV BUYS OR BARGAINS.

2) ESTIMATED VOLUME DEMAND AT DIFFERENT PRICES.3) ELASTIC OR INELASTIC DEMAND.4) MAJOR COMPETITORS’ PRICES AND THEIR EXPECTED REACTION.5) STAGE IN THE ECONOMY CYCLE AND THE PREVAILING ECONOMIC

CONDITIONS (INFLATION, INTEREST RATE, EXCHANGE RATE) 6) POSSIBILITY TO CHANGE THE PRICE IN FUTURE.7) POSSIBILITY OF GOVT. INTERVENTION.8) FAIR PROFIT TO RESELLERS TO GAIN THEIR SUPPORT.

MAJOR METHODS OF SETTING PRCIE

1) COST-PLUS, MARK-UP OR COST-BASED PRICING METHOD.2) BREAK-EVEN ANALYSIS OR TARGET RETURN PRICING

METHOD.3) COMPETITION-BASED PRICING METHOD OR GOING RATE

PRICING METHOD.4) CUSTOMER PERCEIVED VALUE PRICING METHOD.5) VALUE PRICING METHOD6) SEALED-BID PRICING METHOD.

MAJOR METHODS OF SETTING PRICE OF A SERVICE PRODUCT

1. COST - PLUS OR MARK-UP PRICING METHODADDING A CERTAIN MARK-UP TO THE TOTAL COST OF PRODUCING , MARKETING AND DELIVRING A SERVICE PRODUCT TO CUSTOMERS.

• IT HAS THREE STEPS 1) CALCULATE TOTAL VARIABLE AND FIXED COST PER UNIT 2) DECIED MARK-UP AND 3) ADD MARK-UP TO THE TOTAL UNIT COST, USING THE FOLLOWING FORMULA

PRICE = TOTAL UNIT COST

1.0 - % MARK-UP

COST- PLUS PRICING METHOD IS FURTHUR DIVIDED INTO:

a) PROFIT-ORIENTED COST-PLUS PRICING b) GOVERNMENT CONTROLLED COST-PLUS PRICING

2. MARKET- BASED OR COMPETITION-BASED PRICING MEATHOD FIXING THE PRICE OF A SERVICE KEEPING IN MIND THE PRICE OF STRATEGIC COMPETITORS

• POPULAR, WHY? • SIMPLE, COLLECTIVE WISDOM

• SERVICE PROVIDER’S PRICE MAY BE:a) SAME AS THAT OF MAJOR COMPETITORS. NO PRODUCT

DIFFERENCES. COST NOT CONSIDERED.b) BELOW THAT OF MAJOR COMPETITORS. TWO

DRAWBACKS:– PRICE WAR– SERVICE USER PERCEIVES LOW QUALITY OF SP.

c) ABOVE THAT OF MAJOR COMPETITORS – DISTINCT BENEFITS, DISTINCT OR EXTRA SERVICES AND SSPs– S.PROVIDER HAS HIGH IMAGE/ PRESTIGE/ SDS

3) CUSTOMER PERCEIVED VALUE PRICING METHODSET PRICE CLOSE TO THE WORTH OF SP AS PERCEIVED BY TM CUSTOMERS. FIND VIA MR.COST IS CONSIDERED.

• IT HAS FOUR STEPS :• FIND TOTAL PER UNIT COST • FIND OUT CPV VIA MARKETING RESEARCH• KNOW STRATEGIC COMPETITORS’ PRICE • FIX PRICE OF THE SERVICE PRODUCT CLOSE TO THE CPV, KEEPING THE

MIND THE PRICE OF STRATEGIC COMPETITORS.

PRICING STRATEGIES

1. DIFFERENTIAL / FLEXIBLE DISCRIMINATORY PRICING STRATEGYTWO OR MORE PRICES OF THE SAME SERVICE TO ACCOMMODATE DIFFRENCES IN CUSTOMERS, LOCATIONS AND TIMINGS, etc

PRICING STRATEGIES

• THREE SUCH PRICING STRATEGIES, EACH FOR A DIFFERENT PURPOSE.

a) CUSTOMER- SEGMENT FLEXBLE PRICING STRATEGYb) LOCTION FLEXIBLE PRICING STRATEGYc) TIME FLEXIBLE PRICING STRATEGY

– MAJOR DISADVANTAGE: CUSTOMERS GET HABITUAL, DELAY PURCHASES

PRICING STRATEGIES

2. DISCRETE PRICING STRATEGYQUOTING A PRICE WITHIN THE FINANCIAL AUTHORITY OF A DECISION MAKER WHO HAS SYMPATHTIC ATTITUDE TOWARDS A SERVICE PROVIDER.

3. DIVERSIONARY PRICING STRATEGYOFFERING A LOW PRICE OF ONE OF THE MANY SERVICE PRODUCTS IN ORDER TO DEVELOP AN IMAGE OF A LOW PRICE COMPANY AND TO INCREASE CUSTOMERS TRAFFIC.

4. GUARANTEED PRICING STRATEGY PAYMENT IS MADE BY A CUSTOMER ONLY IF CERTAIN RESULTS ARE GUARANTEED OR DELIVERED BY THE SERVICE PROVIDER

PRICING STRATEGIES

5. FIRST LOSS-ORDER PRICING STRATEGY REDUCING PRICE FOR THE FIRST ORDER WITH THE HOPE OF GETTING FUTURE BUSINESS AT A BETTER PRICE

6. OFFEST PRICING STRATEGY THE PRICE OF THE BASIC SP IS LOW BUT EXTRA SERVICES OR SSP CARRY HIGHER CHARGES

7. BUNDLE PRICING STRATEGY OFFRING ONE PRICE OF A BUNDLE OF SERVICES WHICH IS LOWER THAN THE SUM TOTAL OF INDIVIDUAL PRICES

8. TWO-PARTS PRICING STRATEGY a) FIXED PART b) VARIABL PART

PRICE VS NON-PRICE COMPETITION

(A) PRICE COMPETITION• PRICE IS THE PRIMARY BASIS FOR FIGHTING COMPETITION.

IT IS USED WHEN PRODUCTS ARE SIMILAR. PRICE IS SET AS LOW AS POSSIBLE TO GAIN VOLUME SALES AND MS. MINIMUM PSS ARE OFFERED.

• POSSIBILITY OF PRICE WAR. MOST COMPANIES WANT TO AVOID IT AND, INSTEAD, PROMOTE THEIR PRODUCT ON THE BASIS OF BETTER AVAILABILITY AND SPTs.

• CONSUMERS BENEFIT ON SHORT TERM BASIS. THEY BUY AS LONG AS A BRAND’S PRICE IS LOWEST.

PRICE VS NON-PRICE COMPETITION

(B) NON-PRICE COMPETITION• PRICE IS NOT THE PRIMARY BASIS OF FIGHTING

COMPETITION.

• THE SELLER HAS A GOOD PRICE AND INCREASES VOLUME SALES AND MS BY EMPHASIZING ON THE OTHER Ps

OF M-MIX

ADDITIONAL CLASSFIFCATION BASIS OF SERVICES FOR PRICING PURPOSE

• BASIS: WHO REGULATES / CONTROLS THEIR PRICE

• THREE CATEGORIES OF SERVICES FOR PRICING PURPOSE:1) SERVICES SUBJECT TO GOVERNMENT PRICE CONTROL2) SERVICES SUBJECT TO FORMAL PRICE REGULATION BY TRADE BODIES3) SERVICES SUBJECT TO PRICE REGULATED BY MARKET FORCES

DISCOUNTS

• PERCENTAGE REDUCTION IN THE LIST PRICE OF A PRODUCT.

• TYPES OF DISCOUNTS. 1. TRADE DISCOUNT: FOR PERFORMING CERTAIN DISTRIBUTION FUNCTIONS.

2. CASH DISCOUNT:- FOR PAYING BILL WITHIN A SPECIFIED PERIOD. E.G 2 \ 10 , NET / 30.

DISCOUNTS

3. QUANTITY DISCOUNTS TO ENCOURAGE CUSTOMERS TO BUY LARGE QUANTITIES / AMOUNT. CAN BE ON:- (a). NONCUMULATIVE BASIS DISCOUNT BASED ON THE SIZE OF EACH INDIVIDUAL ORDER. ENCOURAGES LARGE ORDERS. (b) CUMULATIVE BASIS DISCOUNT BASED ON TOTAL VALUE OR VOLUME PURCHASED IN A CERTAIN PERIOD. CUSTOMER IS TIED UP WITH THE SELLER. E.G FFPs, FGPs

DISCOUNTS

4. SEASONAL DISCOUNT: SLACK / OFF-SEASON TO EVEN-OUT DEMAND AND SUPPLY, TO AVOID INVENTORY COST. 5. PROMOTIONAL ALLOWANCE FOR PROMOTIONAL SERVICES PERFORMED BY THE MM.

EG: DISPLAYS, RETAILERS’ AD SHOWING SELLER’S PRODUCT.

PLACE• LOCATION. ACCESSIBILITY

VIA PHYSICAL AND COMMUNICATION MEANS• DISTRIBUTION CHANNELS • DISTRIBUTION COVERAGE

PLACEDISTRIBUTION

• TWO ASPECTS/ DECISIONSA. LOCATION OF SERVICES PROVIDER

SINGLE OR MILTI-SITE LOCATIONS• FACTORS TO BE CONSIDERED IN LOCATION

1) DOES THE CUSTOMER GO TO THE SERVICE PROVIDER OR DOES THE SERVICE PROVIDER GO TO THE CUSTOMER

2) ACCESSABLE VIA PHYSICAL AND COMMUNICATION MEANS

PLACEDISTRIBUTION

B. DISTRIBUTION CHANNEL STRUCTURE AND EXTENT OF COVERAGE.

1. DIRECT DISTRIBUTION CHANNAL IS USED MOST OFTEN 2. INDIRECT DISTRIBUTION CHANNEL. USED LESS3. EXTENSIVE, SELECTIVE OR EXCLUSIVE DISTRIBUTION

COVERAGE

PROMOTION

MARKETING-MIX

PRODUCT PRICE PLACE PROMOTION

PERSONALSELLING

ADVERTISING

SALESPROMOTION

PUBLIC RELATIONS

PUBLICITY

MARKETING TOOLS FOR CS.4,5 OR 7

INTEGRATED / COORDINATED FOR IMC

• PROMOTION TO INFORM, CONVINCE OR REMINDSTRESS ON AVAILABILITY, CONSISTENT SERVICE QUALITY, PEOPLE, AND PHYSICAL ENVIRONMENT / EVIDENCE AND LOCATION

• PROMOTIONAL-MIX:1) PERSONAL SELLING2) ADVERTISING3) SALES PROMOTION TECHNIQUES4) P. RELATIONS AND PUBLICITY5) MAILING

PROMOTIONDEFINITION

PURPOSE TO COMMUNICATE WITH (TO INFORM, PURSUADE OR REMIND) AND

TO INFLUENCE TM CUSTOMERS TO USE COMPANY`S PRODUCT(S).

DEFINITIONPROMOTION IS TO INFORM, PERSUADE OR REMIND TARGET MARKET

CUSTOMERS OF A PRODUCT OR A COMPANY, THROUGH VARIOUS METHODS OF PROMOTION, IN ORDER TO ACHIEVE MARKETING

OBJECTIVES.

PROMOTIONAL METHODS

• FIVE MTHODS, EACH WITH DIFFERENT FEATURES AND SUITABLE IN DIFFERENT PROMOTIONAL SITUATIONS.

1) PERSONAL SELLING (PS)*2) ADVERTISING (AD)*3) SALES PROMOTION TOOLS OR TECHNIQUES (SPTs)4) PUBLIC RELATIONS (PR)5) PUBLICITY (PB)

*PRIMARY METHOD .• IMC

METHODS MUST BE COORDINATED FOR GREATEST IMPACTa) SEQUENSEb) SAME MESSAGE

PROMOTIONAL METHODS

1) PERSONAL SELLING• DIRECT PRESENTATION OF A PRODUCT TO A CUSTOMER OR A GROUP OF

CUSTOMERS, THROUGH A REPRESENTATIVE, EITHER IN A FACE TO FACE SITUATION OR OVER PHONE (TELEMARKETING)

• DIRECTED AT INFLUENCERS, END-CUSTOMERS OR ON MIDDLEMEN.MAJOR PROMOTIONAL METHOD FOR COMPLEX PRODUCTS, BUYER IS A PROFESSIONAL.

• WORD OF MOUTH COMMUNICATION

• PERSUADE SATISFIED CUSTOMERS TO TALK TO OTHER CUSTOMERS

• ENCOURAGE POTENTIAL CUSTOMERS TO TALK TO SATISFIED CUSTOMERS

PROMOTIONAL METHODS

2) ADVERTISING:• NON-PERSONAL, MASS PROMOTION OF A PRODUCT OR A COMPANY,

THROUGH FIVE ADVERTISING MEDIA. PAID

• PRINT, BROADCAST & FILM, ELECTRONIC, DISPLAY AND TRANSIT MEDIA

• MAJOR PROMOTIONAL METHOD FOR SIMPLE PRODUCTS

PROMOTIONAL METHODS

3) SALES PROMOTION TOOLS OR TECHNIQUES• TEMPORARY AND SHORT TERM INCENTIVES, GIVEN TO SALES

REPRESENTATIVES, INFLUENCERS, MIDDLEMEN OR TO CONSUMERS, IN ORDER TO ENCOURAGE QUICKER AND BIGGER SALE OR PURCHASE OF A PRODUCT, DURING A SPECIFIED PERIOD.

• COMPARE SALE BEFORE, DURING AND AFTER A SALES PROMOTION TOOL HAS BEEN USED, TO JUDGE EFFECETIVENESS OF SPTs

• SUPPORTIVE PROMOTIONAL METHOD TO PERSONAL SELLING OR ADVERTISING.

PROMOTIONAL METHODS

• THREE KINDS OF SALES PROMOTION TOOLS:a) SALES FORCE INCENTIVES

b) TRADE INCENTIVES

c) CONSUMER INCENTIVES

• CHARACTERISTICS OF SALES PROMOTION TOOLS1) YIELD FAST RESULTS

2) WORK BEST WITH A SUPERIOR PRODUCT.

3) BECOMING VERY POPULAR. WHY?a) CUSTOMERS AND MM ARE BECOMING INCENTIVE / DEAL ORIENTED

b) COMPETITORS’ PRESSURE

c) MANAGEMENT’S PRESSURE ON PM & SALES EXECUTIVES

PROMOTIONAL METHODS4) PUBLIC RELATIONS

A VARIETY OF COMMUNICATION EFFORTS, MADE BY A COMPANY, TO CREATE A FAVOURABLE ATTITUDE / OPINION OF VARIOUS PUBLICS * TOWARDS THE COMPANY OR ITS PRODUCTS SO THAT SELLING BECOMES EASY. BUILDS RELATIONS.

• USUALLY, NO SPECIFIC PRODUCT PROMOTIONAL MESSAGE IS COMMUNICATED IN PUBLIC RELATION EFFORTS.

• PR MODES / TOOLS:

NEWSLETTERS, LOBBYING (INFLUENCING VIA PERSONAL CONTACTS), SPONSORING EVENTS (LITERARY, CHARITY, SPORTS, SCIENTIFIC), HOUSE MAGAZINE,RELEASING NEWS ABOUT COMPANY, PEOPLE OR PRODUCTS ETC.

• USED AS A SUPPORTIVE PROMOTIONAL METHOD TO MAJOR METHODS OF PROMOTION.

*PUBLICS : STOCKHOLDERS, EMPLOYEES, CUSTOMERS, SUPPLIERS, PRESSURE GROUPS, SOCIETY, GOVERNMENT, MEDIA PEOPLE, POLITICIANS ETC.

PROMOTIONAL METHODS5)PUBLICITY

• A SPECIAL FORM OF PUBLIC RELATIONS. INVOLVES RELEASING NEWS, ARTICLES, PHOTOGRAPHS, HOLDING PRESS CONFERENCES ETC., ABOUT A PRODUCT OR THE COMPANY, TO THE MASS MEDIA, FOR PUBLICATION / BROADCASTING AS A “NEWS” ITEM. IT IS NON-PAID

• HAS HIGH CREDIBILITY

• USED AS A SUPPORTIVE PROMOTIONAL METHOD TO MAJOR METHODS OF PROMOTION

PROMOTIONAL MIX• AN APPROPRIATE COMBINATION OF PERSONAL SELLING, ADVERTISING,

SALES PROMOTION TECHNIQUES, PUBLIC RELATIONS AND PUBLICITY, IN ORDER TO ACHIEVE PROMOTIONAL AND MARKETING OBJECTIVES.

• PROMOTIONAL OBJECTIVES

AWARENESS, KNOWLEDGE, LIKING, PREFERENCE, BUY, LOYALTY AND TO HAVE BRAND NAME ON THE TOP OF MIND.

• MARKETING OBJECTIVES:

SALES, MS, GR, RANKING,RETAINING EXISTING AND DEVELOPING NEW CUSTOMERS AND PROFIT.

WHAT TO EMPHASIZE IN PROMOTION?

a) UNIFORM HIGH QUALITY SERVICE PRODUCTb) CONVENIENT LOCATION c) CONFORTABLE AND CLEAN PHYSICAL ENVIRONMENT d) QUALITY OF SERVICE PERSONNEL COURTESY AND

ATTENTIVENESS e) PERSONAL ATTENTION f) EXTRA SERVICESg) SSPh) EASE OF PURCHASE i) WHAT SATISFIED CUSTOMERS SAYj) HIGH REPUTATION OF THE SERVICE COMPANY

PEOPLE

• PEOPLEPLAY A CENTRAL ROLE IN BUILDING CS BY CREATING AND DELIVERING THE SERVICE, PARTICULARLY “THE CUSTOMERS’ CONTACT STAFF”

• TWO CATEGORIES OF PEOPLE a) CO’S STAFF

• CUSTOMERS’ CONTACT STAFF• CUSTOMERS’ NON-CONTACT STAFF

b) CUSTOMERSi. THE CUSTOMERii. OTHER CUSTOMERS

THEIR APPEARANCE AND BEHAVIOUR INVOLVE THEM IN SERVICE PRODUCTION AND DELIVERY PROCESS

TYPES OF STAFF

CUSTOMER-CONTACTSTAFF

CUSTOMER - NONCONTACTSTAFF

• CONNECTS CO TO CUSTOMER• CONNECTS CUSTOMER TO THE COMPANY.• THEREFORE, HE IS “THE COMPANY”• BACKBONE OF CO, CRITICAL FACTOR. WHY?

• PROVIDES MANAGEMENT SUPPORT AND VARIOUS RESOURCES

CUSTOMER CONTACT STAFF DIFFERENTIATORS

HIRE, TRAIN, COACH,DEVELOP,MOTIVATE, SELL THE JOB AND COMPENSATE BETTER CUSTOMER CONTACT STAFF THAN THAT OF MAJOR COMPETITORS.

• STAFF DIFFERENTIATORS 1. GRACEFULL AND COURTEOUS2. GOOD COMMUNICATION3. COMPETENT / SKILLFUL 4. RESPONSIVE/ CUSTOMER FOCUSED 5. EMPOWERED6. MOTIVATED7. TRUSTWORTHY

PHYSICAL ENVIRONMENT AND EVIDENCE

TWO ASPECTS OF PHYSICAL ENVIRONMENT AND EVIDENCE

A. PHYSICAL ENVIRNMENTA PLACE WHERE THE SERVICE IS CREATED OR DELIVERED OR WHERE THE INTERACTION BETWEEN THE SERVICE PROVIDER AND THE SERVICES USER TAKES PLACE.

PAY ATTENTION TO:1) LAYOUT OF BUILDING 2) NOISE LEVEL 3) COLOURS USED, DECOR, FURNITURE, TEMPERATURE etc.4) FACILITATING EQUIPMENT

B. TANGIBAL CLUE A DOCUMENT WHICH SUPPORTS THAT THE CUSTOMER HAS PURCHASED AND USED THE SERVICE. IT ALSO REFLECTS THE IMAGE OF THE SERVICE PROVIDER

• BANKS, HOTELS , RESTAURANTS, AIRLINES etc, SPEND LOT OF MONEY ON PHYSICAL ENVIRONMENT AND THE TANGIBLE CLUE.

• THESE ITEMS SHOULD MATCH WITH THE PRODUCT POSITIONING

• POOR PHYSICAL ENVIRONMENT AND TANGIBAL CLUE CAN HURT A SERVICE COMPANY AND CONVEY A NEGATIVE MASSAGE AND IMAGE

PROCESSES

• PROCESSES• WHAT

INDIVIDUAL SMALL,SEQUENTIAL, SPECIFIC AND VALUE ADDING STEPS CARRIED OUT TO PRODUCE AND DELIVER A SERVICE OR COMPLETE A TASK.– WRITTEN– MECHANIZE– CUSTOMERS’ INVOLVEMENT

• KINDS: PRODUCTION AND DELIVERY PROCESSES

EXAMPLES: RESERVATION / APPOINTMENT SYSTEM, SELF SERVICE IN

STORES, RESTAURANTS etc.

PROCESS

• WHATSMALL, SEQUENTIAL, SPECIFIC AND VALUE ADDING STEPS TO COMPLETE A TASK

• EXAMPLE FROM McDONALDSSTEPS:

1) GREETING BY THE COUNTER ATTENDANT. “GOOD AFTERNOON”

2) ASK THE CUSTOMER TO GIVE HIS ORDER “ MAY I TAKE YOUR ORDER”

3) REPEAT BACK THE ORDER TO AVOID MISTAKES4) ASK IF THERE IS SOMETHING ELSE THE CUSTOMER

WOULD LIKE “WOULD YOU LIKE TO ORDER FRENCH FRIES”

5) ASK FOR PAYMENT6) ANNOUNCE, ASSEMBLE THE ORDER AND PRESENT IT

WITH COURTESY. THANK AND ASK THE CUSTOMER TO COME AGAIN.

SPECIALITY TO COMMODITY CONTINUUM MODEL

• SPECIALITY, A COMMODITY PRODUCT,TOP, MOP, PLC• AS A SPECIALITY PRODUCT MOVES THROUGH ITS PLC, IT BECOMES A

COMMODITY PRODUCT. THIS SPECIALITY TO COMMODITY SLIDE RESULTS IN:-A) LOW PRODUCT IMAGEB) LOW PRICEC) INCREASED COMPETITIOND) LOW PROFIT

• COMPETITION OF A SPECIALITY PRODUCT IS FOUGHT ON PERFORMANCE QUALITY, FEATURES, BENEFITS, OPTIONS, DURABILITY, OUTLOOK, REPAIRABILITY, PACKAGE, PSS ETC

• COMPETITION OF A COMMODITY PRODUCT IS PRIMARILY BASED ON PRICE AND MODE / TERMS OF PAYMENT.

SPECIALITY TO COMMODITY CONTINUUM

COMPETITIONLOW

HIGH PRODUCT IMAGE

HIGHSPECIALITY PRODUCT

COMMODITY PRODUCT

PROFIT

MARKRT SHARE GROWTH STRATEGIES

MARKET SHARE

IT MEANS PERCENTAGE OF A MARKET OR OF A PRODUCT CLASS

CONTROLLED BY A COMPANY OR BY A PRODUCT / BRAND

CURRENT USER STATUS

• INFREQUENT, FREQUENT • LOYAL , RETAIN

• USE MORE OFTEN, OM

• INTRODUCE NEW USES

• RM

USERS COMPETITORS` USERS NON-BELIEVERS OF PRODUCT CLASS•. SHIFT / SWITCH, OM

• FORGET

NON-USERS OF

PRODUCT– CLASS• CONVERT THEM TO USERS, OM

MARKET SHARE GROWTH STRATEGYPRODUCT–MARKET EXPANSION MATRIX

ANSOFF’S MATRIX

CURRENT PRODUCTS NEW PRODUCTS

CURRENT MARKET

NEW MARKET

2. MARKET DEVELOPMENT STRATEGY

3. PRODUCT DEVELOPMENT STRATEGY

4. DIVERSIFICATION STRATEGY

1. MARKET PENETRATION STRATEGY

MARKET PENETRATION STRATEGY

THIS STRATEGY CONSISTS OF INCREASING SALES AND MS OF A CURRENT PRODUCT IN THE CURRENT MARKET THROUGH DIFFERENT AND MORE AGGRESSIVE MARKETING-MIX STRATEGIES AND TACTICS

MARKET PENETRATION STRATEGY

• THREE MARKETING TACTICS TO INCRESE MARKET SHARE

1. ENCOURAGE CURRENT USERS TO REMAIN LOYAL AND USE MORE FREQUENTLY, IF THEY ARE INFREQUENT USERS.

DO SOMETHING DIFFERENT AND INNOVATIVE, E.G.

OFFER INCENTIVES, DO ENTERTAINMENT, ORGANIZEEVENTS etc.

2. SHIFT COMPETITORS’ USERS.

MAKES SENSE IF THERE ARE MAJOR WEAKNESSES IN

COMPETITORS’ PRODUCTS, PRICING, DISTRIBUTION, PROMOTIONOR THEY LACK FUNDS.

3. CONVINCE NON-USERS OF THE PRODUCT-CLASS, IF STILL UNDECIDED.

MARKET DEVELOPMENT STRATEGY

• CONSISTS OF INCRESING SALES AND MARKET SHARE OF A CURRENT PRODUCT BY ENTERING INTO A NEW GEOGRAPHIC OR DEMOGRAPHIC MARKET OR A NEW USE-AREA.

• TACTICSA) URBAN TO RURAL, OTHER COUNTRIESB) ADULT TO CHILDRENC) GENDER SHIFT

PRODUCT DEVELOPMENT STRATEGY

• THIS STRATEGY CONSISTS OF INCREASING SALES AND MARKET SHARE OF A PRODUCT BY DEVELOPING EITHER A NEW PRODUCT OR IMPROVED VARIANTS, FOR THE CURRENT MARKET

TACTICSa) DEVELOP A NEW PRODUCTb) OFFER BENEFITS VIA NEW PRODUCT FEATURES.

DIVERSIFICATION STRATEGY

• ENTER A NEW MARKET WITH A COMPLETELY NEWPRODUCT, BOTH UNRELATED WITH THE CURRENT

BUSINESS. Eg PIA : HOTEL BUSINESS, SPEEDEX SAS: HOTEL BUSINESS, AUTO RENTAL SERVICES ALFALAH : WARID

THIS STRATEGY IS ADOPTED WHEN GROWTH IS NOT POSSIBLE FROM THE OTHER THREE STRATEGIES.

RISKY, COSTLY AND LONG-TERM STRATEGY. TOP EXECUTIVES MAKE THIS DECISION.

PROFITABILITY

• PROFIT = REVENUE – COSTS= (UNITS X PRICE) – (VPCs + FCs)

• FOUR WAYS TO INCREASE PROFITABILITY 1) INCREASE VOLUME (UNITS) 2) INCREASE PRICE 3) REDUCE VPCs VIA BETTER PURCHASE OF INPUTS. 4) REDUCE FCs VIA EFFECTIVENESS AND EFFICIENCY OF PEOPLE THROUGH TRAINING AND UPTO DATE USE OF TECHNOLOGY IN OPERATION.

LONG-TERM PROFITABILITYPRODUCT OR BRAND

INCREASEVOLUME

INCREASEPRODUCTIVITY

PRODUCTDEVELOPMENT

MARKETDEVELOPMENT

MARKETPENETRATION

COST *REDUCTION

IMPROVE FFAND LABOUR

EFFECTIVENESS& EFFICIENCY

ENTER NEWGEO. OR DEMO.

SEGMENTS

ENTER NEWUSE-AREAS

OPERATION MARKETING

INCREASEUSAGE RATE & QUANTITY

WINCOMPETITORS’

CUSTOMERS

WINNON-USERS OF P-CLASS

* VPCs AND FCs

WHY DO COMPANIES NEED VOLUME GROWTH?

1. TO INCREASE LONG-TERM PROFITABILITY

2. TO COMPENSATE INCREASING COSTS VS PRICE INCREASE.

3. TO OFFER A CHALLENGE TO PEOPLE.

4. TO IMPROVE COMPANY’S MARKET RANKING.

GROWTH STRATEGIES

• NINE WAYS TO GROW :1. INCREASE PRODUCT-LINES (INCREASE P-MIX WIDTH)2. INCREASE PRODUCT-LINE LENGTH AND DEPTH.3. MARKET PENETRATION STRATEGY (MORE USAGE)4. MARKET DEVELOPMENT STRATEGY(MORE USERS)5. PRODUCT DEVELOPMENT STRATEGY

(BANKS: CREDIT CARDS).6. PRODUCT DIVERSIFICATION STRATEGY

EG: AIRLINES HAVING OWN HOTELS

GROWTH STRATEGIES

7) FORWARD INTEGRATION GOING INTO A NEW BUSINESS IN WHICH THE “OUTPUT” OF THE CURRENT BUSINESS CAN BE GAINFULLY USED AS AN “INPUT” TO PRODUCE AN OTHER PRODUCT EG : DRYCLEANING EQUIPMENT MANUFACTURING COMPANIES GOING INTO DRYCLEANING BUSINESS.

8) BACKWARD INTEGRATION GOING INTO A NEW BUSINESS IN WHICH THE “OUTPUT” OF THE NEW BUSINESS CAN BE GAINFULLY USED AS AN “INPUT” FOR THE CURRENT BUSINESS EG : DRYCLEANING COMPANIES ACQUIRING EQUIPMENT MANUFACTURING COMPANIES.

9) HORIZONTAL INTERRATION ACQUIRING / MERGIING WITH A SIMILER COMPANY

DIVISIONS OF A SERVICE ORGANIZATION

DIVISONS OF A SERVICE ORGANAIZATION

A) INVISIBLE PART- CONSISTS OF:1. INTERNAL AREAS2. INTERNAL STAFF PROVIDES RESOURCES AND MANAGEMENT SUPPORT TO

THE CUSTOMER CONTACT STAFF3. INTERNAL PROCESSES

B) VISIBLE PART - CONSISTS OF :1. CUSTOMER CONTACT STAFF2. THE CUSTOMER3. OTHER CUSTOMERS4. PHYSICAL SETTING 5. FACILITATING EQUIPMENT6. DELIVERY PROCESS

DIVISIONS OF A SERVICE ORGANIZATION

SERVICE ORGANIZATION

INVISIBLE PART VISIBLE PART

• INTERNAL AREAS

• INTERNAL STAFF

(NON-CUSTOMER CONTACT STAFF)

• INTERNAL PROCESSES

THECUSTOMER

OTHERCUSTOMERS

B,C,D….

• CUSTOMER CONTACT STAFF

• PHYSICALSETTING

• FACILITATING EQUIPMENT

• PROCRSS TO DELIVER

MIS AND MARKETING RESERACH

NEED FOR INFORMATION FOR DECISION MAKING DURING VARIOUS STAGES OF MANAGEMENT

• CHARACTERISTICS OF INFORMATION1) RELEVANT2) ADEQUATE3) TRUE / ACCURATE4) UPDATED5) ON TIME

• INFORMATION IS AVAILABLE BOTH FROM INSIDE AND OUTSIDE A COMPANY, THROUGH MR.

• UNLESS INFORMATION IS USED, IT IS WORTHLESS.

MARKETING INFORMATION SYSTEM

DATA / INFO ABOUT

•MIS BEGINS AND ENDS WITH MARKETING MNGT.•ASSESS INFO NEEDS THROUGH INTERVIEWS•DEVELOP NEEDED INFO USING SUITABLE COMPONENT OF MIS•DISTRIBUTE INFO TO RIGHT MANAGERS FOR GOOD DECISION MAKING.

MKT. I S

• MARKET & CUSTOMERS

• ME

•CO’s PER- FORMANCE

• REACTIONS TO M-MIX

•ANALYSIS

•PLANNING

•ORGANIS- ING

•IMPLEMEN- ATION

•MONITOR/ CONTROL

•ACTIONS

WHAT IS MARKETING RESEARCH ?

• IT IS A SYSTEMATIC PROCESS OF DESIGNING, GATHERING, ANALYSING AND REPORTING RELEVANT, ADEQUATE, TRUE, UPDATED AND TIMELY INFORMATION ON A SPECIFIC MARKETING TASK, FOR DECISION MAKING, TO THE RELEVANT MARKETING PEOPLE.

• OVERALL OBJECTIVES OF MARKETING RESEARCH

i. TO REDUCE UNCERTAINTIES IN DECISION MAKING.

ii. TO MONITOR / CONTROL PERFORMANCE OF MARKETING ACTIVITIES.

STATUS OF USE OF MR IN SERVICES BUSINESS

• OFTEN USED IN AIRLINES, BANKS, INSURANCE COs. FIVE STAR HOTELS, FAST FOOD RESTAURANTS etc. IN SUCH COs, MARKETING RESEARCH IS A COMPONENT OF MIS.

• IN MANY SERVICE BUSINESSES, IT IS NOT USED DUE TO VARIOUS REASONS.

• RECOMMENDED SPENDING : 1-2% OF SALES

• SMALL COs. CAN ENGAGE STUDENTS FOR MR.

THE MARKETING RESEARCH PROCESS

• MR PROCESS IS MUCH THE SAME IN ORGANIZATIONS MARKETING A PHYSICAL OR A SERVICE PRODUCT.

• EIGHT STEPS OF MR PROCESS:1. DEFINE THE MARKETING TASK/ PROBLEM

• BE SPECIFIC EG :-

» COPY TESTING» PRICE RESPONSIVENESS » CUSTOMER SATISFACTION LEVEL» CONCEPT TESTING.

2. DECIDE DATA / INFO SOURCE :i. PRIMARY DATA

NEW DATA GATHERED INTERNALLY OR EXTERNALLY. EXPENSIVE AND TIME CONSUMING.

ii. SECONDARY DATAALREADY AVAILABLE INSIDE OR OUTSIDE.INEXPENSIVE SOURCES :CO’S INTERNAL RECORDS OR REPORTS FROM OUTSIDE SOURCES

– GOVT. PUBLICATIONS– TRADE / PROFESSIONAL BODIES– MR FIRMS– INSTITUTIONS

3. DECIDE RESEARCH APPROACH FOR GATHERING P. DATAi. SURVEY METHODii. OBSERVATION METHODiii. EXPERIMENTAL METHOD

• CHOICE OF METHOD DEPENDS UPON THE NATURE OF TASK, TIME AVAILABLE AND THE COST.

HOW TO GATHER PRIMARY DATAPRIMARY DATA GATHERING METHODS

SURVEY METHODGATHERING DATA/INFO BY ASKING Qs

OBSERVATION METHODPEOPLE’S ACTIONS, BEHAVIOUR, HEARINGWHAT THEY SAY

EXPERIMENTAL METHODSEEING RESULTSBY CHANGING ONEVARIABLE

INTERVIEWPERSON(S)

TELEPHONE POSTAL

PERSONAL OBS

ELECTRONIC OBS

INDIVIDUAL FOCUS GROUPS

4. PREPARE A QUESTIONNAIRE TO RECORD RESPONSES / OBSERVATIONS, TO QUESTIONS.

5. DECIDE SAMPLE PLAN FOR P. DATAi. WHICH TM TO SURVEY ?ii. HOW MANY?iii. WHICH ONES ?

6. COLLECT DATAi. OWN OR OUTSIDE STAFFii. ACTIVE PHASE, EXPENSIVE PHASE, PRONE TO ERROR

7. ANALYSE DATA AND MAKE A REPORTi. TABULATE THE DATA, AVOID PRESENTING LOT OF DATAii. EXTRACT FINDINGS FROM THE DATA USING VARIOUS STATISTICAL

TECHNIQUES.8. PRESENT FINDINGS IN WRITING TO THE MANAGEMENT.

QUESTIONNAIRE

• IS A SET OF APPROPRIATE QUESTIONS, PRESENTED TO A RESPONDENT FOR RECORDING ANSWERS, RESPONSES OR OBSERVATIONS.

• USED COMMONLY

QUESTIONNAIRE

• CHARACTERISITCS OF A GOOD QUESTIONNAIREA) SIMPLE WORDSB) SHORT AND SIMPLE QUESTIONSC) SEQUENTAL QUESTIONS.D) PERSONAL QUESTIONS TOWARDS THE

END.E) ONE SPECIFIC IDEA PER QUESTION.F) NOT TOO MANY QUESTIONS. 10 – 12 QUESTIONS ARE SUFFICIENT.

QUESTIONNAIRE

G) INCLUDE BOTH OEQs AND CEQs1) OEQs (DICHOTOMOUS, MULTIPLE CHOICE, SCALING,

DIRECT AND INDIRECT). - GENERALLY, MAKE THE RESPONDENT THINK - ANSWERED IN RESPONDENT’S OWN WORDS - REVEAL MORE INFO.

2) CEOs (DICHOTOMOUS, MULTIPLE CHOICE, SCALING, DIRECT AND INDIRECT).

- GENERALLY, DO NOT MAKE THE RESPONDENT THINK

- RESPONDENT MAKES HIS CHOICE OF ANSWER FROM THE PRE-SPECIFIED ANSWERS.

TEST THE QUESTIONNAIRE BEFORE ITS USE ON A LARGE SCALE.

SUB-CLASSIFICATION OF OEQs AND CEQs

1) DICHOTOMOUS QUESTIONGIVES CHOICE BETWEEN TWO ANSWERS

2) MULTIPLE CHOICE QUESTIONGIVES CHOICE BETWEEN MORE THAN TWO ANSWERS

3) SCALLING QUESTIONGIVES CHOICE OF ANSWER ON A NUMERICAL SCALE (MINIMUM TO MAXIMUM)

4) DIRECT QUESTIONA QUESTION WHICH CONTAINS THE WORD “YOU” OR “YOUR” TO MAKE IT A PERSONALIZED QUESTION

5) INDIRECT QUESTION A QUESTION WHICH CONTAINS THE WORDS “OTHER PEOPLE” IN ORDER NOT TO MAKE IT A PERSONALIZED QUESTION

PROBLEMS IN MR IN SERVICES ORGANIZATIONS

THREE PROBLEMS1. RELUCTANT ATTITUDE TOWARDS MR IN SERVICE

ORGANIZATIONS.ALTHOUGH THE USE OF MR HAS GROWN IN SERVICES BUSINESS, YET THERE IS RESISTANCE TO ITS VALUE IN SOME QUARTERS.

REASONS ARE :-a) REGARD MR UNETHICAL

EG: PROFESSIONAL SERVICES.b) SMALL COMPANY SIZE AND BEING LOCAL IN OPERATION DOES

NOT JUSTIFY EXPENDITURE ON MR. EG: REPAIR WORKSHOPS, BEAUTY PARLOURS.

c) MONOPOLY IN BUSINESS. DEMAND IS MUCH GREATER THAN SUPPLY.

d) LACK OF MANAGERIAL KNOW-HOW IN MR AND ITS AWARENESS IN S. COMPANIES.

e) CLAIM THAT THE STAFF IS CLOSE AND IN DIRECT CONTACT WITH CUSTOMERS. THUS, NO NEED TO SPEND ON AN EXTERNAL MR AGENCY.

DRAWBACKS OF SUCH CONTACTS i. TOO UNPLANNEDii. TOO INFORMAL

THUS, THE RESULTS ARE OFTEN WRONG.

2. POOR QUALITY AND QUANTITY OF SECONDARY DATA.

CHARACTERISTIC

1) INTANGIBILTY THUS, DIFFICULT TO OBTAIN PATENT AND RISK OF BEING COPIED QUICKLY 2) INSEPARABILITY THE PRESENCE OF SERVICE PROVIDER IS

NECESSARY.

3) QUALITY STANDARDIZATION IS DIFFICULT.

QUALITY DEPENDS UPON THE S. PROVIDER, P.EVIDENCE, THE CUSTOMER AND

OTHER CUSTOMERS PRESENT.

EFFECTS ON MR

• REDUCES INCENTIVE FOR R&D (INNOVATION) THUS, FUCUS ON “ME-TOO SERVICES”

• HOME-USE TESTS ARE NOT POSSIBLE.• CREATES PROBLEMS IN CONCEPT TESTING

• MR RESULTS MAY BE VERY WRONG OR DIFFERENT.

3. PROBLEMS RESULTING FROM THE CHARACTERISTICS OF A SERVICE PRODUCT

MARKETING RESEARCH PUBLIC SECTOR OBJECTIONS

• MR IS MUCH LESS DEVELOPED IN THE PUBLIC SECTOR THAN IN THE PRIVATE SECTOR. REASONS :

1) MONOPOLY IN MANY SERVICE CATEGORIES.

2) MARKETING AND MR IS REGARDED UNNECESSARY

3) PUBLIC SECTOR SERVICES ARE FOR THE WHOLE COMMUNITY, NOT FOR A PARTICULAR SEGMENT OF SOCIETY. GENERALLY, NO DISCRIMINATION.THIS IS UNLIKE IN THE PRIVATE SECTOR WHERE DISCRIMINATION IS DONE VIA MARKET SEGMENTATION.

4) UNLIKE THE PROFIT CRITERION USED IN THE PRIVATE SECTOR SERVICES, NON-PROFIT EVALUATION CRITERIA ARE USED IN JUDGING A PROPOSAL IN THE PUBLIC SECTOR SERVICES.

MARKET AND ENVIRONMANTAL ANALYSIS

WHAT IS MARKET AND ENVIRONMANTAL ANALYSIS ?GATHERING AND ANALYSING DATA / INFO ABOUT THE MARKET AND THE MARKETING ENVIRONMENT (ME), MAKING CONCLUSIONS (IDENTIFYING Os and Ts) AND THEIR IMPACT ON THE M-MIX. MARKET AND ENVIRONMANTAL ANALYSIS IS DONE VIA MARKETING RESEARCH AND MARKETING INTELLIGENCE SYSTEM (FOR ME). MARKET AND ENVIRONMANTAL ANALYSIS A IS THE SAME BOTH FOR PRODUCTS AND SERVICES

MAJOR QUESTIONS WHICH MUST BE ANSWERED IN AMARKET AND ENVIRONMANTAL ANALYSIS

1. DO NEEDS / WANTS FOR A PARTICULAR SERVICE EXIST ?2. TO WHAT EXTENT THESE HAVE BEEN SATISFIED OR ARE

UNSATISFIED?

FIND VIA MR.3. SIZE OF DEMAND / MARKET.

4. PRICE WHICH THE CUSTOMER IS READY TO PAY.5. COST OF PRODUCING AND DELIVERING THE SERVICE BY THE COMPANY.6. PROFITABILITY.7. STRATEGIC COMPETITORS

THEIR NUMBER, SIZE, AGGRESSIVENESS, THEIR M-MIX AND THE TYPE OF COMPETITION.

8. MAJOR CHANGES IN THE EXTERNAL UNCONTROLLABLES

STEPS OF MARKETING PLANNING PROCESS

THE MANAGEMENT PROCESS

FIVE PHASES OF MANAGEMENT

1) SITUATION ANALYSIS

GATHERING, STUDYING AND ANALYSING FACTS ABOUT PAST & PRESENT PERIODS.

MAKING CONCLUSIONS AND PREDICTING THEIR EFFECTS ON FUTURE

2) PLANNING

• SETTING OBJECTIVES,

• MAKING STRATEGIES / TACTICS

• DETERMING RESOURCES

• DECIDING MONITORING

MECHANISM AND ITS TIMING

3) ORGANIZING AND IMPLEMENTING

ORGANIZATION STRUCTURE, STAFFING, GIVING RESPONSIBILITIES, EMPOWRING,TRAINING; COACHING COMMUNICATING AND EXECUTING THE PLAN

4) LEADING, DIRECTING, MONITORING,EVALUATING CONTROLLING, MOTIVATING

5) TAKING ACTIONS

DEFINITIONS

CONCEPT DEFINITION AND CHARACTERISTICS

OBJECTIVE

6) PRIORITIZED

4) MUTUALLY AGREED

5) MATCH WITH COMPANY’S OBJECTIVES

1) WRITTEN 2) SMART

STRATEGY

TACTICS

HOW A PERSON OR A COMPANY INTENDS TO ACHIEVE THE OBJECTIVE (S).

OVERALL AND NON-SPECIFIC ACTION, METHOD OR A GAME PLAN.• GENERATE AND EVALUATE ALTERNATE STRATEGIES BEFORE SELECTING THE

FINAL STRATEGY• INVITE PARTICIPATION• LOOK FOR CREATIVITY• LONG-TERM

DETAILED AND SPECIFIC ACTIONS WHICH WILL BE TAKEN TO IMPLEMENTTHE CHOSEN STRATEGY IN ORDER TO ACHIEVE THE OBJECTIVE (S).

• LOOK FOR CREATIVITY• INVITE PARTICIPATION

WHAT A PERSON OR A COMPANY WANTS TO ACHIEVE . END RESULTS SELECTED AFTER EVALUATING ALTERNATES. QUANTITATIVE AND QUALITATVE. MUST BE :-

COMPANY MISSION

THE PURPOSE FOR WHICH A COMPANY IS ESTABLISHED, EXPRESSED IN TERMS OF CUSTOMERS’ NEED, PRODUCTS AND TARGET MARKET. WHAT BUSINESS THE COMPANYIS IN?

3) PURE

• SHORT TERM

KEY PLANNING TERMS / CONCEPTS

WHAT IS PLANNING?• ONE OF THE STAGES OF MANAGEMENT PROCESS DURING WHICH:-

A MANAGER AFTER HARD THINKING AND INTENSIVE CONSULTATION:-1) SETS OBJECTIVES / GOALS2) ESTABLISHES STRATEGY

a) TM b) SCAs IN THE MARKETING-MIXc) PRODUCT POSITIONING

3) DEVELOPS A DETAILED PLAN OF SPECIFIC ACTIONS / TACTICS4) DETERMINES NEEDED RESOURCES5) DECIDES A MONITORING OR CONTROLLING MECHANISM AND ITS TIMING

• NEEDED IN ALL COMPANIES, IN ALL BUSINESS FUNCTIONS AND AT ALL LEVELS.

• A PLAN IS THE RESULTANT DOCUMENT PRODUCED AT THE END OF THE PLANNING STAGE

• A PLAN GIVES A CLEAR ROAD MAP TO FOLLOW.

• IT IS A WORKING DOCUMENT

STEPS IN PLANNING PROCESSSITUATIONAL ANALYSIS

SET GOALS FROM ALTERNATIVES

DECIDE MONITORING MECHANISM

AND ITS TIMING

DECIDE TM

DECIDE SCAs FOR TM

DECIDE PRODUCT POSITIONING

ESTABLISH MARKETING MIX STRATEGIES

AND TACTICS FROM ALTERNATIVES

DECIDE RESOURCES

1. SITUATION ANALYSIS a) STUDY COMPANY’S, COMPETITORS’ AND MARKET’S PERFORMANCE FOR

THREE YEARS (CURRENT, -1YEAR AND -2 YEARS).

THIS WILLSHOW COMPANY’S TREND IN PERFORMANCE COMPARED TO THE COMPERTITORS AND MARKET PERFORMANCE.

KNOW REASONS FOR GOOD / BAD RESULTS.

b) GATHER, STUDY AND ANALYSE INFO ON THE ME AND MARKET FOR THE BUDGET YEAR.

c) IDENTIFY MAJOR Ss AND Ws IN THE M-MIX, PARTICULARLY IN PRODUCT(s) AS WELL AS IN THE COMPANY AND Os AND Ts IN THE ME AND MARKET.

SWOT ANALYSIS.

MARKETING ENVIRONMENT (ME)

• ACTORS AND FORCES, OUTSIDE THE MARKETING DEPARTMENT, WHICH AFFECT MARKETING ACTIVITIES OR DECISIONS ABOUT MARKETING-MIX OR MARKETING PERFORMANCE.

• DIVIDED INTO MACRO AND MICRO EXTERNAL UNCONTROLABLE FORCES / ACTORS

MACRO EXTERNAL UNCONTROLLABLE FORCES

1. POLITICAL AND LEGAL FORCES2. ECONOMIC FORCES3. CULTURAL AND SOCIAL FORCES4. GEOGRAPHIC AND NATURAL FORCES5. DEMOGRAPHIC FORCES6. TECHNOLOGICAL FORCES7. COMPETITIVE FORCES

LOCATIONOF

STRENGTHS AND WEAKNESSES(OWN AND COMPETITORS’)

• VARIOUS Ps OF M-MIX• PRODUCT SUPPORT SERVICES • COMPANY PERFORMANCE

A) SALESB) MS, GR, RANKING

• HUMAN RESOURCE AND THEIR SKILLS (QUANTITY & QUALITY)• NON-HUMAN RESOURCES (QUANTITY & QUALITY)• COMPANY IMAGE

QUALITATIVE SWOT ANALYSIS

•STRENGTHS• ------------------------------• ------------------------------•-------------------------------• ------------------------------•OPPORTUNITIES

• -----------------------------• -----------------------------•------------------------------• ------------------------------

•WEAKNESSES• ------------------------------• ------------------------------•-------------------------------• ------------------------------

•THREATS• ------------------------------• ------------------------------•-------------------------------• ------------------------------

BASIC PRINCIPLE FOR SUCCESS• MUST HAVE A SUSTAINABLE COMPETITIVE ADVANTAGE (s) (SCA)

• WHAT IS A SCA?

SOMETHING BETTER IN ANY OF THE ELEMENTS OF MARKETING-MIX, NECESSARY FOR LONG -TERM ABOVE AVERAGE SUCCESS OF A COMPANY.

• CHARACTERISTICS OF A SCA

(a) MEANINGFUL/ IMPORTANT

(b) BELIEVABLE

(c) AFFORDABLE

(d) DIFFERENT

(e) SUSTAINABLE

IF YOU DO NOT HAVE A SCA, DO NOT COMPETE

2. FORMULATE CRITICAL ASSUMPTIONS MADE FOR THE ACHIEVEMENT OF THE PLAN.

EG: PRICING ASSUMPTIONS, LAW AND ORDER SITUATION.3. OBJECTIVES SETTING

a) KNOW COMPANY OBJECTIVESb) SET OBJECTIVES

KEEP a,b AND c UNDER STEP 1 AND a) UNDER STEP 3 IN MINDi. QUANTITATIVE (WRITTEN, SMART). SALES, PROFIT

etc.ii. QUALITATIVE (PURE)

4. ESTABLISH STRATEGIES AND TACTICS :i. SELECT TM

VIA SEGMENTATIONii. CREATE SDAsiii. DEVELOP DISTINCT PRODUCT POSITIONINGiv. DEVELOP AN APPROPRIATE M-MIX TO ACHIEVE CSv. DECIDE RESOURCES vi. DECIDE MONITORING MECHANISM AND ITS TIMING

5. IMPLEMENT THE PLAN :i. CREATE AN APPROPRIATE ORGANIZATION.ii. RECRUIT STAFF WITH ABILITY / TALENT,

WILLINGNESS / MOTIVATION AND SUITABLE PERSONALITY.iii. EXECUTE THE PLANNED STRATEGIES AND TACTICS.

6. MONITOR / EVALUATE / CHECKACTUAL RESULTS

VS PLANNED RESULTS

7. TAKE NEEDED ACTIONS :i. RECOGNIZE, APPRECIATE / REWARD.ii. HELP, REPRIMAND, GIVE WARNING, REPLACEiii. CHANGE OBJECTIVES / STRATEGIES / TACTICS

VERY OFTEN THE MISTAKE LIES IN THE EXECUTION OF STRATEGIES AND TACTICS

REPRIMAND

SERVERE VERBAL DISAPPROVAL OF A BIG WRONG ACT OF AN EXPERIENCED SUBORDINATE, BY HIS SENIOR

BENEFITS OF PLANNING

• GIVES DIRECTION VIA GOALS • SETS YARDSTICK OR STANDARDS • REDUCES / AVOIDS UNCERTAINTY OR HAZARDS BY

LOOKING AHEAD, ANTICIPATING CHANGE AND ITS IMPACT; AND RESPONDING TO CHANGE

• IMPROVES EFFECTIVENESS AND EFFICIENCY DUE TO WELL THOUGHT SPECIFIC ACTIONS

• MAKES OTHER STAGES OF MANAGENENT RUN EASY AND SMOOTH

• ENSURES COORDINATION BETWEEN VARIOUS PEOPLE AND DEPARTMENTS

WHAT PLANNING WILL AND WILL NOT DO

A) WILL DOa) PLANNING FORCES PEOPLE TO THINK.b) PLANNING ENHANCES CREATIVITY.c) GUIDES EFFORTSd) GIVES A YARDSTICKe) PLANNING MINIMISES UNCERTAINTY AND SURPRISE.f) MAKES OTHER MANAGEMENT PHASES / TASKS EASY.g) IMPROVES EFFECTIVENESS AND EFFICIENCY DUE TO WELL THOUGHT

SPECIFIC ACTIONS

B) WILL NOT DOPLANNING WILL NOT GIVE A “PERFECT CRYSTAL BALL.” IT WILL NOT PREDICT FUTURE WITH 100% ACCURACY

PLANNING PROCESS

WHERE ARE WE NOW ?

WHERE DO WE

WANT TO Go TO ?

HOW WILL WE GET THERE ?

HOW WILL WE KNOWIF WE HAVE ARRIVEDOR NOT ?

WHAT IS A MARKETING PLAN ?• A PLAN IS THE RESULTANT DOCUMENT OF THE PLANNING PHASE OF

MANAGEMENT PROCESS . IT CONTAINS:

1) EXECUTIVE SUMMARY, 2) SA,3) OBJECTIVES, 4) STRATEGY AND TACTICS, 5) NEEDED RESOURCES 6) MONITORING MECHANISM AND ITS TIMING7) PROFIT / LOSS8) KEY SUCCESS FACTORS / ASSUMPTIONS

FOR THE BUDGET / PLANNING YEAR, TO GUIDE MANAGERS DURING THE REMAINING PHASES OF MANAGEMENT . IT IS A WORKING DOCUMENT

PERIOD OF PLANNINGA) STRATEGIC PLANNING / PLAN

1) LONG-TERM MORE THAN 5 YEARS TOP MANAGERS

2) MEDIUM-TERM 2-5 YEARS

B) OPERATIONAL OR TACTICAL PLANNING / PLAN – SHORT-TERM, USUALLY 1 YEAR – DERIVED FROM THE STRATEGIC PLAN – MOSTLY ALL MANAGERS

• MANY COMPANIES OPERATE WITHOUT FORMAL PLANS. • NOT GOOD, NOT DO WELL.

WHY MARKETING STRATEGIES FORMULATION IS DIFFICULT IN SERVICES

a) UNIQUE CHARACTERISTICS OF SERVICES :• UNLIKE GOODS, INTANGIBILITY CHARATERISTIC OF SERVICES MAKES

CONSUMER’S CHOICE DIFFICULT. OPINION CAN BE OBTAINED FROM OTHERS.

• INSEPARABILITY MAKES MARKETING STRATEGY OF SERVICES LOCALIZED. RELATIVELY DIFFICULT TO SELL SERVICES ON NATIONWIDE BASIS.

• PERISHABILITY MAKES STORAGE OF SERVICES IMPOSSIBLE, THUS, PLANNING SUPPLY AND DEMAND OF SERVICES IS DIFFICULT

• HETROGENEITY MAKES ENSURING OF UNIFORM QUALITY DIFFICULT.

SITUATION ANALYSIS AND

PLANNING PHASE

• SITUATION ANALYSIS AND PLANNING PHASE IS HOMEWORK FOR A MANAGER.

• THE BETTER IS THE HOMEWORK DONE, THE MORE EASY IT BECOMES TO CARRY-OUT THE REMAINING PHASES OF MANAGEMENT

WHO DOES PLANNING IN A COMPANY?

STRATEGIC PLANNING

OPERATIONALPLANNING

TOPMANAGERS MIDDLE

LEVELMANAGERS

FIRST LEVEL

MANAGERS

TOPMANAGERS

services marketing

growth of services

new services

services role

training services

repair services

types of services

services organizations

importance of services

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