STUDY NOTES

MARKETING OF SERVICES
(BBA 605)

BBA Semester VI
(Session 2020-2021)

Prepared By
Mr. Kuldeep Dwivedi
Asst. Prof.

BORA INSTITUTE OF MANAGEMENT

SCIENCES LUCKNOW
 MARKETING OF SERVICES
UNIT-1
MEANING AND DEFINITION OF SERVICES:-

According to Philip Kotler, “ A service is an 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”.

NATURE OF SERVICES

Services have four unique characteristics not found in goods like:-

• INTANGIBILITY:- Intangible means which can’t be touched, seen, tasted etc and the
nature of service is the same. Service is just an activity, benefit or satisfaction provided with the sale
of the product.
• INSEPARABILITY:- Services are marketed by two kinds of inseparability:
a.) Inseparability of production and consumption.
b.) Inseparability of the service from the person who possesses the skill and performs the
service.

Services are typically produced and consumed simultaneously but this is not true with physical
goods.

• VARIABILITY:- Services are also marked by variability/ individuality/ and

heterogeneity due to:-
a.)Inseparability of the service from the provider
b.)Services are highly people intensive
c.)The effect varies dependent on when and where the service is provided
• PERISHABILITY:- Services cannot be stored. For ex:- doctor charge patients for missed
appointments because service value exist only at that time.

CHARACTERISTICS OF SERVICES
1. OWNERSHIP:- Goods means ownership which can be transferred but service doesn’t have
any ownership. People can only access the service.
2. SERVICE AS PERFORMANCE:- Products are always produced but services are always
performed.
3. SIMULTANEITY:- Services cannot be delivered to the customer but here it is essential that
the users are brought to the providers or the providers go to the users.
4. QUALITY MEASUREMENT:- Services can’t be measured. For ex:- One can quantify the
food served in a hotel but the way a waiter or a carrier serves it or overall environment or
behavior of other staff can’t be ignored while rating the total process.
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5. NATURE OF DEMAND:- The services are found fluctuating in nature. Particularly during the
peak season, he finds an abnormal increment in the demand. For ex:- the mobility of passenger
is found increased, especially during the marriage season or during important festival.
6. CUSTOMER INVOLVEMENT:- In most services, the consumer is an integral part of the
production process, as he has to be physically present when the service is produced.

Like goods services can also be classified in several ways like:-

CLASSIFICATION OF SERVICES

MARKET SEGMENT OR END USER DEGREE OF TANGIBILITY

SKILLS OF THE SERVICE PROVIDER BUSINESS ORIENTATION

DEGREE OF REGULATION DEGREE OF LABOUR INTENSIVENESS

DEGREE OF CUSTOMER CONTACT

1.) By Market Segment:- Market segmentation is the process of identifying and targeting groups of
individuals who are similar to one another. Markets can be segmented in many different ways: by product or
service needs, by sensitivity to price, by geographic area, by demographic segment, or by psychographics
and lifestyles.
a.) END CONSUMER SERVICES:- These services are purchased by individuals customers for their own
consumption. For ex:- beauty care physiotherapy and hair cutting.
b.) BUSINESS CONSUMER SERVICES:- These services are called business to business (B2B) services.
These services are purchased by the organization. For ex Market Research, consultancy and advertising.
2.) By Degree of Tangibility:- There are three types of services which are classified by degree of
tangibility:-
Highly Tangible:- The service include a physical product used during a contract period like
house on rent.
a.) Services linked to Tangible Goods:- These are the guarantee or warranty period during which
the seller provides free or subsidized services to the customer like machine, vehicles and gadgets
etc.
b.) Tangible goods linked to services:- Like good with a train or air ticket.
c.) Highly Intangible:- Here no products are offered as a major part of service like haircut, body
massage, cinema etc.
3.) By Skill of the Service Providers:- The people involved in delivering services may vary in
skills. Customers select only those service providers who are having high skills.
a.) Professional or High skilled services:- These services requires high level of qualification and
training to provide the services like doctors, lawyers, IT Professionals etc
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 b.) Non Professional Services:- These services do not require any skill and can be performed by an
untrained person like office guard, courier services etc.
4.) By Business Orientation (Profit Oriented):- This kind of service depend upon the business
orientation( Objective, Purpose, aim) of the organization as:-
a.) Commercial Organization:- The main objective here is to earn profit by providing services and
satisfying customers.
b.) Non Profit Organization( Service Oriented):- The main objective here is to serve the tangible
clientele, without any motive of earning profit. Off course money is required to run such an
organization, and that is being done through public donation, trust fund or government aid etc.
5.) By Degree of regulation:- Government exercises control over the services by enacting
regulation. Some services like banking, insurance are highly regulated. Services like catering fast
food are subjected to limited regulations. For ex:- used colors in sweets should be edible of
specifications.
6.) Degree of Labor Intensiveness:- The labor intensive services are categories as equipment
based and people based. Equipments based services are automated, monitored by relatively
unskilled operations and operated by skilled operators. For ex:- automated coffee vending machine.
People based services are:- appliance repair, catering, unskilled
7.) Degree of Customer Contact:- service is categorized on the basis of customer contact like
a.) High Contact:-Where customer stay for a period of week, month or an year like hospitality or
education sector.
b.) Low Contact:- Low contact service is one which the contact with service system ranges from
few minutes to some hours like appliance repair services or postal services etc.

SIGNIFICANCE OF SERVICES

Significance of Service Marketing

Relationship Are Key Multiple Touch Points

Service Proliferate Feedback Improves Service

Technology Impacts A Key Differentiator

Customer Retention

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1. Advances in technology that has led to more sophisticated products that require more services.

2. Growth in per capita income has given rise to a greater percentage of income being spent on luxuries
such as restaurant meals, overseas holidays and weekend holiday breaks. Growth in per capita income is
also increasing the demand of financial services such as insurance and pension.

3. Companies are outsourcing heavily. Companies are buying services that are outside their core
expertise. Most companies are now buying services like cleaning, catering, warehousing, transportation
and so on.

4. Governments are moving out of businesses, and deregulation has increased level of competition in
certain service industries like telecom and airlines.

This has resulted in expansion with more customers availing of the services as prices are going down
due to competitive actions. Simultaneously, companies are advertising more and wooing customers
more stridently, further fuelling demand for services.

5. Due to growth in per capita income, people are buying more goods, which has contributed to making
retailing an important service.

Ques:- How is service marketing differ from product marketing?

GOODS AND SERVICES: A COMPARATIVE STUDY

S.No GOODS SERVICES

1. Goods are stored for a long time Services are for a short duration

2. Goods are Non-Perishable in Nature Services are Perishable in Nature

3. Goods are separable in Nature Services are in-separable in Nature

Goods have a fixed value in Services doesn’t have a fixed value in monetary
4.
monetary terms terms
5. Goods are non-variable Services are variable in Nature

6. Goods are tangible Services are Non-Tangible

7. Goods are returnable Services are Non- Returnable

Ques:- What is Service Marketing?

SERVICE MARKETING

Services marketing typically refers to both business to consumer (B2C) and business to business (B2B)
services, and includes marketing of services such as telecommunications services, financial services, all
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types of hospitality services, car rental services, air travel, health care services and professional services.
Services are (usually) intangible economic activities offered by one party to another.
In Marketing of Services, the service providers are supposed to influence and satisfy the customers or
users.

The Key Points regarding Service Marketing are:-

1. It is a managerial process of managing the services.

2. It is an organized effort for providing a sound foundation for development of an organization.
3. It is a social process helping an organization to understand emerging social problems and to take
part in the social transformation process to justify its existence in the society.

Ques:- What is the nature of service marketing? What are the various factors affecting
service marketing?

NATURE OF SERVICE MARKETING

Marketing of Service product is different from marketing of products due to following features:-

1.INTANGIBILITY:- Services can’t be smelled or tasted. This causes lack of confidence in the
consumer. Consumer only understand the service through marketer promise and performance.

2.LOW PRICE SENSITTIVITY:- Consumer always pay high for a service as long as they feel
assured about the quality. Consumer decision in service marketing is based on two parameters, price
sensitivity and performance expectation.

3.NO INVENTORY:- In service industry there is Zero time gap between production and consumption.
Services that are produced have to be consumed as they are produced.

4. VALUE CREATION PROCESS:- Marketers can only create value in service process through
people, process, physical evidence and productivity and quality on which a service is delivered.

5.PROVIDING TANGIBILITY TO THE INTANGIBILITY:- Intangibility is a drawback to a

marketer and to overcome this drawback there are different ways :-

a.) VISUALISATION:- The marketer help the customer to visualize the transaction process and see the
benefit of consuming the product through pictures, films etc.

b.) ASSOCIATION:- Intangibility factor can only be convinced by the marketer through credibility,
character or the “ability to keep its word”. This can be overcome by associating the offer with some
living persona, or known inanimate objects or brand ambassador.

c.)PHYSICAL REPRESENTATION:- The intangible factor force the marketer to go for a tangible
representations symbolizing the existence and character of service industries. Some of the ways in which
this can be used are use of uniform, colors, logos and mascots.

d.)DOCUMENTATION:- Marketers cite their facts and figures for promotion to support the claim of
their performance in terms of dependability, reliability and responsiveness.

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e.) SELLING SERVICES:- To establish the integrity of service a service provider do face to face
selling. Some service providers use professional who are specialized rather than salesperson.

g.)TANGIBLISING SERVICES THROUGH BENEFITS:- Means when we add a benefit of free

service after sales while selling a product this help a marketer to promote or increase sale of the product.

h.) TANGIBLE THROUGH POSITIONING:- The intangibility of services makes positioning

decision difficult. It is totally based on performance attributes which can be measured only after a
purchase.

FACTORS AFFECTING SERVICES MARKETING

1. Organisation Size and Structure:-Many service providers are typically small and specialized-
plumbers, lawyers and accountants are representative of the traditional service provider.
Marketing specialists were not employed due to the size of the operations.
2. Regulatory Bodies: Regulatory bodies have also restricted the activities of many service
providers. Restriction exist today on the amount and type of advertising undertaken by certain
professional services, particularly in the medical and legal fields.
3. Growth in Service Industries:- Growth in major service industries such as banking, hotel and
catering and tourism services has been accompanied by new developments in marketing. The
design of service product, or offering has shifted from a product-based focus to a customer
focus- the organization provides what the market needs, not what the organization thinks the
market wants.
4. Characteristics of Services:- The characteristics of services- intangibility, inseparability,
heterogeneity and perish ability- mean that there are new considerations facing services
marketers. These differences led to the development of the expanded marketing mix to focus on
issues perceived by customers to be important in service marketing.
5. Customer/Employee Interaction:- The customer/employee interaction takes on a far more
significant role in services marketing than in the marketing of physical goods because of better
training and communication.
6. Service Quality:- Service marketing also places a clear focus on service quality and programs
for implementing service quality this has lead to specific quality issues in service marketing.
7. Specific Service Sectors:- Specific areas of services marketing have attracted interest, especially
non-profit organizations and professional services. The adoption of marketing by these
organizations and the growth or marketing expertise in the area, is leading to a greater marketing
orientation.

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8. Social Image of the service Provider (Brand):- In Some cases, Customers wants to use the
service which is rendered by a branded service provided. It creates value for its customers and
make them brand loyal.
9. Availability and Timing:- The service marketing is totally based upon the relationship with the
target market. Every marketer should try to make the services available within the time given by
the customer.
10. Customer Involvement:- Every company should take this factor into account for service
marketing. Customer involvement is the degree as which the customer found himself/ herself
involved with the service provider.

SIGNIFICANCE OF SERVICE MARKETING

1. Customer retention:- Due to highly competitive scenario selling organization undertakes

some activities to reduce customer defections. Successful customer retention starts with the first
contact an organization has with a customer and continues throughout the entire lifetime of a
relationship.
2. Multiple Touch points:- Service marketing involves many touch points for the consumer.
Interaction with multiple people and experiences is less tangible than buying an actual product.
Regular interaction will help in establishing a perception in the consumer’s mind.
3. Service Proliferate:- To stay for a long period in the market, the service marketer has to stand
out its services from the crowd because consumers have many services to choose due to
intangibility of the product. This can be done through offering ways to communicate the benefit
of service in their language according to the need and value.
4. Feedback Improves Service:- To have an effective marketing the service marketer involve the
consumer by taking his feedback to improve its services.
5. Technology Impact:- Technology is having a major impact on the service economy. For ex:-
Internet based services like allowing consumer to participate actively in the service marketing
process, often never involving contact with another human being. Having a Website is very
important to help people in getting information about service providers before deciding which
one to use.
6. A key Differentiator:- Now a days maximum of the products are homogenous in nature. So a
service marketer should have something in that product or service which can differentiate the

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 product. For ex in case of Pizza Hut and Domino’s the products are similar but only the service
quality is distinguishing the brand.

Ques:- Discuss 7 Ps of service marketing mix

mix.

SERVICING MARKETING MIX

The service marketing mix is a combination of the different elements of services marketing that
companies use to communicate their organizational and brand message to customers. The mix
consists of the seven P's i.e. Product, Pricing, Place, Promotion, People, Process and Physical
Evidence.

CLASSIFICATION OF SERVICES

The service marketing mix ix is also known as an extended marketing mix and is an integral part of a
service blueprint design. The service marketing mix consists of 7 P’s as compared to the 4 P’s of a
product marketing mix. Simply said, the service marketing mix assumes the service as a product itself.
However it adds 3 more P’s which are required for optimum service delivery.

The product marketing mix consists of the 4 P’s which are Product, Pricing, Promotions and Placement.
The extended service marketing mix places 3 further P’ P’ss which include People, Process and Physical
evidence. All of these factors are necessary for optimum service delivery.

Product – The product in service marketing mix is intangible in nature. Like physical products such as a
soap or a detergent, service products
roducts cannot be measured. Tourism industry or the education industry
can be an excellent example. At the same time service products are heterogeneous,
heterogeneous perishable and
cannot be owned.. The service product thus has to be designed with care. GeGenerally
nerally service blue printing
is done to define the service product. For example – a restaurant blue print will be prepared before
establishing a restaurant business. This service blue print defines exactly how the product (in this case
the restaurant) is going to be.

LEVEL OF SERVICE PRODUCT

Level 1: Core Product. What is the core benefit your product offers? This is the fundamental benefit or
service that the customer is buying. For eg. A customer going to a Hotel is buying rest, sleep etc.

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Level 2 Basic Product: Basic functional attributes. All Hotels provide rest and sleep. The aim is to
ensure that your potential customers purchase your one service. Thus the functional attributes like
Room, Bed, Bath are important.

Level 3 : Expected product : Set of attributes that the buyer expects (Clean room, large towels,
quietness)

Level 4: Augmented product: What additional non-tangible benefits can you offer? This meets the
customer’s desires beyond his expectations – (Prompt room service, music, aroma etc)

SERVICE PRODUCT MIX

Product mix, also known as product assortment, refers to the total number of product lines that a
company offers to its customers. For example, a small company may sell multiple lines of products.
Sometimes, these product lines are fairly similar, such as dish washing liquid and bar soap, which are
used for cleaning and use similar technologies. Other times, the product lines are vastly different, such
as diapers and razors. The four dimensions to a company's product mix include width, length, depth and
consistency.

Width
The width of a company's product mix pertains to the number of product lines that a company sells. For
example, if a company has two product lines, its product mix width is two. Small and upstart businesses
will usually not have a wide product mix. It is more practical to start with some basic products and build
market share. Later on, a company's technology may allow the company to diversify into other
industries and build the width of the product mix.
Length
Product mix length pertains to the number of total products or items in a company's product mix,
according to Philip Kotler's textbook "Marketing Management: Analysis, Planning, Implementation and
Control." For example, ABC company may have two product lines, and five brands within each product
line. Thus, ABC's product mix length would be 10. Companies that have multiple product lines will
sometimes keep track of their average length per product line. In the above case, the average length of
an ABC Company's product line is five.

Depth
Depth of a product mix pertains to the total number of variations for each product. Variations can
include size, flavor and any other distinguishing characteristic. For example, if a company sells three
sizes and two flavors of toothpaste, that particular brand of toothpaste has a depth of six. Just like length,
companies sometimes report the average depth of their product lines; or the depth of a specific product
line.
Consistency
Product mix consistency pertains to how closely related product lines are to one another--in terms of
use, production and distribution. A company's product mix may be consistent in distribution but vastly
different in use. For example, a small company may sell its health bars and health magazine in retail
stores. However, one product is edible and the other is not. The production consistency of these products
would vary as well.

Place – Place in case of services determine where is the service product going to be located. The best
place to open up a petrol pump is on the highway or in the city. A place where there is minimum traffic
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is a wrong location to start a petrol pump. Similarly a software company will be better placed in a
business hub with a lot of companies nearby rather than being placed in a town or rural area.

CHANNELS IN SERVICES

Two services marketers are involved in delivering service through intermediaries:-

a.) Service Principal:- The service principal is the entity that creates the service concept.

b.) Service Deliverer:- The service deliverer is the entity that interacts with the customer in the actual
execution of the service.

Promotion – Promotions have become a critical factor in the service marketing mix. Services are easy
to be duplicated and hence it is generally the brand which sets a service apart from its counterpart. You
will find a lot of banks and telecom companies promoting themselves rigorously. Why is that? It is
because competition in this service sector is generally high and promotions is necessary to survive. Thus
banks, IT companies, and dotcoms place themselves above the rest by advertising or promotions.

Pricing – Pricing in case of services is rather more difficult than in case of products. If you were a
restaurant owner, you can price people only for the food you are serving. But then who will pay for the
nice ambience you have built up for your customers? Who will pay for the band you have for music?
Thus these elements have to be taken into consideration while costing. Generally service pricing
involves taking into consideration labor, material cost and overhead costs. By adding a profit mark up
you get your final service pricing. Here on we start towards the extended service marketing mix.

The pricing decisions for a product are affected by internal and external factors.

A. Internal Factors:

1. Cost:

While fixing the prices of a product, the firm should consider the cost involved in producing the product.
This cost includes both the variable and fixed costs. Thus, while fixing the prices, the firm must be able
to recover both the variable and fixed costs.

2. The predetermined objectives:

While fixing the prices of the product, the marketer should consider the objectives of the firm. For
instance, if the objective of a firm is to increase return on investment, then it may charge a higher price,
and if the objective is to capture a large market share, then it may charge a lower price.

3. Image of the firm:

The price of the product may also be determined on the basis of the image of the firm in the market. For
instance, HUL and Procter & Gamble can demand a higher price for their brands, as they enjoy goodwill
in the market.

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4. Product life cycle:

The stage at which the product is in its product life cycle also affects its price. For instance, during the
introductory stage the firm may charge lower price to attract the customers, and during the growth stage,
a firm may increase the price.

5. Credit period offered:

The pricing of the product is also affected by the credit period offered by the company. Longer the credit
period, higher may be the price, and shorter the credit period, lower may be the price of the product.

6. Promotional activity:

The promotional activity undertaken by the firm also determines the price. If the firm incurs heavy
advertising and sales promotion costs, then the pricing of the product shall be kept high in order to
recover the cost.

B. External Factors:

1. Competition:

While fixing the price of the product, the firm needs to study the degree of competition in the market. If
there is high competition, the prices may be kept low to effectively face the competition, and if
competition is low, the prices may be kept high.

2. Consumers:

The marketer should consider various consumer factors while fixing the prices. The consumer factors
that must be considered includes the price sensitivity of the buyer, purchasing power, and so on.

3. Government control:

Government rules and regulation must be considered while fixing the prices. In certain products,
government may announce administered prices, and therefore the marketer has to consider such
regulation while fixing the prices.

4. Economic conditions:

The marketer may also have to consider the economic condition prevailing in the market while fixing
the prices. At the time of recession, the consumer may have less money to spend, so the marketer may
reduce the prices in order to influence the buying decision of the consumers.

5. Channel intermediaries:

The marketer must consider a number of channel intermediaries and their expectations. The longer the
chain of intermediaries, the higher would be the prices of the goods.

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 1) Cost based pricing: It is also called as cost-plus pricing. Under this method the company
determines the cost of service delivery as well as a pre-determined rate of profit in order to
arrive at a price. It is necessary to-, analyze all costs accurately and differentiate between fixed
and variable costs in order to use cost as the basis for pricing decisions. In the service
industries it is complicated to identify and trace the cost to the particular offering. This method
of pricing is widely used in catering services and by advertising agencies.

2) Demand based pricing : In this method of pricing the cost is not considered but the serve
provider allows the demand to determine the price. Demand based pricing is generally us
where the services are price sensitive. The consumer perception of the value of the service
quality varies. Therefore successful demand based pricing is based on effective segmentation
of market to achieve the maximum price from the segment.

3) Competition based pricing: Homogeneous services that are standards without specie service
attributes are the best examples of competition based pricing. In this method of pricing the
price is determined on the basis of competitor’s price. Price under such situations may be used
to gain short-term competitive advantage over rival

Ques:- What are the pricing strategies in service marketing? Explain in detail.

Pricing Strategies in Service Marketing

1. Price Discounting:- For ex:- A coupon published in a health magazine, the customer may avail a
discount for the first month’s fee in a gymnasium. If a person take the membership of any club
hotel or a resort then the services offered to him are on discount basis.
2. Odd Pricing:- The prices of services are set at a price just below the rounded sum. Thus a large
size pizza may be priced at Rs.199 instead of Rs.200
3. Penetrating Pricing:- is a strategy in which the initial price of the service is set low in relation
to the target market’s range of expected price.
4. Bundle Pricing:- means pricing and selling services as group rather than individually. It has
benefit for both customers and service companies.
5. Loss Leadership Pricing:- The fundamental services are priced at a low level. However if the
client needs higher level or additional services, he has to pay premium prices.

People – People is one of the elements of service marketing mix. People define a service. If you have an
IT company, your software engineers define you. If you have a restaurant, your chef and service staff
defines you. If you are into banking, employees in your branch and their behavior towards customers
defines you. In case of service marketing, people can make or break an organization. Thus many
companies nowadays are involved into specially getting their staff trained in interpersonal skills and
customer service with a focus towards customer satisfaction. In fact many companies have to undergo
accreditation to show that their staff is better than the rest. Definitely a USP in case of services.

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Process – Service process is the way in which a service is delivered to the end customer. Lets take the
example of two very good companies – Mcdonalds and Fedex. Both the companies thrive on their quick
service and the reason they can do that is their confidence on their processes. On top of it, the demand of
these services is such that they have to deliver optimally without a loss in quality. Thus the process of a
service company in delivering its product is of utmost importance. It is also a critical component in the
service blueprint, wherein before establishing the service, the company defines exactly what should be
the process of the service product reaching the end customer.

Ques:- What is line or Flow operation s and Job-Shop Process?

Types of Service Process

1.Line or Flow Operations:- In this process, the output of a particular stage become an input for the
next stage. The process cannot be modified to suit fluctuations in demand or to offer customized
services. For ex:- to prepare a French fries in five minutes first they chop potatoes and fry in a
machine then processed in another machine to be salted.
2.Job Shop Process:- It determines the activities and their sequential arrangement based on the type
of job at hand. For ex:- in a coffee shop, the same set-up can be used to serve a cappuccino. It
customize the service according to the customer need.

Physical Evidence:- Physical evidence is important in determining what constitutes ‘Value for money’
in the service sector. Facilities, décor and the physical environment in which the services exchange
takes place should reflect the price of the service.

Physical Evidence is the element of the service mix which allows the consumer again to make
judgments on the organization.

CHARACTERISTICSW OF SERVICE PROCESS

1. CUSTOMER PARTICIPATION IN THE PROCESS:- For Ex:- Self Service Restaurant. Which
shows the involvement of customer in the service process.

2. LOCATION OF SERVICE DELIVERY:- For Ex:- Plumbing or carpet cleaning should be tried
out at the customers home while dry cleaning will be carried out at a specialist outlet.
3. SERVICE ITSELF:- The service itself, whether is process dependent (usually the case with highly
intangible services such as legal representation) or equipment based (such as vending machines or
dry cleaning).
4. HIGH CONTACT OR LOW CONTACT SERVICES:- The level of contact between the
customer and the service provider personnel can range from nil to very high contact as in medical or
professional services where the client or patient is being looked after by the organization’s
personnel for varying periods of time.
5. DEGREE OF STANDARDISATION:- The extent to which the service can be altered from the
standard to meet the needs of different consumers or users may be termed divergence. For ex;- the
McDonalds fast food) where each client need will be slightly different and will be served
accordingly.
6. COMPLEXITY OF THE SERVICE:- This is measured by the number of steps or activities,
which contribute towards the service delivery. For ex:- To ensure that tourists will enjoy their

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 holiday will include many different steps like hotel operational mgmt, high level of customer
contact etc.

TYPES OF SERVICE PROCESS

There are two types of processes available for a service provider:-

1. LINE OR FLOW OPERATION:- Under this process, the output of a particular stage becomes
an input for the next stage. For ex:- A French fries chain prepare fresh French fries in five
minutes ; they follow line operations, as the chopped potatoes are fried in a machine and then
processed in another machine to be salted.
2. JOB-SHOP OPERATION:- This process is quite flexible and can be used to offer various
types of services that need a similar set serve a cappuccino, a café latte, or an Espresso.

UNIT-2

Ques:- What is Marketing Information System?

MARKETING INFORMATION SYSTEM

According to Cundiff, Still and Govani, “ Marketing information system is an organized set of
procedures, information handling routines and reporting techniques designed to provide the information
required for making marketing decision”.
A Marketing Information System (MKIS) is a management information system (MIS) designed to support
marketing decision making.
According to Jobber (2007) "MIS is a system in which marketing data is formally gathered, stored,
analyzed and distributed to managers in accordance with their informational needs on a regular basis."
According to Kotler, “An overall Marketing Information System can be defined as a set structure of
procedures and methods for the regular, planned collection, analysis and presentation of information for use
in making marketing decisions.

Ques:- What is Customer Relation Management?

Customer relationship management (CRM) :- is a term that refers to practices, strategies and technologies
that companies use to manage and analyze customer interactions and data throughout the customer lifecycle,
with the goal of improving business relationships with customers, assisting in customer retention and driving
sales growth. CRM systems are designed to compile information on customers across different channels -- or
points of contact between the customer and the company -- which could include the company's website,
telephone, live chat, direct mail, marketing materials and social media. CRM systems can also give
customer-facing staff detailed information on customers' personal information, purchase history, buying
preferences and concerns.

Ques:- What is E-Commerce?

E-commerce (electronic commerce or EC) is the buying and selling of goods and services, or the
transmitting of funds or data, over an electronic network, primarily the internet. These business

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transactions occur either as business-to-business, business-to-consumer, consumer-to-consumer
or consumer-to-business. The terms e-commerce and e-business are often used interchangeably.
The term e-tail is also sometimes used in reference to transactional processes for online
shopping.

Ques:- What is Six- Sigma?

Six Sigma is a method that provides organizations tools to improve the capability of their business processes.
This increase in performance and decrease in process variation lead to defect reduction and improvement in
profits, employee morale, and quality of products or services. Six Sigma quality is a term generally used to
indicate a process is well controlled (within process limits ±3s from the center line in a control chart, and
requirements/tolerance limits ±6s from the center line).

MIS IN SERVICE MARKETING

In a competitive situation, the service industry requires service distinction to create an identity, a position and
a growth, to remain ahead of the competition. Therefore, we can say that service industry is a sensitive
market and consumer research is necessary to identify the segment to be served, its requirement, expectations
and perceptions. To achieve the target we need a strong MIS in service marketing. The MIS for various
service sectors is discussed below:-

MIS FOR BANKING INDUSTRY

A bank acts as a place, where the financial services are offered, which may include provision for the retail
banking, investment banking, personnel banking etc.
The factors which the customers consider before choosing a particular bank can be summarized as follows –
a. The ease of doing the business.
b. The quality of the personnel and the service.
c. The range of the financial services.
The following points should necessarily be addressed during the designing of an MIS for a bank –
a. Customer database
The factors which greatly influence the service expectations and the perceptions can be summarized as
follows –
i. Customer:- Individuals, Company, institutions, etc
ii. Operator:- Housewife, employee, officer of the organization
iii. Range of the service which is being or is to be provided:- Saving, credit checking and payment, the other
financial services
iv. Class of the customers:- Income group, Corporate bodies, etc.
v. Working hours:- Morning, afternoon, evening etc.

b. Service to the account holders

The Management Information Systems must give the following reports to the management:
i. The non moving account.
ii. The account with the balance more than say Rs. 50,000/-
iii. The account going down below the minimum balance.
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iv. The routine payments not made.
v. The routine credits not arrived.
vi. The defaults on loan repayment.
vii. The delays on crediting cheques amounts.
viii. A sudden rise and fall in the account movement.
c. Service for business promotions
The Management Information Systems should lay a great stress on the collection of the data from the
various sources, in order to analyze and conclude the future business strategy.
With the help of such information, banker is able to move out to talk to the customer and as a result of this;
he is also able to get some type of business for the bank.
So it can be said that it is very important to have an in depth knowledge about the trend in the business
industry.
d. Index Monitoring System:- MIS also monitor the variety of indices and ratios to banking operations
which are internal to the banking business. These ratios fulfill the statutory needs, some meet the policy
needs and so on. With the help of this indices manager take decision to keep index, norms and ratios within
the acceptable limit.
e. Human Resource Upgrade:- The financial service business is becoming competitive by offering a good
distinctive service. To remain in the market, the only solution is to improve the business prospects. So MIS
can help in first identifying such specific problems and offer help to the management in designing training
courses for the employees to improve their knowledge about banking and the financial world.

MIS FOR INSURANCE INDUSTRY

The MIS in the insurance business revolves around the information needs which would generate out a desire
to provide a distinctive service to the customer by way of risk coverage, risk handling, and claim settlement.
There are four basic principles of the insurance business-Simple Products, Low premium, high risk
standards and cautious investments. The success of insurance business lies in how efficiently and effectively
the claim are settled, an accurate billing and record keeping and an accurate representation of product
features.
The MIS in insurance handles the following main areas:-
1. The information for development of new insurance products through different policies.
2. The settlement of claims, in terms of time, value and fairness.
3. The administration and management of the existing policies.

All these areas are now described in detail as follows:-

a. INFORMATION FOR NEW PRODUCTS:- To get necessary information before launching a new
product, regular survey should be conducted, which generate the needs by regularly contacting with the
business and industry . Normally the insurance products are designed by evolving risk model of the risk

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incidence, the market for such risk coverage and value of risk coverage to the customer. Different products
have different coverage and premium. The skill lies in evolving an attractive insurance risk coverage product.
b. SETTLEMENT OF CLAIMS:- Apart from the risk cover and its cost, the distinctive service depends
upon how soon the claim is settled. Claim settlement becomes a critical application in the MIS and it should
be designed effectively so that the management attention is brought in for a quick decision for a
breakthrough. The processing of the claim fast helps the customer to start the process of revival at his end
and come to a normal functioning at the earliest. The MIS should deal with the claim processing as a critical
system.
The MIS should bring out exception report on the claims pending the dispute, not settled and rejected. It also
use this information to improve the policy profile and change the premium structure to accommodate even
one in million chance of rejection.
c. MANAGEMENT OF THE POLICIES:- Another critical application in the insurance business is the
management of existing policies by offering help to the policy holder. Issues are as under:-
i) Renewal of a Policy
ii) Revision of a Policy
The application is handled through a series of mailing such as a reminder, policy documents, obtaining the
premium, etc. This application includes the following systems:
i)Customer data management system;
ii) Commission, billing and claim settlement
iii) Premium accounting and policy analysis

MIS FOR TOURISM MARKETING

A tourism information system is a specific type of information system. It consists of all the
information channels used in a business or community to promote itself as a tourism attraction.

CHARACTERISTICS OF MIS FOR TOURISM MARKETING

1. UNIQUE FUNCTION:- Each Channel in the system has its own function. Travelers use different channels to get
different kinds of information. For Ex:- Deciding where to go on vacation.
2. INTERRELATED:- All the information channels used in the system relate to each other. A tourism information
system is like a novel because it has many different parts tied together by the theme.
3. INTERDEPENDENT:- All channels used in the system are interdependent. A tourism information system function
like a puzzle. The different pieces of the system, the channels, are used to communicate with tourists.

SOFTWARE FOR TOURISM MARKETING INFORMATION SYSTEM

1. Computer Reservation System( CRS) and Global Distribution Systems (GDS):- It is a database that enables a
tourism organization to manage its inventory and makes it accessible to its distribution channel partners. It help to
present information including flight schedules, fares, seat availability, and passenger reservation, destination
choices, holiday packages, travel, lodging and leisure services and the actual price and availability of such services.
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2. Destination Marketing Systems (DMS):- A DMS is a computer based information system founded on
geographical linkages that form a destination. They include information and reservations and operate at national,
regional and local levels. They have information on pre/post arrival.
3. Marketing Decision support System (MDSS):- The importance of information and efficient information
management is steadily increasing not only due to the evaluation of new technologies and high capacity storage
media but also to the growing market dynamics that raise information needs. MDSS can be of particular importance
as it support organizations in collecting, storing ,processing and disseminating information and in the decision
making process by providing forecasts and decision models.

MIS FOR HOSPITALITY INDUSTRY

The front end applications –

a. Patient database –
i. Handling the queries on the existing patients and the patients treated and discharged.
ii. Queries can also come from the visitor, a doctor or other employees of the hospital.

b. Medical server database –

i. Name, address, telephones etc. of all medical staff.
ii. Hospitals, work times and the locations on the week days for the contact.
iii. Service centers like the laboratories, the blood banks, the especial clinics etc. in the town for providing
the support services.

c. Resource planning and control –

i. An online query facility for answering the number of queries on the availability, scheduling and re –
scheduling of the resources and the facilities.
ii. For judging the usage of the facilities and to put them in the proper use.

d. Medical case history database –

i. Knowledge database on the case history for the guidance and the research.
ii. Monitoring the effect of the drugs to judge the efficacy in terms of the patient’s response.
iii. Analyze the health care demand.

The back Office applications

a. Core applications are:-
i. Manpower and personnel planning.
ii. Payroll and employee related applications.
iii. Hospital billing and the recovery.
iv. An inventory control procurement, the planning and the control.
v. The expiry date management.
vi. Resource utilization and the analysis.
vii. Financial accounting.
viii. Capital budgeting and the expense control.
ix. Maintenance of the service facilities.

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b. Critical control application –
i. Patients waiting time and the service cycle.
ii. Not using the critical resources.
iii. Stock outs of the critical drugs.
iv. Analysis of the delays in terms of the duration and the causes.
v. New trends in the service demands and the service performance in such cases.

MIS FOR AIRLINES INDUSTRY

Application of MIS in Airlines industry

The airlines move the people and the goods from one location to the other. In most of the cases – safely and
also on time. The perceptions about the good service can include schedule, convenience, prices, seat
comfort, meal quality, treatment by the crew and the ground staff, the facilities that are available at the
airport etc.

The service goals can be –

i. One complaint per 1, 00,000 passengers.
ii. 95 % occupancy to conclude that the schedules are convenient.
iii. Through put time, check in to check out, is less than 10 minutes.
The Management Information Systems concentrate on the following data in order to make the managerial
and the operative decisions to achieve the service goals.

a. Passenger information –
i. The type, Class and the purpose of travel.
ii. The socio – economic group.
iii. The duration of the stay at the destination.
iv. The food and the eating habits.
v. The language and the communication needs.
vi. The traffic flow between the towns, cities and the countries.
vii. The emerging/future pattern of travel.

b. Information on the aviation

Here Management Information Systems depends largely on the business and the operations research
models and helps in solving the complex problem of the planning and control. The Management
Information Systems helps in the perspective planning and the strategy formulations and hence ultimately
supports the implementation of the plan framed for offering a distinct service.

MIS FOR HOTEL INDUSTRY

MIS for the hotel management addresses the issue of assessing customer expectations and their perceptions
and fulfilling them in the best possible manner. Following are some of the responsibilities of Hotel
Information System:-

• KEEP TRACK OF THE CUSTOMER PROFILE:- The following information is to be kept in the
customer database:-

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 a. Type of the customer
b. The nature or purpose of visit
c. The duration of stay
d. The service demanded
e. The socio-economical class of the customer
f. The religion, the language and the culture of the religion

• MONITORING OCCUPANCY LEVEL:-

It is necessary to control occupancy at a high level. The MIS should provide the information on a high or
low. This would help the hotel management to take actions by evolving different tariff schemes, attractive
gifts and discount schemes.

• PROJECT FUTURE NEEDS:-

The MIS should provide information on new needs, which are emerging in the foreseeable future.

• MONITOR THE LEVEL OF EXPECTATIONS:-

The customer expectations on the service level norm differ from class-to-class and service-to-service.
The efficient and effective process is a function of training. Understanding and knowledge of manpower,
while the speed of the process would depend on the strength and competence of manpower.

• MONITOR THE COMMUNICATION NEEDS:- The communication makes interaction with the
customer a comfortable exercise. It is necessary to upgrade the knowledge and skills of all employees to
fulfill the changing needs of the customer.
• CUSTOMER DATABASE:- Most of the good hotels create a customer database for handling a variety
of applications. Such database handles personal information about the customers. It keeps the data about
their room choice, food habits, special likings, record of contacts and so on.

MIS FOR EDUCATI ON INDUSTRY

Education Management Information System is an information system with the main purpose of
providing information which is used for improving the management of education at all levels. The
value of information for management purposes is increasingly recognized in the business environment
and by government bodies.
Key Features of EMIS Benefits of EMIS are as follows:
School data collection tool for capturing students, 1. Informing decision-makers
teachers, data and other basic school management 2. Identifying issues to be addressed by planners
functions 3. Supporting policy planning
4. Providing general planning information
Report manager module for printing all reports 5. Providing tools for education sector management
Data manager module for data collection and 6. It provides Information to other users e.g. ministry
Management or Regional Offices, the Media, Public Offices Bearers,
Researchers, and more
Data manager module for data collection and
Management

Executive dashboards for monitoring and evaluating

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 education in a zone or Region.

EMIS school online module for schools to access the

EMIS data of their school and other downloads

Data posting and publishing module for posting data to

the EMIS online solutions.

TARGET MARKETING (STP) IN SERVICES

TARGET MARKETING:- is a process to satisfy the needs of different consumers group by adopting
different marketing strategies .

(STP:- SEGMENTING, TARGETING AND MARKETING) involve the following steps:-

1. Identifying Markets:- The first step is to identify market with unsatisfied needs

2. Determining Market Segmentation:- After identifying unsatisfied needs similar kinds of people having same
unsatisfied need are grouped in a single segment. Segmentation involves two elements:

i) Identifying segmentation variables and segment the market

ii) Developing profiles of resulting segments

3. Selecting a Market to Target-market Targeting:- This step calls for :-

i) Evaluating the attractiveness of each segment
ii) Selecting the target segment
4. Positioning through Marketing Strategies:- Market Positioning involves:-
i). Identifying possible positioning concepts for each target segment
ii) Selecting, developing and communicating the chosen positioning concept

TARGET MARKETING INVOLVES THREE ACTIVITIES

1. Market Segmentation (identification of market segments)
2. Market targeting (Selecting market segments)
3. Positioning the offering (differentiating products and services)

SERVICES MARKET SEGMENTATION

MARKET SEGMENTATION:- Is the process of dividing the total market for goods or services
into several smaller groups, such that members of each group are similar with respect to the factors
that influence demand. The purpose of market segmentation is trying to identify specific user
group/groups then pursue it with the tailored products or services supported by appropriate
marketing mix strategies.

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According to Philip Kotler, “ Whenever a market for a product or service consists of two or more
buyers, the market is capable of being segmented, that is divided into meaningful buyer groups. The
purpose of segmentation is to determine differences among buyers which may be consequential in
choosing away then or marketing to them”.

REQUIREMENTS FOR EFFECTIVE SEGMENTATION

To earn profit through segmentation following requirements are to be fulfilled like:-

1. DISTINTIVE:- Each segment should be internally homogenous in nature.
2. MEASURABLE SEGMENT:- The size of each segmented market can be measured.
3. SUBSTANTIAL SIZE OF THE SEGMENT:- The segment must be large enough so that the
marketer can invest in product or service development to meet the specialized demands
profitability.
4. ACCESSIBILITY:- Each distinct segment is easily accessible for appropriate actions.
5. ACTIONABLE:- Through segmented market a marketer develop effectively marketing
program to attract and serve potential customers effectively.

SIGNIFICANCE OF SEGMENTATION

1. CUSTOMISED SERVICES:- Services offered to the customer should be in accordance to

the need of the customer so that he’ll be fully satisfied.
2. MULTIPLE CHOICES:- By segmenting the market, a customers have a choice to select a
service and a corresponding price range that suits their budget.
3. COST EFFECTIVE:- By serving a particular segment or a niche, the investment in
resources, marketing, production facilities etc can be minimized thereby increasing the return on
investment.
BASE FOR SEGMENTATION
1. GEOGRAPHICAL SEGMENTATION:- is a common strategy when you serve customers in a
particular area, or when your broad target audience has different preferences based on where they are
located. This marketing approach is common for small businesses that serve a wide demographic
customer base in a local or regional territory.
2. DEMOGRAPHIC SEGMENTATION:- is a market segmentation according to age, race, religion,
gender, family size, ethnicity, income, and education. Demographics can be segmented into several
markets to help an organization target its consumers more accurately.
3. PSYCHOGRAPHIC SEGMENTATION:- involves dividing your market into segments based
upon different personality traits, values, attitudes, interests, and lifestyles of consumers.
4. VOLUME SEGMENTATION:- Consumers are classified light, medium and heavy users of a
product. In some cases, 80 per cent of the product may be sold to only 20 per cent of the group.
Marketers can decide product features and advertising strategies by finding common characteristics

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 among heavy users. For example, airlines having ‘Frequent Flyer’ are using user rate as the basis of
market segmentation. Generally, marketers are interested in the heavy user group.

But marketers should pay attention to all the user groups because they represent different opportunities. The
non-users may consist of two types of people— those who do not use the product and those who might use
it. Some may change over time from a non-user to a user.

Those who do not use due to ignorance may be provided extensive information. Repetitive advertising may
be used to overcome inertia or psychological resistance. In this way non-users can gradually be converted
into users.

5.BENEFIT SEGMENTATION:

Consumer behavior depends more on the benefit sought in product/service than on demographic factors.
Each market segment is identified by the major benefits it is seeking. Most buyers seek as many benefits as
possible. However, the relative importance attached to individual benefits differs from one group to another.
For example, some consumers of toothpaste give greater importance to freshness while other prefer taste or
brightness of teeth.

Research studies on benefit segmentation reveal that it is easier to take advantage of existing segment, then
to create new segments. As no brand can appeal to all consumers, a marketer who wants to cover the market
fully must offer multiple brands.

The following benefit segments have been identified:

(а) The Status Seeker:

This group comprises buyers who are very much concerned with the prestige of the brand.

(b) The Swinger:

This group tries to be modern and up-to-date in all of its activities.

(c) The Conservative:

This group prefers popular brands and large successful companies.

(d) The Rational Man:

This group looks for benefits such as economy, value, durability and other logical factors.

(e) The Inner Directed Man:

This group is concerned with self-concept, e.g., sense of homour, independence, honesty, etc.

(f) The Hedonist:

This group is concerned mainly with sensory benefits.

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Marketing experts suggest that benefit segmentation has the greatest number of practical implications than
any other method of segmentation.

5. PRODUCT-SPACE SEGMENTATION:
Here the buyers are asked to compare the existing brands according to their perceived similarity and in
relation to their ideal brands. First, the analyst infers the latent attributes that consumers are using to
perceive the brand. Then buyers are classified into groups each having a distinct ideal brand in mind. The
distinctive characteristics of each group are ascertained.

SERVICE MARKET TARGETING

A target market is the market (customers) a company wants to sell its products and services to, and to whom
it directs its marketing efforts. Identifying the target market is an essential step in the development of a
marketing plan.

Ques:- What do you understand by service positioning? Explain positioning strategies in

services.

SERVICE MARKET POSITIONING

Positioning is a marketing strategy that aims to make a brand occupy a distinct position, relative to
competing brands, in the mind of the customer. Companies apply this strategy either by emphasizing the
distinguishing features of their brand (what it is, what it does and how, etc.) or they may try to create a
suitable image (inexpensive or premium, utilitarian or luxurious, entry-level or high-end, etc.) through
advertising. Once a brand is positioned, it is very difficult to reposition it without destroying its credibility.
It is also called product positioning.

According to Ries and Trout, “ Positioning is defined as not ‘what you do to a product’ but rather ‘ what you
do to the mind of the prospect’; you position the product in the mind of the prospect”.

OBJECTIVES OF POSITIONING

1. To create a distinctive place of a product or service in the minds of potential customers.

2. To provide a competitive edge to a product or service, i.e, an attempt to convey attractiveness of the
product or the service to the target market
3. Place an intangible service within a more tangible frame of reference.
4. Help to influence both service development and the re-design of existing services
5. Follow consideration of competition’s possible moves and responses so that appropriate action can be
taken.
6. To give the target markets the reason of buying the services of the marketers and then design the whole
strategy.
7. To provide guidelines for the development of marketing mix with each element being consistent with
the positioning.

POSITIONING STRATEGIES IN SERVICES

1) USING PRODUCT CHARACTERISTICS OR CUSTOMER BENEFITS AS A POSITIONING

STRATEGY:-This strategy basically focuses upon the characteristics of the product or customer benefits.
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For example if I say Imported items it basically tell or illustrate a variety of product characteristics such as
durability, economy or reliability etc. Lets take an example of motorbikes some are emphasizing on fuel
economy, some on power, looks and others stress on their durability. Hero Cycles Ltd. positions first,
emphasizing durability and style for its cycle.

At time even you would have noticed that a product is positioned along two or more product
characteristics at the same time. You would have seen this in the case of toothpaste market, most
toothpaste insists on ‘freshness’ and ‘cavity fighter’ as the product characteristics. It is always tempting to
try to position along several product characteristics, as it is frustrating to have some good characteristics
that are not communicated.

(2) PRICING AS A POSITIONING STRATEGY – Quality Approach or Positioning by Price-Quality –

Lets take an example and understand this approach just suppose you have to go and buy a pair ofjeans, as
soon as you enter in the shop you will find different price rage jeans in the showroom say price ranging
from 350 rupees to 2000 rupees. As soon as look at the jeans of 350 Rupees you say that it is not good in
quality. Why? Basically because of perception, as most of us perceive that if a product is expensive will
be a quality product where as product that is cheap is lower in quality. If we look at this Price – quality
approach it is important and is largely used in product positioning. In many product categories, there are
brands that deliberately attempt to offer more in terms of service, features or performance. They charge
more, partly to cover higher costs and partly to let the consumers believe that the product is, certainly of
higher quality.

(3) POSITIONING STRATEGY BASED ON USE OR APPLICATION – Lets understand this with
the help of an example like Nescafe Coffee for many years positioned it self as a winter product and
advertised mainly in winter but the introduction of cold coffee has developed a positioning strategy for the
summer months also. Basically this type of positioning-by-use represents a second or third position for the
brand, such type of positioning is done deliberately to expand the brand’s market. If you are introducing
new uses of the product that will automatically expand the brand’s market.

(4) POSITIONING STRATEGY BASED ON PRODUCT PROCESS – Another positioning approach is to

associate the product with its users or a class of users. Makes of casual clothing like jeans have introduced
‘designer labels’ to develop a fashion image. In this case the expectation is that the model or personality
will influence the product’s image by reflecting the characteristics and image of the model or personality
communicated as a product user. Lets not forget that Johnson and Johnson repositioned its shampoo from
one used for babies to one used by people who wash their hair frequently and therefore need a mild people
who wash their hair frequently and therefore need a mild shampoo. This repositioning resulted in a market
share.

(5) POSITIONING STRATEGY BASED ON PRODUCT CLASS – In some product class we have to make
sure critical positioning decisions For example, freeze dried coffee needed to positions itself with respect
to regular and instant coffee and similarly in case of dried milk makers came out with instant breakfast
positioned as a breakfast substitute and virtually identical product positioned as a dietary meal substitute.

(6) POSITIONING STRATEGY BASED ON CULTURAL SYMBOLS – In today’s world many advertisers
are using deeply entrenched cultural symbols to differentiate their brands from that of competitors. The
essential task is to identify something that is very meaningful to people that other competitors are not
using and associate this brand with that symbol. Air India uses maharaja as its logo, by this they are trying
to show that we welcome guest and give them royal treatment with lot of respect and it also highlights
Indian tradition. Using and popularizing trademarks generally follow this type of positioning.
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(7) POSITIONING STRATEGY BASED ON COMPETITORS – In this type of positioning strategies, an
implicit or explicit frame of reference is one or more competitors. In some cases, reference competitor(s)
can be the dominant aspect of the positioning strategies of the firm, the firm either uses the same of
similar positioning strategies as used by the competitors or the advertiser uses a new strategy taking the
competitors’ strategy as the base. A good example of this would be Colgate and Pepsodent. Colgate when
entered into the market focused on to family protection but when Pepsodent entered into the market with
focus on 24 hour protection and basically for kids, Colgate changed its focus from family protection to
kids teeth protection which was a positioning strategy adopted because of competition.

BEHAVIOR OF CONSUMER
CONSUMER BEHAVIOUR:- is the study of individuals, groups, or organizations and the processes
they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs
and the impacts that these processes have on the consumer and society.

According to Solomon, “ Consumer behavior is the process involved when individuals or groups select,
purchase, use or dispose of products, services, ideas or experiences to satisfy needs and wants”.

FACTORS INFLUENCING CONSUMER BEHAVIOUR

1. Culture
Culture is crucial when it comes to understanding the needs and behaviors of an individual. Throughout
his existence, an individual will be influenced by his family, his friends, his cultural environment or
society that will “teach” him values, preferences as well as common behaviors to their own culture. For
a brand, it is important to understand and take into account the cultural factors inherent to each market
or to each situation in order to adapt its product and its marketing strategy..For example, in the West, it
is common to invite colleagues or friends at home for a drink or dinner. In Japan, on the contrary, invite
someone home does not usually fit into the local customs.
McDonald’s is a brilliant example of adaptation to the specificities of each culture and each market.
Well aware of the importance to have an offer with specific products to meet the needs and tastes of
consumers from different cultures.

2.Sub-cultures
A society is composed of several sub-cultures in which people can identify. Subcultures are groups of
people who share the same values based on a common experience or a similar lifestyle in general.
Subcultures are the nationalities, religions, ethnic groups, age groups, gender of the individual, etc..The
subcultures are often considered by the brands for the segmentation of a market in order to adapt a
product or a communication strategy to the values or the specific needs of this segment.

3.Social class
Social classes are defined as groups more or less homogenous and ranked against each other according
to a form of social hierarchy. Even if it’s very large groups, we usually find similar values, lifestyles,
interests and behaviors in individuals belonging to the same social class. We often assume three general
categories among social classes : lower class, middle class and upper class.
People from different social classes tend to have different desires and consumption patterns. Disparities
resulting from the difference in their purchasing power, but not only.
For example, consumers from the middle class and upper class generally consume more balanced and
healthy food products than those from the lower class.
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 according to social class. A consumer from the lower class will be more focused on price. While a
shopper from the upper class will be more attracted to elements such as quality, innovation, features, or
even the “social benefit” that he can obtain from the product.

4.Reference groups and membership groups :

The membership groups of an individual are social groups to which he belongs and which will
influence him. The membership groups are usually related to its social origin, age, place of residence,
work, hobbies, leisure, etc..
The influence level may vary depending on individuals and groups. But is generally observed common
consumption trends among the members of a same group.
• The initiator: the person who suggests buying a product or service
• The influencer: the person whose point of view or advice will influence the buying decision. It may be a
person outside the group (singer, athlete, actor, etc..) but on which group members rely on.
• The decision-maker: the person who will choose which product to buy. In general, it’s the consumer but
in some cases it may be another person. For example, the “leader” of a soccer supporters’ group
(membership group) that will define, for the whole group, which supporter’s scarf buy and bear during
the next game.
• The buyer: the person who will buy the product. Generally, this will be the final consumer.
Many brands look to target opinion leaders (initiator or influencer) to spread the use and purchase of
their product in a social group. Either through an internal person of the group when it comes to a small
social group. Or through a sponsorship or a partnership with a reference leader (celebrity, actor,
musician, athlete, etc..) for larger groups.
Family:
The family may be the most influencing factor for an individual. It forms an environment of
socialization in which an individual will evolve, shape his personality, acquire values. It also develop
attitudes and opinions on various subjects such as politics, society, social relations or himself and his
desires. We all kept, for many of us and for some products and brands, the same buying habits and
consumption patterns that the ones we had known in our family.
For example, if you have never drunk Coke during your childhood and your parents have described it as
a product “full of sugar and not good for health”. For brands – especially for Fast-Moving Consumer
Goods (FMCG) or Consumer Packaged Goods (CPG) – successfully “integrate” the family is both a real
challenge and an opportunity to develop a strong consumer loyalty among all the family members.

CUSTOMER DECISION MAKING PROCESS

When 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,
The service encounter stage, and the post- purchase stage, each containing two or more steps

PRE-PURCHASE STAGE:- The decision to buy or 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 they used it for the first time they may conduct an
intensive information search.
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SERVICE ENCOUNTER STAGE:- After deciding 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 placing an order. Contacts may take the form of personal exchanges
between customers and service employees, or impersonal interactions with machines or computers.

POST PURCHASE EVALUATION:- After purchasing and using a product or service, the customers
evaluates it by comparing its performance with his expectations. A customer is satisfied when the product or
service meets or exceeds his expectation.

Ques:- What aspects of consumer behavior in services make it unique and challenging?

Ans:- The major aspects of consumer behavior towards services are as follows:-

1. Consumers seek and rely more on information from personal sources than from non-personal sources
when evaluating services before purchase.
2. Consumers engage in greater post-purchase evaluation and information seeking with services than with
goods.
3. Consumers perceive greater risks when buying services than when buying goods.
4. The consumer’s evoked set of alternative is smaller with services than with goods.
5. For many non-professional services the consumer’s evoked set frequently includes self-provision of the
service.
6. Positive (negative) moods and emotions enhance (decrease) the likelihood of performance of behavior
with positive expected outcomes.
7. Mood and emotion bias the customers evaluation of service encounters in ‘mood-congruent’ directions.
8. The mood of the customer influences the way impressions of a service are encoded, retained, and
retrived by the customer.
9. The greater the human interaction in the service encounter, the more likely the consumer’s evaluation of
the service will be influenced by moods and emotions.
10. Service encounters can be viewed as role performances.
11. Negative departures from the customer’s expected script will detract from service performance.
12. Departures from the customers expected script, including provision of more of an attribute than
expected, may detract from, or add to, the service experience.
13. Customer compatibility is a factor that influences customer satisfaction, particularly in high contract
services.
14. Consumers attribute some of their dissatisfaction with services to their own inability to specify or
perform their part of the service.
15. Consumers may complain less frequently about services than about goods due to their belief that they
themselves are partly responsible for their dissatisfaction.
16. Consumers adopt innovations in services more slowly than they adopt innovations in goods.
17. Brand switching is less frequent with services than with products.
18. Retailing customers for a particular service is easier than in case of goods.

SERVICES MARKETING MANAGEMENT

Philip Kotler defines Marketing Management as analysis, planning, implementation, and control of
programs, designed to create, build, and maintain beneficial exchange with target buyers for the purpose of
achieving organizational goals

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Ques:- Describe Service Triangle in Short. How is understanding of employees behavior and
consumer behavior relevant in quality service delivery?

SERVICES MARKETING TRIANGLE

The marketing and selling of services requires a special set of tactics and priorities compared with selling
physical products. The service marketing triangle breaks the marketing tasks of your business down into
three types. As a service business, you must market both to your employees so they understand the focus of
your business and to your customers so they do more business with you. The triangle shows the three
interlinked groups that work together to develop, promote and deliver services.
POINTS OF THE TRIANGLE
Each side of the service marketing triangle represents a type of marketing, and the types interact between
the entities on the points where the sides meet. At the top of the triangle sits your business organization. At
each corner at the bottom of the triangle are your customers and your employees who interact with and
provide the services to your customers.
The key players are labeled on the points of the triangle:

a. The Company
b. The Customers
c. The providers

Providers can be the firm’s employees, sub-contractors, or outsources entities who actually deliver the
company’s services. With the help of a triangle three types of marketing must be successfully carried out
for a service to succeed as given below:

a. Internal Marketing
b. External Marketing
c. Interactive Marketing

COMPANY

INTERNAL MARKETING EXTERNAL MARKETING

Enabling Promises Making Promise

Providers Customers

Interactive Marketing
Keeping Promises

Service Marketing Triangle

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INTERNAL MARKETING
Internal marketing is the side of the triangle between your organization and your employees who provide
your services to customers. Marketing issues include adequate training on the services to be delivered and
customer satisfaction service techniques. Internal marketing requires you to be involved with your
employees and let them know the goals and even problems facing the business. Internal marketing also can
include a performance rewards system for employees who deliver the highest level of customer service.
EXTERNAL MARKETING
External marketing goes from your business organization out to customers and prospective customers. This
is the traditional form of business marketing, showing customers how the services provided by your
business benefit them. External marketing includes advertising, your website and your company's social
media efforts. The purpose of external marketing is to fill the business pipeline with future business.

INTERACTIVE MARKETING
The side of the triangle between your employees and customers is called interactive marketing. This form of
marketing revolves around how your employees deliver the services your company provides. The goal is to
have highly satisfied customers who become long-term, repeat customers. The effectiveness of the
interactive marketing relates back to the internal marketing efforts of your business. Interactive marketing is
also how your employees keep the promises made by your external marketing efforts.

How Employee behavior and Consumer Behavior is relevant with the quality of service delivered?

1.EMPLOYEE BEHAVIOR

a. Provides the Context and Sets the Mood:- The employee behavior provides the context and sets the
mood for service evaluation. In services it is not important to stimulate services with the outsiders rather
stimulating among the employees, especially the ‘frontliners’ is crucial.
b. High Correlation between Employee Behavior and Service Delivery:- Employee behavior have
great effect on overall customer satisfaction regardless of customer’s gender, nationality and purpose of
visit, number of visits and length of stay.
c. Employees are a Critical Resource:- Internal marketing states that the employees of the organization
are the first market and the final consumers are the second. So it is essential to understand the employee
behavior and satisfy the needs and wants of the employees in order to serve the employee better.
d. Multiple Tasks and Roles:- Front line service employee’s work involves multiple tasks an roles;
therefore it is important to plan, stage or script communication and employee behavior to achieve a
sustainable level of service quality.
2. CONSUMER BEHAVIOR
a. Gives a Competitive Edge:- It requires an understanding of customer expectations and the types of
expectations. Further, knowledge of factors influencing the desired service level, adequate service level,
etc, help service organizations to consistently meet service expectations of the customers.
b. Word-of-Mouth Publicity:- Customers gathered and rely on information obtained from personal
sources. Therefore, marketers should be careful in satisfying the existing customers by meeting or
exceeding their expectations.
c. Credence Qualities:- Services are intangible in nature. Customers require the assistance of the service
provider to access the value of a service with high credence qualities.
d. Part of the Service Delivery:- In marketing of services, the customer becomes a part of the service
delivery process. This is termed as Co-Production.

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 SERVICE QUALITY

According to the American Society for Quality Control “ Quality refers to the totality of features and
characteristics of a product or a service that bear on its ability to satisfy stated or implied needs”.

Ques:- What is gap model of Zeithmal et al? Discuss each gap model in brief.

GAP MODEL IN SERVICE QUALITY

The gap model (also known as the "5 gaps model") of service quality is an important customer-
satisfaction framework. In "A conceptual model of service quality and its implications for future
research" (The Journal of Marketing, 1985), A. Parasuraman, VA Zeitham and LL Berry identify five
major gaps that face organizations seeking to meet customer's expectations of the customer experience.

The five gaps that organizations should measure, manage and minimize:

• Gap 1 is the distance between what customers expect and what managers think they expect -
Clearly survey research is a key way to narrow this gap.
• Gap 2 is between management perception and the actual specification of the customer experience
- Managers need to make sure the organization is defining the level of service they believe is
needed.
• Gap 3 is from the experience specification to the delivery of the experience - Managers need to
audit the customer experience that their organization currently delivers in order to make sure it
lives up to the spec.
• Gap 4 is the gap between the delivery of the customer experience and what is communicated to
customers - All too often organizations exaggerate what will be provided to customers, or

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 discuss the best case rather than the likely case, raising customer expectations and harming
customer perceptions.
• Finally, Gap 5 is the gap between a customer's perception of the experience and the customer's
expectation of the service - Customers' expectations have been shaped by word of mouth, their
personal needs and their own past experiences. Routine transactional surveys after delivering the
customer experience are important for an organization to measure customer perceptions of
service

Customers generally have a tendency to compare the service they 'experience' with the service they
'expect' to receive; thus, when the experience does not match the expectation, a gap arises.

GAP 1:
Gap between consumer expectation and management perception: This gap arises when the management
or service provider does not correctly perceive what the customer wants or needs. For instance – hotel
administrators may think guests want better food or in-house restaurant facilities, but guests may be
more concerned with the responsiveness of the staff or the cleanliness of their rooms.

Consumer Expectations

Hotel administrators may think guests want better food or in-house restaurant facilities, but guests may
be more concerned with the responsiveness of the staff.

Factors that affect the size of the knowledge gap include:

Market research

• Before introducing a new product or service into the market, a company must conduct market
research to understand whether there would be any demand for the product, and what features
should be incorporated. The better this process is conducted, the smaller the knowledge gap will
be.
• There are methods of ensuring that customer desires are taken on board. These include:
comprehensive studies, gauging satisfaction after individual transactions (surveys immediately
after a purchase is made), customer panels and interviews, and through customer complaints.

Communication channels

• The fewer the layers between management and customer contact personnel, the more likely that
customer preferences will be incorporated into higher-level decision making on the product.

GAP 2 :

Gap between management perception and service quality specification: This is when the management or
service provider might correctly perceive what the customer wants, but may not set a performance
standard. An example here would be that hospital administrators may tell the nurse to respond to a
request ‘fast', but may not specify ‘how fast'.
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 GAP 3:

Gap between service quality specification and service delivery: This gap may arise in situations
pertaining to the service personnel. It could happen due to poor training, incapability or unwillingness to
meet the set service standard. An example would be when a doctor's office has very specific standards of
hygiene communicated but the hired staff may have been poorly trained on the need to follow these
strict protocols.

GAP 4 :

Gap between service delivery and external communication: Consumer expectations are highly
influenced by statements made by company representatives and advertisements. The gap arises when
these assumed expectations are not fulfilled at the time of delivery of the service. For example – a
hospital printed on its brochure may have clean and furnished rooms but in reality, it may be poorly
maintained – in this case the patient's expectations are not met.

GAP 5:

Gap between expected service and experienced service: This gap arises when the consumer
misinterprets the service quality. The physician may keep visiting the patient to show and ensure care,
but the patient may interpret this as an indication that something is really wrong.

Ques:- What is Customer Delight?

Ans:- Customer delight happens when you surprise a customer (or client) by exceeding
expectations. When expectations are met, you have customer satisfaction. When
expectations are exceeded, you achieve customer delight.

UNIT-3

BANKING SERVICES MARKETING

A bank is a financial institution that accepts deposits and channels the money into lending activities.
Bank Marketing refers to all the functions needed to cater to the financial and other closely related
needs of the customer, keeping in mind the organizational objective of customer delight.

NATURE OF BANKING SERVICES

1. MOBILISATION OF SAVINGS:- By mobilization of deposits, bank collect savings from the

public which in turn are lent for investment when they purvey credit to various sectors of the
economy.

2. FACILITATE COMMERCE AND TRADE:- Finance is important for trade and commerce and
banks provide funds for facilitating these activities in the economy.

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3. BALANCED REGIONAL DEVELOPMENT:- For the balanced development of economy the
banks have to promote lending and investment in those regions or parts of the country which are
less developed.

4. PROVISION OF FINANCE TO BACKWARD COMMUNITIES:- The banks provide loan at

concessional rates to SC/ST and weaker sections of the society, as per the guidelines of the govt.

5. DEVELOPMENT OF AGRICULTURE AND OTHER PRIORITY SECTORS IN THE

ECONOMY: Banks provide loans to the described sectors at concessional rates so as to facilitate
their growth and provide employment in the economy.

MARKET SEGMENTATION OF BANKING SERVICES

The bank professionals have to segment the market in such a way that the expectations of all the
potential customers are studies in a right perspective and the marketing resources are developed
to fulfill the same.

CRITERIA FOR SEGMENTATION

An important criteria for market segmentation is the economic system in which we find
agriculture sector, industrial sector, service sector, household sector, institutional sector, and
rural sector requiring due to weight age while segmenting.

1. Agriculture Sector:- In the agriculture sector, there are four categories as follows:-
a. The improved scientific system of cultivation
b. The help of nature
c. The magnitude of risk
d. The availability of infrastructural facilities .
The banking organizations are supposed to know and understand the changing requirements of
different categories of the farmers
2. Industrial Sector:- The banking organizations sub-serve the interests of the industrial sector.
The large sized cooperative and tiny industries use the services of bank.
3. Service Sector:- Through the service sector banking organizations earn profit. There are two
categories of organization, one is profit-making and second non-profit making . According to
the need of the organization, demands are to be fulfilled by the bank
4. House hold sector:- is a sector of different income groups. According to the group needs and
requirements are to be fulfilled by the bank.
5. Professional Sector:- Under this , we find different categories of professions and we find a
change in their needs and requirements.
6. Institutional Sector:- In this sector, we find different categories of organizations like cultural
organization, charitable, industrial etc. To satisfy and to increase the market share, it is pertinent
that the banking organizations are familiar with their changing needs and requirements.\

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 INSURANCE SERVICE MARKETING

The term insurance marketing refers to the marketing of insurance service with the motto of
customer-orientation and profit-generation. The insurance marketing focuses on the formulating of
an ideal mix for the insurance business so that the insurance business may thrive and survive in a
right perspective.

There are following facts related to insurance marketing like:-

a. It is a managerial process.
b. It is conceptual of marketing principles
c. It is a process of formulating the marketing mix
d. It is a device to make possible customer-orientation
e. It is an attempt to help profit maximization
f. It is another name for marketing professionally
g. It is even a social process that paves avenues for social transformation
h. It is to make possible product attractiveness
i. It is to energies the process of quality up gradation

NATURE OF INSURANCE SERVICES

1. Risk Sharing:- Insurance is considered as a device to share the financial loss which might affect
the individual or his/her family members. The unforeseen event may be death of a breadwinner of a
family, danger associated with the sea in case of marine insurance etc.

2. Risk Assessment:- Evaluation of risk is the important factor that decides the amount of
premium to be calculated. When the threat perception is high premium is more and vice-versa.

3. Cooperation:- The most important feature of any insurance is the cooperation of a large
number of persons who come together voluntarily to share the financial loss that may arise due to a
specific risk for which protection is sought. There is no compulsion on the part of the insurer to
enroll the customers and seek protection against a specific threat.

4. Payment at the time of contingency:- The insurer compensates the insured by paying
compensation in the event of loss. i.e. payment is made at the time of contingency. This is true in
case of life insurance where the payment is made at the end of the term or in case of death
whichever is earlier.
5. Quantum of compensation:- The value of compensation depends on the extent of loss suffered
by the insured from a particular risk provided the maximum capped value is not surpassed.

6. Larger the Number, Better the Care:- The number of insured persons shall be large enough to
spread the loss immediately, smoothly and economically. When the number of insured is smaller, it
would translate into a higher premium an hence it becomes unaffordable and unpopular.

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 7. Insurance by choice and not by chance:- The productivity of a community is increased by
means of insurance because it eliminates worry and increases the initiatives. The uncertainty is
changed to certainty because the insurer gives the assurance to compensate the loss monetarily in
the event of loss.

8. Insurance, a Charity:- Charity is practiced without giving consideration whereas insurance is a

business and without premium it is not possible to run the business. It offers security an safety to
the individual an society in return of premium and thereby compensate the loss suffered.

MARKETING MIX OF INSURANCE SERVICES

The four ingredients of the marketing mix are discussed briefly as under :
1. Product (Scheme) : It is the first element, product is the sum total of physical, social and psychological
benefits. Managing the product component involves product planning and development. The insurance
marketers must define their market in terms of product function. What the customer expects from the
product. It may offer a single product of several products. Life insurance as product has also to be
designed, keeping in view these basic requisites, in case of life insurance the needs are in the form of
two broad economic contingencies viz., death of the breadwinner and the subsequent financial insecurity
of his dependents, and secondly, longer life

2. Price (Premium) : The price is another powerful element in the insurance marketing mix and vitally
affect the volume of sales. Price is the valuation placed upon the product by the offer. In the case of life
insurance, premium is the price which the person seeking insurance pays to LIC for purchase in the life
insurance policy. The management must take decisions regarding pricing (premium), investment return,
level of premium, node of premium, commission, insured sum, life to be covered, interest on loan, price
strategy, under writing and price related situations. It deals with price competition.

3. Physical Distribution / Place : Marketing channel policy is another integral part of the insurance
marketing mix. Physical distribution is the delivery of insurance products at the right time and at the
right place. In the case of life insurance, it is the combination of decisions regarding channels of
distribution, Agents, Development Officers, Brokers, Branch Office, At present the strength of LIC's
distribution channel comprising over 6.10 lakhs active agents and over 19,000 Development officers
appears to be phenomenal.

4. Promotion : The business enterprise should inform the customers about its products and persuade them
to buy. It covers methods of communicating with consumers through personal selling, advertising,
publicity, sales promotion, social contracts, public relations, exhibition and demonstration used in
promotion. For promoting life insurance business sales promotion activities are carried out by the agent,
development officers and branch offices. Calendars, diaries, bags etc are also given to policy holders as
a token of gifts. All these activities increase the volume of sales by expanding as well as retaining the
market share for the insurance products.

5. People: Being a service industry there is a high involvement of people interaction. It is important to use
this resource efficiently in order to satisfy customers as also to have competitive edge in the market.

37
6. Process:- The process involved in the insurance industry should be customer friendly. The speed and
accuracy of payment is of vital importance. The processing methodology should be such that it provides
total ease and convenience to the customers.

7. Physical Evidence:- The best physical evidence in case of insurance policies can be provided by the
timely receipt of policy certificates, timely intimations of the due dates of premiums and the timely
payment of periodical money backs by the insurance companies.

Ques:- Elaborate the nature, segmentation and marketing mix of Tourism industry.

TOURISM SERVICES MARKETING

With global international tourist arrivals reaching one billion each year, and growth only expected to
increase, opportunities in the tourism industry are endless. Yet many destinations and tourism businesses
fail to achieve success. Why are so many destinations struggling in a climate that is ripe for tourism?
Marketing is a major part of the problem, but it is also an integral part of the solution.
Marketing tourism products is different from most other products because what is being sold is
consumption of an experience rather then a tangible product. The product is primarily service based.
This means that customer often walks away from tourism offering with only a memory or experience.

NATURE OF TOURISM SERVICES

1. STABLE LOCATIONS:- Tourism locations are fixed and potential customers have to visit these
locations for consuming the various services offered. For ex:- if a tourist visiting India wants to
enjoy the backwaters, he has to go to kerala.

2. HUGE FINANCIAL INVESTMENTS:- The tourism industry requires huge investments for the
development of infrastructure to meet the needs and demands of customers. The government need
to spend a lot on travel facilities like airport and trains on maintaining and improving tourist
attractions and on providing accommodation and entertainment to tourists.

3. UNSTABLE DEMAND:- The demand for tourism products is not stable. For ex:- the tourist
services and destinations are in demand during vacation time or when the weather is suitable.

4. PERISHABILITY:- Tourism products like an airline seat or a room at a hotel are highly
perishable and cannot be inventoried. This means that , all the unutilized resources during the low
demand season cannot be inventoried and saved for the peak demand season.

MARKET SEGMENTATION IN TOURISM

Every tourist is different. Every tourist feels attracted by different tourist destinations, likes to engage in
different activities while on vacation, makes use of different entertainment facilities and complains
about different aspects of their vacation. While all tourists are different, some are more similar to each
other than others: many people enjoy culture tourism, many tourists like to ski during their winter
holiday and many tourists require entertainment facilities for children at the destination. Acknowledging
that every tourist is different and that tourism industry cannot possibly cater for each individual
separately forms the basis of market segmentation.

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Geographic Segmentation
One of the first variables that could be used for segmentation iis geographic. This would break the market into
sections by climate, density, market size, world or states. Many companies use climate if their products or services rely
on the weather, such as snow shovels, melting pavement salt, wave runners and boats. Our Town USA is more
interested in targeting geographic locations that are located near the park in a 100-mile radius. They believe some
customers will fly in from out of state, so in addition, they will target large-density areas nearby.

Demographic Segmentation
Demographic segmentation is extremely important to all marketing departments since the data is easily
available and does drastically affect buying patterns. Age, income, gender, ethnic background and
family life cycle are all important factors of demographic segmentation. The park is going to use an age
range of 2-60 years of age so they can include kids, teens, parents and even grandparents. The income
level would have to be middle to upper class - $50,000 annual income or above - since park tickets are
very expensive. The amusement park is not a gender-specific product, and ethnicity will also not affect
the overall plan.

Psychographic Segmentation

A very complicated way to segment the market is through using psychographics. Psychographic
segmentation is segmenting a market based on personality, motives and lifestyles. When the amusement
park team identifies their target market's psychographic traits, they will look at consumers with
personalities who enjoy fun, like spending time with their family, enjoy leisure time and are outgoing in
nature. The television ad for the park will consist of people laughing, screaming on exciting rides and
enjoying a day of freedom.

Behaviouristic Segmentation
This form of segmentation has several dimensions but in general it aims to group consumers in terms of
their relationship with the destination product.For ex Whether they are first time or regular visitors, the
purpose of their visit, loyalty, and their attitudes to the destination before segmenting on the basis of
behaviour or benefits sought.

Multivariable Segmentation

A multivariable segmentation strategy requires that tourist consumers are clustered according to their
background, needs and wants. To determine whether the visitor market has been properly segmented,
the following criteria should be considered

1. EFFECTIVENESS AND DISTINCTIVE:- Tourist consumer should have homogenous needs

which are significantly different from those in other segments.
2. MEASURABILITY:- The potential of the customers should be accurately quantified of each
segment to ensure that it is commercially viable.
3. ACCESSIBILITY:- The tourism organization must be able to reach the segment with specifically
formulated and cost effective marketing program.
4. ACTIONABLE:- The destination management organization must have the resources to exploit
identified marketing opportunities that emerges from the segmentation process.

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 ELEMENTS OF MARKETING MIX IN TOURISM SERVICES

1. Product:-Product in Tourism is basically the experience and hospitality provided by the

service provided. In general the experience has to be expressed in such a way that the
tourists see a value in them.

2. Process:- The process in Tourism include, (a)trip planning and anticipation, (b) travel to the
site/area, (c) recollection, (d) trip planning packages. The trip planning packages include, maps,
attractions en route and on site, information regarding lodging, food, quality souvenirs and
mementoes.

3. Place and Time –Location and Accessibility The place and time in tourism is providing
directions and maps, providing estimates of travel time and distances from different market
areas, recommending direct and scenic travel routes, identifying attractions and support facilities
along different travel routes, and informing potential customers of alternative travel methods to
the area such as airlines and railroads.

4. Productivity and Quality:- This is similar to other service industries. The quality is assessed
by time taken for a service, the promptness of the service, reliability and so on.

5. Promotion and Education:-Like other services, the promotion should address, the
accurate and timely information helping to decide whether to visit target audience, the image to
be created for the organization, objectives , budget, timing of campaign, media to be selected,
and evaluation methods.

6. People:-People is the centre for Tourism. It is more a human intensive sector. For hospitality
and guest relations it is very important to focus on people. It also plays a vital role in quality
control, personal selling, and employee morale.

7. Price and other user costs:- The price of the tourism services depend on business and
target market objectives, cost of producing, delivering and promoting the product, willingness
of the target, prices charged by competitors offering similar product/service to the same target
markets, availability and prices of substitute products/services, and economic climate. The
possibility of stimulating high profit products/services by offering related services at or below
cost.

8. Physical Evidence:-In Tourism the physical evidence is basically depends on travel

experience, stay, and comfort. Here, the core product is bed in case of stay.

How are tourism related industry related services performing in India? Explain you viewpoints
with reasons

40
Indian travel and tourism industry

Indian tourism offers most diverse products globally. The country’s rich history, cultural heritage, beauty,
diversity of religion and medicine fascinate budget and luxury travelers. Tourism in India has registered
significant growth over the years. This has been led by growth in both leisure and business tourism. Rising
incomes, increasing affordability, growing aspirations, increasing globalisation, and a growing airline industry
along with improvement in travel-related infrastructure have supported industry growth. Tourism holds immense
potential for the Indian economy. It can provide impetus to other industries through backward and forward
linkages and can contribute significantly to GDP.

India’s travel and tourism industry is expected to generate revenue of Rs. 1,970 bn (US$ 42 bn) in 2010,
according to the World Travel & Tourism Council (WTTC). This would be around 3.1% of total GDP. However,
since travel and tourism touches all sectors of the economy, its real impact is greater and the travel and tourism
economy directly and indirectly accounts for ` 5,533 bn (US$ 118 bn), equivalent to 8.6% of total GDP.

Personal travel and tourism is the most significant contributor, accounting for 55% of the total market, while
business travel forms only 9%. Capital investment is also significant with a share of 24%. Hotels, air transport,
surface transport, basic infrastructure, and facilitation systems environment are some of the related sectors.

The share of the Indian travel and tourism industry globally is very less. However the industry holds immense
potential. In fact, India has been ranked among the leaders by the WTTC for long-term (10-year) growth
prospects. Further, a globally renowned travel magazine, Conde Nast Traveler, ranked India among the top 10
tourist destinations of the world. JBIC has also ranked India as the fifth most attractive investment destination.
India is probably the only country that offers various categories of tourism with its geographical diversity and
rich cultural heritage.
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Tourism comprises activities of people travelling to and staying in places outside their usual environment for not
more than one consecutive year for leisure, business and social, recreational, and knowledge seeking purposes.

The tourism industry is primarily service and people oriented; it is made up of businesses and organisations
belonging to various other industries and sectors. It is an interplay among these businesses and
organisations/persons which offer “travel experience” to tourists. The tourism industry comprises hospitality
(related to accommodation and dining), travel (transportation services through different modes), and various
other businesses which offer services and products to tourists. other businesses which offer services and products

to tourists.

Most of the players in the tourism industry are SMEs. The unorganised sector dominates the industry in India.
Hotels, airline companies, and tour operators form the organised sector.

Specialist travel service providers assist tourists with travel arrangements. These providers include travel
agencies who are involved in retailing of travel products directly to the tourists (individuals or groups). They
provide information on different travel destinations and advise customers on travel plans. They also sell
associated products such as insurance, car hire, and currency exchange.

Business travel agencies specialise in making travel and accommodation arrangements for business travelers and
promoting conference trades. The tour operators provide packages for individuals while the principals provide
basic travel and tourism related services.

Tour operators offer holiday packages which comprise travel (road, rail, sea, air as well as to and from the
destination airport, car hire, excursions, etc) and accommodation (hotels, guesthouses, apartments, etc) services.

Transport service providers could be airlines, cruise lines, car rentals, and rail companies. A tourist’s choice of
transport would depend on the travel budget, destination, time, purpose of the tour, and convenience to the point
of destination. Accommodation could be hotels and motels, apartments, camps, guest houses, lodge, bed and
breakfast establishments, house boats, resorts, cabins, and hostels. In addition, tourists also require catering
facilities, which a variety of outlets for food and refreshments offer. These include hotels, local restaurants,
roadside joints, cafeterias, and retail outlets serving food and beverages.

Another major component of the travel and tourism industry is ‘attractions’ such as theme parks and natural
attractions including scenic locations, cultural and educational attractions, monuments, events, and medical,
social or professional causes.
42
 The tourist information and guidance providers include a number of service providers such as those offering
insurance, recreational, communication, and banking services; government agencies; tour guides; industry
associations; packaging agents; ticketing agents; and holiday sellers.

Current Status of Tourism Services in India

1. Increase in Foreign Tourists Arrivals:- In comparison to the year 2008-09 with a negative growth
of -2.2%, foreign tourist arrivals increased considerably to register a growth of 8.1% in 2009-10 . It
was increased from 5.78 million in 2010 to 6.29 million in 2011 registered a growth rate of 8.9%
over 2010.
2. Private Players in Market:- Along with the national carriers, entry of 12 private domestic airlines
has not only resulted expansion of the networks and capacities but it also brought intense
competition and made air travel accessible to millions of people. Further with 454 airports of which
16 with international status, India may also be rated as one of the leading countries in Asia with
regards to airport density.
3. Tourist attraction Portfolios:- Rural tourism, golf tourism, adventure tourism, camping sites,
medical tourism, wellness tourism, ecotourism, highway tourism leads to fast changing tourist
consumer preferences, India in the race for creating and re-creating diverse tourist attraction
portfolios .
4. Increase in Investment:- According to WTTC India’s rank 4th in terms of travel and tourism
investment in 201 with a total of USD 26.7 billion. This suggest that in terms of investment, India is
much ahead of most countries in the Asian region.
5. Different Attributes of States towards Tourism:- States differ widely in their attributes towards
tourism like Kerala, Rajasthan and Goa have emerged as front-runners in this field. It is a sad
commentary that states endowed with historical and natural beauty such as Uttar Pradesh, Bihar,
Madhya Pradesh, Karnataka, Orissa, Andhra Pradesh, Uttaranchal and Himanchal Pradesh have not
fully exploited their rich tourism potential,

HOSPITAL SERVICES MARKETING

A hospital in the modern sense is an institution for healthcare providing patient treatment by specialized
staff and equipment, and often, but not always providing for inpatient care or longer-term patient stays.
Health care services are becoming more significant today than ever before in India. With the growth of the
industry and services, the demand for health care is also increasing.

NATURE OF HOSPITAL SERVICES

1. PATIENT PARTICIPATION:- In healthcare, as in any service industry, to evaluate
performance a distinction must be made between inputs and outputs. Patients who receive care are
among the inputs into the service process. On the other hand, after diagnosis and treatment, the
patient’s condition constitutes the effectiveness of the healthcare organization-i.e., output.

2. SIMULTANEOUS PRODUCTION AND CONSUMPTION:- As in service industry,

healthcare is produced and “ consumed” simultaneously. This point reflects the fact that health is

43
not a product to be created, stored, and sold later. It lacks in quality control in compare to
manufacturing industry.

3. PERISHABLE CAPACITY:- Health care organizations design their services to serve with
certain capacity over a period of given time. If the designed capacity is not used during that period,
the opportunity to generate revenue from that capacity is lost.

4. INTANGIBLE NATURE OF HEALTHCARE OUTPUTS:- The output in healthcare does not

comprise a tangible product on hand like food bought from the favorite fast-food restaurant, where
one can judge the quality of the food as much as the promptness of the service.

5. HIGH LEVELS OF JUDGEMENT CALLED UPON , AND THE HETEROGENIOUS

NATURE OF HEALTHCARE:- In healthcare services a wide range of tasks that require a high
level of judgment, personal interaction and individual adaptations, in a given service category. For
ex:- a surgeon and an anesthetist must make specific decisions before operating, to plan the surgery
for the particular condition of patient.

MARKET SEGMENTATION OF HOSPITAL SERVICES

Healthcare may be broadly segmented into hospitals, allied services like pathological labs,
ambulance services, private mortuaries, pharmacy centers, paramedical services like fitness centres
and beauty clinics dealing with obesity and skin problems and academic institutions like medical
collages, nursing schools and research centres.
Hospitals which are a major part of the health services, can be broadly divided into three segments
in the Indian Context like government hospitals, Non-Government hospitals and private hospitals.
For segmentation of the healthcare market two principles are to be followed –one is on the basis of
patient characteristics and another by marketing practices.

1) PATIENT DEMOGRAPHICS :- The two most relevant patient characteristics are age and
affluence. The healthcare market can be segmented according to age group (for ex. Children,
teenagers, adults and senior citizens).
Affluence is an important factor because it is related to affordability. It should be possible to
segment the market at least with respect to premium versus best-value services.
A third demographic characteristics that is likely to become more important in the coming years
is occupation. A person’s occupation often dictates his or her lifestyle and work style.
ii).Patient Psychographics:- The Psychology of the patient is becoming important in shaping
the utilization of healthcare services. People differ significantly in their attitudes towards
modern healthcare.

44
 iii) Usage Pattern:- The use of healthcare services depends upon people’s attitude towards
different ways to care for their illness. For ex:- some people believe in home remedies, other
believe in self-medication and still others may prefer non-pharmaceutical remedies .

2) MARKET PRACTICES:- It is also possible to segment the healthcare market on the basis of
the marketing practices of providers like
i) COMPETITIVE POSITIONING:- The healthcare market can be segmented according to
quality-price variations as indicated in figure3.8:
The provider might select a group described in one of the boxes in the figure as a market
segment and offer services in a manner consistent with that quality-price combination. For ex:-
if the premium positioning segment is selected, the implication is that care will be given by the
best physicians, nurses and paramedics. In general most health care providers can easily be
positioned into on the basis of their past and current practices.
ii) FULL SERVICE VERSUS SPECIALITY:- A second method of segmentation the
healthcare market is based on the concept of fully integrated, one-stop healthcare centres, where
all healthcare services can be provided by the same organization and possibly under one roof.
iii) PAYMENT PLANS:- The healthcare provider can also segment the market by method of
payment. For ex:- it may offer an in-house prepaid plans, or provide services exclusively to one
corporation or organization.

MARKETING MIX OF HOSPITAL SERVICES

Product
Presenting the correct product (goods and/or services) with values that meet or exceed the needs and
expectations of the target market.
When was the last time you took an unbiased and critical look at yourself—products, service, value
proposition, facility—the works? For a toothpaste company, the “product” is a box on the store shelf.
But the product for service organizations is usually defined in terms of personal happiness: less tangible
than a pretty box and not easily quantified.
The primary determinant is in knowing that customers perceive and receive value and satisfaction by
way of your healthcare practice or organization.

Price
The amount paid in exchange for the value received. Price must be competitive and lead to profit, but
may vary within promotional and/or bundle purchase options.
Price is a toughie in the healthcare industry. Sometimes there are few or no options: Price is what it is, or
maybe it’s paid through an individual’s insurance. Elective care or cosmetic procedures, of course, are a
different animal. Anywhere in this spectrum, price is also a function of value, competition in the
marketplace, and affordability. Take a serious look at those areas where there is flexibility, and be open
to adjusting prices.

Place
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Presenting products or services to the customer (patient, client, end-user) in the right place and at the
right time.
The most obvious “place” is the office, facility, SurgiCenter—where the product meets the user. In
healthcare, the place for purchase decision is often separate from where and when product/service is
delivered. Keep this spectrum in mind…a change in location can impact the decision to buy. And it’s
likely that more than one “place” is involved when there are multiple providers in the practice and/or
multiple offices.
(Importantly, place can also refer to your marketplace demographics, or even the world if you deliver
services over the Internet.)

Promotion
The many and various forms of communicating with the target audience to effectively present benefits,
answer needs and inspire action.
For this list, it’s convenient that Promotion begins with a P, but some healthcare professionals react
negatively to the “retail” or “blue-light-special” connotation. A better label for this category is
communications, meaning all the direct and indirect ways of expressing yourself (your practice, your
brand, your services) to those who need and want your services.
This includes both personal or direct interaction (one-to-one, inspiring referrals), and interacting with
many (advertising, public relations, publicity). In all instances, this is done in a professional way. This is
also where you consider changes in the media that’s in play. A few years ago, nobody had a website.
And a few moments ago, Social Media Marketing had yet to be invented. Some newspapers have
disappeared or gone online only. Magazines and other publications, online and in print, adjust to capture
audiences.

People
The patients, clients, customers, prospective patients, providers, staff, management – everyone –
involved in the healthcare organization, facility, or practice.
The people who deliver a service are a significant ingredient in the product itself. Consumers evaluate
service and satisfaction based on perceptions and personal interactions. A patient doesn’t have much
insight to a physician’s clinical skills, but they will know if they are pleased based on dealt with them as
a person. Your reputation and your brand are not yours alone—it’s a matter of teamwork.

Process
Services are provided fewer than two broad categories, viz., services for inpatients and those for
outpatients. The processes for these two services are a little different. The basic process however starts
with reporting at the reception at the appointed time and meeting the doctor concerned for diagnosis and
treatment. If the doctor says that simple medication is required, the patient can avail of the services as an
outpatient. However it the doctor says that the patients needs special continuous care and needs to be
admitted to the hospital, then the patient becomes an inpatient.

Physical Evidence:-
Apart from the location, the ambience of a hospital is also very important for making a positive
impression on patients and their attendants. Therefore, corporate hospitals should be very careful about
presenting the right kind of atmosphere, which is both hygienic and relaxing.
46
Ques:- Elaborate the nature, segmentation and marketing mix of consultancy services.

CONSULTANCY SERVICES MARKETING

Consultancy is perhaps one of the oldest professions, dating back to the astrological consultants of the
pre-vedic times. There are a variety of consultancy services provided by consultants and they range from
management consultancy, architects, chartered accountants, medical consultants to property or
investment consultants etc.

NATURE OF CONSULTANCY SERVICES

PEOPLE-DRIVEN AND KNOWLEDGE BASED:- Consultancy is essentially a people-

driven, knowledge based industry. Consultants are professionals who possess specialized
knowledge and skills in a particular field/ area of operation. They help customers to solve their
organizational problems, improve their organizational processes and working create and launch
new products or services.

PROFESSIONALISM:-

PROACTIVE:- Earlier, consultants merely used to offer their opinion on the given problem
and make recommendations regarding the course of action. However, present day consultants
are more proactive and offer several other value-added services like active client involvement,
professional support in the implementation of the recommendations made, improving/
modifying the action plan based on the feedback of the client etc.
IT REVOLUTION:- The IT revolution over the past decade and a half has opened the gates for
new areas like e-commerce, knowledge management etc. which require both domain and
technical expertise. It has also brought about many changes in the working style of the industry.
The style of working has become more flexible, professional and technology oriented.

MARKET SEGMENTATION FOR CONSULTANCY SERVICES

1.) REGION-WISE SEGMENTATION:- helps consultancy organizations in studying the

needs and requirements of different zones and the development of marketing resources are thus
made optimal to the users representing a particular Zone.
2.) SECTOR-WISE SEGMENTATION:- It is divided into five parts like Legal Sector,
Technical Sector, Financial Sector, Management Sector and Medical Sector. It is quite
natural that segmentation on the basis of sector helps the consultants and the consultancy
organizations in understanding the expectations of different categories of users in a different
way.
3.) GEOGRAPHICAL SEGMENTATION:- In this respect, we find important categories as
Rural, Urban, Individual and Organizational. The consultants or the consultancy organizations
47
are supposed to study and perceive the changing requirements of different segments in a right
fashion which would help them in developing the marketing inputs optimally.

MARKETING MIX OF CONSULTANCY SERVICE

1. PRODUCT:- Product in consultancy services includes the results of the analysis performed by the
consultancy, the professional advice offered and the implementation support provided. It is basically the
final service output of the firm and has a direct impact on the client’s satisfaction. For ex:-
Specialization like budget planning, marketing research, techniques like opinion surveys, operation
research, process like counseling, etc may be considered the product aspects of the services.

2. PRICE:- Price is the fee received from the client for providing consultancy services. The fee can be
determined based on the project undertaken/service provided , reputation of the consultancy and
competition in the market.

3. PLACE:- Consultancy services cannot have any intermediaries in the process of delivering or
distributing the service. Since it is people based industry, so the stress is on the individual knowledge
and skills of the service personnel.

4. PROMOTION:- Consultancy too requires promotion like any other service in the present
competitive environment. Consultancy is primarily about selling confidence to the client, as the client
needs to trust the consultancy with the business. So, a mere promotional hyperbole is not enough.. Any
promotional campaign should be backed by quality service for which there is no substitute

5. PEOPLE:- Consultancy is a ‘people-skills’ industry. It is the employees of a consultancy firm and

it’s clients that constitute ‘people’. People form the pivot around which the whole industry revolves. The
quality of the service delivered and consumed depends on the skills, knowledge, attitude and the
experience of the consultants and the clients.

6. PROCESS:- Each firm has its own process of operating in the consultancy industry. The process
depends on the client, the nature of the project in hand and the work culture of the firm. Though each
project requires a separate action plan, most firms develop their own unique model, which can be
suitable modified accordingly to the requirements of the client.

7. PHYSICAL EVIDENCE:- It is not feasible to offer physical evidence the clients of a

consultancy firm. The only means of evidence can be the past successes of the firm and its analysis of
the existing problem of the client.

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 UNIT-4

Ques:- Service Marketing is heavily dependent on promotion. “ Why? Explain . Give different
promotional strategies opted by service provider.

PROMOTION

According to Philip Kotler, “ Promotion compasses all the tools in the marketing mix whose
major role is persuasive communications.”

According to Stantun, “ Promotion includes, advertising, personal selling, sales promotion and
other selling tools”.

FEATURES OF PROMOTION FOR SERVICES

1. HELPS TO INFORM ABOUT SERVICES:- Customers are informed about the services of
the company, either at the time of introduction of a new service into the market or when any
change is made in the existing service.
2. HELPS REMIND ABOUT SERVICES:- Customers are reminded of the services of the
company by replacing the same advertisement.
3. PERSUADES CUSTOME5R FOR PRUCHASE:- Customers are requested or persuaded to
purchase the services of the company.
4. PROMOTIONAL TECHNIQUES:- Promotion includes, advertising, personal selling and
other sales promotion techniques.
5. HELP DETERMINING CUSTOMER’S NEEDS AND DEMANDS:- Promotion activities
are performed by the manufacturer. It is responsibility of the producer to get information about
customers and prospective consumers so that the necessary services may be served to meet their
demands.

5 Ws MODEL TO SET PROMOTION OBJECTIVES

The 5 W’s are simply the “who”, “what”, “when”, “where”, and “why” of your marketing and they are
as follows:

The First “W”: The “Who”-Target Audience

In a nutshell, this is your target market — this is who you intend on selling your products and/or services
to. So who are they exactly? Who are you going to market to?

The Second “W”: The “What”-Specifying Communication Objectives

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What exactly are the product and/or service you are marketing? And what are the benefits they bring? If
you’re not crystal clear on what you’re really selling, there’s a good chance your target market won’t be
either — and a confused mind does not buy.

The Third “W”: The “When”-Communication need to take place

When it comes to marketing, both timing and consistency are critical. So when do you intend to start
marketing your product and/or service? How long do you intend your marketing campaign to last? A
common understanding amongst marketers is that on average it takes at least 4 touches or contacts with
your target market to just get on their radar, and at least 7 for them to consider buying from you.
Therefore, it probably makes sense to plan at least 7 touches into your marketing campaigns. Now it’s
also important here to determine at what intervals you will make each touch. In other words, day 1
you’ll get in front of your target market this way… day 3 you’ll get in front of them that way… day 7
this way… and so on.
Rule of thumb: erratic marketing = erratic results… consistent marketing = consistent results!

The Fourth “W”: The “Where”-should we communicate this?

These are the marketing mediums that you will use for your marketing campaign. Marketing mediums
are simply the paths we use to communicate our marketing messages to our target market. So where will
you do your marketing? What mediums will you use and why? What mediums does your target market
prefer? Knowing how you target market prefers to be communicated with can go a long way here.

The Fifth “W”: The “Why”

This is your purpose for marketing. It defines what you expect to accomplish from your marketing
efforts. So why are you planning on marketing your product and/or service in the first place? What
results do you expect? Do you want to increase sales… establish your credibility… broaden your reach
within your target market… or, all of the above? My point is to just be clear on your “why”.
So in closing, I’m going to be a bit harsh here so hold on to your seat for a moment. Conducting any
marketing without being clear on your 5 W’s is essentially negligence — it’s a blatant misuse of your
company’s time and money. So my challenge to you is to take the necessary 15 minutes to think
through, document, and communicate the 5 W’s of each marketing campaign with all those involved
with helping you make it happen.

PROMOTIONAL MIX STRATEGIES FOR SERVICES

In marketing, the promotional mix describes a blend of promotional variables chosen by marketers to
help a firm reach its goals. It has been identified as a subset of the marketing mix. It is believed that
there is an optimal way of allocating budgets for the different elements within the promotional mix to
achieve best marketing results, and the challenge for marketers is to find the right mix of them.
Activities identified as elements of the promotional mix vary, but typically include the following:

Advertising:- is the paid presentation and promotion of ideas, goods, or services by an identified
sponsor in a mass medium. Examples include print ads, radio, television, billboard, direct mail,
brochures and catalogs, signs, in-store displays, posters, mobile apps, motion pictures, web pages,
banner ads, emails.

Personal selling:- is the process of helping and persuading one or more prospects to purchase a good or
service or to act on any idea through the use of an oral presentation, often in a face-to-face manner or by

50
telephone. Examples include sales presentations, sales meetings, sales training and incentive programs
for intermediary salespeople, samples, and telemarketing.

Sales Promotion:- is media and non-media marketing communication used for a pre-determined limited
time to increase consumer demand, stimulate market demand or improve product availability. Examples
include coupons, sweepstakes, contests, product samples, rebates, tie-ins, self-liquidating premiums,
trade shows, trade-ins, and exhibitions.

Public relations:- or publicity is information about a firm's products and services carried by a third
party in an indirect way. This includes free publicity as well as paid efforts to stimulate discussion and
interest. It can be accomplished by planting a significant news story indirectly in the media, or
presenting it favorably through press releases or corporate anniversary parties. Examples include
newspaper and magazine articles, TVs and radio presentations, charitable contributions, speeches, issue
advertising, seminars.

Direct Marketing:- is a channel-agnostic form of advertising that allows businesses and nonprofits to
communicate directly to the customer, with methods such as mobile messaging, email, interactive
consumer websites, online display ads, fliers, catalog distribution, promotional letters, and outdoor
advertising.

Corporate image:- campaigns have been considered as part of the promotional mix.

Sponsorship:- of an event or contest or race is a way to generate further positive publicity.

Guerrilla marketing tactics are unconventional ways to bring attention to an idea or product or service,
such as by using graffiti, sticker bombing, posting flyers, using flash mobs, doing viral marketing
campaigns, or other methods using the Internet in unexpected ways.

Product placement:- is paying a movie studio or television show to include a product or service
prominently in the show.

E-Commerce/ Internet/Online Marketing:- Advancement in technology and developments have

led to dramatic growth of communication through interactive media, particularly the internet. Interactive
media allow for a back-and-forth flow of information whereby users can participate in and modify the
form and content of the information they receive in real time.

Packaging:- Packaging plays major role with regard to physical evidence. It is not just required for
functional reasons but also to add value to the service and create a positive image.

Event Marketing:- Special events combine many IMC tools like advertising, sales promotion, public
relations etc., in linking the brand to a specific event. Organizations can arrange special events
themselves or participate in events organized by other parties to create exciting service-related
experiences for their consumers.

Ques:- What is Word-Of-Mouth promotion?

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 Ans:- Oral or written recommendation by a satisfied customer to the prospective customers of a good or
service. Considered to be the most effective form ofpromotion, it is also called word of mouth
promotion.

Ques:- Write Short note on Relationship Marketing.

RELATIONSHIP MARKETING

Relationship marketing refers to an arrangement where both the buyer and seller have an interest in
providing a more satisfying exchange. This approach tries to dis ambiguously transcend the simple post
purchase-exchange process with a customer to make more truthful and richer contact by providing a
more holistic, personalised purchase, and uses the experience to create stronger ties.

According to Philip Kotler, “ Relationship marketing is the process of building long term, trusting and
win-win relationship with customers, distributors, dealers and suppliers. Over a time, relationship
marketing promises and delivers high quality, efficient service and fair prices to the other party. It is
accomplished by strengthening economic, technical and social ties between members of two
organizations or between the marketer and the individual marketing”.

FEATURES OF RELATIONSHIP MARKETING

1.) Long Term Orientation/Horizon:- It access success in terms of how long a customer is kept in
relationship and the share of ‘ Customer Wallet’. RM involves estimating customer lifetime value
and engaging in relationships based on the value of those relationships over a number of years. This
view promotes collaboration and the creation of mutual value.

2.) Commitment and Fulfillment of Promises:- RM implies a long term relationship with the
customers by mutual exchange of information. This suggests that there ought to be trust between
the parties. Each party believes in the relationship to be valuable enough to invest in and to commit
to.

3.) Customers Share not Market Share:- RM Shifts emphasis from concentrating on gaining
share of market and rewarding its employees for the new business which they bring in. Instead, it
concentrates on keeping customers and attempting to gain a bigger share of their ‘ wallet’ by selling
more of the same product or by cross-selling to them.

4.) Customer Lifetime Value:- It is the key element in the practice of RM. It is not economical for
a supplier to invest in long-term relationships with all customers- not that all customers would
necessarily want such a relationship.. The supplier has to identify those customers who are willing
to enter a long-term relationship with his company, forecast their lifetime with the company, and
then calculate those customer’s lifetime values in order to identify the ones with whom it will be
profitable for the company to have a relationship.

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5.) Two-Way Dialogue:- Is a requirement of RM to facilitate a two way dialogue between the
supplier and the customer in order to identify needs and to find solutions. A proper designed RM
System should provide ample opportunity for the customer to initiate communication with the
supplier.

6.) Customization:- RM service provider gain a better knowledge of the customer’s requirements
and needs. This knowledge can encounters to tailor and customize the service to customer’s
specifications.

OBJECTIVES OF RELATIONSHIP MARKETING

1. Acquiring /Getting Customers:- The primary goal of relationship marketing is to build and
maintain a base of committed customers who are profitable for the organization. To achieve this
goal, the firm will focus on the attraction, retention and enhancement of customer relationships.

2. Satisfying Customers:- This goal is to build long-term relationships by fulfilling its promises to
satisfy the respective parties. Anyone will prefer to continue the relationship for a long-term if
he/she considers the relationship beneficial.

3. Retaining Customers:- Once they are attracted to begin a relationship with the company,
customers will be more likely to stay in the relationship when they are consistently provided with
quality products and services and good value over time.

4. Enhancing Customers:- Companies should strive for promoting relationships beyond the line
of transactions. They have to build relationships that are more rewarding. The organization has to
show a lot of care and concern and offer special beneficial packages to the customers.

6 MARKETS MODEL IN RELATIONSHIP MARKETING

The 6 market model helps the organization to study about the stakeholders and key market domain that
may be important to them. If an organization wants to grow and sustain, it has to maintain its relation
with internal as well as external environment. Through the analysis of all 6 markets, managers can kind
the critical markets and the opportunity in each market. In order to visualize and understand each
market’s importance Payne and Holt(2001) gave this 6 markets model.

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1. Customer Market: This market contains buyer, intermediates, final customers and retailers. They are
our final consumers for a product. So they are the most important entity for any business. We need to
retain them as long as we can. We also need to attract new customers. Ultimately creating brand loyal
customers is our main goal. We can add more values to our product. V
Customer Market directly influences an organization. If customers are not satisfied with our product, we
can not retain them. In case of Service Marketing customers’ satisfaction is more crucial.

2. Influence Market: Influence market includes stakeholders as well as third parties. Customers who
have bought our product must give feedback to their friends, relatives and neighbors. For any
organization these customers
stomers are their influencers and when third party like supply partners and retailers
influence our customer to buy our product, they are called value added influencers. They may be TV
reporters, Shopkeeper, Article writers, Analysts etc.
etc.Sometimes our own competitors also act as our
influencer. Their ads can help an organization to add more customers and their promotional activities
can decline our sale.

3. Referral Market: Referral marketing is when we buy something after being referred by our friends
and relatives. In general we can understand this term as “Word of Mouth”.. In case of Service
Marketing, Referral marketing is very common. We can also find this in our daily life. We can get
hundreds of advises when we look for a doctor. Everyone in our family would suggest a different
Physician. So this is what Referral Marketing is.
So Referral Market can further be divided into 2 categories: Customer and Non Customer Referral
Markets. So this is the cheapest way of promotion and effective too. So our main pr
priority
iority should be
“Customer Satisfaction”.

4. Supplier Market: Suppliers are like partners to an organization. They do supply the crucial raw
materials and parts. We need to develop an strategic alliance with them. We need to maintain a good
relation with them as well.
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5. Employee/Recruitment Market: This market helps an organization to keep the best people who can
add values to the organization. They should be talented, experienced, skilled and royal. In IT industry
the firm needs innovative and skilled persons but in case of Service Markets firms need skilled as well
as experienced people. So we can say that people inside the firm also affect the profitability. An
organization always looks for individuals with particular skills; who are highly productive, innovative,
and effective; and who share a given organization’s values.

Ques:- What is Internal Market?

6. Internal Market: This kind of market applies to the customers and employees within the
organization. Actually there should be proper harmony among the employee and suppliers and
customers so that organization can work together and achieve its mission.
Specifically in terms of relationship marketing, those within the organizations must understand how the
impact relationships between the firm and other parties, do so in a way that reflects and supports the
organization’s long-term goals, and resolve conflicts of interest accordingly.

STRATEGIES OF RELATIONSHIP MARKETING

Personalization Rewards

RM Strategy
Components

Communication Special Treatment

Benefits

1. Communicate frequently. How often do you reach out to customers? Do the bulk of your
communications focus on product offers and sales? For best results, it's important to communicate
frequently and vary the types of messages you send. Instead of a constant barrage of promotions,
sprinkle in helpful newsletters or softer-sell messages. The exact frequency you choose will depend on
your industry and even seasonality, but for many types of businesses, it's possible to combine e-mail,

55
direct mail, phone contact and face-to-face communication to keep prospects moving through your sales
cycle without burning out on your message.

2. Offer customer rewards. Customer loyalty or reward programs work well for many types of
businesses, from retail to cruise and travel. The most effective programs offer graduated rewards, so the
more customers spend, the more they earn. This rewards your best, most profitable clients or customers
and cuts down on low-value price switchers-customers who switch from program to program to get
entry-level rewards. Whenever possible, offer in-kind rewards that remind your customers of your
company and its products or services.

3. Hold special events. The company-sponsored golf outing is back. With the renewed interest in
retaining and up-selling current customers, company-sponsored special events are returning to the
forefront. Any event that allows you and your staff to interact with your best customers is a good bet,
whether it's a springtime golf outing, a summertime pool party or an early fall barbecue. Just choose the
venue most appropriate for your unique customers and business.

4. Build two-way communication. When it comes to customer relations, "listening" can be every
bit as important as "telling." Use every tool and opportunity to create interaction, including asking for
feedback through your Web site and e-newsletters, sending customer surveys (online or offline) and
providing online message boards or blogs. Customers who know they're "heard" instantly feel a rapport
and a relationship with your company.

5. Enhance your customer service. Do you have a dedicated staff or channel for resolving
customer problems quickly and effectively? How about online customer assistance? One of the best
ways to add value and stand out from the competition is to have superior customer service. Customers
often make choices between parity products and services based on the perceived "customer experience."
This is what they can expect to receive in the way of support from your company after a sale is closed.
Top-flight customer service on all sales will help you build repeat business, create positive word-of-
mouth and increase sales from new customers as a result.

6. Launch multicultural programs. It may be time to add a multilingual component to your

marketing program. For example, you might offer a Spanish-language translation of your Web site or
use ethnic print and broadcast media to reach niche markets. Ethnic audiences will appreciate marketing
communications in their own languages. Bilingual customer service will also go a long way toward
helping your company build relationships with minority groups.

7. Visit the trenches:- For many entrepreneurs, particularly those selling products and services to
other businesses, it's important to go beyond standard sales calls and off-the-shelf marketing tools in
order to build relationships with top customers or clients. When was the last time you spent hours, or
even a full day, with a customer-not your sales staff, but you, the head of your company? There's no
better way to really understand the challenges your customers face and the ways you can help meet them
than to occasionally get out in the trenches. Try it. You'll find it can be a real eye-opener and a great way
to cement lasting relationships.

LEVELS OF RELATIONSHIP MARKETING

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FIRST LEVEL:FOCUS ON PRICE:- Relationship marketing efforts rely on pricing and other
financial incentives to motivate customers to enter into buying relationships with a seller.

SECOND LEVEL:SOCIAL INTERACTIONS:- As buyers and sellers reach the second level of
relationship marketing; their interactions develop on a social level. Sellers have begun to learn that
social relationships with buyers can be effective marketing tools. Customer service and communication
are key factors at this stage.

THIRD LEVEL: INTERDEPENDENT PARTNERSHIP:- At the third level of relationship

marketing, relationships are transformed into structural changes that ensures buyers and sellers are true
business partners. As buyer and seller work more closely together, they develop a dependence on one
another that continues to grow over time.

METHODS/WAYS FOR RELATIONSHIP MARKETING

Methods for Relationship Marketing

Customer Satisfaction Trust

Adding Value to a
Relationship Creating Barriers to Exit

1. Customer Satisfaction:- High level efforts of the organization leads to satisfy the customer.
Relationship development cannot simply be left to a relationship manager. The companies have
an apparently poor standard of service can achieve high level of repeat business in a competitive
market by charging low prices.
2. Trust:- The top of the loyalty ladder is more likely to be reached by a customer who trusts a
company. However, merely being trusted doesn’t guarantee profitability for a firm-the rest of its
operational and financial strategies must also be right.
3. Adding value to a Relationship:- A relationship, to be sustainable, must add value in the eyes
of customers. This value can come about in a number of ways, including:-

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 i.) Reordering of Goods:- Making the reordering of goods and services easier. ( For ex:- many
hotels record guest’s details and preferences so that they do not have to be re-entered each time
the guest checks in ).
ii.) Offering Privileges to Customers:- Privileges is being given to those who wish to enter into
some types of formal relationships.
iii.) Development Ability to Jointly Solve Problems:- For ex:- A car repair garage may
endeavor to identify exactly what the problem is that a customer wants to put right rather
than leaving it to the customer to specify the work that he/she wants carried out.
4. Creating Barriers to Exit:- Companies can bring about repeat buying by trying to make it
difficult for customers to defeat to a competitor.

WORLD TRADE ORGANIZATION

The World Trade Organization (WTO) is an intergovernmental organization which regulates international trade. The
WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April
1994, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. The WTO deals
with regulation of trade between participating countries by providing a framework for negotiating trade agreements
and a dispute resolution process aimed at enforcing participants.

Ques:- What are the services approved under World Trade Organizations?

Among the various functions of the WTO, these are regarded by analysts as the most important:

• It oversees the implementation, administration and operation of the covered agreements.

• It provides a forum for negotiations and for settling disputes.

Additionally, it is the WTO's duty to review and propagate the national trade policies, and to ensure the
coherence and transparency of trade policies through surveillance in global economic policy-making.
Another priority of the WTO is the assistance of developing, least-developed and low-income countries
in transition to adjust to WTO rules and disciplines through technical cooperation and training.

1. The WTO shall facilitate the implementation, administration and operation and further the objectives of this
Agreement and of the Multilateral Trade Agreements, and shall also provide the frame work for the
implementation, administration and operation of the multilateral Trade Agreements.
2. The WTO shall provide the forum for negotiations among its members concerning their multilateral trade
relations in matters dealt with under the Agreement in the Annexes to this Agreement.
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 3. The WTO shall administer the Understanding on Rules and Procedures Governing the Settlement of Disputes.
4. The WTO shall administer Trade Policy Review Mechanism.
5. With a view to achieving greater coherence in global economic policy making, the WTO shall cooperate, as
appropriate, with the international Monetary Fund (IMF) and with the International Bank for Reconstruction and
Development (IBRD) and its affiliated agencies.

AGREEMENTS OF WTO

The major agreements that have taken place in WTO are as follows:-
1. Agreement on Agriculture:- The agreement relating to agriculture is made to maintain the rural
economy. It seek to reform trade in agriculture and provide the basis for market oriented policies and to
improve economic co-operation between import and exporting countries.

2. Agreements on Sanitary and Phytosanitary Measures:- The Agreement on the application of

Sanitary and Phytosanitary Measures sets out the basic rules for food safety and animal and plant health
standards. It allows countries to set their own standards. But it also says regulations must be based on
science. They should be applied only to the extent necessary to protect human, animal or plant life or
health. And they should not arbitrarily or unjustifiably discriminate between countries where identical or
similar conditions prevail.

3. Agreements on Textiles and Clothing:- The objective of this agreement is to secure the integration of
the textiles and the clothing sector where much of the trade is currently subject to bilateral quota
negotiations under the Multi-Fibre Agreement into the main stream of WTO.

4. Agreement on Trade Related Investment Measures (TRIMS):- TRIMS are investment related
measures proposed by WTO to ensure free flow of investment all over the world. TRIMS will help the
underdeveloped countries by providing necessary capital in the form of foreign investments.

5. Agreements on Anti-Dumping Practices:- The GATT had permitted imposing of anti-dumping duties.
A ‘Sunset’ clause was introduced for the review of anti-dumping actions every five years.

6. Agreements on Customs Valuation:- Fraudulent practices normally involved in customs valuation

were taken care of during the Tokyo Round. It was said that the basis for the valuation of goods for
customs purposes should be at the maximum of the transaction value of the goods.

7. Agreements on Pre-Shipment Inspection:- It involves the use of specialized private companies to

check shipment details, such as the price, quality, and quantity of goods. The agreement sought to
introduce greater transparency in favor of an independent review procedures that could resolve any
dispute between the inspecting agencies and the exporter.

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8. Agreements on Rules of Origin:- Origin means “ nationality” of a product. It is important, particularly
in case of a product is manufactured in more than one country. This is because the origin of a product
determines the amount of tariff to be imposed in the importing country.

9. Agreements on Import Licensing Procedures:- The agreement tried to bring in transparency to the
import licensing procedure. It emphasized on the publication of the licensing rules in the importing
countries to avoid unnecessary delay in granting license.

10. Agreements on Subsidies and Countervailing Measures:- It prohibit subsidies that were related to
export performance but the least developed countries and developing countries below $1000 per capita
income continued to remain outside the scope of this provision.

11. GATS:- The agreement contains three elements: a framework of general rules and disciplines,
annexes addressing special conditions relating to individual sectors (the sectors covered are: movement
of natural persons, cross-border trade, consumption abroad, and commercial presence) and national
schedules of market access commitments. A council for trade in services oversees the operation of the
agreement.

12. Agreements on TRIPS:- The WTO agreements of Trade Related Aspects of Intellectual Property
Rights(TRIPS) recognizes that widely varying standards in the protection and enforcement of
intellectual property rights and the lack of multilateral disciplines dealing with international trade in
counterfeit goods have been a growing source of tension in international economic relations.

13. Agreements on TPRM(Trade Policy Review Mechanism):- leads to smoother functioning of the
multilateral trading system, by achieving greater transparency in, and understanding of, the trade
policies and practices of Members.

SERVICES COVERED BY GATS (General Agreement on Trade in Services)

The GATS practically covers all types of services. The services covered under the following twelve
broad sectors, each divided into several sub-sectors:-

1.) Business Services:- Professional Services, including legal services, accounting, auditing and book-
Keeping, architectural and real estate services, engineering services and dental services, veterinary
services, other professional services, computer related services etc.

2.) Communication Services:- All forms of basic and value-added telecommunication services,
including online information and date processing services postal and courier services, audio-visual
services; radio and television services, motion picture etc.

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3.) Construction and Related Engineering Services:- General Construction work for buildings, general
construction work for civil engineering, installation and assembly work, building completion and
finishing work.
4.) Distribution Services:- Including retail, Wholesale and Franchising
5.) Educational Services:- Primary education, secondary education, higher education services, adult
education
6.) Environmental Services:- Such as sewage, disposal and sanitation services
7.) Financial Services:- Direct Insurance underwriting, re-insurance and insurance intermediation and
other insurance auxiliary services, banking and other financial services, including securities-related
services.
8.) Health-Related Services and Social Services:- Hospital Services, other human wealth services,
social services
9.) Tourism and Travel-Related Services:- Travel agencies and tour operators, hotels and restaurants,
catering, tourist guide services.

Ques:- What is internal and interactive Marketing?

• With an internal marketing strategy, employees are treated as “internal customers” who must
be convinced of a company's vision. In other words, internal marketing is based on the idea
that customers’ attitudes toward a company are based on their entire experience with that
company, and not just their experience with the company’s products.

• Interactive marketing is a strategy that uses two-way communication channels to allow

consumers to connect with a company directly. Although this exchange can take place in
person, in the last decade it has increasingly taken place almost exclusively online through
email, social media, and blogs.

Ques:- Difference between WTO and GATT

DIFFERENCE BETWEEN WTO AND GATT

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 BASIS FOR
GATT WTO
COMPARISON

Meaning GATT can be described as a set WTO is an international

of rules, multilateral trade organization, that came
agreement, that came into force, into existence to oversee
to encourage international trade and liberalize trade
and remove cross-country trade between countries.
barriers.

Institution It does not have any It has permanent

institutional existence, but have institution along with a
a small secretariat. secretariat.

Participant Contracting parties Members

nations

Commitments Provisional Full and Permanent

Application The rules of GATT are only for The rules of WTO
trade in goods. includes services and
aspects of intellectual
property along with the
goods.

Agreement Its agreement are originally Its agreements are purely

multilateral, but plurilateral multilateral.
agreement are added to it later.

Domestic Allowed to continue Not allowed to continue

Legislation

Dispute Slow and ineffective Fast and effective

Settlement System

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