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It is Indias vastness that challenges the imagination: the sub-continent, 3200km (2000 miles) from
the mountain fastness of the Himalaas in the north to the tro!ical lushness of "erala in the south, is
home to one si#th of the $orlds !o!ulation, a diverse culture and an into#icatingl richhistor%
&he most fre'uentl visited !art of India is the (olden &riangle ) *elhi and the magnificent
monuments of +gra and ,ai!ur, a legac of centuries of -uslim rule )but there is much besides% &he
unfairl maligned great cities of -umbai and "olkata (.alcutta) have a bustling, colourful charm,
$hile the hol cit of /aranasi or the a$e-ins!iring tem!les of &amil 0adu are $orth ob1ects of
!ilgrimage% 2or those $ho !refer more sbaritic !leasures, the !alm-fringed beaches of (oa have a
3uro!ean charm all of their o$n%
Hinduism is !racticed b 45 !er cent of Indians, the religious rites and red-letter das $oven into the
fabric of everda life ) ritual $ashing in the (anges and the ear-s!litting celebrations of the festival
of (anesh ) and the ine'ualities of the caste sstem are there for all to see%
6ne of the fascinations of India is the 1u#ta!osition of old and ne$7 centuries of histor ) from the
!re-historic Indus civili8ation to the 9ritish :a1 ) rub shoulders $ith the com!uter age7 and
9angalore;s <=ilicon /alle is as much a !art of the $orld;s largest democrac as the remotest
village is%:ichard Ho!ton%
SWOT Analysis.
Indias geogra!hical location, a culmination of deserts, forests, mountains, and beaches%
+ $ealth of archeological sites and historical monuments%
-an!o$er costs in the Indian hotel industr are one of the lo$est in the $orld% &his !rovides better
margins for the industr%
>ack of ade'uate infrastructure% &he airlines in India, for e#am!le, are inefficient and do not !rovide
basic facilities at air!orts% &he road condition in India is ver bad%
0o !ro!er marketing of Indias tourism abroad% 2oreigners still think of India is one of !overt,
su!erstition, and diseases% &he case of !lague in =urat in ?@@A led to decrease of 3BC in arrival of
foreign tourists in India%
-ore !roactive role from the government of India in terms of framing !olicies%
+llo$ing entr of more multinational com!anies into the countr giving us a global !ers!ective%
(ro$th of domestic tourism% &he advantage here is that domestic tourism and international tourism
can be segregated easil o$ing to the different in the !eriod of holidas%
Dolitical turbulence $ithin India in "ashmir and (u1arat has also reduced tourist traffic%
+ggressive strategies ado!ted b other countries like +ustralia, =inga!ore in !romoting tourism%
Basis of Segmentation.
?% oli!ay" -ass market, Individual market, and Do!ular market%
2% #eman!" Drimar, =econdar, and 6!!ortunit%
3% $eography" International, according to regions, etc%
A% %sy&hology" >ifestle, Dersonal motive, and "no$ledge%
5% #emography" +ge, =e#, and religion%
B% So&ioe&onomi&" :ich, !oor, rural, urban, literate, illiterate%
E% %urpose" 9usiness travel, .ultural &ourism, and common interest convention%
4% Age" &eens, kids, outh and senior citi8en%

+nother method of classifing users of tourism services is on the basis of the fre'uenc of usage of
'on(users" &he are not interested in using the services% &he lack the $illingness, desire and
abilit (income and leisure time)%
%otential Users" &he are also called the !ros!ects or the !ros!ective users% &he have the
$illingness but the marketing resources have not been used o!timall to influence their im!ulse%
&he bear the efficac and the marketing !rofessionals are su!!osed to ca!itali8e on their !otentials
b using creative !romotional measures%
A&tual Users" &he are alread using the services generated b the tourist organi8ations%
O&&asional Users" &he have not formatted the habit of traveling%
a)itual Tra*elers" &he have formed a habit of avail of the services regularl%
&he variet of users makes it essential that !rofessionals stud and understand their changing
behavioral !rofile% &his $ould sim!lif the task of creating and stimulating demand% &he marketing
decisions cannot be creative and !roactive unless an in-de!th kno$ledge of the users is kno$n%
&he individual s!ecific behavior in the market!lace is affected b internal factors such as needs,
motivation, !erce!tion and attitudes as $ell as b e#ternal factors such as famil, social grou!s,
culture, and economic and business influences% Fhile studing the behavioral !rofile the stud of
lifestles is most im!ortant%
&hus it can be said that arriving at sound marketing decision cannot be !ossible unless a sound
marketing !lan and o!timal marketing resources are develo!ed%
%ositioning the %ro!u&t.
&he $orld is literall full of travel !roducts% 0ot onl the travelers offer a huge variet of
destinations, the also have man hotels, airlines, car rental com!anies attractions ad other travel
!roducts from $hich to choose%
&he !erce!tion of the consumer for a !articular !roduct is a critical variable in the marketing
!rocess, one that has a great influence on !urchasing decisions, es!eciall decisions among similar
Ser*i&e Marketing Triangle.
Company +MT#C, SOTC, IT#C, et&.-
3nabling Dromises -aking Dromises
%ro*i!ers Customers
+Tra*el Agents,oteliers, et&.-
=ervice marketing is uni'ue in man $as in the travel and tourism industr% &here are 3 !laers in
the transaction !rocess:
Company" + travel and tourism com!an listens to the customers and evolvesGdevelo!s the
travelGtour !ackage and it communicates the attractiveness and the utilit of that ver tour !ackage
directl to the customers% &he com!an makes !romises to the customers%
&he com!an in the &ourism =ector can be the .entral (overnment, the =tate &ourism .or!orations,
&our 6!erators such as =6&., I&*., etc% the com!an carries out <3#ternal -arketing as $ell as
<Internal -arketing%
3#ternal -arketing: It makes !romises to the customers, for e%g% the -alasian governments
advertisement H-alasia, &rul +siaI that !romises a veritable cultural !aradise to the customer%
Internal -arketing: &he .om!an enables the !roviders to fulfill the !romises made b it to the
customers% 2or e#am!le, the -alasian (overnment maintains the local trans!ortation $ithin the
countr, maintains the tourist s!ots such as "> &o$ers, etc%
%ro*i!ers" &he are a travel com!ans internal customers constituting em!loees and agents% &he
com!an does internal marketing $ith the !roviders educating and motivating them about the idea of
the !articular tour !ackage that the can offer to their customers% &his is done to enable the !roviders
to effectivel carr out the survive trans!ortation !rocess% &he !roviders make !rovisions for office
s!ace, accessibilit and connectivit% &he com!an enables !romises to be ke!t b this infrastructure
&he Droviders include all the entities that finall fulfill the .om!ans !romise to the .ustomers%
&he undertake <Interactive -arketing, because the are in touch $ith the final customer% &hus in
the case of the -alasian government, this $ould include the trans!ortation !roviders (-alasian
+irlines, +ir India, >ocal
9us trans!ortation, >ocal &rains in "uala >um!ur, .ar and t$o-$heeler rentals), the different hotels
$ithin -alasia, souvenir outlets at tourist areas, tourist s!ots ("> &o$ers, &$in &o$ers, etc%),
restaurants ("2. ,oints, -ar 9ro$n, Di88a Hut), etc%
Customer +Tra*elers-" &he customers are the reasons that the &ravel .om!an e#ists and for $hom
the com!an has designed the traveling and touring !ackage as $ell as setu! the infrastructure
facilities and s!ent mone on em!loee develo!ments !rograms% Here the !roviders are the onl
ones $ho interact $ith the customers, like the travel agents interact $ith the customers and not $ith
the com!an% &he agents !erform interactive marketing that is <on time, all time, ever-time% &his is
the most crucial of service marketing in the travel and tourism sectors% &hose agents have the
res!onsibilit of <kee!ing !romises made and enabled b the com!an% &he !roviders (agents) are
res!onsible for the !erceived 'ualit level of the service transaction% &his underlines the uni'ueness
of service marketing%
In !lanning its market offering, the marketer needs to think through five levels of !roduct% 3ach level
adds to the customer value, and the five constitute a customer value hierarch%
&he levels of the !roduct that the travel and tourism industr offers to its customers are as follo$s:
?) .ore !roduct
&he core !roduct offered b &ravel and &ourism industr is the destination% It is core because the
main aim of the tourist is the destination $here he has to reach or go%
2) 9asic !roduct
&he basic !roducts offered b &ravel and &ourism industr are ticket booking, trans!ort, sight
seeing, hotel booking%
3) 3#!ected !roduct
&hese are the !roducts that the customer e#!ects the organi8ation to offer% &hese are im!eccable
services, seat availabilit on needed time as it is critical to business travelers, accurate information,
'uick check in for the senior manger of the com!an, authentic information, information about
various !ackages, different routes leading to a !articular destination%
A) +ugmented !roduct
&hese are the !roducts that are offered b the com!anies to distinguish itself from others% &hese
!roducts become e#!ected !roducts in the future% &hose are flat beds in business class, Fi-2i
connection in hotels, customi8ed meals on board, tele checking 4hrs booking in hotels, hotels
!roviding la!to!s on re'uest, internet access as com!limentar for the cor!orate !ackages%
5) Dotential !roducts
&hese are the future !roducts that the com!anies $ill offer to its customers% &hese can be under$ater
tourism, hovercraft for traveling% +lso /irgin +tlantic airlines are thinking of adding a casino and a
sho!!ing mall in the airline%
Droduct $idth of the !roduct mi# refers to ho$ man different !roduct lines the com!an carries%
&he $idth of the !roduct mi# refers to ho$ man variants are offered of each !roduct in the !roduct
&he !roduct length is the total number in the !roduct lines%
&he $ell-kno$n conce!t of five-'ualit dimension :+&3:, $e hereb relate them to Es of &ravel
and &ourism% =o $hat do $e mean b Es &ravel and &ourism Industr and $hat is its significance in
relation to :+&3:%
2- RE0IABI0IT3 ( Su&hna ( Information
&he $a and the kind of information, $hich is !rovided, b an &ravel and &ourism organi8ation to
its customers is the !arameter of 1udging the :eliabilit of that organi8ation% Fh do $e make such
a statementJ &o e#!lain that let us take an e#am!le of &ravel agenc% &he various services !rovided
b agenc includes Dlanning Itinerates, &icketing, Forking out travel routes , Droviding information
on *estinations ,+rranging visas, -aking sta reservations% Here information !las a ver dnamic
role% >et us assume that the customer comes for booking a ticket% It is ver im!ortant on the !art of
the service !rovider (travel agenc) to give accurate information on all t!es of flight available, their
fairs, and ne$ schemes going on $hich $ould in turn hel! customers to choose most suitable
!roduct for their traveling% =uch re!eated and accurate information creates of a reliable organi8ation%
I%e% in future the customer $ould trust the organi8ation for an information%
4- ASSURA'CE ( Suraksha ( Safety
It is one of the !rime factors considered $hen talking about this sector% + safe travel is the to!
!riorit of an traveler% &hus it is ver im!ortant for &ravel and &ourism organi8ation to consider the
safet of the tour !ackage% &he safe travel $ill in turn ensure the customers traveler%
5- TA'$IB0ES ( S6agat 7 Su*i!ha 7 Safai.
&hese are the backstage elements, $hich hel! in a great $a for the customers to evaluate the
service% Fhen $e talk about tangible !roduct in &ravel and &ourism the ?
$ould include
a- S6agat
It means $arm $elcome% 3verone loves a $arm $elcome% It reall gives a good start to the $hole
holida% &hus kee!ing this tangible factor in mind the tourism agencies for e#am!le &homas cook
al$as kee!s in mind the =$agat of their traveler% 6ne good e#am!le of such is in this !ackage of
&homas cook from -umbai to (oa, $herein the give a $elcome drink to travelers and !rovide
them $ith a fruit !latter and famous cashe$ nuts of (oa%
)- Su*i!ha
It means facilit% &oda if ou talk to! an business traveler the $ant to be !am!ered sill from flat
beds in business class to Fi-2i in hotels customi8e the needs% &hese are the kind of facilities the
e#!ect% &hus if a &ravel and &ourism organi8ation is able to !rovide all such demanding facilities
then it adds value to its travel !roducts and makes the !roduct hike from standard 'ualit level to
su!erior 'ualit level%
&- Safai
It means cleanliness% Hgiene is also an im!ortant factor of a travel !ackage% .lean hotel rooms and
lobb create a s!ik and s!an im!ression of the !ackage and add to the 'ualit level%
8- EM%AT3 ( Sahyog 7 Cooperation.
+ famous 'uote from =te!hen .o$e book goes like this )H=eek to understand and then to
understoodI is ver im!ortant% &hus the<s that $e relate to em!ath is sahog i%e% co-o!eration i%e%
listen to the customers understand them and co-o!erate $ith them to come do$n to a solution this
factor creates a ver !ositive im!ression in the minds of the customers and hel!s the service to get a
tag of its e#cellent service 'ualit%
9- RES%O'SI1E'ESS(Sanra&hna 7 Information.
&his is the last element in the conce!t of :+&3:% It is related to the last<s i%e% =anrachna $hich
means infrastructure% Fh do $e relateA infrastructure to res!onsiveness is because ho$ fle#ible is
the infrastructure of &ravel and &ourism organi8ation affects the service res!onsiveness% 2or e#am!le
if ou !lan and book a Kualis car to travel from !lace + to !lace 9 and if the car breaks do$n then
ho$ fast can ou res!ond b re!lacing it $ith a ne$ car sho$s the fle#ibilit of the infrastructure
i%e% the no of cars%
COM%0AI'T A'#0I'$
0o matter ho$ $ell !re!ared ou are there is al$as the !otential for something to go $rong% &he
$a ou and our !ersonnel handle com!laints can be the determining factor in turning a LdisasterL
into a Lsuccess%L &ourism M -ore offers the follo$ing ideas on handling com!laints:
?. Listen. Fhen a visitor is angr or u!set allo$s the !erson to kno$ that heGshe is being heard%
Dre!are our !ersonnel to listen and to handle each com!laint as if it $ere the most im!ortant !art of
their da%
2% Understand. -ake sure !ersonnel have a full understanding of the com!laint% Drior to res!onding
to the com!laint the need to determine the e#act nature of the com!laint% Dersonnel should tr to
focus in on the main conte#t of the com!laint, and not be diverted b side issues%
3% Take Action. &he visitor should see that heGshe matters, and that ou seriousl consider their
com!laint% -ake sure the u!set visitor kno$s e#actl $hat can or cannot be done, and $hat heGshe
ma e#!ect as a form of recom!ense% If the !roblem cannot be solved, immediatel tell the visitor
a!!ro#imatel ho$ long it $ill take to find a solution% 6ften something as sim!le as an ine#!ensive
com!limentar gift or some s!ecial attention from the manager or boss can turn a negative situation
into a !ositive one%
A% Learn. 3ver com!laint andGor com!lainer !rovides a the tourist !rofessional $ith a learning
e#!erience% Have our !ersonnel share $ith colleagues $hat things $ent $rong, and the ste!s the
took to correct the situation% "ee! records of !ast com!laints, not onl for in-house training
!ur!oses, but also as a guide of future !roblems to !revent%
#EA0I'$ WIT #I::ICU0T %EO%0E
Here are some suggestions to hel! our staff co!e $ith the angr guest%
1 Do not fight to win every battle. 6ften it is easier to sim!l sa, LNes =irG-am ou are right%
/er fe$ angr visitors are $illing to listen to our side of the stor%
2%Take the angry erson o!t of a !blic area. Fhenever an angr !erson decides to do battle in
front of other LguestsL ou lose% Invite the !erson into a !rivate room, offer himGher a drink and
then listen%
3% "ake s!re that yo! know that the angry erson knows that yo! will deal with the iss!e at
that #o#ent. Nour credibilit $ith an angr tourist is ver lo$7 telling himGher that ou $ill
get to the !roblem $ill onl make the visitor even angrier% =tart the re!air !rocess
at that moment% >et the visitor see that ou are doing something%
A% Use the erson$s right na#e and title. If the angr visitor introduces himGherself as L*r% =mithL
don;t sa -r% or -s% =mith and don;t use a first name unless given !ermission% &he misuse of
names or titles onl adds fuel to an alread e#!losive situation%
5% "ake s!re that the erson addressing the roble# is co#etent to solve it. If a member of our
staff cannot solve a !roblem, then turning to someone $ho can hel!, is doing something% 0ever 1ust
shrug one;s shoulders and sa LsorrOL
B% Rather than getting angry% try to think of so#ething co#ical. 2or e#am!le, imagine $hat
this !erson $ould look like angr in hisGher under$ear, and then laugh to ourself%
D+:& II
1 Don$t be defensive. &r to understand that !eo!le on vacation are often a bit irrational% Instead
of reacting in a negative $a, cooll ask ho$ ou can make their situation better
2 &n a like #anner% never arg!e% b!t rather aologi'e. 6nce the a!olog is made the
u!setGdifficult !erson is more $illing to listen% Fin b losingO
3 &n a like #anner% never arg!e% b!t rather aologi'e. 6nce the a!olog is made the
u!setGdifficult !erson is more $illing to listen% Fin b losingO
?% Dress in a rofessional manner% It is ama8ing ho$ much more res!ect a $ell dressed
functionar receives% It is a lot easier to deal $ith a difficult !erson $hen dressed in a suit
rather than in 1eans%
In !ricing decisions, the !roduct or the service mi# of the tourist organi8ation is im!ortant% &he
have to set !rices in line $ith the 'ualit of services to be made available to the customers and the
t!e of customers the are targeting% Dricing decisions are influenced b internal factors like !ricing
!olic of the com!an, and e#ternal factors like the destination itself% &he are re'uired to think in
favor of discounting !rice% &hese ma include discounts for cash !aments, seasonal discounts, trade
discounts etc% 9ut $hile offering the discounts, it is not to be forgotten that it ma also create image
!roblem since some of the value sensitive tourists ma doubt the 'ualit%
.reation of a$areness has a far-reaching im!act% &he tourist organi8ations bear the res!onsibilit of
informing, !ersuading and sensing the !otential tourists in a right fashion% &he marketers need to use
the various com!onents of !romotion o!timall so that the succeed in increasing the number of
habitual users% Dromotion hel!s in ma#imi8ing the duration of sta, fre'uenc of visit b offering
ne$ tourist !roducts in the same countr to areas, $hich have remained unta!!ed or !artiall ta!!ed%
&he various dimensions of tourism !romotion are as follo$s:
A!*ertising" +dvertisement gives im!ortant information to the actual and !otential tourists% Its
coverage is $ide% +dvertising is aimed at the !ublic to create a$areness of the travel offers available
on a resort and its attractions to influence their business decisions% Intangibilit can be com!ensated
$ith the hel! of visual e#!osure of scenes and events% Fe can !ro1ect hotel bedrooms, $ell-arranged
restaurants and cafeterias, s$imming !ools etc%
%u)li&ity" It focuses attention on strengthening the !ublic relations measures b develo!ing a
ra!!ort $ith media !eo!le and getting their !ersonali8ed su!!ort in !ublici8ing the business% It hel!s
in !ro1ecting the !ositive image of tourist organi8ations since the !ros!ects trust on the ne$s items
!ublici8ed b the media !eo!le% &he !ublicit !rogram include regular !ublicit stories and
!hotogra!hs to the ne$s!a!ers, travel editors, contact $ith maga8ines on stories etc% advertising is a
!art of !ublicit%
Sales promotions" =ales !romotion measures are the short-term activities seeking to boost sales at
!eak demand !eriods to ensure that the firms obtain its market share and are used to hel! launch a
ne$ !roduct or su!!ort an ailing or modified one% &he tool of sales !romotions is designed to a!!eal
!articularl to those customers $ho are !rice-sensitive% &here are a number of techni'ues to !romote
sale and the tourist !rofessional need to use them in the face of their re'uirements vis-P-vis the
emerging trends in the business% 3g% In the tourism industr, a travel com!an offers give-a$as to
their clients, such as flight bags, $allets for tickets, 2oreign 3#change (2ore#) and covers of
!ass!ort% &he hotels offer a number of facilities like shoe shine clothes, first aid se$ing kits, sho$er
ca!s and sham!oo% 2urther, the /ID clients also get fruits and flo$ers in their rooms%
Wor!(of(mouth %romotion" -ost communication about tourism takes !lace b $ord-of-mouth
information, $hich in a true sense is $ord-of-recommendation% In the tourism industr it is found
that the $ord-of-mouth !romoters !la the role of a hidden sales force, $hich hel! the !rocess of
selling% &he high magnitude of effectiveness of this tool of !romotion is due to high credibilit of the
channel, es!eciall in the ees of the !otential tourists% &he sensitivit of this tool makes it clear that
tourist organi8ations need to concentrate on the 'ualit of services the !romise and offer% &he
marketers or the tourist organi8ations need to kee! their ees o!en, identif the vocal !ersons or the
o!inion leaders and take a s!ecial care of them so that the kee! on moving the !rocess of
stimulating and creating demand%
%ersonal Selling" Dersonal =elling is based on the !ersonal skill of an individual% &he travel and
hotel business de!end considerabl on the !ersonal selling% &he develo!ment of travel and tourism
has been !ossible due to $ell-educated and trained sales !ersonnel% &he develo!ment of tourism
business has been influenced b the services rendered b the travel agents and travel guides since
the $ork as information carriers% Dersonal selling is the !ersonal !resentation of a tangible !roduct
or intangible services or ideas to the customers% It is im!ortant to mention that in the tourism
industr, the !ersonnel $ho attend tourists form an essential ingredient of the !roduct, such as sales
!ersonnel are found res!onsible for dealing $ith customers behind the counter, the resort
re!resentatives cater to the need of tourists $hen the reach the destination etc% all of them !la a
vital role in ensuring that the tourism !roducts satisf the tourists% &he !hrase- the customer is
al$as right a!!lies s!ecificall to the tourism industr% 0o reduction in !rice $ould com!ensate for
im!olite and indecent travel guide, a solvent $aiter and a surl or a haught coach driver% &hese
facts are testimon to the !ro!osition that the travel business is linked $ith the !erformance and
behavior of sales !ersonnel or travel staff%
Telemarketing" It is a method of selling in $hich a !rofessionall sound telemarketer markets the
business% &he 'ualit of technolog and the communicative abilit of the telemarketers determine
the magnitude of success of this com!onent% In tourism, the travel agents, offices of air$as,
rece!tionist, and secretaries cant $ork efficientl if the tele!honic services are not u! to the mark%
+lso recruiting a !erson considered to be !rofessionall sound, !ersonall-committed sales
!ersonnel having an in-built creativit, innovation and imagination is ver im!ortant%
E;hi)itions &he !artici!ants include state and national tourism !romotion boards, travel agents and
tour o!erators, airlines, car rentals, cruise liners, holida financiers, technolog !roviders, hotels and
resorts, education institutions in the field of hos!italit and tourism% 6ver the ears the !artici!ation
of foreign tourism !romotion boards like the *ubai &ourism and the -auritius &ourism, etc has
increased in order to aggressivel !romote their res!ective countries%
%0ACE MI/.
-ost tour o!erators sell their services through travel agents, ho$ever some deal directl $ith the
consumers and eliminate middlemen% 2or e#am!le, &homas .ook has its o$n branches situated
throughout the countr so the are easil accessible% &he customer, in the travel and tourism
industr, has to go to the service !rovider% Hence strategic locations are ver im!ortant for &homas
.ook% 6ther com!anies ma also utili8e more than one method of distribution%
&rans!ort also !las a ma1or role in the tourism industr% It makes the destinations accessible to
!eo!le from around the $orld% +lso, in the case of tangible !roducts in tourism such as souvenirs
and cuisine, trans!ortation becomes a ma1or logistical com!onent%
E/TE'#E# 5 %<S O: MAR.ETI'$
>ike other industries, the tourism industr de!ends substantiall on management of human
resources% &he tourism industr is an amalgam of the services of a lot of !eo!le and hence this
industr cannot $ork efficientl if the travel agents, tour o!erators and travel guides lack $orld class
!rofessional e#cellence% 6f course the offices of travel agents de!ends on the ne$ technolog but
after all em!loees and the other staff contribute significantl to the !rocess% &he travel guides need
!rofessional e#cellence since the !ro1ection of a !ositive image regarding a destination in !articular
re'uires their due coo!eration, failing $hich even the $orld class services offered b the travel
agents are found meaningless% &he tour o!erators also need to manage human resources efficientl%
In the management of !eo!le, the related organi8ations are re'uired to think in favour of
develo!ing an ongoing training !rogram so that $e find a close relation bet$een the develo!ment of
technologies and the 'ualit of !ersonnel $ho are su!!osed to o!erate and maintain the same% &he
need a lot of credentials to fulfill the e#!ectations of the customers% &he organi8ation has to make the
environmental conditions conducive and focus has to be laid on the incentives to the em!loees for
energi8ing the !rocess of !erformance orientation% 3m!loee orientation re'uires due $eightage to
efficienc generation, value-orientation and !erfection%
In the tourism industr the travel agents and the travel guides are the t$o most im!ortant !eo!le $ho
s!eak a lot about the industr% Hence it is im!erative that the have to be at their best at all times%
&ravel guides es!eciall, are e#!ected to have a lot of !atience, good sense of humour, tact to
transform the occasional tourists into habitual ones, thorough kno$ledge of the !laces, linguistic
skills etc%
&he (overnment !las an im!ortant role in !roviding the right kind of !eo!le for this industr% +s
such there are a lot of (ovt% and Dvt% Institutes $hich offer training for the same%% &he training
courses run b the Institutes are designed to suit the needs of the various target grou!s%
D36D>3 - in service marketing includes
6&H3: .Q=&6-3:=
3-D>6N33= ) &he are the re!resentatives of the com!an% &heir !erformance can create a
!ositive as $ell as negative im!act of the service !rocess and the image of the com!an% "ee!ing
<!eo!le factor health is one of the !rime concerns of the com!an% Fhen $e talk about !eo!le in
travel and tourism industr, the are reall crucial !art as at ever stage the !la a role of the
service !rovider on the stage of service encounter also kno$n as moment of truth%
=3:/I.3 30.60&3: )
&he so-called stage service encounter or moment of truth is the element of interaction bet$een those
!roviding services and the customers% &he instances of service encounter in travel and tourism
industr are )
In the ticket booking !rocess $hen the customer calls the service !rovider that is the front
line staff in order to book the tickets is the first service encounter incidence% Its the moment
of truth $here, there is one to one interaction bet$een the service !rovider $ho is booking
the ticket and the customer $ho $ants the ticket booked% &his interaction takes !lace on the
In the itinerar !lanning !rocess the service encounter takes !lace $hen the customer visits
the travel and tourism agenc to !urchase a holida !ackage and meets the travel manager%
Fhen the customer is e#!eriencing the holida !ackage there are numerous service
encounters that he goes through and one of them is his constant interaction $ith the tourist
&hese $ere some e#am!les of service encounter%
&his stage is a ver crucial one $here in the !rovider has to !erform at the o!timum level in order to
avoid the customer from having the e#!erience of credence 'ualit%
.:3*3.3 KQ+>I&N
Is the 'ualit, $hich is difficult to evaluate, and $hen ou ask the customer the 'uestion on ho$ $as
the serviceJ He usuall gives vague ans$ers like <it $as ok, <I dont kno$%
+ ver im!ortant conce!t in <!eo!le is the ) service !rofit chain% In the service !rofit chain the first
ste! is to kee! the internal customers ha!! and satisfied the internal customer being the em!loees%
&o kee! them follo$ing !oint have to be taken care of
Fork !lace design
,ob design
3m!loee selection and develo!ment
3m!loees re$ards and recognition
&ools for serving customers%
&hese as!ects in turn lead to em!loee satisfaction, $hich $ould result in to em!loee retention and
!roductivit, this $ould result in !roviding value services and that $ould ield customer satisfaction%
Fhich $ould lead to customer loalt and finall revenue gro$th and !rofitabilit through referral
and re!eat business%
It is the $a of undertaking transaction su!!ling information and !roviding services on a $a,
$hich is acce!table to the consumer and the effective to the organi8ation% 0o$ to make this
definition of !rocess true, it is necessar for the organi8ation $hich !rovides services to recogni8e
the critical moments in the entire !rocess $hich makes the service acce!table or not acce!table to
the customer de!ending on the 8one of tolerance and effective or not effective to the organi8ation%
2urther to reali8e $hat are the critical moments in the considered !rocess a conce!t of blue !rinting
is introduced%
It is a ver im!ortant factor for the travel and tourism industr% &his marketing ! is im!ortant in 2
distinct $as:
?) as the environment in $hich the sales takes !lace
2) the environment $here the !roduct is consumed
3#!lanation of the first case
$hen the !urchasing of the !roduct is taking !lace, ho$ever the customer cannot be sure $hether
the $ill en1o the !roduct or not% In the mean time their e#!ectations and emotions are influenced
b factors like laout of the room, the furniture, noise level, tem!erature, lights and other factors like
the brochure of the com!an% In case of customers $ho b electronicall the a!!earance of the
$ebsite is the !hsical evidence%
3#!lanation of the second case
In the travel industr $here the !roduct is being e#!erienced s !articularl im!ortant in securing
re!eat business thus e#tensive facitilities that !rove to be !hsical evidence are !rovided to lure and
$oo the customer
&he tangibles include flat beds in business class, Fi-2i connection in hotels, customi8ed meals on
board, tele checking 4hrs booking in hotels, hotels !roviding la!to!s on re'uest, internet access as
com!limentar for the cor!orate !ackages%
&he critical incidences in this !rocess are
Qnderstanding the customers needs and e#!ectations from the holida or business tour $hich
ever he or she is o!ting for
-aking an a!t travel !lan and route adhering to the re'uirements of the customer
3#ecution of the !lanned itinerar is the most critical one% +s a com!an has committed some thing
and this is the time $hen the customer is actuall e#!eriencing the entire !roduct and if an one of
the commitments dont materiali8e then the 8one of tolerance is affected and lot as it is alread lo$
because the customer on a tour $hether leisure or business e#!ects !erfection%
&he tourism industr is highl infle#ible in terms of ca!acit% &he number of beds in a hotel
or seats on a flight is fi#ed so it is not !ossible to meet sudden u!surges in demand similarl
restaurants tables, hotels beds and flights seats remain em!t and unused in !eriods of lo$ demand%
In*entory = %erisha)ility
It is related to the fact that travel !roducts are intended to be consumed as the are !roduced%
2or e#am!le, an airline has seats to sell on each flight7 a hotel has rooms to sell for each night% If the
airline is not able to sell all its seats on its flight, or a hotel is not able to sell its rooms for the night
then the o!!ortunit to sell the !roduct is lost forever% Service sector cannot keep inventory like
products. &o overcome this !roblem, the travel industr has come u! $ith various marketing
strategies% 6ne is to overbook% +n airline overbooks its seats to a certain e#tent in antici!ation that
even though certain customers do not turn u! but the flight $ill be full seated% +nother strateg is
multi!le distributions% 2or e#am!le a customer can bu an airline ticket from an airline, tour o!erator
or from a travel agent% &he chances of !erishabilit are reduced% If the tourist cannot visit the !lace,
the o!!ortunit is lost% Hence, this becomes one of its im!ortant characteristics%
+ general norm is that in &ravel and &ourism industr the !roduct or the !ackage of the
tourism can be standardi8ed i%e% for e#am!le of 2 das 3 night in so and so hotel, but the actual
e#!erience of consuming this !ackage is highl inconsistent% Fe hear a lot of travel stories $hich
becomes a !ortraal of a lot of bad e#!eriences for e#am!le the tourist guide ma not be good, the
hotels lodging and boarding $as bad etc% &herefore there is high level of inconsistenc !revailing%
&ravel !roducts cannot be touched as the include flight e#!erience on an air!lane, cruise on
an ocean liner, a nights rest in a hotel, vie$ of the mountains, a visit to a museum, a good time in a
night club and much more% &hese !roducts are e#!eriences% 6nce the have taken !lace the can
onl be recalled and relished% &he tangible !roducts on an air!lane, a bed in a hotel, food in a
restaurant are used to create the e#!erience but these are not $hat the customer is seeking% &he
customer $ants intangible e#!erience like !leasure, e#citement, rela#ation, etc% &he tangible
!roducts that are !urchased !rovide the access to intangibles%
-ost travel !roducts are !roduced and consumed at the same !lace and at the same time%
&his is the o!!osite of the tangible !roducts, $hich are !roduced at a different !lace and time and
consumed at a different !lace and time% In contrast, most travel !roducts are sold first and then, then
simultaneousl !roduced and consumed% 2or e#am!le, an airline !assenger consumes the flight as it
is being !roduced, and a hotel guest uses a hotel room as it is being made available for the nights
slee!% &hus there is simultaneous consum!tion and !roduction% &his creates certain interde!endence
bet$een su!!liers and customers as the interaction bet$een the su!!lier and customer takes !lace on
the su!!liers !remises% &he interaction sha!es the travel e#!erience% 2or e#am!le, the customers
could not take the cruise home $ith them7 in fact the have to leave their home%
:i;e! lo&ation
&ourism destinations are fi#ed locations so effort must be taken in communicating the facilit
to the !otential consumer%
Relati*ely large finan&ial In*estments
3ver modern tourist establishment and facilit re'uires large investment, fre'uentl over a
long time scale% &his means that the level of risk and the rate of return are criticall im!ortant to
tourism management%
&ourism =ervices are high contact services, as !eo!le interact $ith !eo!le at virtuall
3/3:N stage of the $a% &ourism services are ver !eo!le-oriented services, and the service !eo!le
are !lent and have high contact $ith the consumers% &he consumer interacts $ith a mriad of
service !eo!le starting from $hen he books his ticket and throughout the course of his holida%
%EST Analysis of Constru&tion In!ustry
%EST refers to all !olitical, economic, social and technological factors affecting an industr% &he
ob1ective of D3=& analsis is to ob1ectivel stud the environmental factors facing a firm, com!an
or an industr% &he e#ternal environment affects the com!an in man different manner and unlike
internal environment it cannot be influenced much%
Political (actors
&he !olitical factors affecting the construction and housing industr mostl consists of
documentations and !ermits that has to be obtained during the various !hases of construction of a
structure and its sale%
Buil!ing Commen&ement Certifi&ate: .onstruction of a building or an such structure
cannot take !lace unless and until the builder or the com!an secures a commencement
certificate from the authorit, in case of -umbai it is the 9-. $ho gives I6*M..-
Intimation of *isa!!roval M .ommencement .ertificate%
:loor Spa&e In!e; +:SI-" 2=I is basicall a ratio, $hich determines ho$ tall can buildings
or a structure can be constructed on a !articular !lot% &he local authorit issues it%
O&&upation Certifi&ate" +fter the com!letion of construction $ork of a building, the builder
or the com!an has to secure an 6ccu!ation .ertificate $ithout $hich the flats in the
building cannot be occu!ied for residential or commercial !ur!oses%
Brihan Mum)ai Corporation >BMC? #e*eloping %lans" 9-.s develo!ing !lans form
the most basic criteria in selecting a site% &hese develo!ing !lans chart out !re-defined areas,
$hich the 9-. has alread allocated for certain !ur!oses%
3%g% In a given area, some land is reserved for !lantationGfarming, some !iece is ke!t for
industrial establishments like the -I*. area and the other one reserved for residential !ur!oses%
=o the 9uilder finds out the t!e of land, $hich is suitable for his !ur!ose, i%e%7 if he $ants to
build u! a residential com!le#, then he has to do so in the area reserved for residential !ur!oses7
as !er the 9-.s develo!ing !lans%
CR@ +Coastal Re&o*ery @one-" +ccording to this rule a builder cannot carr out an
construction $ithin the radius of half kilometer from sea%
T#R +Transfer of #e*elopment Right-" &his right is available to a builder for
utili8ing the additional 2=I% 0ormall &*: is given b the local -unici!al +uthorit
$ho ac'uires the !ortion of land of builders either for the !ur!ose of constructing
road or for making gardens%
Others" +!art from the above mentioned !oints there is also ta# e#em!tion that is
given for the construction of building on the land having area of more than ? acre%
)cono#ic (actors
:lu&tuations in pri&es of inputs: -an builders tend to sto! $ork $hen the !rices of in!uts
like cement, iron etc goes u! so as to $ait for the time $hen the e#!ect the !rices $ill come
do$n% &his result in unnecessar dela in the $ork and the cost of $asting time $ould
actuall be more than the increase in !rice%
Changes in !eman!" .hanges in demand due to factors like changes in dis!osable income
of !ros!ective buers and inflation% +lso $ith the eas availabilit of housing loans and ta#
e#em!tion on loans the demand for houses is rising%
:uture $ro6th A Resale 1alue: +n !ro1ect must be located in an area that if not full
develo!ed must at least be on the $a% &his is because !eo!le !refer those areas having high
resale value and $ill fetch them a good amount of gain%
Stamp #uty A Registration" Daments of =tam! dut follo$ed b the registration of the
agreement are t$o im!ortant acts $hen one enters into an agreement $ith a develo!erGseller%
Fith the decrease in the stam! dut b 50C it is considered as a good sign for .onstruction
*ocial (actors
Cre!i)ility of the &ompany=firm: Deo!le dont kno$ $hat kind of materials has been used
in the construction of a building or a structure% .redibilit of a builder or the com!an !las
an im!ortant role in convincing the buer to bu the house and be sure of the 'ualit of
construction $ork done% + lo$ credibilit or image can lead to !oor financial !erformance% +
good image is not 1ust built in a da, it takes ears of servicing the societ through follo$ing
high standards of $ork in the !rocess of construction and sale%
%er&ei*e! Image of the property !e*elope!" + flat in a so-called H!oshI area ma
cost much more than a one in a Hnot so !oshI area% &his factor can also determine the success
of failure of a !ro1ect% + flat is selected on the basis of infrastructure facilities like $ater
availabilit, trans!ort facilities, nearness to schools, colleges, hos!itals, sho!!ing com!le#es,
leisure centers, etc%
Buil!ing :a&ilities: &he builders ma offer buildings that have s$imming !ools, health-
clubs, gms M !arks%
Technical (actors
*ue to technical nature of the construction !rocess, the technical environment kee!s on changing
everda% &here are develo!ments in techni'ues used, materials used and various other such as!ects
of the construction business% + fe$ of such develo!ments are as follo$s
%re(stru&ture! Con&rete Blo&ks" &hese are blocks of concrete, $hich are made in the
factories according to the dimensions of the building or structure to be built% It is 1ust like a
1igsa$ !u88le $here these blocks are !ut together using a huge crane and 1oined together
using mortar b $orkers% &his enables 'uick com!letion of $ork and also economies of
Mi;ture of Cement an! San!" no$adas in order to save time the constructor can order the
mi#ture of sand and cement directl from the su!!liers as against the traditional $a of
ordering cement and sand se!aratel and then filtering them and then mi#ing it%
Other EBuipments" other modern machines that are used in construction are the use of huge
drilling t!e of machines to dig the ground, $hich $as before done b $orkers%
C %<s of marketing mi;"
In marketing !roduct refers to the totalit of the offering%
In Constru&tion in!ustry the total !roduct includes services offered b the contractor in the su!!ort
of the core !roduct i%e% !hsical !roduct%
:or the &onstru&tion in!ustry pro!u&ts are "
Dhsical: houses, !ublic and commercial facilities infrastructure M building !roducts%
=ervice: e#!ertise consultanc M design
Dersons and re!utation: eg hafee8 contractor
Ideas and !ro!osals: urban regeneration, regional develo!ment and com!etitions
3ssentials: $ater gas electricit telecommunication, trans!ort facilities
Highl desirable: schools, hos!itals, sho!!ing com!le#es, leisure centers
*esirables: environmentall secure, ada!table%
Droduct offerings can be e#!lained through the total !roduct conce!t $hich consists of core !roduct,
formal !roduct and augmented !roduct%
In the ousing in!ustry:
&he core !roduct consists of : !ermanent accommodation G living s!ace% &he format !roduct consists
of : locations, utilities, electricit, brand name, availabilit of schools and hos!itals nearb%
&he augmented !roduct consists of : securit available clean environment, amenities%
Droduct has to reach the ultimate buer so the com!an $orks $ith its intermediaries to bring to
bring their !roduct to the market% -arketing channels !erform $ork of moving goods from the
!roducer to the consumer%
In the housing and the construction industr construction cannot be transferred but here
intermediaries transfer information of distinct !laces about the availabilit of accommodation so that
not having an idea about these constructions get to kno$ about it% In this industr distribution is
done through real estate agents, $ho acts as connecting tool bet$een the consumer and the !rovider%
+greeing the !rice for a !iece of $ork seals the relationshi! bet$een contractor and the client% It is
the central feature, and reflects the value !laced on the relationshi!%
%ri&es is )ase! on the &om)ination of"
Fhat the market e#!ects
Fhat the client can afford
&he nature of com!etition in the sector
Fhat the contractor can afford to $ork for
+n s!ecific factors concerning the !articular 1ob e%g% location material used
Fhat is being agreed and !aid for- $hether com!letion of a bldg or $ider !rocess offered su!!orted
b maintenance, !re sale and after care agreementsJ
Dricing considerations
2or housing an construction industr there are man considerations:
.a!ital !ro1ects M bldg activities are !riced so that variable costs- the costs incurred as a result
of gaining the $ork-are covered% Ideall the !rice also makes a contribution to the fi#ed costs of
the contracted org% It is also necessar to consider charges incurred b the contractors as the
result of having to under$rite the !ro1ect from ince!tion to deliver M from the need to ac'uire
an s!ecialists e'ui!ment and e#!ertise necessar%
9uilding !roducts are !riced so that an individual !erce!tion of 'ualit value and service are
at a level that the si8e and nature of the can sustain% it is also increasingl common to find
differentiate !ricing a!!roaches as com!etitors seek real and !erceived !rice advantages%
&he !eo!le in housing and construction industr can be divided into grou!s:
&hose $ho develo! the !roduct
&he consists of location hunters architect builders% &he are re'uired to have technical skills of
geological ma!!ing soil testing building designs and so on% &he !ossessions of this skills is of
utmost im!ortance because building cannot be constructed on all t!es of land% +lso materials use to
build houses in different regions because of climatic differences% 3%g% in 3ngland most houses are
builds of $oods $hereas $ood is not a viable !ortion in the tro!ical area% 9uilders $ho do the final
construction consists of civil engineers skilled and unskilled labor
&hose $ho market the !roduct
&hese consists of marketing !eo!le $ho ma or ma not have civil engineering background but
certainl have the skills of understanding the customer as a $ell as the !roduct% &he marketer uses
all the tools that hel! to overcome the uni'ue characteristics the service industr% It includes the
construction of a sam!le flat, $hich $ill break the tangibilit factor intensive advertising to
overcome the !erishabilit factor and so on%
=ervice .om!an can design a su!erior deliver !rocess% 9ecause of heav initial, ca!ital
investment, long gestation !eriod and a s!eculative tendenc (irregular demand) housing and
construction industr $orks other !eo!les mone i%e% construction begins $ith advance booking and
then customers are su!!ose to !a installments most of the !ament is made after the !roduct has
been handed over this strongl e#!eriences intangibilit as!ect of this industr%
In this industr tangible industr is su!!orted b services in $hich the services offered enhance the
client a!!eal for the !roduct this relates to all as!ects of the building and civil engineering $here the
creation of R!articular facilit is su!!orted b the !ro1ect and environment management, client
liaison and s!ecialist consultanc services and sometimes through maintain refurbishment u!grading
and facilities management services and for !ublic !ro1ect sometimes also for general services to
$ider communit%
+ service industr can develo! a more attractive service environment $here a service can be
delivered% In the housing and the construction, sam!le houses !hotogra!hs and !osters of !revious
achievement can be dis!laed in construction offices or those can be sho$n to the customers $hen
the come foe en'uir gets attracted to it%
&he need to !lace the client need rather than the contractor e#!ertise at the core of all
+ttention to all as!ects of !ro1ect design and ince!tion, and the develo!ment of !resales
services and activities the service as!ects of $ork in !rogress and after sales activities%
+ttention to 'ualit and durabilit of the !ro1ect $hen com!lete%
+ckno$ledgement that !resentation is as im!ortant as technological e#!ertise%
.ontinuous attention to service, service e#tension and service develo!ment
&aking the trul enlightened vie$ of the needs $ants and demands of the clients and
commissioner of $ork the !ressure on contractors and consultants and understanding them
&otal enduring im!act of activities on the !articular environment and location in $hich it
takes !lace%
&he construction industr is concerned $ith follo$ing forms of !roduction:
&he !romotion of its ca!abilities and e#!ertise to client and !otential client
&he !romotion of its finished !roducts to the communit and societ at large
&he !romotion of !rofessionals $ithin the industr to each other !romoting s!ecific general and
continuing inter relationshi!s and confidence bet$een architecture, contractor 'ualit surveor
!lanner other consultant civil engineers and sub contractors%
&he !romotion of general confidence, !ublic sm!ath and su!!ort for activities%
&he overall !ur!ose of !romotion is:
Dromotion activities of the construction industr can be divided in follo$ing:
%rimary promotion
#ire&t sales"
&his is targeted at clients !otential clients and other ca!able of using the distinct e#!ertise on offer%
It involves o!ening u! client face to face contact $ith those commission $ork and inviting tenders
and !resenting the distinct e#!ertise on offer in the clients best interest%
Targete! !ire&t market"
If this is to be effective it re'uires kno$ing $ho the !eo!le $ith influence are !romotional material,
brochures, and achievements can then be arranged and !resented and if necessar s!eciall !re!are
on client or sector s!ecific basis%
Se&on!ary promotion
$eneral a!*ertising:
(eneral advertising es!eciall in the trade !ress to ensure continuing general a$areness% 2rom time
to time some construction com!anies have engaged in television and radio ads%
0ogo !esign an! reinfor&ement"
9illboards, hoardings and !erimeter fences%
+ttendance at trade, !rofessional and regional fairs and e#hibit
Other efforts in&lu!e :
=!eculative designs and !ro!osals
Tertiary promotion
%ositi*e me!ia &o*erage
it is in various forms e%g% .ontractors !laces the hoardings at side of the finished bldg stating
com!leted si# months ahead of schedule
$eneral positi*e pu)i& relations"
the current activit that comes under this hading at !resent includes general su!!ort for schools,
colleges and universities and contribution to the general amenities to communities

-arketing the .onstruction industr forms a ver crucial !art% + good a$areness level is re'uired for
our !roduct to be successful% -arketing under this sector is done through various mediums such as:
A!*ertisements in ne$s!a!ers and maga8ines, television and radio and also through e-mails
and $ebsites
Sole selling agen&ies: &hese are agencies that are given the contract of marketing the !roduct
$ho are res!onsible for the sale of the !roduct%
oar!ings: &hese hoardings are !ut u! at the site and contact numbers are given% Hoardings
are also !ut u! at rail$as, road$as and on 9=& buses, etc%
Marketing through Estate agents: &hese estate agents also called as consultants act as
middlemen bet$een the customer and the builder% &he are !rovided $ith brochures and site
Target market"
&he target market i%e% determining the customer are based on the follo$ing considerations:
?% 0o&ality: &he region $here the building is constructed and the t!e of cro$d it $ill attract
$ill have varied e#!ectations% 3%g% $hether its in the suburbs or south -umbai
2% In&ome group an! family siDe: *e!ending on the budget of the customer, a !articular
income grou! !eo!le $ill be given s!ecific t!e of amenities% In a countr like India, ever
!roduct is formed after taking into consideration the famil si8e% 3%g% carsO&&upation: &here are
colonies and societies set u! for !eo!le from the same occu!ation also em!loed b the same
com!an e%g% Indian oil nagar at +ndheri ($est) and :ail$a 'uarters for the rail$a-em!loed
3% Religion, ra&es an! so&ial &lass: &here are societies for !eo!le from a !articular caste e%g%
Darsi colon at andheri ($est)
Ser*i&e en&ounter"
&he total number of interactions bet$een the service !rovider and the customer is kno$n as the
service encounter% &hese interactions are called as the moments of truth%
.onstruction is a secondar service sector unit but is gaining much im!ortance no$% In this $a,
!eo!le (customer) coming directl in contact $ith service !rovider are ver lo$%
&he moments of truth here are during:
?% Fhen the estate agent, $ho acts as a middleman, fi#es a meeting bet$een the service
!rovider (builder) and the customer (buer)% &his is the first meetingG interaction $here
negotiation takes !lace%
2% &he final meeting $hen the deal is finali8ed bet$een the builder and the buer to fulfill all
the formalities%
&his falls under lo$ direct contact service%
Ser*i&e Buality" RATER
&he 5 dimensions of 'ualit can be e#!lained as follo$s:
:eliabilit under construction $ould mean if the builder gives timel !ossession to the buers and
fulfills all his commitments%
.redibilit: &his is the trust develo!ed b the builder, the good$ill that he has attained since so
man ears% 3%g% :ahe1a builders , !eo!le kno$ that if the go to :ahe1as the $ont be cheated% &he
trust$orthiness is maintained since ears%
=ecurit: =trong foundation of building earthing, !ro!er indicators on to$ers as a safet measure, the
building e#terior !aint to be stain resistant%
.ourtes: :es!ect our customers and their suggestions% 9e friendl and understand their com!lains%
.om!etence: the !ersonnel have to be kno$ledgeable in their concerned fields so that an issue
raised on them $ill sort out as soon as !ossible%
In construction, ma1or 'ualit dimension is the tangibilit% 2acilities !rovided are the tangible factors
such as e%g% a builder sho$s a furnished flat he gives good fittings M fi#tures, furniture, a'ua-guard,
intercom facilit, elevators, etc% the most im!ortant tangible factor is the localit of the building%
+ccess: &he customer should be able to easil access an information regarding our !roduct% &he
$as to access can be the site office !resent at the site itself, $ebsites, some organi8ations also have
the facilit of call centers, etc%
.ommunication: >istening to the customers needs and communicating in an eas language%
Qnderstanding: &o understand their needs and make changes according to their necessit%
Fillingness to !rovide !rom!t service% &here are !eo!le a!!ointed in large organi8ations for
handling 'ueries of the customer%
Complain han!ling"
In .onstruction, there is a standard $a of handling com!lains, the customer has to give his
com!lain in $riting to the builder that can be before !ossession or after !ossession and $ithin E das
action is taken% &his also sho$s after sales service given b the constructors%
&he !rocedure to lodge these com!lains can be e#!lained as follo$s:
S&reening an! logging:
&he date the !roblem occurred7 a descri!tion of the !roblem, and an other information should be
formall being given in $riting to the builder
+fter the builder receives the com!lain, he gathers facts about the !roblem and investigates on the
>et the customer kno$ that the matter is receiving attention and ho$ long it $ill take to resolve the
:ormulating a solution:
Fhile formulating a solution, the im!ortant criteria to consider include the $arrant obligations,
customers e#!ectation, and the cost versus benefit of alternative solution% Here, $ithin E das
a!!ro!riate action is taken after considering these im!ortant criterias%
6n !erson $ithin the organi8ation has the ultimate authorit and res!onsibilit for customer
Fhen a customer com!lains the e#!ect 3 things:
?% Out&ome fairness: In construction, if the builder fails to construct the building $ithin the
mentioned !eriod, then he has to give his customers a com!ensation in the form of !roviding
housing facilit to them for the remaining !eriod% e%g% if the construction of the building is
delaed b B months then he has to !rovide the buers $ith housing facilit for B months%
2% %ro&e!ural fairness: Here, the builder takes the res!onsibilit to solve the com!lain $ithin E
das of receiving it in $riting%
3% Intera&tional fairness: &he builder listens to the !roblem of the buer and tries to resolve it%
>istening !las a ver im!ortant role in communication% It is al$as considered here that the
H.ustomer is al$as :I(H&I
India occu!ies an eminent !osition in the civil aviation sector $ith a large fleet of aircrafts% In all, 5B
airlines are o!erating scheduled air services to and through India and 22 foreign airlines are fling
over Indian &erritor% &here are over A50 air!orts and ?0@? registered aircraft in the countr% In
addition to the three !ublic sector airlines +ir India, Indian +irlines, +lliance +ir - there are three
!rivate o!erators -,et +ir$as, =ahara India +irlines M +ir *eccan% &here are also A? non-scheduled
air trans!ort o!erators% +dditionall 3A a!!licants have been granted 06. b the -inistr of .ivil
+viation for setting u! non-scheduled air trans!ort o!eration%
3stimates sho$ that the domestic and international !assenger traffic in India is !ro1ected to
gro$ annuall at ?2%5C and EC res!ectivel over the ne#t decade% 9 the ear 2005, Indian air!orts
are likel to handle B0mn international !assengers and 300,000 tons of domestic and ?%2mn tons of
international cargo%
%EST Analysis" The In!ian Airline In!ustry
%oliti&al :a&tors
In India, one can never over-look the !olitical factors $hich influence each and ever
industr e#isting in the countr% >ike it or not, the !olitical interference has to be !resent
ever$here% (iven belo$ are a fe$ of the !olitical factors $ith res!ect to the airline industr:
o &he airline industr is ver susce!tible to changes in the !olitical environment as it has a great
bearing on the travel habits of its customers% +n unstable !olitical environment causes
uncertaint in the minds of the air travellers, regarding travelling to a !articular countr%
o 6verall Indias recent !olitical environment has been largel unstable due to international events
M continued tension $ith Dakistan%
o &he recent (u1arat riots M the governments inabilit to control the situation have also led to an
increase in the instabilit of the !olitical arena%
o &he most significant !olitical event ho$ever has been =e!tember ??% &he events occurring on
=e!tember had s!ecial significance for the airline industr since air!lanes $ere involved% &he
immediate results $ere a huge dro! in air traffic due to safet M securit concerns of the !eo!le%
o International airlines are greatl affected b trade relations that their countr has $ith others%
Qnless governments of the t$o countries trade $ith each other, there could be restrictions of
fling into !articular area leading to a loss of !otential air traffic (e%g% Dakistan M India)
o +nother as!ect is that in countries $ith high corru!tion levels like India, bribes have to be !aid
for ever !ermit M license re'uired% &herefore constant liasoning $ith the minister M other
government official is necessar%
E&onomi& :a&tors
9usiness ccles have a $ide reaching im!act on the airline industr% *uring recession, airline
is considered a lu#ur M therefore s!ending on air travel is cut $hich leads to reduce !rices% *uring
!ros!erit !hase !eo!le indulge themselves in travel M !rices increase%
&he loss of income for airlines led to higher o!erational costs not onl due to lo$ demand
but also due to higher insurance costs, $hich increased after the F&. bombing% &his !rom!ted the
industr to la off em!loees, $hich further fuelled the recession as s!ending decreased due to the
rise in unem!loment%
So&ial :a&tors
&he changing travel habits of !eo!le have ver $ide im!lications for the airline industr% In a
countr like India, there are !eo!le from varied income grou!s% &he airlines have to recogni8e these
individuals and should serve them accordingl% +ir India needs to focus on their clientele $hich are
mostl lo$ income clients M their habits in order to kee! them satisfied% &he destination, kind of
food etc all has to be chosen carefull in accordance $ith the tastes of their ma1or clientele%
3s!eciall, since India is a land of e#tremes there are !eo!le from various religions and
castes and ever individual travelling b the airline $ould e#!ect customi8ation to the greatest
!ossible e#tent% 2or e%g% + ,ain $ould be satisfied $ith the service onl if he is served 1ain food and
it should be ke!t in mind that the customers ne#t to him are also 1ain or at least vegetarian%
+nother good e#am!le $ould be the case of South West Airlines $hich occu!ies a solid
!osition in the minds of the Q= air travelers as a reliable and convenient, fun, lo$ fare, and no frills
airline% &he ma1or element of its success $as the augmented marketing mi# $hich it used ver
effectivel% Fhat =outh Fest did $as it made the environment inside the !lane ver consumer
friendl% &he cre$ neither has an uniform nor does it serve an lavish foods, $hich indirectl
reduces the costs and makes the consumers feel comfortable%
Te&hnologi&al :a&tors
&he increasing use of the Internet has !rovided man o!!ortunities to airlines% 2or e%g% +ir
=ahara has introduced a service through the internet, $herein the unoccu!ied seats are auctioned one
$eek !rior to the de!arture%
+ir India also !rovides man internet based services to its customer such as online ticket
booking, u!dated flight information M handling of customer com!laints%
Q=&*+ (Q= trade M develo!ment association) is funding a feasibilit stud and $orksho!s
for the +ir!orts +uthorit of India as !art of a long-term effort to !romote Indian aviation
infrastructure% &he +uthorit is develo!ing modern communication, navigation, surveillance, and air
traffic management sstems for India;s aviation sector that $ill hel! the countr meet the e#!ected
gro$th and demand for air !assenger and cargo service over the ne#t decade%
+ !ro!osal for restructuring the e#isting air!orts at *elhi, -umbai, .hennai and "olkata
through long-term lease to make them $orld class is under consideration% &his $ill hel! in attracting
investments in im!roving the infrastructure and services at these air!orts% =etting u! of ne$
international air!orts at 9angalore, Hderabad and (oa $ith !rivate sector !artici!ation is also
+ good e#am!le of the im!act of technolog $ould be that of ++I, $herein $ith the hel! of
technolog it has converted its obsolete and unused hangars into profit &enters. ++I is no$ leasing
these hangars to international airlines and is earning huge !rofits out of it% ++I has also tried to
utili8e s!ace that $as !reviousl $asted installing a lamination machine to laminate the luggage of
travelers% &his activit earns ++I a lot of revenue%
Segmentation" The Airline In!ustry
-ost airlines use a ver traditional segmentation strateg, dividing !assengers into business
travelers and econom travelers (mostl leisure travelers)% &he common strateg is to s'uee8e as
much !rofit as !ossible from business class !assengers $ho are attracted b su!erior services and
corres!onding high !rices and, at the same time, to tr and fill the rest of the seats and ensure gro$th
b attracting econom class !assengers $ith lo$er fares%
Business passengers &he are crucial for airlines; !rofitabilit% Fith less s!are time and
more cash in their !ockets, the agree to !a a !remium !rice for a !remium servce% &oda business
!assengers account for a!!ro#imatel A4C of !assengers, and these A4C contribute BBC of airlines;
revenue% &he !remium !rices the !a !rovide $ider and more comfortable seats, better choice of
meals and seats, lu#urious lounges% +irlines can choose from a multitude of !remium services to
offer to business travelers% =ome of these e#tras range from seats e'ui!!ed $ith fa#es and
tele!hones, to gambling machines, sho$ers, massage services and suit ironing services in the
recentl introduced arrival lounges% 9usiness !assengers believe it is $orth e#tra mone if the can
save time and arrive looking fresh for an im!ortant meeting% 9usiness !assengers $ill avoid transit
flights even if a longer flight could save them mone% 9ut amongst other !erks, fle#ible reservation
services are !robabl the most im!ortant to them% :eservations for business tri!s are often made 1ust
a cou!le of das in advance% + no !enalt cancellation !olic is also ver im!ortant to business
!assengers%&he best $a to reach business travelers is through !rinted advertising% 9usiness ne$s
media, such as L&he 3conomistL or L&he Fall =treet ,ournalL are some of the best !ublications
through $hich airlines can reach business travelers% -an airlines design s!ecial !romotional
!rograms that target cor!orate bookers and meeting !lanners, $ho are res!onsible for business tri!s
reservations% 2re'uent fler !rograms are an added bonus for business !assengers%
0eisure Tra*elers &he re!resent a totall different market% &he most im!ortant consideration for
most of them is the !rice% &he lo$er the airfare, the more !eo!le $ill fl the res!ective airline% 9
and large, $ith the e#ce!tion of $ealth travelers, this segment $ill not !a e#tra for !remium
services and $ill agree to change several !lanes during their tri! if this o!tion costs less than a direct
flight% *es!ite lo$er margins !rovided b this segment, leisure travelers are ver im!ortant to an
airline;s bottom line% Dart of the reason is that technological !rogress in the area of tele-conferencing
and increased use of the internet for business communications is e#!ected to reduce the number of
business travelers% &hus, airlines are counting on the leisure segment to !rovide further gro$th% 9
im!roving services and reducing !rices for econom class !assengers, airlines risk that some
business !assengers $ill s$itch to econom class% 6n the other hand, if an airline focuses on
business class !assengers, it risks losing its econom class !assengers to another airline% =ince
business class !assengers are not man, a com!an reling mostl on business travelers $ill often
end u! fling half-em!t !lanes, losing the !otential revenue generated b lo$er !riced econom
seats% 6n the other hand, fe$ airlines catering solel to econom class !assengers can be successful
because a lo$ fare carrier must fill the entire !lane if it is to generate revenue from its lo$-margin
o!erations%&his kind of segmentation serves airlines $ell enough $hen im!lemented $ithin one
com!an% It $ould be ver difficult for an single airline to target 1ust one of these t$o segments -
business or leisure - successfull%
Intangible services are difficult to sell because the cannot be !roduced and dis!laed ahead
of time% &he are therefore harder to communicate to !ros!ective customers% It means that services
are high in credence 'ualities $hereas goods are high in search 'ualities%
-arketers of services can reduce these risks b stressing tangible cues that $ill conve
reassurance and 'ualit to the !ros!ective customers% &hese tangible cues range from the firm;s
!hsical facilities to the a!!earance and demeanor of its staff to the letterhead on its stationer to its
In the airline industr trans!ortation is the core !roduct% =ince it is intangible in nature a service
com!an can distinguish itself from its com!etitors b !roviding several tangible clues like:
o 2ood G 9everages
o 0e$s!a!ers
o -ovies
o -usic
o =taff uniforms- +ir Indias staffs al$as $ears a !rinted blue sari%
o >ogos - +ir India;s centaur is the logo and mahara1a is the mascot%
o .olour and design - ,et air$as have blue colour tickets%
o =eats and cushions
o +udio G /ideo facilities for $ork or !leasure
o 2a#, la!to!s, etc%
o 9aggage retrieval
o 2light bookings
-an services re'uire customers to !artici!ate in creating the service !roduct% In the airline
industr, it is ver im!ortant for the com!an to consider the customers as a !art of the com!an in
order to serve them better% &he inse!arabilit of services leads to:
o .ustomer being co-!roducer7
o 6ften customer being co-consumers $ith other customers and7
o .ustomer travelling to the !oint of service !roduction%
+ll the above three !roblems are face b the service marketer in the airline industr% =o the
service marketer has to think of $as in $hich he can satisf his consumers in an efficient manner%
In the airline industr, the customer has to be !hsicall !resent in the service factor% Hence, he
is coming in direct contact $ith the service !rovider as $ell as other customers of the airline%
*ifferent front-line !ersonnel have different abilities% 3ven the same service !rovider has
good das and bad das or ma be less focused at different times of da% =ervices are !erformances,
often involving the coo!eration and skill of several individuals, and are therefore unlikel to be same
ever time% &his !otential variabilit of service 'ualit raises the risk faced b the consumer% &he
service !rovider must find $as to reduce the !erceived risk due to variabilit% 6ne method is to
design services to be as uniform as !ossible - b training !ersonnel to follo$ closel defined
!rocedures, or b automating as man as!ects of the services as !ossible%
3%g%: most airlines include online booking resulting in a standardi8ed !rocedure M fe$er
mistakes due to human errors% + second $a to deal $ith !erceived risk from variabilit is to !rovide
satisfaction guarantees or other assurances that the customer $ill not be stuck $ith a bad
result%+nother $a of reducing inconsistenc in airlines is the standardi8ation of in-flight !rocedures
for e#am!le the securit instructions given at the beginning of the flight%
=ervice businesses cannot normall stock!ile their out!ut, because the time bound nature of
service deliver makes it im!ossible to inventor the finished goods% 2or e#am!le, the !otential
income from an em!t seat of an airline flight is lost forever once the flight takes off%
.onversel, $hen demand for service e#ceeds su!!l, the e#cess business ma be lost% If
someone cannot get a seat on one flight another carrier gets the business or the tri! is cancelled or
!ost!oned% &he inventor for airline industr is mainl the food and the aircrafts s!ares and !arts%
+irlines face the !roblem of inventor mainl due to irregular demand !atterns%
The Ser*i&es Marketing Triangle
&he services marketing triangle sho$s the three interlinked grou!s that $ork together to
develo!, !romote and deliver services% &hese ke !laers are labeled on the verte# of the triangle
sho$n belo$%

Internal marketing 3#ternal marketing Hmaking
Henabling !romisesI

D:6/I*3:= .Q=&6-3:=
I0&3:+.&I/3 -+:"3&I0(
H"ee!ing DromisesI
=ervices marketing can be e#!lained $ith the hel! of the =ervice Industr &riangle% &here are
three entities in the $hole transaction !rocess%
.ustomers refer to the !ersons $ho have certain needs, $ants and desires% &he com!an
makes promises to its customers% In the +irline industr, the customers refer to those !ersons $ho
feel the need of travelling from one destination to another% &he customers are further classified as
Individual and Institutional% Institutional customers are those cor!orates $ho need their em!loees
and e#ecutives to fl ver often% Hence the have block bookings (reserved bookings) $ith the
&he com!an is the dreamer and the offeror% &he com!an dreams u! an idea of service offering
$hich $ill satisf the customers e#!ectation% &he com!an is established $ith the basic ob1ective of
!roviding the s!ecific trans!ort service% &hus the airline industr $ith !laers like Indian airlines, 1et
air$as, =ahara air$as etc came into being%
&hese are finall the !ersons (staff) $ho interact $ith the customer% &he are the ones $ho
carr out the final transaction% &his interface of the customer $ith the com!an is through the
customers interaction $ith the em!loees of the com!an% In order to kee! its !romises, the
com!an ena)les its employees to through setting u! facilities to deliver the !romises that is b
setting u! ticket and en'uir counters% Hence the com!an aims at offering its !roviders $ith the
re'uired infrastructure and training to o!timi8e the 'ualit of the transaction% 2or eg: Nearl
em!loee training !rograms and !erformance a!!raisals done b =ahara airlines%
&he strategic !oints $here the !rovider and the customer interact are:
3n'uir of the services, flight timings, routes etc%7
Durchasing tickets, either from the airlines or from the travel agencies7
.hecking in7
*uring boarding7
6n board cre$7
*uring disembarkation%
In a triangle, all three sides are essential to com!lete the $hole% 2or services all three marketing
activities re!resented b the sides of the triangle are critical to success7 $ithout one of the sides in
!lace, the triangle or the total marketing effort cannot be o!timall su!!orted%
The C %<s of Marketing Mi;
%ro!u&t Mi;
(etting the !roduct right is the single most im!ortant activit of marketing% If the !roduct isn;t $hat
the market $ants, no amount of !rice ad1ustment or brilliant !romotion $ill encourage consumers to
bu it% &he airline !roduct is 'uite a com!le# one since it com!rises of a service of incor!orating the
tem!orar user of airline seat and certain tangible !roducts such as free flight bags or a free bottle of
dut free s!irit to encourage booking%
&he airline !roduct includes of t$o t!es of services:
?% on the ground services,
2% In-flight services%
&he on-the-ground services include a convenient air!ort $ith car !arking facilities, dut free; -
sho!!ing 'uick and efficient checking of baggage, efficient service at reservation counter, trans!ort
to the air!ort, etc%
&he service !rovided inside is intangible and is highl variable% &he airhostesses are trained to
!rovide !olite, $arm and courteous service% &he courteous service that the re!resentatives at the
baggage counter, reservation counter !rovide goes a long $a in develo!ing customer loalt% &he
travel agents of the airlines also need to be efficient and !olite%
#ifferentiating the %ro!u&t
It is im!ortant to recogni8e that $hat the consumers are demanding are not !roducts, or
features of !roducts but the benefits the offer% Droducing added benefits thus hel!s the marketer to
distinguish one !roduct from another% (ood design or stle of service can form the basis of
differentiation% &his enables the com!an to create a !ersonalit for its service% &he design and decor
of the aircraft !rovides o!!ortunities to !ersonali8e their !roduct as $ell as !eriodicall to u!date
them $hen differentiation under I+&+ regulations $as virtuall e#cluded, nonetheless, certain
airlines $ere able to develo! distinct !ersonalities% 3agle +irlines created an entirel ne$ market
bet$een 0e$ I Nork and 9ermuda, for e%g% b develo!ing an image of a friendl airline distinctive
from other airline serving the route% + similar stle $as evident in :ichard 9ranson;s /irgin +ir$as%
%ri&e Mi;
Drice !las as much a tool of marketing as !romotion !las a critical role in the marketing mi#% &he
conce!t of ;fair !rice; is !aramount% 9uers 1udge $hether a !roduct is fairl !riced b seeing
$hether it re!resents value for mone%
%ri&ing Strategies
%remium %ri&ing"
&he airlines ma set !rices above the market !rice either to reflect the image of 'ualit or the uni'ue
status of the !roduct% &he !roduct features are not shared b its com!etitors or the com!an itself
ma en1o a strong re!utation that the ;brand image; alone is sufficient to merit a !remium !rice%
1alue for Money %ri&ing"
&he intention here is to charge the average !rice for the !roduct and em!hasi8e that it re!resents
e#cellent value for mone at this !rice% &his enables the airline to achieve good levels of !rofit on
the basis of established re!utation%
Cheap 1alue %ri&ing"
&he ob1ective here is to undercut the com!etition and !rice is used to trigger the !urchase
immediatel% Qnit !rofits are lo$, but overall !rofits are achieved% +ir India and Indian +irlines have
slashed their !rices to meet the com!etition of !rivate airlines so that the can consolidate their
!osition in the market%
+irlines usuall !ractice !ifferential pri&ing% &here are three classes: &he 2irst .lass, &he 3#ecutive
or 9usiness .lass and &he 3conom .lass% 2ares for each class are different since the facilities
!rovided and the comfort and lu#ur level is different in each class% =easonal fares are also fi#ed,
fares rise during the !eak holida times%
0o6(&ost %ri&ing"
Fith the advent of the lo$-cost airlines in the Indian aviation industr, a different lo$-cost fling
conce!t has come u!% =ince these lo$-cost airlines are tring to $oo the customers b !roviding air
travel in e#ce!tionall lo$ !rices, a !rice-band kind of !ricing has to be designed%
In lo$-!ricing strategies, the airlines !rovide ver lo$ !rices for the flight tickets% +lso, the !rices
are made chea!er b booking the tickets long before the flight date%
A%E/ :ares"
In this scheme, !eo!le are given ver chea! rates onl if tickets are booked atleast before the
s!ecified time !eriod% 9ut the dra$-back here is that if the booking is cancelled, a substantial amount
of mone is not returned%
%la&e Mi;
Qnderstanding $hat, $here, $h, $hen, and ho$ the target market bu, is the first ste! in designing
the marketing channel% &he marketer must understand the service out!ut levels desired b the target
market and t!es and levels of services that the !eo!le $ant and e#!ect $hen the !urchase the
&he airline industr has ado!ted different distribution channels for marketing their services to their
target audience% 6n the ground there are man ticket counters $ith com!uteri8ed 2A-hour reservation
sstems% &he have man s!eciall designed check-in counters for club and !remiere !assengers%
&here are t$o !rinci!al methods of booking seats on an airline%
&he first is the grou! of traditional method such as the !hone, fa#, and email% .or!orates or
vacationers generall a!!roach travel agents $ho book the tickets form the airline M take the
commission from them%
&he second M increasingl !o!ular method of reservation is the online booking method% Here the
customer fills in his details online M he receives an instant booking of his ticket% His !ament is
generall through credit card% +lthough not as !o!ular in India, this booking sstem has
achieved much success in the develo!ed countries that travel agents are losing their 1obs%
+n e#am!le of ho$ distribution is carried out:
&he !lace mi# of airlines consists of mainl the distribution channels% &he number of
destinations that an airline flies to can also contribute to its !lace mi#%
#istri)ution &hannels
&he 2our methods of distribution are as follo$ing:
A? Consoli!ation" &he direct sale of tickets from air!ort to the !assenger on the airline desk%
B? Tour Operator= Tra*el Agent" .ustomers a!!roach travel agents or tour o!erators $ho book
the tickets from the airline and take commission% 3%g% =6&.
C? Affiliate! 6ith &ompanies" +s the name defines, airlines gets affiliated $ith com!anies $ho
carr all its tri!s $ith a same airline $ho in turn gives s!ecial discounts or offers in return%
#? #ire&t through home lease! system, e%g% !hone, fa#, email and also online e-booking%
%romotion Mi;
&he formulation of an ideal !romotion mi# is essential to inform sense and !ersuade the users% In
the Indian !ers!ective, $e need more creative efforts because the !otential users in a ma1orit of the
cases dont !refer to use air services% &he business magnets, e#ecutives, !oliticians, actors, high
s!ending tourists etc are some of the users of the air services% &he users a!!ears to be more
conscious, a$are of their rights and in a ma1orit of the cases are found to be so!histicated and
therefore the !romotional efforts have to be creative% -an airlines are facing financial crunch, it is
!ertinent that the make o!timum use of different com!onents of !romotions
+irlines need creative advertisements to !romote their business% In the vie$ of rising cost of
in!uts and the increasing im!act of $orld$ide economic de!ression on the airlines, advertisements
should be budget o!timistic vis-P-vis o!timal% &he telecast media and !rint media are im!ortant for
!romoting the air business%
&he airlines have to make sure that $hatever strategic decision the make to !romote the
businesses are in a !osition to establish an edge over com!etitors !romotional measures% +lso the
airlines should kee! in mind the 'ualit and the nature of the target markets and the level of
It is also essential that $hile advertising airlines should also kee! in mind the image of our
countr, the scenic beaut, tourist attractions, rich cultural heritages or $hich $ould attract number
of tourists% Fhile advertising it is im!act generating that one should select an o!!ortune moment of
flight is an attractive scene of take off, and so on% +irlines can also use broadcast media% &he
domestic flights should use radios because due to increasing access to 2-%
Dublicit is an im!ortant com!onent of !romotion mi#% It is a !rocess of !ersuasive
communication% It is ver instrumental in sensiti8ing the !ersuasion !rocess !rovided the media
!eo!le, !ublic relations officers !rovide their hel!% =trengthening the D: activities is essential to
!romote airlines business% &he D:6, :ece!tionist, &ravel agents, -edia !eo!le are ver im!ortant
!eo!le in !ublici8ing the business% &he marketing !rofessionals can seek the coo!eration of media
!eo!le b organi8ing dinners, meetings, get together, !ress conference etc, also giving them small
gifts and motivating them to !ublish ne$s items $hich are in favour of airlines%
Sales promotion"
&he sales !romotion measures are meant for both the related sources channelising and using the
business, such as the travel agents, tour o!erators and all of them $ho !rocess the services and the
!assengers and business houses $ho use the services%
&he travel agents contribute a lot to the !romotion of airlines business and therefore the need to
think of them in their favour on their !riorit basis% In addition the tour o!erators, the frontline staff
also must be given !riorit% Hence the should be offer some incentives this $ill motivate them to
!romote the !roduct% &he user also deserves incentives%
&he incentives ma be in the form of concessional services, a small gift etc%
3%g% 3-Is, $hich allo$s customers to !a in installments%
Wor! of mouth
ECustomer 0oyalty 0a!!er<
&his ha!!ens to be an im!ortant constituent of the !romotion mi# in $hich the !romoters act as a
hidden sales force% &he satisfied grou!s of users, o!inion leaders narrate outstanding merits or salient
features of services used b them%
If ou travel b +ir India and are satisfied $ith the services offered b them then it is natural that
ou $ill share our e#!eriences $ith our friends relatives, the trust in ou and therefore the
stimulation !rocess is on% &he moment our friends and relatives get an o!!ortunit to travel the
find +ir India their first choice%
+ds ma be ineffective, !ublicit ma also be ineffective but $ord of mouth can never be ineffective
%eople Mi;
In the service industr, service !ersonnel come in direct contact $ith their customers in the course of
!roduction and consum!tion of the services%
9ecause !eo!le !rovide most services, the selection, training, and motivation of em!loees can
make a huge difference in attaining customer satisfaction% Ideall, em!loees should e#hibit
com!etence, caring attitude, res!onsiveness, initiative, !roblem solving abilit, and good$ill% -an
service organi8ations trust their !eo!le enough to em!o$er their front-line !ersonnel to resolve
customer !roblems%
&he airhostess in an airline come in contact $ith the customers in the !rocess of !roviding the
service, $hile the cock-!it cre$ are em!loees $ho contribute to the service !roduct but do not
come in direct contact $ith the customers%
&he !hsical !resence and the !ercentage of time the customer is !resent reflect the customer
contact and e#tent of contact res!ectivel% =ervices $ith high contact are more difficult to control
and manage because of the degree of variabilit in the 'ualit, demand and nature of service%
&he service contact !ersonnel in the airline industr is an airhostess $ho is e#!ected to !ossess a
!leasing !ersonalit $ith !olite service handling% Fhile on the other hand the cock !it cre$, being
categori8ed as a lo$ contact !ersonnel, re'uire to !ossess high analtical and technical attributes% In
the airline industr, there is also the ancillar service !ersonnel, the travel agent $ho hel!s to create
the service e#change but is not a !art of the service%
Fhile delivering services, airlines ensure that the service is delivered as !romised and this is often
totall $ith in the control of the front-line staff% &his ensures some amount of reliabilit% &his in turn
affects the degree of res!onsiveness sought from customers% &he 'ualit of service that the front-lone
staff !rovides is highl de!ended on hisGher abilit to communicate their credibilit% +irlines deliver
caring and individuali8ed attention to customers through their airhostesses% 3m!ath im!lies that
these !ersonnel $ill listen, ada!t, and be fle#ible in delivering $hat individual customers need% +lso
the a!!earance of an em!loee are im!ortant as!ects as it forms the tangible dimensions of 'ualit
along $ith other factors like service 'ualit, decor etc%
&o start off, airlines hire the right !ersonnel $ith essential re'uirements% &he recruit the right
!eo!le and develo!, and train them to deliver 'ualit service% &hese em!loees are !rovided $ith
effective and sufficient su!!ort sstems and are motivated in a manner, the stick to the
organi8ation% &he are more treated as customers, rather than em!loees%
%ro&ess Mi;
&he !rocess of airline service las em!hasis on the involvement of channels, front line staff, travel
agenc offices, offices of the tour o!erators or so form $here the services flo$ M reach to the
ultimate users%
&he !rocess begins at the time of reservation goes on to the confirmation of seats% 2or e%g%:
.om!uter reservation sstem of Indian +irlines enables an reservation re'uest from an$here in
the $orld to be auctioned in minutes% &he reservation facilit is accessible through all-ma1or
com!uteri8ed reservation sstem of the $orld%
9 giving details of $here to book and ho$ to book airlines hel! in !roviding 'ualit services to the
customers% &he also offer concession, b not charging an cancellation charges and also giving
them the o!tion to make a change in the reservation status if he re'uests so on the !resentation of
ticket, all these facilities go a long $a in increasing !assenger convenience%
&hen facilities at the air!ort, the baggage handling, flight information, etc% also hel!s in delivering
'ualit service and making travel a !leasure%
In the aircraft the meal service, in-flight entertainment, reading material, in-flight amenities, etc% hel!
the customers, the travelers to have an en1oable and convenient travel%
+ll these !rocedures form a !art of the total !rocess designed to deliver 'ualit service% +irlines are
making ever effort to constantl redefine service !rocedures to enhance service satisfaction levels%
%hysi&al E*i!en&e
Dhsical 3vidence refers to the environment in $hich the service is delivered and $here the service
industr and customer interact% &he aircraft b itself, the seating configuration meant to be
comfortable and s!acious, and the in-flight food !rovide !hsical evidence to the airline service%
&he 9oeing .om!an and &he +irbus Industr are the best commercial aircraft makers and almost
all airline industries make use of one of these airlines% &he seating is such that it is comfortable and
there is enough leg s!ace
&he in-flight food is another, im!ortant as!ect, a $ide selection of meals is offered to the !assengers%
Dassengers are re'uested to indicate their reference at the time of reservation itself% *elta +irlines
has introduced ne$ slee!er seats $ith electric controls for reclining lumbar su!!ort, leg rest
e#tension, e#!anded seat back height for a more insulated environment etc% thus !roviding highl
comfortable seating%
9ooking offices, ticket counters, etc% must be s!acious and $ell designed $ith good looks% 2urther
the air crafts must be given good e#teriors and must be maintained $el?%
&he aircraft must have elegant interiors and must be incor!orated $ith all basic facilities% &he
aircrafts must have $ell designed seats $ith more leg room es!eciall in the business class%
*omestic lounges are enhanced $ith good interiors and basic amenities $hich $ill make it an ideal
!lace to conduct business, entertain or rela#%
&he 1et logo !rominentl dis!laed on each of its aircrafts, is used a cue to trigger of a reminder of
the customers e#!erience at ,et M also of all the values that 1et air$as stands for%
&he !hsical evidence $ould also include the other facilities in the aircraft% =ome of the bigger
aircrafts have more than the usual facilities on board% &hese sort of tangible clues act as
identification marks for the airline M hel! the customer to evaluate on airline from another%
Fuality #imensions" RATER Analysis
.ustomers dont assess the 'ualit of service on one dimension onl, the use multi!le !arameters to
1udge the 'ualit of the service that the are being offered% &hese characteristics $hich !eo!le
consider var from !erson to !erson, industr to industr% 3ven de!end u!on the !roduct on offer%
9ecause of the intangibilit and multifaceted nature of man services, it ma be harder to evaluate
the 'ualit of a service than a good% 9ecause the customers are often involved in the service
!roduction a distinction needs to be dra$n bet$een the !rocess of service deliver and the actual
out!ut of the service% &he most e#tensive research into service 'ualit is strongl user oriented%
=ervices are broadl classified into ?0 dimensions namel:
Qnderstanding the customer
=ince most of these dimensions are overla!!ing the $ere !ooled do$n to five dimensions as
given belo$:
Fhen $e look at these dimensions $ith res!ect to the airline industr $e find that the follo$ing
service 'ualities are e#!ected b the customer%
:eliabilit ) flights to !romised destinations de!art and +rrive on schedule
+ssurance ) trusted name, good safet record, .om!etent em!loees
&angibles ) aircraft, ticketing counters, baggage area, uniforms
3m!ath ) understanding of s!ecial individual needs, antici!ates customer needs
:es!onsiveness - !rom!t and s!eed sstem for ticketing, in- flight, baggage handling
A)ility to perform the promise! ser*i&e !epen!a)ly an! a&&urately.
&his $ould basicall be that com!an delivers to the customer $hat is !romised M the
customers basicall like to deal $ith com!anies that can fulfill their !romises%
Fhen $e look at the airline industr $e can see the follo$ing things the customer $ould e#!ect
certain basic facilities like: some functional infrastructure !rovided to him, the flight leaving M
taking off on time, the luggage reaching safel%
Employees< kno6le!ge an! &ourtesy an! their a)ility to inspire trust an! &onfi!en&e
+ssurance relates to kno$ledge and accurac of em!loees and their abilit to conve trust
and confidence% &his dimension is of great significance for services $here a customer !erceives high
risk and is not sure of the outcomes% &he em!loees should have a !ositive morale M should be
motivated if the have to !romote the firm M create a sense of assurance in the flers mind%
,et +ir$as is generall considered the more customer friendl of the domestic airlines% &he
staff there is nicer to old !eo!le or little kids $ho might be travelling% &hough ,et has a ver oung
staff, so some of the members could !ossibl not match the kind of e#!erience the Indian +irlines
cre$ has% =u!!ose some senior citi8en is travelling alone in an aircraft for the first time the cre$
should see to it that he is given !ro!er instructions M is comfortabl settled in his seat%
9esides this, after the =e!tember ?? crisis, there $as a lot of sce!ticism in the fliers M to
instill a little confidence in the consumers mind, the government !aid greater em!hasis on securit
in the aviation !olic% &his $as all so that !eo!le $ould feel safe ne#t time the traveled b air%
S&he $ould a!!oint a committee and look into the recommendations !rovided b them to
better the securit arrangements in the air!lanes M air!orts%
Appearan&e of physi&al fa&ilities, eBuipment, personnel an! 6ritten materials
&angible features $ould be those !hsical features, $hich can be seen b the customer% &hese
$ould be the !hsical !roofs, $hich $ould hel! the customer to 1udge the 'ualit of service% &he
customers evaluate the 'ualit of these services on the basis of the tangibles !rovided b the service
!roviders% &he marketers of services em!hasi8e on tangiblising the intangibles%
Incase of the airline itd be the aircraft that the airline uses, ho$ old the are, and the kind of
facilities that are !rovided inside the aircraft or in the $aiting area% &he technolog used for baggage
handling% &he coaches used to trans!ort the customer to the aircraft, all of these s!eak lea!s M
bounds about the service !rovider% &he kind of skilled staff that the have the uniform that the staff
$ears%&he tangibles $ould also include the infrastructural facilities !resent at the air!orts% &his is
$here $e find most of the Indian air!orts lacking% &he have no !ro!er arrangements to handle the
Fhen $e look at the aircraft fleet that is a ver im!ortant tangible feature, and $e find that
Indian +irlines has a reall ancient fleet of aircrafts $hich doesnt make it e#tremel safe as older
!lanes are more !rone to damage% Fhereas, ,et +ir$as has the oungest fleet in the business%
Empathy 7
Caring, In!i*i!ualiDe! attention gi*en to &ustomers
3m!ath basicall is $hen the em!loees of the organisation make the customer feel at
home, at ease, making him feel $anted% &he customers are mostl offered the same service from
most of the airlines% &he easiest $a for an airline the maintain and gro$ its client base is to be
em!athetic to$ards their customers, to understand their s!ecific needs and to cater to them M the
should make each customer feel like he is a uni'ue asset to the com!an M like their single most
im!ortant client% +ddressing the clients b their first names, kee!ing a track of their usual fling
routes, their !references in flight M catering to all of those, mabe giving him his favorite seat each
time he travels%
Responsi*eness 7
Willingness to help &ustomers an! pro*i!e prompt ser*i&e.
:es!onsiveness is $illingness to hel! the customers and !rovide !rom!t service &he degree
of res!onsiveness sho$s the level of commitment that the !eo!le of the com!an have to$ards their
$ork% It is ver necessar for the com!an to concentrate on !rom!t M the right kind of
res!onsiveness to the needs of the customer%
Incase, a certain !assenger doesnt like a certain meal served on the !lane, the cabin cre$
should be in a !osition to offer him an alternative meal in little time, as his !erce!tion or o!inion of
the airline com!an $ould mainl de!end u!on $hether he goes satisfied on this com!laint or not%
.are should be taken that !rom!t res!onse and to! 'ualit service is !rovided to satisf all of the
customers needs%
&he interaction bet$een the customer and service !rovider in the airline industr means that
the em!loee often re!resents the com!an to the airline travelers (customers)% 3s!eciall in the
airline industr the service encounter !las a significant role because here the customer comes in
direct contact $ith the em!loees of the airline com!an and s!ends a lot of time in the service
factor (the aircraft)% Hence the issue of staff !resentation is a ma1or tangible factor in the airline
industr% &his in turn influences the satisfaction level of the customer%
&he airline com!ans organi8ational structure and culture dictates the e#tent to $hich
res!onsibilit for staff recruitment, training and motivation is shared bet$een marketing o!erations
and human resources% 2or service marketers in this industr, the core of service element is the
interaction bet$een those !roviding services and the customer is kno$n as service encounter%
.ritical incidents are s!ecific encounters bet$een customers and service em!loees that are
es!eciall satisfing or dissatisfing for one or both !arties% In the airline industr critical incidents
are ver im!ortant as the hel! the com!an evaluate and measure satisfaction level of the
customers% &he critical incident techni'ue is a methodolog for collecting and categori8ing such
incidents in service encounters%
+ service firm ma $in b delivering consistentl higher 'ualit service than com!etitors and
e#ceeding customers e#!ectations% &hese e#!ectations are formed b their !ast e#!eriences, $ord of
mouth and advertisement% +fter receiving the service customers com!are the !erceived service $ith
the e#!ected service% If the !erceived service falls belo$ the e#!ected service customers lose interest
in the !rovider% If the !erceived service meets or e#ceeds the e#!ectations the are a!t to use the
!rovider again% &he model sho$n identifies 5 ga!s that cause unsuccessful deliver in the airline
a. $ap )et6een &onsumer e;pe&tation an! management per&eption" -anagement does not
al$as !erceive correctl $hat customers $ant% In the airline industr, the com!an might !erceive
its target customers to be ambience driven and not !rice driven but in realit it might turn out to be
the other $a%
). $ap )et6een management per&eption an! ser*i&e Buality spe&ifi&ation" -anagement might
correctl !erceive the customers $ants but not set a s!ecified !erformance standards% + com!an
like +ir India $ho thoroughl understands $hat its customers $ant but due to e#ternal factors like
lack of resources and the fact that it is a government run organi8ation due to $hich there is a lot of
!olitical interference restricting the com!an from !erforming at its best%
&. $ap )et6een ser*i&e(Buality spe&ifi&ations an! ser*i&e !eli*ery" &he !ersonnel might be
!oorl trained or inca!able or un$illing to meet the standards% 6r the ma be held to conflicting
standards such as taking time to listen to customers and serving them fast% &his had ha!!ened in the
case of +ir India during the =+:= outbreak $here the !ilots refused to fl on the last moment after
the flights had been declared scheduled%
!. $ap )et6een ser*i&e !eli*ery an! e;ternal &ommuni&ations" .onsumer e#!ectations are
affected b statements made b com!an re!resentatives and ads% +ir India boasts in its hoarding
advertisements about the com!anion of the customer fling free i%e% bu ? and get ? free but it is
onl a!!licable for ?
class !assengers $hich is no $here mentioned and there are man such
e#am!les or cam!aigns that can be mentioned about%
e. $ap )et6een per&ei*e! ser*i&e an! e;pe&te! ser*i&e" &his ga! occurs $hen the consumer
mis!erceives the service 'ualit% &his is a combination of one or more of the !revious ga!s and
!rovides a clear indication of the degree of $hich service 'ualit e#ists in the service organi8ations%
Ser*i&e Re&o*ery
Fhen the com!an fails to stand for its !romises made to the customer on the basis the build
e#!ectation, its to be said that there is service failure% Fhen the service failure occurs, there can be
again severe ramification% .ustomer is considered to be the bread and butter, hence retaining them is
the biggest challenge, and ho$ever service failure acts as an obstacle to it% In such failures,
?) &he customer $ants $hat the $ere !romised%
2) .ustomer $ants !ersonal attention
3) .ustomer $ants a decent a!olog
A) .ustomers $ant that the should not be made to feel that the are the cause of the
!roblem% (&hough in man cases the are res!onsible for nuisance)
&here are again five ste!s involved in order to deal $ith service failure% &he are mentioned as
ste!: ackno$ledgement and a!olog for the fact%
ste!: listening to the customers%
ste!: avoid defending the com!an and offer a rational e#!lanation%
ste!: offer some e#tra benefits
ste!: have a !ro!er follo$ u! and make sure no mistakes this time, so that he can easil forget
about the service failure and is retained%
(3#am!le covered $hile !resentation)
+ customer e#!ects 3 shorts of fairness in case of service recover% &he are mentioned as belo$%
2. Intera&tion fairness: - $hen there is service failure, first the com!an is su!!osed to
ackno$ledge the customer% *ue to this the customer might turn erate, but he still e#!ects fairness
and courtes in the language and tone used b the addresser
4. %ro&e!ure fairness" - to kno$ in detail about the incidence of service failure or to avail the
com!ensation% &here should be sim!licit in !rocedure, $hich is involved% =ervice failure and
com!le#it in !rocedure both together might result in a disaster as far as customer is concern%
5. Out&ome fairness: - no$ $hen the com!an reali8es that there is service failure the should
end u! com!ensating, arranging for some alternative mode of trans!orting or com!lies $ith the
customer condition% &he outcome should be taken b considering the customer, his needs and the
com!ans !olic%
Complain an!ling
Handling com!laints is a big challenge for ever com!an toda% 9efore understanding ho$
to handle, let us see $hat are the factors, $hich can result in customers com!laints
&he 2ish-9one diagram for the +irline Industr
&here are ten ste!s involved in handling com!laints effectivel% &he are mentioned belo$%
?) &he frontline em!loee handling com!laints should sta calm under an circumstances%
2) >et the customer get the stor off their chest- do not interru!t, this $ill onl cause
irritation% In this case listening skills comes into !icture%
3) +void admitting an liabilit at this stage% &he officer 1ust need to sho$ concern like,
HIm sorr for the inconvenience, let me see $hat I can doI% (ive attention to the
customer, make him feel im!ortant%
A) (et facts b using 'uestion and tr to find out the real and $hole stor behind it%
5) +fter listening and collecting data, 1ust identif a!!ro!riate action considering com!ans
!olic and customers e#!ectation%
B) &ake action if ou have authorit or involve manager or concerned !erson%
E) If corrective action cannot be taken immediatel, tell the customer% Its better to give bad
ne$s rather giving false ne$s%
4) :ecord the action to be taken and inform anone else in the organi8ation involved%
@) >ook into the matter, !rovide a !ro!er follo$-u!%
&he Indian banking has finall $orked u! to the com!etitive dnamics of the <ne$ Indian market
and is addressing the relevant issues to take on the multifarious challenges of globali8ation% 9anks
that em!lo I& solutions are !erceived to be <futuristic and !roactive !laers ca!able of meeting
the multifarious re'uirements of the large customers base% Drivate 9anks have been fast on the
u!take and are reorienting their strategies using the internet as a medium &he Internet has emerged
as the ne$ and challenging frontier of marketing $ith the conventional !hsical $orld tenets being
1ust as a!!licable like in an other marketing medium%
&he latest develo!ment in technological in com!uter and telecommunication have
encouraged the bankers to changes the conce!t of branch banking to an$here to an$here banking%
&he use of +&- and internet banking have allo$ed antime an$here banking facilities% =im!le
'uires are no$ ans$ered b automatic voice recorders, currenc accounting machines7 self service
counters are no$ encouraged% .redit card facilit has encouraged an era of cashless societ% &oda
master card and visa card are the t$o most !o!ular cards used $orld over% &he banks have no$
started issuing smartcards or debit cards to be used for making !aments% &hese are also called as
electronic !urse% =ome of the banks have also started home banking through telecommunication
facilities and com!uter technolog b using terminals installed at customers home and the can
make the balance in'uir, get the statement of accounts, give instructions for fund transfers, etcT
through 3.= $e can receive the dividends and interest directl to our account avoiding the dela or
chance of loosing the !ost%
9anking is as old as authentic histor and the modern commercial banking are traceable to ancient
times% In India banking has been e#isted in one form or the other from time to time% &he !resent era
in banking ma be taken to have commenced $ith establishment of bank of 9engal in ?404@ under
the government charter and $ith government !artici!ation in share ca!ital% +llah bad bank $as
started in the ear ?4B5 and Dun1ab national bank in ?4@5, etcT
3ver ear :9I declares its B monthl !olic and accordingl the various measures and rates are
im!lemented $hich has im!act on the banking% +lso the union budget affects the banking sector to
boost the econom b giving certain concessions or facilities% If in budget savings are encouraged
more de!osits $ill attract the banks and in turn the can lend more mone to the agricultural sector
and industrial sector, therefore booming the econom% If the 2*I limits are rela#ed then more 2*I
are brought in India through banking channels%
(overnment and :9I !olicies affects the banking sector sometimes looking into the !olitical
advantage in a !articular !art the govt% declares some measures to their benefits like $aver of short
term agricultural loans, to attract the farmers votes% 9 doing so the !rofits of the bank get lo$er
do$n% /arious banks in the coo!erative sector are o!en and run b the !oliticians% &he e#!loit these
banks for their benefits% /arious chairmens of the bank are a!!ointed b the government%/arious
!olicies are framed b the :9I looking at the !resent situation of the countr for better control over
the banks%
9efore nationali8ation of the banks the control of banks $ere in the hands of the !rivate !arties and
onl big business houses and the effluent sections of the societ $ere getting benefits of banking in
India% In ?@B@ government nationali8ed ?A banks% &o ado!t the social develo!ment in the banking
sector it $as necessar for s!eed economic !rogress consistent $ith social 1ustice in democratic
!olitical7 sstem $hich is free from domination of la$ and in $hich o!!ortunities are o!en to all%
+ccordingl $ith national and social ob1ective bankers $ere given direction to hel! economicall
$eaker section of the societ and also !rovide need based finance to all the sectors of the econom
$ith fle#ible and liberal attitude% 0o$ the banks !rovide various t!es of loan to farmers, $orking
$omen, !rofessionals, and traders% +lso on a!art from the recentl education loan to the students and
housing loans, consumer loans, etc%%%
9anks having big client or big com!anies sa reliance etcThave to !rovide something like
!ersonali8ed banking to their clients because these customers do not believe in running about and
$aiting in 'ueues and getting their $ork done% &he bankers have to !rovide these customers $ith
s!ecial !rovisions and also at times benefits like food and organi8e !arties for them% 9ut the banks
do not mind incurring these costs because of the kind of business these clients bring for the bank%
C %<S of BA'.I'$ SECTOR
It is ver im!ortant for an bank to identif the E Ds of services so $as understands their customers
better and !rovide them $ith best of service% &he E Ds are:
=avings, .urrent, 2i#ed etc%
+B- A#1A'CES"
+2- :un! Oriente!"
a- &erm >oan,
)- .lean >oan,
&- 9ills *iscounting,
!- +dvances,
e- Dre-shi!ment 2inance,
f- Dost-shi!ment finance,
g- =ecured and Qnsecured lines of credit%
+4- 'on(fun! oriente!"
a) (uarantees, and
b) >etter of .redit%
+C- I'TER'ATIO'A0 BA'.I'$"
a) >etter of .redit, and
b) 2oreign .urrenc%
+#- CO'SU0TA'C3"
a) Investment .ounselling,
b) Dro1ect .ounselling,
c) -erchant 9anking, and
d) &a# .onsultanc%
a- &raveller .he'ues,
)- .redit card,
&- :emittances,
!- .ollections,
e- =ale of *rafts,
f- =tanding instructions, and
g- &rusteeshi!%
%ri&e Mi;
&he !rice mi# in the banking sector is nothing but the interest rates charged b the different banks% In
todas com!etitive scenario $here customer is the king the banks have to charge them interest at the
rate in force on accordance $ith the :9I directives%
9anks also com!ete in terms of annual fees for services lie credit cards, *-+& etc% another
im!ortant !art of the banks !ricing !olic toda is the interest charged on the Home >oans and .ar
>oans% Fith Indias econom !rogressing there are more and more buers seeking these loans but at
a ver com!etitive interest rate%
>ets understand this $ith an e#am!le% + !articular buer a!!roaches for a car loan sa for a !eriod
of 3 ears% He is charged :s% 20,000 as interest% ho$ever if a sales re!resentative of another bank
comes to kno$ of this deal he $ill tr to attract the customer b giving him a better deal that is a
loan at a lo$er rate on interest% In this $a due to the high level of com!etition the customer
1alue pri&ing
&his t!e of !ricing is mainl done b banks having uni'ue or different !roducts or schemes% &he
usuall charge a combination of high and lo$ !rices de!ending on the customer loalt as $ell as
the !roducts% &his t!e of !ricing strateg is usuall cou!led $ith !romotion !rogrammes%
$oing rate pri&ing"
&he most !ricing techni'ue is going rate !ricing% In going rate !ricing the banks bases its !rice
largel de!ending on the com!etitors !rices% &he banks ho$ever have to sta $ithin the :9I
directives and com!ete% &he banks ma charge higher or lo$er than their com!etitors% +fter ?@@?
$hen the foreign banks entered the Indian market this method of !ricing has gained increasing
Mark up pri&ing"
&his is a !ricing techni'ue $herein the cost of the service is determined and a small margin is added
to it and then the final !rice is offered to the customers% &his t!e of !ricing is the not ver !o!ular
since in the banking sector it is not ver eas to arrive at the cost of the service% &hus most banks use
a combination of mark ) u! !ricing and going rate !ricing%

&his model sho$s a !ricing strateg $hich should be ado!ted in order to ensure ma#imum
satisfaction to both the bank as $ell as the customers%
Dlace mi# is the location analsis for banks branches% &here are number a factors affecting the
determination of the location of the branch of bank% It is ver necessar a bank to situated at a
location $here most of its target !o!ulation is located%
=ome of the im!ortant factors affecting the location analsis of a bank are:
?% The Tra!e Area"&he trade area is a ver im!ortant factor determining the !lace $here a
bank branch should be set u!% 2or e#am!le a !articular location mabe a huge trading !lace
for te#tiles, diamonds or for that case even the stock market% =uch locations are ideal for
setting u! of bank branches%
2% %opulation Chara&teristi&s" &he demogra!h of a !lace is a ver im!ortant factor% &his
&he income level of the !o!ulation
&he average age
&he average male female !o!ulation
&he caste, religion, culture and customs
&he average s!ending and saving habit of the !eo!le%
&hese factors are ver im!ortant for a bank as the hel! them decide the kind of business the
branch $ill get%
3% Commer&ial Stru&ture"&he commercial structure refers to the level of commercial i%e%
business activities taking !lace at a !articular location% &he higher the level of business
activities taking !lace in a !articular location the more !referable it is for setting u! a bank
A% In!ustrial Stru&ture"&his is nothing but a combination of the trade area analsis and the
commercial structure% Ho$ever the industrial structure focuses more on the kind of industries
o!erating in a !articular location% 2or e#am!le an area like see!s is marked $ith a lot of
electronic manufacturing units% &hus the industrial stricture determines the kind of financial
transactions that could take !lace in a !articular location
5% Banking Stru&ture"&he 9anking structure refers to the e#istence of other banks in the area%
Fhether there is alread an efficient net$ork of other bank branches o!erating at that
!articular area% &hus the overall infrastructure needed for the $orking of a bank%
B% %ro;imity of other &on*enient outlets"&his refers to the other branches of the same bank as
$ell other commercial, entertainment and industrial outlets%
E% Real Estate Rates"&his is mainl dealing $ith the cost factor involved in o!ening u! a bank
branch at a !articular location% &he real estate rate is ver strong factor influencing the
location decision for a bank branch%
4% %ro;imity to pu)li& transportation"&he location should be !ro#imate to !ublic
trans!ortation facilities% &his means it should have bus sto!s close b as $ell as it should be
!ro#imate to rail$a stations so to make it convenient for the common man%
@% #ra6ing Time"*ra$ing time refers to the time !eriod in $hich a bank can dra$ a huge
amount either from other banks o from the :9I in case of an kind of emergenc
re'uirement% 0o bank has more than a certain amount $ith them and in case a customer
$ants to $ithdra$ an amount more than that available $ith the bank, the bank needs to dra$
that amount from other banks% Hence a location must be such that it facilitates minimum
dra$ing time%
?0% 0o&ation of Competition"&he e#istence of other banks also means com!etition% If the level
of com!etition is ver high in a !articular location it is necessar that a bank does a lot of
market research before o!ening a branch so as to estimate the kind of business it $ould get%
??% 1isi)ility"&he location of a branch should be such that is visible and easil noticed b the
customers as $ell other !eo!le%
?2% A&&ess"&he bank branch should be ver easil accessible to the customers% If this is not the
case the customer might s$itch to some other bank $hich is more convenient to him and
ver easil accessible% &he location should be such that it is ver convenient for the customer
to reach%
%romotion Mi;
Dromotion is nothing but making the customer more and more a$are of the services and
benefits !rovided b the bank% &he banks toda can use a lot of ne$ technolog to communicate to
their customers% &$o of the fastest gro$ing modern tools of communicating $ith the customers are:
?% Internet 9anking
2% -obile 9anking
#ifferent 6ays of %romotion
%u)li& Relations"In todas com!etitive scenario develo!ing strong !ublic relations is ver
im!ortant for an bank to be successful% -ost banks toda have a se!arate Dublic :elations
de!artment% Ho$ever !rimaril it is considered as a res!onsibilit of the various bank managers to
develo! a stead and strong relationshi! $ith their !resent customers as $ell as !otential customers%
&his can be done b a constant follo$ ) u! and also some small !rogrammes etc%
%ersonal Selling"Dersonal selling is found to be one of the most effective and !o!ular form of
!romoting bank business% &he main reason for this is that banking is a service in $hich trust !las a
ver im!ortant role% In !ersonal selling a bank re!resentative goes to the customers and e#!lains the
scheme to the customers% +lso he gives the customers an kind consultation he might need% He
!rovides the customers all the information seeked b him% :e!resentative tries to !ersuade the
customers to go for the scheme !rovided b the bank b telling him all the benefits% Here are some
of the im!ortant features of !ersonal selling
it is a direct relation bet$een the buers and the seller
it is oral !resentation in conversation
it is !ersonal and social behavior
it is found to be more effective in service oriented organi8ations
it is based on the !rofessional e#cellence or e#!ertise of an individual
Sales %romotion"=ales !romotions are basicall giving the customers some additional benefits
mabe at times 1ust some small gifts in order to !romote the schemes% &he more innovative the sales
!romotions the more !ositive are the results% =ome of the most !o!ular sales !romotions techni'ues
are gifts% .ontests, fairs and sho$s% *iscounts and commission, entertainment and traveling !lans for
bankers, additional allo$ance, lo$ interest financing etc% it is ver im!ortant that the sales
!romotions benefits are designed in such a manner that the are better than those of the com!etitors%
Wor! 7 of 7 mouth %romotion" &his form of !romotions is not onl ver effective in banking
services but in an kind of service% Ho$ever it is more im!ortant in banking for the onl reason that
this is a service $here trust !las a ver im!ortant role% If a !articular banks services are
recommended b ones friends, relatives, or other $ell ) $ishers the !erson is more influences and
inclined to$ards that bank% It is ver im!ortant to note that the internal em!loees of the bank !la a
ver im!ortant role in $ord ) of ) mouth !romotion techni'ue% &his is because the can start the
!rocess b recommending the bank to their friends and relatives and after that it is like chain $hich
s!reads like $ild fire%
Telemarketing"In recent times telemarketing has gained increasing im!ortance as an effective tool
for !romotion% &he telemarketing is a !rocess of making use of so!histicated communication
net$ork for !romoting the banks% &his includes !romoting through television, tele!hone, radio and
no$adas ver largel through cell !hones% &his is the most !o!ular form of !romotion% 9anks toda
have started using <=-= and man other services su!!orted b cell !hones to !rovide benefits to
their customers and thus have tried to increase their sales% In todas com!etitive and modern
scenario it ver im!ortant that banks makes use of telemarketing techni'ues ver efficientl to have
desirable results%
Internet"&he use of internet as a !romotion tool is increasing ver fast toda% -ore and more banks
are using internet to !romote their services% &he online banking has made it even easier for the
customers to avail the banks services% 0o longer do !eo!le have to go to their bank branches for
small !ett matters like checking their balance etc% all this can done $ith 1ust the hel! of a fe$
clicks% &hus these $ere the numerous $as in $hich a bank can !romote its services and create more
a$areness amongst the !eo!le%
%eopleDeo!le are the em!loees that are the service !roviders% In a banking sector the service
!rovider !las a ver im!ortant and determinant role in rendering the customers a satisfactor and a
good service% It is e#tremel essential that the service !rovider understands $hat his customers
e#!ects from him% In a banking sector the customer needs to be guided in a lot of matters $hich is
!ossible onl $ith the hel! of the service !rovider%&he !osition in the ees of the customer $ill be
!erceived b a!!earance, attitude and behavior of the customer contact em!loees% 0ot onl the
customers contact em!loee influence the customers but also the customer base of the organi8ation
does so%
%ro&ess Mi;
&he !rocess mi# constitutes the overall !rocedure involved in using the services offered b the bank%
It is ver necessar that the !rocess is ver customer friendl% In other $ords a !rocess should be
such that the customer is easil able to understand and eas to follo$% &oda if !articular banks
formalities are long and the !rocedure ver com!licated the overall !rocess fails and the customer
ma not be inclined to$ards using that banks services%
>ets take for e#am!le the !rocess for a!!lication for a car loan%
0o$ this mainl involves 3 things%
?% Droducing of !ro!er documents
2% 2illing u! of a!!lication form
3% Daing for the initial do$n !ament%
Here the !rocess ma fail in the follo$ing cases:
?% If the customer is asked to !roduce a number of forms out of $hich some ma not be
necessar at all% &hus it is ver necessar that the customer is asked for the minimum but
most necessar document and not other unnecessar documents%
2% In case of a!!lication form, the a!!lication form must in a language best understood b the
customers and it should not be ver length one demanding a lot on unnecessar information%
3% 2inall the !ament of initial amount% &he customer should be given o!tions as to ho$ he
$ould like to !a b .he'ues or b credit card% 6nce again the amount should be ver
com!etitive not ver high above the regular rates !revailing in the markets%
&he smaller and sim!ler the !rocedures the better the !rocess and the customer $ill be more
Dhsical evidence is the overall laout of the !lace% Ho$ the entire bank has been designed% Dhsical
evidence refers to all those factors that hel!s make the !rocess much easier and smoother% 2or
e#am!le in case of a bank the !hsical evidence $ould be the !lacement of the customer service
e#ecutives desk, or the location of the !lace for de!ositing .he'ues% It is ver necessar the !lace is
designed in such a manner so as to ensure ma#imum convenience to the customer and cause no
confusion to him%
TE 8 I<S O: BA'. MAR.ETI'$
&here are four distinctive characteristics of service, $hich create challenges and o!!ortunities%
&he are commonl kno$n as the four Is namel:
2.- Intangi)ility
It is that characteristics of a service indicating that is not a !hsical attribute that a !erson ma feel,
hear, taste before the bu it%
>ike for e#am!le of the bank that I visited, a !erson $ho is ne$ to this bank and $anted to o!en u! a
account in the bank can not feel it that or taste it that it could be good before o!ening an account% He
has to e#!erience it ho$ is the service, ho$ humbl do !eo!le or the staff members behave $ith
him, is his mone invested or !ut in an account safe or not, he $ould come to kno$ from the
services% &his could be done onl from the trust that that he $ould build u! as these things cannot be
ins!ected before the use that is in this case the cannot be told ho$ the service is before having some
actual $ork in the bank% It is used that the service has been !erformed and delivered at a certain
!articular 'ualit%

4.- In&onsisten&y"
&his refers to variabilit that a com!an or an organi8ation ma de!end on Inconsistenc% 2or a
bank, a ne$ customer or a rare going customer ma not get the same t!e of service as much as a
regular customer ma get% &his ma be the case because the staff members kno$ the !erson $ell as
he comes often but the dont kno$ that !erson $ho does not come in again and again%
+lso another !oint for inconsistenc is that the service deliver b different !eo!le that is service is
delivered differentl from different t!es of !eo!le% >ike in case of a bank, different staff members
$ould !rovide different services% In the bank a !erson ma have lot of $ork and ma not attend a
customer as ma be a !erson $ith the same $ork ma attend him $ith great enthusiasm%
In one of the book, I read the bank HD+0,+9 0+&I60+> 9+0"I that !romotes itself as Hcro$n of
'ualit for customer $ho is the kingI and is an I=6 @002 certified bank% &hus it has to have
consistenc and 'ualit to serve its customers%
5.- Insepara)ility "
Inse!arabilit is that characteristics of a !roduct that cannot be se!arated from creater-seller of a
!roducts% &his means that $henever a !roduct is sold a service is also attached $ith it% >ike for e%g% if
ou bu a room in a hotel to sta for 2 das then the rece!tionist, the $aiters all have their service
attached $ith it% 9ut this is onl !ossible $hen the hotels have customers to sta inn and the hotel
o$ner has mangers, $aiters etc% to !rovide them services% &hus, services $hen !rovided should have
both the acce!ter as $ell as seller% &hen it is kno$n as inse!arable%
&here are basicall 3 t!es of services%
(i) .o- !roduction: $here the service !rovider and the customer $ork together to !roduce services%
9ank service $here if a customer $ants to $ithdra$ cash then both need to be !resent%
(ii) Isolated !roduction: the !art of service that is done outside to an organi8ation% =ervices of &3>3-
(iii) =elf =ervice !roduction: uses the e'ui!ments of the service !roviders and self serve it% =ervices
of +&-%
8.- In*entory"
9 this one means that the !erishable characteristics of the service marketing% In a bank if a
customer starts $ith his da in the morning eight and ending in the da at four $here as in bank is
o!en in morning at @:00 a%m% and closes at ?:00 !%m% in the afternoon, then one might not be able to
attend it but nothing can be done in this case because for such a !erson the bank cannot be on till
end% +lso there ma be is less $ork in the middle of the month $here as in end and starting of a
month there could be more $ork like !eo!le come to !ut in mone as the get there salar, there
$ould be $ithdra$als, !ass book checking etc% $hich cannot be transferred in the bet$een of the
month as it de!end on the !eo!le $hen the come as $ell one $ould come to !ut his mone of
salar onl $hen he gets it and thats at the end of month% =o service faces a lot of !roblem from
inventor as it cannot be stored, saved and then used later%
+n organi8ation is su!!osed to enter to the changing needs of customers7 it is natural that all
customers have their o$n likes and dislikes% &he have some uni'ueness $hich thro$s a big im!rint
on their lifestles% &his makes the task of understanding a bit difficult% It has the conte#t that $e go
through the !roblem of market segmentation in the banking service%

In the banking services, the banking organi8ations are su!!osed to satisf different t!es of
customers living in different segments% &he segmentation of market makes the task of bank
!rofessionals easier% If the market segmentation is done in a right fashion, the task of satisfing the
customers is sim!lified considerabl% &he modern marketing theories advocate the formulation of
marketing !olicies and strategies for each segment $hich an organi8ation !lans to solicit%
=egmentation in a right fashion makes the $a for !rofitable marketing% &his hel!s !olic !lanners
in formulating and innovating the !olicies and at the same time also sim!lifies the task of banking
!rofessionals $hile formulating and innovating the strategic decision% &he follo$ing criterion makes
the segmentation right%
+n im!ortant criterion for market segmentation is the economic sstem in $hich $e find
agricultural sector, industrial sector, services sector, household sector, and rural sector re'uiring the
$eight age $hile segmenting%
A-. A$RICU0TURA0 SECTOR: In the agricultural sector, there are four categories since the
needs of all categories cant be identical%
&he mechani8ation of agriculture, the im!roved or scientific sstem of cultivation, the hel!
of nature , the magnitude of risk, the availabilit of infrastructural facilities influence the level of
e#!ectations vis-P-vis the needs and re'uirements% &he banking organi8ations are su!!osed to kno$
and understand the changing re'uirements of different categories of farmers%
B-. I'#USTRIA0 SECTOR" &he banking organi8ations are su!!osed to have an in-de!th
kno$ledge of the changing needs and re'uirements of the industrial sector% &he large )si8ed, small-
si8ed co-o!erative and tin industries use the services of the banks% &he e#!ectation of all the
categories cant be uniform%
&he banking organi8ations are su!!osed to have an in-de!th kno$ledge of the changing
needs and re'uirements of the industrial segment% &he emerging tends in com!etition, the !ressure of
inflation, the use of so!histicated technologies, and the business regulations are some of the
im!ortant as!ects influencing the hierarch of needs%
C-. SER1ICES SECTOR" It is an im!ortant sector to the econom $here the banking
organi8ations get !rofitable business% &he t$o categories of organi8ations such as !rofit-making and
non- !rofit making are found im!ortant in the ver conte#t%
&he banking organi8ations need to identif the changing needs and re'uirements of the
services sector $ith the fre'uent use of I& and $ith the mounting !ressure of inflation and
com!etition, $e find a change in the hierarch of needs%
D:62I& -+"I0( 6:(
9+0" I0=Q:+0.3,
&:+0=D6:& H6&3>,
&6Q:I=-, D3:=60+>
.+:3, .60=Q>&+0.N
06& 26: D:62I& -+"I0(
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4-. OUSEO0# SE$ME'T"
&his also constitutes an im!ortant sector $here different income grou!s have different needs
and re'uirements% In the belo$ figure $e can see the different segments of household sector%
A-. OUSEO0# SE$ME'T" &he high income grou!, middle income grou!, subsistence level
grou! and marginal income grou! have different hierarch of needs $hich influence the level of
their e#!ectations%
B-. $E'#ER SE$ME'T" In the gender segment $e find male and female having different needs
and re'uirements% &he banking organi8ations are su!!osed to identif the level of e#!ectations of
both se#es as sho$n in the belo$ figure%
(ender =egment
=ome of the $omen are house$ives and therefore the have different needs and re'uirements
$hereas some of them are $orking ladies having different needs and re'uirements%
C-. %RO:ESSIO' SE$ME'T: In the !rofession segment, $e find different categories of
!rofessions and therefore $e find a change in their needs and re'uirements% +s sho$n in the belo$
Drofession =egment DublicG Drivate 2ormalGInformal
Forking >adies
(ender =egment
=ub- =egment
Fhite - .ollar
9lue ) .ollar
&he technocrats, bureaucrats, cor!orate e#ecutives, intellects, $hite-collar and blue collar
em!loees have different needs and re'uirements and therefore the banking organi8ations should
kno$ their e#!ectations%

In this sector $e find different categories of organi8ations% =ome of the organi8ations are
kno$n as charitable organi8ations, some of them are culturalG social organi8ations, some of them are
industrial and man of them are !rofit making and man are !hilanthro!ic and man of them are
related to trade and commerce% It is natural that the needs and re'uirements vis-P-vis the level of
e#!ectations cant be identical in all cases% &o satisf and to increase the market share it is im!erative
that the banking organi8ations are familiar $ith changing needs and re'uirements% &he emerging
trends in the social transformation !rocess determine the hierarch of needs%

Institutional=egment =ub- =egment

.haritable &rusts
.hamber of
&rade and
=!orts 6rg
2ront =tage
6ther causes
I& is a term referring to both tele!hon and com!uter technolog% I& includes all forms of
technolog used to create, store, e#change and use information in its various forms%
&he term I& includes:
Internet service
.ables and $ires etc%
&he definition of I& is ver dnamic% It has been defined as sim!le automation of manual
!rocesses using micro!rocessors to com!uters to net$ork and so on%
I& has been !revalent in India for a long time but the real im!ortance and the global recognition is
has been a ver recent !henomenon% India has a vast number of I& !rofessional $ith a ver
kno$ledge and also the are chea! as com!ared to lobar from other countr%
I& in India has been continuousl gro$ing after liberali8ation in ?@@?% + large number of
multinationals started setting u! their soft$are develo!ment centers in India due to availabilit of
good labor at a good !rice%
=eeing this o!!ortunit the Indian soft$are firms started offering their service from India dedicated
to s!ecific Q= clients% 9 this time India $as onl !referred due lo$ cost but no$ $hen most I&
com!anies like &.=, FID:6, I026=N= have been I=6 @000 .3:&I2I3*, no one can doubt the
N3+: 2000 an im!ortant ear for the India I& firms% :emember the N2" virus% Q= faced a big
!roblem called the N2" and due to shortage of good labor the had to outsource the solution from
India% 6nce again Indian firms !roved that the $ere indeed the best%
=ince then there is no looking back and India is toda kno$n as the king of I&%
Forld $ithout I&J =o difficult to imagine% &here is no sector that does not understand the
im!ortance of I&% ,ust think $hat $ill ha!!en to the mobile sector $ithout I&% It $ould crash% I& has
brought the $orld together $ith the hel! of Internet service%
>et it be the airline sector or housing sector or let it be an other sector, I& has hel!ed all of them to
become much more efficient%
I& enables ou to book a ticket online% It makes things so accessible% Nou can bu and sell shares
online% Internet banking is one more e#am!le% In that case even +&-s run $ith the hel! of I&%
+!art from this I& has made it !ossible to outsource the su!!ort service beond the geogra!hical
barriers% &his has created a ne$ sector in itself called the I&3= or I& enabled services% .all centers
are the best e#am!le over here% =ome more e#am!les $ould be:
+0I-+&I60 .6-D+0I3=
F39 =I&3 =3:/I.3
H: =3/I.3= >I"3 6Q&=6Q:.3* D+N:6>> D:3D+:+&I60
+..6Q0&I0( =3:/I.3 =Q.H += 9+." 622I.3 *+&+ D:6.3==I0(
%EST Analysis
%oliti&al +in&l. 0egal-:
3nvironmental regulations and !rotection-the countr is o!en to firms that are set u! for the
I& industr% It !rovides !rotection from foreign com!etitors b not allo$ing a com!lete
?00C stake in the Indian subsidiar%
&a# !olicies-I& firms initiall had ta# discounts% 3ven no$ It firms en1o lo$er ta# rates
than other service industries%
International trade regulations and restrictions%
.ontract enforcement la$
.onsumer !rotection
3m!loment la$s
(overnment organi8ation G attitude
.om!etition regulation
3conomic gro$th-India has gro$n a lot more in the last 20 ears than it id in the !revious 20%
&his it self sho$s that the gro$th has been due to ne$er technologies coming into the
countr% Hence I& is the ke-driving factor in this%
Interest rates M monetar !olicies%
(overnment s!ending%
Qnem!loment !olic-unem!loment in the I& sector is 1ust as high as the em!loment rate
is% &he !ersonnel turnover in It sector is amongst the highest among all service industries%
3#change rates
Inflation rates
=tage of the business ccle
.onsumer confidence
Income distribution-&he e income distribution in the countr is ver biased% 9 the entr of
I& in a ma1or $a a lot of !eo!le $ho $ere struggling to make 2 ends meet $ere given
em!loment o!!ortunities%
*emogra!hics, Do!ulation gro$th rates, +ge distribution
>abor G social mobilit-&hanks to the It era the mobilit of human resources is massive%
Deo!le from allover the countr $ork together% 3m!loees are !icked u! from all over the
globe to $ork at certain research or management center%
>ifestle changes-&he entr of I& into the lives has !eo!le has bought about huge changes in
their lives% I& firms !a better than the average salar rates in industries% *ue to this
em!loees are buing more, earning more, s!ending more% Hence there is an im!rovement
in their lifestle%
ForkGcareer and leisure attitudes
(overnment research s!ending-the government itself has set u! research centers and
!romotes firms that go into research of technolog%
Industr focus on technological effort
0e$ inventions and develo!ment-everda a ne$ technolog or a certain deviation is being
invented% &he I& industr is a ver fast !aced and ever changing
:ate of technolog transfer-&he rate of technolog transfer is ver fast in the I& sector%
Qsuall com!anies im!ort the technolog to enhance their !osition in the global market%
>ife ccle and s!eed of technological obsolescence-&echnological obsolescence is ver fast
in the I& sector% Qsuall the life ccle of an em!loee is 1ust as much as the technolog that
he s!eciali8es in%
3nerg use and costs
Completing a %EST analysis is relativel sim!le, and can be done via $orksho!s using
brainstorming techni'ues% Qsage of D3=& analsis can var from business and strategic !lanning,
marketing !lanning, business and !roduct develo!ment to research re!orts%
The C %<s of IT ser*i&es
%hysi&al E*i!en&e
&he !roducts and services $hich make u! the I& industr are man and varied, being used b
all manner of organi8ations in business, government, administrative, technical, scientific, educational
and manufacturing !rocesses%
Co%ponents o& IT'
Co%puter technolo(ies
Co%%unication technolo(ies
Computer te&hnologies
&his has t$o ma1or !arts:
?% com!uter hard$are
2% com!uter soft$are
Droduct line: the various !roducts offered b the industr%
Droduct $idth: the various !roducts and various t!es of the !roducts $ith distinct features%
Co%puter hard)are: all mechanical, electrical and com!onents of a com!uter sstem are kno$n as
com!uter hard$are% &he monitor, central !rocessing unit and the keboard%
Co%puter so&t)are: com!uter soft$are is the set of com!uter !rogrammes, $hich $ould carr out
!articular com!uter based a!!lications% .om!uter !rogramme is a series of instructions given to a
com!uter to !erform a !articular task% + full documented !rogramme or a set of !rogrammes,
designed to !erform a !articular task is called a soft$are !ackage%
Co%%unication technolo(ies: &he technolog that hel!s to communicate data or
information in analog as $ell as digital mode is called communications technologies% It
includes telecommunications, satellite technologies7 Internet based technologies and
com!uter net$orking%
Dricing is one of the im!ortant as!ects amongst the rest of the marketing mi#% Ho$ever !ricing is
obviousl affected b various environmental factors like es!eciall economical%
&o elaborate on it !ricing in I& is something ver much !remium% Ho$ever no$ a das it is been
dee!l affected b com!etition due to $hich !rices are going do$n for e#am!le !reviousl these
home !ersonal com!uters $ere available at a!!ro# :s% B0000 and no$ one ma get it at 30000 also
this is because there $as onl one com!an before making it no$ there has been tremendous
com!etition in it% >ike it $as onl I9- no$ it is also HD, =Q0 and so on also the monitors are of
different com!anies e#am!le =amsung, -icrotech and so on% &he ne#t !oint is that no$ it is
available in assembl !ieces also hence it is going chea!er ho$ever this is related to hard$are%
Dricing in I& is decided taking into consideration the follo$ing factors:
%ro!u&t &hara&teristi&s
Im!ortant characteristics of information, $hich have influence on !ricing, are accurac, timeliness
and fittingness $ith eas use and re!roduction abilit% -ore accurate, timel, and fitting the
information, higher $ould it be the user and higher it $ould also cost to collect and !rovide to the
buer b the marketer%
Data Capture
& Verifcation
+s such $e see that com!anies such as Infoss Fi!ro charge ver high !rice and as a result their
gross margin is as high as B0C to E0C of their sales%
Type of the pro!u&t
Information can be into three broad categories:
=ervices and
/alue added servicesG!roduct%
Dricing a !roduct is ver different from !ricing a service or value added information% 9etter
!ackaging, faster deliver or making it user friendl ma add value of a !hsical !roduct sa an
issue of current content% Ho$ever in case of a service none of the above attributes is visible to the
buer before the service is bought% =ervices are !rimaril retailing activities $ith the sellerG!rovider
dealing directl $ith the intended user%
The Customer" 6ho is )uying
It is essential to stud and kno$ ours users before ou become involved $ith the !ricing frame%
3verone needs information% Ho$ever, $hat !rices $ill a customer !a for the information de!end
on ans$ers to some ke 'uestions like:
Ho$ im!ortant it isJ
Ho$ much the can !aJ
Ho$ much do the e#!ect to !aJ
A)ility to pay
3ven if the value of the information tho the customer can be ascertained, the abilit to !a for the
information differs across customers% &he differences arise because of variations in the t!es of
In general these are:
Fhether the customer is located in develo!ed or develo!ing countriesJ
Fhether the customer is an individual or an organi8ation J
&he t!e of customer $ithin each class
*ue to com!etition it is found that com!anies are reducing !rice and as a result there !rofits are
adversel affected% In discussing the Ds of services it is im!ortant to note that I& industr !las a
ver im!ortant :ole of su!!lementar to all other industries be it banking hotel etc%
Web Cat
Call Back
!nline & Billing
:ollo6 Up
#elp Desk
Client Account
Dlace mi# deals $ith location, channels of distribution, managing these channels, etc%, in I&
the issue of location doesnt come into the !icture as the entire I& industr is based on distribution
net$orks% Hence here the im!ortant as!ect is a distribution net$ork% Hence here the im!ortant as!ect
is distribution of the net$orking% :est all as!ects of !lace do not have relevance in I& industr%
%romotion A&ti*ities
=ome of the relevant !romotional activities under direct marketing, !ublic relations and advertising
are as follo$s:
*irect marketing Dublic relations +dvertising
3lectronic sho!!ing
&/ sho!!ing
2ree sam!les
+nnual re!orts
.haritable donations
Dublic interest articles in
Drint and broadcast ads
9rochures and booklets
Dosters and leaflets
*is!la signs
+udio visual
=mbols and logos
&hese are used to inform the customers about the salient features offered and the corres!onding
!rices%3g% Internet =ervice Droviders >ike /=0>, =if, etc%,
*otcom com!anies to inform the customers about their !roducts and services mostl use these
methods3g% :ediff, 9a8ee%com, indiatimes
24 hour
Outsourcing &
Customer Service
&he com!anies to attract customers b !roviding them information through tele!hone services use
this%3g: I.I.I *irect%com
3lectronic =ho!!ing
In India this t!e of !romotion is famous through b some com!anies like 9a8ee%com,
indiatimes%com% 0ot man I& com!anies use these !romotion techni'ues%
%u)li& relations"
+ll I& com!anies through before and after the sales follo$s it%3%g% Infoss, =atam, etc%,
+ll com!anies use these, as the are one of the best !romotional methods for the I& .6-D+0I3=%
.om!anies use this medium to dis!la their !roducts and services and also an grievances or
information about services are taken from customers% 3%g% Fi!ro, Infoss, I9-, etc%
%rint me!ia"
-ost of the I& com!anies use less of this method to !romote their !roducts% +lthough
advertisements in the local and regional ne$s!a!ers hel! reaching the customers more effectivel%
In HD com!an, $hich !rovides hard$are !roducts all over India, surves ?00 regular customers
about their e#!erience $ith !roducts and $hat modifications the have to make in the !roducts,
accordingl changes are to be made%
In HD com!an, the conduct seminars on a fre'uent basis% Here the call their cor!orate customers
and tell them about their seminars, !rovide free traveling e#!enses and accommodations of the
customers are given to them b the com!an% =eminars are al$as launched before a ne$ !roduct is
launched or an ne$ innovations have to be made in the !roducts or ne$ technolog being
introduced b the com!an% &hus the seminars hel! the com!an to !rovide the best of information
and u!dates of their !roducts to the customers%
Drocess includes the actual !rocedures, mechanisms and flo$ of activities b $hich the service is
delivered ) the service deliver and o!erating sstem% In the service industr for the com!an to
survive the !rocess of service deliver should be 'uick and eas $hether the !rocess is customi8ed
or standardi8ed% &he same a!!lies to the I& industr too% In this industr, it is the !rocess $hich is
the most im!ortant differentiating as!ect bet$een different com!anies, and $hich also forms the
basis of com!etition% &he com!an having the easiest and 'uickest service deliver survives%
2- Employees 7 &he service !rovider al$as has to do a !erfect 1ob analsis of each and ever 1ob
and accordingl select a !erson $hose !ersonalit best suits the 1ob% &he service 'ualit totall
de!ends u!on the em!loee giving the service% &hat is the reason $h 1ob analsis and selection is
ver im!ortant in the service industr% +lso the em!loee should have 1ob satisfaction and he should
be made to feel as a !art of the organi8ation% It is onl $hen the em!loee is ha!! $ith the
com!an, that the em!loee can sell the service of the com!an% -otivation and re$ards are factors,
$hich should not be forgotten% +nother as!ect is that the em!loees should be $ell trained% 2or e%g%
even a sim!le H=mileI given b the em!loee can do $onders for the image of the com!an%
4- Customers ) &he have been referred to as H!artial em!loeesI, human resources $ho contribute
to the organi8ation !roductive ca!acit% .ustomers are also !roducers of service as it is the $ho
decide the 'ualit of the service and not the com!an% 2or e%g% if I sa that a !articular com!ans
service is bad, it means that the 'ualit of service of the com!an is not good even though the
com!an feels that it !rovides the best service% Hence here the decision makers are the customers%
(ood 'ualit $ould obviousl result in good !roductivit% In I& the customers on the basis of ease of
receiving the service rate industr the service 'ualit% &hat is the reason $h +&- cards, Internet
banking, online sho!!ing etc are sectors, $hich are in boom in the market no$% &hese technologies
are called self-service technologies% &he striking feature of these services is there is minimum human
intervention, $hich in this industr is an advantage to the com!an, as the customer $ants to receive
a good service 'uickl $ithout actuall having to have an interaction $ith the em!loees%
It is often said that he consumer 1udge the 'ualit of the service before the actuall !urchase it% &he
'uestion that arises over here is that ho$ does a !erson 1udge something that is intangibleJ If it $ere
good then $e can at least touch it feel it but over here it is service% Fell sim!le% In this case the
consumer starts looking out for the tangible cues or the DHN=I.+> 3/I*30.3%
=o $e can sa that the !hsical evidence is the environment in $hich the service is delivered to the
consumer or the environment in $hich the consumer and the firm interact% &he evidence can
basicall change the !erce!tion of the !eo!le com!letel%
In the soft$are industr there are 3 as!ects to this <D of service:
?%$raphi&al Interfa&e:
&hese interfaces are the $ebsites of the com!anies% &he $ebsites are the medium bet$een the
com!an and the customer% It is through the $ebsites that the com!an interacts $ith its customers%
&he look the feel the color of the $ebsite matters a lot over here $hich acts to be the tangible cue%
2or 3#am!le: India Infiline it totall deals $ith information regarding an com!ans $orking share
!rice, financials etc% it has a total cor!orate feel to it%
2%Companies going to soft6are !e*elopment"
2or in e#am!le I026=N= $hen a client $ants to develo! a soft$are for its information transfer or
an other !ur!ose it $ill !ersonall go to Infoss $ith its re'uirements and =!ecifications% 0o$
$hen a custom goes to develo!er it is the ambience of the office etc% that $ill !a a vital role in
identifing the $orthiness of the com!an%
3% #e*elopers &omes to the Customer"
&his could be ver $ell e#!lained $ith the HD e#am!le itself% HD does not actuall believe in
encounters $ith the customers% Ho$ever at its retail outlets it does%
9ut mostl the are the ones $ho a!!roach the customers $here at that !oint of time their dressing
and their language and their voice 'ualit is an im!ortant cue through $hich the customers might
1udge the com!an as a $hole%
Hence the re!resentative of the com!an also have to absolutel formal in their behavior
$ith the customer and HD follo$s this rule%
MaGor segments of IT
2ollo$ing is a fairl detailed generic classification of I& 3nabled =ervices $hich are alread e#isting
or $hich have !otential for evolving into areas of entr:
.ustomer Interaction =ervices such as .all .entres
2inance and +ccounting =ervices such as back office data !rocessing for +irlines, etc%
3ngineering and *esign =ervices such as outsourced design activities
Human :esources =ervices such as outsourced !aroll !re!arations, etc%
+nimation for movies and &/ serials, cartoon stri!s, etc%
&ranslation, &ranscri!tion and >ocali8ation such as -edical &ranscri!tion =ervices%
0et$ork .onsulting and -anagement covering outsourced net$ork designing and
*ata =earch, Integration and +nalsis covering areas such as !re!aration of legal data bases,
research M !re!aration of re!orts based on data bases on !ast records, etc%
-arketing =ervices such as bureaus for marketing !roducts or services based on .all .entres
or local market data bases, etc%
Feb =ite =ervices for creating site contents, advertising, etc%
:emote 3ducation for utili8ing I& infrastructure to strengthen formal education sstem for
remote and e#!ertise starved areas%
-edical .onsultanc b !roviding e#!ert advice based on data or making available data
=ecretarial =ervices through bureaus $hich utili8e information technolog for offering
secretarial hel!%
I& ma also contribute to increase in !roductivit, revenue and !rofits com!ared to their
com!etitors% &here is some evidence in the I& management literature that links
im!rovements in o!erations, service and 'ualit directl to I&%
(overnment incentives for soft$are e#!ort sector-ta# incentives, setting u! of =&Ds, etc%
6n-time, on schedule deliver of !ro1ects% High reliabilit factor of Indian soft$are
I& costs are relativel lo$%
=u!!ort from successful Indians in =ilicon /alle, Q=+
/ast base of 2ortune 500 customers $ho are increasing outsourcing to India
2or man organi8ations, measuring the outcomes of the technolog investments is a
frustrating e#ercise because of the confusion over $hat should be measured and ho$ to
define the value of I&% 9usiness investments are 1udged to have value onl if their
contribution to the out!ut of the business could be distinctl 'uantified% &he abilit to
assign value to I& business out!uts is far more difficult than a sim!le costGbenefit
analsis% -ost I& investment decisions based on standard :6I (return on investment) and
0D/ (net !resent value) assume a static business scenario%
>o$ tele!hone, D. and Internet !enetration
Inade'uate utili8ation of I& budgets b (overnment de!artmentsGD=Qs leading to lo$
domestic com!uteri8ation% *ue to such a h!e in the tech boom the govt had !lanned to
invest crores of ru!ees in its develo!ment% 9ut later on it $as seen that some !ub
com!anies had the com! but not the staff to $ork on it and in some !laces the had
alread sent their staff for learning but the com!s $ere not read or $ere ver fe$% 0o
!ro!er im!lementation%
>ack of locali8ation of soft$are-lo$ availabilit of regional language soft$are
Inade'uate I& skills base, $orsened b the Hbrain drainI%
&hese traditional measures of value often lead to inade'uate or outdated I& sstem%
Ine'uitable access%
>ack of a national I& strateg%
>o$ level of literac and education%
Inade'uate I& skills base, $orsened b the Hbrain drainI%
I& H!hobiaI and elitism%
Door government services ham!er II& rollout%
Industrial age management is still being used in the I& age%
=mall local I& market%
Door technolog transfer%
6rgani8ations can use interactive media on the $eb to !rovide information about
themselves, their !roducts and services and s!ecific information that addresses the
concern of a customer that translates to customer service activit% QD= and 2ederal
3#!ress are e#cellent e#am!les of ho$ customer service can be effectivel !rovided
through u!-to-date information on the status of !ackage shi!!ed% &hese sites !rovide
timel and eas-to-use !ackage tracking, !ricing and deliver time
6rgani8ations can leverage the $eb to identif users and !ros!ects, enhance loalt b
!roviding value-added services, and use $hat the learn about their customi8ed e#isting
services or cross-sell ne$ !roducts and services% .om!anies like .itibank, /olvo, Hatt
and man others have used the $eb to learn more about their customers
&he $eb can be used as another channel% &o a large e#tent, it has alread succeeded in
eliminating intermediaries like service agents% 0o$ it is beginning to emerge as a channel
itself, a channel that is more directl linked to the end customer%
6!!ortunities to increase offshoring% 3#isting customers are enhancing their offshoring
com!onent to India% 0umber of global customers e#!ected to offshore !ro1ects to India
e#!ected to increase ra!idl
Fhereas for some com!anies on-line commerce is a natural outgro$th of their business, for
others moving into cbers!ace is a difficult endeavour% &he !roblem these com!anies face
have little to do $ith lack of technolog or imagination% &he stem instead from the lack if
rules% +t this moment there are fe$ rules in cbers!ace% &he legal status of electronic
co!right is still vague, as are the legal and !ractical issues surrounding on-line e#change%
+nother reason $h com!anies hesitate to use the internet as medium to do business is that it is
risk to !a for our !roducts on the net% Hackers ma get access to confidential information
such as .redit card numbers
-ore high 'ualit man!o$er is re'uired% 2ocus should move from L'uantitL to L'ualitL
Increasing cost of human ca!ital
=lo$do$n in the Q= econom%
,i(ure' The Conceptual Model o& IT Service -uality
&he ne$ conce!tual model of I& service 'ualit identifies that there are E ga!s bet$een su!!liers
and customers of I& service% &hese are defined as:
Bet6een Suppliers an! Customers of IT ser*i&e
$ap 2: the difference bet$een I& su!!liers and customers !erce!tions of &deal level of &T
$ap 4: the difference bet$een I& su!!liers and customers !erce!tions of Accetable level
of &T service7
$ap 5: the difference bet$een I& su!!liers and customers !erce!tions of Act!al level of &T
:or Customers of IT ser*i&e
$ap 8: the difference bet$een I& service level customers $ould like to receive, and $hat
the $ould acce!t, given the limitations due to !ersonnel, technolog and other
organi8ational factors7
$ap 9: the difference bet$een I& service level acce!table to customers, and the actual level
of I& service !erceived b customers7
:or Suppliers of IT ser*i&e
$ap H: the difference bet$een I& su!!liers !erce!tion of $hat customers re'uire, and the
level of I& service the can !rovide given the constraints due to !ersonnel, technolog and
other organi8ational factors7 and
$ap C: the difference bet$een I& service level I& su!!liers can !rovide, and the actual level
of I& service being !rovided%
In!ustry Stru&ture"
O N B a s i s O f N a t u r e O N B a s i s o f S t a r O n b a s i s o f n u m b e r o f h o l d i n g s
H 6 & 3 > =
Residential ,otels
Co##ercial ,otels
-each Resort ,otels
&nternational ,otels
(loating ,otel
,eritage ,otels
?) :3=I*30&I+> H6&3>= - &he are also referred as a!artment hotels as the serve as
a!artments% &hese hotels charge rent to their customers on a monthl, half earl or earl basis%
&he are generall located in big cities M to$ns% 0o meals are !rovided to the customer% Initiall,
these hotels $ere set u! in Q=+%
2) .6--3:.I+> H6&3>= -.ommercial hotels are meant for !eo!le $ho visit !laces of trade M
commerce or for business !ur!oses, thus these hotels are located at commercial M industrial centers%
&hese hotels focus their attention on individual business travelers% &he also !rovide added facilities
like com!uter access, Internet facilit, fa#, conference rooms, etc%
3) 93+.H :3=6:&= - :esort hotels are meant for holidamakers, tourists M those $ho seek a
change in environment M atmos!here mainl on health grounds% &hese hotels are located near the
sea, mountains or other areas having an attractive landsca!e M a health climatic condition%
Deninsular India bounded b the +rabian =ea, 9a of 9engal, Indian 6cean
A)I0&3:0+&I60+> H6&3>=-&hese hotels are modern lu#urious hotels classified as on basis of
various international guidelines% &hese hotels are further classified into various star categories%
Pre#i!# *eg#ent or L!.!ry
-!dget *eg#ent
Chain of ,otels
*tandalone ,otels
Locali'ed hotel Co#anies
5) 2>6+&I0( H6&3>= - &hese hotels are located on $ater surfaces ) sea, river or lake% &hese
hotels !rovide all facilities and services that are made available in good lu#urious hotels% In India,
the houseboats in "ashmirs lake are an e#am!le of floating hotels%
B) H3:I&+(3 H6&3>= - In the !ast four decades, certain architecturall distinctive !ro!erties such
as !alaces and forts, built !rior to ?@50, have been converted into hotels% &he government classifies
such hotels as heritage hotels
?) D:3-IQ- 6: >QUQ:N =3(-30& - &his segment com!rises of the high-end 5 star delu#e
and 5 star hotels, $hich mainl cater to the business and u! market foreign leisure travelers and
offers a high 'ualit and range of services to cater to the target segment% 6ver 40C of the clientele of
the !remium segment com!rises of business guests% &his segment has been the fastest gro$ing
segment in India%
2) 9Q*(3& =3(-30& -&his segment com!rises of the 3 and A star hotels, $hich are generall
located in smaller to$ns and tourist destinations and cater to the average foreign and domestic
leisure traveller% &his segment also caters to the middle level business travellers since it offers most
of the essential services of lu#ur hotels $ithout the high costs as this segment is not as heavil
ta#ed as the !remium segment and en1os a lot of incentives from the government%
?) .H+I0 62 H6&3>= - &hese are grou!s of hotel o$ning a chain of hotels throughout the countr%
2ollo$ing are the A ma1or !laers in India holding a chain of hotels M falling in the !remium
categor of hotels% &hese hotels had an established !resence in one or more metro cities !rior to the
tourism boom in the eighties% (&H3 &+, (:6QD, &H3 693:6I (:6QD 62 H6&3>=,
F3>.6-3 (:6QD, &H3 +=H6"+ .H+I0 62 H6&3>=)
2) =&+0* +>603 H6&3>= -=tand-alone hotels have come u! after the tourism boom of the eighties
and nineties% *ue to the lack of !rior e#!erience in the hotel industr, these !laers have !referred to
o!t for o!eratingG management arrangements $ith international !laers% =ome of the com!anies in
this categor are Hotel >eelaventure ($ith "em!inski), +sian Hotels (Hatt International
3) >6.+>IV3* H6&3> .6-D+0I3= -&he com!rise of mainl earl entrants like the =ura, :it8
$ho have not !referred to e#!and during the tourism boom and have instead focused on building and
catering to a loal customer base% &he !rivate !laers among the hotel chains are industr leaders%
&he !ublic sector I&*. and H.I, though currentl !rofitable, are not as efficientl run and are
relative under !erformers%
&he Indian hotel industr is an oligo!ol $ith fe$ ke !laers gra!!ling for control%
&he include,
0ame of Hotel -arket share
&he Indian Hotels .om!an, >td%
(&he &a1 (rou!)
>argest hotel o!erator ) 20C
I&*. (rou! (+shoka grou! of hotels) .losest rival ) ?5C
3ast India Hotels ?2C
I&. 4C
2ollo$ed b, Hotel >eelaventure, +sian Hotels and ,a!ee Hotels
&he business traveler-He is the businessman or a cor!orate e#ecutive% &his segment includes
cor!orates, $ho o!en offices in the hotel !remises during start-u!s7 cor!orate e#ecutives $ho make
e#tended sta either for long duration !ro1ects or $hile $aiting for !ermanent accommodation
(!rimaril e#!atriates) and convention arrivals% Fhile the senior e#ecutives usuall sta in 5 star
hotels, the middle level e#ecutives, $ho are much larger in number, sta in the budget hotels% &his
segment offers better reali8ations as the demand relativel smaller discounts on room rents (about
?0-?5C), use more of facilities such as D.s, fa# multi-media, conference halls and also the 2M9
revenues are better as the usuall eat in the hotel itself due to their bus schedules% &his segment is
highl de!endent u!on the general economic scenario in the countr%
&he leisure traveler-He could either be a foreigner or a domestic traveller% Qsuall leisure travellers
are !art of a !ackage run b a tour o!erator% &he margins offered b leisure travellers tend to be
lo$er because of t$o reasons% 2irstl, the seek higher discounts (about 25C) and also !rovide less
2M9 revenues as the usuall eat out% &he leisure travellers (es!eciall the domestic vacationers)
generall sta in budget hotels rather than in 5 star hotels% &he business offered b this segment is
highl seasonal and tends to !eak in the =e!tember to -arch !eriod%
+irline .abin .re$s-&he form another im!ortant segment because of the re!etitive and guaranteed
nature of the business that the !rovide% Qsuall these are a !art of an annual contract, $hereb in
return for a fi#ed rate, a certain number of rooms are !rovided on demand for cabin cre$s% &he usual
discount rates are A0-50C%
>u#ur travelers - +ccording to senior officials in an international hotel chain, lu#ur travellers
have !articular re'uirements and are !eo!le $ith time and mone for their holidas% &he are not
grou! travellers, seek 'ualitative e#!eriences and demand !ersonal and confidential service%
I'1E'TOR3 - In the hotel in!ustry, if the rooms an! restaurants are not utilise! to the
greatest of its &apa&ity, the ser*i&e )e&omes perisha)le. If a hotel ha*ing an
a&&ommo!ation fa&ility of 2II rooms is a)le to lease out only CI rooms on a
parti&ular !ay, then the remaining 5I rooms or 5IJ &apa&ity gets perishe! an! &an
ne*er )e reuse!.
I0.60=I=&30.N-&he services !erformed in the hotel industr are largel dominated b
relationshi! management- that is !erformed b individuals% =ince no human is !erfect, it is difficult
to standardi8e the 'ualit of the human effort in this industr% &he fact that service 'ualit is difficult
to control com!ounds the marketer;s task% =ervices are !erformances, often involving the
coo!eration and skill of several individuals, and are therefore unlikel to be same ever time% &he
onl solution to this !roblem is to design services to be as uniform as !ossible% -c *onalds- the
$orlds largest fast food chain is reno$ned to standardi8e the 'ualit of its service b making the
$hole !rocess as standardi8ed as !ossible% &his is su!!lemented b training !ersonnel to follo$
closel defined !rocedures, or b automating as man as!ects of the services as !ossible% &he a!!eal
of some service !ersonnel - !articularl, the hotel industr- lies in their s!ontaneit and fle#ibilit to
address individual customer needs%
I0=3D+:+9I>I&N - In the manufacturing de!artment, the !roduction goods takes !lace at a
se!arate location and the final consumer bus the !roduct at another location% &he !resence of the
customer is not re'uired during the manufacture of the !roduct% 9ut in the case of the hotel industr,
$hich is a service, customer !las an im!ortant role in the !roduction !rocess as his !resence and
active !artici!ation is vital to the service encounter% *e!ending u!on the skill, attitude, and
coo!eration and so on that customers bring to the service encounter, the results can be good or bad,
but in an event are hard to standardi8e%
I0&+0(I9I>I&N-Intangible services are difficult to sell, as their benefits are harder to communicate
to !ros!ective customers% -arketers of services can reduce these risks b stressing tangible cues that
$ill conve reassurance and 'ualit to the !ros!ective customers% &hese tangible cues range from the
firm;s !hsical facilities to the a!!earance and demeanor of its staff to the letterhead on its stationer
to its logo% In case of hotel industr, the ambience, the moods created through various factors like
lighting, music, aroma, etc create the intangible factors% 9ut, b and large, the hotel industr is
?% E;ternal marketing" 3#ternal marketing fuctions means anthing that is communicated to
the customer before the service is delivered% In case of the Hotels, e#ternal marketing means the
!romotional activities and advertisements done b the hotel in ne$s!a!ers, travel maga8ines,
television etc% since there is direct customer contact in an Hotel, their advertisements are centered
around their em!loees $hereb the tr to reflect customer care, attitude and other as!ects of the
em!loees and their hos!italit%
2% Internal Marketing" In the hotel industr, the em!loees, $ho are the internal customers of
the com!an have different !ositions ranging from the doormen, the bellbo, the rece!tionist to the
chef, the $aiter, etc% the basic !rinci!le of internal marketing is < ever individual in a service
organi8ation should recogni8e that the have customers to serve% &he main thrust in this is that it is
not 1ust the customer contact em!loee $ho need to concerned about satisfing customer but also all
the service em!loees% In order to ensure that the final consumer receives 'ualit service, ever
individual em!loee and ever de!artment $ithin the organi8ation must receive and !rovide a
'ualit service% In fact each functional de!artment should be treated as the customer of another
functional de!artment% 2urther, all em!loees must be convinced about the 'ualit o the service
being !rovided%
2or e#am!le, the 'ualit received b an ultimate customer of restaurant $ill de!end u!on the 'ualit
of the service !rovided b each individual in the su!!l chain% &he chef needs 'ualit ingredient from
the stores and $ell-trained $aiter to give a 'ualit service to the ultimate customer% &he follo$ing
model e#!lains the im!act of functional de!artments 'ualit deliver on the overall 'ualit received
b the final customer%
=ervice ?00C ?00C ?00C ?00C
*elivered =&6:3
.H32 F+I&3: .Q=&6-3:
@?C 4?C E3C
&he above model sho$s that ever em!loee connected $ith service organi8ation need to recogni8e
that there is someone $hom he or she must serve%
3% Intera&ti*e Marketing" Interactive marketing takes !lace bet$een the .ustomer and the
front line managers, rece!tionists, em!loees etc% all the individuals must successfull com!lete all
interactions that add value to the service encounter% &he em!loee- customer encounter !las a ma1or
role in the hotel industr, $here relationshi! management is a vital factor so that the customer
loalt is maintained%
Relationship marketing aims at develo!ing and maintaining relationshi!s $ith the customers, the
em!loees, the su!!liers, distributors (the tour o!erators and travel agents in case of the hotel
industr) and other !arties in the marketing environment%
To6ar!s Customers" In case of hotels the rece!tionists and in case of :estaurants, the =u!ervisor
of the dining areas should al$as tr to recogni8e their regular customers and maintain health
relationshi! $ith them% &he can do so b !roviding such customers $ith discounts, membershi!
cards, etc so that the customer gets eas recognition from the em!loees of the HotelG :estaurant%
To6ar!s Interme!iaries" the hotel must tr and maintain good relationshi!s $ith intermediaries
like tour o!erators, travel agents, etc as the are the one $ho escort travelers to the hotels b
advertising and recommending our hotels% Hence the must be given fair and timel com!ensation to
maintain the good relationshi!s%
To6ar!s Employees" Hotels also have to maintain health relationshi!s $ith em!loees as its H:
de!artment s!end a lot on training and develo!ment of the em!loees% It has to train the em!loees
in various as!ects like table communication, order taking, food service techni'ues, hos!italit,
eti'uettes, etc% hence the hotel cannot afford to have a high amount of em!loee turnover as hotel
$ill not 1ust loose a !recious trained em!loee but it $ill have to incur additional cost on selection,
recruitment and training the ne$ em!loees%
%EST Analysis Of otel In!ustry
%oliti&al Analysis"
+n unstable !olitical situation in India made the foreign investor cautious leading to both a
slo$do$n in foreign investment and business travel% Ho$ever, government is tring its best to boost
tourism in India $hich $ill further boost hotel industr%
&he hotel industr is at !resent going through one the toughest !eriods% Feak economic
conditions have lead to a stee! decline in foreign as $ell as Indian business arrivals% &ourist arrivals
have also seen a ma1or decline follo$ing @G?? and because of increasing terrorism%
&he Q= governments a!!eal to its citi8ens not to travel to +sian M +frican countries affected the
tourism M hotel industr as the occu!anc crisis hit the industr%
.rumbing to F&6 !ressure (overnment of India has reduced the tariffs M duties on various
items $hich !roved attractive for foreign traders to invest M !erform business in India% Fith
im!roved relations M trade affairs $ith other countries encouraged trade M travel $hich !roved to
be a boon for the Indian Hotel industr%
&he 2*I !olic on ?00C investment through the direct route is still offshore this has created a
confusion in the minds of foreign venture ca!italists as the la$s in ,oint /enture investment reveal a
different stor%
Fith the limitations on granting of visas b the 3#ternal +ffairs -inistries M !olicies of the
embasss in granting visas M maintaining relations has affected the gro$th of hos!italit industr
over the ears%
&he .entral (overnment and the =tate (overnments are e#!ected to be taking various o!!ortune
ste!s in the hotel sector like divesting its stake in the Indian &ourism *evelo!ment .or!oration
(I&*.) and the Hotel .or!oration of India, both organi8ations o$n a large number of hotels in
!rime locations%
E&onomi& Analysis"
&he economic liberali8ation of the earl @0s led to a boom in the hotel industr, es!eciall in
Fhen the economic conditions are favorable, hotels en1o high occu!anc rates% &his gives them
the fle#ibilit of increasing their room rates% *uring the boom !hase most hotel com!anies o!erated
at ver high occu!anc rates, $hich gave them the lee$a of increasing their room rates%
2oreign *irect Investment (2*I) is entering Indian shores and foreign institutional investors
(2IIs) are increasing their e#!osure to India% +ll these !ositive signals s!ell more business travelers
and better times for the hotel industr%
&he hotel industr is heavil ta#ed% 3#!enditure ta#, lu#ur ta# and sales ta# inflate the hotel bill
b over 30C% 3ffective ta# in the =outh 3ast +sian countries $orks out to onl A-5C% +s these ta#es
are the domain of the state government, the rates var accordingl%
&hese units $ill be allo$ed to im!ort ca!ital goods under the 3D.( scheme at 8ero dut, the
minimum amount of im!orts being ca!!ed at :s?0mn%
&he infrastructure facilities like the +ir!orts, .ommunication facilities M commuting facilities
not being at !ar $ith oriental countries affects the attractions of the tourists%
(enerall 50C of the hotels revenue is de!endant on the tourism industr% &he +verage :oom
:evenue (+::) has increased from 3%AE Q=* in ?@AE to 3AE Q=* in 2002 (+HM>+ re!ort)%
So&ial En*ironment Analysis"
(loball, leisure and entertainment are seen to be gro$ing industries% Hence stable socio-
!olitical and economic conditions cou!led $ith an im!rovement in infrastructure facilities (roads,
air!orts etc) $ill im!rovement the sentiments of the tourists to$ards India%
&he hotel markets its business $ith the hel! of the local festivals and long trusted M cherished
Indian culture like +urveda in "erala, 9eaches in (oa and traditional melas%
.onsuming beef is considered as a taboo for Hindus% =imilarl, India being the !lace of domicile
for 2A crore -uslims ranking 2
onl to Indonesia in the $orld is highl influenced b the <Islamic
culture and Doke is considered as a taboo for -uslims% 9ut, 9eef is a !art of the dail food for the
foreign tourists% Hence, the hotelier has to cater the needs of various !eo!le from both 6ccidental
and 6riental culture%
Indian customers are highl !rice sensitive% -an of them com!are service offered $ith !rice%
&here is al$as a limitation on the !art of the hotelier to design the service $ithin the !rice
Te&hnologi&al En*ironment Analysis"
&echnolog has influenced not onl the basic !roduct in the hotel industr, but also the
su!!lementar services to a great e#tent% :ight from order taking to billing to !ament has been
com!uteri8ed no$adas%
&echnolog has revolutionalised the booking sstem in hotels% 6ne of the ma1or source of
booking is (lobal *istribution =stem ((*=) $here the travel o!erator can book for various hotels
though it% +lso, hotels !rovide online booking sstems $here the hotelier tries to !ersonali8e the
booking and minimi8e the customer interaction%
&he hotel is no$ e'ui!!ed $ith all the modern facilities $hich adds to the service offering%
=stem allocation is the ke to an hotels success% &he frontline service !rovider should be able to
satisf customers demands%
3g:- Hotels !rovide >.*, >a!to! M conference facilities%
&he 6berois intranet facilit hel!s to gain access to ever information re'uired b the customer, or
b the !rovider to satisf the customers needs%
The a*aila)ility of suffi&ient parking is the )asi& reBuirement for a&&re!iting 6ith the STAR
&ategory. But the &ost of property is soaring like the rising sea. The intro!u&tion of ele*ate!
parking is a )lessing as its more &on*enient A &ost effe&ti*e to the hotelier.
+t the ver center is the core !roduct $hich satisfies the basic need of the consumer% &he core
!roduct in the hotel industr is +..6-6*+&I60% &he role of Hotel International is to !rovide
basic accommodation facilities% >ike a bed for the night and a room $ith a bathroom%
Fhen consumers e#!ectations gro$s snchroni8ed $ith increased com!etition, the marketer offers
some tangibilit to the e#isting core !roduct, that is, some more features% .onsumers !refer to !a
more for these additions and the marketers have more to offer than the com!etition%
Hotel International has to !rovide some additional features like:
ygiene" It comes ne#t to the basic function of accommodation% Hgiene !las a ver im!ortant
role in the status of a hotel% +n unhgienic hotel $ill never be able to attract lot of !eo!le,
es!eciall if it has to attract a lot of !eo!le from foreign countries $here the hgiene conditions
are to! notch%
Room Ser*i&e" Fhen !eo!le go to hotels, the $ould e#!ect good and !rom!t room service%
&his means, $hen the order food or ask for an service, a hotel that !rovides it !rom!tl $ill
have a great edge over the other hotels%
%ri&e" &he !rice of the rooms should be such that both the rich and the middle class !eo!le can
afford them% 0ot everone can afford a ver e#!ensive room and also not everone $ill like to
sta in a room that does not have some lu#urious facilities%
EtiBuettes" &he !eo!le $ho come in contact $ith the customers, that is, the rece!tion !eo!le,
room service !eo!le, and $aiters, all have to be trained $ell to behave in a manner that !leases
the customer% &he should be civili8ed, cultured and !olite%
0aun!ry ser*i&es
:oo! an! Wine"&he food should be of good 'ualit and should be !re!ared in hgienic
Fith further higher e#!ectations of the customer- again snchroni8ed $ith intense com!etition-
marketers offer more and more intangible features% +ll the e#tra things !rovided are service oriented%
In the case of Hotels the augmented !roducts include:
:a&ilities In Room "
W .&/ =atellite channels
W International direct dial
W :efrigerator (delu#e rooms and suites)
W 9athtub (e#ecutive rooms and above)
W :unning hot and cold $ater%
Ser*i&es %ro*i!e! "
W +urvedic -assage .enter and steam bath
W 9eaut Darlor
W 2lorist
W 2A H:= :oom =ervice
W 2A H:= .offee =ho!
W +ir!ort &ransfer
W +m!le .ar Dark
W =afe *e!osit >ockers
W &ravel +ssistance
W .urrenc 3#change
W =ame *a >aundr
W *irect *ialing
W .able &/
W Health .lub
W 9an'uet Halls
W 9ack Fater .ruises and Dackage &ours
W 2A hrs .heck 6ut
?% /ariet :estaurant (Indian, &andoor, "erala, .ontinental and .hinese dishes%)
2% 2A hour =!ecialt .offee =ho!%
3% 2amil 9ar (dail ha!! hours%)
&he !ricing decision is monitored b a number of factors% &he magnitude of com!etition is the most
im!ortant element in governing the !ricing decision% If the intensit of com!etition moves u!$ards
the hotel tariff ma not increase% 6n the other hand $hen the intensit of com!etition moves
do$n$ards the hotel tariff ma be raised% +lso if a domestic big business e#ecutives or foreign
tourists consider the tariff structure as a status smbol and !refer to sta in costl hotel, then the
tariff structure must be follo$ed carefull% 2irstl the !rices for accommodation is directl related to
the follo$ing factors:
:oom s!ace
Kualit of furniture
9ath, toilet, sho$er, hair drer and trouser !ressing e'ui!ment
&ele!hone, .olour tv, radio
2ridge, tea and coffee making e'ui!ments
Dersonal com!uter, office facilities and others
0ormall $henever hotels u!grade or renovate, the u!gradation rates are reflected in their costs%
=econdl the room rate is related to the market% If the market is in a !osh and fashionable area $ith
am!le !arking and garage facilities, and fre'uented b high-class !eo!le including businessmen and
other grou!s, the !rices $ill accordingl var%
&hirdl the room rates also reflect the availabilit of !ersonal comfort facilities like lounge, bar,
restaurants, sho!!ing arcade, banks, and standard of cuisine, hairdressing, s$imming !ool and health
club% In short the room rates also incor!orates the augmented services costs%
>ocation: >ocation involves considering $here to deliver the services to the customers% +s far as the
service location is concerned, $e normall encounter three situations:
?) .ustomer goes to the service !rovider
2) =ervice !rovider goes to customer
3) =ervice !rovider and consumer transact at an arms length
In the Hotel Industr, it is the customer $ho goes to the service !rovider% In case of :estaurants, the
customer s goes to the service !roviders to satisf their hunger%In case of hotels, the customers go to
the hotel both to satisf his hunger and for the !ur!ose of accommodation% Hence in order to receive
the benefits of hotel services, the customer must !hsicall enter the service sstem, i%e% the service
factor% Ho$ever in case of free home deliver, it is the service !rovider that goes to the
customer%=ince in most of the cases it is the customer that goes to the hotel, the location assumes a
ver im!ort role% + $ell-located hotelGrestaurant can !ick u! demand, as the customers $ill locate
these hotels easil, 'uickl and comfortabl% &he customer toda has become convenience oriented%
Hence it is ver im!ortant to locate the hotels at a convenient !lace% Hotels should be easil
accessible% +ccessibilit can be measured in terms of visibilit and !ro#imit to different modes of
trans!ort% =imilarl it makes more sense in locating a five star hotel in a so!histicated area%
Its the front of the hotel that the guest sees7 so must be designed in such a manner that it - sells the
hotel to the !otential customer% &his includes the s!ace, colour, light M such other element7 as these
affect guest im!ression about the hotel% >obb- It being the first M the last !art of the hotel that the
guest sees7 its designing !las a ver im!ortant role% It must be designed $ith fine art, elegant
finishing M comfortable furnishing% +nd also the lobb must be functional $ith rece!tionist area
a!!arent to the incoming guests% &hough, the architect of the lobb grabs the customers interest but
its the guest room that kee!s them coming back% (uest room $ith conformable furnishing, s!ace,
colour is a must%
Strategies to !eal 6ith In*entory"
&he nature of demand for hotel services is more ) less seasonal% In case of !eak seasons, the
demand is much greater than the su!!l ca!acit% Ho$ever in case of off seasons the demand is ver
less as com!ared to the !otential su!!l% &his is more relevant in case of hotels located at !laces of
tourist attraction like -atheran and -ahabalesh$ar%
*uring off-season7 hotels can tie-u! $ith some agencies like travel and tourism agencies% &hese
agents !la a ke role in recommending services to the customers and can form an im!ortant
distribution channel% +lso hotels can design attractive !ackages and schemes to attract customers%
&he best e#am!le of this is the &a1%
Strategies to !eal 6ith intangi)ility
&he intangible nature of services makes consumers more concerned about the service !roviders% In
order to create trust, marketers have to !rovide tangible evidence% &he less tangible a service, the less
the service marketing resembles goods marketing% Derformance here can be 1udged onl after the
service is com!leted and consistent service level is difficult to maintain%
+ hotels !romotional effort must sho$ the benefits to be derived from the service, rather than
em!hasi8ing on the service itself% &he !romotional strategies usuall used to !ortra the strength of
the service are (from :+-D+> (QD&+, a!!licable for all services)
?) /isuali8ation ) it !romotes the tangible element of a service% 2or e#am!le, a hotel de!icts the
benefits of dining at its restaurant $ith its ads, $hich sho$s beautiful interiors, $ell laid facilities,
2) +ssociation- $hile !romoting the hotel, the service is associated $ith a tangible !erson, ob1ect or
!lace% 2or e#am!le: -c *onalds has associated itself $ith :onald, the clo$n in order to a!!eal to
3) Dhsical re!resentation ) services $hen re!resented b some !hsical re!resentation hel! in building
the trust of the customers for e#am!le: restaurants dress their service !roviders in uniforms to
em!hasi8e visibilit, reliabilit and cleanliness, attractive menu cards also hel!%
A) *ocumentation- documentation is sued b service !roviders to tangibilise their intangibles% Hotel
orchid advertises the a$ards received b it in the recent !ast and em!hasis its hotel as an
environmentall sensitive hotel%
5) 9randing- also adds tangibilit to intangibles% 9rand hel! in differentiating the service from that of
its com!etitors in terms of name, logo, mascot and other identifing features and forms an im!ortant
com!onent of the communication mi#
Strategies to !eal 6ith in&onsisten&y
=ervices are highl inconsistent in nature% *ue to this characteristic, marketers face the !roblem of
standardi8ing their services% &he strategies used to reduce inconsistenc are:
?) Hard technolog- it means substituting machiner for !eo!le% -c *onalds has been able to !rovide
consistent service b using this industriali8ation conce!t% Infact, -c *onalds is built on the
foundation of consistenc% -r% :a "roc insisted that a great brand is one that commands trust
because it eliminates uncertaint from the consumers life% -c *onalds has ever little detail of its
o!erations laid do$n- from ho$ to set u! a unit to the 'ualit of the ketchu! @ to be s'uee8ed from a
!re calibrated dis!enser)%
2) =oft technolog- it is a $a to industriali8e services b substituting !re!lanned sstems for
individual services, 6beroi hotels and resorts have standardi8ed their service b using soft
technolog in the form of !re- !ackaged offers%
3) Hbrid technolog ) is a technolog for industriali8ing service b combining both hard and soft
A) 3stablish set rules and !rocedures routine- the use of !re !lanned sstems $ith a s!ecific setoff rules
and routines can be used to manage !erformance effectivel in service deliver% >imited menu
restaurants like !i88a hut ensures high consistenc from one visit to the ne#t because the have
standardi8ed !re!aration !rocedures%
Dromotion mi# of hotel industr like an other service encom!asses of follo$ing communication
mi#% &hese are
+dvertising, Dersonal =elling, =ales Dromotions, *irect -ail% &he !romotional strategies are
re'uired to be innovative and creative so that the marketers find it eas to increase the occu!anc
ratio% +ttractive and natural !hotogra!h of different t!es of available accommodation must be ke!t
at the rece!tion desk% &he rece!tion office must maintain a file of furnishing details, giving
additional information on each room like location si8e, dXcor, facilities, etc%
A!*ertising" &he media used b medium is:
9usiness Dublications to attract business class !eo!le%
&ourist Dublications to attract tour travelers%
*irectories like Nello$ Dages es!% b small hotels%
*irect mail to tour o!erators%
6n the other hand, media like &%/%, radio, etc% are rarel used b Hotel industr% -an hotels have
cars $ith the hotel name and logo !rinted on the car, $hich serves as indirect medium of
%ersonal Selling: H Fhile the advertisement hel!s in creating the kno$ledge of the hotel, Dersonal
selling brings in revenue%I + hotel industr !las a role of salesman for selling the accommodation%
It is rightl said that <Recetionist is the nerve of the hotel/% +n effective rece!tionist must !ossess an
im!ressive !ersonalit, should have high degree of kno$ledge about his hotel - variet of room%
:ece!tionist should also be !rovided $ith facilit like com!uter containing u! to date information
about room availabilit and other information about hotel so that he can ans$er an uni'ue 'uer of
the customer% +lso attractive !hotogra!h of different t!es of rooms available should be dis!laed at
the rece!tionist desk%
Sales %romotions" &hese are !aid form of marketing communication activit (other than
advertisements) to stimulate the customer to come to the hotel%
?) (ifts: (iving attractive gifts to the customer accommodating in the hotel or customer $ho is
served meal in the restaurant, attracts the customer to$ards such hotel or restaurant%
3g% -c *onalds ) $ith ever !urchase of HHa!! -ealI gives gifts targeting kids%
2) Dackages: >ike Hotel &a1 introduces different kinds of !ackages like 2 da ) 3 nights !ackage
$hich includes Felcome drink, sight seeing, discounted sho!!ing, etc% =uch schemes are es!eciall
introduced during off seasons%
3) 9onus Dacks: >ike, If a customer stas for A nights $ithin 3 months, he $ill get a night sta free
for ne#t month% &hese are es!eciall targeted to increase the loalt of the customer to$ards the
5) .ontests: marketing de!t holds various contests% +nd the !erson $ho $ins the contents is given a
%u)li& Relations" Hotels kee! the data base of their !ast customer and send them <good $ishes
card on their 9irthdas, +nniversar% &his creates good image of hotel in the mind of old customers%
?) Hotel s!onsor various &/ 'ui8 sho$s M contests, and the !erson $inning this contents $ill get
some nights free da sta at that hotel% &his creates indirect !ublicit of the hotel%
2) Hotel also give free or lo$ !riced rent to travel sho$s like <-usafir Hoon Narro and other &/
serials, $hich also creates indirect !ublicit of the hotel%
3) Hotels also maintain good relation $ith travel agents M tour o!erators as the form a link bet$een
customer M the hotel% =o, to kee! them ha!! M satisfied hotel gives these tour o!erator M agent )
high commission, (ifts like bags and also informing about various scheme hotels introduces% 0o$,
according to a surve b 2H:+I,
-5 star hotels s!end around BC of their total revenue in marketing
-Fhile 3 star hotels s!end around 23C of their total revenue%
&he reason for this difference is -5 star hotels have alread an image, a !osition% 9ut its 3 star hotel
$ho need to create a$areness about their e#istence, and further create good image so to influence
the customer to come to their hotel%
Its the manner in $hich service is delivered% =ince, in hotel industr service are rendered b hotel M
e#!erience b the customer simultaneousl, because of the inse!arabilit nature, the !rocess in
$hich these services are delivered becomes ver im!ortant% &his is because ever !rocess is
carefull b the customer M the customer is 1udging the 'ualit of the service on this basis%
=ervice 3ncounter: +cc% to 2H:+I re!ort, there are around 250 moments of truth in a hotel industr
$here the customer comes in direct contact $ith the service !rovider, e'ui!ment, and !hsical asset%
.ritical incidents: 6ut of these 250 service encounters, there are certain encounters $hich makes the
customer e#tremel delighted or e#tremel disa!!ointed% &hese are:
?) .heck-in -if the customer $ho had booked the hotel in the room arrives M to his sur!rise
finds that no room are vacant or him% +nother hand, If in an festival season $hen there no hotel
rooms available in the cit, a hotel makes arrangement for accommodation for a customer $ho has
not booked his room in an hotel%
2) 9ell !erson carring the luggage to the room- $hen the bag arrives in the room, its in
e#tremel bad condition% &his leaves negative im!ression in the mind of the customer%
3) 2ood - Kualit of food, time taken for food to arrive
A) Fake u! call- +s $ake call not made b the rece!tionist, the customer misses his flight)
5) .heck out- too much time taken, !rocedural failure%
.ustomer: 2ailure in delivering service ma occur bco8 of the careless of the customer% >ike, to
board the flight at 3:00 !m he checks out of his room at ?:30 and then e#!ects billing !rocedures to
be com!leted $ithin fe$ minutes, $hich is not !ossible% 9ecause of this the customer misses his
3'ui!ments: >ike if the tea making machine at hotel or soft machine at -c*onalds does not $ork
and these machines denote have an back u!7 then such hotels M -c*onalds $ill fail to deliver such
food $hen ordered b customer%
2ront stage !ersonnel: 9ecause of high em!loee turnover, the rece!tionist at counter fails to
recogni8e regular customer, his needs, at fail to give him discounts for his loalt to$ards the hotel%
In such case, such customer $ill no more be loal to hotel%
Drocedure: =a, $hen the !rocedure for !re!aring the bill are 'uite length $herein the customer have
to $ait for more than half an hour for their bill to arrive because of the long billing !rocedure of
billing $ere the hotelier first finds the utilities used b the customer onl after he checks out of the
room, then find the unit cost of each of them, and then finall arrive at the final cost% &his es!eciall
disa!!oints business class !eo!le $ho desire 'uick service%
-aterial =u!!lied: =a, if the customer in the restaurant orders for ki$i 1uice M ki$i is out of stock%
9ackstage Dersonnel:
Information: if the rece!tionist doesnt have an information on the number of rooms vacant on a
!articular da and makes registration of all $ho calls u! and $hen these customers arrive the see
that no room is vacant% &his is service failure on the !art of rece!tionist bco8 of lack of information,
$hich dissatisfies the customer%
6ther causes: =a like there is &rans!ortation strike or !rices of 6nions hike most of hotels $ont be
able to !rovide them food, $hich the customer desires%
$A% MO#E0
(a!?: -anagement didnt correctl !erceive $hat e#actl customer $ants%
3g% -anger of the restaurant !erceives that customer $ants good ambiance M 'ualit service% 9ut he
fails to recogni8e that customer actuall $ants good food7 and good ambiance M 'ualit service are
of secondar im!ortance%
(a!2: -anagement kno$s $hat a customer $ants but cant deliver it%
3g% -anagement kno$s that business call !eo!le $ants 'uick service% If the order tea or order a
meal the $ant $ithin fe$ minutes% Ho$ever, this is !racticall !ossible bco8 the limitation on the
!art of chef $ho needs at least 2 min% to !re!are a tea and ?2 min% to !re!are a meal%
(a!3: -anagement kno$s the customer $ants, sets standard to deliver them7 but still fails%
2or e%g% -gmt% "no$s that front stage !ersonnel are ver im!ortant and the re!resent the hotel so
the must behave $ell and !rovide !ro!er service $illingl% =o, to ensure this hotel also !rovides
them training% 9ut in s!ite hotel fails bco8 of attitude of the front stage em!loee M un$illingness
to $ork%
(a! A: .ustomer e#!ectation arises from com!ans advertisement but is not met%
2or e%g% 6rchid Hotel in its !rint ad sho$ a ver good ambience but customer actuall goes there he
doesnt find so%
(a! 5: &he customer mis!erceives the service%
2or e%g% 9 hearing the name Hill vie$, the customer !erceives it to be a 5-star hotel but it turns out
to be a 2-star hotel%
Insuran&e Market Segmentation"
In insurance industr, !rofiling is ver im!ortant in determining !remium rates% &!icall, insurers
collect ever information available% Ho$ever, anal8ing thoroughl is not feasible since the number
of variables is normall large%
&he starting !oint is thus mass marketing% In mass marketing, the seller engages in the mass
!roduction, mass distribution and mass !romotion of one !roductG service for all buers%
+ niche on other hand is a more narro$l defined grou! seeking a distinctive mi# of benefits%
-arketers usuall identif niches b dividing a segment into sub segments%
+lso, in terms of !roduct com!le#it, insurance !roducts can be categori8ed into lo$ com!le#it and
high com!le#it !roducts%
0o6 &omple;ity pro!u&ts" &hese are sim!le !roducts $ith a standard set of covered risks, !erils
and ha8ards%
igh &omple;ity pro!u&ts" &he have a large number of riders and $arranties and do not
indemnif certain causes of loss%
0OW I$
'i&he Market 2ire Insurance (different risk !rofiles
for each), -arine Insurance
?% Feather Insurance
2% Droduct >iabilit
Mass Market Householders com!rehensive
Dolic , -edical Insurance
Dersonal +ccident Insurance
Dension Droducts
&he distribution strateg should var according to the t!e of !olic% Insurance !roducts $ith lo$
com!le#it can be sold through bank-assurance, but !roducts $ith high com!le#it should not be
sold through the same channels, as it $ould be ver difficult (in terms of time, effort and cost) to
train bank em!loees in understanding the finer details of the com!le# !olicies%
Droducts $ith high com!le#it need a certain amount of customer hand holding in terms of
e#!laining the terms, conditions, riders and $arranties of the !olic% In case of niche marketing,
direct marketing can be used in the form of e-mails and direct calls through agents to s!ecific
customers belonging to the target segment% 2or high com!le#it niche !roducts, s!reading a$areness
and selling through financial advisors, consultants and brokers $ould also be a good strateg%
0OW I$
'i&he Market *irect marketing through
!ersonali8ed e-mails
+dvertise in area s!ecific
1ournal $ith toll free numbers
to set u! a!!ointments
?% Fell trained agents
2% 2inancial
3% 9rokers
Mass Market ?% 9ancassurance
2% Dostal de!artment
3% +gents
?% Fell trained agents
2% +dvertise in ne$s!a!ers
$ith toll free numbers to set
u! a!!ointments
Market Segmentation in Insuran&e
Industrial =ector
&rade =ector
Institutional =ector
:egional Fise
:ural =ector
=ub =egment
:lo6er of Ser*i&es
2lo$er of services refer to a $ell-formed !ackage of total services $ith all the su!!lementar
services being $ell formulated along $ith the core services% &he various !etals of the flo$er are:
+ marketer needs to !rovide ade'uate information to his em!loees and his customers% &his
information is general information !rovided through various communication channels%
In the insurance industr information is !rovided to the customers $ith the hel! of:
o +gents
o =eminars
o Feb sites
o Drint media
o :adio
o &elevision, etc%
&his is additional customi8ed information !rovided to the !otential customers b the service
!rovider% In the insurance industr it is !rovided b com!ans staff and agents%
E;ample: In >I. $hen a customer enters asking of information about the !olic, he is directed
to$ards the assistant sales manager% +ssistant sales manager $ill listen to the customers
re'uirement and as !er his re'uirement list the number of !olicies that are available% He $ill also ask
the customer about the !rice and limit the number of o!tions for the customer, so that he can easil
choose the !olic $ithout confusion%
Or!er taking"
6rder taking should be done $ithout mistakes% In >I. order taking is generall done b:
o 9 +gents
o 6n Feb site ($$$%licindia%com)
o 9 +ssistant sales manager directl in the office%
Hos!italit is a ver !rett !etal, reflecting !leasure at meeting ne$ customers and greeting old ones
$hen the return% Hos!italit finds its full e#!ression in face-to-face encounters%
In >I. customers directl come in contact $ith the sales manager% &he customers are treated as
guests% &he sales managers of >I. are given s!ecial training of ho$ to sell the !olicies to the clients%
It is onl in >I. that a customer can meet the chairman directl $ithout an a!!ointment%
Safe keeping"
It is in the !rocess and !rocedures used b marketers to safe guard and to maintain secrec%
In >I. the data of the customers is ver im!ortant% &he feed the data of the customers in their
:ront an! Appli&ation %rogram Soft6are $hich is connected $ith all the branches of >I.% &he
data is onl available $ith the sales !eo!le and not sho$n to an !erson%
3#ce!tional service means service over and above customers e#!ectations%
>I. has the fastest &laim settlement in the 6orl! thereb !roviding e#ce!tional service% >I. also
solves com!lains of the customers $ithin Edas%
&he !ament of !remium is normall through che'ues% .ustomer can make !ament in >I. through:
o +gents
o >oans
o Feb sites
o =tanding instruction to banks:
In this the account holder $ill give standing instruction to his bank to !a the amount of
!remium ever month $ithout his consent on the given date directl to >I.%
&he billing should be done in such a $a that there are no mistakes and if there are an the must be
immediatel rectified% &he billing should !rovide break-u!s of !remium charged, service charges,
%ro!u&t Mi;
The Wi!th of a pro!u&t mi;"
It refers to ho$ man different !roduct lines are available% In case of insurance sector, there are
generall three different !roduct lines i%e% >ife Insurance, -arine Insurance and 2ire Insurance%
The length of a pro!u&t mi;"
It refers to the total number of items in the mi#% In case of insurance sector, the follo$ing is the
length of !roduct mi#:
The !epth of a pro!u&t mi;:
&he various !roducts and various t!es of the !roducts $ith distinct features% In the insurance sector,
one !olic can be made available in different variations% =ome of the e#am!les are as follo$s:
0ife Insuran&e"
&hese !roduct mi# dimensions !ermit the com!an to e#!and its business%
3%g%: It can add ne$ !roduct lines thus $idening its !roduct mi#%
$eneral Insuran&e"
%ro!u&t le*els"
In this figure there is a nucleus or core in the center, $hich is su!!orted b series of tangible and
intangible features and benefits and these form a cluster around the core !roduct%
0e*el Type of
Contents Insuran&e se&tor
? .ore service 9asic service !roduct >ife
0on-life insurance !olic
2 3#!ected
9asic !roduct and minimum !urchase
conditions that must be met%
+fter sales service
>o$ claim settling !eriod%
3 +ugmented
=omething different, $hich enables
one !roduct to be differentiated from
6nline !remium !ament
Dament through credit cards
=tanding instruction to bank
A Dotential
2eatures that attract the customers and
are useful to them%
-aturit claims settled on or before the
maturit date%
%ri&e Mi;
In the insurance business, the !ricing decisions are concerned $ith the !remium charged against the
!olicies, interest charged for defaulting the !ament of !remiums M credit facilities, commission
charged for under$riting M consultanc services
Dremiums are the !eriodic !aments usuall monthl or 'uarterl that the !olic holder !as to the
insurance com!an to !urchase and kee! a !olic in force%
2or e#am!le in case of life insurance according to the !olic it ma be the amount !aable during
the endo$ment term of the !olic or until the death of the life assured $hichever is earlier%
&he basis on $hich the insurance com!an decides the amount of !remium to be !aid b each
!erson is determined mainl b 3 factors:
Mortality Ta)les"
+ll insurance com!anies refer to different mortalit tables% &hese tables differ from countr to
countr% &he mortalit table indicates the !robabilit of a !erson ding in a !articular age grou!% 2or
e%g% in an age grou! of 25-30 ears, the !robabilit might be 1ust t$o, but this !robabilit $ould
increase for a higher age grou! of A5-50 ears%
>ife Insurance .om!an (>I.) $ith its long-standing !resence has a mortalit table, $hich is
grossl outdated% =ome other insurance com!anies have got their o$n tables but the are more or
less in line $ith that of >I.%
E;pe&te! Surplus"
&he !remiums collected b the insurer are invested in ca!ital markets% &here is a fi#ed investment
!attern for the insurer% 6ut of the sur!lus earned on the !remiums invested, @5C is distributed to the
!olicholders and the insurance com!an retains the balance 5C%
+n insurance com!an has to incur e#!enses in the form of commission to agents, office e#!ense,
advertising e#!ense, salaries to em!loees% &hese e#!enses are to be managed b the com!an in the
5C sur!lus earning $hich the earn as mentioned above%
0o$ the criterias on $hich the !remium amounts are fi#ed are different from different t!es of
0ife Insuran&e %ri&ing"
&he !ricing in case of life insurance is done on the basis of:
0ife E;pe&tan&y"
In case of life insurance, the !remium amount tends to be different for different customers% &his
differentiation is on the basis of age, medical histor of a !erson%
Age (
3%g%: >o$ !remium is charged for children and oungsters as it is assumed that the are at a lesser
risk of death as com!ared to the aged !eo!le%
Me!i&al istory (
&he medical histor should be revealed to the insurance com!an b the customer in Utmost $oo!
:aith i%e% the insured must !rovide to the insurer com!lete, correct and clear information of the
sub1ect matter of insurance%
Motor 1ehi&le Insuran&e"
.ar insurance com!anies take man factors into account $hen determining $hat !remiums the
insured $ill !a% 3verbod does not !a the same !remium% Nou !a a !remium based on $hat the
com!an assesses as the !ossible risk ou !ose% &he ma1or factor is the age and condition of the car%
&he other factors are as follo$s:-
Multiple &ars or poli&ies"
Fhen ou have more than one car on an insurance !olic, most com!anies $ill give ou $hat is
kno$n as a multi!le line discount% 9ecause ou use the com!an for all of our auto insurance
needs, the re$ard ou%
#istan&e an! amount of !ri*ing you !o:
-ost car insurance com!anies ask !ros!ective clients ho$ far, and to $here, the do most of their
driving in a da% &he thinking is that further ou have to drive, and the more often ou do it, the
more likel ou are to have an accident% &he !erson $ho commutes A5 minutes to $ork ever da is
going to !a more than the !erson $ho drives ?0 minutes to $ork% >ike$ise, a college student $ho
$alks to class, and drives home three or four times a ear $ill cost less than the college student $ho
s!ends 30 minutes commuting to and from cam!us each da%
0o&ation of your &ar:
.ar insurance com!anies rate areas according to the number of accidents or thefts that occur in a
s!ecified amount of time in that area% =ometimes, the com!an can even !in!oint a neighborhood% If
ou live in a large cit, our rates $ill be higher than if ou live in a to$n%
:ire an! Marine Insuran&e %ri&ing"
&he !rinci!le of utmost goo! faith is a!!licable even for fire and marine insurance%
3%g%: If a trader $hile taking a fire insurance !olic does not disclose the !revious occurrence of fire
in the factor, and subse'uentl after taking !olic, there is another fire, the insurance com!an ma
refuse to !a the com!ensation if it learns about the !revious occurrence of fire $hich $as not
disclosed at the time of taking the !olic%
&he !ricing in case of fire and marine insurance is done on the basis of:
Type of Buil!ing:
In case of a building the rate of !remium also de!ends on the t!e of construction% If it is $ood
construction the insurance !remium is lo$ as the cost in constructing a $ood building is lo$ in
com!arison to a concrete building $hich has higher !remium amount
%ast E;perien&e"
If a fire or marine insurance com!an has a !ast e#!erience of settling a claim successfull then, the
credibilit of the com!an increases and it charges higher !remium for similar !olicies% &he
customers are assured that the com!an $ill be able to handle the claim $ell as it $as done in !ast
and hence the are read to !a higher !remium%
#is&ount %ri&ing"
In insurance sector, discount is offered if group insuran&e is o!ted for% (rou! Insurance =cheme is
meant to !rovide life insurance !rotection to grou!s of !eo!le% +dministration of the scheme is on
grou! basis and cost is ver lo$%
*iscount is given on grou! insurance scheme because the insurance com!an gets a large number of
customers at a time and hence it saves e#!enses on !romotion and advertisement, $hich are to be
incurred to attract ne$ customers%
&hus, discount is given in order to attract more customers at a time b this grou! insurance scheme%
&he cost incurred on giving discount is much less as com!ared to the cost s!end and advertising and
!romotion% Hence discounting is much more !rofitable for the com!an
Ho$ever, B5 !er cent of the !ricing is still determined b the government that is the &ariff +dvisor
.ommittee% =o the rates of !remium are more or less the same% It is going to change over the ne#t
fe$ ears% In non-tariff !roducts like !ersonal accident etc there is a lot of !ressure on !ricing%
.om!anies $ill have to be reasonable $hile determining a !ricing structure because, across the
globe, there are instances of com!anies going bust $hile !laing the game of undercutting state-run
%la&e Mi;
In case of insurance sector, the follo$ing channel of distribution is follo$ed according to the target
*irect =elling +gents
2inancial +dvisors
.all .enters
Dartner =elling 9ancassurance
Dostal *e!artment
=elling through .or!orates
#ire&t Selling"
&he agents are selected and recruited b the develo!ment officer of the insurance com!an% &hese
agents inform the customers about the various insurance !olicies offered b the com!an and
convince them to bu these !olicies%
:inan&ial A!*isors"
&he financial advisors are also consulted b the customers regarding their financial matters% &hese
advisors suggest their clients to get their goods insured against an calamit or risk%
Call &enters"
&he !eo!le $ho re'uire insurance call u! the call centers% &hese call centers send their direct
marketing agents $ho go to the customers !lace and sell the insurance !olic%
%artner Selling"
In bancassurance, the insurance !roducts are sold through the banks net$ork of branches%6m "otak
-ahindra has tie-u! $ith *ena bank, b $hich former doesn;t entertain bancassurance $ith an
other bank and the latter also doesn;t distribute !olicies of an other insurance com!an
%ostal #epartment"
% Insurance com!anies can tie u! $ith the !ostal de!artment to sell and distribute various insurance
covers% &his $ould certainl re'uire u!front training costs, as the !ostal em!loees in turn need to
educate and sell the conce!t and benefits of insurance to the !eo!le in rural areas% Selling Through
Insurance can be sold through cor!orates too%
3%g%: Fhen a customer !urchases a -aruti car, he gets the insurance of the car free from the -aruti
.om!an itself% &hus this is termed as selling insurance through cor!orates%
Ele&troni& Channels:
In the last decade, numbers of technological advances have taken !lace due to immense use of 3*I
(3lectronic *ata Interchange)
3lectronic channels >I. on internet
Information "iosks
Information kiosks:
>I. have set u! ?50 interactive &ouch screen multimedia "I6="= in !rime locations in metros and
some ma1or cities for dissemination information to general !ublic on our !roducts and services%
=-= through mobile !hone is recentl ne$ technolog introduced b the >I. to !romote their
In insurance, location, the !lace $here office situated is not as im!ortant as mostl the agents of the
insurance com!an goes to the !lace of the customers for doing most of that customers $ork%
%hysi&al E*i!en&e
Dhsical evidence is the environment in $hich the service is delivered and $here the com!an and
the customers interact and an tangible goods that facilitate the !erformance and communication of
the service%
=ervices are intangible and heterogeneous% Intangibilit means that services cannot be dis!laed,
!hsicall demonstrated or illustrated7 heterogeneit means that consumers cannot be certain about
!erformance on an given da% It !las a ma1or role in enhancing customers !erce!tion of the
service 'ualit%
Ho$ever, in case of insurance sector, the customer rarel visits the insurance com!an% &he
customer comes mostl onl in contact $ith the service !rovider%
Insuran&e Ser*i&e Tangi)les as %hysi&al E*i!en&es
? Dolic *ocuments
2 9rochures
3 Deriodic =tatements
A :ene$al 0otices
5 9usiness .ards
B =tationar
E .alendar, *iaries
4 >ettersG.ards
@ Febsite
%eople Mi;.
3m!loees are ver crucial because:
&he are the service
&he are the brand
&he are the marketers
&he are the organi8ation in the ees of the customers%
&he various em!loees involved in !roviding service to the customer in insurance sector are:
Customer ser*i&e representati*es:
&he, !rocess insurance !olic a!!lications, changes, and cancellations% &he revie$ a!!lications
for com!leteness, com!ile data on !olic changes, and verif the accurac of insurance com!an
records% &he ma also !rocess claims and sell ne$ !olicies to e#isting clients%
Marketing an! sales managers:
&hese constitute the ma1orit of managers in carriers local sales offices and in the insurance sales
agents segment% &hese em!loees sell insurance !roducts, $ork $ith clients, and su!ervise staff%
Claims a!Gusters, appraisers, e;aminers, an! in*estigators:
&hese decide $hether claims are covered b the customers !olic, confirm !ament, and, $hen
necessar, investigate the circumstances surrounding a claim% .laims ad1usters $ork for !ro!ert and
liabilit insurance carriers or for inde!endent ad1usting firms% &he ins!ect !ro!ert damage,
estimate ho$ much it $ill cost to re!air, and determine the e#tent of the insurance com!ans
liabilit7 in some cases, the ma hel! the claimant receive assistance 'uickl in order to !revent
further damage and begin re!airs%
Qnder$riting is another im!ortant management and business and financial occu!ation in insurance%
Qnder$riters evaluate insurance a!!lications to determine the risk involved in issuing a !olic% &he
decide $hether to acce!t or re1ect an a!!lication, and the determine the a!!ro!riate !remium for
each !olic%
Insuran&e sales agents:
+bout ?5 !ercent of $age and salar em!loees in the industr are sales $orkers, selling !olicies to
individuals and businesses% Insurance sales agents, also referred to as !roducers, ma $ork as
e#clusive agents, or ca!tive agents, selling for one com!an, or as inde!endent agents selling for
several com!anies% &hrough regular contact $ith clients, agents are able to u!date coverage, assist
$ith claims, ensure customer satisfaction, and obtain referrals%
&he insurance industr em!los relativel fe$ !eo!le in !rofessional or related occu!ations, but
those $ho are so em!loed are essential to com!an o!erations% 2or e#am!le, insurance com!anies
la$ers defend clients $ho are sued, es!eciall $hen large claims ma be involved% &hese la$ers
also revie$ regulations and !olic contracts% 0urses and other medical !rofessionals advise clients
on $ellness issues and on medical !rocedures covered b the com!ans managed-care !lan%
Computer systems analysts, &omputer programmers, an! &omputer support spe&ialists:
&hese are needed to anal8e, design, develo!, and !rogram the sstems that su!!ort the da-to-da
o!erations of the insurance com!an%
&hese re!resent a relativel small !ro!ortion of em!loment in the insurance industr, but the are
vital to the industrs !rofitabilit% +ctuaries stud the !robabilit of an insured loss and determine
!remium rates%
Deo!le mi# not onl includes em!loees but also customers% &he customers are to be treated $ith
res!ect and courtes%
%ro&ess Mi;
In case of insurance sector, the !rocess mi# includes the various interactions that take !lace bet$een
the insurance agent and the customer in the !rocess of selling the !olic to the customer till the
settlement of claims%
&he follo$ing !rocess mi# is follo$ed b insurance com!anies in case of life insurance:
?% &he insuran&e agent &alls up the &ustomer and informs him about the different !olicies offered
b the com!an and the !rice mi# of all the !olicies% If, the customer seems interested in taking
the !olic then, he fi#es an a!!ointment $ith the customer%
2% &he insuran&e agent meets the &ustomer and gives him some information about the insurance
com!an and also about the benefits of the !olic%
3% &he customer is then asked to fill a finan&ial re*ie6 form +:R:- and the agent is asked to find
out the standard of living of the customer so that the insurance com!an gets a clear !icture
about the financial condition of the customer and $hat kind of !olic he can afford%
A% &he insurance com!an offers various !olicies but the might not be suitable for the customer
hence, on the basis of his re'uirements and financial status, the insuran&e agent suggests t6o or
three poli&ies to the customer, $hich $ill be suitable for him%
5% &he insuran&e agent e;plains the !ifferent poli&y plans in !etail to the &ustomer i%e% the
amount of !remium to be !aid, the time interval at $hich the !remium is to be !aid, the benefits
of each of the !olic etc% + )ro&hure is also !rovided to the customer $herein the entire
descri!tion of all the !olicies is given%
B% &hen, the insurance agent !rovides a fee!)a&k form to the customer and asks him to give his
feedback regarding the !olicies that he has been informed about% &his feedback is taken in order
to find out $hether the customer is satisfied $ith the !lans of the !olic or $hether the com!an
needs to make the !olic !lans more attractive so that it ma a!!eal to its future customers%
E% &hen, the ne#t a!!ointment is fi#ed b the insurance agent $ith the customer and in this
meeting7 the &ustomer sele&ts the poli&y plan, $hich a!!eals to him% &he customer is then
asked to fill up the proposal form $hich contains various details of the !ament and he is asked
to make the first premium payment%
4% &hen, the insuran&e agent su)mits the !uly fille! an! signe! form in the insuran&e offi&e
along $ith the other necessar documents% 3%g%: -edical :e!orts in case of >ife Insurance%
=ubmission of +ge Droof is essential as the rate of !remium !aable on a life insurance !olic
generall varies $ith age, and therefore age is one of the most im!ortant factors in determining
the rate of !remium !aable in an individual case% &he follo$ing is acce!ted as age !roof:
o .ertified e#tract from munici!al or local bods records made at the time of birth%
o .ertificate of 9a!tism if it contains date of birth
o Dass!ort issued b !ass!ort authorities in India%
o .ertified 3#tract from school or college records, if date of birth is mentioned%
&he customer must get himself e#amined from the a!!roved doctor of >I.% &he medical
e#amination is necessar to determine the !hsical fitness of the customer% If the medical re!ort
is favourable, then onl >I. $ill issue the !olic%
@% +n average t$elve das time is taken b the com!an to *erify the su)mitte! !o&uments% +fter
the t$elve das !eriod, the insurance agent meets the customer to !rovide him a poli&y
!o&ument, 6hi&h &onsists of the terms an! &on!itions of the poli&y. &his is because terms and
conditions of the !olic differ for different customers due to differences in medical conditions of
customers in case of life insurance and due to differences in nature of goods and mode of
trans!ortation in case of marine and fire insurance%
?0% &hen, a re&onfirmation is taken b the agent from the customer that he agrees $ith the terms
and conditions of the !olic%
??% &he insurance agent then regularly &olle&ts the premium from the customer $henever the
!remium becomes due%
%romotion Mi;
It is a !aid form of non-!ersonal communication% It is used to create a$areness and transmit
information in order to gain a res!onse from the target market% 2orms of advertising are as follo$s:
o 'e6s %apers an! MagaDines:
>I. give ads in the ne$s !a!ers and maga8ines round the ear to continue its brand image and
also $hen ne$ !roducts are introduced% 0ormall its ads are !ublished in Times of In!ia%
o Ele&troni& me!ia"
Insurance com!anies also advertise its services in the 3lectronic media like:
Internet +We)sites-"
.om!anies like >I. ($$$%licindia%com), I.I.I ($$$%icici!rudential%com) all have $ebsites
from $hich !eo!le can get the information about their !roducts, !rices, various schemes, and
lots of other information% Deo!le can also !urchase the !roduct through this $ebsite%
.om!anies like 0IC, Met 0ife In!ia, advertise on television to make !eo!le a$are of their
!roducts and services%
ICICI %ru!ential advertises on @2%5 red 2m%
o oar!ings"
0IC !ut its hoardings $here there is a mass flo$ of !eo!le, es!eciall outside the rail$a station
or at the backside of the bus%
Fhen Met 0ife $as introduced it has !ut his hoardings on the side of the train, to target huge
number of !eo!le%
o Bro&hures"
.om!anies !rovide brochures to the customers so that the can have a look on various schemes
and their !rices%
%u)li& relations"
Dublic relations are hel!ful for the com!anies to build their brand image, to maintain good
relationshi! $ith customers, to make the !eo!le a$are of its recent ha!!enings, etc% -ediums of
Dublic relations are:
o %ress releases:
&his hel!s the com!an to conve its message to its customers and other !eo!le%
o Seminars:
&hese are held to !rovide information about the ne$ !roduct launched, !osition of the com!an
in the market, etc%
Sales %romotion"
>I. !rovides diaries, !ens, booklets, etc to its customers%
o Sponsoring E*ents"
3g: -a# 0e$ Nork >ife Insurance .om!an has s!onsored the recent India-Vimbab$e-0e$
Vealand tri series%
%ersonal selling"
o Agents"
It is the most $idel used method of !romotion b all insurance com!anies% &he recruit, train
and motivate the insurance agents to convince the customers to bu insurance !olicies of that
!articular com!an% &he agent also collects the monthl !remium and settles the claims of the
Wor! of Mouth"
Ford of -outh !romotion !las the role of hidden sales force% &he $ord of mouth !romotion is
normall carried out b &ustomers, agents an! employees% It can be !ositive or negative de!ending
u!on the service or e#!erience the receive%
o Customers:
It is im!ortant for the organi8ation to !rovide customers $ith 'ualit service so that he is
satisfied and s!read the good $ord of mouth% 6n the contrar if the customer is not satisfied $ith
the service or e#!erience he s!reads bad $ord of mouth%
The consultants in addition to other as!ects also need to assign due $eightage to the nature
and t!es of users of the services% &his makes it essential that the are $ell a$are of the changing
attitudes and behavioural !rofile% &his sim!lifies the task of understanding the e#!ectations,
develo!ing the marketing resources in tune $ith their needs and re'uirements and making the
marketing decisions !roactive% Qsers ma be an individual or an institution% &he motives ma be
!ersonal and commercial% &he !roviders are su!!osed to make sure that customers and clients
remain satisfied% +t the same time, the have also to be careful that the services !rove to be
remunerative and ver much instrumental in maintaining the commercial viabilit% &he are
su!!osed to think for the clients, move $ith the clients, $ork for the clients and go $ith the clients%
&he consultants are not su!!osed to lag behind their clients since the bear the res!onsibilit of
su!!orting them vis-a-vis to remove the !schofobia as and $hen the circumstances necessitate so%
&he need to subserve the interests of their clients% +n individual or an institution seeking legal
advice, technical or managerial suggestions or medical !rescri!tions needs su!!ort of consultants at
different stages% If the consultants move $ith the clients, $e find develo!ment of a sense of
confidence among them $hich kee! on moving the !rocess of retaining the business% &he clients in a
ma1orit of the cases feel that their goals $ould remain unfulfilled, if consultants are not $ith them
!hsicall, !rofessionall and morall% &his in a natural $a increases the instrumentalit of
% In the figure $e find different categories of users using the services of different t!es of
&he marketing strategies formulated on the basis of segment are found to be customer-oriented% In
the consultanc services an organi8ation needs to segment the market on the basis of region, sector
and geogra!hical conditions% In 2igure ?%2, $e find region $ise segmentation%
2.4 Region6ise Segmentation
The .entral Vone, 3astern Vone, 0orthern Vone, =outhern Vone and Festern Vone are the
different market segments classified into different 8ones as !er the re'uirements% =uch
segmentation hel!s consultanc organisations in studing the needs and re'uirements of different
8ones and the develo!ment of marketing resources are thus made o!timal to the users
re!resenting a !articular 8one%

In the figure ?%3, $e find segmentation on the basis of sector% =uch a sector $ise segmentation is
divided in to five !arts, such as >egal sector, &echnical sector, 2inancial sector, -anagement sector
and -edical sector%
2.5 Se&tor6ise Segmentation
It is 'uite natural that segmentation on the basis of sector hel!s the consultants and the
consultanc organisations in understanding the e#!ectations of different categories of users in a
different $a% &he sector$ise segmentation !resented in 2igure ?%3 clarifies that in the consultanc
services, a consultanc organi8ation needs to identif the needs and re'uirements of a client related
to that segment% In some of the organisations, the legal advice is to be given and like this in some
other organisations, the financial and technical suggestions are needed%
In 2igure ?%A, $e find segmentation on the basis of geogra!hical considerations% In this res!ect, $e
find im!ortant categories as :ural, Qrban, Individual and 6rgani8ational%
2.8 $eographi&al Segmentation
The aforesaid segment sho$n in 2igure ?%A clarifies that in the rural segment, the technological
re'uirements $ould not be so advanced as found in the urban sector% >ike this, the individuals have
different e#!ectations from the consultanc organisations%
2. The %ro!u&t Mi;
In the consultanc services, the im!ortant !roducts are technical services,
legal services, medical services and the managerial services% &he !roviders and the clients ma be an
individual or even an institution% .ustomer orientation is considered to be an integral !art of !roduct
develo!ment strategies%
The formulation of a sound !roduct mi# makes it essential that the consultanc organisations
make efforts to design a sound !roduct !ortfolio in
$hich different t!es of services are included% &he medical consultants need to
be a$are of the latest devices of treatment and to offer to the !atients the $orld class medical aids%
&he technical consultants also need to innovate their !roduct mi# in the face of technological
so!histication and to eliminate the traditional services from the !roduct mi#% &he legal consultants
need to be a$are of the latest develo!ments, such as amendments in la$s, rules and regulations and
to formulate the service mi# accordingl% &hus the elimination and inclusion !rocesses need to be
ado!ted even in the consultanc services% &he management e#!erts not a$are of the latest
develo!ments in the business $orld $ould hardl be successful in serving the interest of their
clients% &hese facts make it clear that; like other organisations, the consultanc organisations also
need to make !ossible innovation in the face of multi-dimensional develo!ments in the business
A!*ertising" Fe find advertising a !aid form of !ersuasive communication% &he latest
develo!ments in the field of marketing communication technologies have made advertising a shar!-
edged $ea!on in the hands of consultant and the consultanc organisations% &he sensitivit in
advertising is found increased $hen the advertising slogans and messages !rove to be creative% &he
advertising !rofessionals having a $orld class e#cellence can make it !ossible%
&he marketing e#!erts feel that creativit !aves avenues for sensitivit and sensitivit reserves
elbo$ room for acce!tabilit of the messages, slogans, a!!eals and themes% &his makes it essential
that messages have high degree of creativit%
%u)li&ity" Fe find !ublicit instrumental in activating the !rocess of !ersuasion for $hich the
advertisers are not su!!osed to !a anthing% &he !ublic relations activities are found im!ortant
$hile !ublicising% >ike other organi8ations even the consultanc organisations are re'uired to use
this com!onent of !romotion% &he ultimate ob1ect of !ublicit is to transmit to the masses the ne$s
and information related to the effectiveness of the a!!eal% In the consultanc services, the !ublicit
measures are re'uired to be innovated% &his re'uires su!!ort of academics and !rofessionals in the
field of creating creative literature and getting them !ublished in the im!ortant ne$s!a!ers,
maga8ines and 1ournals !referred b the target clients% &he !ublicit measures sim!lif the task of
consultative sales !eo!le, as the creative literature $ould be instrumental in raising the effectiveness%
&he services to be offered b a consultanc organi8ation $ould be !ublished in a re!uted media
having $ider circulation% &he technical, medical, legal;s management 1ournal, and the im!ortant
ne$s!a!ers and maga8ines !referred b the !ros!ects re'uire due attention of marketing
Sales %romotion" &his com!onent of !romotion bears the efficac of touching the target $ith the
hel! of incentives offered to the middlemen and the clients or consumers% It is a tem!orar incentive
$ith a certain motive found instrumental in !romoting the consultanc business% Fe need to mention
that in the consultanc business the middlemen are also used to offer the services to the clients% &he
leading consultanc organisations have branch and site offices $here a number of !ersonnel are
found engaged in offering the services to the clients% &he services are offered directl to the users
$hen $e find an individual acting as a consultant% &he marketing !rofessionals are su!!osed to take
decisions related to incentives to be offered to the middlemen as $ell as to the users% &he branch
!ersonnel, site-!ersonnel !la an incremental role in selling the consultanc services% Fe go through
incentive measures to be offered to both%
%ersonal Selling" Dersonal selling needs !ersonal e#cellence to influence the !ros!ects% It has
!roved to be an im!ortant com!onent of the !romotion mi#%
&he consultanc organisations find this constituent of the !romotion mi# effective in !romoting the
business% Ho$ to build confidence is an im!ortant as!ect of !ersonal selling in $hich the
consultative sales !eo!le are re'uired to !erceive the changing e#!ectations of clients or users in a
right fashion% &he are su!!osed to !erceive !o$er, value and decision making sstem in the client;s
organisations% It is also essential that the develo! !ersonal relationshi! $ith the !ersonnel engaged
in the organisations of clients% In a true sense, the are re'uired to move $ith the client% &he success
of !ersonal selling substantiall de!ends on the !ersonalit and e#cellence of an individual%
Wor!(of(mouth %romotion" Kualit of services is the main thing in !romotion% If the services are
of $orld class, the customersGusers start !romoting our !roduct% .ontrar to it, if our services are
of !oor 'ualit even the most so!histicated !romotional measures fail in sensitising the users% It is
against this background that $e talk about this constituent of !romotion mi#% 9 $ord-of-mouth
communication our em!hasis is on !romoting the services b the hidden salesforce% It is !ertinent to
mention that the satisfied grou!s of customers communicate to their close friends and relatives the
outstanding !ro!erties of the services availed b them% =ince $e trust on our friends and relatives,
the !rocess of stimulation is found activated% If ou are satisfied $ith the services of a medical
consultant since heGshe has successfull cured ou on the basis of hisG her e#!ertise and in addition,
hisGher behaviour has also been decent7 ou talk to our friends and relatives regarding the same%
Telemarketing" 6f late, $e find telemarketing ver much instrumental in !romoting almost all
t!es of good and services% Fe are a$are of the fact that telemarketing is based on the contribution
of tele!honic services and therefore, $e can also call it marketing $ith the su!!ort of tele!hones% It
is im!ortant to
mention that $ith the satellite communication facilities, the telemarketing has,
!roved to be an effective as $ell as an economic com!onent of !romotion% In some of the areas, $e
find a combination of tele!hones and televisions for !romoting the services% &he main thing in
telemarketing is the instrumentalit of telemarketers% He should have a high communicative abilit
in addition to the art of tele!honic talk% &he consultanc organisations can use telemarketing for
!romoting the business% +n individual consultant or the consultanc organisations need to recruit
efficient !ersonnel to act as telemarketers &he !ersonnel acting as telemarketers need an ongoing
training% +n in de!th kno$ledge of the related services is found essential to the telemarketers% He
bears the res!onsibilit of ans$ering to the 'uestions and 'ueries of clients, transmitting to them the
re'uired information, removing their confusion and misunderstanding on the basis of his
communicative abilit% It is natural that for discharging hisGher functional res!onsibilities in a right
$a, the consultanc organisations need to make it sure that the !ersonnel $orking as telemarketers
are !rofessionall sound%
4. The %ri&e Mi;

In the consultanc services $hen $e talk about the !rice mi# our em!hasis is on fee or
commission charged b the consultants or the consultanc organi8ations for making available to the
clients the services as !er the !romises or agreement% Fe agree $ith this vie$ that a decision related
to fee or commission !las a significant role% In this conte#t, it is essential that the consultants are
a$are of the !ricing ob1ectives, $hich ma be either !rice-com!etitor or non-!rice-com!etitor% In the
!rice-com!etitor ob1ective, the consultanc organisations offer lo$er !rice since the !ricing
decisions are re'uired to be motivational% In the non-!rice com!etitor ob1ective, $e find stable !rice
for individual services and for multi-service situation, a balance or an o!timal !oint is searched in
the high, medium and lo$ !rice lines%
%ri&e 0ining Strategy" In this strateg, the consultants and the consultanc organisations charge
different fee-structure since the services var% &his is !ossible in the retail business% +s for e#am!le,
$e find different !rice structure for shirts of different categories% Here it is essential that the consult-
ants are in a !osition to su!!ort !rice differentiation on the basis of service differentiation% &he
consultants serve in a different $a such as the !re!are feasibilit re!ort, dail !ro1ect re!ort,
technical s!ecification and so on% &his strateg hel!s both the consultants as $ell as the clients in
making cost analsis and revenue forecasting% &he ad1ustment of fee is found difficult and therefore
the consultanc organisations ma face numerous !roblems in the long run%
3% 0ea!er %ri&ing Strategy" &his !ricing strateg hel!s in building volume and introducing as man
clients as !ossible% It involves substantial reduction in !rice charged for goods or services having
fre'uent demand% Here the ob1ective is to market additional services as full !rice, es!eciall to the
res!onding favourabl to the leader !riced services% In this strateg the clients
!refer to !urchase e#clusivel the leader service% + number of clients like to negotiate $hich raises
the !ossibilit of shifting to other com!etitors% + dangerous stage like !rice $ar is e#!ected $hich is
not suitable to the develo!ment of an organi8ation% + stage like !rice $ar is to 1eo!ardi8e everthing%
A% %restige %ri&ing Strategy" In this strateg, the consultants charge fee higher than the market% &his
is su!!orted b the logic that the offer 'ualit
services and therefore charge high for the su!erior 'ualit and less for the inferior 'ualit% Fe find
fee re!resenting the status and this limits the number of clients having fee and status consciousness%
If ou offer $orld class services, the high fee structure is found 1udicious%
5% Competition()ase! strategy" =uch a strateg is based on com!etition%
Here the consultants have three o!tions, the first Lto beatL, secondL to meetL and the third Lto leadL%
In other $ords, in the Lto beatL strateg, $e find em!hasis on lo$er !rice structure so that the !rice is
used as a motivational tool and the clients are motivated% In the Lto meetL strateg, $e find focus on
similar !rice structure $hereas in the Lto leadL strateg, $e find em!hasis on charging higher than
the com!etitors% 9ut this strateg is not suitable $hen the intensit of com!etition is high%
B% Skimming strategy" In this strateg, the consultants recover their services and develo!ment costs%
Here the consultants get the ma#imum fee but the intensit of com!etition influences the !ricing
decisions% &his strateg hel! in the formation of a negative attitude $here clients feel that fee has
been reduced as the services are of sub-standard 'ualit%
E% %enetration strategy" &he !enetration strateg focuses on break-even !oint% Here the fee
structure is found a bit higher than the average% Here the
motto is to create trial, ra!id acce!tance and high volume of services for the consultants% In this
strateg, the consultants and the consultanc organisations are re'uired to increase the fee sooner or
later $hich ma act as a demotivational tool and the clients ma be discouraged% Here it is !ertinent
that the consultants sho$ their e#cellence b 1ustifing a change and this focuses our attention on
modifing or im!roving the services so that the clients don;t develo! a negative attitude%
4% #is&ount Allo6an&e strategy" 6f course, $e don;t find discount allo$ance strateg suitable for
the consultanc organisations, ho$ever the consultants ma offer discount or allo$ance $hen the
act as sub-contractors to another
consultant% In this conte#t, $e find reduction in fee due to a reduction in the overhead costs%
The %la&e Mi;
In the consultanc services, the distribution mi# also occu!ies a !lace of
outstanding significance% &he !lace mi# on making available !romises our em!hasis !romised
services to the clients on time
Bran&h Offi&es" If the consultanc organisations find that the relationshi! $ith the clients is of
!ermanent nature or it is not !ossible to have a direct contact $ith the clients due to their
unmanageable number, cost ineffectiveness or constraints in transmitting the information7 the
!roviders need to think in favour of a full-fledged branch%
Site Offi&es" &o be more s!ecific $hen there is a 1ob contract, the o!ening
of site office is found essential% &his brings momentum in the !rocess of offering the services%
Through A Representati*e" It is im!ortant to mention that $hile distributing the consultanc
services, $e make an advocac in favour of a re!resentative $here the establishment or o!ening of
site office is not found to be a commerciall viable !ro!osition%
Fhat do mutual funds sellJ :eall s!eaking, the do not sell anthing, tangible or intangible% &his
does seem confusing% 9anks sell their !roducts on the basis of certain assured returns7 insurance
com!anies sell contracts% 0ot so mutual funds% &he mobili8e funds from the investing !ublic to
manage those funds efficientl, i%e%, the create an e#!ectation of good returns in the minds of
investors and generate a desire in them to !ut their mone $ith a !articular fund%
&here is a clear distinction bet$een com!an shares and mutual fund units% Fhen a com!an
issues ca!ital, investors e#!ect that the com!an $ill be able to return the $orth of their investments
through manufacturing or servicing activities, but in the case of mutual funds managerial efficienc
and investment skills $ould determine returns% =uccessful mutual fund marketing therefore must
create confidence among !otential investors and strengthen their desire to !ut their mone $ith a
!articular fund% It is not onl !ublicit, talking skills and !ublic relations, $hich $ill strengthen
confidence, but also evidence of good !erformance% +dditionall, organi8ational image, visibilit of
o!erational !olicies and 'ualit of management form an indirect !art of mutual fund marketing%
-arketing Dlan for -utual 2und
2. %ro!u&t #esign an! Range
-utual fund !roducts (schemes) are basicall investments-oriented and the savings
mobili8ed b them are invariabl invested in the instruments (shares, debentures) !ro1ected in the
schemes% &here is little sco!e for fle#ibilit% &herefore, due care needs to be taken $hile designing
!articular !roducts taking into account e#!ected changes in ca!italG stock market in vie$ of future
investments return% &he changing !rofile of customers (investors) must be taken into account in
identifing the savings market%
*ifferent segments of the !otential savings market have different e#!ectationsYlong-term
gro$th, regular income ta# benefits, and so on% 0e$ !roducts must be aimed at satisfing one or
more ob1ectives% &a# la$s and other related regulations also !la an im!ortant role in designing ne$
!roducts because benefits can be offered to investors $ithin the e#isting frame$ork of ta#
India lags behind countries like the Q=+, the Q" and ,a!an in terms of innovative !roducts%
-ost of the !roducts launched in India are either income or income-cum-gro$th schemes7 fe$ are
!ure gro$th schemes% Investor o!tions have been restricted due to limited !roduct range%
>ike !roduct !lanning, !roduct launching is a crucial element in marketing% -an Indian
mutual funds have !erformed !oorl due to $rong timing of launch% -arket research can hel! to
assess the needs of !otential customers, availabilit of e#isting !roducts and future gro$th in
4. %ri&ing %oli&y
&he !rice of mutual fund !roducts is ine#tricabl linked $ith returns% Indian mutual funds
follo$ the historic !ricing structure% =39I (-utual 2unds) :egulations, ?@@B, contain guidelines
about the !ricing of units% +s !er these guidelines, the schemes ma also !rovide for the !rice at
$hich the units ma be subscribed or sold to the inde!endent !artici!ants in the scheme and the
!rice at $hich such units ma at an time be re!urchased b the mutual funds% -utual funds are also
to !ublish the sale and re!urchase !rices at least once in a $eek% -utual funds are also to ensure that
the difference bet$een the sale and re!urchase !rices does not e#ceed E !er cent of the sale !rice%
In India the face value of the units of most of the mutual funds is :s ?0% Ho$ever, $hile
deciding on the !rice, incentives, brokerage charges and commissions are also to be decided in
advance because the e#!enses to$ards these items $ill effect the ultimate returns to investors%
5. #istri)ution an! %romotion of %ro!u&t
+ ne$ mutual fund !roduct ma have all the desired 'ualities but that does not ensure its
s!ontaneous acce!tance b customers% =uccess $ould greatl de!end on a!!ro!riate distribution and
!romotion% &he identification of a!!ro!riate market segments for the !roduct, selection of
a!!ro!riate distribution channels and !romotional aids are essential%
&ill the advent of !ublic sector mutual funds in ?@4E and !rivate sector mutual funds in ?@@3,
the marketing strateg follo$ed b Q&I $as largel !assive%
Q&I units have been mainl sold through >I. agents $hose 1ob is reall marketing insurance%
-arketing intermediaries like agentsGbrokers in India, moreover, are under no obligation to follo$
an norms unlike the Q=+, Q" and ,a!an%
Fhile Indian mutual funds still de!ends mostl on retailing, a distinct change has been noted
in marketing strateg after ?@@3%
&he ma1or market intermediaries are: agents a!!ointed b res!ective mutual funds,
stockbrokers $ho are members of stock e#change and are registered $ith the mutual fund,
institutional and cor!orate agents%
Dublic sector mutual funds like >I. -2 and Q&I have an edge over others due to their $ell-
established agenc net$ork% &hough the cor!orate offices formulate the overall marketing strateg
and co-ordinate the activities relating to !ublicit and !roduct distribution, local level activities are
su!ervised and coordinated b the 8onal and branch offices% 2or e#am!le, Q&I has four 8onal offices
and AA branches7 >I. -2 has seven area offices% 6ther mutual funds also have regional offices,
$hich !romote sales at the local level%
:ecent innovations in marketing aim to reach !articular target grou!s% 2or e#am!le:
&o market its income-cum-gro$th scheme in ?@@3 a bank-s!onsored !ublic sector mutual
fund sent a!!lication forms to all the credit cardholders of the s!onsoring bank% It is re!orted
that about ?0 !er cent of the total collections came from the cardholders%
+ !ublic sector mutual fund, $hich launched a gro$th scheme in ?@@A tied u! $ith a foreign
bank and the holders of credit cards of this bank, could !a for the initial subscri!tion
through credit cards%
-an mutual funds offer incentives for earl subscri!tions7 some mutual funds also offer
insurance benefits to attract investors%
+n emerging trend is the distribution of schemes through merchant bankers% + number of
funds have a!!ointed lead managers to their schemes% &he merchant bankers distribute the
scheme through their booking $ings that usuall have $ide net$ork of sub-brokers%
*istribution of a!!lication forms through a tie-u! $ith ne$s!a!ers is also no$ a common
Droduct !romotion in India has taken the usual routes of advertisement and !ublicit% -utual
funds advertisements are regulated b =39I, $hich !rohibits materials and contents of !ublicit that
ma mislead the investing !ublic%
.ommunication is im!ortant for effective marketing and communication through
advertisement is the most im!ortant !romotional aid for a mutual fund% 6nce the target grou! and its
re'uirements are identified, an a!!ro!riate advertisement strateg is devised in order to reach the
ma#imum number of !otential customers% +dvertising cam!aigns must aim at creating a$areness of
the !roduct, its com!arative advantages and future !otential, !ast !erformance of similar !roducts
and su!eriorit of the fund in relation to others in terms of assets, management and !erformance%
8. Customer Ser*i&e
&he marketing of service is significantl influenced b the 'ualit of service and the
inter!ersonal relationshi! bet$een customers and the service organi8ation% =ervicing has great
significance in mutual funds, as in an other financial service industr% Drom!t and timel service as
in issuing certificatesGche'ues and in attending to an customer !roblem $ould make a distinct
difference% 3#!ected rates of return being more or less same for all schemes, it is the 'ualit of
service that becomes the deciding factor% =ervices can be !rovided through e#ternal agencies, or
internall through the service de!artment% In India most mutual funds !rovide after-sales service
through both e#ternal agencies and internal service de!artment, although the largel rel on
e#ternal agencies like registrars and transfer agents $ho are s!eciali8ed in the 1ob% =ometimes there
are com!laints that after-sales servicing are not u! to the e#!ectation level% &his is !robabl due to
absence of sufficient staff% Ho$ever, mutual funds do need to develo! in-house e#!ertise to render
after-sales services more !rom!tl and cost effectivel%
In order to ensure 'ualit service to customers, service audit $ould be great hel! to monitor
the range of services usuall rendered b mutual funds% &hese are sales-related, com!laint-related
and suggestions-related services% =ervice standards can be fi#ed on the basis of e#!ectations levels
of customers, $hich can be found through market surves%
MaGor inputs of health &are in!ustry
&he ma1or in!uts of health care industries are as listed belo$:
I% Hos!itals
II Me!i&al insuran&e
III% -edical soft$are
I/% Health e'ui!ments
O*er*ie6 of health &are se&tor in In!ia"
Indias healthcare sector has made im!ressive strides in recent ears% It has transformed to a Q=Z ?E
billion industr and is surging ahead $ith an annual gro6th rate of 25J a year. &he healthcare
industr in India e#!ected to gro$ in si8e to :s 2E0,000 core b 20?2% The health&are in!ustry
employs o*er four million people, 6hi&h makes it one of the largest ser*i&e se&tors in the
e&onomy of our &ountry.
Healthcare is de!endent on the !eo!le served7 Indias huge population of a billion !eo!le re!resents
a big o!!ortunit% Deo!le are s!ending more on healthcare%
Dolitical factors
-ost of the health nations are also $ealth nations% In India even after 53 ears of inde!endence
$e all have to acce!t that government has failed to !rovide basic healthcare% Healthcare is the
neglected field, onl meant for slogans b our !oliticians%
&o im!rove healthcare facilities $e have to !rovide s!ecial assistance to !rivate healthcare sector%
&he realit in !rivate healthcare sector is that as an industr it has long gestation !eriod and so most
of the bigger !ro1ects fail%
(overnment has to give certain concessions to !rivate health sector% It can be in the form of free land
for small hos!itals at district levels or concession in !o$er tariff% (overnment later on gets back
revenue in the form of ta# $hen these institutions start making !rofits% .oncessions can be limited to
first five ears or so%-aharashtra government is !laing an im!ortant role in the develo!ment of the
hos!ital sector%
3conomic factors
The In!ian health&are is the ne;t )oom in the &ountry after the IT euphoria. =etting u!
hos!itals is not an eas task%
&he amount of hos!itals in India is ver less $hen com!ared to the other develo!ed countries% 3ven
the urban areas do not have enough medical facilities% In the rural areas one village has onl one
doctor, $ho ma not be ver $ell 'ualified%
&he other governments of other states should take u! a cue from the -aharashtra government, in
setting u! similar ,oint ventures all over the state $ith the assistance of Forld 9ank% The Worl!
Bank &an make a*aila)le fun!s of aroun! Rs CII &rore for state health systems an!
!e*elopment proGe&ts%
&he !eo!le in India do not avail of the hos!ital facilities ver soon% &his is because of the high cost
related to it% Ho$ever this ma all change because of the increasing de!loment of third !art
!ament either in the form of -edical and +llied Insurance, or in the form of reimbursements from
the =tate% &his in turn $ill increase the em!loment o!!ortunities to man !eo!le%
So&ial :a&tors
?% .ertain !ercentages of beds have to be ke!t for !oor !eo!le% 3%g% in 9omba 20C of beds has
to be ke!t reserved for !oor !eo!le%
2% >ook after the needs of local !oor !eo!le%
3% 6!en counseling and relief centers%
A% &each hgiene, sanitation among the !oor masses%
5% =afe dis!osal of hos!itals $astes like used in1ection needles, $aste blood etc% and taking due
care of environment%
B% =!reading a$areness about various diseases through cam!aigns and free medical check u!s%
E% In brief the social as!ect of hos!itals industr is to see that latest treatment and medicines are
available to !eo!le at large at concessional rates or free of cost and that its activities are not
onl restricted to rich !eo!le%
Te&hnologi&al :a&tors
Fe are $itnessing Information technologies transforming the $a health care shall be delivered%
Innovations such as com!uter based hos!ital information sstems, medical records7 decision su!!ort
sstems, health information net$orks, telemedicine, real time image transfers and ne$er $as of
distributing health information to consumers are beginning to affect the cost, 'ualit, and
accessibilit of health care%&he technologies toda can su!!ort vast databases, net$ork
communications, 'uick distribution and reliable image transfers%
&he classification of Hos!itals on the basis of ob1ective, o$nershi!, !ath and si8e%
2. On the )asis of the OBKECTI1E there are three types"
Teachin( cu% research for develo!ing medicines and !romoting research to im!rove the
'ualit of medical aid%
.eneral hospital for treating general ailments%
Special hospitals for s!eciali8ed services in one or fe$ selected areas%
4. On the )asis of the OW'ERSI%, there are four types"
.overn%ent hospital, $hich is o$ned, managed and controlled b government
Se%i/(overn%ent hospital, $hich is !artiall shared b the government%
"oluntary or(anisations also run hos!itals%
Charita0le trusts also runs hos!itals%
5. On the )asis of %AT O: TREATME'T, there are"
Allopath $hich is the sstem !romoted under the 3nglish sstem%
Ayurved% $hich is based on the Indian sstem $here herbals are used for !re!aring
8. On the )asis of the SI@E, there are"
Teachin( hospitals ) generall have 500 beds, $hich can be ad1usted in tune $ith number of
#istrict hospital ) generall have 200 beds, $hich can be raised to 300 in contingencies%
Taluka hospital ) generall have 50 beds that can be raised to ?00 de!ending on the
!ri%ary health centres ) generall have B beds, $hich can be raised to ?0%
Intangibilit indicates that the service has no !hsical attributes and as a result, im!ossible for
customer to taste, hears, feel or smell before the actuall use it% Hos!ital industr is $here the
customers (!atients) get treated for !hsical !roblems the have% &he customers cant reall reali8e
the service !rovided until the get $ell% 2or this the have to !rovide good su!!lementar
services%&he onl $a the can !rovide tangible clues to make the service !rovided a success% 2or
e%g% the hos!itals !rovide e#tra facilities like television, or then friendl !ersonnels can make a
&t/s also referred to as heterogeneity or variability% &he inconsistenc occurs largel because of
*ifferent service !roviders !erform differentl on different occasions%
Interaction bet$een customer and !rovider ma var from customer to customer%
=tandardi8ation is hard to maintain% 3ver doctor is not the same and ma not give the same
diagnosis% +lso a !atient ma not each diagnosis in a different $a% +lso since the 'ualit of $ork
done can be determined onl after the service is !erformed the !roviders have to be $ell trained in
case of !erforming the service !rocess%

Inse!arabilit means that the service can not be se!arated from the creator-seller of the service%
Infact there are man services $hich are created, delivered and consumed simultaneousl through
interaction bet$een customer and service !roducers%
Here too the customer, i%e% the !atient has to come u!to the hos!ital to get the treatment% &he
customer has to be !resent $hen the service is !erformed% Infact in case of hos!itals the service is
created and delivered simultaneousl% &he t!e of service to be !rovided de!ends on the customer%
=ervices can not be easil saved, stored or inventoried% &his is all due to the !erishable nature of the
services% +lso theres cost also associated $ith the carring of inventor% Here the costs are more
sub1ective and are related to ca!acit utilisation for e%g% if a doctor is available but theres no !atient
during that !eriod, the fi#ed cost of the idle !hsicians salar is a high inventor carring cost%
+lso due to demand fluctuations the services can not be stored% 3%g% theres a lot of rush at the
dentists clinic in *ecember and ,anuar as thats the time $hen there are lots of tourist visiting India%
C.2 ( %RO#UCT
&he service !roduct is an offering of a commercial intent having features of both tangible and
intangible seeking to satisf ne$ $ants and demands of the consumer, hos!ital industr is action
oriented and there is a lot of interaction $ith the customers% &he service !roducts of the hos!itals
have the follo$ing features:
Fuality le*el
=u!!orting services !la an im!ortant role having the 'ualit of -edicare% &hese services, $hich
include laborator, blood banks, catering, radiolog and laundr, in a true sense determine the
'ualit of services made available b medical and !aramedical !ersonnel%
&his is a ver good $a of segmenting customers% -an hos!itals !rovide additional services
such as catering, laundr, oga sessions, cafeterias, etc% for the customers $ho are $illing to !a
e#tra% Hos!itals have different $ards-(eneral and s!ecial% .ertain hos!itals !rovide services for
the famil members of the !atients )$hen the are not the same-cit for accommodating and
It is the bundling of man services into the core service% 3%g% +!ollo hos!ital offers a full
healthcare checku! to the !atients%
%ro!u&t 0ine
Hos!itals through their services offer man choices to the !atient and cover a $ide range of
customer needs% 2or e#am!le: +!ollo has a dental de!artment, cardiolog de!artment etc% and
$ithin the dental de!artment it has dental surger, root canal, etc%
Bran! name
Hos!itals, to differentiate themselves and their services from others use a brand name% &he
intangibilit factor of the service makes it all-im!ortant for the hos!itals to do so%
$o*ernment ospitals"
&his as a !roduct is fairl good% In some hos!itals like ,%,% hos!ital, -umbai the !rovide 'ualit
services at chea!er rates and also is technicall $ell e'ui!!ed% 9ut most of the government
hos!itals in s!ite of government grants do not !rovide 'ualit service% Hence it is !erceived as of
lo$ 'ualit%
%ri*ate hospitals"
Drivate hos!itals like 9omba Hos!ital, +!ollo are $ell e'ui!!ed and the services !rovided are
of good 'ualit but the charge huge !rice for it% Hence the middle-income grou! !erceives them
as elite class hos!itals%
C.4 ( %0ACE
Incase of hos!itals the location !las a ver im!ortant role% &he kind of services a hos!ital is
rendering is also ver im!ortant for determining the location of the hos!ital%
3#am!le: &ata memorial hos!ital s!eciali8es in cancer treatment and is located at a center !lace
unlike other normal hos!itals, $hich ou can find all over other !laces%
In a countr like India $hich is geogra!hicall vast and $here ma1orit of the !o!ulation lives in
the rural areas !lace factor for a hos!ital !las a ver im!ortant role% + t!ical small village or
to$n ma be having small dis!ensaries but he $ill not have su!er s!ecialt hos!itals% 2or that
the $ill have to be inde!endent on the hos!itals in the urban areas.
C.5 ( %EO%0E
Qnder hos!ital marketing mi# !eo!le includes all the !eo!le involved in the service !roviding
!rocess $hich includes doctors, nurses, su!!orting staff etc% the earliest and best $a of having
control on the 'ualit of !eo!le $ill be b a!!roving !rofessionall sound doctors and other
Hos!ital is a !lace $here small activit undertaken can be a matter of life and death, so the
!eo!le factor is ver im!ortant%
Qnder hos!ital marketing a right !erson for the right 1ob has to be a!!ointed and the should
be ada!table !ossess versatilit% &he !atients in the hos!itals are alread suffering from trauma,
$hich has to be understood b the doctors and staff% &he !eo!le of the hos!ital should be
constantl motivated to give best of their effort%
$o*ernment ospital"
In Indian government hos!itals e#ce!t a fe$ almost all the hos!itals and their !ersonnel hardl
find the behavioral dimensions significant% Hence even if the !atients get the correct treatment
the are often dissatisfied $ith the behavioral !attern of the staff%
%ri*ate ospital"
&he have !leasing manners and behave softl $ith the !atients% &he !rovide timel care and
are !resent al$as in times of need%
Drocess generall forms the different task that are !erformed b the hos!ital% &he !rocess factor
is mainl de!endant on the si8e of the hos!ital and the kind of service it is offering%
$o*ernment ospital"
&here is lot of !a!er $ork involved in the $hole !rocess% Hence the $hole !rocess from
admission to discharge is tedious%
%ri*ate ospital"
Fith the advent of information =stems in hos!itals all the !a!er $ork is reduced and the
!rocess is smooth and fast%
C.9 ( %3SICA0 E1I#E'CE
It does not !la an im!ortant role in the health care services, as the core benefit the customer
seeks is !ro!er diagnosis and !ro!er cure of the !roblem%
Dhsical evidence can be in the form of smart buildings, logos, mascots etc a smart building
infrastructure indicates that the hos!itals can take care of all needs of the !atients%
$o*ernment ospital"
(overnment hos!itals have a huge building, but are not !ro!erl maintained7 hence it creates a
bad im!ression among its !atients that the hos!ital is unhgienic%
%ri*ate ospital"
Drivate hos!ital like 9omba Hos!ital has got a smart building, $hich hel!s, in develo!ing the
minds of the !eo!le, the im!ression that it is the safest o!tion among the different hos!itals
available to the !eo!le%
Hos!itals for !romotions use either advertisements or D%: or both after taking in to consideration
the target customers, media t!e, budget and the sales !romotion% &he health care field has
become ver com!etitive% +lthough one fourth of our !o!ulation stas in urban India, three
fourth of the total doctors have engaged themselves in this !art% Ford of mouth !las an
im!ortant role during information ac'uisition stage of the customers, as there are no ob1ective
!erformance measures to 1udge the various alternatives available to them% &herefore satisfied
!ast !atients of the hos!ital can bring more number of !atients to that hos!ital than a number of
In a com!etitive market !lace the images of the firms $ill affect their com!etitive standing%
6ne factor that is likel to have significant im!act of the health care scene is the gro$ing
hos!ital chains such as +!ollo, 9irla health centers, etc% artificial heart trans!lants and other
com!le# o!erations although are fe$ in number and generate a small !otion of the total revenue,
the hel! in generating $ord of mouth $hich health care !roviders are actuall interested% -an
of these com!anies are s!ending a lot in cor!orate advertising for image building%
$o*ernment ospital"
&he do not undertake ma1or !romotion !rogrammes and hence are not ver !o!ular among the
%ri*ate ospital"
&he undertake e#tensive !romotion% +long $ith this the undertake massive com!le#
o!erations $hich if successful create a good brand value of the hos!itals%
%ri&ing in $o*ernment = Trust ospitals
In the Indian setting $here a number of !ersons are belo$ !overt line it is challenging task to
formulate a !ricing strateg, $hich is successful in serving the social interests and generating
!rofits% Hos!itals need to invest a lot in so!histicated e'ui!ment and technologies to im!rove the
'ualit of medical aid% 3ven the affluent sections of the societies e#!ect7 lo$ cost services form
the social institutions in general and hos!itals in !articular the task of services innovative in line
$ith latest develo!ments in field of !hsical sciences is difficult% It is due to this that the most
government hos!itals are in de!lorable condition% &he e#-checker finds it difficult to finance
hos!itals and further, the government regulations also close doors foe generating finance from
internal sources% &he ultimate sufferers are the societ and s!eciall the !oorer sections% =ince
the affluent sections have the o!tions to avail the e#!ensive medical services made available b
the hos!itals% &he societal marketing !rinci!les make can advocac in favor of !rotecting the
!ublic interests but it not meant that the hos!itals have a uniform !ricingGfee structure for all the
users% &he fee strateg for all the hos!itals should be in !ro!ortion to the incomes of users, $hich
$ould engineer a sound foundation for 'ualitative or 'uantitative im!rovements%
2or social institutions like government hos!itals a discriminator fee structure is !referred since
it !rovides even the $eaker sections of societ, an o!!ortunit to avail the 'ualit medical
services% &his enables hos!itals to innovate services to kee! !ace $ith the latest develo!ments in
the medical sciences%
2. 4.

5. 8.

Government / Trust
Cost ! surplus to
ma"e up the losses
of #$
%i&rimator' (ri&ing
)For no in&ome
)For lo,-in&ome
Cost ! losses from .
%ri&ing in %ri*ate ospitals
.ost based !ricing: Drice [ *irect costs \ overhead costs \ !rofit margin% In hos!ital
services, this method is cumbersome because the tracking and identification of costs are
difficult% 2ee for services, ho$ever can be used b doctors% 0ot$ithstanding, some hos!itals
in the !rivate sector follo$ this method%
.om!etition based !ricing: using other !rice as an anchor for the hos!itals !rice,
heterogeneit of service across and $ithin !roviders makes the a!!roach com!licated%
*emand based !ricing: .ost based !ricing and com!etition based !ricing do not consider
certain criteria% *emand based !ricing involves !rice setting consistent $ith customer
!erce!tion of value% Drices are based on $hat $ill !ar for the services !rovided%
%er&ei*e! 1alue
Derceived value is the customers overall assessment of the utilit of a service based on !erce!tion of
$hat is received and $hat is given%
#i&&erential pricin( in the hospital industry happens
3#ternall (bet$een 2 hos!itals)
Internall ($ithin a hos!ital)
9et$een t$o hos!itals, even to !rovide the same treatment, the !rices differ% 3ven though the
o!eration to be done might be the same, !ricing differs due to the kind of service !rovided !re and
What &ustomer per&ei*e a)out *alue Ser*i&e offere! a&&or!ingly
/alue is lo$ !rice
.ould be offered on $eekends
Health s!as in off season
*ifferentiated as incentives
2ree consultation b dentistGdoctors
/alue is everthing I $ant in service
Drestige !ricing-health club
9omba hos!itals of +rabs (value is high 'ualit)
/alue is the 'ualit I get for the !rice I !a
-arket segmentation !ricing based on affordabilit
to !a, value is affordable 'ualit
/alue is all that I get for $hat I give
/alue is getting e#cellent treatment in shortest
!ossible time e%g% treatment in 9omba hos!ital,
9reach .and, ,aslok%
Datient brought in emergenc to the hos!ital
!ost o!eration% .ost is associated $ith the kind of service ou !rovide, and so the hos!ital is bound
to charge the !atient for it%
&here is a !rice differentiation even bet$een the t$o $ards of the same hos!ital% &here is difference
bet$een the general $ard and s!ecial $ard $here the rooms are air-conditioned and e#tra services
are !rovided% &hus the !ricing $ould be different% 3ven the doctors visiting feesGconsultation charges
are different% =ometimes if the !atient is ver !oor then the doctor ma halve his fees%
In a hos!ital the !rocess is divided into the follo$ing !hases:
&he 1oining !hase,
&he intensive consum!tion !hase, and
&he detachment !hase and feedback%
0o$ $e $ill be considering the !rocess blue!rint of an 3mergenc G Dolice .ase

%ri&e an! Buality
Dolice .ase 0on - Dolice .ase
Inform the local !olice Datient rushed to the 3mergenc
Dolice arrives
+ttended b the doctors
In'uir b the !olice at
the hos!ital
Datient stabili8es
=tatement of the !atient :elativesG!atients have to do the
!a!er $ork, !a the de!osits and
com!lete all the formalities of the
<Drice is the indicator of service 'ualit% It is an attraction as $ell as a re!ellent variable% .ustomers
use !rice as indicator of 'ualit de!ends on man factors including other information available to
Fhen service cues to 'ualit are readil accessible $hen brand names !rovide evidence of
re!utation of hos!ital, customer ma use their cues instead of !rice% 6ther$ise the think that the
!rice is the best indicator of 'ualit% It should conve a!!ro!riate signal regarding 'ualit% Dricing
too lo$ can lead to inaccurate inferences about the 'ualit, !ricing too high can set e#!ectations that
ma be too difficult to match in the deliver% Drice is used to 1udged 'ualit because of the
e#!erience and credence !ro!erties of services as o!!osed to goods% 3#cellent hos!itals like -ao
.linic, -assachusetts (eneral, &-H, and =loan "ettering are a mega brands% &he have a great
brand re!utation and can charge a !remium based on sheer !erce!tion of 'ualit because of socio-
economic issues, !overt levels, government o$ned hos!itals cannot think of !rofit ob1ectives% It is a
social marketing !rocess of enhancing the $ell being of individuals%
6ff late ho$ever the government has !ro!osed to state government that those $ho are above !overt
line should !a the cost for treatment% In !rivate hos!itals, $here the !rofit is most im!ortant
ob1ective, !remium can be charged% &he !rice !aid b customers de!ends on ho$ he !erceives the
'ualit of service% 3%g% 9omba hos!ital, 9reach .and and ,aslok the have a high re!utation for
'ualit services%
&H3 =3:/I.3 -+:"3&I0( &:I+0(>3
Company: Here, the hos!ital is the com!an that dreams u! an idea of service offering (treatment)
$hich $ill satisf the customers (!atients) e#!ectations (of getting cured)%
Customer" &he !atient $ho seeks to get cured is the customer for the hos!ital as he is the one $ho
avails the service and !as for it%
%ro*i!er" *octor, the inse!arable !art of the hos!ital is the !rovider, as he is the one $ho comes in
direct contact $ith the !atient% &he re!utation of the hos!ital is directl in the hands of the doctor% +
satisfied !atient is a ver im!ortant $ord of mouth !romotion for the organi8ation%
D+&I30& *6.&6: