UNIT-4 SERVICES: DEFINITION: A Service is any act or performance that one party can offer to another that is essentially

intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. Service Industries Are Everywhere The whole government sector with its Courts, Employment services, Hospitals, Loan agencies, Military services, Police and fire departments Postal service, Regulatory agencies and schools, is in the service business. Service Industries Are Everywhere The private nonprofit sector, with its museums, charities, churches, colleges, foundations, and hospitals, is in the service business SERVICE INDUSTRIES ARE EVERYWHERE A good part of business sector , with its airlines, banks, hotels, insurance companies, law firms, management consulting firms, medical practices, motion picture companies, plumbing repair companies, and real estate firms, is in the service business. VALUE-ADDED SERVICES Manufacturers, distributors, and retailers can provide value-added services or simply excellent customer service to differentiate themselves. DIFFERENCE BETWEEN GOODS AND SERVICES HIGHER INTANGIBILITY LACK OF ABILITY TO STORE THEM FOR FUTURE SALE GREATER INTERACTION BETWEEN THE CUSTOMER AND THE SERVICE FACTORY GREATER VARIABILITY IN SERVICE DELIVERY GREATER VARIABILITY AMONG SERVICE IN CUSTOMERS EXPECTATIONS CATEGORIES OF SERVICE MIX PURE TANGIBLE GOOD>> NO SERVICES ACCOMPANY PRODUCTS TANGIBLE GOOD WITH ACCOMPANYING SERVICES>>MAJOR PRODUCT/MINOR SERVICE HYBRID>>EQUAL PART OF GOOD & SERVICE MAJOR SERVICE WITH ACCOMPANYING MINOR GOODS AND SERVICES PURE SERVICE>> ONLY SERVICES DISTINCTIVE CHARACTERISTICS OF SERVICE 4 types of characteristics that greatly affect the design of marketing programs INTANGIBILITY INSEPRARABILITY VARIABILITY PERISHABILITY DISTINCTIVE CHARACTERISTICS OF SERVICE >>INTANGIBILITY Services cannot be seen, tasted, felt, heard, or smelled before they are bought. Services only can demonstrate their service quality through physical evidence and presentation through no. of marketing tools such as place, people, equipment, communication material, symbols and price. DISTINCTIVE CHARACTERISTICS OF SERVICE >>INSEPRARABILITY Services are typically produced and consumed simultaneously. If a person renders a service, then the provider is part of the service. Provider-client interaction is a special feature of services marketing. Eg. Theatre & Audient, lawyer & client, doctor & patient, Transporter & passenger. DISTINCTIVE CHARACTERISTICS OF SERVICE >>VARIABILITY Who? When? Where? Whom? They are Provided, so highly variable So service firms can take these 3 steps to increase quality control. 1. Invest in good hiring & training procedures 2. Standardize the service-performance process throughout the organizations. 3. Monitor customer satisfaction. DISTINCTIVE CHARACTERISTICS OF SERVICE >>PERISHABILITY Services cannot be stored. Perishability is not a problem when demand is steady. But when demand fluctuates the service firms face problems Several strategies can produce a better match between demand and supply in a service business On demand side strategies 1. Differential pricing 2. Nonpeak demand 3. Complementary services 4. Reservation systems On supply side strategies 1. Part-time Employees

2. Peak-time Efficiency 3. Increased consumer participation 4. Shared services 5. Facilities for future expansion CUSTOMER RELATIONSHIP Through out the world customer satisfaction is dropped in recent years in all most all service sectors like banks, stores, hotels, airlines etc., Customers complain about 1. inaccurate information 2. unresponsive, rude, or poorly trained personnel and 3. long waiting times Customers find complaints not reaching a live human being because of slow or faulty phone or online customer service EFFECTIVE RESPONSE IMPLIMENTATION TO MAINTAIN GOOD RELATIONSHIP WITH CUSTOMERS Send an automated reply to all customers mentioning will get back very soon with a good solution [ideally within 24 hours] Ensure the subject line always contains the company name Make the message easy to scan for relevant information Give customers an easy way to respond with follow-up questions CLASSIFY CUSTOMERS & SERVICE Customers in high profit tiers get special discounts, promotional offers and lots of special service Customers who delay their payments and misbehave with employees get lower services, have to wait in Q and charge higher price and use only voice messages to process their inquiries CUSTOMER EMPOWERMENT Customer empowerment is enhancing day by day as technology increases. They can easily identify and becoming more sophisticated about buying product support services and pressing for SERVICE UNBUNDLING They want separate prices for each service element and the right to select the elements they want. INTERNET AND CUSTOMER RELATIONSHIP Internet has empowered customers by letting them vent their rage about bad service or reward good service- and have their comments beamed around the world with a mouse click. Facebook, twitter, Google buzz, blogs, hi5, zoropia, orkut etc., are helping customers to be more expressive and interactive. Customers rejecting quality-less products invariably CUSTOMERS COPRODUCTION Pure services require and demands customers co-production in excelling quality service. Customers knowledge on technology, creativity, thoughts & ideas, suggestions effect the service provider and allow him to give the best service. Poor quality of service also depends on customers cooperation and coordination. HOLISTIC MARKETING FOR SERVICES Service encounters are complex interaction affected by multiple elements adopting a holistic marketing perspective in especially important. The service outcome, and whether or not people will remain loyal to a service provider, is influenced by a host of variables. Keaveney identified more than 800 critical behaviors that cause customers to switch services. These behaviors can be placed into one of 8 categories. HOLISTIC MARKETING FOR SERVICES- Factors leading to customer switching behavior PRICE High price Price INCONVENI increase INVOLUNTA Cleanin ENCE Unfair RY g/ Location/hou pricing SWITCHING rs Deceptive Customer Wait pricing moved maint for appointment Provider enanc for Wait closed e service ETHICAL CORE PROBLEMS SERVICE Cheat servic FAILURE Hard sell Service es Unsafe mistakes HOLISTIC MARKETING REQUIREMENTS Conflict of SERVICE Billing errors EXTERNAL MARKETING>> Pricing, distributing, and promoting service to customer interest ENCOUNTE INTERNAL MARKETING>>training & Financial/banking R motivating employees to serve customers well FAILURES COMPETITI RESPONSE services INTERACTIVE MARKETING>>employees skill in serving the client. Both technical and functional quality are Uncaring ON TO important to satisfy customer. Impolite Found better SERVICE THREE TYPES OF MARKETING IN SERVICE INDUSTRY Unresponsiv service FAILURE e Negative Unknowledg response eable No response

8 categor ies

Restaurant industry
Reluctant response

MANAGING SERVICE QUALITY 1. The service quality of a firm is tested at each service encounter. 2. If service personnel are bored, cannot answer simple questions or 3. Are visiting with each other while customers are waiting 4. Customers will think twice about doing business again with that seller. CUSTOMER EXPECTATIONS Customers form many expectations from many sources such as 1. Past experiences 2. Word of mouth 3. Advertising So the customers compare the perceived service with the expected service, then the customers are disappointed 5 GAPS THAT CAUSES UNSUCCESSFUL DERLIVRY IN SERVICE QUALITY 1. Gap between consumer expectation and management perception 2. Gap between management perception and service-quality specification 3. Gap between service-quality specifications and service delivery 4. Gap between service delivery and external communication 5. Gap between perceived service and expected service SERVICE-QUALITY MODEL

5 DETERMINANTS OF SQ

1. 2. 3. 4. 5.

RELIABILITY RESPONSIVENESS ASSURANCE EMPATHY TANGIBLES

RELIABILITY Providing service as promised Dependability in handling customers service problems Performing services right the first time Providing services at the promised time Maintaining error-free records Employees who have the knowledge to answer customer questions RESPONSIVENESS Keeping customer informed as to when services will be performed Prompt service to customers Willingness to help customers Readiness to respond to customers requests ASSURANCE Employees who instill confidence in customers Making customers feel safe in their transactions Employees who are consistently courteous EMPATHY Giving customers individual attention Employees who deal with customers in a caring fashion Having the customers best interests at heart Employees who understand the needs of their customers Convenient business hours TANGIBLES Modern equipment Visually appealing facilities Employees who have a neat, professional appearance Visually appealing materials associated with the service ROLE OF MARKETING CHANNELS AND VALUE NETWORKS MARKETING CHANNELS: Marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption. In other words marketing channels are the mediators between manufacturer and the consumer and makes the product or service available in the market. PUSH VS. PULL STRATEGY

A push strategy uses the manufacturers sales force, trade promotion, money, or other means to induce intermediaries to carry, promote, and sell the product to end users. In a pull strategy the manufacturers uses advertising, promotion, and other forms of communication to persuade consumers to demand the product from intermediaries, thus inducing the intermediaries to order it.

CHANNEL FUNCTIONS AND FLOWS A marketing channel performs the work of moving goods from producers to consumers. It overcomes the time, place and possession gaps that separate goods and services from those who need or want them. FUNCTIONS OF CHANNELS They gather information about a. customers b. competitors c. other actors and forces in the marketing environment They develop and distribute communication to make purchases They do agreements on price and other terms for the transfer of ownership They place order with manufacturers They acquire funds to finance inventories at different levels They assume risk and make ready themselves to face them They provide best storages and make movement of physical products They provide and arrange the payment of bills through banks and other financial institutions FLOWS OF CHANNELS A. PHYSICAL FLOW Suppliers>>Transporters,Warehouses>>Manufacturer>>Transporters,Warehouses>>Dealers>>Transporters>>Customers B. TITLE FLOW Suppliers>>>>>Manufacturer>>>>>Dealers>>>>>Customers

C. PAYMENT FLOW Suppliers>>>Banks>>>Manufacturer>>>Banks>>>Dealers>>>Banks>>>Customers D. INFORMATION FLOW Suppliers>>Transporters,Warehouses,Banks>>Manufacturer>>Transporters, Warehouses, Transporters, Banks>>>Customers E. PROMOTION FLOW Suppliers>>>Advt. agency>>>Manufacturer>>>Advt.Agency>>>Dealers>>>Customers

Banks>>Dealers>>>

CHANNEL LEVELS I. CONSUMER MARKETING CHANNELS A. ZERO-LEVEL MANUFACTURER TO CONSUMER B. ONE-LEVEL MANUFACTURER TO RETAILER TO CONSUMER C. TWO-LEVEL MANUFACTURER TO WHOLESALER TO RETAILER TO CONSUMER D. THREE-LEVEL MANUFACTURER TO WHOLESALER TO JOBBER TO RETAILER TO CONSUMER II. INDUSTRIAL MARKETING CHANNELS E. ZERO-LEVEL MANUFACTURER TO INDUSTRIAL CONSUMER F. ONE-LEVEL MANUFACTURER TO INDUSTRIAL DISTRIBUTOR TO INDUSTRIAL CONSUMER G. TWO-LEVEL MANUFACTURER TO MANUFACTURERS REPRESENTATIVE TO INDUSTRIAL DISTRIBUTOR TO INDUSTRIAL CONSUMER H. THREE-LEVEL

MANUFACTURER TO MANUFACTURERS SALES BRANCH TO MANUFACTURERS REPRESENTATIVE TO INDUSTRIAL DISTRIBUTOR TO INDUSTRIAL CONSUMER

CHANNEL DESIGN DECISIONS A. ANALYSING CUSTOMERS DESIRED SERVICE OUTPUT LEVELS

Lot size : no. of units permits a consumer to buy Waiting time: average time the customers wait to receive goods Spatial convenience: No. of outlets of a product and availability in the market Product variety: more choices for consumers Service backup: credit, door delivery, installation, repairs, guarantee/warranty
B. ESTABLISHING OBJECTIVES AND CONSTRAINTS Minimize total channel costs Effective planning to identify the perfect segments To do direct or indirect marketing Evaluative strengths and weaknesses of the intermediaries Legal restrictions and regulations also affect channel design C. IDENTIFYING MAJOR CHANNEL ALTERNATIVES

Types of intermediaries :
a. Company sales force b. Manufacturers agency c. Industrial distributors Number of intermediaries:

Exclusive distribution: Limited No. of intermediaries used by producer when he want to control service level outputs eg., new automobiles, womens apparel brands b. Selective distribution: Few no. but less than all of the intermediaries will carry a particular product eg., Nike shoes maker c. Intensive distribution: manufacturer placing the goods and services in as many as outlets as possible like tobbaco, alcohol, soaps, snack food etc., Terms and responsibilities of channel members: a. Price policy b. Conditions of sale refers to payment c. Distributors territorial rights d. Mutual services and responsibilities CHANNEL MANAGEMENT DECISIONS

a.

A.SELECTING

CHANNEL MEMBERS--Producers should determine what characteristics distinguish the better intermediaries. eg. No. of years in business, other lines carried, growth and profit records, financial strength, cooperativeness and service reputation.

B. TRAINING/ MOTIVATING CHANNEL MEMBERS--To stimulate top performance starts with understanding their needs
and wants like training programs, market research programs and other capability-building programs to improve intermediaries performance. powers used to elicit cooperation coercive power, reward power, legitimate power, expert power, referent power.

C. EVALUATE CHANNEL MEMBERS--periodical evaluation of intermediaries performance against such standards as

sales-quota attainment, average inventory levels, customer delivery time, treatment of damaged and lost goods and cooperation in promotional and training programs D. MODIFYING CHANNEL ARRANGEMENTS Periodical review and modification of channel design and arrangements as consumer buying pattern changes, the market expands, new completion arises, innovative distribution channels emerge and the product moves into later stages in the PLC. CHANNEL INTEGRATION AND SYSTEMS Distribution channels dont stand still. New wholesaling and retailing institutions emerge, and new channel system evolve. The recent growth of vertical, horizontal and multichannel marketing systems are here.

1. VERTICAL MARKETING SYSTEMS [VMS] A conventional marketing channel comprises an independent producer,
wholesaler, and retailer. Whereas in VMS, By contrast, comprises the producer, wholesaler, retailer acting as a unified system. One channel member, the channel captain, owns the other or franchises them or has so much power that they all cooperate. 1. Corporate VMS successive production and distribution under single ownership 2. Administered VMS - successive production and distribution under one of the total members 3. Contractual VMS consists of independent firms at different levels of production and distribution, integrating their programs on a contractual basis to obtain more economies or sales impact then they could achieve alone. This again are 3 types like wholesaler-sponsored voluntary chains, retailer cooperatives and franchise organizations.

2. HORIZONTAL MARKETING SYSTEMS [HMS] two or more unrelated companies put together resources or programs to
exploit an emerging marketing opportunity. Each company lacks the capital, know-how, production, or marketing resources to venture alone, or it its afraid of the risk. On temporary or permanent basis or crate a joint venture company. Eg. Post offices selling insurance and mutual funds, HUL strategic tie-up with PepsiCo India for bottling and distribution of Liptons ready-to-drink and other beverages.

3. INTEGRATING MULTICHANNEL MARKETING SYSTEMS Integrated multichannel marketing systems occur when a
single firm uses two or more marketing channels to reach one or more customer segments. most companies today have adopted multichannel marketing. Disney sells its DVDs through five main channels such as movie rental stores, retail stores, online retailers and through its own online stores CONFLICT, COOPERATION AND COMPETITION CHANNEL CONFLICT is generated when one channel members actions prevent another channel from achieving its goals. CHANNEL COOPERATION and coordination occurs when channel members are brought together to advance the goals of the channel, as opposed to their own potentially incompatible goals. TYPES OF CONFLICT AND COMPETITION Vertical channel conflict-between different levels within same channel Horizontal channel conflict-between members at the same level within the channel Multichannel conflict-exists when the manufacturer has established two or more channels that sells to the same market. CAUSES OF CONFLICT Goal incompatibility Unclear roles and rights Differences in perception

 Intermediaries dependence on the manufacturer E-COMMERCE MARKETING PRA CTICES E-business describes the use of electronic means and platforms to conduct a companys business. E-commerce means that the company or site offers to transact of facilitate the selling of products and service online. E-commerce has given rise to e-purchasing and e-marketing. M-COMMERCE MARKETING PRACATICES Consumers no longer need computer to send and receive information. All they need is a cell phone or personal digital assistant[PDA]. Connect internet to check stock prices, the weather, and sports scores, send and receive e-mail messages and place on-line orders. RETAILING: It includes all the activities involved in selling goods or services directly to final consumers for personal, non business use. A retailer or retail store is any business enterprise whose sales volume comes primarily from retailing. TYPES OF RETAILERS A. specialty store B. department store C. supermarket D. convenience store E. discount store F. off-price retailer SERVICES OFFERED BY RETAILERS TO CUSTOMERS Self-service Self-selection Limited service Full service MAJOR TYPES OF RETAIL ORGANISATIONS Corporate chain store: owned by producers Voluntary chain: a wholesaler sponsored outlets run by retailers Retailer cooperative: independent retailers owned central buying org., Consumer cooperative: consumers funded and org., outlets Franchise organization: contractual outlets by independent business men Merchandising conglomerate: free-form corporation with several product mix TRENDS IN RETAILING New retail forms and combinations continuously emerge New retail forms are facing a shorter life span, rapidly formed and quickly loose their novelty Non-storage services such as Mail services are improving Tele branding and shopping are ahead in positive way Toll-free tele-bookings are increasing rapidly Internet shopping is also increasing very fast Discount stores, factory outlets are increasing Comfort levels for consumers to shop are increasing Product mix organizations are increasing Shopping, entertainment and food are sold at one place old system of all goods and services at one place concept is increasing to save consumers time of traveling, costs of traveling marketing channels are increasing and becoming professionally managed and programmed technology is combined with services services are offered in a stylish and fashionable way to attract consumers schemes, free gifts are offered to make them buy exchange of old products in lieu of new products directly by retailers increasing advt., promotion and publicity is equally maintained par with producers and manufacturers retail chain system is rapidly increasing all around WHOLESALING: It included all the activities involved in selling goods or services to those who buy for resale or business use. Wholesaling excluded manufacturers and farmers because they are engaged primarily in production and it excluded retailers. FUNCSTIONS OF WHOLESALERS selling and promoting buying and assortment building bulk breaking warehousing transportation financing risk bearing market information management services and counseling

GROWTH OF WHOLESALING: It has grown in the US at a compount rate of 5.8 percent over the past 10 years. A number of factors explain this , they are growth of larger factories located some distance from the principal buyers production in advance of orders rather than in response to specific orders an increase in the no. of levels of intermediate producers and users GRWOTH REQUIRED FOR @ increasing need for adapting products to the needs of intermediate and final users in terms of # quantities # packages # forms MAJOR TYPES OF WHOLESALING Merchant wholesalers Full-service wholesalers Limited-service wholesalers Brokers and agents Manufacturers and retailers branches and offices Miscellaneous wholesalers TRENDS IN WHOLESALING MAIN REASONS WHOLSALERS FAIL AND MAJOR COMPLAINTS ON THEM ARE AS FOLLOWS: They do not aggressively promote the manufacturers product line, acting more like order takers They do not carry enough inventory and therefore fail to fill customers orders fast enough They do not supply the manufacturer with up-to-date market, customer and competitive information They do not attract high-caliber managers and bring down their own costs They charge too much for their services It even appeared that wholesalers were headed for a significant decline as large manufacturers and retailers moved aggressively into direct buying programs Slowly savvy wholesalers rallied to the challenges and began to reengineer their businesses They recognized the value to the channel and the customers and moved a head towards the success STRATEGIES OF HIGH-PERFORMANCE WHOLESALER-DISTRIBBUTORS Strengthening core operations: no duplicating the efficiency by retailers and manufacturers Expanding into global markets: chemical, electronics and computer fields expanded to establish their own networks Doing more with less investments: invested heavily on technology, including bar coding and scanning, fully automated warehouses electronic data interchange and advanced information technology without support of manufacturers and retailers Fulfilled their commitments to the manufacturers requirements by visiting their plants and attending manufacturer association conventions and trade shows They identified and offered value-added services to help their suppliers It is ready to face lot of challenges in next century The trend toward vertical integration, in which manufacturers try to control or own their intermediaries is still strong LOGISTICS Market logistics includes planning the infrastructure to meet demand, then implementing and controlling the physical flows of materials and final goods from points of origin to points of use, to meet customer requirements at a profit. Role of Marketing Communications Marketing communications are the means by which firms attempt to inform, persuade and remind consumers directly or indirectly about the products and brands they sell. It represents the voice of company and its brand. MARKETING COMMUNICATION MIX MODES Advertising Sales promotion Events and experiences Public relations and publicity Personal selling Direct marketing Interactive marketing Word-of-mouth marketing ADVERTISING: Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods or services by an identified sponsor. Advertising // print and broadcast ads // packaging inner/outer // motion pictures // brochures and booklets // posters and leaflets

// directories // reprints of ads // billboards // display signs // point of purchase displays // audiovisual material // symbols and logos and // videotapes The advertising departments job is to # propose a budget # develop advertising strategy # approve ads and compaigns # handle direct-mail advertising # dealer displays # other forms of advertising 5 MS OF ADVERTISING MISSION: SALES GOALS, ADVERTISING OBJECTIVES MONEY: STAGE IN PLC, MARKET SHARE,COMPETITION,ADVT. FREQUENCY AND PRODUCT SUBSTUTABILITY MESSAGE: GENERATION, EVALULATION&SELECTION, EXECUTION, SOCIAL RESPONSIBILITY REVIEW MEDIA: REACH, FREQUENCY, IMPACT, MAJOR MEDIA TYPES, SPECIFIC MEDIA VEHICLES, MEDIA TIMING,GEOGRAPHICAL MEDIA ALLOCATION MEASUREMENT: COMMUNICATION IMPACT AND SALES IMPACT SALES PROMOTION: It consists of a diverse collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade. In other words the sales promotion is to use the tools and attract the consumer to purchase the product from the market in the given period of time set by the organizations. Sales promotion // contest, games, seepstakes, lotteries // premium and gifts // sampling // fair and trade shows // exhibits // demonstrations // coupons // rebates // low-interest financing // entertainment // trade-in allowances // continuity programs // tie-ins MAJOR CONSUMER-PROMOTIONAL TOOLS a. samples b. coupons c. cash refund offers/rebates d. price packs e. premiums/gifts f. prizes/games/contests g. patronage awards h. free trials MAJOR TRADE-PROMOTIONAL TOOLS a. price-off b. allowance c. free goods MAJOR BUSINESS AND SALES FORCE PROMOTIONAL TOOLS a. trade shows and conventions b. sales contests c. specialty advertising PUBLIC RELATLIONS: A public is any group that has an actual or potential interest in or impact on a companys ability to achieve its objectives.

Public Relations (PR) involves a variety of programs designed to promote or protect a companys image or its individual products. Public relations and publicity // press kits // speeches // seminars // annual reports // charitable donations // sponsorships // publications // community relations // lobbying // identity media // company magazine // events FUNCTIONS OF PUBLIC RELATIONS Press relations Product publicity Corporate communication Lobbying Counseling MARKETING THE PUBLIC RELATIONS Assisting the launch of new products Building interest in a product category Influencing specific target groups Defending products that have encountered public problems Building the corporate image in a way that reflects favorably on its products

Events and experiences Company-sponsored activites and programs designed to crate daily or special brand-related interactions Interactive marketing Online activities and programs designed to engage customers or prospects and directly or indirectly raise awareness, improve image or elicit sales of products and services Word-of-mouth marketing People-to-people oral, written, or electronic communication that relate to the merits or experiences of purchasing or using products or services Personal selling Face-to-face interaction with one or more prospective purchasers for the purpose of making presentations, answering questions, and procuring orders. Personal selling // sales presentations // sales meetings // incentive programs // samples // fairs and trade shows Direct marketing Use of mail, telephone, fax, e-mail or internet to communicate directly with customers. Direct marketing // catalogs // mailings // telemarketing // electronic shopping // TV shopping // fax mail // e-mail // voice mail

COMMUNICATION PROCESS

DEVELOPING EFFECTIVE COMMUNUCATIONS 1. Identify target audience 2. Determine objectives 3. Design communications 4. Select channels 5. Establish budget 6. Decide on media mix 7. Measure results 8. Manage integrated marketing communications[IMC]