Services Marketing

Chapter 9
Services Marketing Communication

Integrated Service Marketing Communication

Service marketers make prospective customers aware about Services and also persuade them to use new services through Marketing Communication or Promotion. Service marketers also use promotion to raise awareness from level of disinterest to interest. Marketing communication or promotion informs, persuades, reminds target audience or publics about service provider and /or their services to influence publics behaviour favourably. Publics who are influenced by Promotion are current and potential customers, trade intermediaries, suppliers, consumer advisor groups, opinion makers like critics, journalists, govt., society, employees and other stake holders.
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Key Challenges in Service Communication Customers fail to achieve satisfaction because of discrepancy between delivered service and external communication. It arises out of : 1. Inadequate management of Service Promises When companies fail to manage service promises made by salespeople, advertising etc.. In many traditionally managed companies, service delivery may not be up to communication. 2. Inadequate management of Customer Expectations When expectations are raised to unrealistic levels through communication or otherwise, actual service may lead to customer dissatisfaction and discourage repeat business though initial sale may go high due to overpromise.
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3. Inadequate Customer Education If customers are unclear about service procedure , their role in service delivery, method to evaluate services that they have never used, customers are likely to be disappointed though the fault lies with customers rather than service providers leading to dissatisfaction.

4. Inadequate Internal Marketing Communication In service organisations, marketing communication and service delivery should be coordinated to render satisfaction to customer. For example, a bank advertises encashment of cheques in less than ten minutes but operation staff may not be conversant with it leading to dissatisfaction of customers.

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Service Communication Strategies

Following elements are to be focused at to plan Service Communication Strategy : 1. Who is your target audience ? 2. What do we need to communicate and achieve ?

3. How should we communicate this ?

4. Where should we communicate this ? 5. When do communications need to take place ?

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1. Target Audience Marketing communication are used in service firms with i) service employees called internal customers & ii) prospects and users called external customers 2. Objective of Communication Commonly adopted service promotion objectives are : i) Build awareness and interest on a new service or brand ii) Develop favourable disposition towards it by speaking about strengths and benefits to be derived. iii) Reposition a service relative to competitors service. iv) Encourage trial by providing incentives. v) Provide reassurances by giving guarantees. vi) Inform customers as to how the service is to be used etc.
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3. Service Marketing Communication Mix Elements Communication with target audience are carried through different media having capability of achieving success like * Personal Communication -- Through selling, customer service, training, telemarketing , word of mouth communication (external) etc. * Advertising -- Through broadcast ( radio, TV), printmedia, internet, outdoor hoardings, direct mail etc. * Sales Promotion -- Through sampling, coupons, gifts, rebates, prizes, scholarships etc.
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* Public Relations & Publicity -- Through press releases, press conferences, special events, sponsorships, trade shows, exhibitions , special media coverage etc. * Corporate Design -- By interior dcor, signage, outdoor vehicles, equipments, stationery, employee uniforms etc.

* Training Material -- Like web sites, manuals, brochures, video & audio cassettes, software, CD-ROM, voice mail etc. In addition communication may reach prospective customers from and through other quarters both intended and unintended. These may influence customers favourably or otherwise as indicated :
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Word of Mouth communication Positive (or not) messages about service or service provider coming from other satisfied (or not) users, peers, relatives and friends are generally viewed more credibly. Service Environnment Layout, design and environment of service delivery enclosures send powerful messages to customer. The ambience and servicescape also play important role in sending messages. Majority of service providers arrange to maintain same design, dcor, colour combination in their service outlets to influence customers positively and also to develop Brand image.
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4. Service Communication Programme

Effective service marketing communication depends up on successful implementation of : * Setting Communication Objectives * Identification of Target Audience Market Research to Market Segmentation to Selection of Target Market * Decide Marketing Budget * Develop Communication Message * Decide Communication Mix Elements * Control Progress
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Service Branding
In todays world of proliferating products and services of same type, it may become difficult to choose the same favourite product or service unless there exists a distinguishing feature. A unique identity is created for the service by giving it a name, term, sign, design or combination of these. Identification of service of one service-provider from that of another may be done by this identity called Service Brand. Thus Service Brand is a conjoint of words, images, colour etc. that lead to specific perception of a Service. To a person, a Brand acts as a link to recognise, think of value, quality and benefits of a given Service.
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On the other hand a Service Brand represents a set of promises made by service-provider to user of the Brand. Importance of Service Brands To Customers : -- Services are intangible therefore difficult to comprehend, so branding of services help in * easy recognition * recalling its attribute, quality, benefits etc. * making quick decision to buy the service or not To Service-Providers -- Helps in repeat purchase (or not) by customers -- Enabling a premium to be charged (or not) in price -- Introducing similar services conveniently and economically -- Popularity of a Service brand is an asset of service provider.
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Service Branding Approaches

Branding of services is more complex because of their intangibility and difficulty in standardisation. So approaches to Service Branding are mostly indirect. A. By Including a Symbol or Logo As for example, LIC puts the logo of A lamp within two hands and slogan of Jindagi ke Sath Bhi Aur Jindagi ke Baad Bhi ; ITC group puts A pair of folded hands . B. By Putting a Suitable Slogan Oriental Insurance Co. always puts the slogan You are in safe hands; MyPage (rediff.com) - Search for helpful contacts etc.
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C. Making Use of Suitable Colours and Design Jet Airways makes maximum use of Blue and Yellow colours; Red colour by left political parties, Zerox photocopying uses Yellow colour everywhere.

Brand Loyaly in Services

Generally speaking trend of Brand Loyalty in services is high, mainly because i) Finding substitutes for services is more difficult than products ii) Switching cost for services is HIGH iii) Service customers prefer to go for repeat purchases iv) It is easier to develop Relationship Bond with service customers.
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Customer Relationship Management

-- Till mid-nineteenth century, buyers used to go to their favourite neighbouring store to purchase requirements regularly. The proprietor, handful of its staff and buyers knew each other by first name. -- Stores knew taste and preference of buyers. In turn buyers were also loyal to the store. -- As urban communities grew, size of stores also grew with urge for economy of scale. In the process buyers became mobile. Thus the unique relationship became a casualty into nameless, faceless entity called customer. -- The customers also started hunting for bargains for low price from supplier to supplier.
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-- Consequently, stores also started attracting more new customers every now and then without much caring for existing customers, called Traditional Marketing. The situation now appears to have moved a full circle. -- Stores are now realising futility of Traditional Marketing. They are trying to increase their profit by retaining customers permanently by providing greater satisfaction to them. -- To achieve this, stores are making use of tools and technology to promote good relationship with customers. -- It has come to be known as Customer Relationship Management.
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-- Thus, Customer Relationship Management (CRM ) is a business strategy of broader customer-centric concepts of marketing, manufacturing, finance, HR, R&D and other disciplines of management. So efficient CRM arises out of integration of all relevant corporate functions and not only marketing. Components of CRM 1. Customers -- Customers are only source of profit and future growth of suppliers and they have become highly knowledgeable . Secondly, competition is very fierce so loyal customers have become scarce. So suppliers need to make efforts to develop relationship with them.
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2. Management -- CRM is not limited to marketing function only. It rests up on corporate culture and process. Customer related Information is treated as corporate knowledge in CRM-practising firms, it helps in driving all corporate functions like R&D, Procurement, Manufacturing, HR etc. and not marketing alone.

Thus, Customer Relationship Management is a strategic orientation and business philosophy that focuses up on keeping and improving relationship with existing customers rather than acquiring new customers all the time.
CRM may also be defined as a Business Approach with conscious objective to develop long term and/or trusting relationship with customers, intermediaries, suppliers and other business partners.by Prof. H.Ganguly Presentation 18

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Transactional vs. Relationship Marketing -- When a company sells to new customers without worrying to retain them, it is Transactional Marketing. -- It costs 5 to 6 times more to attract a new customer than it costs in taking an order from existing customer.

-- When a firm cannot satisfy a customer in first visit to retain them, they are to attract new customers every time -- Whereas in Relationship Marketing, new and existing customers repeatedly purchase from the firm because of the satisfaction that they derive.
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Comparision between Transactional & Relationship Marketing

Transactional Marketing
* Do Deals and Disappear

Relationship Marketing

* Negotiate Win-Win Sale and stay around * Short term thinking & actions * Long term thinking & actions * Push Price * Push Value

* Does business on deal to deal * Build business on relationship * Gets new customers more and more
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* Keeps all customers

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Transactional Marketing * No structure to do business * Sales focussed * Short-term empathy

Relationship Marketing * Structure to support Relationship * Relationship -- focussed * Long term empathy and rapport

* Sales on telling and selling

* Poor after-sales service

* Sales based on trust

* Invest in after-sales service

* Incentives given on deals

* Deal is target and end-result of efforts
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* Incentives on relationship and on revenue

* Sale is beginning and result of long relationship.
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Benefits of Customer Relationship Management A. To Customers

Customers receive greater value from CRM firms compared to competing firms. The value received is in trade-off between what customer feels he gets (quality, satisfaction and specific benefits) against what he pays (monetary and nonmonetary costs)
As customers feel to get this value consistently from CRM firms, they find it beneficial to stay in relationship with CRM firms. In addition, customers feel to receive following benefits from Relationship-firms :
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1. Confidence Benefits -- Because of trust and confidence on service-provider, anxiety of customers is reduced. 2. Economy Benefits -- The switching cost in terms of search and retraining is saved, providing psychological support and economic saving. 3. Social Benefits -- Customers develop familiarity and relationship with CRM firms such that service encounters become source of pleasure. 4. Special Treatment Benefits -- Special relationship among them may lead to preferential deals and benefits.

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B. To CRM Service Providers 1. Increase in Revenue -- Customers buy more from Relationship firms 2. Reduced Cost of Operation -- CRM firms save on advertisement, sales promotion etc. 3. Word of mouth Publicity -- Satisfied customers are too glad to refer other parties to CRM firms; it is taken more seriously than advertisements. 4. Lifetime Value of Customers [LVC] -- Total sales revenue and profit generated from relationship customers are invariably higher than transaction customers considered with costs and expenses. 5. Employee Retention -- Level of employee satisfaction is always higher in firms with satisfied customers.
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Customer Relationship Process

The process of CRM is laid around customer satisfaction to delight in a managerial manner. Stage I : Identifying Right Customer In CRM, market segmentation is done based up on Consumer behavioral variables like nature, volume, frequency of purchase etc.. Suitable target markets are selected for developing sustainable business models. Stage II : Retaining Right Customers CRM firms classify customers into A, B, C & D class based on their frequency of purchase value per transaction and 7/26/2012 profitability. Presentation by Prof. H.Ganguly 25

Class A : Customers HIGH on all three parameters Class D : Customers LOW on all three parameters & Class B & C : Customers in between the parameters. Stage III : Delighting Customers CRM service providers develop strong value proposition in terms of better service to retain the customers Secondly, they operate customer-centric strategies to generate higher profitability.

CRM Service providers ensure that they do not hurt companys profitability to please customers.

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Service Strategy of Retaining Customers

Customers may be retained without fail by providing them with value greater than what they expect i.e. Customer Delight. Step 1 Identify customers critical expectation that is possible and should be exceeded to provide delight to customers.

Step 2 -- CRM firm tries to deliver delight first to most important Class A customers. It does not attempt to deliver delight to all groups of customer, neither it is profitable to do so. Step 3 -- One way of delivering delight is to under promise and over deliver But repeated under promise may reduce firms competitiveness among others.
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Customer Relationship Management Strategies

CRM firms adopt different type of strategies or Bonds to retain customers and bind them in long term relationship : Level I - Financial Bond CRM firm first binds selected customers with financial incentives on volume purchase, e.g., Frequent fliers discount by Airlines. Since these schemes may be imitated easily by competitors, these are to be strengthened by other relation building bonds. Level II Social Bond Next CRM firm tries to bind customers through more powerful social or interpersonal bonds.
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Customer is no longer treated as a nameless, faceless person but as a client (Mr./Ms. Such & Such) whose individual needs, wants and expectations are well studied and services provided are to specially suit her/him. Interpersonal bonds are mostly used by professional service-providers like consultants, legal practitioners, doctors, B-2-B service providers, etc. These social bonds with financial incentives become very strong relationship in retaining customers. Level III Customisation Bond Relationship with customers is further strengthened by customisation i.e. knowing needs of customer intimately, developing solutions on one to one basis and delivering those.
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For example, home-delivery of ordered vegetables, fruits groceries, walking dogs of high net worth persons during their holidays abroad by tour operators etc. Level IV Structural Bonds The Structural Bonds are technology-oriented relationships to make customers make more efficient and effective. For example, a B-2-B service provider may carry out data mining operation on their customers customers and other such assistance.

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