SERVICES MARKETING

MBA Sem IV Marketing

University of Pune
1 - Foundation of Services
marketing

1-45
 The Services Concept
A Service is any act or 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

The AMA (American Marketing Association)

defines Services as activities, benefits or
satisfaction which are offered for sale.
 Introduction to services marketing

In other words a service performs something or

offers something extra which provides a
benefit (value) to the customer

E.g. of services include hospital, banks, transport

services, consultancy firms, tourism and travel
agencies.
 Introduction to services marketing
A service can be provided even by a

MACHINE E.g. machine, kiosk or a vending

machine

A PERSON E.g. Doctor, advocate

A combination of both MAN and MACHINE E.g.

services of a mechanic or technician
 Introduction to services marketing

The service sector accounts for 50% of Indias GDP. It is

growing at a much faster rate than the two sectors
namely manufacturing and agriculture
Services Industries are everywhere. The government
sector with it courts, employment services, hospitals,
loan agencies, military services, police and fire
departments.
The private non profit sector with museums, charities,
churches, colleges and hospitals
Business sector with airlines, banks, hotels, insurance
companies, law firms, management consulting firms
and real estate firms etc.
 Nature of Services
The service component can be a minor or a
major part of the total offering
Pure tangible good : primarily a tangible good
like soap, toothpaste or salt. No service
accompany the product
Tangible goods accompanying the services :
consist of tangible goods by one or more
services E.g. cars, computers as these are
more technologically sophisticated general
products and are more dependent on quality
and availability of its accompanying customer
services
 Nature of Services
Hybrid : Equal parts of goods and services E.g.
restaurants for both food and services
Major services with accompanying minor
goods and services : major service along with
additional services or supporting goods. E.g.
Airline passengers buy transportation. Trip
includes food, drinks, magazines etc.
Pure Services : Consists primarily a service E.g.
Baby Sitting, psychotherapy, Massage etc.
 Characteristics of Services
Services differ from the physical goods in
certain characteristics. These characteristics
make them unique and pose a challenge
before marketers to market them separately
from goods. Major characteristics are
Intangibility
Inseparability
Heterogeneity / Variability
Perishability
 Intangibility
Services are intangible and cannot be
experienced unless consumed. E.g. a
motorbike can be defined in terms of horse
power and mileage but a service cannot
always be defined in absolute terms.

Unlike product, services cannot be seen,

heard, touched, smelt and tested before it is
purchased or consumed
 Intangibility

Service companies try to demonstrate their

service quality through physical evidence and
presentation.
E.g. A bank willing to position itself as a fast bank
could make this positioning strategy through a
number of marketing tools
PLACE interiors and exteriors should have
cleanliness. Layout and traffic flow should be
planned carefully
 Intangibility
PEOPLE sufficient number of employees to manage
the workflow
EQUIPMENT - computers, copying machines, desks
should be and look state of the art
COMMUNICATION MATERIAL printed material, text
and photos should suggest efficiency and speed
SYMBOLS name and symbol should suggest fast
service
PRICE could advertise that it will deposit Rs. 50/- in
account of any customer who waits for more than five
minutes
 Inseparability
Services are typically produced and consumed
simultaneously, whereas products are put into
inventory, distributed through multiple resellers
and consumed later.
E.g. a music concert is not the same if Ustad Zakir
Hussain is replaced by a local or even a well
known national level artist.
When client have strong provider preference the
price is raised both to ration the preferred
provider limited time and shield him/her from
over exposure
 Inseparability
Strategies to overcome limitations

Learn to work with larger groups

Learn to work faster
Train more service providers and build up
client confidence
Use technology to reach a larger audience
without sacrificing interactivity
 Heterogeneity
A machine can produce units identical in size,
shape and quality. But a human being cannot
work uniformly and consistently throughout the
day.
Because service depends on who provides them
and when they are provided they are highly
variable
E.g. Some doctors have excellent bed side
manners, others are less patient with their
patients. Some surgeons are successful in
performing a certain operation, others are not
 Heterogeneity
Quality can be controlled by

Investing in good hiring and training procedures

Standardize the service performance process

throughout the organization

Monitor customer satisfaction

 Perishability
Unlike products, services cannot be
inventoried or stored for future consumption

Perishability is not a problem when demand is

steady. When demand fluctuates, service
firms have problems.
 Perishability
E.g. public transportation companies have to
own much more equipment because of rush
hour demand than if demand were even
throughout the day

Some doctors charge patients for missed

appointments because the service value exists
only at that point.
 Several strategies can produce demand

Differential pricing : will shift some demand

from peak to off peak periods

Non Peak demand : can be cultivated. Mc

Donalds pushes breakfast services
 Several strategies can produce demand

Complementary : Services can be developed

to provide alternatives to waiting customers
such as cocktail lounges in restaurants and
automatic teller machines (ATM) in banks

Reservation systems : are a way to manage

demand level. Airlines, hotels and physicians
employ them extensively
 On supply side
Part time employees : can be hired to serve
peak demand
Peak time efficiency : routines can be
introduced. Employees perform only essential
tasks during peak period
Increased consumer participation : can be
encouraged. Consumers fill out their own
medical records or bag their own groceries
 On supply side
Shared services can be developed. Several
hospitals can share medical equipment
purchases

Facilities for future expansion : can be

developed. An amusement park buys
surrounding land for later development
 Classification of Services
Services can be classified on several bases. Some of
the bases for classification of services are the
degree of involvement of the customer
Service tangibility
Skills and expertise required by the
service provider
business orientation of the service
provider
Type of end user
 Degree of involvement of the customer

PEOPLE PROCESSING : The customer is highly

involved in the service process and needs to be
physically present in order to experience the
service.
E.g. In a school or a training center students have
to be physically present to avail the service.
Other examples : health care centers, passenger
transport services, beauty saloons, educational
services etc.
 Degree of involvement of the customer

POSSESSION PROCESSING : The customer doesnt

require to be physically present to experience the
service but submits his property or belonging to
the service provider to avail the service. This
service is directed at the object possessed by the
customer and not at the customer
E.g. Car servicing, Laundry and dry cleaning
services, postal service, courier service and
freight transportation
 Degree of involvement of the customer

MENTAL STIMULUS PROCESSING : The attention

of the customer must be directed at the service
to experience it. In this case the services are
directed at the mind of the customer
E.g. A person being counseled by a professional
counselor gets stimulated mentally to take the
right decision or develop the right attitude
E.g. Advertising, entertainment, education and
consultancy services
 Degree of involvement of the customer

INFORMATION PROCESSING : Requires service

personnel to collect information, analyze it,
interpret and offer appropriate advice to the
client

E.g. A market research firm, Accounting,

Insurance, legal services, programming, data
processing etc.
 Involvement of the customer
Customer Involvement

Possession Mental stimulus Information

People processing
processing Processing processing
 Classification on the basis of the
service tangibility
High tangible : The consumer gets a tangible
product though it may sometimes last only for
a short period. E.g. A person buys a PC service

Services linked to tangible goods : Some

organizations offer warranty period to the
customers who purchase products from them.
During this period they offer free service if the
customer reports any problem with the
product. E.g. Organization buys a printer the
manufacturer offers free service for a specified
period. HP offer one year free service
 Classification on the basis of the
service tangibility
Tangible goods linked to services : Some services
offer tangible product along with the services
requested by the customer. E.g. Airlines services
offer food and magazine and market research
firms provide clients with a detailed report of
research results

Highly Intangible : There are services which do

not provide customers with any tangible product.
E.g. massage parlour
 By Degree of Tangibility
Car Rental, Book Rental, Hotel
Rental Goods Room rental, Tool rental

By degree of
Television repair, Watch Repair,
tangibility Owned goods
Plumbing Repair

Non Goods College Education, Tutoring, Legal

Services
 Classification on the basis of skill and expertise
required

Professional Services : Service provider to be

formally trained to deliver the service. E.g.
Services rendered by a doctor, pilot, an IT
consultant or a corporate trainer

Non Professional Services : These services do not

require service provider to undergo any training
to deliver the service. E.g. Baby sitting,
housekeeping are examples of non professional
services and can be delivered without formal
training
 By Skill of Service Provider
Professional
Legal Services, Medical
Services, Accounting
services, Management
Consulting

Skill of service provider

Taxi, Uniformed Security,

Non Housekeeping
Professional
 Classification on the basis of Business orientation of service
provider

Not for profit organizations : The main objective

of these organizations is to serve the society and
not to make profits.
E.g. Government schools, social service
organizations. Aravind Eye hospital in Madurai
Commercial organizations : the main objective of
these organizations is to earn revenues and make
profit. E.g. Airlines, Insurance firms and
restaurants charge customers for the services
they offer and attempt to improve the services
and profitability
Classification on the basis of Business orientation of
service provider

Not for profit

Business Orientation

Commercial organizations
 Classification on the basis of the type of end user

Consumer Services : These services are purchased by

individual customers for their own consumption. For
E.g. beauty care products, physiotherapy and hair
cutting
Business to Business services : These services are
purchased by organizations. E.g. market research,
consultancy and advertising are some of B2B services
Industrial Services : Generally based on a contract
between organizations and service providers. Machine
Installation and plant maintenance are some examples
of such services
 By Market Segment

Final Consumer Magazines, Jeans, Watch

By Market
Segment

Organizational Chemicals, Excavator, Crane

Consumer
Goods Services Resulting Implications
Tangible Intangible Services cannot be inventoried
Services cannot be easily patented
Services cannot be readily displayed or communicated
Standardized Heterogeneous Service delivery and customer satisfaction depend on
employee and customer actions
Service quality depend s on many uncontrollable
factors
There is no sure knowledge that the service delivered
matches what was planned and promoted
Production Simultaneous Customers participate in and affect the transaction
separate production and Customers affect each other
from consumption Employees affect the service outcome
consumption Decentralization may be essential
Mass production is difficult

Non Perishable It is difficult to synchronize supply and demand with

Perishable services
Services cannot be returned or resold
 7 Ps of Services Marketing
Product
Price
Place
Promotion
Process
People
Physical Evidence
 People
People management is important aspect of service
organizations. Service organizations gain
competitive advantage through their service
personnel
Customers judge the performance of the service
organization by associating it with the behavior and
attitude of its service personnel.
The personnel are trained on how to handle unruly
and unpleasant customers and on the use of proper
language and posture and maintenance and
cleanliness and proper appearance
 Process
Some service organizations standardize their
process
Customers have become co-creators of the
service
E.g. Service organizations identify the customers
who are not ready to be involved in the service
co - production and are willing to pay higher
prices for the services to be delivered to them.
E.g. Customers are ready to pay an additional
amount as commission to portfolio managers for
managing their mutual funds
 Physical Evidence
Service customers experience greater difficulty in
accessing the service as they cannot rate it until it
is consumed. Therefore service providers try to
attach an element of tangibility to their service
offers. This is the physical evidence and can be in
any form
E.g. Brochures in travel agencies showing the details
of the holiday destination and the interiors of a
fast food outlet provide physical evidence to the
customers
Southwest Airlines Aligning People, Processes and
Physical Evidence

People : Southwest uses its people and its

customers effectively to communicate its position.
Employees are unionized yet are trained to have fun
and given authority to do what it takes to make
flights lighthearted and enjoyable.
People are hired at southwest for their attitude,
technical skills can be and are trained. They are the
most productive workforce in the US airline
industry.
Customers are also included in the atmosphere of
fun and many get to act by joking with the crew and
each other and by flooding the airline with letters
expressing their satisfaction
 Southwest Airlines Aligning People, Processes and Physical
Evidence

Process : there are no assigned seats in the

aircraft, so passengers line up and are herded by
number onto the plane where they jockey for
seats
The airline does not transfer the baggage to the
to connecting flights on other airlines.
Food is not served in the flight
In all process is very efficient, standardized, low
cost allowing for quick turnaround and low fares
Southwest Airlines Aligning People, Processes and Physical
Evidence

Physical evidence : All the tangibles associated

reinforce market position
Aircraft is orange and mustard brown which
accentuates low cost and unique orientation
Employees dress casually wearing shorts in the
summers to reinforce fun and further emphasize
airlines commitment to its employees comfort
No in flight meal service confirms the low price
image through absence of tangibles. Absence of
meal is not viewed as value detractor
Simple easy to use website
 Southwest Airlines

President of the airlines since inception until

2001 and currently serving as chairman is
famous for his belief that EMPLOYEES COME
FIRST, NOT CUSTOMERS
 2 - IMPORTANCE OF
SERVICES MARKETING

46-79
 Importance of Services Mktg.

As noted in 2003 service sector represented

just over 80% of total employment. Almost
all absolute growth in number of jobs and
fastest growth rates in job formation are in
services industry
Trade in services is growing worldwide.
World class providers of services such as
American Express, Mc Donalds and Marriot
Hotels together with many small companies
are exporting information, knowledge,
creativity and technology
 Importance of Services
Quick pace of developing technologies and
increasing competition make difficult to gain
strategic competitive advantage through
physical products alone. The focus has now
shifted to grow profits through services in the
manufacturing and IT industry

E.g. General Electric, IBM, Hewlett Packard etc

 Importance of Services
Deregulated Industries and Professional
Service needs : In the past several decades the
government has deregulated very large service
industries which used to be tightly controlled
by the government are now partially and in
some cases totally in the control of the
individual firms.
Traditionally the professions avoided using the
word marketing they are now seeking better
ways to understand and segment their
customers to ensure the delivery of quality
services and to strengthen their position amid
a growing number of competitors
 Importance of Services
Many firms during 1980s and early 1990s
started concentrating on services, investing in
services initiatives and promoting service
quality as ways to differentiate themselves
and create competitive advantage.
Most managers believed that quality service
made good business sense. Indeed quality
service has been the foundation for success
for many firms
 Importance of Services
Due to increasing complexity, specialization and
competitive nature of business the market for services
business has boomed

In view of changing needs of the customer, changing

world, changing lifestyle and technological innovations
the market has become customer service oriented

The service sector has now surpassed the

manufacturing sector in term of contribution to GDP in
developed, developing and under developed countries
Distinctive characteristics of services

Four Is
Intangibility performances or actions rather
than objects. Cannot be seen, felt, tasted or
touched
Inconsistency result of human interaction
(Employees and customers)
Inseparability most services are sold first and
then produced and consumed
Inventory cannot be saved, stored, resold or
returned
Expanded marketing mix for Services
Product Place Promotion

Physical Good features Channel type Promotion blend

Quality level Exposure Sales people -

selection, training,
incentives
Accessories Intermediaries Advertising Media
types, Ads

Packaging Outlet Locations Sales promotion

Warranties Transportation Publicity

Product Lines Storage Internet / Web

Strategy
Branding Managing Channels
Expanded marketing mix for Services

Price People

Flexibility Employees -
Price Level Recruiting,
training,
Motivation,
Terms Rewards,
Teamwork
Differentiation
Discounts
Allowances Customers Education,
training
 Expanded marketing mix for Services
Physical Evidence Process
Facility Design Flow of activities
Standardized, Customized
Equipment Number of steps
Simple, Complex
Employee Dress Customer
involvement
Other tangibles
Reports
Business Cards
Statements
Guarantees
Services Market Segmentation
Market segmentation is the process of dividing
the total market for goods and service into
smaller groups such that members 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 a market
rather that trying to be all things to all
people
Services market segmentation
The purpose of market segmentation is trying
to identify specific user group than pursue it
with the tailored products or services
supported by appropriate marketing mix
strategies.
Market segment must be measurable,
accessible and sizable. Marketers must be
able to measure the size, the purchasing
power of the segment and it should be
possible for them to reach the segment
through distribution and communications
 Segmentation strategies
Geographic segmentation

Demographic segmentation

Psychological segmentation

Volume segmentation

Benefit segmentation
 Geographic
Geographic segmentation divides consumer on the
basis of countries, regions, states, cities and towns.
The marketers divide the market according to
geographic units. A firm may decide to market
different products or services in certain areas.

E.g. A bank practices geographic segmentation

when it decide on the location of a new branch.
Since a bank cannot have a locations everywhere, it
must carefully allocate it resources to meet the
business goals. It does that by locating the new
branch offices in more promising geographic market
areas
 Demographic
Demography is the study of people in the
aggregate, including population size, age, sex,
income, occupation and family life cycle
E.g. A bank establishes an executive banking
group specifically for accountants, doctors and
professionals
A bank that develops equity credit line aimed at
house owners with income more than Rs.
75,000/- is targeting another specific
demographic segment
E.g. Museums are generally seen as being for
older people while theme parks for the young
 Psychographic Segmentation
Psychographic is a technique that classifies
lifestyles by investigating how people live,
what interests them and what they like. It is
also called lifestyle analysis or AIO because
it relies on number of statements about
persons activities, interests and opinions
and
Psychographic segment is the process of
dividing markets into segments on the basis
of consumer lifestyle, social class or
personality profile
 Examples psychographic
A bank might identify the young professional
on fast track as the prime market for credit
card sales

A bank may concentrate on conservative

consumers who want to shield their savings by
marketing them 5 year compulsory deposit
schemes
 Volume segmentation
Marketers make an attempt to segment final consumers
and organizational consumers based on usage rate, usage
expenses and brand loyalty
Segments under volume segments are
Heavy usage
Medium usage
Light usage
Non users
Heavy usage segment is consumer group that accounts for a
large proportion of goods or sales relative to the size of the
market. In many businesses a small proportion of
customers say 20% generate large proportion of sales 80%
This is called as Pareto Principle
 Benefit segmentation
Benefit segmentation is the process of
grouping consumers into market segment on
the basis of different benefits sought from the
product
E.g. For desktop publishing market, Apple
offered graphics oriented hardware and
software delete which provided the benefit of
easy typesetting to the users in the ordinary
business environment
A bank may offer the benefit of after working
hour appointment for the upper income
segment
 Examples Benefit segmentation

A bank might target the segment that seek

the benefit of speed and convenience. This
bank may promote its telephone loan
service, promising same day approval
A leasing company may promote its
financial services by providing benefits to a
group of customers in terms of speed and
convenience. British Motor Car Co. is
offering benefit of providing 10% extra on
your old cars from market price, 30 minutes
approval and open on Sundays
 Positioning
To create a distinctive place of a product or
service in the minds of potential customers
To provide a competitive edge to a product or
service
Place a intangible service within a more
tangible frame of reference
To give target market the reason of buying
your services and then design the whole
strategy
 Positioning of services
The process of designing a service has an
impact on the image of the service in the
mind of the customer. It is generally agreed
that term image represents the sum of beliefs,
attitudes and impressions that a person or
group has of an object.
It describes not individual traits or qualities
but the total impression that an object makes
on the mind of others
 Positioning of services
Different type of images are

The current image - The way that a company

is seen by different groups

The mirror image The way that a company

think it is seen by different groups

The wish image The way that a company

would like to be seen by different groups
 The positioning influences
Employee attitude
Customer contact employee interaction
Policies and procedures of an organization
Responsiveness to solving customer problems
And host of the other issues related to service
experience
Two tests of effective positioning organizations
promise in its offerings must be believable in
the customers mind
The promises must be delivered consistently and
constantly over a time
 Positioning Process
The various steps of developing effective
positioning are

Market Positioning

Psychological positioning
objective positioning
Subjective positioning
 Market Positioning
The market positioning is a process of
identifying and selecting markets or
segments that represent business potential
to determine the criteria for competitive
success. This must be based on the
following factors

Thorough knowledge of needs, wants,

perceptions of the target market and
benefits offered by the service offered.
 Psychological Positioning
Psychological positioning involves enables
marketers to create a unique product image
with the objective of creating interest and
attracting customers.

Use of communication to convey the firms or

its offerings identity and image to the target
market
 Psychological positioning
Two tourists attractions which are dissimilar
may be perceived as the same by a consumer
and two similar tourist attractions may be
perceived as different. Marketers make
attempts to control the positioning and do not
allow it to let it happen
 Positioning

Objective positioning : relates to the objective

attributes of the physical product

Subjective positioning : inspires cultural

heritage rather than physical attributes
 Objective positioning
Objective positioning is usually used in the
tourism industry. Any attraction or
destination which has unique feature, that
feature can be used to objectively position the
attraction or destination to create an image
and to differentiate it from the competition
 Example
If objective positioning is to be used to position
India among American visitors or tour operators
any of the unique landmark such as Tajmahal or
Khajuraho temples could be used to show the
culture and heritage of those attractions
Degree of objective positioning depends on the
uniqueness of features. If the features of an
attraction are not unique the objective position
will be of lesser degree
 Subjective positioning
Example : for a tourist the perceptions about Taj
and the resulting image may not necessarily
reflect the true state of the Tajs physical
characteristics. They may simply exist in tourists
mind and not all the tourists images agree with a
particular perception or image
When Khajuraho or Konark is visited subjective
positioning will inspire the visitor about Indian
heritage rather than the physical attributes or sex
depiction through scriptures
 Approaches to positioning
Positioning by attributes, features or
customer benefits
Positioning by price value
Positioning by use of application
Positioning according to users or class of users
Positioning with respect to product class
Positioning against competition
Positioning by endorsements
 Approaches to positioning
Positioning by quality dimensions (RATER)
Reliability, assurance, tangibility, empathy and
responsiveness

Positioning by service evidence - people,

physical evidence and process
3 - Differentiation of services

80-137
 Differentiation
The deregulation of major service industries has
resulted in intense price competition to the
extent that the customers view a service as fairly
homogenous, they care less about the provider
than the price

Despite the lack of enough opportunities to

differentiate the service offerings, service
organizations try to aim customer loyalty by
differentiating the service on the basis of offer,
delivery and image of the organization
 Offer
Service firms have to be innovative in devising
new ways to attract customers. A basic level of
service is known as primary service package is
expected by all the customers. However some
customers are demanding and have higher
expectations.

Thus service organizations can attract customers

by providing them additional and secondary
service features over the primary service
package, at a little extra cost
 Offer

The enhanced service offer thus helps to firms

to differentiate themselves from their
competitors
E.g. hotel chains like Taj hotels and ITC
welcome group differentiate themselves by
providing their customers with hi-tech rooms
and suites. Their customers get access to
computers, fax machines and electronic mail.
The management ensures that the customers
have an access to latest news before the
newspaper hits the stands
 Delivery
For efficient service delivery service providers
must hire people who have the ability to deliver
good service, train them well and provide them
outstanding support systems and processes.
Excellent performers should be rewarded to
ensure that they continue to deliver superior
service.
E.g. Dominos Pizza, - quick and timely delivery of
the service
 Image
Service organizations can take help of advertising,
prestige pricing and market segmentation to
create unique image for themselves
Image becomes crucial aspect for differentiation
when a firm is unable to differentiate itself on the
basis of product.
Companies communicate their image through
their logo, symbol, companys management etc.
 Extended services marketing mix
One who buys a service offering probably takes a
decision based on the following factors
Influence of promotion campaign
Assessment of service offered
Willingness to pay for a service
How easy it would be to buy it
Marketers carefully plan these factors in an attempt
to convince customers to buy their products
 Elements of service mix

PRODUCT
PHYSICAL
EVIDENCE PRICE

Customer
service
PROMOTION
PEOPLE

PROCESSES
PLACE
 Strategies for services marketing
Characteristics potential problems Appropriate strategies
for marketing services

Intangibility Difficult to evaluate in Build brand benefit

advance linkages
Associate with tangible
cues

Inventory Inadequate availability Use of peak pricing

at desired times Offer flexible delivery
Characteristics potential problems Appropriate strategies for
marketing services

Inconsistency Hard to assume Substitute equipment for

consistent quality people
Establish set rules and
routines

Inseparability Perception of services is Build membership

based on perception or relationship
provider Personalize the service
Provide sensitivity training
 Service delivery process

Employees role in service delivery

Customers role in service delivery

Delivering services through intermediaries and

electronic channels
Employees role in the service delivery
Companies choose to invest heavily in their
employees as employees are the service and
the brand
The frontline service providers are enormously
important to the success of the organization
they represent
They are responsible for understanding
customer needs and for interpreting customer
requirements in real time
 Service culture
Behavior of employees will be influenced by the
culture of the organization
Customer oriented, service oriented
organizations will have its heart a service culture
defined as a culture where an appreciation for
good service exists and where giving one of the
most important norm by everyone
It is not enough to promise service to final
customers, all people in the organization deserve
the same kind of service
 Global feature

International markets offer tremendous

opportunities for growth many companies
find significant challenges when they attempt
to transport their service to other countries
Differences in values, norms, behavior and
language become evident quickly and have
implications for training, hiring and incentives
that can ultimately affect the success of the
international expansion
 McDonald's approach
Successful in international expansion
People around the world want an American
experience when they visit the outlet
Company is sensitive to cultural differences
Training at Hamburger university which is
required for all the employees before they
become managers (every year 3000 employees
from 100 countries enroll and attend the
Advanced operations course
The curriculum is 80% devoted to communication
and human relations skills
Certain adaptations in dcor, menu and other
areas of cultural differences are then allowed
 UPSs Experience
Strong culture built on productivity, highly
standardized service delivery process and
structured training
Brown trucks and uniforms are instantly
recognizable
Tagline what can brown do for you
Indignation in France When drivers were told
they could not have wine with lunch, protest in
Britain when drivers dogs were banned from
delivery trucks and dismay in Spain when it was
found that UPS trucks resembled the local
hearses
 Employees make a difference
Singapore airline flight, a restless toddler
repeatedly dropped his pacifier. Every time
the child would cry and someone (the mother,
another passenger or a flight attendant)
would retrieve the pacifier. Finally one of the
attendant picked up the pacifier, attached it to
the ribbon and sewed it to the childs shirt.
The child and the mother were happy and the
passengers seated nearby gave the attendant
standing ovation
 Employees make a difference
A phone associate at Universal card services
received a call from a husband whose wife
suffering from Alzheimers disease had vanished
The husband hoped that he would find his wife
through tracing her use of universal card. The
phone associate placed a hold on the card and
arranged to be called personally when any
activity on the card.
When it happened a week later the associate
contacted the husband, doctor and police who
were able to assist the missing woman and get
her home
 Strategies for managing emotional
labour
Screening for emotional labour abilities values,
background and personalities
Teaching emotional management skills and
appropriate behaviors - surface acting
Carefully constructing the physical work
environment
Allowing employees to vent share their
frustrations
Putting the management on the front line
Giving employees a break
Handing off demanding customers to managers
 The importance of customers in
service delivery

In many situations employees, customers and

even others in the service environment
interact to produce the ultimate service
outcome. Customers are indispensible to the
production process of service organizations
and they can actually control or contribute to
their own satisfaction.
i print - self service printing online
In the current environment of online and
internet based services customers can
produce services for themselves with little or
no personal interaction with the provider
A web based custom printing service describes
itself as a complete fully automated, self
service online creation, ordering and
commercial printing environment
 I print customers
Create their own value through participation in the
production of customized printing services. The
company developed a process to create personalized
products
Completed designs can be purchased over the
internet and typically received in few days. Designs
are also automatically saved to allow for easy
reordering
Customers ordering the products are offered lower
prices than they would normally pay
Customers do work in the entire process hence
essentially become co producers
 Classroom training situation
In a classroom training situation students
interact with the instructor, they consume
and co create the educational services
Customers themselves can influence whether
the delivered service meets customer defined
specification
At times customers may understand their role
but be unwilling or unable to perform the
service for some reason. E.g. Health club
customers
 Customer Co-creation

Starbucks the international mega success

story. Hear music coffee houses allow
customers to create a total experience around
coffee, socializing and music. The customers
can listen to their favorite music, burn a
personal CD
 Customer co-creation
On Star is a service launched by General motors
corporation (GM) to provide safety and
emergency for its automobile customers. The
customer can unlock the vehicle , help police to
track the vehicle when stolen.
Over the time the service has expanded to
include information and entertainment . E.g.
system allow the customers to access location
based information on restaurants such as find
me the nearest restaurant and make a
reservation
Each customer has an opportunity to create a
total and unique experience by combining the
elements of the system
 Customer roles

Customers as productive resources - if

customers contribute effort, time or other
resources to the service production process
As contributors to service quality and
satisfaction effective participation
Customers as competitors - not need the
provider at all
SSTs (Self service technologies)
 SST Self service technologies
ATMs
Airline check in
Various vending machines
Self scanning at retail stores
Pay at the pump
Internet banking
Vehicle registration online
Online auctions
Distance education
Package tracking
 Strategies for enhancing customer
participation
Define customer jobs

Helping others

Promoting the company - WOM

Individual differences choices for different

market segments

Recruit, educate and reward customers

 Delivering service through intermediaries and
electronic channels

Many services are delivered directly from the

service provider to the consumer. Channels of
service are direct with the creator of the
service. E.g.
Air travel (southwest)
Healthcare (mayo clinic)
Consulting services (IBM global services)
Many of the primary functions that distribution
channels serve inventorying, securing and
taking title to the goods have no meaning in
services, allowing the service principal to deliver
the service directly to the customer
 Delivering service through intermediaries

Franchisees are service outlets licensed by a principal

to deliver a unique service concept it has created or
popularized
Franchise services such as haircutting, key making and
dry cleaning are produced by the intermediary (the
franchisee) using a process developed by the service
principal.
Service intermediaries also make services locally
available providing time and place convenience for the
customer

E.g. fast food chains, hotels

Direct or company owned channels

It is important to acknowledge that most of the

services are distributed directly from the provider
to the customer. Some of these are local services
Doctors
Dry cleaners and
hairstylists
The major benefit of distributing through company
owned channels is that the company has
complete control over the outlets
 Agents and brokers
Agents represent buyers and sellers on a
permanent basis. Do not possess the title of
goods. They are Paid money in the form of
commission.

Brokers represent buyers and sellers on a

temporary basis. Negotiate with buyers and
sellers, take minimal of risks and having
limited participation in intermediary activities
 Benefits of distributing services
through agents and brokers
Reduced selling and distribution costs

Intermediary possession of special skills and

knowledge

Wide representation

Knowledge of local markets

Customers choice
 Challenges of distributing services
through agents and brokers
Loss of control over pricing typically
empowered to negotiate price, configure
services. If customers are geographically
dispersed the flexibility to give different prices
will not create a problem

Representation of multiple service principals

agent represent multiple suppliers. E.g.
agents carry range of insurance products from
different companies
 Electronic channels
Electronic channels are the only service
distributors that do not require direct human
interaction.
They require a predesigned service and a
electronic vehicle to deliver it
More the service relies on technology and less
on face to face contact with the service
providers the less service is characterized by
inseparability and non standardization
 Electronic channels
Movies on demand
Interactive news and music
Banking and financial services
Multimedia libraries and databases
Distance learning
Desktop videoconferencing
Remote health care services
Interactive network based games
 Benefits of electronic channels
Consistent delivery for standardized services

Low cost

Customer convenience

Wide distribution

Customer choice and ability to customize

Quick customer feedback

 Challenges in distributing through
electronic channels
Price competition
Inability to customize with highly
standardized services
Lack of consistency due to customer
involvement
Changes in consumer behavior
Security concerns
Competition from widening geographies
 Common issues involving
intermediaries
Channel conflict over objectives and
performances

Difficulty controlling quality and consistency

across outlets

Tension between empowerment and control

Channel ambiguity
Strategies for effective service delivery
through intermediaries
Control strategies measurement and review
Empowerment strategies help to develop
customer oriented service processes, provide
needed support systems, develop
intermediaries to deliver service quality,
change to a co-operative management
structure
Partnering strategies alignment of goals and
consultation and co-operation
 Service Blue print

One of the keys in matching the service

specifications to customer expectations is the
ability to describe critical service process
characteristics objectively and depict them so
that employees, customers and managers
alike know what the service is, can see their
role in its delivery and understand all the steps
and flows involved in the service process
 Service Blue print

The service blueprint is a picture or map that

accurately portrays the service system so that
the different people involved in providing it
can understand and deal with it objectively
regardless of their roles or their individual
point of view.
Blueprints are particularly useful at the design
stage of service development
 Service blueprint
A service blueprint visually displays the service
by simultaneously depicting the process of
service delivery, the points of customer
contact, the roles of customers and employees
and the visible elements of the service
It provides a way to break a service down into
its logical components and to depict the steps
or tasks in the process, the means by which
the tasks are executed and the evidence of the
service as the customer experiences it
 Service blueprint
Blueprinting has its origin in a variety of fields
and techniques , including logistics, industrial
engineering, decision theory and computer
system analysis.

Services are experiences rather than objects

blueprinting is particularly useful tool for
describing them
 Service blue print benefits

The blueprints are deliberately kept very simple,

showing only the most basic steps in the services
Identifies fail points that is , weak link of chain
of service activities, which can be the target of
continuous quality improvement
Informed service design
Line of visibility promotes a conscious decision on
what customers should see and which employees
will be in contact with customers thus facilitating
rational service design
 Service blue print benefits
Strengthens continuous quality improvement
Stimulates strategic discussions by
illuminating the elements and connections
that constitute the service
Provides basis for identifying and assessing
cost revenue and capital invested in each
element of the service
Constitutes a rational basis for both external
and internal marketing
 Managing employees for service
orientation
The strategies to enable service promises are
often referred to employees as internal
marketing.
The fast company magazine suggests that
When it comes to building great companies the
most urgent business challenge is finding and
keeping great people. Sure that the web strategy
is important but the best companies know that
people are the foundation of greatness
 Managing employees for service
orientation
Hire the right people looking above and
beyond the technical qualification of
applicants to access their customer and
service orientation as well

Compete for the best people A

complementary strategy is to interview
multiple employees for every position
 Managing employees for service
orientation
At southwest airlines the people department is
relentless in pursuit of talented employees

A quote from the Southwests long time president

Herb Kelleher illustrates the point the people
department came to me one day and said we have
interviewed 34 people for this ramp agents position
and we are getting a little worried about the time and
effort and the cost that going into it. And I said if you
have to interview 154 people to get the right person
DO IT
 Managing employees for service
orientation
Be the preferred employer extensive
training, career and advancement
opportunity, excellent internal support,
attractive incentives and quality goods and
services that employees are proud to be
associated with.
Develop people to deliver service quality
train for technical and interactive skills,
empower employees, promote teamwork
 Managing employees for service
orientation
Provide needed support systems Measure
internal service quality, provide supportive
technology and equipment, develop service
oriented internal processes

Retain the best people include employees in

the company vision, treat employees as
customers, measure and reward strong service
performers
 Managing employees for service
orientation

Represent the services in customers eyes

Face inherent stress and conflict

Be efficient and productive in the jobs and

satisfy the customer
Distribution strategies for Services
The distribution system may be defined as the
channels or the means by which the service
provider gains access to potential buyer of the
service product

The special characteristics of services i.e.

intangibility, inventory, inconsistency and
inseparability have led to specific form of
distribution
Distribution strategies for Services
Information processes
Information
Consultation
Order taking
Hospitality
Safekeeping
Exceptions
Billing
Payment
 Distribution strategies for Services
Methods of service delivery
Nature of interaction Single site Multiple site
between Customer
and service
organization
Customer goes Theatre Bus service
to service
organization Barber shop Fast food chain
Service House painting Mail delivery
organization
comes to the Mobile car wash Auto club road
customer service
 Distribution strategies for Services
Methods of service delivery
Nature of interaction Single site Multiple site
between Customer and
service organization
Customer and Credit card Broadcast
service company network
organization
transact at arm Local TV station Telephone
length (mail or company
electronic
communication
 Challenges in the Distribution of
Services
There is no actual tangible product that is being
distributed
It involves customer movement to the service
location
The intermediaries / agents play a key role in
recommending services to consumers
The service organization has to device
promotional, distribution strategies suiting
customer coming directly, through agents or
other modes
 Challenges in the distribution of
services
Services are intangible and cannot be stored,
transported or inventoried and since they
cannot be separated.

There is no physical product, traditional

wholesalers and other intermediaries can
rarely operate in such markets and retailing
cannot be an independent activity
 4 - Customer
satisfaction and service
quality in Services
Marketing
138-175
 Customer satisfaction
Customer satisfaction has been defined by
researchers in a variety of ways, including
the following :
A level of happiness resulting from a
consumption process
A cognitive stage resulting from a process
of evaluation of performance relative is
previously established standards
A subjective evaluation of the various
experiences and outcomes associated with
acquiring and consuming a product relative
to a set of subjectively determined
expectation
 Customer satisfaction
A two factor process of evaluating set of
satisfiers and a set of dissatisfies associated
with the offer
One step in the a complex involving prior
attitude towards a product or service, a
consumption experience resulting in positive or
negative disconfirmation of expectancies
followed by feeling of satisfaction or
dissatisfaction which mediate post consumption
attitude which subsequently influences future
purchase behavior
 Customer satisfaction
It is generally agreed that customer satisfaction
(goods or services) results from a subjective
comparison or expected and perceived attribute
level.

The model highlights that where perceived

performance meets or exceeds expectations the
customers is satisfied even perhaps delighted;
where performance fall short of expectations the
customer is dissatisfied
 Issues related to expectations
In other words before any measurement occurs
marketers must be aware of a number of issues

Knowledge and experience of customers

Level of expectations
Customer satisfaction
Performance significantly below expectations
Exceeding expectations
 Components of expectations
Three aspects of expectations
An anticipated performance level I will be served in
15 minutes

A probability estimate of the likelihood of the levels

occurring e.g. I am fairly sure that I will be served in
15 minutes

An evaluation of the anticipated attribute level e.g.

15 minutes service is fairly good
 Service Quality in services marketing
Quality is a holistic philosophy and should be included
at every stage in the organization. Quality can be
viewed from two points of view

From the point of view of the service provider To set

up standards or specifications in the manufacturing
process as well as output which is totally objective
and technical in nature

From the point of view of the customer service

quality occurs only when the service firm provides
service to the specification that satisfies their needs.
The idea of quality here is subjective and will strongly
linked to the needs and expectations of the customers
 Service Quality in services marketing
Some popular definitions of service quality
Fitness for purpose

The totality of features of services that meets the

needs

The difference between the customer expectation and

performance delivery

Meeting or exceeding what customer expects from the

service
 Service Quality in services marketing
Ten popular criterias used by customers in
evaluating service quality
Dimensions and Examples of specific
Definition questions realized by
customers
Tangibles Appearance of Are bank facilities attractive?
physical facilities, equipment, Is my stockbroker dressed
personnel and communication appropriately?
materials Is my credit card statement
easy to understand
 Service Quality in services marketing
Reliability Ability to perform the When the loan officer says he will
promised service dependably and come back in 15 minutes. Does she
accurately do so
Is my credit card statement free of
errors

Responsiveness Willingness to Does the bank resolve my problem

help customers and provide prompt quickly?
service Are charges for returned
merchandise credited to my account
promptly

Competence possession of the Is the person able to answer my

required skills and knowledge to question
perform the service
 Service Quality in services marketing
Courtesy politeness, Is the telephone operator
respect consideration and polite when answering calls
friendliness of the contact Does the repair person
personnel takes off his muddy shoes
before stepping on my
carpet
Credibility Does the bank has a
Trustworthiness, reputation
believability, honesty of the Are the interest rates
service provider consistent
Does the repair firm
guarantees its services
 Service Quality in services marketing
Security freedom from Is it safe for me to use the
danger, risk or doubt banks ATM
Is my credit card free from
unauthorized use

Access Approachability Is it easy to approach top

and ease of contact officials in case of problem
Do they have 24 hours Toll
free telephone number
 Service Quality in services marketing
Communications Keeping Clear explanations
customers informed in Does the broker avoid
language they can technical jargon
understand and listening to Is the company willing to
them listen to me
Understanding the Does someone recognizes
customer Making an effort me as a regular customer
to know the customers and Is the credit limit set by the
their needs credit card company
consistent with what I can
afford
 Service quality
Quality has gained significant relevance in context
of service industry with reference to customer
needs and expectations
Definitions have been categorized in five
approaches to quality by David Garvin

Transcendent approach a mark of

uncompromising standards and high achievement
grade
Product based approach quality as precise and
measurable variable
 Service quality
Manufacturing based approach concerned
with engineering and manufacturing practices

Value based approach value is the quality

you get for the price you pay

User based approach the goods that best

satisfy customer preferences are believed to
be of high quality
 Dimensions of quality
Performance primary operating
characteristics
Features secondary characteristics that
augment the basic functions
Reliability probability of product break
downs

Conformance The degree to which the

product and product design
and operating characteristics
match pre-established
standards
 Dimensions of quality
Durability How much use one gets
before the it breaks down or
has to be repaired
Serviceability The speed and competence of
repair and courtesy received

Aesthetics How product looks, sounds,

feels (appeal of a product to
five senses)
Perceived Image, reputation, brand
name
 Five dimensions later model/FIVE
STARS
Tangibles

Reliability

Responsiveness

Assurance

Empathy
Role of HR and internal marketing
The role of the contact staff is critical in the
provision of customer service. Service firms need
the commitment and motivation of the
employees particularly the frontline to deliver
quality service
Human resource management is the key factor in
the success of the service firm. By listening to
what they have to say about their jobs and
understanding their needs, the firm creates the
opportunity to build their loyalty and
effectiveness
Role of HR and internal marketing
In order to enhance job satisfaction of the
employees the service company must hire the
right personnel who are empathetic, provide
adequate training and empower them to
whatever takes to satisfy the customer

Training is important not only in terms of

concept and systems knowledge but also
dealing with the customers
 Gap model
In 1985 Parasuram, Zeithaml and Berry developed a
model for service quality. Their model claims that
the consumer evaluates service quality experience
as the outcome of the gap between expected and
perceived quality.
The model identifies five gaps that can cause
unsuccessful service delivery. By learning the flow
of this model, it is possible to exercise greater
management control over the consumer
relationships. The study of this model could lead to
an improved utilization of the key issues at which
the service provider can influence the satisfaction
of the consumers
 GAP MODEL
Gap 1 lack of understanding (gap between
consumer expectation and management
perception)
Gap 2 lack of development (gap between
management perception and service quality
specifications)
Gap 3 Poor delivery (Gap between service
quality specifications and service delivery)
Gap 4 Unrealistic expectations (gap between
service delivery and external communication)
Gap 5 Service Gap (Gap between perceived
service and delivered service)
 GAP model
Gap 1
Not knowing what your customers need and
expect. This is inexcusable. Logical response
is to undertake research to find out

Gap 2
Not using the knowledge of the customer needs
and expectations as the basis for defining and
specifying service quality standards
 GAP model
Gap 3
Results when execution fails to match the predefined
standards. This is conformance problem and often
reflects the poor internal communication and lack of
quality controls
Gap 4
Come from the failure of advertising and sales people to
portray the service accurately in their communication
to the customers, most commonly they overpromise.
Could result from exaggerated performance in order to
capture customer interest
 GAP model
Gap 5

Results when customer misperceives the quality of

service performance. One of the characteristic of
good quality is often it is unobstructive. A
customer may simply not realize the quality of
work performed, especially with a infrequently
used service such as healthcare, consulting or
specialized repair work
 Handling complaints
People complain because the service they
have received is below their zone of tolerance.
If the complaints are not resolved to the
satisfaction of the customer they are likely to
tell others about the poor service
Those customers who have had problems
have been satisfactorily resolved tend to be
the most loyal customers of all
Complaint is a gift
Effectively complaint management

Respond efficiently and effectively to the

complaints of individual customers

Collect, aggregate and analyze complaint data

to pinpoint and correct the root cause of the
customers problem
 Ten stage approach for handling
complaints

Stay calm irritation is not aimed at you

Avoid admitting any liability at this stage
Let the customer get the story off their chest
Get the facts ask questions and carefully listen
Find out what the customer wants
Identify the appropriate action to take
Take action to solve the problem if you have the
authority
 Ten stage approach for handling
complaints

If the corrective action cannot be taken, tell the

customer what will be done and when

Record action to be taken and inform anyone else

in the organization involved

Follow up broken promises cause further

irritation
 Service failure recovery
Service recovery is an umbrella term referred for
systematic efforts by a firm to correct a problem
following a service failure and retain a customer
goodwill.
Service recovery effort plays a crucial role in
achieving customer satisfaction
Effective service recovery requires thoughtful
procedures for resolving problems and handling
disgruntled customers
The risk of defection is high when a variety of
competing alternatives are available
 Service failure-recovery
The customers who experience a service failure
and then have it resolved to their full satisfaction
are more likely to make future purchases then are
customers who have no problem in the first place
Customers may forgive once but get disillusioned
if failure reoccur
The best strategy is to do right at the first time.
Michael Hargrove puts it service recovery is
turning a service failure into an opportunity you
wish you never had
 E- SERVICE ONLINE CONSUMER
BEHAVIOR
Electronic channels are the only service distributors
that do not require direct human interaction. They
require predesigned service (almost always
information, education or entertainment) and an
electronic vehicle to deliver it
E.g. Telephone, television channels, internet and
web. The consumer and business services that are
made possible through these vehicles include
movies on demand, interactive news and music,
banking and financial services, multimedia libraries
and databases, distance learning, desktop, vide
conferencing, remote health services and
interactive network based games
 E- SERVICE ONLINE CONSUMER
BEHAVIOR
The more the service relies on the technology
for service production and less it relies on face
to face contact with service providers, the less
the service is characterized by inseparability
and non standardization

Using electronic channels overcomes some of

the problems associated with service
inseparability and allows a form of
standardization not previously possible in
most services
 Benefits of electronic channels
Consistent delivery for standardized services

Low cost

Customer convenience

Wide distribution

Customers choice and ability to customize

Quick customer feedback

 Challenges
Price competition

Inability to customize with highly standardized

services

Lack of consistency due to customer involvement

Changes in consumer behavior

Security concerns

Competition from widening geographies

 Online consumer behavior
A consumer purchasing a service through electronic
channels engages in a different behavior than a consumer
entering a retail store and talking to a salesperson
Considerable changes in the willingness for the search of
information in the willingness to perform some aspects of
the services themselves, in the acceptance of different
levels of services are necessary when customers use
electronic channels
Behavior change is difficult even for a consumer wanting
to make a change, therefore marketers wishing to
motivate consumers to alter long established patterns will
be challenged
 Marketing of social services of non
profit organization
Non business organizations generally deal with
ideas and services than with goods. Sometimes it
becomes difficult to define what is being offered
by an organization.

These organizations offer services that may

provide forum for social gatherings, courses,
sense of cop-operation, cash grant for research
by a research foundation or a cause like childcare,
stop smoking or say no to drugs
 Examples
Temple : the temple has a mission to provide
religious services only (limited mission)
If the temple has a mission to provide spiritual
development, personal development, providing
fellowship, literary services its service offerings
are broad

E.g. The government of India is marketing the

concept of bringing awareness about the hazards
of smoking by a statutory warning cigarette
smoking is injurious to health It is obvious that
the benefits that a person receives from the
service are complex, intangible and long term
5 - Search, experience and
credence attributes

176-182
Search, Experiences and credence
attributes
One framework for isolating differences in
evaluation processes between goods and
services is classification of properties of
offerings proposed by economists

Economists first distinguished between two

categories of properties of consumer products
: search qualities, attributes that a consumer
can determine before purchasing a product;
and experience qualities, attributes that can
be discerned only after purchase or during
consumption
 Search, Experiences and credence
attributes
Search qualities include color, style, price, fit, feel,
hardness and smell
Experience qualities include taste and wear
ability

Products such as automobiles, clothing, furniture

and jewelry are high in search qualities because
their attributes can be almost completely
determined and evaluated before purchase
 Search, Experiences and credence
attributes
Products such as vacations and restaurant meals
are high in experience qualities because their
attributes cannot be fully known or assessed until
they have been purchased and are being
consumed

A third category credence qualities includes

characteristics that the consumer may find
impossible to evaluate even after purchase and
consumption
 Search, Experiences and credence
attributes
Ex. Of offerings high in credence qualities are
appendix operations and brake relining on
automobiles.

Few consumers possess medical or mechanic

skills sufficient to evaluate whether these
services are necessary or are performed
properly, even after they have been
prescribed and produced by the provider
Search, Experiences and credence
attributes
Search, Experiences and credence
attributes
Products high in search qualities are the
easiest to evaluate (left end of continuum)
Products high in experience qualities are more
difficult to evaluate because they must be
purchased and consumed before assessment
is possible (center of continuum)
Products high in credence qualities are the
most difficult to evaluate because the
consumer may be unaware of or may lack
sufficient knowledge to appraise whether the
offerings satisfy given wants or needs even
after consumption (right end of continuum)
6- PRODUCT &
PROMOTION
184-205
 The service product concept
Theodore Levitts product concept
Potential

Augmented

Expected

Basic

Core
 Product
Branding Separate names or umbrella
branding
Educating customers
Technology and services
Service products bundled with
conventional products and standalone
Service quality
Delighting customers
Customization and standardization
Service guarantees and SLAs
 Place
Location

Agents

Serving customers efficiently

Ensuring partners viability

Managing channel conflicts

 Promotion
Media Selection print, television,
cinema theatre commercial, posters,
lampshades or bus stops, hoardings or
billboards, direct mailers, direct
marketing, event sponsorship, fliers on
newspapers or shopping centre's,
personal visits for promotion/sales
Promotion budgets objective or need
based, percentage or expected sales,
competition based
Crafting the message
 Price
Cost
Competition
Objective or strategic considerations
Penetrative pricing v/s price skimming
Role of CRM
Pricing information technology services (IT)
 Concept and Process of Integrated Marketing
Communications /promotion

The word promotion have originated from Latin.

In Latin Pro means forward and movere means
to push. Thus promotion means to push forward.

Promotion ensures integration of all marketing

tools, approaches, and resources within a
company which maximizes impact on consumer
mind and which results into maximum profit at
minimum cost.

.
 Promotional Mix
Firms select a mix of promotional tools to
effectively communicate with their target
group. The different elements of the mix
are :

Advertising
Personal selling
Sales promotion
Public relations
 Promotional Mix
Not each element is helpful in all product
market situations
Advertising is known to deliver results in
soft drinks industry
Personal selling is effective in personal
computers and software
Advertising has bigger role to play in
consumer durables, service marketing etc.
Sales promotion and publicity have an
equal significance in all type of products
 Promotional Tools Advertising
Advertising is a paid form of non personal presentation
of goods and services by an identified sponsor. It
can be done by using a media like television, radio,
print media etc.
Advertising is also considered as cost efficient as it
can reach a vast number of audiences
simultaneously.
The message can be repeated several times
Adds value to the product to certain extent
Helps in boosting the sales of the company
It provides reassurance to the customer after they
have taken the correct purchase decision
 Promotional Tools Advertising
Helps in changing customers perception of a product

Creates awareness amongst the potential customers

Helps in offsetting competitors advertisement

Is expressive and hence it dramatizes the whole

concept

Helps in building a strong image of the company

Benefits of Advertisements

Advertisements create awareness, interest and

desire in the customers to buy them AIDA

Cost Efficient as reaches vast number of

audiences simultaneously

The message can be repeated several times

thereby creating an impact on the mind of the
customer
 7 Main stages
Identifying the Schedule the Measure
target advertising advertising
audience campaign effectiveness

Specifying
advertisement Select media
objectives

Set the Develop

advertising advertisement
budget message
 Sales Promotion

AMA defines : Sales promotion include

activities that supplement both personal
selling and advertising and co-ordinate them
and make them effective such as displays,
shows, demonstrations and other non-
recurrent selling efforts not in the ordinary
routine
 Sales promotion
In simple words Sales promotion as an activity
is taken up to boost the sales of the product. It
can include a host of activities like running
advertising campaigns, handling public relation
activities, distribution of free samples, offering
free gifts, conducting trade fairs, exhibitions
and competitions, offering temporary price
discounts, launching door to door selling and
telemarketing etc.

Compared to any other element Sales

promotion is more action oriented
Different types of Sales Promotion

There are two types

Consumer Sales Promotion Methods

Trade Sales Promotion Methods

Consumer Sales Promotion Methods
Marketers use sales promotion to introduce new product
or brand, or promote the existing brand
Price Promotions : Price discounts
Coupons : certificate that offers price discount for some
specified items to the holder (pasted on package, placed in
the package, newspaper, offered with a purchase, cut out
in advertisement, printed on back of receipts)
Free gifts / samples (subscription based products-
magazines, consumer luxuries perfumes, vehicles etc)

Banks and other businesses offer free gifts like calendars,

diaries, penholders etc.
Consumer Sales Promotion Methods
Money refunds and rebates : on multiple purchases
Frequent user incentives : rewarding loyal customers
(E.g. Frequent flier schemes offered by airlines)

POP-point of purchase displays : (window displays, wall

displays, display racks, danglers, balloons, outside signs,
counter pieces, and innovations such as sniff teasers
that spread a products aroma in the store etc.
Installment offers : paying remaining amount on an
installment basis
Consumer Sales Promotion Methods

Consumer Contest : Competition to attract

customers attention

Consumer Sweepstakes : submit the names in a

draw for prizes

Trade Shows : Exhibitions and trade shows

Trade Sales Promotion Methods

Manufacturers use special trade promotion methods

to encourage reseller like retailers to promote their
products

Buying Allowance : Temporary prize reduction

offered to the retailer for purchasing specific
quantity of product

Buyback Allowance : Offered to the channel member

for each additional unit purchased after initial deal
Trade sale promotion methods
Merchandise Allowance : Manufacturer
agrees to pay certain amount of money for
promoting companies product through
advertising or displays

Free Merchandise : Additional amount of

product is offered without any additional
cost as an incentive to purchase a minimum
quantity
Trade Sales Promotion Methods
Dealer Loader : Reward or gift given to retailer
to encourage display of merchandise

Dealer Listing : Technique in which

advertisement of company identifies &
acknowledges its retailer

Scan back Allowance : Retailers are rewarded

on the basis of number of units that moved
through their scanners
Promotional Tools Personal Selling
Personal selling takes place when the
sellers or the salesperson in a face to face
interaction with a potential buyer tries to
persuade him to purchase the product or
service he is promoting on behalf of the
company.

Personal selling takes place at a personal

level and involves a personalized
transaction.
Promotional Tools Personal Selling
The sales person communicates the
product benefits to the customer in an
attempt to inform him and convince him
to make a purchase.

Personal selling provides salesperson with

immediate feedback and helps him to
adjust or modify his sales preposition to
suit the requirements of the buyer
 Promotional Tools Personal Selling

The sales person has to meet certain goals.

These include

Finding new prospects

Convincing the prospects to purchase the
companys product and
Keeping the customers satisfied and indirectly
influencing them to provide a positive word of
mouth publicity of the company
 Promotional Tools Personal Selling
Personal selling can be described as a handy tool in
the hands of the marketer for the following
reasons

Personal Selling gives marketer the freedom to

make adjustments in the promotional message to
satisfy the information needs of the customers
Target the promotional message with utmost
precision at the most promising leads
Provides marketer with more information about
customer preferences and also serves as a means
of obtaining feedback about the company and its
products
 Personal selling process

Prospecting
Closing Follow up
and evaluation

Handling
Preapproach
objections

Approach presentation