Sri Krishna College of Arts and Science

Coimbatore-641008

Department Of Business Management with

Computer Application

Marketing Mix in Service Sector

Author: Jenifa Nancy.S

Co author: Arthi.B

Phone no.: 9566582510, 7708696979

Email id: jeni.pinkstar@gmail.com

 MARKETING MIX IN SERVICE SECTOR
Jenifa Nancy.S, Arthi.B
Department of Business Management with CA

INTRODUCTION:
Service industries have typically lagged behind manufacturing firms in adopting and
using marketing concepts. But this is now changing as it calls not only for external
marketing but also for internal marketing to motivate the employees and interactive
marketing to create skills in the services provided.
Services are widely used by people today in practically all aspects of life. In service
sector the concept of marketing mix was accepted as the set of marketing tools that a firm
uses to pursue its marketing objectives in the target market, influenced by specific
environmental variables. Marketing mix is classified into traditional 4Ps as product,
price, place (distribution) and promotion.

THE FIRST P: SERVICE PRODUCT:

Product in the marketing context is anything which is offered to the market for exchange
or consumption. Conventionally, we describe a product as an object which is developed,
produced, delivered and consumed. However, in services there is no or only a little
tangible element because of which they are considered as benefits which are offered to
the target market. There are two important things to note. First a service is a bundle of
feature and benefits and secondly, these benefits and features have relevance for a
specific target market. Therefore, while developing a service product it is important that
the package of benefits in the service offer must have a customer’s perspective.
The five different levels in product and their meanings are as follows:
 Core benefit – the fundamental benefit or service that the customer is buying
 Basic product – basic, functional attributes.
 Expected product – set of attributes/conditions the buyer normally expects.
 Augmented product – that meets the customers desires beyond expectations
 Potential product – the possible evolution to distinguish the offer.
The services a product offers consist of three basic levels
 The basic service package which includes core services, facilitating services and
supporting services.
 An augmented service offering where accessibility, interaction and customer
participation is given equal importance in delivering the service product.
 The market communication of the service offering as in its absence the
augmentation service package does not have any relevance to the customer.
SUGGESTION:
Here the suggestion is that issues related to the accessibility of the service, interaction
with the service organization and consumer participation are also integral elements of the
service product. Gronross identified the relevance of these issues in relation to the
augmented services offering. The details i.e. the elements of augmented service offer are
summarized below,
Accessibility of service: - Number and skills of personnel
- Working hours and time used in
performing various tasks
- Location of service outlet
- Exterior and interior of service outlet
- Infrastructure, hardware,
documentation
- The number and knowledge of
consumers simultaneously involved in
the process
Interaction with service organization: - Interactive communication between
employees and customers
- Interactions with the physical and
technical resources of the organization
needed in the service production
process
- Interaction with other customers
involved in the process
Customer participation: .
- How well is the customer aware
about the process of service delivery
and his or her role
- How well is the customer prepared
to share information
- How well is the customer willing to
share information or use service
equipment.
DEVELOPING NEW SERVICE OFFERING:
If a new service offer is to be developed then the following five steps should be
systematically followed in a sequence.
 The first step in developing a new service offering is to assess the customer
benefits. It is said that people don’t buy products because of their attributes,
rather they buy their benefits. Therefore it is important to identify what benefits
the prospective customer would seek from your service offer
 The second step is that services organization should develop the service
concept. Consumer benefits have to be translated into core, facilitating and
support services with a view to defining what general benefits the service
organization would offer to its customers.
 The third stage is that of developing the augmented service offer. Obviously the
service production and service delivery system are to be developed so that the
service package is not only made accessible but customer is also involved in the
delivery process itself.
 The fourth step, here careful planning is essential because if the right service in
the right form and in the right quality and quantity is not delivered, the entire
customer oriented plan would collapse. Therefore, the delivery of the service
offer if an inseparable part of development of any service offer
 Lastly, the appropriate market communication strategy should be prepared and
its implementation plan should be defined not only to inform and persuade the
customers but also to enhance the desired image.

THE SECOND P: PRICING:

Pricing is yet another variable of the marketing mix. A particular product or service is
acceptable to the customer at a particular price and if the price is increased, it is likely
that the same product or service might become less acceptable to the customer. The other
issue, which is related to pricing, is that of perceptions about quality. Generally, to most
customers high price means high quality. However, some customers don’t need the
highest quality at the maximum price. Detergents are one such example where average
quality detergents at moderate prices are market leaders.
Service pricing follows the principles and practices of pricing of goods and therefore,
they are either cost based or market based.
Within these categories prices may be profit oriented, government controlled, competitive
or customer oriented. However, the characteristics of services do influence the pricing
and therefore different methods of pricing are to be followed.
GUIDELINES OF SERVICE PRICING:

There are some basic guidelines for pricing of services. These guidelines may help in
developing an appreciation of the framework for service pricing.
• For services, the pricing strategy should be such that demand fluctuations are
successfully handled. Since services are perishable, they cannot be inventoried. In
such a situation pricing strategy should be such that it should encourage the
customers to delay their use of services till the period of low demand.
• Service prices should be based on costs so as to take into account the cost of
tangible clues of intangible services. To the first time it is primarily dominated by
intangibles. Therefore the tangible and material content of the service product
should be integrated in the service –offer package, which has definite cost
implications.
• The service pricing should be such as to provide value addition and quality
indication to the customers. In situations of “homogeneous” services, the pricing
strategy may be market oriented or customer oriented. But in heterogeneous
services, the price may be used as a quality indicator.
• The pricing strategy should be such as to cope up with the degree of competition
operating within a certain geographic and time zone. Services are inseparable from
the person who provides them and time limits or markets, which can be served by
them.

THE THIRD P: PLACE OR DISTRIBUTION:

Because of intangibility of services they cannot be stored, transported and inventoried.
Hence traditional distribution channels available for product marketing like wholesalers
and other intermediaries cannot be used. Even the retailing cannot be an independent
activity.
These characteristics make the channel very short and direct. Most services are
distributed through direct sales. At the best one agent or middleman can be added to it,
like in the case of insurance, travel agency, courier service, etc.
So we see that there is a little controversy regarding the distribution of services.. The
advantage of direct selling is that the service can be offered to the customer at a lower
cost.
Keeping in view the characteristics of services and the potential management problems
in retailing of services, there are distinct channel configurations which one can notice in
service sector. Rathmell has suggested the dominant channel configuration in the
service sector where agents and brokers play the key role in distribution of services.
The major function of these agents and brokers is like any other intermediary to bring
the producer of service and the user or consumer together.
For certain services, agents can be identified and deployed with selling as the chief
function to be performed by them. These agents can be compared with the agents of
goods and they are classified as brokers or sales agents. The example of this kind of
channel is transportation and office or factory workers. However, in some cases the
agents may be trained in the creation and production of service and then franchised to
sell it.

THE FOURTH P: SERVICE PROMOTION:

It is now established that there are clear differences in information usage between goods
and services.
 First the difference is that consumers of services are less likely to purchase
without information than those of goods.
 Second the consumer of services will prefer personal sources over impersonal
sources of information.
 Third the basic characteristics of services have implications for communication
strategy.
Therefore the above three differences influence the decisions regarding the (a)
communications objectives, (b) target audience and (c) planning of each of the sub
elements in the promotion mix.

PROMOTION OBJECTIVES:
Although there could be a variety of objectives to promote, but the basic objectives of
the promotion mix for services may fall under one of the following:
Develop personal relations with client
1. Make a strong impression of competency, honesty and sincerity.
2. Should be able to use indirect selling techniques.
3. Manage to maintain a fine image by positive word of mouth.
4. Packaging and customization.

TARGET OBJECTIVES:
 While defining the objectives of communication campaign, wemshould also be
clear about the target audience.
 In services sector there is a direct contact between the person who provides the
service and customers.
 Therefore, some amount of promotion should be targeted at the employees so as
to motivate them to serve the customer better.
 In such communications the objective can also be to educate the employees
about how to handle operational problems so as to increase their performance
level.
 PLANNING THE PROMOTIONAL MIX:
In the case services a customer is buying the performance of the service personnel and
therefore the advertising in service industries should not only restrict itself to encouraging
consumption, but also it should encourage employees to perform well.
There are six basic guidelines to help design effective advertising programmes
• The advertising should have positive effects on contact personnel.
• It should capitalize on the word of mouth
• It should provide tangible clues to the customers
• It should make the service offering easily understood
• It should contribute to the continuity
• It should promise only what is possible

GUIDELINES FOR SELLING SERVICES:

 First the service sales person should develop a personal relationship with the
client. Quite often it is the personal relationship rather than the service itself that
results in satisfaction or dissatisfaction with the service. If there is a distinct need
for a high quality personalized service, then one must pay more attention to its
organizational structure.
 Second, it is suggested that one must adopt a professional orientation as the key to
most service transactions is the buyer’s confidence in the seller’s ability to deliver
the desired results. It is therefore important that a service salesperson must make a
strong impression of competency, honesty and sincerity.
 Third they have to build and maintain a favorable image. The public opinion plays
a very important role in marketing a service therefore, managing word-of-mouth
publicity is important.
 And lastly a service seller sells services and not a service. At any given point of
time, a service seller is dealing with a host of services rather than one. Their
thoroughness on each and ability to package them to suit each customer’s needs
would determine the success. In other words, the ability of seller to customize the
service offering is very important.

CONCLUSION:
In service organization also it has been observed that the 4P’s are equally relevant,
however, with a difference. The paper reveals that, one should attempt to reflect a
consistent and attractive personality in all manifestations of the organization that reach
the public. Lastly stress on specialization rather than on all things for all people, this
would help in creating a unique positioning.