market positioning, market mix decisions crm
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MARKETING OF SERVICES
MARKETING MIXCRM
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Marketing Services V/S Goods
Philip Kotler has classified products into the following
five categories for establishing goods-service
relationship:
Pure tangible goods.
Tangible goods with accompanying service.
Hybrid. Service with accompanying goods.
Pure Service.
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Service Package
The package concept of service product suggest
that what you offer to the market is a bundle of
different services, tangible and intangible, but there
is a core service and around it are built the otherservices which are:
Facilitating services
Supporting services
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Developing New Service Offering
If a new service offer is to be developed, then the
following five steps should be systematically followed
in a sequence:
Consumer Benefit Concept.
Developing Service Concept.
Developing the Augmented Service Offer.
Service Delivery System.
Managing Image & Communication.
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Augmented Service Offering
Basic service package is not always equivalent to theservice product the customer perceives.
Therefore, basic service package has to be expanded to amore holistic model of augmented service offering.
Elements of Augmented Service Offer:
Accessibility of Service.
Interaction with service organization.
Customer Participation.
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8 Ps of Service Marketing
Product
Price
Place Promotion
People
Physical Evidence
Process
Productivity & Quality
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Additional Fraser Hay
Positioning
Packaging
Promotion Persuasion
Performance
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The Service Vision
Service DeliverySystem
People, Tech,Equipment,
layout, process Capacity Normal/Peak
Qualitystandards,differentiation,entry barriers
People, Tech,Equipment,
layout, process Capacity Normal/Peak
Qualitystandards,differentiation,entry barriers
OperatingStrategy
Operations,financing,
marketing, HR Investments
Quality measures,incentives,rewards
Comparison to
competitor quality, costs,productivity,morale, loyalty
Operations,financing,
marketing, HR Investments
Quality measures,incentives,rewards
Comparison to
competitor quality, costs,productivity,morale, loyalty
Service Concept
Most importantelement of
service in termsof resultsproduced forconsumers
Elementsperceived bymarket,
employees Special efforts
required indesign, delivery,marketing
Most importantelement of
service in termsof resultsproduced forconsumers
Elementsperceived bymarket,
employees Special efforts
required indesign, delivery,marketing
Target MarketSegments
Demographics
Psychographics
Importance ofvarioussegments
Needs
Serving theNeeds
Demographics
Psychographics
Importance ofvarioussegments
Needs
Serving theNeeds
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Competitive Environment
Entry Barriers
Economies of scale
Erratic sales
Advantage of size
Buyers Suppliers
Product substitution
Customer Loyalty Exit Barriers
Overall Cost Leadership
Low cost of operations
Cost conscious
customers Standardized service
Differentiation
Tangiblisation
Customization Personnel training
Focus
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Winning Customers
Qualifiers Winners
Losers
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Positioning the Service
Segmenting
Targeting
Positioning
Differentiation
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Positioning Maps
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27 Ps of Marketing
Product
Price
Promotion
Place
People Process
Physical evidence
Purpose
Purchaser
Push/pull
Personal relationships
Positioning
Packaging
Persuasion
Performance
Profitable
Proactive
Pull together
Perform
Permission
Pain
Pleasure
Periodic
Persistent
Partners Psychology
Perceptions
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Pricing Techniques
There are many pricing concepts and techniques which
organization may use in developing their pricing
policy, some of them are:
Penetration Pricing.
Price Skimming.
Competitor Pricing.Differential Pricing.
Marginal Pricing.
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Pricing of Services
Discuss three major ways that service pricesare perceived differently from goods prices by
customers
Articulate the key ways that pricing of servicesdiffers from pricing of goods from a companysperspective
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Overview (cont.)
Demonstrate what value means to customers
and the role that price plays in value
Describe strategies that companies use to
price services
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3 key differences
Customer knowledge of service prices: Service variability limits knowledge
Providers are unwilling to estimate prices
Individual customer needs vary
Collection of price information is overwhelming
Prices are not visible
Role of non-monetary costs:
Time costs
Search costs
Convenience costs
Psychological costs
Price as an indicator of service quality
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Three Basic Marketing Price Structures and
Challenges Associated withTheir Use for Services
P= DC+OC+ProfitChallenges:1. Costs difficult to trace.
2. Labor is more difficult to
price than materials.
3. Costs may not equal the value
that customers perceive the
services are worth.
Challenges:1. Small firms may charge too
little to be viable.
2. Heterogeneity of services
limits comparability.
3. Prices may not reflect
customer value.
Challenges:1. Monetary price must be adjusted to reflect
the value of non-monetary costs.
2. Information on service costs is less available to
customers; hence, price may not be a central factor.
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Value is low price.Value is everything
I want in a service.
Value is thequality I get for
the price I pay.
Value is all thatI get for all
that I give.
Four Customer Definitions of Value
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Value is low price.
Discounting
Odd pricing
Synchro-pricing
Penetration pricing
Pricing Strategies When the Customer Defines
Value as Low Price
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Value is everythingI want in a service.
Prestige pricing
Skimming pricing
Pricing Strategies When the Customer Defines
Value as Everything Wanted in a Service
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Value is the quality I get
for the price I pay.
Value pricing
Market segmentation
pricing
Pricing Strategies When the Customer Defines
Value as Quality for the Price Paid
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Value is all that I get for
all that I give.
Price framing
Price bundling Complementary pricing
Results-based pricing
Pricing Strategies When the Customer Defines Value
as All That Is Received for All That Is Given
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Value is low price. Value is everything
I want in a service.
Value is the quality
I get for the price I pay.
Value is all that I get
for all that I give.
Discounting
Odd pricing
Synchro-pricing
Penetration pricing
Prestige pricing
Skimming pricing
Value pricing
Market segmentation
pricing
Price framing
Price bundling
Complementary pricing
Results-based pricing
Summary of Service Pricing Strategies for
Four Customer Definitions of Value
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Winning Strategies through lowering price
Two firms that have won substantial market
shares by offering the lowest prices to their
customers are:
Southwest Airlines.
Wal-Mart (the worlds largest retailer)
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Place (Distribution)
Most services are distributed through direct sales.
For certain services, agents can be identified and deployed
with selling as a chief function to be performed by them.
Sometimes, services are generally not delivered to the buyer
and the creation of time and place utilities is a vital function in
the service marketing.
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Promotion
Various techniques used for promoting services are:
Advertising (Print, Internet and Direct Mail)
Sales Promotion (Coupons and Prize promotions)
Personal Communication (Selling, Customer service and Word
of mouth)
Corporate Design (Interior dcor, Uniforms and Stationery)
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The Three additional Ps of Service
Marketing
People.
All human actors who play a part in service delivery and thus
influence the buyers perceptions.
This fifth P is by far the most important determinant of
customer brand loyalty.
Two types of service employees which are commonly seen inservice industry are Support personnel and Customer Contact
Personnel.
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The Three additional Ps of Service
Marketing
Physical Evidence
It includes all the tangible representations of service such as
brochures, letterhead, business card etc.
In some cases it also includes the environment of the place
where the service is delivered (servicescape)
For restaurants, health clubs, hospitals and schools thephysical facility is critical in communicating the service and
making the entire customer experience positive.
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The Three additional Ps of Service
Marketing
Process
The mechanism by which the consumer consume the services
(customer management process) also gives customersevidence on which he judge the service.
Another characteristic of the process that can provide
evidence to the customer is whether the service follow aSTANDARDIZED APPROACH or whether the process is
CUSTOMIZED ONE.
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Southwest Airlines
Southwest Airlines occupies a solid position in the minds of U.S airtravelers as a reliable, convenient, fun, low fare, no frills airline.
It has maintained this position consistently for over 30 years while
making money every year. Success has come to the airline for number of reasons like it keeps
its costs down by not serving meals, having no pre assigned seatsand keeping employee turnover very low.
Airlines has the best customer service record in the airline industryand has won the industry Triple Crown award for best baggagehandling and best customer complaint statistics many years in therow.
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Tourism as a Service
Liberalization of the Indian economy has brought
about changes across various dimensions.
Tourism is also developing as an important service
industry in India.
The characteristic features of a service likeIntangibility, Variability and Inseparability apply to
the travel and tourism industry as well.
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TheTourism Marketing Mix
Product & Price.
Place.
Promotion.
People.
Process. Physical Evidence.
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Chapter 12
Services Marketing and
Customer Relationships
Copyright 2001 by McGraw-Hill Ryerson Limited
SommersSommers BarnesBarnesNinth Canadian EditionNinth Canadian Edition
Presentation byPresentation by
Karen A. BlotnickyKaren A. Blotnicky
Mount Saint Vincent University, Halifax, NSMount Saint Vincent University, Halifax, NS
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Chapter Goals
To gain an understanding of:
The nature and importance of services
Characteristics of services and their marketing
implications Issues related to the planning and marketing of
services
The four Rs of services marketing
The relationship marketing approach
The impact of technology in providing services
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The Nature of Services
regardless of the product, there is a servicescomponent to the offerings of all firms
in some cases, a service is the principal
purpose of the transaction, as in the rental ofa car, a haircut, or legal services -- we refer tothis as the core servicecore service
in others, service is performed in support of
the sale of a tangible product -- these arereferred to as supplementary servicessupplementary services
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Goods and Services
Continuum
There are two classes of services.
Services that are the main purpose of atransaction renting a truck to move.
Services that supplement the sale of a tangiblegood for example, an information hotline forcomputer software.
The focus here is primarily on identifiable, intangibleservices that are the main object of a transactiondesigned to provide want-satisfaction to customers;supplementary services growing in importance,however.
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Canned
foods
Ready-
madeclothes
Auto-
mobiles
Draperies,
Carpets
Rest-
aurantmeals
Repairs:
auto, house,landscaping
Air
travel
Insurance,
Consulting,Teaching
MOSTLY GOODS MOSTLY SERVICES
The Goods-Services
Continuum
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Importance of
Services
Three-fourths of the Canadian labourforce is employed in service industries.
Over 70% of the nations gross nationalproduct is produced by services.
From 1986 to 2000, virtually all new jobswill be in the service industries.
Huge growth in personal servicespersonal services as wellas business services.business services.
Copyright 1998 by The McGraw-Hill Companies, Inc.
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Characteristics of
Services intangibilityintangibility: difficult to sample and to evaluate inseparabilityinseparability:: difficult to separate services from
the service provider; mainly direct sales; staff areessential to the delivery of quality services
heterogeneityheterogeneity: virtually every service is different;very difficult to standardize quality
perishabilityperishability:: those not sold can not be stored
fluctuating demandfluctuating demand:: demand for some servicesfluctuates by season, or even by time of day
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Strategic Services
Management
intangibility generally makes the marketingof services a challenge
understanding how people buy services and
the segments that exist is just as important knowing more about the value of customer
segments is important -- some are morevaluable than others
knowing what they value so that servicelevels can be tailored is also important
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Strategic Product
Implications
service organizations have to plan theintroduction of new services and themanagement of the life cycle
the core service can be enhanced through theaddition of supplementary services, therebycreating added value
the life cycle of services has to be managed
the branding of a service can be difficult as thecustomer often has nothing tangible to show
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Managing Service Quality
Quality is hard to define, measure, control, andcommunicate
Quality is defined by the consumer
Its important to measure customer satisfaction with
an organizations service quality.
Customers see five important components:
Core serviceCore service must measure up.
Quality of service
Quality of service, meeting expectations.
TechnicalaspectsTechnicalaspects of delivery.
InteractionInteraction with people who deliver service.
Affective dimensionsAffective dimensions:: How customers feel.
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Pricing Services
The characteristics of perishability, inability to
store, and fluctuating demand for services
create pricing challenges.
Pricing Strategies include:
Discount strategies: Cheaper by the week.
A variable pricing strategy: Kids eat free,movies cheaper on Tuesdays.
Price competition.
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Distribution of Services
because most services are tied directly to aspecific service provider, most have beendistributed directly to customers
with advancing technology, many firms are nowdelivering services through machines
channels of distribution are necessarily short;some firms use one agent intermediary, such asinsurance, real estate, and travel agents
some firms use franchisesfranchises to distribute services
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Promotion of Services
customer contact personnel represent themain channel of customer communication
service providers must ensure that each
serv
ice
e
ncou
nter
serv
ice
e
ncou
nter
is a positive one ifcustomers are to develop a positive image
many professional service firms are nowpermitted to advertise
other elements of the promotional mix areused, including publicity and communityaffairs
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Four Rs of Service Marketing
Retention
Referrals
Relationships
Recovery
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The Changing Environment
for Services
The boom in the service economy, reduced regulationhas created an increase in competition.
Major focus on increased productivity, efficiency
Work on people aspects of business:
Education, training programs
Change technology:
Computer-based technologies used.
Restructure jobs. Bottom line: People are key to success!
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Other Considerations in
Marketing Services Impact ofTechnology:Impact ofTechnology:
Remember, not everyone likes impersonaltechnology
Performance Measurement:Performance Measurement:
Larger firms can use market share, etc.
Customer perceptions are essential.
Prospects for Growth:Prospects for Growth:
It is very likely that services will continue to take anincreasing share of the consumer dollar.
The use of marketing programs in all services isexpected to increase considerably.
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Future Service Profitability
Impacted by:
1. Focusing on the right priorities
2
. Increasing service quality3. Investing in problem solving
4. Being fair to customers
5. Investing in leadership development