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Services are everywhere we turn, whether it be travel to an exotic tourism destination, a visit to
the doctor, a church service, a trip to the bank, a meeting with an insurance agent, a meal at our
favorite restaurant, or a day at school. In general, goods can be defined as objects, devices, or
things, whereas services can be defined as deeds, efforts, or performances. When the term
“product” is mentioned, for our purposes, it refers to both goods and services and is
used. Ultimately, the primary difference between goods and services is the property of
1. American Marketing Association, Committee of Definitions 1960,“Activities, benefits
and satisfactions, which are offered for sale or are provided in connection with the sale of
2. Kotler (1996), “service is an activity that on party offers another that is essential
intangible and does not result in the ownership of anything. Its production may or may
not be tied to physical product.”
3. Quinn, Baruch and Paquette, (1987),“Services include all economic activities whose
output is not a physical product or construction, is generally consumed at the time it is
produced, and provides added value in forms (such as convenience, amusement,
timeliness, comfort or health) that are essentially intangible concerns of its first
4. Zeithmal VA and Mary Jo Bitner, (1996), “services are deeds, processes and
Features of Service:
Services have basically six to eight features
that greatly affect the designer of marketing
programs. They are:
1. Intangibility: Intangibility is the
dominant characteristic of services
and is defined as the lack of
tangible assets which can be seen,
touched or smelled prior to purchase.
The intangible characteristic of
services present service marketers
with several problems. The lack of physical attributes of services makes it difficult to
§ Difficult to visualize
§ Distribution through non physical channels
§ Customer participation
§ No ownership
§ Cannot be inventoried
§ Customer is co-producer.
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display or communicate services readily and easily to customers. Customers often find
it mentally difficult to grasp the service performance or experience without
tangible evidence, which makes it difficult to diffuse.
2. Variability: services are highly variable. It is almost impossible to have the same service
from the same seller the second time. No two customers can have exactly similar even
through they experience it simultaneously.
3. Inseparability: It refers to the simultaneous production and consumption of a
service, thus it is often difficult to separate the service provider from the service
performance. Customers are normally present at and during the service performance and
play an active role in the service production process. The quality of the service
performance is dependent on the interaction between the service provider and the
4. Perishability: Perishability is the inability of a service to be inventoried or stored. This
characteristic is of major concern to service marketers because it inevitably leads to
supply and demand problems. The capacity lost in services can never be regained and
to equalize supply and demand is a difficult task. These distinct service problems
present service marketers with the challenge of setting up good recovery strategies for
service process failures.
5. Ownership: Customers receive only the right to a service process when they
purchase it. Subsequently it is assumed that payment for services buys only the right of
access to a service and not physical transfer of ownership to customers. Customers view
the lack of ownership of a service as a perceived risk. Firstly they are presented with the
uncertainty as to whether the right service has been obtained and secondly with the
uncertainty about the consequences of the service purchase. Since services are produced
and consumed simultaneously, the option of “returning” a service does not exist. The
inability to own a service also has direct implications on the distribution of services.
6. Heterogeneous: because services are performances, frequently produced by humans, no
two services will be precisely alike. The employees delivering the services frequently are
the service in the customer’s eyes, and people may differ in their performance from day
to day or even hour to hour. Heterogeneity also results because no two customers are
precisely alike; each will have unique demands or experience the service in a unique way.
7. No Inventories for Services: Because a service is a deed or performance, rather
than a tangible item that the customer keeps, it is "perishable" and canno t be
inventoried. Of course, the necessary facilities, equipment, and labor can be held in
readiness to create the service, but these simply represent productive capacity, not the
8. I m p o r t a n c e o f th e T i m e Facto r Many services are delivered in real time.
Customers have to be physically present to receive service from organizations such as
airlines, hospitals, haircutters, and restaurants. There are limits as to ho w long customers
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are willing to be kept waiting and service must be delivered fast enough so that
customers do not waste time receiving service.
Marketing of Services:
Service marketing means the activities performed by the marketer to promote his services which
is his final product/services. A different marketing approach is necessary for service marketing,
because services differ from goods in many respects. Service marketing includes all the
marketing activities performed by the marketers.
Marketing mix in services:
The traditional marketing mix is the most basic
concept in marketing and is defined as elements
which organizations control and use to satisfy or
communicate with customers. The components
of the traditional marketing mix are the four
P’s: product, price, place, and promotion. The
three new components address the
uniqueness of three of the service
characteristics. They focus, firstly, on the
inseparability of service marketers from
customers, secondly, on the inability to hold
service in inventory which makes it critical for the
service process to flow smoothly and lastly, on the fact
that a highly intangible service offering must appear
1. Service offerings (Product): A product is anything that an organization offers to
customers that might satisfy a need, whether it is tangible or intangible. An analysis of
service offerings shows that it can be divided it into two distinct components namely, a
core service offering that represents the intangible core benefits of services and a
secondary service offering that represents the tangible and augmented elements of the
service offerings. The core service offerings are developed with customers’ benefit
in mind and place the emphasis on the customers’ perception of services. The
secondary service offerings illustrate the additional benefits that the service offers to
meet customers’ additional needs, and serve to differentiate the offerings from those
of competitors’. These benefits can combine both the tangible and intangible elements of
service offerings that facilitate the customer to comprehend the core service.
2. Price: The price of service offerings is often used by customers as an input into
their expectations, purchase decisions, and evaluation of service quality. It is seen as a
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tangible cue in services with a high risk and experience properties, to form
expectations of the service. Price is used as an indicator of quality by customers. Thus,
the assumption is formed that the higher the price of service offerings, the more is
expected of it by customers.
3. Product: The distribution decision refers to the availability and accessibility of service
offerings to customers. Availability from the customers’ point of view signifies that
services are on hand when they want them, while accessibility is the relative ease
with which customers can conduct service processes with the service providers.
For pure services, the distribution decision is of little relevance, though most services
involve a tangible component. As a result, the distribution decision involves
physical locations and decisions which intermediaries use to provide the services.
4. Promotions: The services promotion mix uses a combination of channels to convey
messages to the target market. These messages are received from sources within the
organization and externally. External sources include word of mouth communications
or press editorials, while internal communications originate from the traditional
marketing mix and from the frontline employees. The combination of
communication channels depends on the characteristics of the target market, the size of
the service, the nature of the service and the cost of the various channels (Palmer and
Cole, 1995:260). The promotional mix of a service organization involves the
transmission of messages to past, present and future customers. The ultimate aim is to
make future customers aware of the service and influence them towards purchase.
5. People: People as an element in the service mix include all the human actors - the
firm’s employees (internal customers), the buyers (external customers), and
other customers - who play a part in service delivery and accordingly influence the
buyers’ perception of choice in the service environment (Zeithaml and Bitner,
1996:26). Service employees interact with customers during service delivery
processes and provide cues to external customers concerning the services. Hence, it
can be said that service employees’ competence, attitude, and appearance influence
customers’ perception of services. Customers often experience service
employees as synonymous with the service and no matter how small or large a part
they play in the actual delivery of the service, they are still the focal point of
the service for customers.
6. Processes: Processes are the actual procedures, mechanisms, and flow of activities by
which services are delivered (Zeithaml and Bitner, 1996, 21). Customers judge services
on the operational flow or on the actual delivery thereof. The inseparability characteristic
of services requires customers to follow a series of extensive or complicated actions to
complete the process. Often the logic of these actions escapes the customers. Whether the
service process is standardized or customized, it is used as evidence by customers to
judge service quality. Standardized services will follow a production-line approach, while
customized services command a greater degree of empowerment. Nonetheless, the
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moment of truth where customers experience the evidence, is not a once-off event but an
The actual service delivery process can be performed in three locations namely,
the customer’s environment,
at a store or an office or
electronically or via telecommunications.
7. Physical evidence: The environment in which the service provider delivers the
service and where the customers and the organization interact, as well as any
tangible component that facilitates performance or communication of the service, is
referred to as physical evidence (Zeithaml and Bitner, 1996, 26). Service
organizations need to provide tangible evidence of the service to develop an image
in the mind of current and prospective customers. Often physical evidence overlaps
with the promotion and distribution mix of the service mix. All tangible
representations of services, such as brochures, letterheads, business cards, report
formats, signage, equipment, and physical facilities where service are rendered,
represent the physical evidence of services.
Types of Services:
1. People processing: involves tangible actions to people's bodies. Examples of
people-processing services include passenger transportation, haircutting, and
dental work. Customers need to be physically present throughout service delivery to receive its
2. Possession processing: includes tangible actions to goods and other physical
possessions belonging to the customer. Examples of possession processing
include airfreight, lawn mowing, and cleaning services. In these instances, the
object requiring processing must be present, but the customer need not be.
People Processing PossessionProcessing
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3. Mental stimulus processing refers to intangible actions directed at people's
minds. Services in this category include entertainment, spectator sports, theater
performances, and education. In such instances, customers must be present mentally but can be
located either in a specific service facility or in a remote location
connected by broadcast signals or telecommunication linkages.
4. Information processing describes intangible actions directed at a customer's
assets. Examples of information-processing services include insurance, banking,
and consulting. In this category, little direct involvement with the customer may
be needed once the request for service has been initiated
Conceptual Framework for Service Marketing:
1. Understanding service products, consumers, and markets
§ New perspectives on marketing in the service economy.
§ Consumer behavior in a services context.
§ Positioning services in competitive markets.
2. Applying the 7P’s of marketing to services
§ Developing the service products: core and supplementary elements.
§ Distribution services through physical and electronic channels.
§ Setting price and implementing revenue management
§ Promoting services and educating customer.
3. Managing the customer interface
§ Designing and managing service processes.
§ Balancing demand and productive capacity.
§ Crafting the service environment.
§ Managing people for service advantage
4. Implementing profitable service strategies
§ Managing relationships and building loyalty.
§ Complaint handling and service recovery.
§ Improving service quality and productivity.
§ Striving for service leadership.
Service marketers face marketing challenges which revolve around issues such as:
§ understanding customers’ needs and expectations of services,
§ making services tangible to customers and
§ keeping and dealing with promises made to the customers
The services marketing triangle helps service marketers to address these challenges. The three
points of the service triangle represent the organization, the customers, and the employees.
Between each of the three points of the triangle different marketing processes such as
external marketing, interactive marketing and internal marketing must be successfully
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carried out for service processes to succeed and to build and maintain relationships with the
internal and external customers.
§ External Marketing: The link between an organization and its customers is
the external marketing process. External marketing represents the promises
which organizations make to their customers with reference to products or
services they offer. Organizations make promises to customers concerning their
offerings and how delivery of the offerings will be conducted.
§ Interactive Marketing: The interactive marketing process is about keeping
the promises made by the organization to the customer along with delivering a
quality service to the customer. Interactive marketing is the actual contact
between the service employees and the customers and is called the "moment of
truth" or service encounter. It is the decisive moment in the service process where
organizations actually show what they can do and how they meet the set
expectations. At these decisive moments, everything about the service process can
succeed or fail. The success or failure can be temporary, complete, or final but
the interaction can never be restaged or controlled.
§ Internal Marketing: Internal marketing hinges on the assumption that
employee satisfaction and customer satisfaction are interlinked, thus internal
marketing must precede external marketing. Organizations whose objective is to
deliver constant high service quality have to enable all employees to practice
customer orientation and marketing. Service organizations must recognize that
achieving objectives and creating change can only be achieved through
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employees. Service providers need to recruit, train, and provide tools to
employees to perform superior service. They should therefore be fully equipped
to provide the best service to the external and internal customers.
Employees who understand their functions within the organization are more likely
to create a harmonious work environment that will pave the way for less role
ambiguity, less conflict, and more satisfied employees in the workplace.
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Service consumer behavior:
There are three important terms in marketing that are commonly used as interchangeable terms.
They are buyer, consumer and customer. A consumer in one who consumes goods and services.
The term consumer includes human beings, animals, birds, trees and all those who have a
capacity to consume. Buyer are those who buy goods and services. All buyers are human beings.
Buyer also represent those consumers who can’t buyer their own. The term customer finds
meaning from the point of view of the seller. If a buyer rapidly buys products of one company,
he will be called a customer of that company.
The three stage model of service consumption:
Purchase process: the stages a customer goes through in choosing, consuming, and evaluating a
service. W h e n customers decide to buy a service to meet an unfilled need, they go through
what is often a complex purchase process. This process has three separate stages: the pre-
purchase stage, service encounter stage, post purchase stage.
1. Pre-purchase stage: The decision to buy and use a service is made in the pre-purchase
stage. Individual needs and expectations are very important here because they influence
what alternatives customers will consider. If the purchase is routine and relatively low
risk, customers may move quickly to selecting and using a specific service provider. But
when more is at stake or a service is about to be used for the first time, they may conduct
an intensive information search.
•awareness of need
•evaluation of alternatives
•requestservicefrom chosen supplier or initiate self service.
Service encounter stage
•evaluation of service performance
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awareness of need
# define need
# identify alternativeservicesupplier
evaluation of alternatives
# review documentation
# consultwith other people
§ Needawareness: the decision to buy or use a service is triggering by a person’s or an
organization’s underlying need or need arousal. The awareness of a need will drive an
information search and evaluation of alternatives before a decision is reached. Needs may
be triggered by:
When a need is recognized, people are likely to be motivated to take action to resolve
§ Information search: once a need or a problem has been recognized, customers are
motivated to search for solutions to satisfy the need. Several alternatives may come into
minds through the information search, and these form the evokedset (also known as
consideration set), the set of products or brands a customer may consider in the decision
making process. The evoked set can be derived from past experiences or external sources
such as advertising, retail display etc. once an evoked set is in place, the different
alternatives need to be evaluated before a final choice can be made.
§ Evaluating awareness: when faced with several alternatives, customer need to compare
and evaluate the different service offerings. Ease or difficulty of evaluating a product
before purchase is a function of its attributes where consumer distinguish between three
Search attributes: are tangible characteristics customer can evaluate before
purchase. Style, color, texture, taste and sound are examples of such features that
allow prospective consumers to try out, taste, or test drive the product prior to
purchase. These help customers understand and evaluate what they will get in
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exchange for their money and reduces the sense of uncertainty or risk associated
with the purchase.
Experience attributes: are those that cannot be evaluated before purchase.
Customers must experience the service before they can assess attributes such as
reliability, ease of use, and customer support.
Credence attributes: product features that customer find hard to evaluate even
after consumption are known as credence attributes. Here, the customer is forced
to believe or trust that certain tasks have been performed at the promised level of
quality. These attributes are such as hygiene factor, safety factor etc.
the more difficulty a customer has in evaluating a service before purchase, the higher the
perceived risk associated with that decision.
Because many services are hard to evaluate, consumers perceive higher risk. As
customers do not like to take risks and prefer safe choices, firms should employ risk
reduction strategy such as offering free trails and guarantees.
Types of perceived risk
1. Functional risk (unsatisfactory
2. Financial risk (monetary loss,
3. Temporal risk (wasting time,
consequences of delays)
4. Physical risk (personal injury
or damage to possessions)
5. Psychological risk (personal
fears and emotions)
6. Social risk (how others
think and react)
7. Sensory risk (unwanted impacts
on any of the five senses)
Examples of Customer Concerns
• Will this training course give me the skill 1
need to get a better job?
• Will 1 lose money if 1 make the investment
recommended by my stockbroker?
• Will 1 have to wait in line before entering the
• Will 1 get hurt if 1 go skiing at this resort?
• How can 1 be sure this aircraft won't crash?
• Will the consultant make me feel stupid?
• What will my friends think of me if they
learn 1 stayed at this cheap motel?
• Will 1 get a view of the parking lot from my
room, rather than the beach?
• Will the bed be uncomfortable?
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W h e n customers feel uncomfortable with risks, they can use a variety of methods to
reduce them during the prepurchase stage. Customer can do these things to reduce their
Seeking information from respected personal sources (family, friends, peers)
Relying on a firm with a good reputation
Looking for guarantees and warranties
Visiting service facilities or trying aspects of the service before purchasing
Asking knowledgeable employees about competing services
Examining tangible cues or other physical evidence
Using the Web to compare service offering
When a company does a good job of managing potential customers’ risk perceptions,
uncertainty is reduced, thereby increasing the chances that they will be the service
provider chosen. Another important input to consumer choice are expectations:
Service expectations: expectations are formed during the search and decision making
process, and they are heavily shaped by information search and evaluation of
attributes. Expectations are internal standards that customers use to judge the quality
of a service experience. Expectations embrace several elements, including desired,
adequate, and predicted service, and a zone of tolerance that falls between the desired
and adequate service levels.
Desiredservices: the type of service customers hope to receive is termed
desired service. It’s a wished for level--- a combination of what customers
believe can and should be delivered in the context of their personal needs.
Adequate services: the minimum level of service customers will accept
without being dissatisfied.
Predicted services: this is the level of service customers actually anticipate
receiving. Predicted service can also be affected by service provider promises,
word of mouth and past experiences.
Zone of tolerance: the range within which customers are willing to accept
variations in service delivery. Performing too low causes dissatisfaction,
whereas exceeding the desired service level should surprise and delight
§ Purchase decision: after consumers have evaluated possible alternatives, purchase
decision is taken. Once the decision is made the consumer is ready to move to the service
2. Service encounter stage: After deciding to purchase a specific service, customers
experience one or more contacts with their chosen service provider. The service
encounter stage often begins with submitting an application, requesting a reservation, or
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placing an order. A service encounter is a period of time during which a customer
interacts directly with a service provider. There are number of models to understands the
consumer behavior at this stage:
§ Service encounter are “moments of truth”: Richard Normann borrowed the “moment
of truth” metaphor from bullfighting to show the importance of contact point with
customers. This metaphor refers to customer touch points that can make or break
customer relationships. Moment of truth is the point in service delivery where customers
interact with service employees or self service equipment and the outcome may affect
perceptions of service quality.
§ Service encounter range from high contact to low contact: services involve different
levels of contact with the service operations. There are mainly three levels of customer
high contact services: tend to be those in which customers visit the service
facility in person. Customers are actively involved with the service organization
and its personnel throughout service delivery (e.g., hairdressing or medical
services). All peopleprocessing services (other than those delivered at home) are
Medium contact services: entail less interaction with service providers. They
involve situations in which customers visit the service provider's facilities (or are
visited at home or at a third-party location by the firm's employees) but either do
not remain throughout service delivery or else have only modest contact with
service personnel. The purpose of such contacts is often limited to: (1)
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establishing a relationship and defining a service need (e.g., management
consulting, insurance, or personal financial advising, where clients make an initial
visit to the firm's office but then have relatively limited interactions with the
provider during service production), (2) dropping off and picking up a physical
possession that is being serviced, or (3) trying to resolve a problem.
Low contact services: involve very little, if any, physical contact between
customers and service providers. Instead, contact takes place at arm's length
through the medium of electronic or physical distribution channels—a fast-
growing trend in today's convenience-oriented society.
§ Servuction model: this model is the combination of terms service and production. The
Servuction system consists of a technical core invisible to the customer and the service
delivery system visible to and experienced by the consumer.
Technical core- is back stage and invisible to the customers, but what
happens back stage can affect the quality of front stage activities.
Therefore, back stage activities have to be coordinated with front stage
Service delivery system- is front stage and visible to the customer. It
encompasses all the interactions that together create the service
experience, which in a high contact service includes customer interaction
with the service environment, its service employees, and with other
customer. Each type of interaction can create or destroy value. Firms have
to orchestrate all these interactions to create a satisfying service
§ Theater as metaphor for service delivery: theater can be used as metaphor for service
delivery, and firms can view their service as staging a performance with props and actors,
and manage them accordingly. The props are the service facilities and equipment. The
actors are the service employees and customers. Each actors needs to understand their
roles and scripts well. Firms can make use of the role and script theories to better design,
train, communicate, and manage both employees and customer scripts and roles.
3. Post-purchase stage: in this stage, customer evaluates the service performance they have
experienced and compare it with their prior expectations.
§ Customer satisfaction with service expectations: satisfaction is an attitude like
judgment following a consumption experience. Customer have a certain predicted
service level in mind prior to consumption. This predicted level typically is the
outcome of the search and choice process, when customers decided to buy a
particular service. During the service encounter, customer experience the service
performance and compare it to their predicted service levels. The resulting
judgment is labeled positive disconfirmation if the service is better than expected,
negative disconfirmation if it is worse than expected, and simple confirmation if it
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§ Service expectations: customer develop expectations about how the service they
chosen will perform. The zone of tolerance can be narrow and they are related to
§ Customer delight: occurs when positive disconfirmation is coupled with pleasure
Very satisfied customers are more likely to make repeat purchases, remain loyal to that supplier,
and spread positive word of mouth. Dissatisfied customers, however, may complain or switch
Market segmentation is the dividing of heterogeneous markets into segments. It should be
ensured while segmentation that each segment is homogenous in all significant characteristics.
Bases for segmentation:
The basis for segmentation can be broadly categorized into – a. consumer characteristics, b.
consumer responses. These are:
1. Geographical Segmentation: it is simplest way of segmenting
the market. Under this approach, the market will be divided
into various geographical units. Companies generally use the
marked divisions such as
To get benefit of already existing databases resources at a very low price.
Geographical segmentation reflects in the identification of cultural groups, climatic
difference, resource combination, demand supply gaps, religion and race. It provides
opportunity to the service stalls to explore distinctive opportunities for product
development as well as product differentiation.
2. Demographic segmentation: under this approach, the market will be divided into
segments based on various demographic variables such as age, family size, gender,
family life cycle, income, occupation, education, religion, race, nationally and social
3. Psychological segmentation: under this approach, consumers are divided into groups
based on lifestyles, personality and values.
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4. Behavioral segmentation: for this approach, consumers are divided into groups based on
their knowledge, attitudes and use or response to a service. The variables used under this
approach are occasions, benefits, user status, usage rate, loyalty status, buyer readiness
stage and attitude towards the service.
5. Technologic segmentation: the market for technology related services has been on a
tremendous rise during the last one and a half decade. Marketers are trying to identify
the customer groups that have the willingness as well as the ability to use the latest
technology. Identification of segments was based on the interaction of three variables.
These are attitude towards technology, application of technology and the financial
position of the consumers.
Criteria for market segmentation:
Service firms generally adopt the following criteria for assessing the suitability of segmentation:
§ Substantiality: the size of the segment is an important dimension. An identified segment
should be large enough to design a distinctive marketing programme for itself.
Substantiality is not only measured in size but also in terms of profitability. The benefits
that are expected from segmentation should be more than the estimated expenditure from
the special marketing efforts required.
§ Measurability: the segment identified must be amendable to measurement.
Characteristics such as size, purchasing power, response rates and so on need to be
measured so as to design appropriate marketing strategy.
§ Accessibility: accessibility has specific significance in services. Production and
consumption of the service take place simultaneously in producer and consumer
interaction. Therefore, the segments identified should be within the reach of the service
§ Differentiability: the difference between segments should be substantial and measurable.
For a specific service package, the response from one segment should be different to that
of other segments.
A segment is selected to be targeting and apply the positioning strategy in the segment.
Target market consists of a set of buyers who share common needs or characteristics that the
company decides to serve.
Evaluating Market Segments
• Segment size and growth
• Segment structural attractiveness
• Company objectives and resources
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Target Marketing Strategies
1. Undifferentiated marketing targets the whole market with one offer
– Mass marketing
– Focuses on common needs rather than what’s different
2. Differentiated marketing targets several different market segments and designs separate
offers for each
• Goal is to achieve higher sales and stronger position
• More expensive than undifferentiated marketing
3. Concentrated marketing targets a small share of a large market
• Limited company resources
• Knowledge of the market
• More effective and efficient
4. Micromarketing is the practice of tailoring products and marketing programs to suit the
tastes of specific individuals and locations
• Local marketing
• Individual marketing
5. Local marketing involves tailoring brands and promotion to the needs and wants of local
6. Individual marketing involves tailoring products and marketing programs to the needs
and preferences of individual customers Also known as:
– One‐ to‐ one marketing
– Mass customization
– Markets‐ of‐ one marketing
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Positioning: positioning means projection the image of the product or service in such a way that
consumers perceive its value distinctively from that of competitive offers. In other words,
positioning intends to influence the perceptual process of consumers against a product or service.
Positioning into the following four principles:
A company must establish a position in the minds of its targeted customers.
The position should be singular, providing one simple and consistent message.
The position must set a company apart from its competitors.
A company cannot be all things to all people—it must focus its efforts.
Uses of Positioning in Marketing Management
Understand relationships between products and markets
compare to competition on specific attributes
evaluate product’s ability to meet consumer needs/expectations
predict demand at specific prices/performance levels
Identify market opportunities
introduce new products
redesign existing products
eliminate non-performing products
Make marketing mix decisions, respond to competition
Possible Dimensions for Developing Positioning Strategies
Reference to competitors (usually shortcomings)
How positioning map helps:
Positioning maps display relative performance of competing firms on key attributes
Research provides inputs to development of positioning maps
Challenge is to ensure that
attributes employed in maps are important to target segments
performance of individual firms on each attribute accurately reflects perceptions
of customers in target segments
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Predictions can be made of how positions may change in the light of new developments
in the future
Simple graphic representations are often easier for managers to grasp than tables of data
or paragraphs of prose
Charts and maps can facilitate a “visual awakening” to threats and opportunities and
suggest alternative strategic directions
Developing an effective positioning strategy:
Approaches in service sector:
1. Fully focused: a fully focused organization provides a limited range of services to a
narrow and specific market segment.
2. Market focused: a market focused company concentrates on a narrow market segment,
but has a wide range of services.
3. Service focused: service focused firms offer a narrow range of services to a fairly broad
market. However, as new segment are added, firms need to develop knowledge and skills
in serving each segment.
4. Unfocused: finally, many service provides fall into the unfocused category, because they
try to serve broad markets and provide a wide range of services.
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New service design and development:
Service product package: a service product is a package of service elements executed in proper
order in keeping with the needs and wants of the consumer, with an intention to maximize
consumer satisfaction. The concept of a basic service package helps to understand the service
product comprehensively. Basic service package includes:
1. core product: the core product is the central component that supplies the principal,
problem solving benefits customer seek. It is the reason for being in the
2. Facilitating services: are those services without
which core service cannot be performed.
3. Supporting services: are those which helps the
customer in making differential image of the
Flower of services:
Flower of services shows the supplementary services:
Christopher Lovelock developed the flower of service,
which indicates the core service surrounded by a cluster
of supplementary services.
1. Information: Customersoften requireinformation
about how to obtain and use a product or service. They may also need reminders and
2. Order taking: Many goodsand services must be ordered or reserved in advance.
Customers need to know what is available and may want to secure commitment to
3. Billing: “How much do I oweyou?”Customers deserve clear, accurate and intelligible
bills and statements
4. Payment: Customersmay pay faster and more cheerfully if you make transactions simple
and convenient for them
5. Consultation: Valuecan be added to goods and services by offering advice and
consultation tailored to each customer’s needs and situation
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6. Hospitality: Customerswho investtimeand effort in visiting a business and using its
services deserve to be treated as welcome guests (after all, marketing invited them
7. Safekeeping: Customersprefernotto worry about looking after the personal possessions
that they bring with them to a service site. They may also want delivery and after-sales
services for goods that they purchase or rent
8. Exceptions: Customersappreciatesome flexibility in a business when they make special
requests. They expect it when not everything goes according to plan
Development of a new service:
What is new service product: a service can be
termed as new service when it is totally innovative,
and is created and offered by the company to the
world for the first time. According to Booz, Allen and
Hamiltan, there can be six category of new service:
new to the world products
new product lines
addition to the existingproduct line
improvements and revisions ofexistingproduct
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NEW SERVICE DESIGN AND DEVELOPMENT:
The service offering:
A service product is a package of a series of service elements executed in proper order in
keeping with the needs and wants of the consumer, with an intention to maximize consumer
satisfaction. There are three elements in basic service package:
Core service: is the reason for being in the market. Thus, a hospital is for health care, a
hotel is for lodging and an airline is for transportation.
Facilitating service: are those services without which core service cannot be performed.
Thus, a hotel requires building consisting of rooms, toilet and so on to provide lodging
Supporting service: do not facilitate the consumption or use of a core service, but
increase the value of the service offering. Thus, a hotel can operate a restaurant inside,
transport services for local visits and so on as auxiliary services which enhance value of
the total offering.
Flower of services
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Christopher lovelock developed the flower of service, which indicates the core service
surrounded by a cluster of supplementary
services. The flower consisting of eight petals,
four of them are facilitating services and the
other four are enhancing supplementary
1. Information: To obtain full value from
any service experience, customers need
relevant information. New customers
and prospects are especially
information hungry. Companies should
make sure the information they provide
is both timely and accurate; if it's not, customers may be annoyed or inconvenienced.
Following are the examples of information elements:
2. Order taking: Once customers are ready to buy, companies must have effective
supplementary service processes in place to handle applications, orders, and reservations.
The process of order taking should be polite, fast, and accurate so that customers do not
waste time and endure unnecessary mental or physical effort. Banks, insurance
companies, and utilities require prospective customers to go through an application
process designed to gather relevant information and to screen out those who do not meet
basic enrollment criteria (like a bad credit record or serious health problems).
• Membership in clubs or programs
• Subscription services (e.g., utilities)
• Prerequisite-based services (e.g., financial credit, college enrollment)
• On-site order fulfillment
• Mail/telephone order placement
• E-mail/Web site order placement
Reservations and Check-in
• Vehicles or equipment rental
• Professional appointments
• Admission to restricted facilities (e.g., museums,
3. Billing: Billing is common to almost all services
(unless the service is provided free of charge).
Inaccurate, illegible, or incomplete bills risk disappointing customers who may, up to that
Flower of Service: a visual
framework for understanding
the supplementary service
elements that surround and
add value to the product core.
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point, have been quite satisfied with their experience. Such failures add insult to injury if
the customer is already dissatisfied. Billing procedures range from verbal statements to a
machine-displayed price, and from handwritten invoices to elaborate monthly statements
of account activity and fees. Companies may provide periodic statements of accounts to
customers or allow customers to complete bills by themselves for greater transparency in
4. Payment: after the billing is done, customers have to take action on payment. Activities
such as cash handling, cheque handling, credit system and coupon system are part of the
payment system. The payment system should facilitate customers to get easy and
convenient payment of their dues.
5. Consultation: Consultation is an enhancing supplementary service that involves a dialog
to identify customer requirements and develop a personalized solution.