services marketing ch.9

7/31/2019 Services Marketing Ch.9

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Services Marketing

Services MarketingCommunication

Chapter 9


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Integrated Service Marketing Communication

Service marketers make prospective customers awareabout Services and also persuade them to use new services

through Marketing Communication or Promotion.

Service marketers also use promotion to raise awareness

from level of disinterest to interest.Marketing communication or promotion informs,

persuades, reminds target audience or publics about service

provider and /or their services to influence publics behaviour

favourably.Publics who are influenced by Promotion are current

and potential customers, trade intermediaries, suppliers,

consumer advisor groups, opinion makers like critics, journalists,

govt., society, employees and other stake holders.

7/26/2012 2Presentation by Prof. H.Ganguly


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Key Challenges in Service Communication

Customers fail to achieve satisfaction because ofdiscrepancy between delivered service and external

communication. It arises out of :

1. Inadequate management of Service Promises

When companies fail to manage service promises made bysalespeople, advertising etc.. In many traditionally managed

companies, service delivery may not be up to communication.

2. Inadequate management of Customer ExpectationsWhen expectations are raised to unrealistic levels through

communication or otherwise, actual service may lead to

customer dissatisfaction and discourage repeat business though

initial sale may go high due to overpromise.7/26/2012 3Presentation by Prof. H.Ganguly


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3. Inadequate Customer Education

If customers are unclear about service procedure , their role in

service delivery, method to evaluate services that they have neverused, customers are likely to be disappointed though the fault lies

with customers rather than service providers leading to

dissatisfaction.

4. Inadequate Internal Marketing Communication

In service organisations, marketing communication and

service delivery should be coordinatedto render satisfaction to

customer. For example, a bank advertises encashment of cheques

in less than ten minutes but operation staff may not be conversant

with it leading to dissatisfaction of customers.



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Service Communication Strategies

Following elements are to be focused at to plan ServiceCommunication Strategy :

1. Who is your target audience ?

2. What do we need to communicate and achieve ?

3.How should we communicate this ?

4. Where should we communicate this ?

5. When do communications need to take place ?


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7/26/2012 Presentation by Prof. H.Ganguly 6

1. Target Audience

Marketing communication are used in service firms with

i) service employees called internal customers &ii) prospects and users called external customers

2. Objective of Communication

Commonly adopted service promotion objectives are :i) Build awareness and interest on a new service or brand

ii) Develop favourable disposition towards it by speaking

about strengths and benefits to be derived.

iii) Reposition a service relative to competitors service.iv) Encourage trial by providing incentives.

v) Provide reassurances by giving guarantees.

vi) Inform customers as to how the service is to be used etc.


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3. Service Marketing Communication Mix Elements

Communication with target audience are carried through

different media having capability of achieving success like

* Personal Communication -- Through selling, customer

service, training, telemarketing , word of mouth

communication (external) etc.

* Advertising -- Through broadcast ( radio, TV), print-

media, internet, outdoor hoardings, direct mail etc.

* Sales Promotion -- Through sampling, coupons, gifts,

rebates, prizes, scholarships etc.


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* Public Relations & Publicity -- Through press releases,

press conferences, special events, sponsorships, trade

shows, exhibitions , special media coverage etc.

* Corporate Design -- By interior dcor, signage, outdoor

vehicles, equipments, stationery, employee uniforms etc.

* Training Material -- Like web sites, manuals, brochures,

video & audio cassettes, software, CD-ROM, voice mail etc.

In addition communication may reach prospective

customers from and through other quarters both intended and

unintended. These may influence customers favourably or

otherwise as indicated :


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Word of Mouth communication

Positive (or not) messages about service or service provider

coming from other satisfied (or not) users, peers, relatives and

friends are generally viewed more credibly.

Service Environnment

Layout, design and environment of service delivery enclosuressend powerful messages to customer. The ambience and

servicescape alsoplay important role in sending messages.

Majority of service providers arrange to maintain samedesign, dcor, colour combination in their service outlets to

influence customers positively and also to develop Brand

image.


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* Setting Communication Objectives

* Identification of Target Audience

Market Research to Market Segmentation to Selection of

Target Market


4. Service Communication Programme

Effective service marketing communication depends up on

successful implementation of :

* Decide Marketing Budget

* Develop Communication Message* Decide Communication Mix Elements

* Control Progress


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Service Branding

In todays world of proliferating products and services ofsame type, it may become difficult to choose the same favourite

product or service unless there exists a distinguishing feature.

A unique identity is created for the service by giving it a

name, term, sign, design or combination of these. Identificationof service of one service-provider from that of another may be

done by this identity called Service Brand.

Thus Service Brand is a conjoint of words, images,

colour etc. that lead to specific perception of a Service.

To a person, a Brand acts as a link to recognise, think of

value, quality and benefits of a given Service.


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On the other hand a Service Brandrepresents a set of

promises made by service-provider to user of the Brand.

Importance of Service Brands

To Customers :

-- Services are intangible therefore difficult to comprehend, so

branding of services help in

* easy recognition

* recalling its attribute, quality, benefits etc.

* making quick decision to buy the service or not

To Service-Providers-- Helps in repeat purchase (or not) by customers

-- Enabling a premium to be charged (or not) in price

-- Introducing similar services conveniently and economically

-- Popularity of aService brand

is an asset of service provider.


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Service Branding ApproachesBranding of services is more complex because of their

intangibility and difficulty in standardisation. So approaches

to Service Branding are mostly indirect.

A. By Including a Symbol or Logo

As for example, LIC puts the logo of A lamp within twohands and slogan of Jindagi ke Sath Bhi Aur Jindagi ke

Baad Bhi ; ITC group puts A pair of folded hands .

B. By Putting a Suitable Slogan

Oriental Insurance Co. always puts the slogan You are in

safe hands; MyPage (rediff.com) - Search for helpful

contacts etc.


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C. Making Use of Suitable Colours and Design

Jet Airways makes maximum use of Blue and Yellowcolours; Red colour by left political parties, Zerox

photocopying uses Yellow colour everywhere.

Brand Loyaly in ServicesGenerally speaking trend of Brand Loyalty in services is

high, mainly becausei) Finding substitutes for services is more difficult than

productsii) Switching cost for services is HIGH

iii) Service customers prefer to go for repeat purchases

iv) It is easier to develop Relationship Bond with service

customers.


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Customer Relationship Management

-- Till mid-nineteenth century, buyers used to go to theirfavourite neighbouring store to purchase requirements

regularly. The proprietor, handful of its staff and buyers knew

each other by first name.

-- Stores knew taste and preference of buyers. In turn buyerswere also loyal to the store.

-- As urban communities grew, size of stores also grew with

urge for economy of scale. In the process buyers became

mobile. Thus the unique relationship became a casualty intonameless, faceless entity called customer.

-- The customers also started hunting for bargains for low price

from supplier to supplier.


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-- Consequently, stores also started attracting more new

customers every now and then without much caring for existing

customers, called Traditional Marketing.

The situation now appears to have moved a full circle.

-- Stores are now realising futility of Traditional Marketing.They are trying to increase their profit by retaining customers

permanently by providing greater satisfaction to them.

-- To achieve this, stores are making use of tools and

technology to promote good relationship with customers.

-- It has come to be known as Customer Relationship

Management.


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-- Thus, Customer Relationship Management (CRM ) is a

business strategy of broader customer-centric concepts ofmarketing, manufacturing, finance, HR, R&D and other

disciplines of management.

So efficient CRM arises out of integration of all relevant

corporate functions and not only marketing.

Components of CRM

1. Customers -- Customers are only source of profit and

future growth of suppliers and they have become highlyknowledgeable . Secondly, competition is very fierce so loyal

customers have become scarce.

So suppliers need to make efforts to develop relationship

with them.


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2. Management -- CRM is not limited to marketing function

only. It rests up on corporate culture and process. Customer related Information is treated ascorporate

knowledge in CRM-practising firms, it helps in driving all

corporate functions like R&D, Procurement,

Manufacturing, HR etc. and not marketing alone.

Thus, Customer Relationship Management is a strategic

orientation and business philosophy that focuses up on

keeping and improving relationship with existing customers

rather than acquiring new customers all the time.

CRM may also be defined as a Business Approach with

conscious objective to develop long term and/or trusting

relationship with customers, intermediaries, suppliers and

other business partners.


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Transactional vs. Relationship Marketing

-- When a company sells to new customers without worrying to

retain them, it is Transactional Marketing.

-- It costs 5 to 6 times more to attract a new customer than it

costs in taking an order from existing customer.

-- When a firm cannot satisfy a customer in first visit to retain

them, they are to attract new customers every time

-- Whereas in Relationship Marketing, new and existing

customers repeatedly purchase from the firm because of the

satisfaction that they derive.


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Comparision between Transactional & Relationship

Marketing

Transactional Marketing Relationship Marketing

* Do Deals and Disappear * Negotiate Win-Win Sale

and stay around

* Short term thinking & actions * Long term thinking & actions

* Push Price * Push Value

* Does business on deal to deal * Build business on relationship

* Gets new customers more * Keeps all customers

and more


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Transactional Marketing Relationship Marketing

* No structure to do business * Structure to supportRelationship

* Salesfocussed * Relationship -- focussed

* Short-term empathy * Longterm empathy and

rapport

* Sales on telling and selling * Sales based on trust

* Poor after-sales service * Invest in after-sales service

* Incentives given on deals * Incentives on relationship

and on revenue

* Deal is target and end-result * Sale is beginning and result

of efforts of longrelationship.


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Benefits of Customer Relationship Management

A. To Customers

Customers receive greater value from CRM firms

compared to competing firms. The value received is in trade-off

between what customer feels he gets (quality, satisfaction and

specific benefits) against what he pays (monetary and non-

monetary costs)

As customers feel to get this value consistently from

CRM firms, they find it beneficial to stay in relationship withCRM firms.

In addition, customers feel to receive following benefits

from Relationship-firms :


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1. Confidence Benefits -- Because of trust and confidence on

service-provider, anxiety of customers is reduced.

2. Economy Benefits -- The switching cost in terms of search

and retraining is saved, providing psychological support

and economic saving.

3. Social Benefits -- Customers develop familiarity and

relationship with CRM firms such that service encounters

become source of pleasure.

4. Special Treatment Benefits -- Special relationship amongthem may lead to preferential deals and benefits.


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B. To CRM Service Providers

1. Increase in Revenue -- Customers buy more from

Relationship firms2. Reduced Cost of Operation -- CRM firms save on

advertisement, sales promotion etc.

3. Word of mouth Publicity -- Satisfied customers are too

glad to refer other parties to CRM firms; it is taken moreseriously than advertisements.

4. Lifetime Value of Customers [LVC] -- Total sales

revenue and profit generated from relationship customers

are invariably higher than transaction customers consideredwith costs and expenses.

5. Employee Retention -- Level of employee satisfaction is

always higher in firms with satisfied customers.


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Customer Relationship Process

The process of CRM is laid around customer satisfactionto delight in a managerial manner.

Stage I : Identifying Right Customer

In CRM, market segmentation is done based up on

Consumer behavioral variables like nature, volume, frequency

of purchase etc.. Suitable target markets are selected for

developing sustainable business models.

Stage II: Retaining Right Customers

CRM firms classify customers into A, B, C & D class

based on their

frequency of purchase

value per transaction and

profitability.


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Class A : Customers HIGH on all three parameters

Class D : Customers LOW on all three parameters &

Class B & C : Customers in between the parameters.

Stage III : Delighting Customers

CRM service providers develop strong value proposition

in terms of better service to retain the customers

Secondly, they operate customer-centric strategies to

generate higher profitability.

CRM Service providers ensure that they do not hurt

companys profitability to please customers.


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Service Strategy of Retaining CustomersCustomers may be retained without fail by providing

them with value greater than what they expect i.e.Customer Delight.

Step 1Identify customers critical expectation that is possible

and should be exceeded to providedelight to customers.

Step 2 -- CRM firm tries to deliverdelight first to most

important Class A customers.

It does not attempt to deliver delight to all groups of

customer, neither it is profitable to do so.

Step 3 -- One way of delivering delight is to under promise

and over deliver

But repeated under promise may reduce firms

competitiveness among others.


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Customer Relationship Management Strategies

CRM firms adopt different type of strategies or Bonds

to retain customers and bind them in long term relationship :

Level I - Financial Bond

CRM firm first binds selected customers with

financial incentives on volume purchase, e.g., Frequentfliers discount by Airlines.

Since these schemes may be imitated easily by

competitors, these are to be strengthened by other relation

buildingbonds.Level IISocial Bond

Next CRM firm tries to bind customers through more

powerfulsocial or interpersonal bonds.


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Customer is no longer treated as a nameless, faceless

person but as a client (Mr./Ms. Such & Such) whose individualneeds, wants and expectations are well studied and services

provided are to specially suit her/him.

Interpersonal bonds are mostly used by professional

service-providers like consultants, legal practitioners, doctors,

B-2-B service providers, etc.These social bonds with financial incentives become very

strong relationship in retaining customers.

Level IIICustomisation BondRelationship with customers is further strengthened by

customisation i.e. knowing needs of customer intimately,

developing solutions on one to one basis and delivering those.


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For example, home-delivery of ordered vegetables, fruits

groceries, walking dogs of high net worth persons during their

holidays abroad by tour operators etc.

Level IVStructural Bonds

The Structural Bonds are technology-oriented

relationships to make customers make more efficient andeffective.

For example, a B-2-B service provider may carry out data

mining operation on their customers customers and othersuch

assistance.

services marketing ch.9

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