Services Marketing

I

Services Marketing

Services Marketing

Saiki Danyi

Oxford Book Company

Jaipur I India

ISBN: 978-81-89473-53-2

First Published 2008

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Preface

The book begins by trying to define services and assessing

the impacts of core service characteristics on marketing

activities. In some aspects of marketing, for example pricing

and promotion, the general principles of marketing can be

adapted to meet the needs of services. In other aspects, new

principles are called for. For this reason, a chapter is given to

studying the service encounter where customers become

involved in the service production process. Another chapter

is devoted to studying the interface between human resource

management and marketing, something which is vital for the

success of people-based services. Other themes that are

emphasised in this book are the importance of information

technology as a tool for producing, distributing and promoting

services, and the increasingly important role of buyer-seller

relationships as a service benefit in its own right.

The final chapter considers the problems and oppo￾rtunities open to firms expanding overseas in increasingly

competitive global markets for services. 10 illustrate the

general principles of services marketing, each chapter contains

contemporary examples of good practice drawn from

successful services organisations. The division of the material

in this book into various chapters is to some extent arbitrary

and successful marketing must recognise the inter-relatedness

of all of the subjects covered.

Saiki Danyi

Contents

Preface v

1. Introduction to Marketing 1

2. The Domain of the Marketing Discipline 136

3. Characteristics of Service Marketing 175

4. Fundamental Consumer Behaviour 197

5. Services Marketing and the Spatial Dimension 213

6. Process and Presentation of Training 238

7. Exchange for Resale and Exchange 264

8. Service Appraisal and Compensation 282

9. Perspective of Services Marketing 308

10. Innovation and Market Opportunities 327

Index 353

Introduction to Marketing

DEFINITION OF MARKETING

Marketing is the process of planning and executing the

conception, pricing, promotion, and distribution (4 Ps) of

ideas, goods and services to create exchanges (with customers)

that satisfy individual and organizational objectives.

Satisfying customer needs (creating utility) through the

exchange process.

Create a Marketing Mix (4ps):

• Product.

• Price.

• Promotion.

• Place

Marketing Mix:

• Product...Border Lights, a new menu of "light foods"

• Price ..... Value Pricing as with their other menu items

• Promotion ... Various media and methods, a commercial

that appeared during the 1995 Superbowl to announce

the arrival.

• Distribution ... Taco Bell has increased its points of

access (where you can by its products) by a factor of

4 over the last couple of years .. .including gas

stations etc .

•

2 Introduction to Marketing

Target Market(s):

• Current fast food customers (typically male, 14 -34 year

olds) and/or

• Health conscious who do not currently purchase fast

food??

TYPE OF ORGANIZATIONS THAT USE MARKETING

• Corporations: ie Pepsi, Coke, GM etc.

• Government: promoting the health plan, politicians

during elections

• Hospitals.

• Schools.

• Churches.

• Army.

• Postal Service

ORIGINS OF MARKETING

• Division of labour.

• Specialization. Led to the Exchange of goods etc.

• Exchange is key to marketing, without an exchange,

there is no need to market.

EXCHANGE AND UTILITY

The criteria needed for an exchange to occur:

• Must have something of value to exchange

• Need to be able to communicate

• Must be able to exchange (under 21 drinking)

• Must want to exchange

• At least 2 people needed for an exchange to occur

The exchange process creates Utility.

Utility is the satisfaction, value, or usefulness a user

receives from a good or a service.

When you purchase an automobile, you give up less (in

$s) than the value of the car (to you) the ability to get you from

A to B, safely, in a timely manner etc.

Introduction to Marketing 3

There are Four Types of Utility

• Form: Production of the good, driven by the marketing

function. EXAMPLE?? Baskin Robbins turns cream,

sugar and milk into ice-cream.

• Place: Make product available where customers will

buy the product. EXAMPLE?? Food truck at a

construction site.

• Time: Make product available when customers want

to buy the product. EXAMPLE?? Pathmark, open 24

hours a day, 365 days a year, has time utility compared

to Landhope Farms etc.

• Possession: Once you own the product, do what you

want with it, ie. eat it

An example of a service that offers all types of utility: 24

Hour pizza delivery service.

Marketing performs the exchange functions that makes

the total utility of the product a reality to consumers.

THE MARKETING MANAGEMENT PIDLOSOPHIES

Marketing management can be described as carrying out

the tasks that achieve desired exchanges, between the

corporation, and its customers. '

There are a number a different philosophies that guide a

marketing effort.

• Production Concept Demand for a product is greater

than supply.

To increase profit, focus on production efficiencies

knowing all output can be sold. Also useful

concept when increasing production raises

economies of scale etc. to reduce price. Henry

Ford, "Doesn't matter what colour car you want,

as long as it is black."".A typical quote during the

production era.

Dominant era: From mid C19th to early C20th,

industrial revolution etc.

4 Introduction to Marketing

• Selling Concept Demand for a product is equal to

supply.

Emphasis is needed to sell the product to increase

profits. Focus on advertising.

Useful for unsought goods, i.e., encyclopedias,

funeral plots. Political candidates, selling

important, not post consumer satisfaction.

Dominant era: 1920's to Mid 1930's WWII to early

1950's

• Marketing Concept Supply for a product is greater than

demand, creating intense competition among

suppliers.

Company first determines what the consumer

wants, then produces what the consumer wants,

then sells the consumer what it wants.

Dominant era: 1930's to WWII 1950's to present.

• Societal Marketing Concept: Focus on other stakeholders,

as well as the business and its customers. Need to

balance 3 items

Company profits

- Customer wants

- Society's interests

The difference between short term consumer wants and

long term consumer welfare.

An example of a company adopting the Societal concept:

Starkist .. .Dolphin Safe Tuna Actually more expensive than

regular tuna, but is more appealing due to society's concerns.

An example of the societal marketing concept...although

the ethics of accepting monies from Hooters may be questioned

(i.e. exploitation of women??)

For another example of Societal Marketing Concept...Visit

the Body Shop and pick up some of their leaflets.

IMPORTANCE OF THE MARKETING CONCEPT

• According to the Customer Service Institute, it costs

as much as five times as much to acquire a new

customer than it does to service an existing one.

I1ltroduction to Marketing 5

• Customers tell twice as many people about a bad

experience over a good one.

• According to the American Marketing Association

(AMA), for an average company, 65% of its business

comes from its presently satisfied customers.

STRATEGIC MARKET

It is necessary to discuss strategic market planning and

marketing early in the course. A strategic market plan gives

direction to a firm's efforts and better enables it to understand

the dimensions of marketing research, consumer analysis, and

product, distribution, promotion, and price planning, which

will be discussed in later classes.

We will look at an overview of the strategic marketing

process including the development of:

• SWOT Analysis

• Mission Statement

• Organizational Goals

• Corporate Strategy

• Marketing strategy

The strategic market plan is not a marketing plan, it is a

plan of all aspects of an organizations strategy in the market

place.

The process of strategic market planning yeilds a

marketing strategy(s) that is the framework and the

development of the marketing plan.

Developing a marketing plan is your group project

assignment. A marketing plan deals primarily with

implementing the market strategy as it relates to target market(s)

and the marketing mix.

STRATEGIC MARKET PLANNING

A Strategic marketing plan is an outline of the methods

and resources required to achieve organizational goals within

a specific target market(s).

6 Introduction to Marketing

"Describes the direction [an organization] will pursue

within its chosen environment and guides the allocation of

resources and effort" - Peter Bennett, Dictionary of Marketing

Terms, AMA 1988

Strategic planning requires a general marketing

orientation rather than a narrow functional orientation.

All functional areas must include marketing and must be

coordinated to reach organizational goals. It is a hierarchal

process, from company wide to marketing specific.

Company wide, SBU Specific

A firm can be broken down into several strategic business

units. Each SBU is a division, product line, or other profit center

within the parent company.

An SBU has its own strategic plan and can be considered

a seperate business entity competing with other SBU's for

corporate resources.

For example Pepsico Companies SBUs include:

• KFC'

•

•

•

Taco:Bell I

Pizz~ Hut

Moutttain Dew

• Lipt~n Tea Brands

• FritolLay

A strategfc plan gives:

• Direction and better enables the company to

unde~stand mkt. function dimensions

• Mak~s sure that each division has clear integrated I

goal~

• Different functional areas are encouraged to coordinate

• Assesses SW & OT

• Assesses alternative actions

• It is a basis for allocating company resources

• A procedure to assess company performance