marketing of services 03
TRANSCRIPT
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By
Prof. K.G. Muralidhara
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Introduction of Service Marketing
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Selling?
Advertising?
Promotions?
Making products available in stores?
Maintaining inventories?
All of the above, plus much more!
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Marketing is the process of planning and executing the
conception, pricing, promotion, and distribution of ideas,
goods, services to create exchanges that satisfyindividual and organizational goals
American Marketing Association
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Marketing management is the art and science of
choosing target markets and getting, keeping, and
growing customers through creating, delivering, andcommunicating superior customer value.
Marketing management is the art and science of
choosing target markets and getting, keeping, and
growing customers through creating, delivering, andcommunicating superior customer value.
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Industry
(a collection
of sellers)
Market
(a collection
of Buyers)
Goods/services
Money
Communication
Information
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Marketing
Mix
Product
Price Promotion
Place
Customer
Solution
Customer
Cost
Communication
Convenience
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Goods
Services
Events
Experiences Personalities
Place
Organizations
Properties Information
Ideas and concepts
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Based on :
Needs, Wants, Desires / demand
Products, Utility, Value & Satisfaction Exchange, Transactions & Relationships
Markets, Marketing & Marketers.
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Needs, wantsdemands
Markets Marketing &
Marketers
Utility, Value &Satisfaction
Xchange, Transaction
Relationships
Products
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The services sector has beengrowing at a rateof 8% per annum in recent years
More than half of our GDP is accounted for
from the services sector
This sector dominates with the best jobs, besttalent and best incomes
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-Theodore Levitt-
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It is the part of the product or the fullproduct for which the customer iswillingto see value and pay for it.
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It is intangible.
It does not result in ownership.
It may or may not be attached with a physicalproduct
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Banking, stock broking
Lodging
Restaurants, bars,
catering
Insurance
News and entertainment
Transportation (freight
and passenger)
Health care
Education
Wholesaling and
retailing Laundries, dry-cleaning
Repair and maintenance
Professional (e.g., law,
architecture, consulting)
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Physical goods Services
tangible intangible
homogeneous heterogeneous
Production and distribution are
separated from consumption
Production, distribution and
consumption are simultaneous
processes
A thing An activity or process
Core value processed in factory Core value produced in the buyer-sellerinteraction
Customers do not participate in the
production process
Customers participate in production
Can be kept in stock Cannot be kept in stock
Transfer of ownership No transfer of ownership
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1. Intangibility - u canttouch this
2. Production (or performingthe service)and Consumption (usingthe service) -
happens at the same time
3. Heterogeneity - services are not alwaysdelivered the same way
4. Perishability - cannot be put ininventory or stored for later useie. You cant buy 2 haircuts
4 Characteristics of Services
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1. Intangibility - u canttouch this
Services cannot be stored
Services cannot be protected throughpatents
- therefore a really greattravel package andservice can be copied
a really great physical object can be patented,and NOT allowed to be copied
Characteristics of Services
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People
Physical evidence
Process
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Goods and Services: Scale of
Elemental Dominance
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service providers have product lines andservice providers have product lines andproduct mixes as wellproduct mixes as wellexamplesexamples
MastercardMastercard
insuranceinsurance
telephone servicestelephone services
cable servicescable services
ISPsISPs -- internet service providersinternet service providers airlines, first class, economy classairlines, first class, economy class
banksbanks
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UNIT-2
CUSTOMER CENTRICITY
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1. The purpose of a company is to create a customerThe only
profit center is the customer.2. A business has twoand only twobasic functions: marketing
and innovation. Marketing and innovation produce results: all the
rest are costs.
3. The aim of marketing is to make selling unnecessary.
4. While great devices are invented in the Laboratory, greatproducts are invented in the Marketing department.
5. Marketing is too important to be left to the marketing
department.
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Are Banks trulyAre Banks truly
marketingmarketing--savvy andsavvy andcustomercustomer -- centric?centric?
Are Banks trulyAre Banks truly
marketingmarketing--savvy andsavvy andcustomercustomer -- centric?centric?
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Myth 1 The larger the range of products, themore customer-centric I am.
MythbusterMythbuster The range of products hasThe range of products has
emerged from beingemerged from being
competitioncompetition--centric.centric.
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Myth 2 Better technology leads to
better customer service.
MythbusterMythbuster TechnologyTechnology
alone does not deliver,alone does not deliver,
helps people do.helps people do.
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Myth 3 Launch a product and the customer will start
using instantly. - Give a customer a card and he will learn how to play
with it immediately
MythbusterMythbuster Customers needCustomers need
To be educated tooTo be educated too
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MythbusterMythbuster CustomersCustomers
are not only presentare not only present
where competition is.where competition is.
Myth 4 The only way to get a customer is from
competition.
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Myth 5 Just advertise and - You will sell.
MythbusterMythbuster Advertising will only sell,Advertising will only sell,
Not retain customers.Not retain customers.
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Myth 6 No difference between marketing & selling
MythbusterMythbuster Selling focuses on the needs of the seller; marketing onSelling focuses on the needs of the seller; marketing on
the needs of the buyer.the needs of the buyer.
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Myth 7 In the absence of relationships trust buildsfinancial brands
MythbusterMythbuster TTrust is not a differentiator at allrust is not a differentiator at all
it is the very minimum that the customer expects!!it is the very minimum that the customer expects!!
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Technology ?
Brand ?
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The real differentiator of
The real differentiator of
customercustomer centricity in acentricity in a
commoditised world of financialcommoditised world of financialproductsproducts --
Customer Service !Customer Service !
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Anyone who is in the market looking at a product /
service for attention, acquisition, use or consumption
that satisfies a want or a need
CUSTOMER IS . . . . .
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CUSTOMER has needs, wants, demands anddesires
Understanding these needs is starting point ofthe entire marketing
These needs, wants arise within aframework or an ecosystem
Understanding both the needs and theecosystem is the starting point of a long term
relationship
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As a priority , we must bring to our customers
WHAT THEY NEED
We must be in a position to UNDERSTAND their
problems
Or in a new situation to give them a chance to
AVOID the problems
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Value Benefit / Cost
Benefit Functional Benefit + Emotional
Benefit
Cost Monetary Cost + Time Cost +
Energy Cost + Psychic Cost
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Whoare your competitors?
Whatare their strengths and weaknesses?
Whathave been their strategies?Howare they likely to respond to your Marketing
plan?
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Strategic MarketingStrategic Marketing
Strategic marketing management is concerned with how we will
create value for the customer
Asks two main questions
What is the organizations main activity at a
particular time? Customer Value
What are its primary goals and how will these be
achieved? how will this value be delivered
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The Strategic-Planning, Implementation,
and Control Process
The Strategic-Planning, Implementation,
and Control Process
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External environment
(Opportunity &
Threat analysis)
Internal Environment
(Strength/ Weakness analysis)
Goal FormulationBusiness Mission
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HMT vs. Titan
HLL vs. Nirma
Bajaj vs. Honda
Dot.com boom, then bust and now resurgence
Market leadership today cannot be taken for
granted.New and more efficient companies are able
to upstage leaders in a much shorter period.
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Factors
Influencing
Companys
Marketing
Strategy
Factors
Influencing
Companys
Marketing
Strategy
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UNIT-3
CUSTOMER SATISFACTION
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Many aspects of the firms value propositioncontribute to customer satisfaction:
The core product or service offered
Support services and systems
The technical performance of the firm Interaction with the firm and it employees
The emotional connection with customers
Ability to add value and to differentiate as a firm
focuses more on the top levels
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Marketers are focused on stimulatingexchanges with customers who make upmarkets B2C or B2B.
The market is comprised of people whoplay a series of roles: decision makers,
consumers, purchasers, and
influencers. It is absolutely essential that marketers
have a detailed understanding ofconsumers, their needs and wants.
Much happens before and afterthe sale toaffect customer satisfaction
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Organize by product units Focus on profitable transactions
Look primarily at financialscorecard Focus on shareholders Marketing does the marketing Build brands through advertising Focus on customer acquisition No customer satisfaction
measurement Over-promise, under-deliver
Organize by product units Focus on profitable transactions
Look primarily at financialscorecard Focus on shareholders Marketing does the marketing Build brands through advertising Focus on customer acquisition No customer satisfaction
measurement Over-promise, under-deliver
Organize by customer segments
Focus on customer lifetime value
Look also at marketing scorecard
Focus on stakeholders
Everyone does the marketing
Build brands through performance
Focus on customer retention
Measure customer satisfaction andretention rate
Under-promise, over-deliver
Old Economy New Economy
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ExpectedService
PerceivedService
ServiceQuality
Gap
Perceived
ServiceQuality
Word ofMouth
PersonalNeeds
PastExperience
ExternalCommunication
to Customers
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Do your customers perceive
your offerings as meetingor exceeding their expectations?
Do you have an accurateunderstanding of
customers expectations?
Are there specificstandards in place to meetcustomers expectations?
Do your offerings meet or
exceed the standards?
Is the informationcommunicated to customers
about your offerings accurate?
Continue to monitor
customers expectationsand perceptions
YES
NO
YES
YES
YES
YES
Take corrective action
Take corrective action
Take corrective action
Take corrective action
NO
NO
NO
NO
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Desired Service
Zoneof
ToleranceAdequate Service
Level CustomersBelieve Can and Should Be
Delivered
Minimum LevelCustomers Are Willing
to Accept
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End goal of customer focused strategies is the same:
Boosting retention and repurchase = moresales!!!
Creating BetterProducts orServices
Offeringcompellingcustomerexperience
Building deepercustomerrelationships
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The tools available to a business to gainthereaction it is seeking from its target market inrelationto its marketing objectives
7Ps Price, Product, Promotion, Place, People,Process, Physical Environment
Traditional 4Ps extended to encompass growthof service industry
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Pricing Strategy
Importance of:
knowingthe market elasticity
keeping an eyeon rivals
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Methods used toimprove/differentiatethe product and increasesales or target sales moreeffectively to gaina competitive advantagee.g. Extension strategies Specialised versions New editions Improvements real or
otherwise! Changed packaging Technology, etc.
Ima
e copyri
ht: www.freeima
es.co.uk
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Strategiesto make the
consumer aware ofthe existence of aproductor service
NOT justadvertising
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How do people consume services?
What processes do they have to go throughto acquire the services?
Where do they find the availabilityof the service? Contact
Reminders
Registration Subscription
Form filling
Degree of technology
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The ambience, mood or physical presentationof the environment
Smart/shabby?
Trendy/retro/modern/old fashioned? Light/dark/bright/subdued?
Romantic/chic/loud?
Clean/dirty/unkempt/neat?
Music? Smell?
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Unit
-IV
Delivering and performing Service
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A GAPS MODEL OF SERVICE QUALITY
CustomersService
Expectations
CUSTOMER SERVICEORGANIZATION
ServiceQualityGap
Customers
ServicePerceptions
GAP 5
OrganizationsUnderstanding of
Expectations
OrganizationsService Standards
OrganizationsService Performance
OrganizationsCommunications to
Customers
MarketInformation
Gap
ServicePerformance
Gap
InternalCommunication
Gap
ServiceStandardsGap
GAP 1
GAP 2
GAP 3
GAP 4
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CustomerExpectations
Key Factors:
Insufficient marketing research
Inadequate use of marketing research Lack of interaction betweenmanagement and customers
Insufficient communication betweencontact employees and managers
ManagementPerceptions of
Customer Expectations
Lack ofUpward
Communication
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GAP 2
Key Factors:
Inadequate management commitment
to service quality Absence of formal process for settingservice quality goals
Inadequate standardization of tasks Perception of infeasibility -- that
customer expectations cannot be met
ManagementPerceptions of
Customer Expectations
ServiceQuality
Specifications
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GAP 3
Key Factors:
Lack of teamwork
Poor employee - job fit Poor technology - job fit Lack of perceived control (contact personnel) Inappropriate evaluation/compensation system Role conflict among contact employees Role ambiguity among contact employees
ServiceQuality
Specifications
ServiceDelivery
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GAP 4
Key Factors:
Inadequate communication betweensalespeople and operations
Inadequate communication betweenadvertising and operations
Differences in policies and proceduresacross branches or departments
Puffery in advertising & personal selling
Service
Delivery
ExternalCommunications
to Customers
Lack ofHorizontalCommunication
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Service Culture
The Critical Importance of Service Employees
Boundary-SpanningRoles
Strategies for Delivering Service QualityThrough People
Customer-Oriented Service Delivery
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Demonstrate the importance of creating a serviceculture in which providing excellent service to bothinternal and external customers is a way of life.
Illustrate the pivotal role of service employees increating customer satisfaction and service quality.
Identify the challenges inherent in boundary-spanning roles.
Provide examples of strategies for creating customer-oriented service delivery through hiringthe rightpeople, developing employees to deliver servicequality, providingneeded support systems, andretainingthe best service employees.
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They are the service.
They are the organization inthe customerseyes.
They are the brand.
They are marketers.
Their importance is evident in: the services marketing mix (people) the service-profit chain the services triangle
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Every encounter counts
Employees are the service
Every employee can make a difference
Through their actions, all employees shape thebrand
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Understanding customer needs
Managing expectations
Traditional marketing communications
Sales and promotion
Advertising
Internet and web site communication
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Service delivery
Reliability, responsiveness, empathy, assurance,tangibles, recovery, flexibility
Face-to-face, telephone & online interactions The Customer Experience
Customer interactions with sub-contractors orbusiness partners
The moment of truth
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Hiringthe right people
Training and developing people to deliverservice
Employee empowerment Support systems
Appropriate technology and equipment
Rewards and incentives
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Overall StrategicAssessment
How is the service
organization doing onall three sides of thetriangle?
Where are theweaknesses?
What are thestrengths?
Specific ServiceImplementation
What is being
promoted and bywhom?
How will it bedelivered and bywhom?
Are the supportingsystems in place todeliver the promisedservice?
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Dont
Ignore customer
Blame customer
Leave customer tofend for himself
Downgrade
Act as if nothing iswrong
pass the buck
Do
Acknowledgeproblem
Explain causes Apologise
Compensate/upgrade
Lay out options
Take responsibility
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Dont
Promise and fail tokeep them
Show unwillingnessto try
Embarrass thecustomer
Laugh atthe customer
Avoid responsibility
Do
Recognise theseriousness
Acknowledge Anticipate
Accommodate
Adjust
Explain rules/policies
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Unit-V
Overview of some of the key factors
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Patients
Family members
Referral DoctorsSuppliers
Employees
Who is the key customer in the hospital?
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Patient Satisfaction is hospital services and itsperception by the patient minus patientexpectations
0 = Patient Satisfied
- = Patient Dissatisfied
+ = Patient Delighted Patient satisfaction measures need to be
developed from the patients perspective
Patients are becoming better informed
Involve patients for making improvements Patient satisfaction is not Static but Dynamic
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Good Medical Care
GoodNursing Care
Less Waiting Time
Excellent Hospitality Personal Attention
Courteous Behavior
Affordable Charges
Cleanliness
Good Coordination
Cooperation among
the Staff Discipline
Communication &Information
Transparency incharges andprocedures
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Health care is generally becomingcompetitive
Providers must not only maintain high
clinical standards but also service thatsatisfies the patients
To meet the dual challenge, providersmust have an understanding of what
constitutes both clinical excellence andcustomer satisfaction
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Agroup of potential customers with a great
deal in common for which a specialized set of
goods or services may be provided.
Examples:
Lawyers
Health Care Professionals
Accountants
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Successful continuing education organizationsmust continually communicate two messages:
The mission of the organizationtherefore
enhancingtheir image
The individual programs and productscurrently available
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Image Marketing Should Target:
y The general public
y
Client or potential client organizationsy The government
y Funding organizations
y Other stakeholders
y The institution
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Newspapers Personal Selling
Direct Mail Flyers
Radio Individual ReferralTelevision E-mail
Telephone Internet
Posters
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Darkenwald identified six factors that
motivate individuals to participate incontinuing education:
Social relationships Social welfare
External expectations
Personal advancement
Escape/stimulation
Learning opportunities
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Flyers are generally distributedto a general audience and use a
variety of inexpensive
distribution systems.
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Posted on windows
Left in offices & businesses
Mailed to prospective students