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Marketing of services Notes
Marketing of services Notes
Marketing of services Notes
UNIT-1:
Introduction,
Marketing of services involves promoting and selling intangible products or activities
rather than physical goods. Unlike tangible products, services are often inseparable from
their providers, perishable, and variable in quality. Here's an introduction to the key
concepts in marketing services:
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The current growth of service sector in India is based mainly on labour market arbitrage.
Moving forward, India can no longer rely on ‘low cost’ for ‘low value added’ services. Therefore,
we need solutions that address these:
i) Boosting the manufacturing sector with both direct and indirect spin - off benefits
for the growth of the service sector in India (e.g. Make in India)
ii) Moving up the value chain, especially in the IT/ ITeS sector.
iii) Broad - basing the Indian Services offering platform into sectors beyond the
traditional IT/ ITeS by identifying the global demand for such services, and meeting
these demands based on our natural competencies and comparative advantages.
Classification of services
Services can be classified based on various criteria. Here are some common classifications:
1. By Nature of Service:
Tangible Services: These are services that involve the delivery of a physical
product along with the service. For example, a car rental service provides both the
vehicle (tangible) and the service (intangible) of renting.
Intangible Services: These services are purely intangible and involve no physical
product. Examples include education, healthcare, consulting, and entertainment
services.
2. By Degree of Tangibility:
Highly Tangible Services: Services where the tangible aspect plays a significant
role in the delivery. For example, in a restaurant, the food and ambiance are
tangible elements.
Highly Intangible Services: Services where the intangible aspect dominates, and
there's little or no physical presence involved. For example, counseling or
financial planning services.
3. By Ownership and Access:
Owned Services: These are services that customers own and possess. For
example, owning a car or a house.
Non-owned Services: These are services that customers access but do not own
outright. For example, public transportation, hotel stays, or healthcare services.
4. By Relationship with Customers:
Business-to-Consumer (B2C) Services: Services provided directly to individual
consumers. Examples include retail, entertainment, and personal grooming
services.
Business-to-Business (B2B) Services: Services provided to other businesses.
Examples include consulting, legal, and accounting services.
Consumer-to-Consumer (C2C) Services: Services facilitated between
individual consumers. Examples include peer-to-peer rental services or freelance
work platforms.
5. By Level of Customization:
Standardized Services: Services that are offered in a uniform manner to all
customers. Examples include fast-food chains or mass transportation services.
Customized Services: Services tailored to meet the specific needs and
preferences of individual customers. Examples include personalized financial
planning or bespoke travel experiences.
6. By Service Industry Sector:
Professional Services: Services provided by professionals with specialized
knowledge and expertise, such as legal, accounting, and consulting services.
Healthcare Services: Services related to medical care, including hospitals,
clinics, and healthcare providers.
Hospitality Services: Services related to accommodation, food, travel, and
tourism, such as hotels, restaurants, and airlines.
Financial Services: Services related to banking, insurance, investment, and
financial management.
Information Technology (IT) Services: Services related to software
development, IT consulting, cloud computing, and technical support.
These classifications provide a framework for understanding the diverse range of services and
the specific characteristics and considerations associated with each type.
Service blueprint:
Designing a service blueprint involves mapping out the entire service delivery process, including
all the steps involved, interactions between different components, and the role of both customers
and service providers. Here's a step-by-step guide to designing a service blueprint:
1. Identify the Service: Clearly define the service you want to blueprint. This could be
anything from a simple customer transaction to a complex service offering.
2. Identify Customer Touchpoints: List all the points of contact between the customer and
the service. This includes physical interactions, such as visiting a store or website, as well
as communication channels like phone calls, emails, or chat support.
3. Map the Customer Journey: Outline the customer's journey from start to finish. This
includes all the steps they take, from the initial awareness of the service to the post-
service follow-up. Use customer personas or scenarios to understand different customer
experiences.
4. Identify Frontstage and Backstage Processes: Differentiate between the processes that
are visible to the customer (frontstage) and those that happen behind the scenes
(backstage). Frontstage processes are customer-facing and directly impact the customer
experience, while backstage processes support the frontstage activities.
5. Identify Support Processes: Consider support processes that facilitate the delivery of the
service. These may include administrative tasks, logistics, IT support, or any other
functions that enable the service delivery process.
6. Determine Service Standards and Metrics: Define service standards and key
performance indicators (KPIs) to measure the effectiveness and efficiency of the service
delivery process. This could include metrics like response time, service quality, customer
satisfaction, and service cost.
7. Map Employee Roles and Responsibilities: Identify the roles and responsibilities of
employees involved in delivering the service. This includes frontline staff, managers,
support personnel, and any other individuals who play a part in the service delivery
process.
8. Map Physical Evidence and Infrastructure: Consider the physical evidence or tangible
elements that support the service delivery process. This could include facilities,
equipment, signage, digital interfaces, and any other physical components that contribute
to the customer experience.
9. Create the Blueprint Diagram: Use a visual representation, such as a flowchart or
diagram, to map out the entire service delivery process. Use symbols or color-coding to
differentiate between different types of activities, interactions, and components.
10. Validate and Iterate: Review the service blueprint with stakeholders, including
employees and customers if possible, to validate its accuracy and effectiveness. Make
revisions as necessary based on feedback and insights gained from the validation process.
11. Implement and Monitor: Implement the service blueprint within your organization and
continuously monitor performance against the defined standards and metrics. Use the
blueprint as a tool for process improvement and optimization over time.
By following these steps, you can create a comprehensive service blueprint that provides a clear
understanding of the service delivery process, identifies opportunities for improvement, and
helps ensure a consistent and positive customer experience.
UNIT-2
1. Product:
In services marketing, "product" refers to the service being offered. This
includes both the core service and any supplementary services or features.
It's crucial to define the service offering clearly, highlighting its unique
features and benefits.
2. Price:
Pricing strategies for services can vary widely based on factors such as the
perceived value of the service, competitive pricing, cost-plus pricing,
value-based pricing, and dynamic pricing. Pricing decisions should
consider the costs involved in delivering the service, as well as customer
willingness to pay.
3. Place:
In services marketing, "place" refers to the distribution channels through
which the service is delivered to customers. This includes physical
locations, online platforms, and any other touchpoints where customers
interact with the service. The accessibility and convenience of service
delivery channels are critical considerations.
4. Promotion:
Promotion in services marketing involves communication strategies to
raise awareness and generate interest in the service. This includes
advertising, public relations, sales promotions, direct marketing, and
digital marketing tactics. Effective promotion strategies should highlight
the unique benefits of the service and address customer needs and pain
points.
5. People:
People are a fundamental component of service delivery. This includes
frontline employees, customer service representatives, managers, and any
other personnel who interact with customers. Hiring, training, and
empowering employees are crucial for delivering high-quality service
experiences and building customer relationships.
6. Process:
Process refers to the systems, procedures, and workflows involved in
delivering the service. This includes everything from booking processes
and service delivery protocols to complaint handling procedures and
quality assurance measures. Designing efficient and customer-centric
processes is essential for delivering consistent service experiences.
7. Physical Evidence:
Physical evidence encompasses the tangible elements that support the
service delivery process and contribute to the customer experience. This
includes facilities, equipment, signage, branding materials, and any other
physical touchpoints that customers encounter. Physical evidence helps to
convey the quality and reliability of the service.
By considering all seven elements of the marketing mix, service-based businesses can
develop comprehensive marketing strategies that address the unique challenges and
opportunities associated with delivering intangible services.
A service channel is a method for allocating a particular kind and scope of work to service
providers. Brands can arrange base system service channels for setting the context and service
channel attributes that characterize the work associated with a channel, or they can make their
own customer service channel to handle work that isn’t supported in the base system channels.
Overall, the internet as a service channel provides businesses with opportunities to reach
a wider audience, streamline operations, enhance customer experiences, and adapt to
changing consumer preferences in an increasingly digital world.
UNIT-3
Strategic Marketing Management for services
Strategic marketing management for services involves developing and implementing long-term
plans and tactics to achieve the business objectives of service-based organizations. Given the
unique characteristics of services, strategic marketing management in this context requires
careful consideration of factors such as intangibility, inseparability, variability, and perishability.
Here's a framework for strategic marketing management for services:
1. Market Analysis:
Conduct a thorough analysis of the market landscape, including customer needs,
preferences, and behaviors, as well as competitor offerings and industry trends.
Understand the dynamics of supply and demand within the service industry and
identify opportunities for differentiation and competitive advantage.
2. Segmentation, Targeting, and Positioning (STP):
Segment the market based on relevant criteria such as demographic,
psychographic, or behavioral factors. Identify target segments that align with the
organization's capabilities and strategic goals. Develop a positioning strategy that
communicates the unique value proposition of the service offering to the target
market segments.
3. Value Proposition Development:
Define a compelling value proposition that articulates the benefits and value
delivered by the service offering to customers. Highlight key features, advantages,
and benefits that differentiate the service from competitors and resonate with the
target audience. Ensure that the value proposition addresses customer needs and
addresses pain points effectively.
4. Service Portfolio Management:
Manage the organization's portfolio of services to ensure alignment with strategic
objectives, market demand, and customer preferences. Evaluate the performance
of existing services and identify opportunities for innovation, expansion, or
discontinuation based on market feedback and business priorities. Balance the
service mix to optimize revenue generation and profitability.
5. Marketing Mix Optimization:
Develop and implement strategies for each element of the marketing mix
(product, price, place, promotion) to effectively position and promote the service
offering in the marketplace. Customize marketing tactics to suit the unique
characteristics of services, such as emphasizing intangible benefits, leveraging
digital channels, and enhancing customer interactions.
6. Customer Relationship Management (CRM):
Build and maintain strong relationships with customers through personalized
communication, exceptional service experiences, and ongoing engagement
initiatives. Implement CRM systems and processes to capture customer data,
analyze customer behavior, and tailor marketing efforts to individual preferences.
Foster loyalty and advocacy among existing customers to drive repeat business
and referrals.
7. Brand Management:
Develop a strong brand identity and reputation that reflects the organization's
values, personality, and commitment to excellence in service delivery.
Differentiate the brand from competitors and cultivate brand equity through
consistent messaging, visual identity, and customer experiences. Monitor brand
perception and actively manage brand reputation through proactive
communication and crisis management strategies.
8. Performance Measurement and Optimization:
Establish key performance indicators (KPIs) to track the effectiveness of
marketing initiatives and the overall performance of the service marketing
strategy. Monitor metrics such as customer acquisition, retention, satisfaction, and
profitability to evaluate progress towards strategic goals. Continuously analyze
data, gather customer feedback, and iterate on marketing strategies to optimize
results and adapt to changing market conditions.
1. Capacity Planning:
Forecasting Demand: Begin by forecasting demand for the service based
on historical data, market trends, seasonal variations, and other relevant
factors. Use quantitative methods such as time series analysis or
qualitative methods such as expert opinion and market research to predict
future demand patterns.
Assessing Capacity: Evaluate the organization's capacity to deliver the
service, considering factors such as available resources (e.g., staff, facilities,
equipment), production capabilities, and service delivery processes.
Identify bottlenecks, constraints, and potential areas for capacity
expansion or optimization.
Balancing Demand and Capacity: Compare forecasted demand with
available capacity to identify gaps or excess capacity. Develop strategies to
balance demand and capacity effectively, such as adjusting staffing levels,
scheduling shifts, optimizing workflow processes, and investing in
infrastructure upgrades as needed.
Flexibility and Scalability: Build flexibility and scalability into capacity
planning processes to accommodate fluctuations in demand and
unexpected changes in market conditions. Implement agile and responsive
strategies to scale capacity up or down quickly in response to changing
customer needs or competitive dynamics.
2. Segmentation:
Market Segmentation: Divide the market into distinct segments based on
relevant criteria such as demographics, psychographics, behavior, or
needs. Identify segments with different demand patterns, preferences, and
willingness to pay for the service.
Demand Segmentation: Segment demand based on factors such as peak
vs. off-peak periods, day of the week, time of day, or seasonal variations.
Analyze historical data to understand demand patterns within each
segment and tailor capacity planning strategies accordingly.
Service Segmentation: Segment services based on characteristics such as
complexity, customization level, price sensitivity, or service delivery
channel. Offer different service tiers or options to meet the diverse needs
and preferences of customers within each segment.
Capacity Allocation: Allocate capacity dynamically across different market
segments and service offerings to optimize resource utilization and
maximize revenue generation. Prioritize high-demand segments or
premium services during peak periods while ensuring adequate capacity
for lower-demand segments or standard services.
1. Clear Vision and Mission: Communicate the organization's vision, mission, and values
to all employees to foster a sense of purpose and direction. Help employees understand
how their roles contribute to the overall success of the organization and its commitment
to delivering exceptional service.
2. Employee Training and Development: Invest in training programs to equip employees
with the knowledge, skills, and resources needed to deliver high-quality service
consistently. Provide ongoing development opportunities to keep employees engaged,
motivated, and up-to-date with industry trends and best practices.
3. Communication and Feedback Channels: Establish open and transparent
communication channels to facilitate dialogue between management and employees.
Encourage feedback, suggestions, and ideas from frontline staff to identify areas for
improvement and address concerns proactively.
4. Recognition and Rewards: Recognize and reward employees for their contributions to
delivering excellent service and achieving organizational goals. Implement incentive
programs, performance bonuses, and employee recognition initiatives to motivate and
incentivize high performance.
5. Empowerment and Autonomy: Empower employees to make decisions and take
ownership of the customer experience within their areas of responsibility. Provide
autonomy and flexibility to adapt service delivery processes and procedures to meet the
unique needs of individual customers.
6. Cross-Functional Collaboration: Foster collaboration and teamwork across different
departments and functional areas to ensure seamless service delivery and consistent
customer experiences. Break down silos and encourage cross-functional communication
and cooperation to address customer needs holistically.
7. Leadership and Role Modeling: Lead by example and demonstrate a commitment to
service excellence at all levels of the organization. Encourage leaders and managers to
embody the organization's values and serve as role models for employees to emulate.
8. Continuous Improvement Culture: Cultivate a culture of continuous improvement and
innovation where employees are encouraged to identify opportunities for process
optimization, service innovation, and customer satisfaction enhancement. Implement
feedback loops and mechanisms for capturing employee ideas and suggestions for
improvement.
9. Employee Well-being and Work-Life Balance: Prioritize employee well-being and
work-life balance to prevent burnout, promote job satisfaction, and retain top talent. Offer
flexible work arrangements, wellness programs, and support services to help employees
maintain a healthy work-life balance.
10. Measurement and Evaluation: Establish performance metrics and key performance
indicators (KPIs) to monitor employee engagement, satisfaction, and performance related
to service delivery. Regularly evaluate the effectiveness of internal marketing initiatives
and adjust strategies as needed based on feedback and performance data.
1. External Orientation:
Customer-Centric Focus: An externally oriented service strategy places a
strong emphasis on understanding and meeting the needs, preferences,
and expectations of customers. It prioritizes delivering value to customers
and creating positive experiences at every touchpoint throughout the
customer journey.
Market-driven Approach: External orientation involves closely
monitoring market trends, competitor activities, and customer feedback to
identify opportunities for innovation, differentiation, and market
positioning. It involves adapting to changing market dynamics and
evolving customer demands to maintain competitiveness.
Service Quality and Differentiation: External orientation emphasizes
delivering high-quality services that meet or exceed customer
expectations. It focuses on differentiating the organization's offerings
based on factors such as service innovation, customization, convenience,
and overall customer experience.
Marketing and Branding: An externally oriented service strategy places a
strong emphasis on marketing, branding, and customer communications
to attract, acquire, and retain customers. It involves building brand
awareness, reputation, and loyalty through targeted marketing campaigns,
promotions, and engagement initiatives.
2. Internal Orientation:
Employee-Centric Focus: An internally oriented service strategy places a
strong emphasis on aligning internal culture, processes, and resources to
support service delivery and customer satisfaction. It prioritizes employee
engagement, satisfaction, and development as key drivers of service
excellence.
Process Efficiency and Effectiveness: Internal orientation involves
optimizing internal processes, systems, and workflows to enhance
operational efficiency, reduce costs, and improve service quality. It focuses
on streamlining processes, eliminating bottlenecks, and implementing best
practices to deliver consistent and reliable service experiences.
Employee Empowerment and Development: Internal orientation
emphasizes empowering employees, fostering a positive work
environment, and investing in employee training and development. It
involves equipping employees with the knowledge, skills, and resources
needed to deliver excellent service and exceed customer expectations.
Organizational Culture and Leadership: An internally oriented service
strategy focuses on building a customer-centric culture and leadership
that values and supports employees as the primary drivers of service
excellence. It involves fostering a culture of collaboration, accountability,
and continuous improvement to align organizational objectives with
employee goals and motivations.
1. Intangibility: Services lack physical form, making them difficult for customers to
evaluate before purchase. Communicating the benefits and value of intangible
services can be challenging, requiring creative marketing strategies to make the
benefits tangible and relatable.
2. Inseparability: Services are often produced and consumed simultaneously,
meaning that the customer is directly involved in the service delivery process.
Ensuring consistent service quality and customer satisfaction relies heavily on the
interactions between service providers and customers, making employee training
and customer relationship management crucial.
3. Perishability: Services cannot be stored or inventoried like physical products,
and unused capacity cannot be reclaimed. Managing demand fluctuations, peak
periods, and off-peak periods poses a challenge for service providers, who must
balance capacity utilization with customer satisfaction and revenue optimization.
4. Variability: Services are highly variable due to human involvement and the lack
of standardized production processes. Maintaining consistency in service quality
across different employees, locations, and customer interactions requires
effective quality control measures, training programs, and service standards.
5. Customer Expectations and Perception: Customer expectations of service
quality are often subjective and influenced by factors such as past experiences,
word-of-mouth recommendations, and brand reputation. Meeting or exceeding
customer expectations is essential for building trust and loyalty, but it can be
challenging to consistently deliver on customer promises.
6. Service Recovery and Complaint Handling: Service failures and customer
complaints are inevitable, but how they are handled can significantly impact
customer satisfaction and loyalty. Implementing effective service recovery
strategies and complaint resolution processes is crucial for turning negative
experiences into positive outcomes and retaining customers.
7. Competitive Differentiation: In crowded service markets, standing out from
competitors and creating a unique value proposition is challenging. Service
providers must identify and communicate their competitive advantages, whether
through service innovation, superior customer service, pricing strategies, or
branding initiatives.
8. Digital Disruption and Technology Adoption: The rapid pace of technological
innovation and digital transformation is reshaping the service industry landscape.
Service providers must adapt to emerging technologies, digital channels, and
changing customer preferences to remain competitive and relevant in the digital
age.
9. Globalization and Cultural Considerations: Expanding into international
markets brings additional challenges related to cultural differences, language
barriers, regulatory requirements, and localization of services. Service providers
must tailor their marketing strategies and service offerings to address the unique
needs and preferences of diverse global audiences.
10. Measuring Service Performance and ROI: Unlike tangible products, the
performance and value of services can be more challenging to quantify and
measure. Developing meaningful metrics and KPIs to evaluate service
performance, customer satisfaction, and return on investment (ROI) is essential
for assessing marketing effectiveness and making data-driven decisions.
UNIT-4
Delivering quality services:
Quality in services:
Quality in services refers to the overall excellence and satisfaction experienced by
customers when they interact with a service provider. Unlike tangible products, the
quality of services is often intangible and subjective, making it challenging to measure
and manage. However, ensuring high-quality service delivery is essential for building
customer trust, loyalty, and satisfaction. Here are some key aspects of quality in services:
The service performance gap, also known as Gap 5 in the gap model of service quality,
represents the difference between customers' perceptions of the service they receive
and their expectations. Closing this gap is crucial for enhancing customer satisfaction,
loyalty, and retention. Key factors and strategies for closing the service performance gap
include:
UNIT-5
Marketing of services with special reference to financial
service :
Marketing financial services requires a unique approach due to the intangible nature of
these offerings and the high level of trust required from customers. Here are some
strategies tailored to the marketing of financial services:
Health services:
Marketing health services requires a delicate balance between promoting the benefits of
your services and maintaining trust, credibility, and sensitivity to the healthcare needs of
your audience. Here are some tailored strategies for marketing health services:
1. Educate Customers: Public utility services often involve complex systems and
processes. Educate customers about how the services work, their benefits, and
ways to use them efficiently. Provide resources such as online guides, FAQs, and
educational materials to help customers understand their utility usage and bills.
2. Promote Conservation and Sustainability: Encourage customers to conserve
resources and adopt sustainable practices. Offer tips for reducing energy or water
consumption, promote energy-efficient appliances, and incentivize conservation
efforts through rebate programs or rewards for reducing usage.
3. Provide Transparent Pricing and Billing: Clearly communicate pricing
structures, fees, and billing processes to customers to build trust and
transparency. Make bills easy to understand, offer online bill payment options,
and provide tools for customers to track their usage and manage their accounts.
4. Offer Customer Support and Assistance Programs: Provide responsive
customer support services to address inquiries, resolve issues, and assist
customers with account management. Offer assistance programs for low-income
customers, seniors, and those facing financial hardships to ensure access to
essential services.
5. Invest in Infrastructure and Technology: Continuously invest in upgrading and
maintaining infrastructure to ensure reliable service delivery. Embrace technology
innovations such as smart meters, IoT devices, and data analytics to optimize
operations, improve efficiency, and enhance the customer experience.
6. Communicate During Outages and Emergencies: Proactively communicate
with customers during outages, emergencies, or planned maintenance activities.
Provide timely updates on restoration efforts, safety instructions, and alternative
service options through various communication channels such as text alerts,
social media, and automated phone messages.
7. Engage with the Community: Build strong relationships with the communities
you serve by participating in local events, sponsoring community initiatives, and
engaging in outreach efforts. Demonstrate your commitment to being a
responsible corporate citizen and contributing to the well-being of the
community.
Communication services:
communication services involves promoting telecommunications, internet, and other
connectivity solutions to businesses and consumers. Here are some strategies tailored to
marketing communication services:
Educational services are usually delivered by teachers or instructors that explain, tell,
demonstrate, supervise, and direct learning. Instruction is imparted in diverse settings, such as
educational institutions, the workplace, or the home, and through diverse means, such as
correspondence, television, the Internet, or other electronic and distance-learning methods.
The training provided by these establishments may include the use of simulators and simulation
methods. It can be adapted to the particular needs of the students, for example sign language
can replace verbal language for teaching students with hearing impairments. All industries in
the sector share this commonality of process, namely, labor inputs of instructors with the
requisite subject matter expertise and teaching ability.
Global Perspective:
Indian Perspective:
1. Growth Engine of the Economy: In India, the service industry plays a pivotal role
in driving economic growth and development. The sector has experienced rapid
expansion in recent decades, fueled by rising domestic consumption,
urbanization, and globalization.
2. Key Sectors: Major segments of the Indian service industry include IT and IT-
enabled services (ITES), business process outsourcing (BPO), financial services,
healthcare, tourism and hospitality, telecommunications, education, and retail.
3. Employment Generation: The service sector is a significant source of
employment in India, employing a large portion of the workforce, particularly in
urban areas. It offers opportunities for both skilled professionals and semi-skilled
workers across various domains.
4. Digital Transformation: India's service industry is undergoing digital
transformation, driven by factors such as government initiatives (e.g., Digital
India), technological advancements, increasing internet penetration, and growing
demand for digital services among consumers and businesses.
5. Export of Services: India has emerged as a global hub for outsourcing services,
particularly in IT, BPO, and software development. The country's skilled workforce,
competitive costs, and English-speaking talent have made it a preferred
destination for outsourcing services from companies worldwide.
6. Government Initiatives: The Indian government has launched various initiatives
to promote the service industry, improve ease of doing business, attract foreign
investment, enhance infrastructure, and develop human capital through skill
development programs.
7. Challenges and Opportunities: The Indian service industry faces challenges such
as infrastructure bottlenecks, regulatory hurdles, skill gaps, and competition from
other countries. However, it also presents opportunities for innovation, job
creation, and inclusive growth, especially in sectors with high growth potential.