UNIT 2
Key elements of service marketing mix
Services refer to activities, benefits or satisfactions, which affect sale or are provided in connection with the sale of goods.
To understand the service marketing mix, it’s necessary to understand the characteristics of service.
- Intangible – a service are intangible which cannot be seen, touched, smelt or taster like physical product before they are purchased. It can only be experienced.
2. Perishability – perishability means a service cannot be stored for future use like tangible goods. It has to be consumed simultaneously with its production.
3. Inseparability - inseparability means services are produced and consumed simultaneously or at the same time.
4. Heterogeneity – heterogeneity means a service cannot be standardized. Every service is unique. The qualities of services are not uniform. The prices charged can be too high or too low.
Each of these characteristics plays a role in the service marketing mix.
Service marketing mix:
The service marketing mix refers to the combination of different elements of service marketing that helps time firms to communicate their organizational and brand message to the customers. The service marketing mix consist of 7Ps i.e. Product, pricing, place, promotion, people, process, and physical evidence. It is also known as extended marketing mix. The first 4Ps are the product marketing mix; the remaining 3Ps are focusing on service delivery and enhancing customer satisfaction.
Elements of service marketing mix
- Product –
Product is the basic element of marketing mix because all other element are required only when there is a product. Product includes both goods and services. Services as a product are intangible, heterogeneous and perishable. Its production and consumption are inseparable. The service product is customized to suit the requirements and give a personal touch. The service product has to be designed with utmost care to increase customer satisfaction.
Product mix are also known as product assortment. It refers to total number of product lines a company offer to its customers. The four dimension of company product mix are as follows.
- Width (number of product lines) – width of a company means number of product lines the company sell.
- Length (total product) – the length in the product mix refers to the total number of products available in the company product mix.
- Depth (production variation) – depth of the product mix refers to the total number of variations with each product. Variation includes any other distinguish characteristics.
- Consistency – consistency refers to how closely related product lines are to each other in terms of use, production and distribution.
Illustration of a product mix
2. Place –
In case of services, place is determined as where the service product going to be located. The organization should focus on the visibility of setup to the potential customers and how frequently the customer visits this will determine the organizational growth. For example fast food center near colleges or offices, where professional and students can quickly grab food.
Use of right place can help the companies increase and maintain the sales for a longer period. Now a days internet is a new market place. Correct placement plays a vital role in reaching the right target audience at the right time.
Distribution channels – distribution is the activities and process of making the service available to the final consumers. This can be done directly by the service providers or through distributor and intermediaries.
Distribution channels are as follows
- Direct – under this channel, the service provider directly sell to the consumers. The service provider can sell the service through one on one meeting and internet sales.
- Indirect – indirect means selling the services through intermediaries. This may increase the cost as each intermediary will get their percentage of the profits.
- Dual distribution – the company uses both direct and indirect channel of distribution to sell their services. The products are sold directly or through intermediaries
- Reverse channels – the last channel allows the consumer to sell the products to the producer back.
3. Promotion –
Promotion mix means activities directed to increase the sales volume. It is known as market communication. The service industry critical and challenging factor is promotion of the service to the potential customers with the right message. The best way to promote the services is advertising, online and direct marketing is a good mix of communication to address a larger audience. Banks, IT, insurance companies promote themselves rigorously by advertisement. Promotion should create a positive brand image in the minds of the customers.
Promotion mix consist of the following element
- Advertising – advertising is one of the most powerful and popular tool of market promotion. It involves mass communication and a paid form of promoting the ideas, good and services by identified sponsor.
2. Personal selling – personal selling refers to face to face selling, where the salesperson uses his abilities and skill to make a sale or convince customer in buying the service. It involves the personal touch, salesperson knows better how to pitch a service to the potential customers
3. Sales promotion – sales promotion involves generating short terms sales. It is a temporary effort to attract customers and induce them to buy through incentives such as discount or coupon, guarantee, various purchase scheme, etc.
4. Publicity – publicity is the public awareness of the goods, services or organization. It involves movement of information through news in mass media, favorable presentation through radio, television, etc.
5. Direct marketing – its is promotion method which includes presenting information about the services to the target market without the use of advertising middleman.
4. Pricing –
Unlike product, it’s difficult to determine the price of the service. Price of a product depends on raw material, cost of production, and distribution, etc. whereas in service pricing, cost of services cannot be measured that easily. For example, educational industry set price of the quality of education imparted. Hospital charges the customers for the care shown; restaurant charges the customer for food and the ambience. Thus all these elements are considered in service costing. Service pricing includes adding a profit markup into labor, material cost and overhead costs.
Types of pricing strategies
- Penetration pricing – under penetration pricing, the organization sets low price to increase sales and market share. One the market is captured the firm then increases their price.
2. Skimming pricing – under skimming pricing, the company charges high price initially and then slowly lowers the price to make the service available to the wider market.
3. Competition pricing – under competitive pricing, price is set in comparison with competitors. The firm has three option to set price which are price higher, lower or same as competitor.
4. Product line pricing - Pricing different products within the same product range at different price points.
5. Bundle pricing – price bundling refers to combining different service into one package at a single price. These are sold at a lower price than if they are purchased individually.
6. Premium pricing – under premium pricing, the price is set high to indicate that the service is exclusive.
7. Psychological pricing – the price are charged based on the psychological impact of the consumers. Generally lower price are charged here.
5. Process –
Service process is the way how efficiently services are delivered to the customers. In today’s, competitive world services are delivered quickly, efficiently and with highest quality. For example, mcdonals and fedex, noth of them have quick service because of their sound process. The company should define what would be the process of the service reaching the end customers.
Process mapping
A process map is a tool that visually describes the flow of work. A process map is also known as flowchart, process flowchart, process chart, functional process chart, functional flowchart, process model, workflow diagram, business flow diagram or process flow diagram. The main purpose of process mapping is to improve the efficiency of the business. Process map helps the team ideas of process improvement, increase communication, provide process documentation.
Types of process mapping
- Activity process map – it refers to value added and non-value added activities in a process
2. Detailed process map – this represents detailed information at each step in the process
3. Document map – it represents the inputs and outputs’ in a process.
4. High level process maps – it includes process involving interactions between Supplier, Input, Process, Output, Customer (SIPOC).
5. Rendered process map – it represents areas of improvement in the current and future state processes.
6. Swimlane map – it is also known as cross functional map. It represents the sub process responsibilities in the process
7. Value added chain diagram – it represents a simplified version of process for quick understanding
8. Value stream map – it refers to the techniques which improves the process needed to provide a service to a customer.
9. Work flow diagram - a work process shown in “flow” format.
Symbols used in flowcharts
Each process element is represented by a specific symbol such as an arrow, circle, diamond, box, oval or rectangle. For drawing process map, this symbol comes from unified modeling language or UML.
- Rectangle – it represents flowchart process step. The step is written inside the box. Usually, only one arrow goes out of the box.
- Arrow – it represents flowchart flow direction from one step or decision to another.
- Diamond – it represents flowchart decision step based on a question. The question is written in the diamond.
- Semi-circle – it shows flowchart delay or wait
- Circle – this shows flowchart link to another page
- Paralellogram – it represent flowchart input or output
- Rounded rectangle or oval –it represents flowchart start and end
Business process mapping techniques and tools
- SIPOC Diagrams – SIPOC diagrams organize initial brainstorming into categories: suppliers, input, process, output, and customers. It involves listing out high level information to the process.
- BPMN process maps – it involves breaking down the process to handle errors and drilling down to get more information as they offer opportunities.
- UML diagrams – A UML diagram is a diagram based on the UML (Unified Modeling Language) with the purpose of visually representing a system by a specific symbol such as an arrow, circle, diamond, box, oval or rectangle.
- VSM mapping – VSM techniques is an excellent choice to streamline an inefficient process. A step by step map is created how things are done today to identify delays, bottlenecks, and other inefficiencies. Finally a future process map is created that eliminate these issues.
- IPO( input process output) model – IPO techniques divides into three steps which includes
- Inputs – information from the environment
- Process – task performed from inputs to produce outputs
- Outputs – process results the final data and material
6. People –
People are one of the important elements of service marketing mix. People define the service they can make or break the organization growth. For ex, restaurant is defined by their chef and service staff, banking is defined by their employees in the branch and their behavior towards the customers. The people of the organization are responsible in creating happy and returning customers. In a barber shop, if the hair cut is not done in proper way, then you will not visit the shop again. Nowadays, companies are involved in training staff in interpersonal skills and customer service which focus towards customer satisfaction. The most successful company put the right person in the right job.
People as a differentiating factor
Large IT companies differentiate themselves with the quality of manpower. They always make a statement that they have highly skilled employees. Thus people become a major differentiating factor for service industry. Similar is the case in restaurant. The better they cook, the more is the success of the restaurant. Thus right people are targeted for the companies requirements.
People in customer service
When the customer wants prompt service or irritated and frustrated with the service, they come to the customer service department. Handling customer complaints properly and calmly is expected from the people of service industry. These qualities are in built in some people and some people are given training for this quality. For example, Vodafone, airtel, ICICI, HDFC are companies at the top because of good customer service.
7. Physical evidence –
The last element of the service marketing mix is physical evidence. Services are intangible in nature. The service provider incorporates tangible element into their offering to create a better customer experience. For example, hair salon have well designed waiting room with magazines where they can read and relax. Restaurants invest in interior designs, music to offer tangible experience to their guest.
Types of evidence
- Physical environment – when you consume a service, physical environment is the space by which you are surrounded. The physical environment is the ambient condition, sign, symbol, and layout. For ex, for meal it’s a restaurant, for a journey it’s a aircraft you travel inside.
2. Ambience – the ambience includes temperature, color, smell and sound, music and noise. The ambiences help you to experience the service. For example, ambience of health spa is calm and relaxing and with soft music.
3. Spatial layout - The spatial layout and functionality are the way in which furniture is set up or machinery spaced out. For example, in Cinema Theater, the seating should be comfortable.
4. Corporate branding – the corporate image is supported by signs, symbols and artefacts of the business itself.
What is a brand?
According to American market association “A brand is a name, term, design, symbol or any other feature that identifies one seller’s good or service as distinct from those of other sellers.”
Branding is a combined effort of the company which is projected to the customers. Branding is helping people to know, understand and want your service offering.
The main brand elements are brand name, URLs, logos, spokespeople, symbols, characters, slogans, jingles, and packaging. With these branding elements customer organize their knowledge about the services.
Service
The American Marketing Association defines services as “activities, benefits or satisfactions, which affect sale or are provided in connection with the sale of goods.”
Service branding model
According to Berry (2000) the service branding model does not differ in kind from that of products, only in degree. He argues that the main difference in building branding equity for products compared to services is the great importance of service performance, meaning human performance of services rather that machine performance for products.
Branding challenges
Branding is not just giving the name or attractive logos or slogan. It is one of the most challenging tasks faced by the service providers.
- Considering branding as an assets – the pressure on branding to deliver short term financial gains tempt most of the organization decision makers to focus more on such measurable tactics. However, often this means by neglecting the objectives of building assets like a brand.
2. Consistency – the main objective of branding is to keep the message consistent all across media, platform and time. The branding message should be articulated in such a way that it remains consistent. As every time the customers interact with the brand they form an association. Thus the second biggest challenge of branding is consistency. It means the organization should live up to the promise to embrace the brands. If the message of the brand is not consistent, then the organization vision remains unfulfilled. The message should be continuously innovated to keep up with the changing customers. If the image is not continuously updated then the service firm will eventually shunned by the target audience.
3. Clutter – the market is increasingly populated and intensely competitive. Customers are bombarded with thousands of advertisement and promotions. It is exceptionally difficult to break through this cluttered environment. This branding challenge is to be unique and stand out among the crowd. This means using innovative strategies to reach the potential clients. Something unique in customer minds means great brand. The most important task is to position the brand uniquely to fulfill supply requirements.
4. Connectivity– brand form an association with the customers each time they interact. Its is very difficult to stay connected in the market and stay in the mind of the customers. Building brand in the market place and stand out among the competitors leads to rising expenses. Thus is important to create a clear and consistent brand identity in the mind of the customers.
5. Communication – company and the customers together create the brand of the company. The strongest brand is the one in which customers become so attached that they share their experiences with others. The firm should communicate all valuable information to the customers. Also should response to customer requirements quickly.
Ways to Overcome Service-Based Branding Challenges
- Proving value and expertise – it’s a challenge with a service to make its offering tangible. Impressing the clients with the value of service and explaining why we are the best source for this service. Webinars is a way to extend our brand reach and demonstrate subject matter expertise. The client should talk about the specific client needs and how the services will meet the requirements.
2. Having tangible representation of quality - with product based business, branding resolves around the physical goods which focuses in a real way branding. With a service based business, the attributes that add value are reliability, timeliness and customer service which is hard to represent. Because of this every details should be taken good care and convince the customers by speaking about the quality of its service.
3. Proving your success – why clients will choose your service? Do you have any success proof?. The company should provide some success stories to its customer which will help the customer to know the a not a gamble. It provides best service which fulfills the needs. Service provider can ask the customer to write their experience and this stories will help other customers to know the benefits the company provides.
4. Dealing with competitors – service based business is run by the employees of the business. To face the competition, the company have to become an expert which focuses on creating original, valuable content that helps to brand you as most knowledable person to satisfy the existing customers and increase the new customers.
5. Demonstrating authority – while dealing with people, they want to connect with you and your ability to perform the service. The company should demonstrate their authority in the industry based on experience. This will help the customer to increase the level of trust and personal connection.
6. Seeming trustworthy – business are run by the employees, before selling the unique features, sell your trustworthiness. Once customers trust on you, then its easy to sell the services. The company should make sure that they don’t break the trust of customer. The customer with positive experience will spread a positive word of mouth and result in increasing the business for the service firm.
7. Assuming goods and services – to improve brand perception, the service industry can go beyond for their customers. Employees are the face of the company and motivating them is the key. Employees are given training to develop their skill, incentive for good performance, etc which motivate them to perform their best.
Delivering the service to the customers means answering the question when, where and how. The service business must understand the different platforms available to sell their service to the target audience. This is known as distribution of services. The nature of delivery system impact powerfully on the customers experience with the service product.
The service delivery system depends on several factors which includes the nature of business, the service process, quality, productivity, types of customers targeted.
Using different channels of distribution helps to create demand for your service. Once the distribution channel are analyzed its helps to reach new markets. The delivery option for services is
- Direct sales method - under direct sales method, without using a distribution channel, the service provider directly contact the customers and prospects. Direct sales involves online solicitation such as newsletters and email subscriptions, personal visits , mail orders. This method gives complete control on how you present the offers and prices to the customers. Direct contact involves immediate feedback which helps in changing marketing strategy accordingly.
2. Virtual distribution services - offering services virtually are a new option for service delivery. Sales consultant offer services through phone, email video conferencing . Delivering service online helps saving cost of owning an office. It's just paying monthly rental to space. For example remote service delivery helps the writers to create content for client and deliver them online. Customers can reach out education institution online by visiting their site and talking to the support team through chats.
3. Agents or referrals - using agents or referral is one of the best way to deliver service to the target customer. Hiring professionals’ agents helps in promoting the service and acquiring the target audience. They have experience in providing value to the customers and increasing the customer satisfaction with positive word of mouth. The agent takes commission for the work done. Through industry professionals’ service can delivered. For example, wedding planner establish referral with a wedding photographer which offer cross promotion which benefits both the service organization.
4. Distribution through publication -many service customers use publication that provides them what exactly they need. For example, delivering service through blogs helps explaining various service that you offer. It also offer written content that answer the concerns related to the service.
Types of delivery services
- On demand delivery - on demand delivery means once the order is placed, deliver the service to the customers immediately. For example, food sector in which as the customer place the food order , the delivery needs to be done immediately. The customer needs quick service. Some of the example are zomato, swiggy
2. Schedule on demand delivery- schedule on demand delivery works on specific time basis. Here the customer plan the order delivery time as per their convenience. For example, uber for laundry pickup.
3. The ice cream truck model - this is the combination of on demand delivery model and schedule on demand known as hybrid model. When the truck is out for delivery, it gets more orders in real time for order fulfillment.
4. Self pick up - some business offers self pickup option to the customers. Business creates different price range for customer choosing option for delivery or self pick up.
