ma session 1

8/2/2019 MA Session 1

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MARKETING APPLICATIONS

Session 1


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Some FACTS

Wal-mart is in the list of Fortune 500

GE derives almost 40% of its revenuefrom services

In India service sector contributes 56%of GDP


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Services dominate the United StatesEconomy:

GDP by Industry, 2001

Source: Bureau of Economic Analysis, November 2002

Finance, Insurance,Real Estate

20%

Wholesale andRetail Trade

16%

Transport, Utilities,Communications

8%Health6%

BusinessServices

5%

Other Services 11%

Government(mostly services)

13%

Manufacturing 14%

Agriculture, Forestry,Mining, Construction 8%

SERVICES


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Fastest growing services

Health care

Higher education

Entertainment

Financial


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New Generation services Management consultancy

Computer maintenance

Recruitment services

Management training

Value-added telecom services Call centre/BPO


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What is a SERVICE ?

A service is any act or performance

one party can offer to another that isessentially intangible & does not resultin the ownership of anything.

Its production may or may not be tied to a physical product


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Defining the Essence of a

Service An act or performance offered by one party to another

An economic activity that does not result in ownership

A process that creates benefits by facilitating a desiredchange in:

customers themselves

physical possessions

intangible assets


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Distinguishing Characteristics of

Services Customers do not obtain ownership of services

Service products are ephemeral and cannot be inventoried

Intangible elements dominate value creation

Greater involvement of customers in production process

Other people may form part of product experience

Greater variability in operational inputs and outputs

Many services are difficult for customers to evaluate

Time factor is more important--speed may be key

Delivery systems include electronic and physical channels


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Growth Factors Economic,socio cultural & life style

change

Women taking up jobs

Explosion of IT sector

Advent of many new technical products

Reforms & liberalization


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Tasks involved Understanding the nature of services

Understanding the customer & his expectations

Giving a shape to service

Organizing delivery system

Pricing strategy

Promoting the services

Extended marketing mix-7P`s

Differentiation

Quality & satisfaction


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Differentiation parameters

Time

Special offerings

People

Physical evidence Convenience


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Marketing ScenarioCompany

Employees Customers

InternalMarketing

Externalmarketing

InteractiveMarketing

f


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Elements of The Services MarketingMix:

7Psvs.the Traditional 4PsRethinking the original 4Ps

Product elements

Place and time Promotion and education

Price and other user outlays

Adding Three New Elements Physical environment

Process

People


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The 7Ps:

(1) Product ElementsAll Aspects of Service Performance that Create Value

Core product featuresboth tangible and

intangible elements Bundle of supplementary service elements

Performance levels relative to competition

Benefits delivered to customers (customers dontbuy a hotel room, they buy a good nights sleep)

Guarantees


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The 7Ps:

(2) Place and TimeDelivery Decisions: Where, When, and How

Geographic locations served

Service schedules

Physical channels

Electronic channels

Customer control and convenience

Channel partners/intermediaries


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The 7Ps:(3) Promotion and Education

Informing, Educating, Persuading, and Reminding Customers Marketing communication tools

media elements (print, broadcast, outdoor, retail, Internet, etc.)

personal selling, customer service sales promotion

publicity/PR

Imagery and recognition

branding corporate design

Content

information, advice

persuasive messages customer education/training


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The 7Ps:(4) Price and Other User Outlays

Marketers Must Recognize that Customer OutlaysInvolve More than the Price Paid to Seller

Traditional Pricing Tasks

Selling price, discounts, premiums

Margins for intermediaries (if any)

Credit terms

Identify and Minimize Other Costs Incurred by Users Additional monetary costs associated with service usage (e.g., travel to

service location, parking, phone, babysitting,etc.)

Time expenditures, especially waiting

Unwanted mental and physical effort


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The 7Ps:(5) Physical Environment

Designing the Servicescape and providingtangible evidence of service performances Create and maintaining physical appearances

buildings/landscaping

interior design/furnishings

vehicles/equipment

staff grooming/clothing

sounds and smells

other tangibles

Select tangible metaphors for use in marketing communications


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7Ps:(6) Process

Method and Sequence in Service Creation andDelivery

Design of activity flows

Number and sequence of actions for customers

Providers of value chain components Nature of customer involvement

Role of contact personnel

Role of technology, degree of automation


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The 7Ps:(7) People

Managing the Human Side of the Enterprise The right customer-contact employees performing tasks well

job design

recruiting/selection

training

motivation

evaluation/rewards

empowerment/teamwork

The right customers for the firms mission

fit well with product/processes/corporate goals

appreciate benefits and value offered

possess (or can be educated to have) needed skills (co-production)

firm is able to manage customer behavior


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Managing the 7Ps Requires Collaborationbetween Marketing, Operations, and HRFunctions

Customers

Operations

Management

Marketing

Management

Human Resources

Management


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The search for customer loyalty

Targeting, acquiring & retaining the right customers is atthe core of many successful service firms.

All businesses aspire to have a database of loyalcustomers.

Loyalty is described as a

customers willingness to continue patronizing a firm purchasing & using its goods & services on a repeated

& preferably exclusive basis &

recommending the firms products to friends &

associates.


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What Makes Loyal CustomersMore Profitable?

Tend to spend more as relationship develops

customers balances may grow

may consolidate purchases to one supplier Cost less to serve

less need for information and assistance

make fewer mistakes

Recommend new customers to firm (act as unpaid salespeople or Customer Advocates)

Trust leads to willingness to pay regular prices vs. shopping

for discounts


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Franchising

Resources are limited

Long-term commitment of store managers is

crucial

Local knowledge is important

Fast growth is necessary to pre-empt

competition

Franchising has become a popular way to expand

delivery of all 7Ps to multiple sites


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The 7 S Framework

Strategy

Shared Value

Skills

Structure

Staff

System

Style

ma session 1

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