UNIT II: SERVICE MARKET SEGMENTATION:

Definition:
Market segmentation is the process of dividing a market into distinct subsets of consumers
distinguished from one another, with common needs and characteristics and selecting one or
more segments to target, with a distinct marketing mix.
Marketing approach:
1. Undifferentiated marketing approach
A single common attribute of the requirements of all segments are chosen and all
goods and services are targeted. That is, the same goods and services are offered
without differentiation, like basic life coverage insurance schemes.

2. Differentiated marketing approach

This approach is the middle approach where a few segments are chosen and the goods
and services are offered to these target segments. For example, different classes in air/
train travel.

3. Concentrated marketing approach

It is a specialised approach where only one or two segments are chosen on the basis of
company’s objectives and available resources, and goods and services are offered as
per customer’s requirement
Bases of Market Segmentation:
i. Geographic:
Geographic segmentation divides the market on the basis of geography. This type of
market segmentation is important for marketers as people belonging to different
regions may have different requirements. People belonging to different regions may
have different reasons to use the same product as well. Geographic segmentation
helps marketer draft personalized marketing campaigns for everyone.
A. Region
B. City or metro size (population)
C. Density
D. Climate

ii. Demographic:
Demographic segmentation divides the market on the basis of demographic variables
like age, gender, marital status, family size, income, purchasing capacity, price
preference, education and occupation. This is one of the most common segmentation
practiced among marketers. Demographic segmentation is seen almost in every
industry like automobiles, beauty products, mobile phones, apparels, etc and is set on
a premise that the customers’ buying behaviour is hugely influenced by their
demographics.
A. Age
B. Gender
C. Marital status
D. Family size
E. Family life cycle
F. Income
G. Purchasing capacity
 H. Price preference
I. Education
J. Occupation

iii. Psychographic:
Psychographic Segmentation divides the audience on the basis of their personality,
lifestyle and attitude. This segmentation process works on a premise that consumer
buying behaviour can be influenced by his personality and lifestyle. Personality is the
combination of characteristics that form an individual’s distinctive character and
includes habits, traits, attitude, temperament, etc. Lifestyle is how a person lives
his life
A. Lifestyle
B. Personality

iv. Behaviouristic:
The market is also segmented based on audience’s behaviour, usage, preference,
choices and decision making. The segments are usually divided based on their
knowledge of the product and usage of the product. It is believed that the knowledge
of the product and its use affect the buying decision of an individual.
A. Benefit segmentation

v. Purchase occasion:
Buyers may be differentiated on the basis of when they use a product or service. It
may be segmented on the basis of time, objective, location, person, user status.
A. Time
B. Objective
C. Location
D. User status

vi. Usage rate:

The frequency of product use, i.e. the usage rate, could be heavy, medium or light and
the markets may be segmented to align the product with the given usage rate for the
product. Market research provides that out of the total customers, light and medium
users are 70 to 80 per cent and constitute only 20 to 30 per cent of the product
demand. There may be different usage occasions for the product and consumers seek
different benefits in different usage occasions. Ad campaigns promote the different
use occasions for the product to make the consumer learn about new uses for the
product. This is done to push forward the product usage rate.
A. Usage rate
B. Awareness status
C. Attitude towards the product
D. Brand loyalty
E. Buyer readiness and marketing factor
Benefits of market segmentation:
1. Facilitates the proper choice
2. Helps distinguish one customer group from another
3. Facilitates effective tapping of the market
4. Divide and rule concept
 5. Makes marketing effort more efficient and helps to identify less satisfied segments
and concentrate on them to improve the level of satisfaction
6. Brings the benefits to the customers as well
7. Helps the specialisation required in products/services, distribution, promotion and
pricing for matching the customer group and developing marketing offers and appeals
that match the needs of such a group.

Process of Segmentation:
i. Needs based segmentation:
Group customers into segments based on similar needs and benefits sought by
customers. The firm should choose a single or a few attributes which are common
amongst the consumers. Then the segmentation is done on one such basis or a
combination of a few of the bases.

ii. Segment identification:

The second step is to identify the target market. The marketers must be very clear
about who all should be included in a common segment. Make sure the individuals
have something in common. Segmentation helps the organizations decide on the
marketing strategies and promotional schemes.
For example, Maruti Suzuki has adopted a focused approach and wisely created
segments within a large market to promote their cars.

Lower Income Group - Maruti 800, Alto

Middle Income Group - Wagon R, Swift, Swift Dzire, Ritz
High Income Group - Maruti Suzuki Kizashi, Suzuki Grand Vitara

iii. Segment attractiveness:

Determine the overall attractiveness of the segment. The segments must be evaluated
for their attractiveness or commercial viability. This is the requirement of effective
segmentation

iv. Segment profitability:

Determine profitability of the segment. Then the company selects segments which is
decided by evaluating and selecting market criteria

v. Segment positioning:
For each segment create a value proposition and product price positioning strategy ba
sed on that segment’s positioning strategy.

vi. Market mix strategy:

Selecting customer segments expands segment positioning strategy to include all
aspects of the marketing mix products, price, place and promotion
Market targeting in services:
The firm must look at the following factors:
i. Segment size and growth potential:
The size of segments should be compared on the basis of their present capacity and
their future potential to grow.

ii. Segment overall attractiveness and profitability:

Marketers should analyse on several factors and on the basis of critical assessment
this targeting should be decided.

iii. Company objectives and resources:

The target selection for companies should match the overall objectives and resources
philosophy of the company.
Targeting Strategies:
Having evaluated different segments, the company can select from five patterns of target
market selection:
i. Single Segment Concentration: Concentrated efforts on single segment.
ii. Selective Specialisation: Only a few segments are targeted depending on the
company criteria and concentrated effort is given.
iii. Product / Service Specialisation Strategy: All the available market segments are
targeted for a single category of products and services.
iv. Market Specialisation Strategy: Only a particular market segment is targeted for all
the categories of products and services.
v. Full Market Coverage: All the available market segments are targeted for all the
categories of products and services
Positioning
Definition:
Positioning is defined as the process of establishing and maintaining a distinctive place in the
market for an organisation and / or its products / services offerings.
Thus, positioning is the creating of a distinct place in the minds of the customer or
influencing the perception of a customer with the respect to the other companies or their
products/services.
Positioning Strategies:
i. Attribute positioning:
It is to associate a product with an attribute, a product feature, or a consumer feature.
Sometimes a product can be positioned in terms of two or more attributes
simultaneously. The price/quality attribute dimension is commonly used for
positioning the products. A common approach is setting the brand apart from
competitors on the basis of the specific characteristics or benefits offered. Sometimes
a product may be positioned on more than one product benefit.
Example: Oppo F1 smartphone has positioned itself based on its selfie feature.

ii. Benefit positioning:

 Based on benefit the customer derives the benefit using a particular service like some
private banks offering privilege banking, instant account opening.
Examples:
Eno is positioned as product which provides relief from acidity
RentoMojo is positioned as a one stop solution for furniture and appliances for those
who relocate to other cities

iii. User positioning:

Positioning a product by associating it with a particular user or group of users is yet
another approach. Motography Motorola Mobile, in this ad the persona of the user of
the product has been positioned.
Examples:
Bournvita is positioned as product for growing children.
Gatorade is positioned as sports drink for men and women who indulge in sports.
Eithad Airways new offering ‘The residence’ is targeted towards the upper class.

iv. Competitor positioning:

Competitors may be as important to positioning strategy as a firm’s own product or
services. In today’s market, an effective positioning strategy for a product or brand
may focus on specific competitors.
Examples:
BMW vs Audi
Snapdeal vs Flipkart

v. Category positioning:
Positioning as a leader of a particular category, so that it becomes synonymous with
that service like Xerox means photocopying, etc

vi. Quality positioning:

This positioning focus on the quality or value offered by the brand at a very
competitive price. Although price is an important consideration, the product quality
must be comparable to, or even better than, competing brands for the positioning
strategy to be effective.
Examples: Tide & Nirma
Steps in developing positioning strategy:
Determining the levels of positioning: Step one is to settle on which level needs
positioning attention and focus. For e.g. Vodafone has separate corporate plans and
individual plans
Identification of attributes: After step one, specific attributes that customers seek
comes into play. For e.g., the purpose of using the banking service may be different
for business and personal service seekers. Timing also influences choice of service.
For e.g. choice of going to a restaurant will be different for a corporate meeting or a
weekend family brunch. The service seeker also evaluates alternatives available to
him/her and makes a choice on the basis of his perception. This choice need not
necessarily reflect the most important attribute he seeks in a service. For e.g. a
customer using the services of a particular bank ranks ‘rate of interest as the most
important feature. But mostly all banks will have similar rates. So he makes his choice
on the basis of other factors like, bank timings. atmosphere, friendly staff, net banking
facility etc. the service seekers perceptions of this process is the basis for developing
positioning map.
Location of attributes on a positioning map: Positioning maps is a useful way to
represent consumer perceptions of alternative products in visual format. They are
typically two attributes, but nowadays, 3-D models can be used to portray positions on
three attributes simultaneously. They are also known as perceptual maps. Positioning
maps can be developed for each segment in the target market and these maps will
show the positions of different players, as per the perceptions of the consumers in
these segments. Mapping future scenarios help identify potential competitive
responses and helps in visualization of strategy.

For example: Product: Ferrari, BMW, Kia, Range Rover, Saab, Hyundai.
 The six products are plotted upon the positioning map. It can be concluded that
products tend to bunch in the high price/low economy(fast) sector and also in the low
price/high economy sector. There is an opportunity in the low price/ low economy
(fast) sector. Maybe Hyundai or Kia could consider introducing a low cost sport
saloon. However, remember that it is all down to the perception of the individual.
Evaluating position options: According to Ries and Trout, there are 3 positioning
options:

(a) Strengthening current position against competitors: This means to better

one’s own services and thus strengthening the current position against competitors

(b) Identifying an unoccupied market position: This means to identify and fill
the unoccupied and unnoticed gaps through better service delivery.

(c) Repositioning the competition: This means to frequently reposition in order to

attain a better position as compared to the competitor can be achieved through
advertising and innovation.

5. Implementing positioning: The positioning should be communicated to the

target audience by all employees, policies and advertising.

Differentiation:
Differentiation is defined as, “creation of different advantage or a competitive edge, that will
enable the firm to serve the target market more effectively than the competitor.”
Effective differentiation should have the following criteria:
1. Important: Customers in the target group attach some value and importance to the
services offered by the company.
 2. Distinctive: customers feel that services offered by the company as compared to that
of the competitors.
3. Superior: Customers feel that the services offered by the company is superior to the
rest in all respect.
4. Communicable: The ease with which the company communicates with the customers
is superior to the rest of the world.
5. Pre-emptive: The differentiation is such that it cannot be easily duplicated or copied.
6. Affordable: Customers should be able to pay for the difference willingly.
7. Profitable: The company should maintain its profitability or profits in offering the
difference, or in other words it should be profitable.
Promotion and Communication in services:
The four main tools of promotion:
i. Advertising:
Advertising is defined as any form of paid communication or promotion for product,
service and idea. Advertisement is not only used by companies but in many cases by
museum, government and charitable organizations. However, the treatment meted out
to advertisement defers from an organization to an organization. Advertising
development involves a decision across five Ms Mission, Money, Message, Media
and Measurement.
Mission looks at setting objectives for advertising. The objectives could be to inform,
persuade, remind or reinforce. Objective has to follow the marketing strategy set by
the company.
Money or budget decision for advertising should look at stage of product life cycle,
market share and consumer base, competition, advertising frequency and product
substitutability.
Message’s development further is divided into four steps, message generation,
message evaluation and selection, message execution, and social responsibility
review. Checking on the effectiveness of communication is essential to company’s
strategy. There are two types of research communication effect research and sales
effect research.

ii. Sales promotion:

Promotion is an incentive tool used to drive-up short-term sales. Promotion can be
launched directed at consumer or trade. The focus of advertising to create reason for
purchase the focus of promotion is to create an incentive to buy. Consumer incentives
could be samples, coupons, free trial and demonstration. Trade incentive could be
price off, free goods and allowances. Sales force incentive could be convention, trade
shows, competition among sales people.
Sales promotion activity can have many objectives, for example, to grab attention of
new customer, reward the existing customer, increase consumption of occasional
users. Sales promotion is usually targeted at the fence sitters and brand switchers.
Sales promotional activity for the product is selected looking at the overall marketing
objective of the company. The final selection of the consumer promotional tools
needs to consider target audience, budget, competitive response and each tool’s
purpose.
 iii. Public relation:
Companies cannot survive in isolation they need to have a constant interaction with
customers, employees and different stakeholders. This servicing of relation is done by
the public relation office. The major function of the public relation office is to handle
press releases, support product publicity, create and maintain the corporate image,
handle matters with lawmakers, guide management with respect to public issues.
Companies are looking at ways to converge with functions of marketing and public
relation in marketing public relation. The direct responsibility of marketing public
relation (MPR) is to support corporate and product branding activities.

iv. Direct marketing:

The communication establishes through a direct channel without using any
intermediaries is referred to as direct marketing. Direct marketing can be used to
deliver message or service. Direct marketing has shown tremendous growth in recent
years. The internet has played major part in this growth story. Direct marketing saves
time, makes an experience personal and pleasant. Direct marketing reduces cost for
companies. Face to face selling, direct mail, catalogue marketing, telemarketing, TV
and kiosks are media for direct marketing.
Promotions through product-life cycle

Stage 1. Market Development

After all research and development has be done it is time to launch the product and begin its
lifecycle. The introduction stage of the product life cycle is when the marketing team
emphasizes promotion and the product’s initial distribution. Often the product will have little
or no competitors at this point. Nonetheless, sales may remain low because it takes time for
the market to accept the new product. At this stage of the life cycle, the company usually
loses money on the product.

Stage 2. Market Growth

In the growth stage of the product life cycle, the market has accepted the product and sales
begin to increase, because the company can start to benefit from economies of scale in
production, the profit margins, as well as the overall amount of profit, will increase. The
company may want to make improvements to the product to stay competitive. At this point,
there are still relatively few competitors. This makes it possible for businesses to invest more
money in the promotional activity to maximize the potential of this growth stage.

Stage 3. Market Maturity

During the maturity stage, the product is established and the aim for the manufacturer is now
to maintain the market share they have built up. This is probably the most competitive time
for most products and businesses need to invest wisely in any marketing they undertake.
They also need to consider any product modifications or improvements to the production
process which might give them a competitive advantage.

Stage 4. Market Decline

Eventually, the market for a product will start to shrink, and this is what’s known as the
decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the
customers who will buy the product have already purchased it), or because the consumers are
switching to a different type of product. While this decline may be inevitable, it may still be
possible for companies to make some profit by switching to less-expensive production
methods and cheaper markets.

Services Environment
Services environment is the environment in which the service is delivered and where the
firm & the customer interact. Service environments also called as servicescapes shape
employee productivity and customer loyalty.
Purpose of Service environment:
• Helps the firm to create distinctive image and unique positioning
• Relates to the style and appearance of the physical surroundings encountered by the
customers at service delivery site.
• Service environment affects the buyer behaviour in three ways:
➢ Message creating medium
➢ Attention creating medium
➢ Effect creating medium
• Customers perceive quality of service from service environment and hence try to
make quality environment for a desired image
• Physical surroundings help shape appropriate feelings and reactions in customers and
employees. For example: Disneyland, Denmark’s Legoland
Role of the service environment:
1. Package
➢ conveys expectations
➢ influences perceptions

2. Facilitator
➢ facilitates the flow of the service delivery process
 ➢ provides information (how am I to act?)
➢ facilitates the ordering process (how does this work?)
➢ facilitates service delivery
3. Socializer
➢ facilitates interaction between:
➢ customers and employees
➢ customers and fellow customers
4. Differentiator
➢ sets provider apart from competition in the mind of the consumer
Dimensions of the service environment:
1. Ambient Conditions
➢ Characteristics of environment pertaining to our five senses
2. Spatial Layout and Functionality
➢ Spatial layout:
o Floorplan
o Size and shape of furnishings, counters, machinery, equipment, and how they
are arranged
➢ Functionality: Ability of those items to facilitate performance
3. Signs, Symbols, and Artifacts
➢ Explicit or implicit signals to:
o Communicate firm’s image
o Help consumers find their way
o Convey rules of behaviour
Impact of ambient conditions:
Ambient environment is composed of hundreds of design elements and details that must
work together to create desired service environment
Ambient conditions are perceived both separately and holistically, and include:
o Lighting and colour schemes
o Scents
o Sounds such as noise and music
o Size and shapes
o Air quality and temperature
Impact of Signs, Symbols, and Artifacts:
• Communicates the firm’s image
• Help customers find their way
• Let customers know the service script
• First time customers will automatically try to draw meaning from the signs, symbols
and artifacts
• Challenge is to design such that these guide customers through the service delivery
process
• Unclear signals from a servicescape can result in anxiety and uncertainty about
how to proceed and obtain the desired service
Designing and managing services process:
Service Blueprint:
• Service blueprint is a picture or map that accurately portrays the service system so that
different people involved in providing it can understand and deal with it objectively
regardless of their individual point of view.
• Particularly useful at design and redesign stages of service development.
• It provides a way to break the service into logical components and to depict the steps or
tasks in the processes, the means by which they are executed and evidence of the service as
consumer experiences it.

Blueprint components:
Basic components of Service Blueprint are:
• Customer actions: it includes steps, choices, activities and interactions that customer
performs in the process of purchasing, consuming and evaluating the service
• “Onstage” contact employee actions: steps and activities that the contact employees
perform that are visible to the customer.
• “Backstage” contact employee actions: steps and activities that occur behind the scene
to support onstage activities.
• Support processes: covers the internal services, steps and interactions that take place
to support the contact employees in delivering the service.

Service Blueprint Components

• Line of interaction: direct interactions b/w the customer and organization.
• Line of visibility: this line separates all service activities that are visible to the
customers from those that are not visible.
• Line of internal interaction: separates contact employees activities from those of
other service support activities and people.
• Physical evidence
Improving Reliability of Processes by Failure Proofing:

Analysis of reasons for failure reveals the opportunities for fail proofing to reduce /
eliminate risk of errors. Errors include:
• Treatment errors: human failures during contact with customers
• Tangible errors: failures in physical elements in service.

Fail safe procedures include measures to prevent omission of tasks or performance of tasks
• Incorrectly
• In wrong number
• Too slowly

There is need for fail safe methods for both employees and customers

Self Service Technologies (SST)

Self service is ultimate form of customer involvement in service production. Customers directly
uses the system and facilities available and avails the service. In SST, customer’s time and effort
replace those of employees.

Firms as teachers: Well-trained customers perform better:

➢ Customers assumes the role of co-producers
➢ Customers need to know how to achieve best results
➢ Education can be provided through brochures, advertising, posted instructions, websites
➢ Service providers, fellow customers and employees must be well trained to help advise,
assist customer
The problem of customer misbehaviour – Identifying and Managing “Jaycustomers”
Who is a “Jaycustomer”
“A customer who behaves in thoughtless or abusive fashion, causing problems for the firm
itself, employees or other customers”
Types of “JAYCUSTOMER”
• The thief: Seeks to avoid paying for service / manipulates
• The rule breaker: Ignores rules of social behaviour and procedures for safe, efficient
use of service.
• The belligerent: Angrily abuses service personnel and sometimes other customers
physically and/or emotionally.
• The family feuders: Sub – category of belligerents who get in to arguments with other
customers mostly their own family members.
• The vandal: Consciously damages physical facilities, furnishings and equipment.
• The deadbeat: fails to pay bills on time.
Customer Relationship Management:
Meaning:
CRM is a widely implemented strategy for managing a company’s interaction with
customers, clients and sales prospects. CRM describes a company - wide business strategy
including customer – interface departments as well as other departments.
By implementing a CRM solution, a company may expect to:
▪ Increase the company’s ability to retain and acquire customers
▪ Maximize customer life cycle
▪ Personalize and improve customer service without increasing cost of service
Types of CRM:
i. Operational CRM:
Operational CRM, generally refers to products and services that allow an
organisation to take care of their customers. It provides support for various business
processes, which can include sales, marketing and service.
It concentrates on three areas of business: the computerization, enhancement &
improvement of services. The major automation applications are:
• Marketing automation: It concentrates on automating the marketing processes.
Marketing campaigns management consists of the use of the actual information of a
specific customer in developing communications aiming at customers n individual
environment.
• Sales force automation: CRM systems are used in acquiring new customers and
dealing with existing customers. This system identifies a customer and maintains all
data.
• Service automation: This application deals with managing actual interactions with
customers like websites, direct sales, call centres and blogs.
 ii. Collaborative CRM:
Collaborative CRM is communication with customers and covers direct interaction
with customers including feedback and issue reporting. Collaborative CRM greatly
improves services offered. Developing collaborative strategies includes following
steps:
• Amplifying commitment: Importance of customer support and feedback to help
them in determining strategies
• Building valuable project team: consists of experts and professionals and they
are involved in decision making of the company
• Requirement analysis: focuses on the actual requirements of business.
iii. Analytical CRM:
Analytical CRM addresses the analysis of customer data for a host of different purposes. It
involves taking into account product and service decision making, pricing and new product
development. The sole aim of analytical CRM towards the organisation is developing,
supporting and enhancing the decision making in the organisation.

Features:
• Developing and implementing the outcome to improve the effectiveness of CRM
systems and process.
• Analysing, determining and developing comprehensive rules and methods to level
and optimize the customer relationship
• Getting the entire important customer’s information from different channels and
sources.
Customer loyalty:
Customer loyalty is a measure of a customer’s likeliness to do repeat business with a company
or brand. It is the result of customer satisfaction, positive customer experiences, and the
overall value of the goods or services a customer receives from a business.
When a customer is loyal to a specific brand, they are not easily influenced by availability or
pricing. They are willing to pay more as long as they get the same quality product or service, they
are familiar with and love. Other characteristics of a loyal customer include the following:

• they are not actively searching for different suppliers;

• they are more willing to refer a brand to their family and friends;
• they are not open to pitches from competing companies;
• they are open to other goods or services provided by a particular business;
• they are more understanding when issues occur and trust a business to fix them;
• they offer feedback on how a brand can improve its products or services;
• as long as there is a need, they will keep purchasing from a business.

Regardless of the size of a company, customer loyalty is essential. First-time customers are harder
to convince because they do not have any experience with the services or goods offered by a
business. However, customers who have already shopped from a particular store are more
accessible to sell to because they know what to expect.

That said, here some reasons why customer loyalty is essential:

• Repeat customers spend more than first-time customers. They have a way higher
average order value that increases with the duration they have been doing business with a
brand.
• Loyal customers produce higher conversion rates. Existing customers have way
higher conversion rates than new ones.
• It boosts profits. To enjoy better profits, brands need to foster customer loyalty.
Business profits go up by 25% to 95% when customer retention rates are increased by only
5%.
• Retaining an existing customer is cheaper than acquiring a new one. It is cheaper to
keep an existing customer than to bring a new one on board.
• Customer loyalty helps in effective planning. Customer loyalty enables businesses
to predict growth more effectively, thus helping in financial planning.
• Loyal customer shop regularly. Given their good experience with a brand, repeat
customers have higher chances of returning. Moreover, their likelihood of making future
purchases increases as they make more transactions.
• Repeat customers spend more during the holidays. While all customers tend to spend
more on busy holiday seasons, loyal customers tend to perform way better.

Types of customer loyalty programme:

Opt-in Programs: Customers provide information about their preferences and in return
receive targeted and relevant messages for promotions / deals / events. Opt-in loyalty
programs gives customer access to the best offers / deals on products that interests via mobile.
Retailers can proactively send offers / incentives to the customer’s mobile device. A loyalty
reward mobile program can alert customer to any special offers when he / she checks-in.

Mobile coupons: It add interactivity, location and real-time attributes to the traditional
coupons. So, companies use mobile coupons in different ways.

Cross selling programmes: It is the action or practice of selling among or between

established clients, or the action or practice of selling an additional product / service to an
existing customer. It is important to ensure that the additional product or service being sold to
the client or clients enhances the value he gets from the organization.

Upselling: It is a sales technique whereby a seller induces the customer to purchase more
expensive items or other add-ons in an attempt to make a more profitable sale.

Co-creation programmes: It is the practice of product or service development that is

collaboratively executed by developers and stakeholders together.
 Brand communities: Group of individuals united through the consumption of your products.
Communality is a vital feature – help and expect help from others. Brandfests are used to share
history. Customers keep consuming the product / service to stay connected.
Traditional loyalty programs vs Modern loyalty programs
Plastic reward cards vs Mobile phones
Use of plastic cards increase upfront cost to launch their loyalty program
Check-in based loyalty program utilize guests’ mobile phones, thus enabling guests to check-in
anytime at the venue
POS vs Online dashboards
Mostly card-based loyalty program is connected to point-of-sale system to track customers’ reward
points
Check-in loyalty program are available with online dashboard that can be accessed to update its
loyalty program and view reports n customer visits and rewards.
Printable coupons vs Mobile coupons
Traditional loyalty programs deliver coupons and rewards via email that the guests might print out.
Check-in loyalty program are linked to guest’s mobile phones, deliver coupons and rewards directly
to the guest’s phones
Social media integration:
In Traditional loyalty programs, the business knows when a guest earns a reward or visits your
business.
Check-in programs are social by nature. It helps business to get it known to guest’s check-in to their
friends and also provides inherent recommendations.
Defining and Measuring Productivity:
The productivity of process is related to how effectively input resources are transformed into value
for customers.
According to Gronroos, for the needs of manufacturers of physical products, there are widely used
productivity concepts and measurements instruments. However, in service processes, the underlying
assumptions of these
concepts and models do not hold. For example, manufacturing-based productivity models assume
that any change of input in the production process does not lead to quality changes in outputs.
However, in a service context, changes in the production resources and systems do affect the
perceived quality of services. Therefore, using
manufacturing-oriented productivity models in service contexts are likely to mislead
organizations. Since the service economy is now the largest portion of the industrialized world’s
economy, its development has significantly raised the importance of maximizing productivity
excellence in service organizations. The quantity and quality of service sector cannot be treated in
isolation, because it may be impossible to separate the impact on the entire service
experience. Hence, both the quantity and quality aspects must be considered together to provide a
joint impact on the total productivity of the service organizations.
Productivity Improvement Strategies:

1. Operations driven strategies:

Typical strategies to improve service productivity:
• Careful control of costs at every step in process
• Efforts to reduce wasteful use of materials or labour
• Matching productive capacity to average rather than peak demand levels
• Replacing workers by automated machines or self-service technologies
• Teaching employees how to work more productively
• Broadening variety of tasks that service worker can perform
• Installing expert systems that allow paraprofessionals to take on work previously performed
by professionals who earn higher salaries

Although improving productivity can be approached incrementally, major gains often

require redesigning entire processes.

2. Customer driven strategies

• Change timing of customer demand
By shifting demand away from peaks, managers can make better use of firm’s productive
assets and provide better service
• Involve customers more in production
Get customers to self-serve
Encourage customers to obtain information and buy from firm’s corporate Websites
• Ask customers to use third parties
Delegate delivery of supplementary service elements to intermediary organizations

3. Backstage and Front-Stage Productivity Changes: Implications for Customers

• Backstage changes may impact customers
Keep track of proposed backstage changes, and prepare customers for them - e.g., new
printing peripherals may affect appearance of bank statements
• Front-stage productivity enhancements are especially visible in high contact services
Some improvements only require passive acceptance, while others require customers to
change behaviour
Must consider impacts on customers and address customer resistance to changes
Better to conduct market research first if changes are substantial
4. A Caution on Cost Reduction Strategies
• Most attempts to improve service productivity seek to eliminate waste and reduce labour
costs and does not involve new technology
• Reducing staff means workers try to do several things at once and may perform each task
poorly
• Better to search for service process redesign opportunities that lead to
Improvements in productivity
Simultaneous improvement in service quality
• Cost reduction strategies should be used with caution as this may impact service quality
negatively.
• Excessive pressure breeds discontent and frustration among customer contact personnel,
who are caught between:
Meeting customer needs
Achieving management’s productivity goals