Notes on service marketing

Problems in Service Marketing

The nature of services creates som marketing challenges. These are listed here, and an idea to solve these is presented.

The process structure and basic characteristics of services can have serious and less serious consequences for the client behavior and internal organization, and through this for the marketing policy of those companies providing services. In this context, there are some core problems companies in the service sector are confronted with:

• Insecurity of (potential) clients: this is caused mainly by the intangible nature and person-bound quality of services.
• Variable quality: since personnel plays an important role in the service providing process, this process is hard to standardize, which implies a variable quality. This is why the quality of the provided service(s) is an important theme in service marketing.
• Internal marketing: the quality of the provided service(s) depends strongly on the motivation and quality of the staff. This is why internal marketing is quite important in the service sector. The company culture often differs from those in production companies, which has to be taken into account.
• Managing service providing processes: the production policy of service providing companies consists for a relevant part out of the managing of service providing processes. Marketing managers of      production companies usually only deal with the output (or product) of the production process.
• Client as production factor: the client is always a (large or small) part of the service providing process. So, managing the client as production factor (or co-producer) is an important task.
• Attuning marketing and policy: marketing and policy should be closely intertwined, ideally even synchronized. In production organizations, this is not a requirement.
• Relation management: the direct contact with and insecurity of clients create opportunities for the necessary relation management.
• Capacity management: services can not be stocked up like physical products, so unused capacity will always be lost. An accountant with nothing to do, or a hotel room that is not occupied, both are by definition not productive. In that context, the transitory nature of services becomes apparent. On the other hand, the capacity can fall short when the question for a service shows unexpected peaks. These events could (and perhaps should) lead to the development of capacity management.

Three tasks

The core problems mentioned above are usually dealt with through a combination of three marketing tasks: external, internal and interactive marketing.

• External marketing means ‘making the promise’,
• Internal marketing means ‘making the promise possible’, and
• Interactive marketing means ‘fulfilling the promise that was made’.

This is (in a strongly simplified form, of course) the marketing concept that is often used by service providing companies at present.

Initially the development of services marketingfocused on service industries. However, manufacturing and technology industriesrecognized services as a prerequisite to compliment their products, in order tocompete successfully in the market place. Therefore it can be argued that, inmost industries, providing a service is no longer an option but a necessity.

Higher Intangibility2.Lack of Ability to store them for future Sale3.Greater Interaction between the customer and the service Factory4.Greater Variability in Service Delivery5.Greater Variability among service customer’s Expectation

 The service economy in developing countries is mostly concentrated in financial services, health, and education. Products today have a higher service component than in previous decades. In the management literature thisis referred to as the sterilization of products

Virtually every product today has a service component to it. The old dichotomy between product and servicehas been replaced by aservice-product continuum. Many productsare being transformed into services. For example,IBM treats its business as a service business. Although it still manufactures computers, it sees the physical goods as a small part of the"business solutions" industry. They have found that the price elasticity of demand for "business solutions" is much less than for hardware. There has been a corresponding shift to a subscription pricing model. Rather than  receiving a single payment for a piece of manufactured equipment, many manufacturers are now receiving a steady stream of revenue for ongoing contracts.

3 stages

Tools : emergence ofthe Internet and the many web-based services that are possible via the Internet. Included is self-service, Creating Language : Language is itself one of the most sophisticated tools and every new field must develop a technical language for communicating knowledge that is created by the community of scholars within the field. Technical words in service are service encounters, service quality, service theater, service experience, service scapes, and service recovery.

food products and modify the service orientation of their staff in orderto adapt to the taste and customs of the locals.These are just some of the emerging trends that managers of servicecompanies must consider. Companies that did not recognize these signs andfailed to adapt to these trends have suffered and send millions or even billionsof their resources in to the trash bin

Service Market Segmentation:Attributes of Effective Segmentation :

1.Identifiable

2.Accessible

3.sizeable

4.profitable

5.unique needs

6.Durable

7.measurable

8.compatible

Reasons for marketing Segmentation:

1.Facilitating proper choice of target markets

2.Higher Profits

3.Facilitates tapping of the market, adapting the offer to the market

4.stimulating Innovation

5.Makes the marketing effort more efficient and economic.

6.Benefits the customer as well

7.Sustainable customer relationship in all phases of the customer life cycle

8.targeted communication

9.Higher market share

Bases of Segmentation

1.Geographic

2.Demographic

3.Psychographic

4.Behaviouralistics

Advantage

Evaluation of market Segmentation:

Target Marketing:

Process of Choosing the Target Market

Positioning

Approaches of Positioning

Service Design and DevelopmentService Life Cycle

1.Introduction

2.Growth

3.Maturity

4.Saturation

5.Decline

New Service DevelopmentA hierarchy of New Services Categories

1.Major Service Innovation

2.Major Process Innovation

3.Product – Line Extensions

4.Process-Line Extensions

5.Supplementary Service – Innovations

6.Service Improvements

7.Style Changes

Stages in New Service DevelopmentProcess

Front-end Planning

Business Strategy Development (or) Review

2.New Service Strategy Development

3.Idea Generation4.Concept Development & Evaluation

5.Business Analysis

Implementation

6.Service Development and Testing7.Market Testing8.Commerlisation9. Post Introduction Evaluation

Blue Printing

A service blueprinting is a picture or a map that accurately portrays thatservice system, so that the different people involved in providing it canunderstand and deal with the objectivity regardless of their role or theirindividual point of view.

Blue Printing Components

1.Customer action2.On stage contact employee action3.Back stage contact employee action4.Support processThe above 4 key actions areas are separated by 3 horizontal lines are1.Line of interaction2.Line of visibility3.Line of internal Interaction4.Vertical line cutting -----across

Environment and trends :

Focus on Customer Service and Customer Satisfaction : Do not spend unnecessarily on expansion of network, technical superiority, and market domination by size or scale because these may not address customer needs and may not bring profit

Focus on the Service Value :  Managers of service companies are tasked to design a service model that are valuable to their customers but priced reasonably. In the past, companies believe that as long as they are “big”in terms of scale, size, and resources, their perceived value is high. This is no longer true today. The best judge of your company’s value is your customers.

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Focus on Information Technology.: Technological advances led to the availabilityof information in all sectors of the organization. Examples of informationare consumer’s purchasing behavior, consumer’s consumption pattern,consumer’s data information and so on. Information made the decision making process of top executives easy and later resulted to furtherinnovation and improvement on the company’s strategic direction. Companies who failed to use information also failed to understand their customers.

Focus on Globalization.: If yourcompany’s service model is effective in your local market, it is not aguarantee that it will also be effective in other countries. Culture, social behavior, and customs of the foreign country must always be taken into account. Many companies who jumped in the globalization band wagon failed to adjust their service approach when setting-up a foreignfranchise. In the fast-food industry for instance, MC Donald’s beef  burger may not be a hit in countries like India because cows are sacred in this country. Some American fast-food chains that established franchise in the Middle East or some parts of Asia changed the ingredients of their food products and modify the service orientation of their staff in order to adapt to the taste and customs of the locals.