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Meaning of Services :A service is a non-material equivalent of goods . A service provision is an economic activity that does not result in ownership and this is what differentiates it from providing physical goods. It is claimed to be a process that creates benefits by facilitating either a change in customers, a change in their physical possessions, or a change in their intangible assets. Philip Kotler : A service is an act of performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. Characteristics : 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Intangibility Inseperatability Variability Perish ability Ownership Service in Performance Simultaneously Quality measurement Nature of Demand Consumer, a part of production process

Types of Services : 1. Periodical transaction volume : The volume of a transaction in a given time period stands as a major consideration in service industry. The hyper-market has very different operation challenges from the local grocery store, not least in simply managing the flow of hundreds of customers in store. 2. Mode of service Delivery : The retail sector provides a good example of this diversity, with face-to-face service in traditional store, remote service through mail order and telephone shopping and the lost latest internet based service.

Classification of Services :1) 2) 3) 4) 5) 6) By market segmentation By degree of Tangibility By skills of the service provider By goals of the provider By degree of regulation By degree of labor Intensiveness

Service Marketing :Service marketing is a marketing based on relationship and value. It may be used to market a service or a product. Marketing a service-based business is different from marketing a goods-base business. We term marketing as a function by which a marketer deliver , promotes and plans goods and services to customer and clients. Nature of Service Marketing : 1. 2. 3. 4. 5. Intangibility Low price festivity No inventory Value creation process Providing tangibility for the intangibility

Difference between service and goods : Basis Intangible Inseperatability of buyer and provider Ease of inventory Difficulty in Measuring and controlling quality Sensitivity to time High degree of risk Consumption of the offering Personalization of buyer relationship Service Fully intangible may be physical evidence Both must be present Cannot store or ware house the service Measure and control people processes instead of product Needed on demand or sale is lost Cost of failure very high Customization likely to enhance customer perception of perceived quality Relationship can be as important as service Goods Fully tangible Remote transaction easy Easily inventoried Measure and control product quality only. Can usually wait to receive the product Product can be replaced Customization increases cost, but likely to enhance perceived product quality Product is the focus of the transaction

Factors affecting development of service marketing : I. II. III. IV. V. VI. VII. Organization size structure Regulatory bodies Growth in service industry Characteristics of services Customer/Employee interaction Service quality Specific service sector

Significance : i) ii) iii) iv) v) Creation and expansion of job opportunities An optimal utilization of resources Paving avenues for the formation of capital Increasing the standard of living Environment-friendly technology

Paradigm in Service Marketing :Progress in any scientific field requires a paradigm, which is conceived as a fundamental set of assumptions that is shared by members of particular scientific community. Although paradigm can facilitate researchers and generate axioms that are useful for both teaching and practice, they are not absolute and the validity of the underlying assumptions may be open to challenges.

. Service as a process : This means that unlike manufacturing differentiation between

operations and marketing is blurred in the service industry. Internal customer focus is important than external customer orientation. Further customer are often involved in the production of service.

. Doing right the first time . Speedy response . Keeping customer perspective
Customer Relationship Management :-

CRM is a strategy adopted by business firms in recent years and includes the formulation of methodologies and tools that help business manage customer relationship in an organize manner. CRM processes are extremely helpful in indentifying and targeting the best customer of the business firm and generating quality sales leads, as well as in the planning and implementation of marketing campaign and definite goals and objective. According to Gartner CRM is a business design to optimize profitability, revenue and customer satisfaction. CRM in service industry :CRM was initially in the industrial context, the service industry is also focused on maintaining and enhancing customer relationship. Services are produced and delivered by the same institutions. The success of the service provider depends upon the long term customer relationship that develop between the customer and the service provider. Characteristics of CRM : 1. 2. 3. 4. Share of customer Lifetime value of the customer Customer equity Greater focus on high value customers

Need of CRM : i) ii) iii) iv) v) vi) vii) Provide updated information Customized strategies Anticipates problem Prompt follow ups Problem resolving mechanism Assesses customer interest Integrating functional system

Types of CRM :1) Proactive Vs Reactive CRM In this type of categorization, the practice of a company to anticipate and respond to the customer need with suitable offerings is contrasted with the practice of simply responding to the customer stimulus that comes in through suggestions and complaints. 2) Operational, Collaborative and Analytical CRM

Building CRM : i. ii. iii. iv. v. Enquiry Interaction Exchange Co-ordination Adoption

Importance of CRM : 1. 2. 3. 4. 5. 6. Increased sales revenue Increases win rates Increase margins Involve customer satisfaction Decreases general sales Lower cost of recruitment customers

Barriers of CRM : 1. 2. 3. 4. 5. 6. 7. Company ownership is based on Capitalist system Require top-management support Confusion in attributes Problem in implementation Building relationship Customer dissatisfaction Incapability

Service Marketing System :Many elements contribute to the customers overall view of the service organization. These includes the communication efforts of the advertising and sales department, telephone calls, letters from service personnel, billing from the accounting department and random exposure to service personnel and facilities, new stories and editorial in the mass media word of mouth comments from current or former customers and even participation in market research studies collectively these components plus those in the service delivery system and up to what is termed as service marketing system.

Service Quality :Company personnel need a common understanding in order to be able to address such issues at the measurement of service quality, the identification of causes of service quality shortfalls and design and implementation of corrective action. Perspective : 1) 2) 3) 4) 5) Transcendent approach Product-based approach User-based approach Manufacturing based-approach Value Based-approach

Dimensions of Quality : a. b. c. d. e. f. g. Performance Features Reliability Conformance Durability Serviceability Aesthetics

Gap Model of Service Quality Delivery :-


Customer Gap

Expected Service

Perceived Service

Company Gap 3 Gap 1

Service Delivery Gap 4 Customer-driven Service designs and standards Gap 2 Company perception of consumer expectation

External communication to customers

Gap 1. Not knowing what customer expect This is basically of Customer Service and Company Perception as expected service is the highest level of desired service existing in the mind of customer. Company perception of consumer expectation are nothing but the companys understanding of what the consumer want. Gap 2. Inability to set the right type of Standards The customer may have service standard expectations that may be either higher or lower than the standards set by you. Gap 3. Not delivering the service standards i. Lack of right type of employees ii. Lack of empowerment iii. Lack of training iv. Failure to predict v. Insufficient customer education Gap 4. Mismatch between promises and performance This is physically impossible or financially unviable to provide all that was promised. This is usually result in customer disappointment. 1. Unrealistic communication to customers 2. Over promising through advertising 3. Lack of internal communication Putting it all together : Closing the gap

Measurement to Service Quality : 1. Tangibles dimensions 2. Reliability Dimensions 3. Responsiveness Dimension 4. Assurance Dimension 5. Empathy Dimension

Understanding customer expectation :Customer expectation and belief about service delivery that functions as standard of references points against which performance is judged. Because customers compare their perceptions of performance with these references points when evaluating service quality, thorough knowledge about customer expectation is critical to service marketers. Measurement of Customer Expectation :1. Assurance 2. Empathy 3. Reliability 4. Responsiveness 5. Tangible Consumer expectation model :1. Ideal service level 2. Desired service level 3. Adequate service level 4. Predicted service level 5. Zone of tolerance Zone of Tolerance :As we discussed earlier, service are heterogeneous in that performance may vary across providers, across employees from the same provider, and even with the same service employee. The extent to which customer recognize and are willing to accept the variation is called the zone of tolerance and is shown in figure aside. Managing Consumer Expectation :Managing consumer expectations is a critical component in the marketing plan of a service business. Consumer expectation must be managed during the pre purchase phase, the service encounter and the post- purchase phase. Customer expectations can be managed during each phase of the purchase process.

1) During the pre purchase phase 2) During the service encounter 3) During the post purchase phase Service Market Segmentation :Meaning and definition of Market Segmentation : Market segmentation is a process of dividing the total market for goods and services into several smaller groups, such that member of each group are similar with respect to the factors that influence demand. Market segment as an element of marketing strategy, recognizes the wisdom of specializing to suit the needs of a segment of market rather than trying to do all things to all people. The purpose of market segmentation is trying to identify specific user group and then pursue with the tailored product or services supported by appropriate marketing mix strategies. Requirement for Effective Segmentation :1. Distinctiveness 2. Measurable segment 3. Substantial size of the segment 4. Accessibility 5. Actionable Advantage : i) ii) iii) iv) Customized service Multiple choices Best distribution Channel Cost effective

Bases of Segmentation :Before giving some brief explanations about these bases, it is vital to understand that, in themselves they are not segments. The following brief review to two predetermined approaches frequently used in market segmentation, products and services and channels helps illustrate this point.


Segmentation Approaches

Customer Characteristics

Customer Responses






Major Approaches to Service Market Segmentation

Based on Customer Characteristics :Demographic and socio-economic segment : It is based on wide range of factors including age, sex, family size, income, education and social class and ethics origin. So it is helpful in indicating the profile of a people who buy a companys product or services. Some of the demographic variables used are : 1. 2. 3. 4. 5. 6. 7. 8. 9. Age and life cycle scale Gender and sexual orientation Marital status Income Social class Family Size Occupation Educational Level Religion

Psychographic Segmentation : Psychographic is a technique that classifies life styles by investigating how people live, what interest them and what they like. It is also called life style analysis or AIO because it relies on number of statement about a persons activities, interest and opinions. 1. 2. 3. 4. 5. Life Style Personality Attitude Belief Values

Geographical Segmentation : In geographical segmentation, the marketers divide the market according to geographic units. They can divide the consumer on the basis of


countries, region, stages, cities and town. A firm may decide to market different product or services in certain areas and not in other. Based on consumer responses : 1. Benefit Segmentation : Benefit segmentation groups customers together on the basis of the benefits they are seeking from a product. 2. Usage : Marketers make an attempt to segment final consumer and organizational consumer based on usage rate, usage expenses and brand loyalty. Amongst the uses they distinguish segment based on volume. 3. Loyalty Segmentation : Loyalty segmentation involves identifying customers loyalty to a brand or product customer tend to be very loyal or disloyal. These groups are then examined to try and identify any common characteristics so that the product can be targeted at prospectively loyal customers.

Segmentation and Zone of Tolerance :The zone of tolerance differs across customers groups and products. It is, therefore, necessary to segment the market, much the same way as it is in consumer product marketing. One useful way of something the marketer is establishing the zone of tolerance across different customer decision criteria like price, performance and service quality. Process of Market Segmentation : 1. 2. 3. 4. 5. Identify bases of segmenting the market Develop profile of resulting segment Develop measure of segment attractiveness Select the target segment Ensure that the target segment are compatible

Market Targeting in service :Targeting follows market segmentation as a natural step and is defined as the process of estimation and comparison of the previously identified segments for selecting one or more segment that fetch the best result for the business. The chosen segment should be the most profitable for the company and should also helps in delivering superior value to the chosen customer base.


Bases : i) ii) iii) Segment size and growth potential Structural attractiveness Company objective and resources

Positioning of Service :Positioning means projecting the product or services in such a way that consumer perceives it value distinctively from that of competitiveness offers. In other words, positioning intends to influence the perceptual process of consumers against a product or a service. The studies on a consumer behavior provide that consumer do perceive against the marketing stimulation. Since marketing stimulation are many, a consumer may not respond selectively through a perpetual process. Objective of Positioning : i. To create a distinctive place ii. To provide a completive edge to the product or service. iii. To place an intangible service to the more tangible frame of reference. iv. To help both service development and the redesign of the existing service. v. To follow consideration of competitors possible moves. vi. To give the target market the reason of buying your service and then design the whole strategy. Steps in developing positioning strategy : 1. 2. 3. 4. Steps in developing positioning strategy Identification if Attributes Location of Attributes on positioning map Evaluating positioning Option


SERVICE MARKETING MIX UNIT II Definition of Marketing Mix :Marketing mix means to collect and mix the resources of marketing in the manner that object of the enterprises may be achieved an maximum satisfaction may be provided to the consumer. According to Borden The marketing mix refers to the appointment of efforts, the combination the designing and integration of the element of marketing into a program me or mix which is on the basis of an appraisal of the market forces with best achieve an enterprise at a given time. Marketing mix elements : 1. 2. 3. 4. Product Price Promotion place

Augmented / Extended marketing mix :In case of services how ever, there are alternatives approaches suggested by various authors. They have suggested the need of services has led to the extension of the mix to serve seven Ps. The additional three Ps listed below are known as the extended service mix. 1. People 2. Physical evidence 3. Process


The process of augmented product mix is developed by Booms and Bitner. It was conducted that whist the four elements of the marketing mix provided a useful structure for marketing implementation, there is a need to strengthen the approach through the inclusion of three other elements. Physical evidence and process.

Service Marketing Mix :The 7 Ps of service marketing mix are : 1) 2) 3) 4) 5) 6) 7) Service product Service pricing Service promotion Service distribution People Process of operation Physical Evidence

Service Product :Developing the service product : Physical goods and services can be looked at in terms of benefits offered, as well as features and specific attributes associated with those benefits. The notion of service concept is based in the idea that actual service offerings can be broken down into a number of levels relating to customer need satisfaction, benefits and features. 1. Statement of Objective 2. Marketing and operating assets statement 3. Developing service marketing Levels of Service Product :1. Core benefit service Specifically to satisfies the needs.


2. Expected service The customer might expect the service they required. 3. Augmented Service Some extra benefit added with the product. 4. Potential Service Attracting the new customers. Service Product Mix : Service product mix consists of all the different product lines a company offers 1. Width of the service product mix 2. Depth of service product mix 3. Consistency in service product mix Service Pricing Strategy :The price is the kept element of marketing mix; it must be acceptable to target customers and it must reflects the other components of the mix accurately. The price of the service is the value attached to it by the service provider and it must correspond with the customers perception of value. Characteristics of Service Pricing : i) ii) iii) Negotiation Discounts Quality

Cost associated with service : I. II. Monetary Costs Non-Monetary Cost a. Time cost b. Search Cost c. Convenience Cost d. Psychological Cost

Pricing Objective :1. 2. 3. 4. 5. 6. Profit Maximization To increase sales volume Status-quo oriented objectives Society oriented objective Survival Maximize market share


7. Service Quality leadership 8. Operation-oriented objective 9. Patronage-oriented objective Pricing Methods :1. 2. 3. 4. Cost-based pricing Competition based pricing Demand oriented Pricing Value based pricing

Factors affecting pricing policy : I. II. III. IV. V. VI. Cost of production Competitor pricing Demand level and elasticity Regulatory factors Marketing mix Positioning

Service Promotion :Service marketers have used the marketing tool to great advantage in using their service, adding tangibility and value to their offer. Promotion is used only as a temporary tool and is communication oriented. In field of service promotion marketing mix plays an important role. Promotion is a descriptive term for the mix of communication activities which serve organization carry out in order to influence those publics on whom their service depends. According to Philip Kotler Promotion compasses all the tools in the marketing mix whose major role is persuasive communication. Characteristics : i. Customers are informed about the product or service of the company. ii. Customers are reminded of the product or service of the company. iii. Customers are requested and persuaded to purchase the product and service of the company.


iv. Promotions includes advertising, personal selling and other sales promotion techniques. v. Promotion activities are performed by the manufacturer are the important source to attract with packaging and important promotional tool. Need of Promotion : Promotion is the tool in marketing mix serves to inform, persuade and remind people about and organizations individual goods, service, image, ideas, community, involvement and impact of the society. Role of Communication in Service Marketing :Marketing communication is essential process to a companys success. Without effective communication, prospects may never learn of a service firms existence. What it has to offer them, or how to use its products to best advantage. Customers might be more easily lured away by competitors and competitive offerings, and there would be no proactive management and control of the firms identity.

Types of Communication : I. Internal Communicating The communication which is carried into the organization between their employees from top level to the service level are comes under that category. This communication is basically the best way of interaction regarding companys overall objective. People/ External Communication : The external communication include the communication between the suppliers, shareholders, business man, foreign clients, government and various boards depending on the nature of service business.


Communication issues of Service Marketers :1. Technology


2. Budgetary Constraints 3. Content 4. Delivery Promotion Mix : Promotion mix refers to the combination of various promotional elements as . advertising, personal selling, sales promotion and sponsorship techniques used by a business firm to create, maintain and increase demand of the service product. It involves an integration of all the above elements of promotion. Usually a firm chooses more than one type of promotional tool and the manager of the firm is to decide how he is going to choose the communication media and blend them into an effective promotion. According to Philip Kotler A companys total marketing communication mix also called its promotion mix consists of special blend of advertisement, personal selling, sales promotion, publicity and the direct marketing tool that the company uses to pursue its advertising and marketing goals. Elements : 1. 2. 3. 4. 5. 6. 7. 8. Advertising Sales promotion Public relations Direct Marketing Adventure marketing Personal Selling Corporate identity Cause-related Marketing

Service Distribution :Delivery of service differs significantly from that of the manufacturing goods. The production of goods is followed by distribution whereas services usually cannot be separated from the service provider. Distribution Place : 1. Location 2. Accessibility and Availability


3. Channel of Distribution 4. Service Inventory 5. Managing Channels People :The service is predominantly people-based. The personnel of the marketing department as well as others are very much instrumental in performing the marketing functions. This makes it essential that one should clearly understand the common purpose and spirit of the task to be performed and its backward and forward linkage with the other task. Nature of service delivery : 1. 2. 3. 4. Inseperatability of production and consumption Difficulty in balancing the demand and supply Lack of standardization in service Recovery services

Role of the Employee in Service Marketing :The role of the employee in services marketing varies according to situation and the level of interaction. Frequently this depends on the degree of tangibility of a service. The level of contact can be determined by classifying the service according to whether it is labor-intensive service or an equipment based service, as follows : i) ii) I. II. III. People Based service Equipment based service Selection and Recruitment Training and Development Empowerment

Process of Operations :The service process is a element of segmented marketing mix and vital point of the value chain. This has received less attention though it is an important part of marketing task. The adoption of the processes, which add value to the service offering without incurring major cost disadvantage, are beneficial to the customers and the organization.


Characteristics of Service process :1. 2. 3. 4. 5. 6. Customer participation process Location of service delivery Service itself High-contact Degree of standardization Complexity of the service

Delivery of Service :Blueprinting is a graphical approach proposed by shostack designed to overcome problems that occur where a new service is launched without adequate identification of the necessary support functions. A customer blueprint has three basic functions : i) ii) iii) All the principal function required to make and distribute a service are identified, along with the responsible company unit. Timing and sequencing relationship among the functions are depicted graphically. For each functions, acceptable tolerance are identified.

Role of Technology in Service Marketing :Technology is dramatically changing the nature of service, resulting in tremendous potential for new services offerings not imaginable even a decade ago. Technology id profoundly changing how services are delivered enabling both customers and employee to get and provide better, more efficient, customized. Some of reason why information technology not having the desired impact on service : 1. 2. 3. 4. 5. Wasteful and insufficient use of IT Legged Effect Outdated method of productivity Measurement Impact of other problems Level of Aggregation

UNIT III Marketing of Financial Service :-


The financial service industry in india has experienced massive changes since the early 1990s. Prior to this time, banks served different customer needs, often catering to different sets of customers. Regulatory frameworks and traditional business practices meant that there was virtually no competition between types of institution. Building societies offered savings and mortgages while banks provided current accounts, loans and business finance. Insurance and investment were largely dealt with by specialist brokers. Characteristics : 1. 2. 3. 4. 5. 6. Intangibility Inseperatibility Variability Perish ability High involvement purchases High level of brand liability

Deciding the service quality of Financial service : Quality of service is very important for customer satisfaction. A high level of external customer satisfaction largely depends upon the level of internal customer satisfaction and corresponding nature of service quality delivered by internal customer to the external customer in financial service industry. Customer satisfaction for financial service is also depends upon the relationship of the customer with the employee of the organization. Perspective of financial service quality : Perspective I : I. II. Functional Quality Technical Quality

Perspective II : I. II. III. IV. V. Reliability Assurance Tangible Empathy Responsiveness


Improving Financial service : 1. 2. 3. 4. 5. 6. 7. Assessing product and customer attributes Striving the quality mission Continuous quality improvement Encouraging employee initiatives Collecting and analyzing information Training and development program me Rewarding quality adherence

Understanding Customer Expectation :Customer expectation understanding is must for every organization. Because customer dissatisfaction or even worse situation will create a hurdle in organization growth. So proactively conducting customer survey about their satisfaction is must for every financial organization. Tips for Understanding Customer : i) ii) Interview customer to design a questionnaire. Typical topic covered in customer satisfaction. a. Overall satisfaction b. Performance of front line staff Design a feedback form and ask customer to rate service quality Use a consultant to design and if necessary conduct a survey.

iii) iv)

Segmenting financial service :1. Demographic 2. Psychographic 3. Behavioral segmenting


Targeting of Financial Services :1. Prime Customers 2. Highly Valued Customers 3. Prosperous but Mobile This group is generally aware of its prospects is not loyal and will frequently shop around for the best deal and will move readily to take advantage of the best offer. 4. Prime Prospects 5. Middle Majority 6. Price Shoppers 7. Tomorrows Valued Customers 8. No Frills 9. Social Responsibilities Positioning of Financial Services :Positioning presents particular challenges to the financial service industry, owing to the intangibility of its products, the absence of patent protection and the ease with which products and services can be copied to competitors. Arguably, positioning is still in its infancy in many areas of financial services around the world. Devising Financial Services :Banking Marketing : Bank marketing is the aggregate of functions, directed at providing services to satisfy customers financial needs and wants, more effectively and efficiently than the competitors keeping in the view the organizational objectives of the bank. Marketing Mix : ( 7 Ps ) i) ii) iii) iv) v) vi) vii) Product Price Promotion Place People Process Physical Evidence


Insurance Marketing Telecom Services Home Loan Credit Cards UNIT IV Services In Global Perspective Services in Global Perspective :As a service economy continuous to grow both in size and importance, the scale of service marketing internationally can be seen to be increasing dramatically. This increase in inevitable, if service organization are to grow and survive in todays global marketplace, they have to develop their international operations. Obviously, trends in international trade will affect all service to lesser and greater degree. Factors influencing globalization : i) ii) iii) iv) v) vi) vii) Changes in Social factor Changes in technology Changes in political condition Competition in the market Competitive advantage Regulations in home country Lack of demand in home country

International Marketing of Services :Service firms are increasingly investing overseas on their own account, as they seek to serve new clients and exploit their own unique competitive advantage. Such advantage take several forms : 1. 2. 3. 4. Producer Service Consumer Service Stock broking, Foreign Exchange or securities dealing Outward Expansion

Market environment for services : i) ii) Protectionism Trans-border Data flow


iii) iv) v)

Competition Protection of Intellectual Property Cultural barriers

Recent Trends :Off-shoring Service - As off-shoring creates a better advantage because workers are available at lower cost. Information technology Enabling service Principal Driving Force in Global Marketing of Services :Several factor driven and influence the globalization of manufacturing firms : Types of globalization drivers : 1. 2. 3. 4. 5. Market drivers Competition Drivers Technology Drivers Cost Drivers Government Drivers

Key Decision in Global Marketing :1. Parameters 2. Decision-making for global marketing 3. Specific consideration for international services Service Strategy :Service firms to a large extent have done their strategic decision in an ad hoc manner based on emerging tendencies and spontaneous opportunities. They often neglect their strategic thinking. Questions as which competitive domain the firm was operating, which client they served and did not serve, which core service they offered and did not offer and how the firm could expect. Elements of Global service strategy :


1. Defining global vs Multi local strategies a. Global market participation b. Delivering global products c. Global location d. Global marketing e. Global competitive moves

Foreign Market entry Decision : One of the most crucial steps a firm or organization ever takes is the decision to introduce a product a service to a foreign market. Having made the decision to venture into world market, the next crucial step is determining the foreign market entry strategy. Market entry method level of Co-operation : a. b. c. d. e. f. g. h. i. Wholly owned strategy Exporting Trading company Piggy-back Agent Distributor Licensing Industrial Co-operation Joint venture

Organizing for Global Services Marketing :Organizing for global marketing is to find a structure that enables the company to respond to relevant market environment differences while ensuring the diffusion of corporate knowledge and experience from national markets throughout the entire corporate system. The pull between the value of centralized knowledge and coordination and the need for individualized response to the local situation creates constant tension in the global marketing organization.