Part-1 Services Marketing

Q3 (A) What is service encounter? Give two independent examples of

service encounter with following themes:
(i) Recovery (ii) Adaptability (iii) Spontaneity (iv) Coping

Ans:

When a customer interacts with the service company a service encounter

is said to have occurred .For example:- among the service encounters a
hotel customer experiences are checking in, being taken to the room by
a bell boy, eating in a restaurant or ask for the meals in the room etc.
These encounters therefore offer an opportunity to the service company to
prove its potential as a quality service provider and to increase customer
loyalty. Service encounter with the above themes are:-

RECOVERY: Employee response to service delivery systems failures. For

example: -
(i) They lost my room reservations, but the manager gave me the VIP suit
for the same price.
(ii) The airline employees continually used unsatisfactory information.
One-hour delay turned into six-hour wait.

ADAPTABILITY: Employees response to the customer needs and

requests. For Example:-
The hotel staff couldn’t deal with the noisy people partying in the hall at 3
A.M.
I lost my glasses on the plane, the stewardess found them and the airline
delivered to my hotel free of charge.

SPONTANITY: Unprompted and unsolicited employee actions. For

Example: - On knowing by chance that a customer birthday is there, waiter
in the hotel room brings a piece of cake as a surprise.
I need a few more minutes to decide on a diner. The waitress said, “If you
would read the menu not the road map, you may want to order”.
COPING: Employees response to problem customer. For example: -
A customer start shouting at the reception desk of a hotel on account of
some falsely perceived problems, but the receptionist keeps her cool and
acts very professionally.
(ii) Manager telling to an uncooperative customer to leave the hotel and
find an accommodation somewhere else if he is encountering so many
problems.

(B) Explain the difference in marketing physical goods of services.

Ans. Services are said to be the intangible because they are

performances and not objects. They cannot be touched or seen in the
same manner as goods. Whereas goods are first produced, and then sold,
then consumed, services are sold first and then produced and then
consumed simultaneously. For example, an airline passenger first
purchases a ticket and then flies, consuming the in-flight services as it is
produced.

Unlike the producers of goods, service providers engage in face-to-face

interactions with there customers who are directly involved in the service
production process. Service providers use strategies like training customer
contact personnel, manage customer through out the service experience
etc.

Standardization and quality control are difficult for a service firm to provide
on regular tasks as compared to goods manufacturers. Service firms use
strategies like offering customized services that meat individual customer
needs.

Unlike goods that can be stored and used at a later rate, service that are
not sold when they become available cease to exist. For example: - airline
seats that are not sold cannot be reserved and added on to the aircraft
during holiday season. Strategies are being developed by service
providers so as to manage supply with the demand and vice versa.

The traditional four P’s viz product, price, place, and production work well
for goods. However in services marketing 3 additional P’s are required i.e.
people, physical evidence and process.
Q4 (a) Describe with examples fine dimensions of service quality.

Ans.

Service quality is a critical component of customer perception. In case

where customer services are offered in combination with a physical
product, service quality is important in determining customer satisfaction.
The five dimensions of service quality are:-

RELIABILIY: It is defined as the ability to reform the promised service

dependably and accurately. Customers want to do business with
companies that keep their promises, particularly their promises about the
main service attributes. For example:- The reliability message of Federal
Express (Fed Ex) in US reads- when it “absolutely, positively has to get
there”- reflects the company’s services positioning.

RESPONSIVENESS: It is the willingness to help customers and to provide

prompt service. This dimension emphasis attentiveness, promptness in
dealing with customer’s requests, questions, complaints etc. For example:
- manager of a hotel lost a customer room reservation, to compensate for
the inconvenience, the manager gave him the VIP suit for the same price.

ASSURANCE: It is defined as employee’s knowledge and courtesy and

the ability of the firm and employees to inspire trust and confidence. This
dimension is applicable for those services that involve risk- banking,
insurance etc. For example: customer is assigned to a banker who well
get to know them individually and who well co-ordinates all their banking
services.

TANGIBLES: It is appearance of physical facilities, equipment, personnel

and Communication materials. The customers evaluate the quality of
service on above tangible features. For example: Some hairdressers
provide fast, efficient service, comfortable and clean waiting area etc.
EMPATHY: It is the ability to provide caring individualized attention to its
customer. For Example- A hotel customer needs to be treated like a guest
and should not be allowed to feel as if he is an unwelcome stranger who
has dropped by at the last minute.

(b) Explain the leaps model of service quality?

Ans. Valerie A Zeethanil and Mary Jo Bitneer have developed the leaps
model of service quality. The central focus of the gaps model is the
customer gap i.e. the difference between customer expectations and
perceptions. Expectations are the standards of performance against which
service experience are compared. Customers would perceive that they
receive what they thought they would and should. The idea is that firms
want to close this gap between what is expected and what is received to
satisfy their customers and build long-term relationships with them to close
this all, first the providers gaps need to be closed which are:-

Gap 1- Not knowing what customers expects.

Gap 2- Not selecting the right service designs and standards.
Gap 3- Not delivering to service standards.
Gap 4- Not marketing performance to promise.

In a broad sense, the gap model says that a service marketer must first
close the customer gap, to do so, the provider must close the four provider
gaps or discrepancies Within the organization that inhibit delivery of
quality service. The gaps model focuses on strategies and processes that
firms can employ to drive service excellence.
 Expected Service

Customer Gap
Perceived Service

Customer
Gap 1

Company

Service Delivery External Communication to

Gap 4 Customers

Gap 3

Customer Driven Service Designs

and Standards

GAP MODEL OF
Gap 2 SERVICE
QUALITY

Customer Perception of Consumer

Expectation
Q9(a) Describe the role of intermediaries in service Distribution. What
are the problems encountered ?

Ans(a)
(1) The procedure appears to be placing the focus destiny in the hands
of intermediaries. But procedures do gain several advantages by using
intermediaries :-

(i) Many procedures lack the financial resources to carryout direct

marketing. For eg:- General Motors sell its auto mobiles through more
than 10,000 dealer outlets.

(ii) In some cases direct marketing simply is not feasible For eg. The
Wrigley Jr. Company would not find it practical to establish small retail
chewing gum shops throughout the Country or to sell it by mail order.
Wrigley finds it easier to work through the extensive network privately
owned distribution organizations.

(iii) Producers who do establish their own channels can often earn a
greater return by increasing their investment in their main business. If a
company earns 20% rate of return on manufacturing and focuses only a
10% return on retailing, it will not want to undertake its own retailing.
The use of intermediaries largely is because of their superior efficiency in
making goods widely available and accessible to target markets. Though
their contacts, experience specialization and scale of operation,
intermediaries usually offer the firm more than it can achieve on its own.
Intermediaries smooth the flow of goods and services.
Using intermediaries also effect in cost saving. For Eg:-
 1
M C M C
2 1 4
3

M
4 5 C M
2 D
5 C
6 8
7 3 6
M 9 C M C

(A)Number of Contacts (B)Number of Contacts

M * C = 3*3 = 9 M + C = 3+3 = 6

M = Manufacturer C = Customer D = Distributor

Part (a) Shows three producers, each using direct marketing to reach
three customers. This system requires nine different contacts.
Part(b). Shows the three producers working through one distributor, who
contacts the three customers. This system requires only six contacts. In
this way, intermediaries reduce the amount of work that must be done.
Problems encounter with intermediaries are :-
1. Channel conflict can occur between the service provider and the
service intermediaries.
2. The monetary arrangement between producers and intermediaries
is also an issue of conflict.
3. Inconsistency and lack of uniform quality results when multiple
outlets deliver services.
Q9(b). Explain the options for service delivery with respect to the place
and time.

Ans(b)

The option for service delivery with respect to place are:-

Mini-Store: Service firms have started to create service factories on a

very small scale to maximize coverage within a geographical area. For Ex:
ATM, which offers many of the functions of a bank branch within a small
self-service machine which can be located within stores, hospital, airports
etc.

Locating In Multipurpose Facilities: Modern buildings are often

designed to multipurpose, featuring not only office or production space but
also such services as a bank, a restaurant, several stores etc.

E-Commerce: Selling goods and services through the internet is a major

growth trend. Virtual shopping centers have become large, more colorful
etc.

With Respect To Time: Some services have long operated 24 hours a

day, every day of the year. These are services that respond to
emergencies such as fire, police and ambulance etc. Hospital and long-
distance trains don’t stop for the night and also telephone conveyance
always has operators available on a 24-hours basis. Customers are busy
with their personal lives and work, so they expect suppliers to be available
to them, when its convenient for customers, not when its convenient for
suppliers, so they want extended hours and easy access. ATM and Call
Centers fulfill this requirement. For Ex:- Citibank, BSNL, VSNL, MTNL,
have call centers that work on 24 hours basis.
Q10(a) Explain the meaning of physical evidence in service marketing with
examples of service and other tangibles.

Ans(a)

Since service are intangible, customers often rely on tangible cues or

physical evidence, to evaluate the service before the purchase and to
access their satisfaction with the service during and after consumption.
Effective design of physical, tangible evidence is important for purchasing
decision. Physical evidence include all aspects of the organization
physical facility (the secures cape) as well as other forms of tangible
communications. Elements of the secures cape include exterior attributes
(such as parking, landscape) and interior attributes (such as design,
layout, etc.) Other tangible include uniforms, reports, brochures etc.
Examples of physical evidence are:-

SERVIC SERVICESCAP OTHER TANGIBLES

E E
Insuranc Not applicable Policy itself, Billing statements,
e Company Brochures, Tellers,
etc
Hospital Building exterior Uniform reports, stationary
parking signs, billing statements.
waiting areas,
medical
equipments, etc.
Airline Airline gate area, Tickets, food, uniform
Airline exterior,
Airline interior
Express Not applicable Packaging, trucks, uniforms,
computers
Q10(b) Explain the importance of managing physical evidence of
(i)Service Facilities (ii)Packing the service (iii)Facilities the Service
Process.

Ans(b)

The importance of physical evidence in the following are:-

Service Facilities: Differentiation can be achieved by using physical
evidence to reposition the service firm in the eyes of its customer.
Upgrading the firms facilities often upgrade the image of the firm in the
minds of consumers and may also attract more desirable market segment.
In addition, the appearance of personnel and facilities often has a direct
impact on how consumers perceive that the firms will handle the service
aspects of its business. Similarly, nicely designed facilities are going to be
perceived as having an advantage over poorly designed alternatives.
Packaging The service: Utilizing the firms physical evidence to package
the service does send quality cues to consumers and adds value to the
service in terms of image development, improves consumer perception of
service while reducing both levels perceived risks associated with the
purchase and doubts after the purchase. The firms physical facilities forms
the customers initial impression concerning the type and quality of service
provided.

Facilitating The Service Process: Physical evidence can provide

information to customers on how the service production process works.
Examples include signage that specifically instructs customers; menus
and brochures that explain the firms offering and facilitate the ordering
process for consumers and providers; physical structures that direct the
flow of consumers while waiting and barriers such as counters at a dry
cleaners, that separate the technical core of the business from the part of
the business in which consumers are involved in the production process.
Q11 (a) Explain the importance of non-financial and financial costs in
pricing of services.

Ans (a)

In purchasing a service (or product), the customer expects to receive a set

of benefits whose anticipated value exceeds the perceived cost of
obtaining it. This expenditure are completed of both financial and non-
financial outlays. For customers, the non-financial costs of service reflect
the time, effort and discomfort associated with search, purchase and use.
Customer’s involvement in production means that customers incur such
burdens as mental and physical efforts and exposure to unwanted sensory
experiences such as noise, heat and smells. Service that are experienced
and its attributes may also create psychological costs, such as anxiety.
The non-financial costs of service can be grouped into 4 distinct
categories.
 Time expenditure
 Physical effort (such as fatigue and discomfort)
 Psychological burdens(such as mental effort and negative
feelings)
 Negative sensory burdens (unpleasant sensation)

Cutting these type of inconvenience may even allow service firms to

increase monetary price while still offering what is perceived by customers
as “good value”, In other words, people are willing to pay higher prices to
reduce the non-financial costs.
Q11(b) Explain the factors that make services pricing different compared
to goods pricing.

Ans(b)

The factors that make services pricing different are:-

No Ownership of Service: It is usually harder for managers to calculate

the financial costs involved in creating an intangible performance for a
customer than it is to identify the labor, materials etc for physical products.
Because of the labor and infrastructure needed to create performance,
many service organization have a much higher ratio of fixed costs to
variable costs.

Variability of Both input and output: Its not always easy to define a unit
of service similarly units of service may not cost the same to produce and
neither may they be of equal value to customers-especially if the variability
extends to greater or lesser quality e.g.:- A restaurant offering good value
of money to youngsters may not offer equal value to family customers.
Many Services are Hard to Evaluate: The intangibility of service
performance and the invisibility of the necessary backstage facilities and
labor market, it makes harder for customers to see what they are getting
for their money than when they purchase a physical good.

Importance of The Time Factor: The way in which scheduling and the
amount of time required to complete a service performance may effect
customer perceptions of valve. In many instances, customers are willing to
pay more for service delivered quickly than for one delivered more slowly.
Sometimes greater speed increases operating costs too (for e.g.:-
Shatabdhi Express being fast, tickets are costly)
Q12 Write short notes on any four-

Servqual:

Service quality is a critical component of customer perception. Service

quality is dominant element in customer’s evaluation and determining
customers satisfaction. Eight dimensions of quality are applied to all goods
and services, performances, feature, reliability, conformance, durability,
serviceability, aesthetics and prestige.

The servqual scale includes fine dimensions: Tangibles, reliability

responsiveness, assurance and empathy. Within each dimension several
items are measured on a 7 points scale from strongly agree to strongly
disagree. The gaps model of service quality focuses on the customer gap
the difference between customer’s expectation and perceptions. In order
to close this gap between customers expect and receive, the model
suggests that the provider gap needs to be closed.

Personal Selling:

Personal selling is the most cost-efficient tool at later stages of the buying
process, particularly in building up buyer’s preference, conviction and
action. Personal selling involves an alive, immediate and interactive
relationship between two or more persons. Effective sales representatives
will normally keep the best interest of their customers at heart, if they want
to maintain long-term relationships. The selling process involves the
following steps:-

• Prospecting
• Preparing
 Identify and qualify Potential  Pre-approach
Customers  Call planning

Presenting Handling Closing Follow-up

 Approach objections
 Probe for needs
 Convince the prospect

Sales Promotion:

Companies use sales promotion loots to create a stronger and quicker

response. Sales promotion can be used to dramatize product offers and to
boost falling sales. Sales promotion effects are short run and does not
build long- run brand preference. Sales promotion loots-coupons,
contests, premiums and the like are diverse and offer three distinctive
benefits:

Communication:

They gain attention and usually provide information that may lead the
consumer to the product.
Incentive: They include concession, inducement etc that gives value to the
consumer.
Invitation: They include a distinct invitation to engage in the transaction
now.
Promotional Objectives in Service Marketing:

Marketers should be clear about their objectives, otherwise it becomes

difficult to formulate appropriate manages and communication tools to
achieve them. Some objectives are as follows:-

• Create memorable images of specific companies and their brand.

• Recognize and reward valued customers and employees.
• Teach customers how to use a service to their own best advantage.
• Encourage trail by offering promotional incentives.
• Provide reassurance (e.g. by promoting service guarantees)
 Part-II Brand Management

Q4(a) Explain the logic of co-branding.

Ans a.

With increasing frequency, companies today are under taking joint

marketing projects. That is, two different companies, fair their respective
brands in collaborative marketing effort:-

New product launches clearly identify the brands that cooperated to create
and market them. For e.g. Compaq and Mattel combined their respective
expertise to bring out a line of high-tech, interactive toys.

Co-branding may help usage extension. In Europe Bacardi and Coke

advertise together. Bacardi’s status is powerful endorsement for coke as
the ideal mixer.

Image reinforcement may also be an objective of co-branding in the

detergents and vice versa. Thus, Ariel and Whirlpool recently launched a
co-branded advertising campaign, whose claim is “The art of washing”.
Co-branding appears in sales promotion too. Whirlpool, includes, Bird’s
eye coupons in its refrigerators owners manuals.

Capitalizing on synergies among a no. of brands is another co-branding

objective. Credit card companies like Visa or MasterCard are excellent
examples of co-branding where synergies with banking companies one
expected giving rise to a number of co-branding e.g. Citibank, Visa Card
or co-branding involving there partners i.e. Sahara Airlines, Standard
Charter Bank, Visa Card.
Q4 (b) Explain the Logic of Brand Extension.

Ans(b)

When they wish to enter markets from which they have been absent, more
companies do so using the name of one of their existing brands, rather
than using a new brand name created for that purpose. This is known as
brand extension.

The logic of brand extension is:-

To be modern in today’s world means to be in the tune with developments
in user habits and practices. If brands do not flow these developments,
there is risk of them being left behind? Innovation is thus required to allow
the brand to remain up to date.

Brand extension results from the concentration of efforts on a few brands.

Firms have thus put an end to the practice of making every new product a
new brand.

This reduces the cost of advertising and supports increase of R and ∆ .

Brand extension enables the brand to break away from the mono-product.
Brand extension is necessary in order for the brand to survive, as all
products are subjected to a life cycle. A product must not get caught in the
life cycle and ensure its survival.

Brand extension gives access to an accumulated image capital. Potential

buyers hopes to derive immediate projects from the brand by extending it
and earning royalties. Reliance has accumulated such a reservoir of brand
image capital that when the company entered Tele-communication
services business, brand extension was the necessary choice.

Brand extension is the only way of defending a brand at risk in a basic

market.
Q6(a) Explain the Concepts of Brand Equity.

Ans(a)

Brand vary in the amount of power and value they have in the market
place. At one extreme are brands that are not known by most buyers in
the market place. Then there are brands for which buyers have a fairly
high degree of brand awareness. Beyond this are brands with a high
degree of brand acceptability In other words, brands that most customers
would not resist buying. Then there are brands that enjoy a high degree of
brand preference. There are brands that are selected over the others.
Finally there are brands that command a high degree of brand loyalty. A
strong brand is said to have a high brand equity is the value of the brand
over and above its commodity value. According to Aiker, brand equity “is
a set of assets linked to a brand’s name and symbol that adds to the value
provided by a product or service”. Brand equity consists of assets such as
brand loyalty name awareness, perceived quality, strong brand
associations and other assets such as patents, trade, marks and
relationships with distributors and strategic partners. High brand equity
provides a number of advantages:

• The company will enjoy reduced marketing costs because of the high
level of consumer’s brand awareness an loyalty.

• The company can more easily launch brand extension since the brand
name carries high creditability.

• The company can change a higher price than its competitors because
the brand has higher perceived quality.
Q6(b) What is brand valuation? Describe any three methods of brand
valuation.

Ans(b)

Valuation of a band is desirable for providing objective to the “value” of the

brand, which otherwise tends to become more subjective and less useful
or a guide for marketing decision making in mergers and acquisition,
brand value could help in determining a corporation price and support the
decision process. A brand exists only because of its commitment of its
internal values, without this, it is nothing but a glorified product name.
Some of the methods of brand evaluation are:-

The Price Premium Method: Here the revenues of an unbranded

competing product are deducted from the revenues of a comparable
branded product to establish the excess or premium value of the brand.
Using this as a baseline, assumptions are made with respect to market
growth, market share, inflation etc. so, as to establish cash flows for
discounting purposes.

The Historic Cost Method: Their method is used when valuing your own
brand image for inclusion in the Balance sheet. The methodology is to
work out the value of cost incurred in developing the product. Strictly they
should be cost that has not yet been expensed out to the P&L a/c, but the
practice includes all directly identifiable costs.

Market Value Method: This method is based on cost i.e. how much would
we have to spend in terms of cost, time, efforts, to develop and market a
similar product and bring it to the level of the brand that we wish to
acquire.
Q (a) Explain Kapeure’s Brand Identity prism.

Ans (a)

Brand identity can be represented by a hexagonal prism.

Six sides of the prism represent six facts that define and help to
establish brand identity-

Physique: It is the brands backbone and its tangible added value. If the
brand is a flower, its physique is a stem. Without the stem, the flower dies
it is the flowers objective and tangible basis.
Personality: A brand has a personality of its own by communicating, it
gradually builds up character. The way in which it speaks of its products or
services shows what kind of person it would be if human.

Culture: These are the set of values feeding the brand’s inspiration and
energy. Culture is what links the brand to the firm, especially when the two
hear the same name.

Relationship: Brands are often at the edge of transactions and

exchanges between people. For e.g- Nike suggests a peculiar relationship
it encourages us to let lose (“just o it”), whereas ‘ Mere Bajaj’ conveys love
and affection.

Reflection: A brand is reflection when asked for people’s views on certain

car brands, people answer in terms of the brands perception: that’s a
brand for young people! For fathers! For old folks! etc. A brand always
builds a image of the layer which is to be layered.

Self-image: A brand speaks to our self-image self image is the tangent’s

own internal mirror. Through our attitude towards certain brands, we
indeed develop a certain type of inner relationship with ourselves.
Q (b) Explain what is brand positioning. What are their limitations?

Ans (b)

Positioning a brand means emphasizing the main characteristic that

makes it different from its competition and appealing to the public. Brand
positioning can be changed even if product remains the same. This is
known as repositioning.

Positioning is a crucial step based on four questions:-

 For What Or Why? – Refers to brand promise and consumer

benefit aspect. For e.g. Bajaj Scooter is reliable etc.
 For Whom? – Refers to the target aspect. For e.g. Coke and Pepsi
are teenager drinks.
 For When? – Refers to the occasion when the product could be
consumed. For e.g. Dermi cool powder for summers etc.
 Against Whom? – Refers to the competitors. For e.g. Wagon-R
against Santro.

Hence the four questions will help position the product or brand and make
its contribution obvious to the customer. But positioning has certain
limitations, which are:-

Positioning focuses on the product itself, but is difficult in the case of multi
product-brand. Positioning does not reveal or reflect all the brands
potential. For e.g. It does not help fully differentiate between Coca Cola
and Pepsi. Positioning controls the words only, leaving rest up to the
unpredictable outcome of creature hunches and protests.
Q8. Write short note on any two:

Ans 8(b)

Value of Brands to Consumers and Companies.

Value of Brands to Consumers:

 Identification: To be clearly seen, to make sense of the offer, to

quickly identify sought after products.

 Practicality: To save time and energy through identical

repurchasing and loyalty.

 Guarantee: To be sure of finding the same quality no matter where

or when you buy the product or service.

 Optimization: To be sure of buying the best product in the

category, the best performer for a particular purpose.

Value of Brands to Companies:

Brands, Market Shares and Profits: The brand leader is the most
profitable and all beyond number two are unprofitable.
Brand leverage: Higher volume leads to economies of scale in
development, production and marketing. Premium pricing increases
revenue.

The Value of Niche Brands: Dominating the top market is usually more
profitable than being fifth in the large market.
Brand Loyalty and beliefs: Strong brands are more attractive to
investors. Brand loyalty also reduces marketing cost and enables firms to
override occasional problems (for e.g. Coke problem in Europe and India)

Motivating Stakeholders: Companies with strong Brands attract good

recruits.
Ans 8(a)

Distribution/Retailers Brands:

For a retailer brand is a means and not a necessity. The different

combinations of DOB (Distributor Own Brands) observed in stores cannot
be analyzed without understanding the function of DOB which varies with
the consequences as the approach to DOB phenomenon is different with
in each sector.

In hypermarket business the aim is to differentiate the stores. Discount

stores use private labels so as to be in better position to negotiate with
their suppliers. Certain stores also have added an image objective. For
e.g- Marks and Spencer, who aim to differentiate themselves in the long
run buy offering high quality goods etc. Indian retail Chains like Shoppers
Stop, Pantaloons probably have the same objective.

No one in coming years is going to eat or drink more the reverse is more
likely to happen. So the priority must be to increase profit margins and the
store loyalty and bring in growth in distribution through DOB. The
presence of national brands tends to make customers unfaithful because it
enables them to compare price between stores. In order to avoid this,
stores are replacing known brands by DOB’s, which are exclusive, and
extent loyalty among the clientele.