Designing Services, Communications, Pricing and Distribution

Dr Vikram Venkateswaran

The 4 Ps of Marketing Who gave this concept?

Product Promotion Price Place

It does not matter how wonderful the service is, the question is will they buy it? Noel Peebles

SERVICES PRODUCT

Planning & creating services

Corporate Objectives and resources Market & Competitive analysis Marketing Assets Statement Customer Portfolio Market Knowledge Product Line Reputation of the brand

Resource allocation analysis Operating assets statement Physical Facilities Equipment IT HR Services operations Concept Nature of processes Geographic Scope Scheduling Facilities design Partnerships Service Delivery Process

Services Marketing Concept Benefits to customer User Cost

Example of services delivery process creation- Indigo Airlines

Distribution
Cabin Crew

Service Frequency

Indigo Airlines(Aircraft)

Inflight Entertainment

Pre and Post flight services

Augmented Product- Dark Knight Rises

Distribution Price

Movie

Screening Frequency

Dark Knight Rises

PVR Cinema Tickets

Pop Corn & drinks

Core Product & Supplementary services

The core product answers the question which business is the firm in? for eg a Movie house is in the entertainment business A supplementary service- enhances the value of the core product and facilitates its use.
Eg The movie theater provides the ambience and the technology to enjoy the cinematic experience

Delivery Process-People, Possession, mental Stimuli and Information

Facilitating & Enhancing services

Facilitating Services Information Order Taking Billing Payment Enhancing Consulting (Movie Reviews) Hospitality (Gold box) Safe Keeping Exceptions

Flower of service
Payment & Billing

Hospitality

Information

Core Product

Order Taking

Safe Keeping

Consultation

Branded customer experience

Random experience with high variability Branded customer experience

Development of new services

Service Innovation Service Process Innovation Product Line Extensions Process Line extensions Supplementary service innovations Service Improvements Style Changes

Sources for services innovationProduct

Product Own the product Rent the product Rent a Car Send document to secretary services

Do work your self Drive the car Hire someone to Hire a secretary do it

Service process reengineering

Fast Food- Walk into a Dominos restaurant Drive in- Place the order and leave with the Pizza Home Delivery- they deliver it at home Home Catering- they cater to a birthday party

Using research to design new servicesHome Health Security Services

Electric communication will never be a substitute for the face of someone who with their soul encourages another person to be brave and true Charles Dickens

COMMUNICATION MIX

Overcoming the Challenge of Intangibility- Advertising

Type of service differentiator Physical representation Components of service

Objective Claims

System Documentation
Performance Documentation

Physical capacity
Past Performance statistics Present a service delivery incident Cite independently audited performance Display typical customers benefitting from the service Case study

Subjective Claims Non Searchability Abstractness

Service performance episode Consumption documentation Service consumption episode Case History

Impalpability

Accenture- Case Study

Accenture the transformation

Services Marketing communication Mix

Personal Communication Advertising Sales promotion Public relations Instructional materials Corporate design

How messages reach a target audience

Messages within the Org

Source

Operations & delivery Marketing

Messages outside the org

Media & Word of mouth

A cynic is someone who knows the cost of everything and the value of nothing Oscar Wilde

PRICING

Objectives of pricing
Revenue & profit objective Patronage

Profit Recover cost

Build Demand Build a user base

Pricing Strategies
Cost Based

Value Based

Competition Based

Cost Based Pricing

Fixed Cost + Variable Cost + Margin = Price

Value Based Pricing

Reduce uncertainty
Benefit driven pricing Flat rate pricing

Relationship pricing Low-cost leadership

Managing the perception of value

Other costs
Time costs Physical costs

Psychological costs Sensory costs

Competition Based Pricing

When Pricing is the only differentiator Personalization, Customization & Switching costs matter Time & Location specify reduced costs

Revenue Management

Reserving capacity for high yield customers Competitive pricing and its effect on revenue management

Cost of price elasticity

Price Elasticity = percentage change in demand/ percentage change in price.
Demand

Price

The fair price debate- is this pricing fair?

Think Global, Act Local John Naisbitt

DISTRIBUTION OF SERVICES

Method of service delivery

Nature of interaction Single Sites Multiple Sites

Customer goes to services organization

Theater

Bus Service

Services comes to you

House Paining

Mail Delivery

Technological interaction

Credit cards

Mobile services provider

Channel Preferences vary

The growth of Airport Malls

Service Delivery: new channels

Smart phones E-commerce Voice recognition technology Bio metrics Smart cards

Case study- Flipkart

Globalization and delivery of services

People Processing Possession processing Information Based

People Processing
Export the service- Multinational banks Imports Customers- medical tourism to Cuba Transport Customers- Luxury Cruises

Possession processing
Aircraft maintenance Hub- RPOs Shipping Sri Lanka Nokia (Communicator) in 2000s

Information based services

Export the service to a local area- Bollywood movie shown in global theaters Import Customers- Watching Shakespeare's plays in Stratford-upon-Avon Export Information- Blue prints sent for local manufacturing

Impact of globalization on services

Drivers Competition People processing Standard management systems eg Citibank Education eg self service kiosk Use of IT eg Netbanking Labor rates impacts pricing eg Taxi services in developed world. Social policies Possession processing Globalization of competitors with technical edge eg Singapore Airlines Level of economic development eg owned vs service Information based Global domination except in cases of government intervention eg BBC Cultural issues

Market

Technology

Labor substitution eg Level of technology Lawn moving adoption eg Smart phones Lower rates favor low cost location eg India Tax , environment Centralized cost elements eg Amazon

Cost

Government

Education and censorship policies

Assignment
Look at a service Look at the four elements Submit a one pager describing the service along these four angles. Individual assignment Graded at 10 marks. Enjoy your rest of the weekend.

THANK YOU