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Service marketing mix management

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Service marketing mix management

  1. 1. Service Marketing Mix Management
  2. 2. Idea generation Concept development and evaluation Business analysis Service development and testing Market testing Commercializa tion Post- introduction analysis New Service Development Process
  3. 3. 1. Idea Generation • Sources of new idea • Focus groups • Brainstorming • Brainwriting • Problem inventory analysis
  4. 4. Focus Groups • Group of individuals providing information in structured forms • Consists 8 to 14 participants • Moderator leads a group of people through an open, in-depth discussion rather than simply asking questions to solicit participant responses • It can be directive and non-directive
  5. 5. Brainstorming • A group method for obtaining new ideas and solutions • It stimulates people to be creative by meeting with others and participating in organized group experience • Four rules of brainstorming • No criticism is allowed by anyone in the group • Freewheeling is encouraged- the wilder the idea, the better • Quantity of ideas is desired • Combinations and improvements of ideas are encouraged: ideas of others can be used to produce another new idea • Brainstorming session should be fun, with no one dominating or inhibiting the discussions
  6. 6. Brainwriting • Created by Bernd Rohrbach at the end of 1960s • It is a silent, written generation of ideas by a group of people • Generally consists 6 members in a group • It provides participants more time to think than Brainstorming • Participants write their ideas on special forms or cards that circulate within the group • Each group member generates and writes down three ideas during a five minute period
  7. 7. Problem Inventory Analysis • It is a method similar to Focus Group Discussion • May be used to generate new product idea or test new product idea • A method for obtaining new ideas and solutions by focusing on problems • Consumers are provided with a list of problems in a general product category • They discuss the products in the category which have that problem
  8. 8. 3. Service Concept Development and Evaluation • Multiple parties need to be involved so as to know how they have taken the new idea in their conception • Developing of service blueprint • Evaluation of concept by customers and employees
  9. 9. 4. Business Analysis • Economic feasibility and potential profit implications should be identified • It involves • Demand analysis • Revenue projection • Cost analysis • Operational feasibility
  10. 10. 5. Service Prototype Development and Testing • Prototype is developed • Detailed service blueprint is developed incorporating reviews from customers and employees • Prototype is tested for customers acceptance
  11. 11. 6. Market Testing • Involves test marketing • Should involve pilot run of the services to be sure that operations are functioning smoothly
  12. 12. 7. Commercialization • Introduction of the product in the market • Service life cycle begins
  13. 13. 8. Post-introduction Evaluation • Operational changes • Market changes
  14. 14. Positioning of a Service Product • It is the process of presenting the product distinct from the competitors offerings • It helps in creating unique brand image of the product
  15. 15. Types of Positioning • Attributes Positioning • Positioning based on certain unique characteristics of a product • Positioning on the basis of quality, price, taste, durability style, design • Benefit Positioning • It provides benefits to the customer after its use • It relates with health, beauty, saving, economy, etc • Image Positioning • Based on company’s image, brand image of company, strategic alliances, etc • Use Occasion Positioning • Particular occasion is focused
  16. 16. • User Positioning • Positioning which is suitable for a specific target group of customers are known as users positioning • It relates with housewives, sports persons, Kids, etc. • Competitive Positioning • Positioning which helps I presenting firms to its competition brand is known as creative positioning
  17. 17. Service Pricing • Pricing is the process of determining the monetary worth of a service/product • Pricing of services is different from pricing of goods in following ways • Customers often have inaccurate or limited reference prices for services • Monetary price is not the only price relevant to service customers • Price is a key signal of quality in services
  18. 18. Uniqueness of Service Pricing • Three Key ways that service prices are different for customers Customer Knowledge of Service Prices The Role of Nonmonetary Costs Price as an Indicator of Service Quality
  19. 19. Customer Knowledge of Service Prices • Sometimes customers have internal reference prices for services • A reference price is a price point in memory for a good or a service • Reference prices for services are less often accurate than goods because of • Service Variability Limits Knowledge • Providers Are Unwilling to Estimate Prices • Individual Customer Needs Vary • Collection of Price Information Is Overwhelming in Services • Prices Are Not Visible
  20. 20. • Service Variability Limits Knowledge • Service firms can offer an infinite variety of services leading to complex and complicated pricing structures • E.g. Variety of Insurance Policies offered by insurance companies • Providers Are Unwilling to Estimate Prices • Many service providers are unable or unwilling to estimate prices in advance • E.g. Legal Services, Medical Services • Most Vital Reason: providers do not know themselves • Individual Customer Needs Vary • Inaccuracy of reference prices may result because of varying needs of customers • E.g. Booking a room in hotel, Booking a party palace
  21. 21. • Collection of Prices Information Is Overwhelming in Services • Too much information is to be gathered to properly identify a true reference price of a service • Single small information is not enough to identify service prices • Prices Are Not Visible • Many customers do not see the price at all until after they receive certain services. • E.g. credit card fees, fees for financial services, etc.
  22. 22. The Role of Non-Monetary Costs • Nonmonetary costs involves Time Costs, Search Costs, Psychological Costs, etc. • Time Costs • Involves waiting time of customers • Sometimes customers tradeoff money for time • Customers generally wait for two major reasons • Because of unpredictability of time of servicing to clients • Because they want to take service from specific service provider. E.g. doctors. • Search Cost • The costs of searching the needed service provider plays important role • Searching cost for services are higher for services than goods
  23. 23. • Convenience Cost • If customers have to travel to receive a service, they incur a cost • Its higher for old people and differently abled people • Arrangement of suitable time to receive service also incur a cost • Psychological Cost • These are most painful nonmonetary costs • E.g. fear of not understanding (insurance), fear of rejection (bank loans), fear of outcomes (medical treatment or surgery), etc Reducing Nonmonetary costs • It can be done by charging some monetary costs to reduce time and other non-monetary costs • Companies can advertise time savings and other costs savings
  24. 24. Price as an Indicator of Service Quality • In case of reputed brands, or if advertisings are able to generate quality perception, price as a cue to quality is not much important • Price may work as a cue to quality service • When quality is hard to detect • In high risk situations (e.g. medical treatment) • Pricing too low can lead to inaccurate inferences about the quality of the services • Pricing too high can set expectations that may be difficult to match in service delivery
  25. 25. Approaches to Pricing Services Cost-based Pricing Competition Based Pricing Demand-based Pricing
  26. 26. Cost Based Pricing • Widely used by industries such as utilities, advertising, contracting, wholesaling, advertising, etc. Price = Direct Costs + Overhead Costs + Profit Margin • Challenges • Costs are difficult to trace • Labor is more difficult to price than materials • Costs may not equal the value that customers perceive the services are worth
  27. 27. Competition-Based Pricing • Focuses on prices charged by other firms in the same industry or market • Not essentially charging the same prices but rather using others prices as anchor • Most suitable when • Services are standard across providers • In oligopolistic situation • E.g. Airlines, Car rental, etc. • Challenges • Small firms may charge too little to be viable • Heterogeneity of service limits comparability • Prices may not reflect customer value
  28. 28. Demand Based Pricing • It involves setting prices as per customer perceptions of value: Prices are based on what customers will pay for the services provided • Four meanings of perceived value • Value is low price • Value is everything I want in service • Value is the quality I get for the price paid • Value is all that I get for all that I give • Challenges • Monetary prices must be adjusted to reflect the value of nonmonetary costs • Information on service costs is less available to customers; hence, price may not be central factor
  29. 29. • Value Is Low Price • Some customers equate value with low price. • Customers see value in a product if it is economical • Value Is Whatever I Want in a Product or Service • For some customers value refers to the benefits they receive from a service or a product • E.g. in telecommunications industry value can be safety and confidentiality in their communications • Value is the Quality I Get for the Price I Pay • Some customer see value as a trade-off between the money they give up and the quality they receive
  30. 30. • Value Is What I Get for What I Give • Some consumers consider all the benefits they receive as well as all sacrifice components (money, time, effort) • In sum “ Perceived value is the consumer’s overall assessment of the utility of a service based on perceptions of what is received and what is given.”
  31. 31. Challenges in Incorporating Perceived Value into Service Pricing • Value may be perceived differently by consumers because of idiosyncratic tastes, knowledge about the service, buying power, and ability to pay • Estimating the value to customers of the company’s services is tough task
  32. 32. Pricing Strategies That Link The Four Value Definitions • In these strategies, monetary price dominates in importance • Involves discounting, odd pricing, synchro pricing and penetration pricing • Discounting • Service providers offer discounts to communicate to price-sensitive buyers that they are receiving value • Odd Pricing • Odd pricing is the practice of pricing services just below the exact Rupee amount to make buyers perceive that they are getting a lower price • E.g. Mobile phone at Rs. 15, 999 Pricing Strategies When the Customers Means “Value Is Low Price”
  33. 33. • Synchro-Pricing • In some service organizations demand for the service fluctuates over time • Pricing can play a role in smoothing demand and synchronizing demand and supply • Time, place, quantity, and incentive differentials are used a. Place Differentials • It is used for services in which customers have a sensitivity to location • E.g. front seats are expensive and back seats are economical in football matches
  34. 34. b. Time Differentials • It involves price variations that depend on when the service is consumed • By offering lower prices for underused time periods, a service company can smooth demand and gain incremental revenue • E.g. Night call service at lower price by NT and Ncell c. Quantity Differentials • It involves lower price in frequent consumption • E.g. Members are charged lower price in Gym d. Incentive Differentials • These are lower prices for new or existing clients in the hope of encouraging them to be regular users or more frequent users
  35. 35. • Penetration Pricing • It is a strategy in which new services are introduced at low prices to stimulate trial and widespread use • Most suitable when • Sales volume of the service is very sensitive to price • It is possible to achieve economies of scale • There is no class of buyers willing to pay a higher price to obtain the service
  36. 36. • The more desirable intrinsic attributes a given service possesses, the more highly valued the service is likely to be • Consists prestige pricing and skimming pricing • Prestige Pricing • It involves offering high-quality or status services • In prestige pricing, demand may actually increase as price increases because the costlier services has more value in reflecting quality or prestige • Skimming Pricing • In this strategy, services are introduced at high prices • It is effective approach when service are major improvements over past services • E.g. pricing of new mobile phones Pricing Strategies When the Customers Means “Value Is Everything I want in a Service”
  37. 37. • It takes quality and price in consideration • Involves value pricing and market segmentation pricing • Value Pricing • It means giving more for less • It involves assembling a bundle of services desirable to a wide group of customers and then pricing them lower than they would cost alone • Market Segmentation Pricing • It involves charging different prices to different customer segments with some or no change in quality • It is because different segments show different price elasticities of demand and desire different quality levels • Pricing can be done by client category, e.g. students, adults, children, old ages etc. • Pricing can be done by service version; higher price for adding more features in service. E.g. simple hotel room will be charged lesser than an A/C installed room. Pricing Strategies When the Customers Means “Value Is the Quality I Get for the Price I Pay”
  38. 38. • Incorporates the time, money, and effort the customer puts in receiving a service • It involves price framing, price bundling, complementary pricing and results-based pricing • Price Framing • Organizing price information for customers so they know how to view it • Customers naturally look for price anchors as well as familiar services against which to judge focal services • If they accept the anchors, they view the price and service package favorably • Price Bundling • It is used when services are consumed in conjunction with other services (warranties, training, delivery) • It involves pricing and selling services as a group rather than individually Pricing Strategies When the Customers Means “Value Is All That I Get for All That I Give”
  39. 39. • Complementary Pricing • Services that are highly interrelated can be leveraged by using complementary pricing • Captive Pricing: Firm offers base service or product and then provides the supplies or peripheral services needed to continue using the service. Charging less for base service and recovering it from peripheral services. • E.g. Installation charge of cable/dish is lesser and the channel charge is higher, etc • Two-part Pricing: Service fee is broken in fixed fee plus variable usage fee. E.g. in fitness clubs. • Loss leadership: It is a pricing strategy where a product is sold below its market price in order to sell additional products. When familiar service is initially provided and later other expensive services are introduced. E.g. Razors are often provided free or at lower price by Gillette and charge more for blades.
  40. 40. Price anchoring E.g. • Regular Price Rs. 500, Sale price Rs. 250 Result Based Pricing  Suitable in which outcome is significant  E.g. online pay-per-click advertising industry, personal injury lawsuit
  41. 41. Discounts • Discounts refers to the deductions in the value of product while selling it to the customers • Discounts motivate customers to buy the products • Types • Cash Discount • Trade Discount • Quantity Discount • Seasonal Discount
  42. 42. • Cash Discount • It refers to the immediate monetary reduction in the price of the products/ services during their purchase • Trade Discount • Such Discounts are provided to the channel members who are involved in distribution of goods or services • Quantity Discount • It is provided on the basis of volume of sales • Higher the volume higher is the quantity discount • Seasonal Discount • Seasonal discounts are provided during off season time to ensure that the products have consistent sales
  43. 43. Allowances • Trade in Allowances • Trade-in allowance is the amount that a seller reduces the purchase price of new property in exchange for the acquisition of property owned by the buyer. • E.g. Bike exchange • Promotional Allowance • Such allowances are provide to dealers for promoting and advertising of product on behalf of manufacturer
  44. 44. Setting Pricing Policy 1. Setting the pricing objective 2. Determining demand 3. Estimating costs 4. Analyzing the competition 5. Selecting a pricing method 6. Selecting the final price Profit, competition, Market Share, Survival, goodwill, etc. Size of demand, price elasticity of demand. Variable costs, fixed costs, BEP. Competitive scenario and basis of competition. Cost based, competition based, or demand based.
  45. 45. Service Promotion • Promotion is an important tool of marketing mix which helps to inform, persuade and remind the customers about the organization and its products • Promotion plays important role in creating demand and responding complaints
  46. 46. Promotion Mix Advertisement Personal Selling Sales Promotion Publicity Public Relation • The combination or blend of marketing communication channels is called promotion mix
  47. 47. Factors Affecting Determination of Promotion Mix • Promotion Objectives • Nature of Product • Nature of Target Market • Stages of Product’s Life Cycle • Size of Promotion Budget • Promotion Mix strategy
  48. 48. • Promotion Objectives • Different promotion tools are used for different advertising objectives • For awareness and reminding- advertisement • For relationship building and educating – personal selling • For increasing sales- sales promotion • For creating brand loyalty- publicity • For better relationship- public relation • Nature of Product • In case of consumer products advertising is mostly preferred • In case of industrial products personal selling is preferred • Nature of Target Market • For consumer market advertisement and sales promotion are better • For industrial market personal selling is preferred
  49. 49. • Stages of Product’s Life Cycle • Introduction- advertisement, publicity and sales promotion are better • Growth- advertisement • Maturity- sales promotion • Declining stage – public relation and personal selling • Size of Promotion Budget • In case of large budget, advertisement is preferred • In case of small budget personal selling is preferred • Promotion Mix Strategy • Push Strategy: personal selling, sales promotion, public relation • Pull strategy: Advertisement
  50. 50. Advertisement • Any paid form of non-personal presentation of ideas, images, goods, or services is called advertisement • It is the most visible element of the promotional mix • Messages can be delivered by • Television • Radio • Newspapers • Magazines • Direct mail • The Internet • Companies are charged for time or space in advertising
  51. 51. Features of Advertisement • Mass Communication • Advertisement is done with the helps of mass media • It reaches to a huge public at once • Persuasive • Advertisements are generally persuasive communications • Paid Form of Communication • Advertisement agencies charge company for the time or space • Non-personal Presentation • The is non-personal, non face to face communication between company and customers
  52. 52. Importance of Advertisement • Provides information • Helps to face competition • Helps customers in making selection decision • Educate the customers • Helps in building company image • Helps to persuade consumers • Helps to remind consumers
  53. 53. Advertisement Appeals • Fear Appeal • Fear appeals focus on negative outcomes that can happen because of an action or inaction • Different types of fears consist fear of disease (used by hygienic food products, contraceptives), isolation (used by toothpaste and deodorants), death, etc. • Humor Appeal • Humor appeal makes consumer laugh and create an emotional link with the product • Chocolate advertisements. • Rational Appeal • It focuses on benefits, practicality and functionality of products • E.g. Fuel efficient automobiles and bikes ads
  54. 54. • Sex Appeal • This type of appeal capture attention however does not promote product consumption • Some element of romance is added by the ad makers • Beer advertisements, Fragrance products’ advertisements. • Bandwagon Appeal • It is an appeal which conveys a message of what others are doing so that the other consumers will follow them • It says buy this product because everyone does • Advertisement of Ruchee noodles- Nepal’s highest selling noodles
  55. 55. Some Best Advertisements of 2016
  56. 56. Top 10 Advertisement Failures
  57. 57. Top 10 Advertisement Failures
  58. 58. Unethical Advertisement
  59. 59. Best Nepali Advertisements
  60. 60. Best Ever Advertisement
  61. 61. Sales Promotion • Sales promotion is a short term incentive tool which is used to encourage the customer in order to purchase the goods • Objectives of sales promotion • Repurchase • Traffic building • Increase frequency of purchase • Inventory building • Promotional support
  62. 62. Methods of Sales Promotion • Consumer Sales Promotion • Sample • Coupons • Premium offer • Cash refund offer • Price pack • Price off offer • Contest and prize • Trade Sales promotion • Allowances • Discounts • Dealers sales contest • Dealers gift • Push money
  63. 63. Consumer Sales Promotion • Sales promotion tools targeted to the final consumers are called consumer sales promotion tools • Marketing activities designed to entice customers to buy a product • Mainly aimed at introduction of new product and to create demand • Samples • It is small portion of product given to customers free of cost for trial purpose • Aims to attract consumers and helps in comparison • Coupons • It is the certificate that reduces the price and provides certain facilities to the buyer • It is enclosed in the package • Increases the volume of sales by repurchase • Premium Offer • It is a temporary reduction in the price or an additional product provided to the customer in order to attract the customer to purchase the product
  64. 64. • Cash Refund Offer • Under this offer specific amount is refunded to the customers in submission of proof of purchase • Helps to create brand loyalty • Price Pack • It is the reduced price by the producer directly on the label of packet of the product • Either single product is sold or two or more products are bundled together mentioning lesser price on label • Price Off Offer • It is charging lesser price than the one mentioned in the label • Helps to increase sales during off season time
  65. 65. • Contest and Prize • Under this technique a contest/competition is organized by the organization • Consumer participation form/coupon are placed inside the package of the product of can be received from the retailers • Winners are selected by the pane of judges appointed by the manufacturer
  66. 66. Trade Sales Promotion • It is a sales promotion tool targeted to the middlemen • Allowances • It is a promotional money which is paid by the manufacturer to the retailer in order to promote their products • Allowances are given either for advertisement or display • Discount • It is the direct reduction in the prices of products for the dealers • Dealers sales Contest • It involves stimulating competition among the dealers in the form of display or sales volume • Prizes are given to the dealers who display the product in an attractive way or who makes highest sales
  67. 67. • Dealers Gift • Under this, some attractive gifts are provided to the dealers for their product orders • Push Money • It is a cash payment made by the company to the dealers in order to promote the product
  68. 68. Personal Selling • Personal selling refers to the objective face to face communication between the prospective buyer and the seller • According to Stanton, “Personal selling is a personal communication of information to persuade somebody to buy something.” • It allows demonstration of product and helps to convince the customers to make purchase decision Features of Personal Selling a.Convincing b.Information and education c. Satisfaction d.Flexibility e.Interpersonal relationship f. Selling device
  69. 69. Indoor Sales Process • Decoration; display of goods; attractive sales personDrawing Attention • Greeting the customers; welcoming themReceiving the Customer • Courteous inquiry about desired serviceMaking Inquiry • Showing the productsDemonstration of Goods • Replying to doubts and inquiries of customersReplying the Objection • Allowing customer to make decision; fixing the dealClosing Sales • Introducing supplementary goods; tactfulness requiredAdditional Sales • Praising the customer for their choice; asking to revisitCommendation of Praise
  70. 70. Outdoor Sales Process • Finding customers and classifying themIdentifying the customers • Learning about the prospect; preparationPre-approach • Introduction; making impressionApproach • Showing the product; providing informationPresentation and demonstration of product • Problem solving; answeringHandling objection • Allowing customer to make decision; fixing the dealClosing sales • Communicating continuously to the customer after sales deal Follow up
  71. 71. Publicity • It is non-paid form of mass communication which helps to create favorable impression about the organization and its products • Features of Publicity • Non-paid communication • Mass communication • High credibility • Lesser control • Information
  72. 72. Methods of Publicity • It is an event where media outlets are called together to cover a newsworthy event • It is a meeting at which somebody talks to a group of journalists in order to answer their questions or to make an official statement Press Conference • News about goods, services, qualities of product, etc. are circulatedNew Release • Articles related to organizations products, services, objectives, policies and procedures are duly mentionedArticles • Some brochures are published; useful for service communicationPublication
  73. 73. Public Relation • Activities targeted at maintaining good relations with the publics are known as public relations • It aims at promoting image of the company and its products in the minds of stakeholders • According to William J. Stanton, “Public relation is a management tool designed to favorably influence attitudes toward an organization, its products, and its policies.” • Objectives of Public Relation • Build market place excitement before product launch • Build and maintain customer loyalty • Build direct relationships with consumers • Build relationships with opinion leaders
  74. 74. Tools of Public Relation • Maintaining better relationship with media persons • Uses local, national, and international media to place favorable news stories about the firm and its products • Better media relation results into better publicity Media relation • It involves working with local community groups, employee groups, customer groups, and social institutions to solve various social problems Group relations • It involves maintaining individual relationships with important people like legislators, government officials, and social leaders Lobbying • It involves sponsoring the events in societySponsorship of social events
  75. 75. Need for Coordination in Marketing Communication • Due to increasing in marketing communication channels over time, there is immense need for integrated marketing communication • Integrated marketing communication helps to send unified message to the customers • The enhanced service marketing triangle shows that customers are target of two types of communication • First: External marketing communication involving the traditional mediums • Second: Interactive marketing communication involving other mediums
  76. 76. Communication and Service Marketing Triangle (Enhance Service Marketing Triangle) External Marketing Communication Advertising Sales Promotion Public Relations Direct Marketing Internal Marketing Communications Vertical Communications Horizontal Communications Interactive Marketing Personal Selling, Customer Service Center, Service Encounters, Social Media and Servicescapes
  77. 77. • External communication channels and interactive communication channels must be integrated to create consistent service promises • Internal marketing communications channels must be managed to deliver consistent service promises
  78. 78. Key Service Communication Challenges • Discrepancies between communicated service and perceived service is due to some factors 1. Service Intangibility • Services are not physical objects. • Before buying: consumers do not know what they are buying • During Purchase: Consumers can not see differences among services • After Buying: Evaluating the service is difficult • Difficulties associated with intangibility are five fold a) Incorporeal (having no physical form): • Service product is neither made of physical matter not occupies physical space • Thus showing the service is difficult
  79. 79. b) Abstractness • Services are difficult to visualize and understand • Services such as financial security, consultancy, health, fun do not correspondent directly with objects c) Generality • Since many service providers use similar/general words, it is hard to differentiate them • Many service promises are described in generalities (wonderful experience, superior education, completely satisfied customers) making them difficult to differentiate
  80. 80. The more risk the consumer perceives the more it relies on word of mouth publicity which is not is not in the control of the organization. d) Nonsearchability • Because service is a performance, it often cannot be previewed or inspected in advance of purchase • It is difficult to search the right and needed service provider e) Mental Impalpability • Services are often complex, multidimensional and difficult to grasp mentally before consuming
  81. 81. 2. Management of Services • Existence of many different departments, complexity of organization structure makes the management of services difficult • Lack of management and coordination leads to communication of untrue messages 3. Management of Customer Expectations • Communicating true message is a challenge • Raising over expectation or drowning down the expectation may be problematic
  82. 82. 4. Customer Education • Lack of education leads to disappointment which may lead to customer defection • Expert service are difficult for customers to evaluate even after consumption • Lack of customer education about occupancy may also lead to problems
  83. 83. • Coordination among Operations and Marketing department, HR and Marketing department is essential • Effective horizontal communication is needed • Consistency is policies and procedures across departments and branches is essential • Doing all the above is challenging 5. Internal Marketing Communication
  84. 84. Five Categories of Strategies to Match Service Promises with Delivery 1. Address Service Intangibility 2. Manage Service Promises 3. Manage Customer Expectations 4. Manage Customer Education 5. Manage Internal Marketing Communication
  85. 85. Five Categories of Strategies… • There are some strategies to make message more effective, dramatic and memorable a. Use Narrative to Demonstrate the Service Experience • Story based appeals are very influential • Consumers can be shown to share their stories about consumption of service • Consumers having positive and realistic experiences can be shown in the commercials 1. Address Service Intangibility
  86. 86. b. Use Interactive Imagery • Imagery is defined as a mental event that involves visualization of a concept or relationship • Imagery can help to recall the names and facts about the service • One way is to integrate logos or symbols with an expression of what the organization/service does c. Focus on The Tangibles • Showing the tangibles provide clues about the nature and quality of the service • E.g. Hotels showing well decorated and luxurious rooms, banks showing credit cards, etc. 1. Address Service Intangibility
  87. 87. d. Present Vivid (clear or graphic) Information • Presenting an information that is catchy to the senses of a person so as to produce a distinct mental picture • One way is to evoke a strong emotion such as fear in order to make information vivid
  88. 88. e. Use Brand Icons to Make The Service Tangible • Brand icons are useful to generate brand visibility • Creating a recognizable brand icon can make service tangible f. Use Associations, Physical Representation, Documentation, and Visualization • Association: linking the service to a tangible person, place or object. E.g. Sanima bank showing well respected actors, Madan Krishan Shrestha and Haribansha Acharya • Physical Representation: it involves showing tangibles like employees, buildings, or equipment 1. Address Service Intangibility
  89. 89. • Documentation: It involves showing some factual information • Visualization: It involves showing vivid mental picture of a service’s benefits or qualities. E.g. Showing people having fun g. Feature Service Employees in Communication • It involves showing actual employees doing their jobs or explaining their service in advertising • Useful for both internal and external customers 1. Address Service Intangibility
  90. 90. h. Use Buzz or Viral Marketing • It involves use of real customer to spread the words • Customers are either fans of service provider and hence work free of cost or are provided with some product or service • However customers do not expose any affiliation to the organization in case if theory are provided with product or service 1. Address Service Intangibility
  91. 91. i. Leverage Social Media • Consumers now a days go through service reviews before consumption • Social media can be used to sharing information among consumers • Organization can also take suggestions from consumer through social media j. Aim Message to Influencers • There are some people who influence others consumption • The online influencers can be identified and used as a vehicle to circulate message • Improved technologies are now helping to identify online influencers 1. Address Service Intangibility
  92. 92. j. Creating Advertising That Generates Talk Because it is Humorous, Compelling or Unique k. Feature Satisfied Customers in Communication • It makes the communication more credible l. Generate Word of Mouth Through Employee Relationship • When customers trust employees, positive word of mouth results • Trust results from: personal connection between customer and employees, care displayed by employees, and employees familiarity with customers 1. Address Service Intangibility
  93. 93. 2. Manage Service Promises • In service more coordination and management is required between the department that makes promises and the one that delivers promises • Greater coordination and integration can be ensured by • Creation of Strong Brand Image • Coordination of External Communication
  94. 94. Create a Strong Service Brand 2. Manage Service Promises
  95. 95. • Presented brand is the part of the brand image that the company controls and disseminates through all personal and impersonal channels • Consists use of advertisements, websites, employees, facilities, etc. • It helps to create the Brand Awareness • Higher and positive brand awareness leads to stronger brand image and more differentiation and hence leads to higher brand equity • Brand equity is the value of a brand in the minds of customers or in the market 2. Manage Service Promises Create a Strong Service Brand
  96. 96. • Customer experiences involve the interactions between customer and employees and other facilities • Customer experiences helps identify the actual quality or meaning of the brand (i.e. is the service) which further shapes the brand equity • Non-controllable external brand communications involve word-of-mouth communication and publicity which are not in control of the company • Non-controllable external communication leads to brand awareness and helps generate brand meaning 2. Manage Service Promises Create a Strong Service Brand
  97. 97. Coordinate External Communication • The important aspect of managing brand image involves coordinating all the eternal communication vehicles that send information to customers • Development of technology has introduced many mediums of communication • External communication comprises communication through • Advertisement • Sales Promotion • Public Relation • Direct Marketing: involves use of mail, telephone, fax, e-mail, etc. to reach customers directly • Personal Selling 2. Manage Service Promises
  98. 98. 3. Manage Customer Expectations • Accurately promising about the service delivery helps to minimize the communication gap • It involves • Make realistic promises • Offer service guarantees • Offer choices • Create tiered-value service offerings • Communicate the criteria and levels of service effectiveness
  99. 99. • Makes Realistic Promises • Promises create expectations thus they should be realistic • Promise what is possible • Promising beyond may lead to customer dissatisfaction and defection • Offer Service Guarantees • Offering explicit service guarantees helps to satisfy customers • Offer choices • Sometimes choices can be offered by the organization to employees to manage expectation • Such choices may involve trade off of time against money • E.g. an audit firm may offer choices like surficial audit in 2 days at Rs. 10, 000 or detailed audit in 10 days for Rs. 50000. 3. Manage Customer Expectations
  100. 100. • Create Tiered-Value Service Offerings • Different tiers of service can be offered at different prices based on their perceived value • There are two advantages of tiered offerings • It puts burden of choosing the service level on the customer, thereby familiarizing the customer with specific service expectations • The company can identify which customers are willing to pay higher prices for higher service levels • Communicate the Criteria and Levels of Service Effectiveness • When its hard for customers to judge the quality of the service, company can teach them the criteria of evaluation • Such criteria may help customers to evaluate our services more favorably
  101. 101. 4. Manage Customer Education • Educating customers about the service can minimize the service failure • Preparing Customer For Service Process • The service employees must make sure that the customers are ready with pre-requisites of consuming service • E.g. in trekking customers must have the suitable clothes suiting the weather of the place • Confirm Performance to Standards and Expectations • Once the service is provided, make sure that the customer knows that the promised or standard service is rendered
  102. 102. • Sometimes, the services are performed behind the scene or customers may not know about the actual quality of the service provided • Communicating about service delivery made helps to satisfy the customer • Clarify Expectations after the Sale • Learning about customer expectations after the sale of some service may help reduce future disappointments
  103. 103. 5. Manage Internal Marketing Communication • Managing internal marketing communication helps to match service delivery with promises • Some strategies to manage internal marketing communication are as below • Create Effective Vertical Communications • Vertical communications involves flow of message from management to employees or from employees to management • In other words it involves downward and upward communication
  104. 104. •Create Effective Horizontal Communication • It is communication across functional boundaries in an organization which facilitates coordination in efforts for service delivery • Different departments have their own priorities and goals thus coordination among them is a difficult process • It involves following two strategies • opening channels of communication between marketing department and operations personnel • Opening channels of communication between sales and operations
  105. 105. • Sell the Brand Inside the Company • It involves treating employees as internal customers • It involves • Choosing the right moment to teach and inspire employees • Linking internal and external marketing • back Bringing the brand alive for customers: creating strong connection between employees and customers
  106. 106. • Align Back-office and Support personnel with External Customers through Interaction or Measurement • It involves organizing interactions between back office employees and customers • Back office employees can be shown the videos about service purchase/consumption by consumers • Establishment of measurement standards to evaluate employees for their performance can also be an effective strategy to involve back-office employees
  107. 107. • Create Cross-functional teams • Cross functional teams are teams containing members from different departments or sections • Cross-functional teams helps to improve communications across employees from different departments
  108. 108. Strategic Roles of the Servicescape • Package • Like tangible product’s package, the servicescape and other elements of physical evidence essentially “wrap” the service and convey to consumers an external image of what is “inside”. • The service scape is an outward appearance of the organization and thus can be critical in forming initial impression or setting up customer expectations • The packaging role helps to create expectations for new customers of new organization • Helps to give a visual representation of the quality of the service • Facilitator • Servicescape also serves as a facilitator in aiding the performance of service personnel
  109. 109. • A well-designed, functional facility can make the service a pleasure to experience from the customer’s point of view and a pleasure to perform from the employee’s • Poor and inefficient design may frustrate both customers and employees • Socializer • An effective servicescape helps in socialization of both employees and customers • A well designed servicescape generates the sense of their roles, behavior and relationships of customer and employee • Differentiator • It helps in differentiating a service organization from its competitors. • Changes in physical evidences may help to attract new market segments simply by changing the colour, displays and type of music played in the store
  110. 110. Guidelines for Effective Physical Evidence Strategy Recognize the strategic Impact of Physical Evidence Blueprint the physical evidence Clarify strategic roles of the servicescape Assess and identify physical evidence opportunities Update and modernize the evidence Work cross-functionally
  111. 111. • Recognize the strategic importance of physical evidence • Physical evidence should be linked clearly to the organizations overall goals and vision.
  112. 112. Service Process Types
  113. 113. High contact with customers in the service process. High levels of customization More staff time is spent in servicing customers. Professional services tend to be people-based and process (how the service is delivered). Examples: management consultants, lawyers’ practices, architects, doctors’ surgeries, auditors etc. Professional Services
  114. 114. Service shops are characterized by levels of customer contact, customization, volumes of customers and staff discretion. Service is provided via mixes of front- and back-office activities. Examples: banks, high street shops, holiday tour operators, car rental companies, schools, most restaurants, hotels and travel agents. Service Shop
  115. 115. Mass services have many customer transactions. Equipment based and ‘product’-oriented, • with most value added in the back office • relatively little judgement applied by front-office staff. Closely defined division of labour and to follow set procedures. Examples: Supermarkets, a national rail network, an airport, telecommunications services, libraries, television stations, the police service and the enquiry desk at a utility. Mass Services
  116. 116. Strategies for Delivering Service Quality Through People • Hire the Right People • Compete for the best people • Firms that think of recruiting as a marketing activity will address issues of market (employee) segmentation product (job) design, and promotion of job availability in ways that attract potentially long-term employees. • Hire for service competencies and service inclination • Service competencies are the skills and knowledge necessary to do the job • Service inclination refers to employees interest in doing service related work which is reflected in their attitudes toward service. • Be preferred employer • Target to be the “Best company to work for” • Provide extensive training, career and advancement opportunities
  117. 117. • Develop people to deliver service quality • Train for technical and interactive skills • Technical skills are work related skills. E.g. working with accounting systems in hotel, cash machine procedures in a retail store, etc. • Empower employees • Empowerment means giving employees the authority, skills, tools, and desire to serve customer. • Promote teamwork • By promoting team work, an organization can enhance the employees’ abilities to deliver excellent service
  118. 118. • Provide needed support systems • Develop service-oriented internal processes • Internal customer service audit is one tool that can be used to implement a culture of internal service quality. • Provide supportive technology and equipment • Measure internal service quality • Internal procedure must support quality service performance.
  119. 119. •Retain the best people • Measure and reward strong service performers • Reward system need to be linked to the organization’s vision and to outcomes that are truly important. • Treat employees as customers • If employees feel valued and their needs are taken care of, they are more likely to stay with the organization. • Include employees in the company’s vision • For employees to remain motivated and interested in sticking with the organization and supporting in goals, they need to share an understanding of the organizations vision
  120. 120. Positioning • Types of positioning • Attributes positioning • Positioning based on the certain unique characteristics of a product. Like taste, durability, etc. • Benefit positioning • It focus on the end result of the positioning • Such positioning relates with health, beauty, time saving, economy, etc. • Image positioning • It is based on companies image, brand image, strategic alliance, etc. • It helps in increasing the value of product in the market
  121. 121. • Use occasion positioning • It is based on the use of product on a particular occasion or for a particular purpose • User positioning • Positioning which is done by targeting a specific group of customers • E.g. focus on house wives, sports persons, kids, etc. • Competitive positioning • It involves use of ways to show the brand superior than its competitors