MARKETING MIX

Traditional & Ps : Product / Service : Price : Place : Promotion Specific to Services : People : Physical Evidence : Process

PRODUCT Service is any activity offered to satisfy a need. Four levels of Service: 1. Generic Basic benefit 2. Expected benefit expected by a customer 3. Augmented added to generic to benefit the customer 4. Potential Beyond the usual and expected
1.

As the expectation of service may differ among customers SEGMENT e.g. Air Travel Railway Travel

A product forms the core of a firm. If it is flawed 2. Marketing environment is dynamic reconsider from time to time to meet the changing needs. 3. Competition pressure to repackage quality Services are processes and not outcome
1.

The Design of a Product 1. Core product bare minimum, no frills 2. Augmented Product Love lock core + supplementary E.g Check in, telephones, valet service

High contact and people processing services have more supplementary E.g. A budget Vs Star Hotel
Kotler core +accessibility, atmosphere, customer interaction with service organisation and with one another. Lynn Shostack: Molecular Model: Core clean room Supplementary check in, check out restaurant If more supplementary more price

3. Delivery Process: How core and supplementary are delivered to the customer. E.g. A packaged Trip Core : Design the package flight, hotel reservation, scheduling stay at various places, customers role ..
Supplementary Sight seeing, taxi reservation, recreational activities ..

Service as a substitute for Goods: Caterpillar Cat financial, Cat insurance, Cat rental service, Cat logistics, Equipment trg.,

Perform the work oneself

Own a Physical Good Drive own car Use own computer

Hire someone to Hire a driver to do the work drive the car Hire a typist to use computer.

Rent the use of Physical Good Rent a car and drive it Rent a computer and use it. Hire a taxi Send work out to secretarial service

Then POSITION. Positioning is the way a service is perceived by consumers, particularly in relation to competing offerings. Make a product to occupy a clear, distinctive and desirable place in the market and in the mind of the target consumer. Three steps for effective positioning:
1.
2. 3.

Identify a set of potential competitive advantage to exploit Select, define and refine the most appropriate set of attributes Effectively communicate the products position to the desired market

Positioning can be:

1. 2. 3. 4. 5. 6. 7. 8.

Category Related Benefit Related Usage, Occasion and time of use related Price Quality Related Physical attributes related Service Related Personnel Related Location Related

Perceptual Mapping 5 Star Deluxe Hotels in Mumbai

High PriceThe Oberoi Towers
Orchid Ecotel $189 Inter continental The grand $180 $ 467 Hyatt Regency Taj Mahal $292

Low Facilities

Leela $ 230

High Facilities

Centaur $285

Low Price

Changing Positioning:
- Change in complexity - Divergence Customise Complexity
Hairstyling New McDonald

Convergent
McDonald

Divergent
Barbering

Simplicity

BRANDING OF SERVICES A branding has distinctive elements not merely name or logo but a heritage, imagery, legends, values it stirs up the experience it conjures. In product brand product is primary In service brand company is primary E.G Liril Federal Express Colgate Spicejet 5 star McDonald Branding helps to differentiate . The way servicing is done differentiates.

Effective branding provides marketing edge:

1. 2. 3. 4. 5. 6.

When service is similar, differentiates. When customer goes for a service the first time, brand is the tilting point. Innovative service or brand extension. When change the marketing strategy, brand is the anchor. Reduces perceived risk. Pricing

Four Tests to Assess the Power of a Brand

1.

Distinctiveness - Generic name with product Jet air, United Airlines - Heritage First Leasing - Proper names Larsen and Tubro Marriolt J.P. Morgan - uncommon Le Meridian, Citibank

2. Relevance: Communicates nature and benefit - Compaq - Ticketron - First Flight

3. Memorability Brevity and simplicity Mudra, Toys Rus, Rx 4. Flexibility Westin Prudential Rock Merrill Lynch - Bull

Customer Experience of the Brand: 1. Consistency service standards in all Moment of Truth throughout cycle of service. 2. Differentiation both process and outcome creates emotional bond.
To build a Service Brand: 1. Dare to be Different: new paths, maverick, Trend setters Motel 6 Darkness Bugs BBK Thomas Cook -

2. Determine your own future: - Creative market segmentation Just born.. - Hampton Inn
3. Make Emotional Bond 4. Internalise the brand - sell to employees the value - communicate brand to the entire organisation - empowerment

SERVICE INTERACTIONS Many Services require interaction between provider & customer MOMENT OF TRUTH Interaction has 3 aspects: 1. Service scope Why the service exists? - What value it gives? - Core service & adjuncts? - How will it be delivered?
2. Service Yard sticks What is effective service to the customer? - What is effective service in realtion to cost, quality, time & effort.

3. Service Transaction System: Operation system: How the service produced? How will it be delivered? Front office, back office
Customer experience during the transaction is the yardstick for the effectiveness. The relationship between the three should be optimised, consistent & adaptable.

2. PRICE
a.

b. c. d.

Difficult to fix the price because difficult to calculate unit cost. So some other unit of measurement Demand flexibility and supply inflexibility Price is surrogate for quality Administered or market driven. Cost plus pricing Vs Value in use pricing

3. PLACE DISTRIBUTION Service inseparable from provider So, direct marketing Now Franchising Critical Factors to choose a location:
1. 2. 3. 4. 5. 6. 7.

Convenience retails, bank , repair services Cost wholesalers, specialty stores Proximity to competition: Shopping services: Tailors, designers Availability of support systems Tourism, Resorts Geographic and Environmental Factors: Holidaying, Gambling Communication Network Financial services, Software Transport Facilities : Wholesalers, Couriers

4. PROMOTION Traditionally, less promotion in services - Often small in size - Some felt some professions should not be promoted - Selling service is difficult because
- Intangible - Supply inflexible

So, how to promote: -Use tangible symbols (Intangibility) -Use opinion leaders (credence and experience) -Demarket (inflexible supply) Personal selling is more important Direct response advertising

COMMUNICATION
Implications of communication in services - Intangibility - Customer involvement in production - The role of customer contact personnel - Difficulty of evaluating many services - Need to bring demand and supply into balance

Problem of intangibility -abstractness capture and display typical customers e.g Tiger woods Generality items that comprise a class of objects, persons, events airline seats Nonsearchability experiential and credence attribute customer testimonials, independent reports - Mental impalpability complex, multidimensional, especially new services. Video of process, actual case histories using metaphors DHL Swiss Air Kellogg
1.

2. Facilitate customer involvement in production T.V & Media 3. Help customers to evaluate service offerings Tangible clues Quality of equipment Facilities 4. Stimulate or dampen demand to match capacity 5. Promote the contribution of service personnel. Employees at work, employee of the month

Marketing Communication Mix

New opportunities for highly targeted communication - From different sources - From the organisation - Outside the organisation - WOM - Blogs - Editorial coverage Internet Banner advertising search engine

Promotion Mix for Services Personal Selling Sales Promotion Publicity Public Relation Direct Response Advertising Personal Services Awareness Comprehension Awareness Advertising Organisational Services Conviction Action

5. PEOPLE All who play a part in delivery and influence buyers perception - dress, appearance, attitude, knowledge - In some cases, the provider is important - In others not so important 6. PHYSICAL EVIDENCE Since services are intangible we rely on tangible cues. Physical evidence is to service, what package is to a product Evidence can be vast from small details to more obvious ones

Some Elements of P.E

Essential Evidence: Integral to the service offering Peripheral Evidence complementary to the core Facility Exterior Facility Interior Ambience Atmospherics Other tangibles Business cards, stationary , brochures

Variation in Form and use of Physical Evidence

Service Scope Complexity of the Physical Evidence Elaborate Self-service (customer only) Interpersonal service (both customer and employee) Super market Golf Hotels Restaurants Hospitals Bank Telephone Insurance Utilities Lean ATM Post Office Dry clean Hair Saloon

Remote Service (Employee only)

Mail order desk Railway information through phone

Eg. Fast Food:

Food Taste, smell, presentation, temperature Packaging: Style, colour Seating: Comfort, layout, availability Overall appearance: hygiene, cleanliness, lighting Facilities Toilet, childrens amusement, pay phones Staff Appearance, dress code, efficiency Corporate Image logo, advertising, CSR Service Delivery Prompt, slow, slipshod

7. PROCESS The procedures, mechanisms and flow of activities to deliver the service. Points to be noted: 1. Customer participation 2. Location of the service delivery: - at the providers premise - at the customers premise 3. High contact Vs Low contact 4. Degree of standardisation 5. Complexity of service

IMPACT OF TECHNOLOGY ON MARKETING OF SERVICES

Enormous Challenges Shortening of PLC - Devpt. In technology accelerating customer sophistication - Concern with environment Convergence of technology leads to new business mobile and entertainment

Technology Foresight to create Business Value

1. 2. 3.

Identify new technology based opportunities radical satellite cinema to rural areas. Understand and manage technology Develop coherence between S.T & L.T. R & D

4. Criticality of Technology Foresight: - Commoditisation of markets, products and most technologies - More perfect global markets - Capital availability in Emerging markets - Global technology equilibrium (Catalysed by internet) - Increase pace of scientific discovery - Large coherent technology initiatives E.g Nanotechnology, Biotech - Relentless productivity increase from I.T.

Assessment of the Lifespan of the Technology Some have become standards Pentium MSOs Some Challenge LINUX Open system share and be shared
Service Innovation No more Mfg or Service firms but solutions to problems Products + after sales service Service + products Mobile

Kinds of innovation Schumpeter 1. New product offering 2. New markets 3. New sources of supply 4. New methods of production 5. Use of new technology Hertog and Bilderbeck: 1. New service concept call centres derivatives 2. Client interface 3. Service delivery system design 4. Technological options

Mapping Patterns of Service Innovation 1. Supplier dominated Microwave cook book 2. Innovation within services technology in class room 3. Client led innovation on-line banking 4. Innovation through services FedEx tracking system 5. Paradigmatic innovations affects everyone across the value chain DTH, set up boxes 6. In a firms internalised service functions impacting employee productivity, payroll 7. In an outsourced service function - security

Impact of Technology on Service Firms 1. Productivity ATM, electronic transfer of money 2. Offering new services telemedicine, digital libraries 3. Control mechanisms FedEx tracking, EBSCO hit rate 4. Widening the reach of the distribution Channels on line reservation, E-commerce 5. Interlocked relationship HP selling MS or Unix CISCO and Oracle

6. Managing customer relationships Data bases, usage rates 7. Fostering Linkages with various stake holders Website educational institutions and employers Video conferencing Alumni and institutions 8. Global IT sourcing: off shoring, outsourcing lower cost Easy access to experts Global supply search, skills Access to new markets Developing experience with external collaboration Assisting domestic IT staff to improve processes.