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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.
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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
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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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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
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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.