Marketing of services

Service

“A service is any act or performance that one party

can offer to another that is essentially intangible and
does not result in ownership of anything. Its production
may or may not be tied to a physical product”.

Services are intangible as it can’t be

seen,felt,tasted,heard or smelled are highly variable as it
depends on who provides it and when and where it is
provided.
Nature

• Goods are produced while services are performed.

• Goods are things while services are activities or process.
• Goods can be standardized while in case of services not
possible.
• Goods can be returned or replaced but not same case with
services.
• Production and consumption of a service are more or less
simultaneous but not in the case with goods.
 Comparison of goods and services

BASIS GOODS SERVICE

Entity Tangible Intangible

Storage Possible Not possible

Ownership Possible Not possible

Repairs Delayed Spontaneous

Consumer reaction Delayed Spontaneous

Producer status Separate from goods Inseparable from

services

Quality Standard Varies with time

&person
Characteristics

• Intangibility
• Inseparability
• Heterogeneity
• Perishability
• ownership
Classification of services

• Market segment
• Degree of tangibility
• Skills of service provider
• Degree of regulation
• Degree of customer contact
Marketing mix in service marketing

• Product (service)
• Price
• Promotion
• Place
• People
• Process
• Physical Evidence
Strategies in service marketing

 Good service firms use marketing to position themselves

strongly.

 Successful service companies focus their attention on

employees as well as customers.

 Services differ from tangible products, require additional

marketing.

 Increase in service profit chain.

Service demands

 Healthy service profits and growth.

 Satisfied and loyal customers.

 Greater service value.

 Satisfied and productive service employees.

 Internal service quality.

Internal service Interactive service External service
strategy strategy strategy
 Train and  Describes the Deals in the
effectively motivate employees skill in external affairs of
its employees. serving the client. product marketing.
Contact employees  Service quality  Describes the
and all the depends heavily on work to prepare ,
supporting service the buyer-seller price, distribute and
people to work as a interaction. promote the service
team.  Service providers to customers.
Provide customer must deliver high-
satisfaction. touch and high-tech
products.
Importance of service marketing
 More than half of consumer’s expenditure are for services.

 Prices for services has been going up at a considerably fast

rate.

 Spending on business services is also increased.

 Market has become customer oriented.

Future of service marketing

 Job generation is far greater.

 Investment is also greater.

 Retailing constitutes a major service area in our country.

 Change in lifestyle and technologies.

 Customer satisfaction and customer focus.

 Value.
Service Quality
 Quality is whatever customer say it is, and the
quality of particular product or service is
whatever the customer perceives it to be.

 Quality of service, as perceived by the

customer is the result of comparison between
the expectations of the customer and his real
life experiences.
Approaches to service quality?

 Services are predominantly intangible in

nature.

 Inseparability aspect of services.

 Services are heterogeneous in nature.

Service quality models

 Gronroos Model

 Gap Model
Gronroos Model
Gap Model
Ten Original Dimension of Service
Quality.
 Reliability
◦ Accuracy
◦ Correct record
◦ Performance

 Responsiveness
◦ Mailing a transaction slip immediately
◦ Calling the customer back quickly
◦ Giving prompt service
 Competence
◦ Knowledge & Skill of Contact Personnel.
◦ Knowledge & Skill of Support Personnel.
◦ Research capability of Organisation.

 Access
◦ The service is easily accessible by telephone
◦ Waiting time to receive service is not extensive
◦ Convenient hours of operation
◦ Convenient location of service facility
 Courtesy (Politeness, respect, consideration)
◦ Consideration for the consumer’s property
◦ Clean and neat appearance of public contact
personnel.

 Communication
◦ Explaining the service itself
◦ Explaining how much the service will cost
◦ Explaining the trade offs between service and cost
◦ Assuring the consumer that a problems will be
handled
 Credibility (believability & honesty)
◦ Company name & reputation
◦ Personal characteristics of the contact personnel.
◦ Degree of hard sell involves interactions with the
customer

 Security(Freedom from danger & risk)

◦ Physical Safety
◦ Financial security
◦ Confidentiality
 Understanding
◦ Learning the customer’s specific requirement
◦ Providing individualized attention
◦ Recognizing the regular customer

 Tangibles
◦ Physical facility
◦ Appearance of personnel
◦ Tools used to provide the service
◦ Physical representation of service
◦ Other service facility.
International Marketing of Services

Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Marketing
 Marketers everywhere
must
◦ Know their markets
◦ Develop services to
satisfy their customers’
needs
◦ Price the services
◦ Make them available to
the buyers
◦ Inform potential
customers and
persuade them to buy
Standardization, Adaptation,
or Completely Different?

 Management would prefer global

standardization of the marketing mix

 Significant cost savings

 Longer production runs
 Standardized advertising, promotional materials, and
sales training
 Standardized corporate image
 Standardized pricing strategies
 Easier control and coordination
 Reduction of preparation time
Service Strategies
 Central focus of
marketing mix
 The total Service includes
◦ Physical evidence
◦ Brand name
◦ Duration of service
◦ Membership
◦ Instructions &
Commitments
◦ Company image
◦ Package
◦ Price
Types of Products
 Industrial Products  Consumer Products
◦ Many can be sold
unchanged worldwide
(ie. transistors)
◦ If changes are
required, they may be
cosmetic (ie. printing
instructions in another
language)
◦ In developing
countries problems
with
 Overload equipment
 Maintenance
◦ Local legal
requirements
◦ Generally, consumer
products require
greater adaptation
than do industrial
products
◦ However, some can be
sold unchanged to
certain market
segments
 Large automobiles,
sporting equipment,
and perfumes
◦ Greater dissimilarity
as you go down the
economic strata
Types of Products
 Services
◦ The marketing of
services, is similar to
the marketing of
industrial products.
 Services are easier to
market globally
compared to consumer
products
 Laws and customs may
force some changes
Foreign Environmental Forces
 Socio-cultural Forces
◦ Dissimilar cultural patterns generally
necessitate changes in food and other
consumer goods
◦ May require
 Redesign of product
 Top-load versus front-load washers
 Change of brand names, labels, or colors
 Colors have different meanings
 Brand name has different meaning
 Translation of instructions or labels
Foreign Environmental Forces
 Legal Forces
◦ Laws concerning
 Pollution
 Consumer protection
 Operator safety
◦ Laws prohibiting classes of imports
 Food and pharmaceuticals influenced by laws
concerning purity and labeling
◦ Legal forces may prevent use of brand name
worldwide
 In some countries brand may be registered to someone
else
Foreign Environmental Forces
 Economic Forces
◦ Great disparity in
 Physical Forces
income throughout ◦ Physical forces, such
the world an obstacle as climate and terrain,
to product prevent international
standardization. product
◦ Many products from standardization
the industrialized ◦ Heat
countries are too ◦ High humidity
expensive for  Special packaging
consumers in ◦ High altitudes
developing countries  Baking products and
 Must either simplify the motors
product or produce a ◦ Rough roads
different, less costly
one
Promotional Strategies
 Promotion
◦ Is communication that
secures understanding
between a firm and its
publics
 to bring about a
favorable buying action
and achieve long-
lasting confidence in
the firm and the
product or service it
provides
Promotional Strategies
 Formulation of distinct promotional strategies
is based on the combination of three
alternatives
Marketing the same physical product
everywhere
Adapting the physical product for foreign
markets
Designing a different physical product with
(a) the same, (b) adapted, or (c) different
messages
Six commonly used
promotional strategies
 Same product--same  Product adaptation--
message message adaptation
◦ Avon, Maidenform ◦ In Latin America, Tang is
 Same product-- sweetened and promoted
as a mealtime drink
different message  Different product--
◦ Honda’s campaign in same message
America is different ◦ Product is produced in
than in Brazil low cost plastic squeeze
 Product adaptation-- bottle for developing
same message countries, but advertised
◦ In Japan, Lever the same
Brothers puts Lux  Different product for
soap in fancy boxes the same use--different
because much of it is message
sold for gifts ◦ Welding torches rather
than automatic welding
machines are sold in
developing countries
The Promotion Mix

 Advertising
 Personal Selling
 Sales Promotion
 Public Relations
 Publicity
Advertising
 Paid, nonpersonal presentation of ideas,
goods, or services by an identified sponsor
◦ Among all the promotional mix elements,
 advertising is the one with the greatest
similarities worldwide
 Today, the major American agencies are all
global, with wholly owned subsidiaries,
joint ventures, and working agreements
with local agencies
Global and Regional Brands
 Reasons for increase in use of global or
regional brands
◦ Cost is most often cited
◦ There is a better chance of obtaining one regional
source to do high-quality work
◦ The belief that a single image throughout the
region is important
◦ Establishment of regionalized organized
organization where many functions are centralized
◦ Global and regional satellite and cable television
are becoming available
Global Brands
◦ Coca-Cola
◦ Microsoft
◦ IBM
◦ GE
◦ Intel
◦ Nokia
◦ Disney
◦ McDonald’s
◦ Marlboro
◦ Mercedes
Advertising
 Branding  Media
◦ Global, regional or
national
 Managers may convert
or use a combination
◦ Private brands
 Serious competitors
 Making alliances with
international retailers
 Trend very common in
Europe
◦ Satellite TV expanding
availability of media
◦ International print
media available
 Reader’s digest has 48
foreign editions
◦ Cinema and billboards
used heavily in Europe
◦ In developing
countries, vehicles
equipped with
loudspeakers
Advertising
 Internet Advertising
Appealing factors of online advertising
An affluent, reachable audience
Web contacts feature interactivity, which
shrinks distance
The possibility exists of involving
customers in determining which messages
and information they receive
For some groups, the Internet may be
among the best media choices
Advertising
 Foreign Environmental
Forces
 A basic cultural
decision for the
marketer is whether to
position the product as
foreign or local
 The preferred position
depends on the
country, the product
types, and the target
market
Advertising
 Foreign Environmental  The youth market
Forces
 Unfortunately for the
advertiser, almost
every language varies
from one country to
another
 To avoid translation
errors, the
experienced
advertising manager
will use
 a back translation.
 plenty of illustrations
with short copy
◦ The young often
prefer American look
and American label
◦ American fast-food
also influences youth
around the world
◦ Very much an
international market
segment
◦ MTV Europe runs
unified English ads
Advertising
 Legal Forces
◦ Have pervasive influence on advertising
 Affect media availability
 Restrict kinds of products that can be advertised
 Some countries illegal to use comparative advertising
 Members of advertising industry have established self-
regulatory bodies in many nations
 Some Middle Eastern countries restrict use of women
in advertising and their style of dress
Advertising
 What should be the
approach of the
international advertising
manager?
◦ Think globally, but act
locally
◦ Neither purely global
or purely local
◦ Pan regional approach
 Latin America
 Middle East
 Africa
 Atlantic
Personal Selling
 The importance of personal selling compared
to advertising depends to a great extent on
◦ The relative cost
◦ The funds available
◦ Media availability
◦ The type of product sold
 Manufacturers of industrial products rely on
personal selling
 Consumer products overseas may use more
personal selling in developing countries
Personal Selling
 Personal Selling and the  International
Internet
 The Internet would
seem to eliminate the
need for personal
selling, but this may
not be the case
 Successful personal
selling depends on
establishing trust
 Although the Internet
makes communication
easier, it may make
building trust harder
Standardization
◦ An overseas sales
force is similar to the
home country in
 Organization
 Sales presentation
 Training methods
◦ Recruitment of
salespeople in foreign
countries can be
difficult
Sales Promotion
 Provides the selling aids for the marketing function
and includes such activities as
◦ the preparation of point-of-purchase displays,
contests, premiums, trade show exhibits, cents-off
offers, and coupons
 Cultural and economic constraints make some sales
promotions difficult to use.
◦ If a premium is to fulfill the objective of being a
sales aid for the product, it must be meaningful to
the purchaser
◦ Sales promotion is generally not as sophisticated
overseas as it is in the U.S.
Public Relations
 Various methods of
communicating with the
firm’s publics to secure a
favorable impression
◦ Marketing of the firm
◦ Improve image and
overcome negative
perceptions
◦ Can work through
government agencies
Pricing
 Important consideration in formulating
marketing strategy
◦ Major determinant of profit
 To obtain the maximum benefit from pricing
management must see pricing is one of the
marketing mix elements that can be varied to
achieve the marketing objectives of the firm
 Pricing is made more complex by
◦ Interaction with the other functional areas
◦ Environmental forces
Interaction between Marketing and Other
Functional Areas
 The finance people want  The tax people are
prices that are both concerned with the
profitable and effects of prices on tax
conducive to a steady loads
cash flow  The domestic sales
 Production supervisors manager wants export
want prices that create prices to be high
large sales volumes, enough to avoid having
which permit long to company with
production runs parallel importing
 The legal department  The marketer must
worries about possible address all these
antitrust violations concerns and consider
when different prices ◦ Legal forces
are set according to ◦ Environmental forces
type of customer
Standardizing Prices
 Pricing for overseas
markets is more complex
because management
must be concerned with
 Foreign national
pricing
 Domestic pricing in
another country
 International pricing
 Setting prices of goods
for export for both
unrelated and related
firms
Distribution
 In the international arena, marketing
managers must concern themselves with two
functions rather than one
 Getting the products to foreign markets (exporting)
 Distributing the products within each market
 In making decisions on distribution
 care must be taken to analyze the interdependence
with other marketing mix variables.
 Channel decisions are critical
 These are long term decisions
Distribution Strategies
 International Standardization
Management would prefer to standardize
distribution patterns internationally
However, two fundamental constraints exist
The variation in the availability of channel
members among the firm’s markets
The inconsistency of the influence of the
environmental forces
Economic differences can also make
standardization difficult
Channel Selection
 Direct or Indirect  Factors Influencing
Marketing
 The first decision that
management must
make is whether to
use middlemen
 Export sales may be
consummated by local
agents if
◦ Management believes this
is politically expedient
◦ The country’s laws
demand it
Channel Selection
 Market Characteristics
 Best coverage
 Product
Characteristics
 Company
Characteristics
 Financial and
managerial resources
 Middlemen’s
Characteristics
 After-sales servicing
Cultural Differences
 Never touch the head of a Thai or pass an object over
it; the head is considered sacred in Thailand.
 Avoid using triangular shapes in Hong Kong, Korea,
and Taiwan; the triangle is considered a negative
shape.
 The number 7 is considered bad luck in Kenya and
good luck in Czechoslovakia, and it has magical
connotations in Benin. The number 10 is bad luck in
Korea, and 4 means death in Japan.
 Red is a positive color in Denmark, but it represents
witchcraft and death in many African countries.
 A nod means no in Bulgaria, and shaking the head
from side to side means yes.
 The "okay" sign commonly used in the United States
and the United Kingdom (thumb and index finger
forming a circle and the other fingers raised) means
zero in France, is a symbol for money in Japan, and
carries a vulgar connotation in Brazil.
Honda Japan