FT-404-C: SERVICE AND RETAIL MARKETING

Section A

1. Briefly explain People, Process and Physical evidences of Service Marketing Mix and their role in
service creation and delivery. Give suitable examples.

To understand the services marketing mix framework, it’s necessary to understand the nature of services.
According to Wolak, Kalaftis & Harris, the characteristics of services are:

Intangibility–the service cannot be touched or viewed, so it is difficult for clients to tell in advance what they
will be getting.

Inseparability (simultaneity)–the service is being produced at the same time that the client is receiving it (eg
during an online search, or a legal consultation).

Perishability–unused capacity cannot be stored for future use. For example, spare seats on one airplane
cannot be transferred to the next flight, and query-free times at the reference desk cannot be saved up until
there is a busy period.

Each of these characteristics plays a role in the service marketing mix.

The Services Marketing Mix

Extending the 4Ps

Product

In the case of services, the “product” is intangible, heterogeneous and perishable. Moreover, its production
and consumption are inseparable. Hence, there is scope for customizing the offering as per customer
requirements, and the actual customer encounter therefore assumes particular significance.

Pricing

Pricing of services is tougher than pricing of goods. While the latter can be priced easily by taking into
account the raw material costs, in the case of services there are attendant costs–such as labor and overhead
costs–that also need to be factored in.

Place

Since service delivery is concurrent with its production and cannot be stored or transported, the location of
the service product assumes importance. Service providers have to give special thought as to where the
service is provided.

Promotion

Since a service offering can be easily replicated, promotion becomes crucial in differentiating a service
offering in the mind of the consumer. Service providers offering identical services such as airlines or banks
and insurance companies invest heavily in advertising their services. This is crucial in attracting customers in
a segment where the services providers have nearly identical offerings.

2. What is quality in Services? Briefly explain Service Quality Model with examples.

Service quality generally refers to a customer’s comparison of service expectations as it relates to a

company’s performance. A business with a high level of service quality is likely capable of meeting
customer needs while also remaining economically competitive in their respective industry. Successful
businesses who remain competitive and relevant in the marketplace work proactively to obtain information
from their current or potential customer base so they can ensure they are meeting their needs.

The following questions are crucial when obtaining customer feedback:

• What does the customer like?

• What do they dislike?

 • How can things be improved?

• Are their needs and expectations being met?

• How much will they pay for something?

• Is convenience important?

Service Quality Model

Some current methods of measuring customer expectations and customer perceptions are SERVQUAL,
SERVPERF, Critical Incidents Technique, observation studies, focus group discussions and in-depth
interviews and evaluate these methods in terms of their relevance and appropriateness for services marketing
in different contexts.

Gap Model:

Parasuraman et at., developed a conceptual model of service quality where they identified five gaps that
could impact the consumer’s evaluation of service quality in four different industries-

SERVQUAL Model:

The SERVQUAL model of measuring service quality is based on the pioneering work of Parasuraman,
Zeithaml and Berry. The model talks about the way a customer distinguishes the service quality by
comparing the expected service with the perceived service.

Critical Incident Model:

Critical incident as described by Lovelock, Patterson and Walker, is a technique designed to elicit details
about services that “particularly dissatisfy or delight customers”. The information can either be collected by
in-house comment cards as found in hotels or through one to one interviews.

3. Discuss various types and formats of Retail Outlets. What major changes do you observe in retailing
during Covid-19 Pandemic? Explain with examples.

While other sources offer expansive lists of retail formats, we’re going to focus on five of the more popular
and common formats used by successful businesses:

Department stores

Department stores sell a variety of products within a variety of niches — with each of these niches being a
“department” within the overall store.

Specialty stores

Specialty stores, also known as “category killers,” major on a singular niche.

Supermarkets and superstores

Supermarkets are retail stores that typically focus on selling consumer packaged goods (CPGs) and similar
consumable products. In general, CPGs are more necessities than desires.

Discount stores

Discount stores are those that focus on selling quality products at lower-than-expected prices.

eCommerce stores: Online retailers

eCommerce stores are retail companies that operate primarily — if not entirely — online. Retailers
belonging to any of the previously mentioned categories may also operate online.

Major changes do you observe in retailing during Covid-19 Pandemic

SHIFT FROM BUSINESS CONTINUITY TO CRISIS MANAGEMENT

 All retailers are revisiting their business continuity plans to reassure customers and colleagues, manage the
inevitable supply chain constraints and demand shocks, by prioritizing critical business activities and
creating contingency plans for disruption.

SCENARIO PLAN TO THE SURVIVAL MINIMUM

Most firms right now are only in the early stages of their response: managing the immediate issues for their
own staff, announcing travel bans, cancelling large-scale events, and implementing quarantine periods.

TRIAGE THE BRICKS & MORTAR ESTATE NOW

As the scenarios play out, each brick-and-mortar store will be affected differently based on the local
consumer demand and the levels of local competition.

DELIVER ON THE DEMAND FOR DIGITAL, BUT ECONOMICALLY

If China is any indication, there will be a massive acceleration in customer demand for digital channels in the
coming days.

PLAN FOR THE LONG HAUL

Retailers need to manage their finances over both the short- and longer-term. Cutting costs today may help
short-term survival but should not be done at the expense of building the foundations for thriving in the
longer-term.

4. Write short notes on any two of the following:

(a) Retail Marketing Environment.

Retail marketing environments of the present technology include a retail store and a layout for the retail
store. The retail store includes a front façade including at least one front window and at least one door, a first
outer side wall connected to the front façade, and a second outer side wall connected to the front façade. The
layout for the retail store includes a first experience zone, a second experience zone, a third experience zone
and a fourth experience zone. The first experience zone includes the front façade and at least one window
display case displaying merchandise that can be viewed through the front window.

(b) Pricing Strategies in Service Marketing.

1. Market penetration strategy: Set prices low to grow market share. Then increase your rates over time as
your customer base grows.

2. Price skimming: The opposite of a market penetration strategy. Here you set a high price and lower it over
time.

3. Premium pricing: Charge higher prices because you have something that makes you unique.

4. Economy pricing: Set low prices because overheads are low. Your costs may be low for several reasons.

5. Cost-plus pricing: Calculate the cost to deliver your services and add a margin for a profit.

6. Psychological pricing: Prices based on the psychological impact they have.

7. Competitive pricing: Charge according to what the competition charges. While competitors can give you a
good idea of where to start, remember that your business is unique.

8. Bundled pricing: Also known as packaged pricing, this strategy involves bundling various services
together and charging one price.

9. Good, better, best pricing: Also known as tiered pricing or price bracketing. Offer clients the option of
choosing between different levels of service or packages..