Service marketing 2nd chapter

LESSON: 2 MARKETING MIX FOR SERVICES

INTRODUCTION

Marketing mix is the set of important internal elements that make up an organisation’s marketing programme. The marketing mix concept is a well-established tool used as a structure by marketers. It can be defined as the elements an organisation controls that can be used to satisfy or communicate with customers. The phrase ‘marketing mix’ was first used by Neil H. Borden. The concept had its genesis in the classic work of James Culliton on the management of marketing costs. Borden suggested twelve marketing mix variables in the context of manufacturers. Borden’s concept of marketing mix was given due recognition in marketing theory and the concept of marketing mix was accepted as the set of marketing tools that a firm uses to pursue its marketing objectives in the target market, influenced by specific environmental variables.

            It was McCarthy who summed up the twelve elements of Borden’s marketing mix into 4Ps - product, price, place (i.e. distribution), and promotion. He even clarified that the customer is not a part of the marketing mix, rather, he should be the target of all marketing efforts. The activities in service marketing are different , and often do not fall in the conventional marketing mix (4Ps) classification, though many marketing concepts and tools used by goods marketers hold good in services with some change in focus and importance. The traditional marketing mix became inadequate for service industries because of the following reasons:

•      The concept of marketing mix as such was developed for manufacturing industries and was more oriented to deal with goods marketing situations.

•      Marketing practitioners in service sector found that it did not address their needs.

•      Due  to  differences  in  characteristics  of  physical  products  and  services,  marketing models and concepts had to be developed in direction of the service sector.

Keeping in view the inadequacy of conventional marketing mix to address the service situations, it needs to be modified and broadened. A seven Ps framework for services has been proposed. These elements of marketing mix for services are product, price, place, promotion, people, physical evidence and process.

PRODUCT

A product is an overall concept of objects or processes which provide some value to customer; goods and services are subcategories which describe two types of product. Thus, the term product is frequently used in a broad sense to denote either a manufactured good or a service. In fact, customers are not buying goods or services - they are really buying specific benefits and value from the total offering. So, the most important issue in service product is what benefits and satisfaction the consumer is seeking from the service. From the point of view of a restaurant’s manager, the restaurant simply provides food. But, the customers coming to the restaurant may be seeking an ‘outing’ - an atmosphere different from home, relaxation, entertainment or even status. The marketing of services can be a success only if there is a match between the service product from the customer’s view point and the supplier’s view point. To find this match it is desirable to analyse the service at the following levels:

(i)        Customer benefit concept: The service product which is offered in the market must have its origin in the benefits which the customers are seeking. But, the problem is that customers themselves may not have a clear idea of what they are seeking, or they may find it difficult to express or it may be a combination of several benefits and not a single one. Over a period of time, the benefits sought may also change. This change in customer may come about by a satisfactory or unhappy experience in utilising the service, through increased sophistication in service use and consumption, and changing expectations. All these make the issue of marketing a service product more complex.

(ii)      Service concept: Using the customer benefits as starting point, the service concept defines the specific benefits which the service offers. At the generic level, the service concept refers to the basic service which is being offered. A centre for performing arts may offer entertainment and recreation. But, within this broad framework, there can be specific choice paths for satisfying the entertainment objectives, such as, drama, musical concerts, mime, poetry recitation, dance, etc. Defining the service concept helps in answering fundamental question - ‘what business are we in?’

(iii)    Service offer: After defining the business in which we are operating, the next step is to give a specific shape and form to the basic service concept. In the case of centre for the performing arts, the service concept is to provide entertainment. The service offer is concerned with the specific elements that will be used to provide entertainment; drama, music, mime, dance. In the category of musical concerts the choice may be vocal or instrumental, with vocal whether light or classical, Hindustani, Carnatic or Western. While these represent the intangible items of the service offer, the physical infrastructure of the centre, in terms of its seating capacity, seating comfort, quality and acoustics, provision for air-conditioning, snack bar and toilets are the tangible items. The tangible aspects can be controlled by offering the best possible benefit, but the quality and performance of the actors, singers, musicians cannot be controlled.

(iv)    Service forms: In what form should the services be made available to the customers is another area of decision making. Should all the shows of the centre be available in a package deal against an annual membership fee or seasonal ticket? Should there be daily tickets with the consumer having the freedom to watch any one or more performances being staged on that particular day? Should each performance have a separate entrance ticket, with a higher priced ticket for a well-known performer? Service form refers to the various options relating to each service element. The manner in which they are combined gives shape to the service form.

(v)      Service delivery system: When we go to bank to withdraw money, we either use a cheque or a withdrawal slip in which we fill all the particulars and hand it over to the dealing assistant, who after verifying the details, gives us money. The cheque or with- drawal slip and the dealing assistant constitute the delivery system. In case of airlines, the aeroplane, pilot, crew members, airport, etc. are the elements of delivery system. The two main elements in a delivery system are the people and the physical evidence. The competence and public relations ability of a lawyer represents the ‘people’ component, while his office building, office door, letter head, etc., are all elements of the ‘physical evi- dence’ component. The experience in two flights of the same airline is not the same. The visit to a bank on two occasions brings different experiences. The consumer’s service experience is, as such, a result of provider-customer interaction, atmosphere, emotional stress, anxieties, surprises, etc.

PRICE

Pricing is one factor that has received much less attention in service firms. Pricing decisions in services are approached in a not-very-sophisticated manner. The role price plays in the marketing strategy is lesser known in service firms than in manufacturing firms. Even in Britain, the United States and some other developed economies where more people are employed in the provision of services than in the direct production of material goods, the marketing of services in general, and their pricing in particular, are relatively neglected aspects of management studies.

Though price is one of the Ps in the marketing mix of firms, its use as a purposive marketing tool has been limited to a few marketers. Most marketers tend to adopt a passive approach and commit many mistakes in pricing their goods and services.

Almost every service has its own price terminology.

Price Terminology for Selected Services

Service	Terminology
Advertising	Commission
Brokerage service	Commission
Consultancy	Fee
Employee Services	Salary
Education	Tuition fee
Financial Services	Interest/charge/commission
Health care	Fee
Insurance	Premium
Legal service	Fee
Property/Accommodation	Rent
Road use	Toll
Recreational service	Ticket charge/money, Admission charge
Share/Stock service	Brokerage/Commission
Transport	Fare
Utilities	Tariff

Pricing is important because it has a direct bearing on sales and profits of an organisation. Therefore, price cannot be determined in isolation without keeping in mind the sales it would generate and the profit it would earn. Generally, a trade-off is observed between the sales and the profit. A lower price of product or service is capable of generating higher sales at low profit per unit. Similarly, a high price would result in greater profit margins but the product or service may not sell that much. Pricing arithmetic is not simple. There are a number of factors that influence the pricing decisions of a firm. It is important for a firm to consider the customers, the marketing offer, competition, legal framework, and social and technological environment while setting the price.

Another characteristic of services that creates a problem in price determination is the high content of the intangible component. The higher the intangibility, the more difficult it is to calculate cost and greater the tendency towards non-uniform services, such as fees of doctors, management consultants, lawyers, etc. In such cases, the price may sometimes be settled through negotiation between the buyer and seller.

The two methods which a service organisation may use to determine prices are cost-based pricing and market-oriented pricing. In the former, the price may be regulated by the government or industry association on the basis of the cost incurred by the most efficient unit. Such a pricing strategy is effective in restricting entry and aiming at minimum profit targets. The market-oriented pricing may either be a result of the competition or customer- oriented. In case of competition-oriented pricing, the price may be fixed at the level which the competitor is charging, or fixed lower to increase market share. Customer-oriented pricing varies according to the customer’s ability to pay.

The pricing tactics that may be used to sell services are:

(i)            Differential or Flexible Pricing: It is used to reduce the ‘perishability’ characteristic of services and iron out the fluctuations in demand. Differential price implies changing different prices according to:

•        customer’s ability to pay differentials (as in professional services of management

consultants, lawyers);

•        price time differentials (used in hotels, airlines, telephones where there is the concept of season and off-season and peak hours); and

•        place differential used in rent of property-theatre seat pring  (balcony tickets are more expensive than front row seats) and houses in better  located  colonies command higher rent.

(ii)          Discount Pricing: It refers to the practice of offering a commission or discount to intermediates such as advertising agencies, stock brokers, property dealers for rendering a service. It may also be used as a promotional device to encourage use during low-demand time slots or to encourage customers to try a new service.

(iii)        Diversionary Pricing: It refers to a low price which is quoted for a basic service to attract customers. A restaurant may offer a basic meal at a low price but one which includes no soft drink or sweet dish. Once the customer is attracted because of the initial low price he may be tempted to buy a drink or an ice-cream or an additional dish. Thus, he may end up buying more than just the basic meal.

(iv)            Guaranteed Pricing: It refers to pricing strategy in which payment is to be made only after the results are achieved. Employment agencies charge their fee only when a person actually gets a job, a property dealer charges his commission only after the deal is actually transacted.

(v)              High Price Maintenance Pricing: This strategy is used when the high price is associated with the quality of the service. Many doctors, lawyers and other professionals follow this pricing strategy.

(vi)            Introductory Pricing: It is one in which an initial low price is charged in the hope of getting more business at subsequently better prices. The danger is that the initial low price may become the price for all times to come.

(vii)            Offset Pricing: It is quite similar to diversionary pricing in which a basic low price is quoted but the extra services are rather highly priced. A gynaecologist may charge a low fee for the nine months of pregnancy through which she regularly checks her patient, but may charge extra for performing the actual delivery and post-delivery visits.

(viii)    Competitive parity pricing: Prices are set on the basis of following those set by the market leader.

(ix)        Value based pricing: Prices are based on the service’s perceived value to a given customer segment. This is a market driven approach which reinforces the positioning of the service and the benefits the customer receives from the service.

(x)          Relationship Pricing: Prices are based on considerations of future potential profit streams over the lifetime of customers. Relationship pricing follows closely the market oriented approach of value-based pricing but takes the lifetime value of the customer into account.

 

PLACE

In order to bring the products to the customer, the marketer has to work with distribution channels that are the interdependent set of organisations involved in the process of making the goods or services available. Service marketers, like goods marketers, also have to handle distribution channel problems. They too, have to make their services available to target customers without which marketing cannot take place. Because of intangibility of services, they cannot be stored, transported and inventoried. Similarly, because of inseparability, that is, in case of services production cannot be separated from selling, services must be created and sold at the same time. These characteristics of services make distribution strategy more complex and difficult.

There are three critical issues that must be sorted out while evolving the distribution   channels for a service:

(i)                 Location of the service: Location is concerned with the decisions a firm makes about where its operations and staff are situated. The importance of location for a  service depends upon the type and degree of interaction involved. When the customer has to go to the service provider, location becomes very important. For a service business such as a restaurant, location may be one of the main reasons for patronage. In this type of interaction, service providers seeking growth can consider offering their services at more than one location. Where the service provider can go to the customer, site location becomes much less important provided it is sufficiently close to the customers for good quality service to be received. In some circumstances, the service provider has no discretion in going to customer as certain services must be provided at the customer’s premises. This is the case with a wide range of maintenance services such as, lift repair, cleaning services etc.

Critical factors affecting choice of location

Critical factor	Services
Convenience	Retail stores, health centres, banks repair services, theatres, personal care.
Cost operating	Speciality shops, wholesalers, clerical services.
Support system availability	Hotels, jewellers, tourism.
Geographic of environ- mental factors	Beach resorts, Ski resorts
Business climate	Insurance companies, private educational institutions, gambling resorts
Communication networks	Banks, financial services
Transport facilities	Mail order houses, couriers, ware houses.

(ii)        Channels through which services are provided: The second decision variable in the distribution strategy is whether to sell directly to the customers or through intermediaries. Traditionally  it  has  been  argued  that  direct  sales  are  the  most  appropriate  form  of distribution for services. Whilst this form of distribution is common in some service sectors, e.g., professional services, companies in other areas of the service sector are increasingly seeking other channels to achieve improved growth and to fill unused capacity.

Many services are now being delivered by intermediaries and these can take a variety of forms. The broad channel options for services are direct sales, agent or broker, sellers’ and buyers’ agents, franchises or contracted service deliverers, etc.

Typical intermediaries for services

Service	Intermediaries
Hotels	Travel agents, tour operators, airlines
Airlines	Travel Agents, hotels
Life Insurance	Agents
Shares	Stock Brokers
Employment	Employment agencies
Financial Services	Banks, financial institutions

(iii)             How to provide service to maximum number of customers: The third decision variable in the distribution strategy is how to provide the service to a maximum number of customers in themost cost-effective manner.

Some of the innovations in the area are:

•           Rental or leasing-leasing or rental offers an easy solution for companies which want

to expand and diversify but do not have the necessary resources to buy the required plant and machinery. This trend is now also becoming popular in services. Today we have the concept of time-sharing for holiday resorts.

•           Franchising-franchising is the granting of rights to another person or institution to exploit a trade name, trade mark or product in return for a lump-sum payment or a royalty. In service industries franchises operate in the area of hotels, restaurants, car rentals, fast food outlets, beauty parlours, travel agencies, couriers, computer education,etc.

•           Service integration - recent times have also witnessed the growth of an integrated

service system. Hotels offer local tours and airlines offer holiday resort services. Travel agencies offer ‘package tours’ in which they take care of all formalities such as visa, foreign exchange, reservations, local travel, etc.

PROMOTION

The promotion element of the services marketing mix forms a vital role in communicating the positioning of the service to customers. Promotion adds significance to services; it can also add tangibility and help the customer make a better evaluation of the service offer. The fundamental difference which must be kept in mind while designing the promotion strategy is that the customer relies more on subjective impressions rather than concrete evidence. This is because of the inherent nature of services. Secondly, the customer is likely to judge the quality of service on the basis of the performer rather than the actual service. Thirdly, since it is difficult to sample the service before paying for it, the customers find it difficult to evaluate its quality and value. Thus, buying a service is a riskier proposition than buying a product. So, the service marketers must design a promotion strategy which helps the customers overcome these constraints.

George and Berry have identified six guidelines for services advertising which really are applicable to most elements of the communication mix. These apply to a wide range of service industries, but not to all of them, because of the heterogeneous nature of services.

•        Provide tangible clues- A service is intangible in the sense that a performance rather than an object is purchased. Tangible elements within the product surround can be used to provide tangible clues, e.g. seating comfort in aircraft.

•        Make the service understood- Services may be difficult to grasp mentally because

of their intangibility. Tangible attributes of the service can be used to help better understand the service offered, e.g. credit cards.

•        Communication continuity- This is important to help achieve differentiation and present a unifying and consistent theme over time. McDonalds and Disney logo provide good examples of such continuity.

•        Promising what is possible- Service firms need to deliver on their promises. If a promise such as fast delivery cannot be consistently met, it should not be made at all, e.g. Domino’s Pizza.

•        Capitalising on word of mouth- The variability inherent in services contributes to the importance of word of mouth. Word of mouth is a vitally important communication’s vehicle in services, as evidenced by the way we seek personal recommendations for lawyers, accountants, doctors, bankers, etc.

•        Direct communications  to  employees-  In  high  contact  services  communication should be directed at employees to build their motivation, e.g. cabin crew of airlines.

The promotion mix of services includes the following elements:

(i)            Advertising: It is any kind of paid, non-personal method of promotion by an identified organisation or individual. The role of advertising in services marketing is to build awareness of the service, to add to customer’s knowledge of the service, to help persuade the customer to buy, and to differentiate the service from the other service offerings. Relevant and consistent advertising is therefore, of great importance to the success of the marketing of the service. Advertising has a major role in helping deliver the desired positioning for the service. Since the core product is intangible it is difficult to promote, and therefore, service marketers frequently choose tangible elements within the product for promotion.

         Thus, airlines promote the quality of their cuisine, seat width, and the quality of their in-flight service. Certain services such as entertainment, transportation, hotel, tourism and travel, insurance, etc. have been advertising heavily in newspapers, magazines, radio, TV to promote greater usage and attract more customers. However, certain service professionals such as doctors and lawyers had rarely used advertising as a means of increasing their clientele. But, this situation is changing and one can occasionally see an advertisement in the daily newspaper giving information about the location and timings that a particular doctor is available for consultation.

(ii)        Personal selling: Personal selling has a vital role in services, because of the large number of service businesses which involve personal interaction between the service provider and the customer, and service being provided by a person, not a machine. The problem with using personal selling to promote services is that in certain types of services, the service cannot be separated from the performer.

       Moreover, it is not a homogeneous service in which exact standards of performance can be specified. In such situations, personal selling implies using an actual professional rather than a salesman to sell the service. A firm of management consultants may send one of its consultants for soliciting new business. This kind of personal selling is certainly effective but also very expensive. One way of making personal selling more cost effective is to create a derived demand by tying up with associated products and services. A management consultant may associate with a bank, so that the bank recommends his name as a consultant to any new entrepreneur coming for a loan. A chain of hotels may team up with an airline to offer a concessional package tour. The other way is to maintain a high visibility in professional and social organisations, getting involved in community affairs and cultivating other professionals so as to maximize personal exposure and the opportunities for getting work from new sources. Personal selling has a number of advantages over other promotion mix elements, such as,

•        Personal contact- Three customer contact functions have been identified; selling, servicing and monitoring. These personal contacts should be managed to ensure that the customer’s satisfaction is increased or maintained at a high level.

•        Relationship enhancement- The frequent and sometimes intimate contact in many service businesses provides a great opportunity to enhance the relationship between the seller/service provider and the customer.

•        Cross selling- The close contact frequently provides the opportunity for cross-

selling other services. The sales persons are also in a good position to communicate details of other services which they may offered to customers.

(iii ) Sales promotion: In the case of services, the sales promotion techniques which are used are varied and various in number. Traditionally, sales promotion has been  used mainly in the fast moving consumer goods market. However, in the recent past we have seen a trend for many service firms to use sales promotion. Sales promotion tools are aimed at these audiences:

•           Customers - Free offers, samples, demonstrations, coupons, cash refunds, prizes,

contests and warrantees.

•           Intermediaries-         Discounts,    advertising    allowances,    cooperative    advertising, distribution contests and awards.

•           Sales force- Bonuses, awards, contests and prizes for best performer.

A number of activities can be undertaken which aim at providing incentive to encourage sales. A doctor may charge lesser amount as fee on subsequent visits to encourage patient’s loyalty, a car mechanic may offer a guarantee for repairs undertaken up to three months, a chartered accountant may offer his services free for the first two visits to allow  the customer to evaluate his work.

In services, sales promotion techniques are also used to offset their perishability characteristic, e.g., family discounts offered by hotels in off-season in which two children under twelve are allowed free of charge. Sales promotion helps to overcome the problem faced by customers in evaluating and judging the quality before making the purchase, thus, it reduces the risk associated with the purchase.

(iv)       Publicity: It is unpaid for exposure which is derived by getting coverage as a news or editorial item. It is possible to get publicity when the service which one is offering is unique and, therefore, newsworthy, by holding a press conference in which offered ser- vices can be associated with some issues of greater social relevance or by involving the interest of the newspaper or its staff in covering the service. The important point about publicity is that the choice of newspaper, magazine and journal should be correct. The vehicle which is chosen must be credible and enjoy a reputation of being trustworthy. A wrong choice of media vehicle will result in adverse publicity.

(v)       Word of mouth: One of the most distinctive features of promotion in service businesses is the word of mouth communications. This highlights the importance of the people factor in services promotion. Customers are often closely involved in the delivery of a service and then talk to other potential customers about their experiences. Research points to personal recommendations through word of mouth being one of the most important information sources. Where people are the service deliverers personal recommendation is often the preferred source of information. Thus, word of mouth can have a more important impact than other promotion mix elements in a number of services, including professional and health care services. Positive or negative word of mouth communication will then influence the extent to which others use the service. However, negative experiences tend to have a greater impact than positive experiences. Customers who are dissatisfied tend to tell more than twice as many people of their poor experiences as those who are satisfied.

PEOPLE

In services, ‘People’ refers to all human actors who play a part in service delivery and thus influence the buyer’s perceptions; namely, the firm’s personnel, the customer, and other customers in the service environment. All of human actors participating in the delivery of a service provide cues to the customer regarding the nature of the service itself. How these people  are  dressed,  their  personal  appearance,  and  their  attitudes  and  behaviours  all influence the customer’s perception of the service. If the service personnel are cold and rude, they can undermine all the marketing work done to attract the customers. If they are friendly and warm, they increase customer satisfaction and loyalty. Employee behaviour is often an integral part of the service product. This is not true in a manufacturing operation, where employee behaviour may affect product quality, but is not a part of the product. People constitute an important dimension in the management of services in their role both as performers of services and as customers. People as performers of service are important because, a customer sees a company through its employees. The employees represent the first line of contact with the customer. People can be subdivided into:

(i)       Service personnel: Service personnel are important in all organisations but more so in an organisation involved in providing services. The behaviour and attitude of the personnel providing the service is an important influence on the customer’s overall perception of the service and he can rarely distinguish between the actual service rendered and the human element involved in it. Customer contact is very important concept in services, which refers to the physical presence of the customer in the system. The extent of contact refers to the percentage of time a customer ought to be in the system out of the total time it takes to serve him. The low contact services include bank, post offices or retailing and the high contact services include hotels, educational institutions, restaurants and hospitals. Services with high contact are more difficult to control and manage because a longer customer contact is more likely to affect the time of demand, and nature of service and its quality;

•      Careful selection and training of personnel;

•      laying down norms, rules and procedures to ensure consistent behaviour;

•      ensuring consistent appearance; and

•      reducing  the  importance  of  personal  contact  by  introducing  automation  and computerization wherever possible.

(ii)          Customers: Customers are important because they are a source of influencing themselves, being actively involved in service delivery, and other customers as well. In case of doctors, lawyers, consultants one satisfied customer will lead to a chain reaction, bringing in his wake a number of other customers. So, its an important task of service marketers to ensure complete satisfaction of the existing customers. The kind of customers that a firm attracts exerts an important influence on prospective customers. The prospective customer may feel attracted towards the organisation e.g.

 

PHYSICAL EVIDENCE

It refers to the environment in which service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service. The physical evidence of service includes all of the tangible representations of the service such as, brochures, letterhead, business cards, report format, equipment, etc.

Packaging importance stems from the fact that it is what comes in between the product and the customer’s eye. The product package is a visual representation of the whole marketing effort. The customer judgement and evaluation are often based on the product packaging.

Physical evidence is to a service, what the packaging is to a product. In services, the product itself being intangible, the need is to tangibles it as far as possible. Thus, physical entities can be successfully employed to describe the service product and its distinguishing qualities. Since the potential customers form impressions about the service organisations on the basis of physical evidence, like building, furniture, equipments, stationery and brochures, it becomes imperative that the marketers manage the physical evidence in a manner that reinforces the proposed position and image of the organisation.

There may be two kinds of physical evidence:

(i)       Peripheral evidence: It is actually possessed as a part of the purchase of service but by itself is of no value. An airline ticket, cheque book, or receipt for a confirmed reservation in a hotel are examples of peripheral evidence. A cheque book is of value only if customer has money in the bank, without that it is of no significance. Peripheral evidence adds on to the value of essential evidence, such as writing pad, pen, match box, complimentary flowers and drinks, etc. in a hotel, which customer may take away. Such evidence must be designed keeping in mind the overall image which the organisation wishes to project and the reminder value of the evidence in its ability to remind the customer about the organisation.

(ii)        Essential evidence: Whereas the peripheral evidence is possessed and taken away by the customer, the essential evidence cannot be possessed by the customer; the building, its size and design, interior layout and decor, logo, etc. of the organisations are constituents of essential evidence. The essential evidence is a very critical input in determining the atmosphere and environment of the service organisation.

Physical evidence can be used to build strong association in the customers’ minds and service can be differentiated from the competitor’s similar offering. By making the service more tangible and making it easier for the customer to grasp the concept of the service, marketers can create the ideal environment for the service offering.

PROCESS

Process in services refers to the actual procedures, mechanisms, and flow of activities by which the service is delivered- the service delivery and operating systems. In a service organisation, the system by which customer receives delivery of the service constitutes the process. In fast food outlets the process comprises buying the coupons at one counter and picking up the food against that at another counter. The process of a delivery function which can be compared with that of operations management implies the conversion of input into the finished product. But, in a service organisation, there is no clear cut input or output. Rather, it is the process of adding value or utility to system inputs to create outputs which are useful for the customers.

The process by which services are created and delivered to the customer is a major factor within the services marketing mix, as services customers will often perceive the service delivery system as part of the service itself. Thus, decisions on operations management are of great importance to the success of the marketing of the service. In fact, continuous coordination between marketing and operations is essential to success in most services businesses. Identification of process management as a separate activity is a prerequisite of service quality improvement. The importance of this element is especially highlighted in service businesses where inventories cannot be stored. Through the introduction of automatic teller machines banks have been able to free staff to handle more complex customer needs by diverting cash only customers to the ATMs. If the processes supporting service delivery cannot, for example, quickly repair equipment following a breakdown or provide a meal within a defined period, an unhappy customer will be the result. This suggests that close cooperation is needed between the marketing and operations staff who are involved in process management. By identifying processes as a separate marketing mix element, its importance to service quality is duly recognized.

Service Design and delivery

Thus customer’s requirements and the performance standards that the service needs to satisfy form the specifications for design. The design consists of four related components:

(i)            Product design

(ii)          Facilities design

(iii)        Service operations process design.

(iv)        Customers service process design.

Service product design refers to the design of the physical attributes of the service. The subscription options for home cable television service or the banking transactions that are available through an automatic teller machine are examples of such attributes. These attributes may involve the assembly of raw materials or developing software.

Further the service facility design refers to the design of the physical layout of  the facilities. Customers’ perceptions of the quality of the service are influenced by attributes such as the cleanliness, spaciousness, lighting and layout of the environment, where the service takes place. In addition to these facilities, other additional facilities such also need to be designed. The efficiency of service operations depends on the configuration of these facilities.

Service operations process design refers to the activities that are needed to deliver or maintain a service. The activities that make up the operations processes are those required for the service to deliver its output. By contrast, the activities comprising the customer service process design pertain to the interactions between the customer and the service provider. For example, in the car rental example described above, in addition to the operational steps, the representative may greet the customer on arrival, refer to him by name, ask him for his preference of cars, and bid him farewell on departure.

The customer service and service operations activities together make up the car rental process. The quality of the service experience depends on the performance of both types of activities. These activities therefore need to be designed together.

 

STEPS IN SERVICE DESIGN

A real design exercise involves the complex interactions of a variety of technical and non- technical factors that affect the quality of the design. In order to design a product, it is important to employ a methodology that integrates the technical aspects of the design with the marketing and management principles that are required to ensure the commercialization of the product. Such a methodology is referred to as total design.

Step 1:	To involve the customer in designing process.
Step 2:	To determine the specifications of the design from these customers.
Step 3:	To determine the technical aspects of the design from these customer as per the specifications. The technology should be a derivative of the customers need and not the other way around.
Step 4:	To design the service using a multi-function team with.
Step 5:	To test the design in the marketplace, and not in the laboratory. A successful design should not only be one that creatively applies the latest technology, but should also be one that customers like, purchase, and use

 

SELF ASSESSMENT QUESTIONS

1.      What do you think are the main reasons for including the element of ‘People’ in the marketing mix for services?

2.      Do you think ‘physical evidence’ really matters in marketing of services? Explain.

3.      Explain the ‘process’ as one of the important element of marketing mix with suitable examples.