SERVICE MARKETING OPPORTUNITIES

Unit II

Based on differences :

- Nature of service act : Tangible/Intangible - Who or What is direct recipient of service:

People/Possessions

There are four categories of services: ◦ People processing◦ Possession processing◦ Mental stimulus processing◦ Information processing

Services Classification : Process

People Processing

Customers must:

physically enter the service factory

co-operate actively with the service operation

Managers should think about process and output from customer’s perspective

to identify benefits created and non-financial costs:

- Time, mental, physical effort

Possession Processing

Possession Processing

Customers are less physically involved compared to people processing services

Involvement is limited

Production and consumption are separable

Mental Stimulus Processing

●Ethical standards required when customers who depend on such services can potentially be manipulated by suppliers

●Physical presence of recipients not required

●Core content of services is information-based

Can be ‘inventoried’

Information Processing

Information Processing

Information is the most intangible form of service output,

But may be transformed into enduring forms of service output

Line between information processing and mental stimulus processing may be blurred.

I Degree of tangibility- Highly tangible- Services linked to tangible goods- Highly intangibleII Labour intensiveness

- People based : Unskilled / Skilled / Professional- Equipment based : Automated / Unskilled operators/Skilled operators

III Goal of the service provider- Profit- Non-profit

Classification of Services

IV Skill level of the service provider- Professional- Non-professional

V Degree of customer contact- High- Low

VI Degree of Regulation- Highly regulated- Limited regulated- Non regulated

Classification of Services

VII By market segment- End consumer service- Business consumer service

Classification of Services

I Product - Core product- Supplementary service elementsII Place & Time- Choice of distribution channel- Directly to end users / intermediaryIII PricePrice level adjusted to factors such as -Type of customer-Time/place of delivery-Level of demand-Available capacity

7 P’s of Service Marketing

IV Promotion and Education- Difficult to visualize and understand- Need to be educated on how to best use a service- Customer – Customer interactions affect service experience

V ProcessHow a firm does things – underlying process- Operational inputs & outputs can vary- Customers involved in co-production- Demand & capacity balance

7 P’s of Service Marketing

VI Physical EnvironmentDesign of physical environment or “servicescape”- Buildings, landscape, vehicles, interior furnishings,

equipments, staff members, uniforms, signs, printed materials

VII People Service suppliers : Attitudes & SkillsHR : Selection / Training / Motivation

7 P’s of Service Marketing

Expanded Marketing Mix

Servicescape : Physical elements of a serviceComponents of service environment :

SERVICE MARKETING ENVIRONMNET

Physical facility Exterior & interior of facility with all furnishings equipments & decor

Location Physical location of the facility

Ambient conditions Intangible elements of a service environment such as sound, temperature & odours.

Interpersonal conditions Interactions between customers & service personnel.

1. External customers / consumers : - Suppliers - Competitors - Regulators - Customers

External to service firm’s marketing context. Either threat or considered to be an opportunity for service firm.

Environment : Micro/Task/Internal

2. Internal customers/ channel partners /providers :

- Controllable - Directly affect the service firmEg. Employees, channel partners, providers,

direct sales agents etc.,

1. Socio-cultural factors(Consumption, Beliefs & Values)2. Legal factors3. Economic factors4. Political factors5. Technological factors6. Demographic changes(Age, Gender, Change in role of women)

Environment : Macro/General/External

I Response Moderators Individuals response to environment

I Cognitive response Knowledge structure, beliefs created by contact with a person, place or thing.

IIAffective response Feelings & emotions created by contact with person, place or thing.

Impact of service environment on consumers :

Pleasure –Displeasure dimension

Arousal & Non-arousal dimension

Degree to which a person feels good, joyful, happy or satisfied with an environment

Degree to which a person feels excited, stimulated, alert or active in an environment

Emotional state ExampleDistressing Medical services

Unpleasant Tax services

Gloomy Legal services

Sleepy Lodging facilities

Relaxing Training salons

Pleasant Dining services

Exciting Entertainment services

Arousing Photography services

Emotional state

III Physiological response Ambient conditions

III Behaviours created by service environmentApproach Behaviour Desire to stay, explore or work in an

environmentAvoidance Behaviour Desire not to stay, explore or work in an

environmentEnvironmental stimuli

Arousal seekers Individuals who enjoy high level of . environmental stimuli. Eg. Entertainment

Arousal avoiders Individuals who prefer low level of environmental stimuli. Eg. Museum

Stimuli screeners Individuals who can experience a high level of stimuli and not be affected

Stimuli non-screeners Individuals who are affected by even small amount of stimuli.

I Focus on customerII Focus on QualityIII Automation and new technologies- ATM Machines- Expert services- Computer reservation systems- Customer relationship management- Internet based commerce and retailing- RFID tags- Data warehousing tools- Integration of billing system with service delivery module- Networking of organisation

Service Marketing : Trends

I Process Opportunities :1. Process Improvement2. Process Certification- Self-certification- Third party environmental certification- Community oriented environmental standard3. E-commerceII Product Opportunities1. Product redesign2. Value added services3. Dematerialize

Environmental strategies for Service Operations :

I Locationa. Operational positionb. Merchantabilityc. Traffic Interceptiond. Cumulative competitive attractione. Competitive compatibilityf. AccessibilityII Physical facilitya. Exterior appearanceb. Interior appearance

Designing the Service environment:

III Ambient conditionsIV Interpersonal factors- Employee appearance & behavior- Impact of crowdingStrategies to reduce impact of crowding :I Operations Management strategies: Modify

layout/Reduce capacity/Control nos inside/Hire more CSR

II Perceptions Management strategies : Use signs to direct/ ambient conditions

Competitors : Their actual strengths & their perception of themselves and their industry

- Motivators- Current & future goals- Current & future strategy- Satisfaction with current level of

performance- Factor lead to more retaliation

Environmental Scanning :

I SPIRE ApproachSystematic probing & Identification of relevant

environmenta. Set out detailed list of environment variablesb. Emphasis on customers, advertising intensification,

dealership increase, new product launches, increase territory coverage etc.,

c. Facilitate interactions of two factors through a matrix to find out linkages.

Approaches : Environmental scanning

d. Identify impact linkages between environmental variables and other strategic marketing components.

e. Impact linkages, arrayed on the matrix revealed as clusters.

Stage I : Analysis of decision(s)Stage II : Identification of key decision factorsStage III: Identifying socio-cultural factorsStage IV: Analysis of each key variable

separately. Stage V : Selection of scenario logics.

II Scenario Building

Used for Marketing strategies : 1. Boston Consulting Group Matrix2. The General Electric Business Screen3. Porter’s Generic strategies for competitive

advantage4. Miles and Snow’s competitor strategies

typologies

Market Opportunity Analysis

STARSAdditional growth potential: Invest further

PROBLEM CHILD(QUESTION MARKS)Risky – few go on to become STARS: Invest in some, divest in some

CASH COWSLimited growth prospects; Minimum investment, can be divested with profitability

CASH CRUNCH (DOGS)No profits or cash flow either now or in the future: Divest or liquidate unless turnaround is possible

BCG Matrix

HIGH Relative Market Share LOW

HIGH

Market Growth Rate

LOW

INVEST INVEST PROTECT (Selectively

Invest)

INVEST PROTECT (Selectively

Invest)

HARVEST

PROTECT (Selectively

Invest)

HARVEST DIVEST

General Electric Business Screen

HIGH MEDIUM LOW

HIGH

MEDIUM

LOW

SBU Strength / Business Position

Market Attractiveness

Reinforced their Information Technology SBU’s with resources and marketing supports

Successfully participated in the disinvestments of CMS and VSNL (Invest)

Selectively invested in steel, infrastructure, telecommunication and automobile (Protect)

Lakme have been profitably sold to FMCG major HLL (Harvest) Tata textiles have been liquidated (Divest) Sell offs through Harvest and Divest have been utilised in

acquiring companies like VSNL & CMS Investing in new areas of retailing through Tata Retail Enterprise

(TRENT)/Westside

House of TATAs

Grand or GenericStrategies

Growth strategies

Concentration Strategies

Diversification strategies

Horizontal Integration

Vertical Integration

Joint venture

Stability strategies

Retrenchment strategies

Harvesting strategies

Turnaround strategies

Divesture strategies

Liquidation strategies

Combination strategies

Grand or Generic strategies

Environment :

Defender Strategies Prospector strategies Analyzer strategy Reactor strategy

Miles and Snow’s Adaptive strategy

MARKET PENETRATION STRATEGYConvince its customers to consume more of its present offers

PRODUCT DEVELOPMENT STRATEGYGive newer bouquet of offers, satisfying different needs for its present customers

MARKET DEVELOPMENT STRATEGYService firm continues with its old offers but now to different customers

DIVERSIFICATION STRATEGYThe service firm targets entirely new customers with different offers

Market Opportunity Analysis :Igor Ansoff’s Product/Offer-Market Matrix

OLD OFFERS NEW OFFERS

OLD MARKETS/ OLD CUSTOMERS

NEW MARKETS/ NEW CUSTOMERS

Players

The Market

TARGET MARKETING

Undifferentiated marketing

Differentiated marketing

Service Marketer : Options & Choices

SINGLE SERVICE OFFER

SINGLE MARKET

Service offer version -1

Service offer version -2

Service offer version -3

SINGLE MARKET

Focused or concentrated or Niche marketing

Target marketing

SINGLE SERVICE OFFER

NICHE MARKET

Service offer version -1

Service offer version -2

Service offer version -3

Service offer version -1

Service offer version -2

Service offer version -3

Market size is large Customers are scattered : Cost-effective Competitors are entrenched Increases the chances of meeting most of

customer’s demand Generated customer loyalty

Target Marketing : Benefits

Market Segmentation

(Identifying

similar group of custome

rs)

Market Targetin

g(Deciding which groups

of custome

rs to aim for)

Market position

ing(Creatin

g a concept

to appeal to the target

market)

3 stages to Target Marketing (STP):

Stage 1 Stage 2 Stage 3

Marketing Information

Marketing Mix

BASIC FOCUS STRATEGIES FOR SERVICES

Dividing a heterogeneous market into homogeneous sub-units.

Customers inside a grouping had similar preferences and traits.

Each of these grouping was called a segment and the process was known as market segmentation

Stage 1 : Market Segmentation

People moved constantly from one place to another for following reasons :

Pull factors

Push factors

The Diaspora Effect :

Measurable and obtainable Accessible Substantial and viable Intensity in competition Actionable Differentiable

Effective Segmentation :

Geo-demographic : - Political- state, districts, blocks- Region – urban, rural- Geographic – North, South, West, East Demographic : - Age- Gender- Marital status- Education- Family size

Bases for segmenting : Service consumer

Socio-economic- Income- Social class- Occupation Culture- Lifestyles- Religion- Language- Ethnic origin- Culture

Bases for segmenting : Service consumer

Survey stage

Analysis stage

Profiling stage

Segmenting the market

1. Segment size and growth potential2. Structural Attractiveness3. Company Objectives and Resources

Stage 2 : Market TargetingBasis of Targeting the Identified segments

Focus/ Concentrated/Niche strategy

Multi-segment strategy

Stage 2 : Market Targeting

Principles of Positioning :

A service firm must position itself in the target segment’s mind

The position should be singular, with one simple, consistent message.

The position must set the service firm and the service product apart.

A service firm cannot be all things to all people, should focus on certain segments.

Stage 3 : Marketing Positioning

1. Employees attitude

2. Customer contact employee interaction

3. Policies and procedures of an organization

4. Responsiveness to solving customer problems

5. Other issues related to service experience

Effective Positioning : Services

1.By attributes, features or customer benefits2. By price value3. By use of application4. According to users or class of users5. Respect to product class6. Against Competition7. By endorsement8. By Quality dimensions (RATER)9. By Service evidence (People, Physical evidence &

Process)

Positioning Approaches

Positioning links market analysis and competitive analysis to internal corporate analysis

Market Analysis◦ Focus on overall level and trend of demand and geographic

locations of demand

◦ Look into size and potential of different market segments

◦ Understand customer needs and preferences and how they perceive the competition

Internal Corporate Analysis◦ Identify organization’s resources, limitations, goals, and values

◦ Select limited number of target segments to serve

Competitor Analysis◦ Understand competitors’ strengths and weaknesses

◦ Anticipate responses to potential positioning strategies

Developing an Effective Positioning Strategy

Using Positioning Maps to analyze competitive

strategy

Great tool to visualize competitive positioning and map developments of time

Useful way to represent consumer perceptions of alternative products graphically

Typically confined to two attributes, but 3-D models can be used to portray positions on three attributes simultaneously

Also known as perceptual maps (built on preference maps)

Information about a product can be obtained from market data, derived from ratings by representative consumers, or both

Positioning of Belleville Hotels:Service Level vs. Price

Positioning of Belleville Hotels: Location vs. Physical Luxury

Future Positioning of Belleville Hotels: Service Level vs. Price

Future Positioning of Belleville Hotels: Location vs. Physical Luxury