Services are intangible and do not have a physical existence.

Hence services cannot be

touched, held, tasted or smelt. This is most defining feature of a service and that which
primarily differentiates it from a product. Also, it poses a unique challenge to those engaged in
marketing a service as they need to attach tangible attributes to an otherwise intangible
offering.

1. People processing involves tangible actions to people's bodies. Examples of people-

processing services include passenger transportation, haircutting, and dental work. Customers
need to be physically present throughout service delivery to receive its desired benefits.
Services that involve tangible actions
to people's bodies.
2. Possession processing includes tangible actions to goods and other physical possessions
belonging to the customer. Examples of possession processing include airfreight, lawn
mowing, and cleaning services. In these instances, the object requiring processing must be
present, but the customer need not be. tangible actions to goods and other physical
possessions belonging to customers.
3. Mental stimulus processing refers to intangible actions directed at people's minds. Services
in this category include entertainment, spectator sports, theater performances, and education.
In such instances, customers must be present mentally but can be located either in a specific
service facility or in a remote location connected by broadcast signals or telecommunication
linkages. intangible actions directed at peoples minds.
4. Information processing describes intangible actions directed at a customer's assets.
Examples of information-processing services include insurance, banking, and consulting. In
this category, little direct involvement with the customer may be needed once the request for
service has been initiated. Let's examine why these four different types of processes often
have distinctive implications for marketing, operations, and human resource strategies.
intangible actions directed at customers' assets
Flower of service in airline industry
Case analysis of the low cost airline, Air Asia
 1. Background of Air Asia
 Air Asia is a famous low cost airline with special feature in its product service; it
provides great benefits to many customers by making “everyone can fly”. This paper will
focus on the quality of the service using the flower of service model.
 2. Discussions
 The flower of service model
 Figure 1.0 The flower of service model
Source: Lovelock, C. and Wright, L. 2001. Principles of service marketing and
management. second edn. Upper Saddle River, New Jersey: Prentice Hall, p 143.
The concept of the flower of service proposes a model in which the core product is
surrounded by a cluster of supplementary services which are either facilitating services or
enhancing services. The model of Flower of Service, according to Arthur A. Thompson,
A. J. Strickland, Tracy Robertson Kramer (1997, p 208), offers both researchers and
companies a method of apprehending and disaggregating the series of supplementary
services that enhance and increase the perceived value of the core product.
 Application of the flower of service model in Air Asia
 Facilitating services
 Information service
 In the consumer decision making process, information finding and gathering is of great
significance (Cant, Strydom & Jooste 2006, p 294). In Air Asia, the company use several
ways to inform and educate the customers about the product services of the company.
The first way is through the email system. Because Air Asia has a large number of
customers and many of them are members of Air Asia, also many of the members are
willing to tick the option to agree to receive the email notice from the company to inform
them about the most updated promotion information that is coming. The second way is
through the advertisements that the company provides by its own or source through other
advertising companies. The company itself has three major ways of channel of making its
own advertising services: in-flight advertisements such as video, magazine, painting
inside and outside the aircraft’s, website and email. Through these ways, customers will
obtain enough of information and news about the company and also the most recent
promotion information in order to attract them to buy the tickets.
 Order taking service
 Order taking service refers to the process of reservation or purchasing behaviors which
could involves a transfer of ownership (Peerenboom 1993). In the case of Air Asia, its
customers would have four major channels to make their orders and pass to the system to
process before they can receive the e-tickets from the system. The first channel is through
online booking which is the recommended way by the company because it does not need
employees to take orders which will increase the operating cost. The online booking
could be done via personal computer or mobile phone which is very convenient to the
customers. The second channel through which customers could easily book their tickets
is through the dealers who would charge additional service fee by helping the customers
to book tickets. But the use of this channel is limited by the company as we can see that
there are very few official business partners to sell the Air Asia ticket because of the
company’s wish to provide the customers with low fare and tries to remove the
 intermediate processes. The third channel is via counters which could be in the services
counter (such as the one in KL central) and in the airports where the Air Asia flight route
network covers. The fourth channel is via telephone which is operated by an outsourcing
call center. Regarding the call center, the company provides two types of lines: normal
hot line and premium hot line as we can see from the figure below. The differences
between the premium hot line and the normal service line is that the customers’ call will
be picked up by premium line agents without waiting too much time like the normal
service lines. The telephone line order taking system again shows that the company has a
positioning of low cost.
 Figure 2.0 The premium customer service hot line offered in Malaysia
Source: airasia.com 2011
 Billing service
 To save up cost, Air Asia does not issue paper tickets to customers who book online or by
mobile phone; hence most customers would need to print out the E-itinerary which would
be sent to their email once the payment has been confirmed. What is more, invoice will
only be stated in the last page of the itinerary without any chop. And even the customers
may request for an official invoice with company’s stamp, the airline would not agree.
 Payment service
 The payment service is important to any residential aviation service providers due to the
large number of online and offline transactions among which many are done within a
short period of time, and in Air Asia, it provides several major payment methods and
services. The first payment method which is the most frequently used and is also
encouraged by the company to used by the customers is the direct debit. Due to the
transaction fee charges, as a low cost airline, Air Asia strongly recommends its customers
use the payment method of direct debit. For example, payment in Malaysia Ringgit
(MYR) would be able to be made using many local banks such as RHB and Maybank.
The second payment method is credit card which is also used widely because many
currencies are still not supported by Air Asia and the local banks. The third payment
method is by cash which is usually used by dealers and in the counter because card
transactions take time to confirm. A fourth payment method is equal to a direct debit
which is through cooperation with the third party payment service providers such as
Alipay and Paypal (widely used among the Australia customers).
 nhancing services
 Service of Consultation
 Consultation service could be defined as “that the consultant works with the consultees as
clients in problem identification, problem analysis, treatment design and implementation,
and treatment evaluation (Weiner, Freedheim, Reynolds, Schinka, Miller & Velicer 2003,
p 436). In Air Asia, there is little consultation service provided to the customers, and it
seems that the company is more willing to engage in the automation of all the service to
save costs.
 Service of Hospitality
 Hospitality could easily make customers feel that they are valued by the company. As a
result, many service companies would require its employees in particular those who have
face to face interaction with the customers to act more politely and more caring about the
need of the customers. In Air Asia, hospitality is a must as we can see the smiles from the
face of the stewardess. This also could be found in the corporate culture as the company
 encourage having fun while working among the employees because while staffs are
having fund, they tend to be more polite than usual. And the key reason that the Air Asia
would focus on the building of service hospitality is because smile does not cost a sen
and a low cost air line would not let such service undeveloped.
 Service of Safekeeping
 The service of safekeeping involves the mission and work to be done to keep the
customers rest assured and do not need to worry too much while enjoying product
service. As a matter of fact, Air Asia by focusing too much on cost reduction has little
flexibility to make the customers feeling safe. For example, if one may wants to change
the flight within 48 hours before the departure time of the flight, his or her request for a
flight change would be declined which is stated in the basic term and conditions. Also the
term and conditions empower the company to change the flight any time without
notifying the customers. Though the company usually will send out SMS and email, but
many customers could have missed the information and hence in some cases customers
would not feel safe at all by flying with Air Asia because uncertainties could happen and
compensation will not be enough. In another aspect in which company has done a good
job to make the customers feel safe and certainty is by keeping a very good flight time
punctuality record of all its flights by efficient and effective operation management.
 Service of Exceptions
 Exceptions services are those services that are not usually offered to customers in normal
cases. For Air Asia, exceptions are made rarely to avoid possible additional costs. Term
and conditions seem to be the most powerful tool and reliance that the company uses to
turn down the request for exceptions. But still there could be exceptional handling which
could only be grated while higher management empowerment is obtained but such
exceptional handlings are also rare.
Types of Services

1. Core Services: A service that is the primary purpose of the transaction. Eg: a haircut or
the services of lawyer or teacher.
2. Supplementary Services: Services that are rendered as a corollary to the sale of a tangible
product. Eg: Home delivery options offered by restaurants above a minimum bill value.
Core and supplementary service.

It is essential to design a service that meets or exceeds the expectation of its customers. Therefore,
hotels service providers must have an idea not only of what customers want but also of what they
actually experience during their service encounters. In the high contact service environments
typified by most people-processing services, most customers arrive at a service site with certain
expectations. Their subsequent behavior, however, may be shaped by the nature of the physical
environment; the employees they encounter, the sequence in which different activities take place,
and the roles that they6 are expected to play. Recent research suggest that customers’ expectations
are continuously updated during the course of a service encounter, with final evaluations of service
quali8tybeing heavily based on these updated expectations rather than on the expectations held
before the encounter began.

Mid level managers and service employees are often unaware of the full extent of a typical
customer’s service experience. One of the most effective ways to gain insights into customer
behavior during service delivery is to create a description, in sequence, of the steps that customers
employees must go through in a given service environment. These steps can be shown visually
using flow charts. Here, we examine service processes in more detail. By depicting each of the
contacts between customers and a service provider, flowcharts can highlight problems and
opportunities in the service delivery process as it affects those customers-what we call frontage
activities.

Stages of a Customer’s Stay in a Hotel

Let’s illustrate the following sages with a simplified model of a service to which most readers can
relate fairly easily: a stay at a hotel. As with many services, the customer’s first encounter with a
hotel involves a supplementary service rather than the core product (which is basically rental of a
bedroom for a night’s sleep). The initial step, for most business travelers, is to make a reservation.
This may be taken some time before the visit actually takes place.

On arrival, guests traveling by car will need to park the vehicle in the hotel’s garage (perhaps a
valet will do it for them). The next step is to check in at reception, after which an employee who
carries the bags may escort guests to their rooms. Already, four supplementary services have been
delivered before a guest even reaches the room. Before retiring for the night the core service a
guest may choose to use several more services, such as dinner at one of the hotel restaurants and
watching a pay-TV movie. After rising, the guest may request that breakfast be sent up by rooms
service and then make some phone calls, before checking out at the cashier’s desk and asking a
valet to retrieve the car from the parking garage.

This scenario depicts the customer’s experience. Note that the core product-a bed for the night-is
surrounded by a variety of supplementary services. Some hotel guests might use more
supplementary services; others might use fewer. A variety of activities are taking place backstage,
too, behind the scenes; some of these are shown in these chart. In fact, each step in the front stage
process is supported by a series of back stage activities, including assignment of stuff; maintenance
of facilities and equipment, capture, storage, and transfer of information.

Many services are provided on an ongoing basis, such as utilities (telephone, gas water or
electricity), Internet and cable or satellite TV, banking, insurance and professional association
membership. In retail banking, for instance, once the account has been opened, service delivery
can be charted as series of monthly cycles. Each month is slightly different, reflecting the
frequency with which different services are used. Over time, changes in patterns might be
observed, reflecting learning about new delivery system and life style changes that may require
new types of financial services.
marketing mix for services
The Services Marketing Mix
The essential elements of product, promotion, price and place remain but three additional
elements – people, physical evidence and process are included to the 7Ps mix.
Definitions of segmentation, targeting and positioning
What Is a Market Segment?
A market segment is a group of people who share one or more common characteristics, lumped
together for marketing purposes. Each market segment is unique, and marketers use various
 criteria to create a target market for their product or service. Marketing professionals approach
each segment differently, after fully understanding the needs, lifestyles, demographics, and
personality of the target consumer.
A market segment is a category of customers who have similar likes and dislikes in an otherwise
homogeneous market. These customers can be individuals, families, businesses, organizations, or
a blend of multiple types. Market segments are known to respond somewhat predictably to a
marketing strategy, plan, or promotion. This is why marketers use segmentation when deciding
a target market. As its name suggests, market segmentation is the process of separating a market
into sub-groups, in which its members share common characteristics.
To met the most basic criteria of a market segment, three characteristics must be present.
First,there must be homogeneity among the common needs of the segment. Second, there needs
to be a distinction that makes the segment unique from other groups. Lastly, the presence of a
common reaction, or a similar and somewhat predictable response to marketing, is required. For
example, common characteristics of a market segment include interests, lifestyle, age, gender,
etc. Common examples of market segmentation include geographic, demographic,
psychographic, and behavioral.
Market segmentation can be defined as:

 The process of splitting a market into smaller groups with similar product needs or identifiable
characteristics, for the purpose of selecting appropriate target markets.
There are many different ways to segment your target markets. For example, you can use the
following approaches:
 Demographic – By personal attributes such as age, marital status, gender, ethnicity,
sexuality, education, or occupation.
 Geographic – By country, region, state, city, or neighborhood.
 Psychographic – By personality, risk aversion, values, or lifestyle.
 Behavioral – By how people use the product, how loyal they are, or the benefits that they are
looking for.

Targeting (or target market selection) refers to:

 An organization’s proactive selection of a suitable market segment (or segments) with the
intention of heavily focusing the firm’s marketing offers and activities towards this group of
related consumers.

Market targeting
The list below refers to what’s needed to evaluate the potential and commercial attractiveness of
each segment.

 Criteria Size: The market must be large enough to justify segmenting. If the market is small,
it may make it smaller.
 Difference: Measurable differences must exist between segments.
 Money: Anticipated profits must exceed the costs of additional marketing plans and other
changes.
  Accessible: Each segment must be accessible to your team and the segment must be able to
receive your marketing messages
 Focus on different benefits: Different segments must need different benefits.

Product positioning
Positioning maps are the last element of the STP process. For this to work, you need two
variables to illustrate the market overview.
In the example here, I’ve taken some cars available in the UK. This isn’t a detailed product
position map, more of an illustration. If there were no cars in one segment it could indicate a
market opportunity. And positioning (which is sometimes referred to as product positioning) is:

 Positioning is the target market’s perception of the product’s key benefits and features, relative
to the offerings of competitive products.

Marketing Strategy
Segmentation
Emirates segments its market into two major categories, the profitable (business travelers) and
the unprofitable one. These can be further divided on the basis of the average length of trip, the
frequency of trips and the brand loyal customers.
Business class passengers are the most profitable to Emirates and are willing to pay for their
luxurious services as price is relatively inelastic for them. Emirates offers these travelers great
Wifi services and more room to work and hence they prefer nonstop trips.
Emirates loses out where the economy class travelers are concerned as they are very price elastic
and prefer to choose low cost carriers.
Brand loyal customers are those who have been flying with emirates for years regardless of their
prices and rely on the quality and reputation of the airline.
Targeting
Emirates caters to high ranking executives and businessmen belonging to the age group of 30-60
who are looking for luxury and comfort in travel. It serves all customers regardless of
nationality.
Positioning
Emirates positioning strategy is primarily benefit oriented and aims at offering unique services.
Emirates positioning is universal, innovative and offers good value for money.
Where business and first class passengers are concerned emirates positioning is one of high
quality, luxury and comfort on board.
For families, Emirates positions itself as a premiere airline providing a complete and enjoyable
inflight experience
British airways positioned itself as a brand that provides excellent quality and service but the
losses incurred over the past 2 year tarnished the brand name and image.
Differentiation
Emirates ranks first when it comes to differentiation. Emirates was the first to implement modern
technology like mobile phone usage on board, internet browsing and the sun and moon concept.
They also offer services like showering on board for first class passengers and complimentary
chauffer services.
Growth strategy
Emirates from the very beginning has adopted an aggressive growth strategy. Their profit figures
show an annual increase without fail barring the second year of operations. Emirates has been
continually expanding their passenger capacity and number of destinations.
The strategy employed by them relies on the acquisition of fuel efficient luxurious aircrafts and
competent staff and the ability leading to lower operational costs.
The company’s lean management structure and quick decision making ability also plays a
contributory role.
THE MARKETING MIX
Price
Emirate uses the premium pricing strategy because it offers luxurious and high quality services
that merit more money as compared to other airlines. It targets those customers who demand
better services regardless of price.
Product
Emirates , owns fleet of 120 wide bodied aircrafts and flies to 108 destinations in 60 countries
over 6 continents. Emirates almost doubles its fleet every year. This year Emirates received 12
A380s and has placed an order for another 78 A380s. Prior to this Emirates purchased 8 Boeing
777 freighter aircrafts.
Place
Dubai serves as the main hub of Emirates as it occupies a very strategic position in terms of its
location and oil reserves. In addition to owning its own airport terminal in dubai Emirates has 11
travel shops in UAE and 122 travel shops worldwide aimed at providing superior services.
Promotion
A combination of both traditional and modern marketing methods is employed by emirates.
Advertisements in newspapers, magazines, television and billboards along with a website in 9
different languages are some examples. The aim is to reach customers of all nationalities. The
primary way however in which emirates promotes itself is through organization of different
events to increase brand awareness.
People
Emirates not only focus on the satisfaction of customers but also on the satisfaction of
shareholders, employees and the general public .In year 2010 when emirates announced a profit
of $964 million, it also announced a bonus 3 weeks for its employees and share prices rose by
about 2.6 %
Processes
Emirates provides an overall interactive experience to its customers on board. Using its websites
people situated throughout the world can not only book themselves on a flight but can also
provide detailed preferences on their choice of seats or meals.
Physical evidence
Emirates understands that physical evidence is extremely important for an intangible product and
hence tries to deliver excellence in quality. Emirates tries to anticipate its customers’
expectations and provide value for money.
Cash Cow :
Emirates Economy Class
Emirates is Economy flights are the foundation of the company. It has always had a large market
share, but there is no growth. Before Emirates Economy came into play, other airlines such as
Qatar Airways had the most success in the industry. Today, many people use Emirates Airlines,
particularly the Economy seats on the flight. Looking at the South Asian audience, Emirates
Economy needs to milk its cow further; the performance in the middle east and the west is quite
steady.

Star
Business / First Class
Star services of Emirates Airlines is Business and First Class; these are the leaders of the
business. These two are the flagship services by Emirates and have a high market share in the
already growing industry. We do see a very high potential in the two services. Recently,
Emirates upgraded its flights and introduced the latest generation of business class seating.

Question Mark
Emirates Holidays
The Question Mark is Emirates Holidays, and the investment is high as compare to the revenue.
Emirates recently launched “Emirates Holidays.” The new service has a low market share,
although the potential is quite high. Emirates has been putting efforts to increase the popularity
and market share of “Emirates Holidays.” The family packages, romantic retreats, and summer
offers to Maldives, Mauritius, and Dubai is performing well.

Dog
Null There is no Dog flights of Emirates Airline .

Product life cycle

Emirates originated in 1985 with two aircrafts provided by the Dubai government and a capital
of only 10 million. Its first destination was Dubai to Karachi and later Bombay and Delhi were
added.
Growth
Emirates became the fastest growing by 1990s. Their revenues increased by about $100 million
every year reaching about $500 million in 1993. The primary factor contributing to its growth
was the gulf war. In 1993 emirates carried 6800 thousand passengers and 1.6 million tons of
cargo.
Maturity
Emirates is now in its maturity stage. In view of heavy competition, Emirates is concentrating on
heavy advertising and promotion. They have added large number of destinations to their list and
intend on adding many more. With the growth in passenger numbers worldwide Emirates is
expected to maintain its current growth pattern.