Doric Multimedia Pvt. Ltd.

Branch I: 1st Floor, Gulati Market, Near CMC

Chowk, Ludhiana

Contact: 7696100090

Branch II: 1st Floor, Arora Tower, Jamalpur

Chowk, Chandigarh Road, Ludhiana

Contact: 8054100099
 SERVICE MARKETING(DMGT510)

LONG QUESTIONS:

Q1. Explain the characteristics of services which differentiate them from

products in detail.

ANS: Characteristics of services:

1. Intangibility:
Intangibility is an important consideration that complicates the functional responsibility of a
marketing manager, specially while influencing and motivating the prospects/customers. The
goods of tangible nature can be displayed, the prospects or buyers can have a view and they can
even test and make a trial before making the buying decisions. The selling processes are thus
found easier. We are aware of the fact that services are of intangible nature and it is intangibility
that complicates the task of decision-makers.
2. Perishability:
Another point complicating the task of a professional is the nature of perishability that we find in
the services. The goods if not sold today can be stored, preserved for further selling. Thus, the
risk element is here in a different form. But in the context of services, if we fail to sell the
services, it is lost only not for today but even for the future. If a labour stops to work, if a seat in
the aircraft remains unsold, if a bedroom in a hotel remains unbooked, a chair in a cinema hall
remains vacant; we find the business non-existent and the opportunities are lost and lost forever.
The services can’t be stored or preserved.
3. Inseparability:
This is also a feature that complicates the task of professionals while marketing the services. The
inseparability focuses on the fact that the services are not of separable nature. Generally, the
services are created and supplied simultaneously. Like the dancers, musicians, dentists and other
professionals create and offer services at the same time. In other words, the services and their
providers are the same. It is inseparability that makes the task of marketing services a bit
difficult. The goods are produced at one point and then distributed by others at other points. In
the services, we find the selling processes making ways for the generation of services.
4. Heterogeneity:
Another feature is heterogeneity which makes it difficult to establish standard. The quality of
services can’t be standardised. The prices charged may be too high or too low. In the case of
entertainment and sports, we find the same thing. The same type of services can’t be sold to all
the customers even if they pay the same price.
The consumers rate the services in a different way. Of course, it is due to the difference in the
perception of individuals at the levels of providers and users. The heterogeneity factor makes it
difficult to market efficiently. The professionals by using their excellence bear the responsibility
of minimising the problem.
5. Ownership:
It is also ownership that makes it significant to market the services in a bit different way. The
goods sold are transferred from one place to another, the ownership is also transferred and this
provides to the buyers an opportunity to resell. In the case of services, we don’t find the same
thing. The users have just an access to the service. As for example, a consumer can use personal
care services or Medicare services or can use a hotel room or swimming pool, however the
ownership rests with the providers.
6. Simultaneity:
Services can’t be delivered to customers or users. Services don’t move through the channel of
distribution. For availing the services, it is essential that the users are brought to the providers or
the providers go to the users. It is right to say that the services have limited geographical areas.
7. Quality Measurement:
The quality of service requires another tool for measurement. We can’t measure it in terms of
service level. It is very difficult to rate or quantify the total purchase. As for example, we can
quantify the food served in a hotel but the way a waiter or a carrier serves it or overall
environment or behaviour of other staff can’t be ignored while rating the total process. Hence,
we can determine the level of satisfaction at which the users are found satisfied. A firm sells
atmosphere, conveniences, consistent quality, status, anxiety, moral, etc.
8. Nature of Demand:
While going through the features of services, we can’t underestimate the factor related to the
nature of demand. Generally, the services are found of fluctuating nature. Particularly during the
peak season, we find an abnormal increase in the demand. As for example, the mobility of
passenger is found increased, specially during the marriage season or during an important
festival.
Q2. Explain the Porter`s five forces that shape the industry competition in
detail.

ANS: Porter's Five Forces is a simple but powerful tool for understanding the competitiveness of
your business environment, and for identifying your strategy's potential profitability. Porter
recognized that organizations likely keep a close watch on their rivals, but he encouraged them to
look beyond the actions of their competitors and examine what other factors could impact the
business environment. He identified five forces that make up the competitive environment, and
which can erode your profitability. These are:

1. Competitive Rivalry. This looks at the number and strength of your competitors. How many
rivals do you have? Who are they, and how does the quality of their products and services
compare with yours?
Where rivalry is intense, companies can attract customers with aggressive price cuts and
high-impact marketing campaigns. Also, in markets with lots of rivals, your suppliers and
buyers can go elsewhere if they feel that they're not getting a good deal from you.
 On the other hand, where competitive rivalry is minimal, and no one else is doing what you
do, then you'll likely have tremendous strength and healthy profits.

2. Supplier Power. This is determined by how easy it is for your suppliers to increase their
prices. How many potential suppliers do you have? How unique is the product or service that
they provide, and how expensive would it be to switch from one supplier to another?
The more you have to choose from, the easier it will be to switch to a cheaper alternative. But
the fewer suppliers there are, and the more you need their help, the stronger their position and
their ability to charge you more. That can impact your profit.

3. Buyer Power. Here, you ask yourself how easy it is for buyers to drive your prices down.
How many buyers are there, and how big are their orders? How much would it cost them to
switch from your products and services to those of a rival? Are your buyers strong enough to
dictate terms to you?
When you deal with only a few savvy customers, they have more power, but your power
increases if you have many customers.

4. Threat of Substitution. This refers to the likelihood of your customers finding a different
way of doing what you do. For example, if you supply a unique software product that
automates an important process, people may substitute it by doing the process manually or by
outsourcing it. A substitution that is easy and cheap to make can weaken your position and
threaten your profitability.
5. Threat of New Entry. Your position can be affected by people's ability to enter your market.
So, think about how easily this could be done. How easy is it to get a foothold in your
industry or market? How much would it cost, and how tightly is your sector regulated?
If it takes little money and effort to enter your market and compete effectively, or if you have
little protection for your key technologies, then rivals can quickly enter your market and
weaken your position. If you have strong and durable barriers to entry, then you can preserve
a favorable position and take fair advantage of it.
Q3. Explain the Gaps Model of service quality.

ANS:

The Gap Model of Service Quality is a framework which can help us to understand customer
satisfactionThe model shows the five major satisfaction gaps that organizations must address
when seeking to meet customer expectations.

In the Gap Model of Service Quality, customer satisfaction is largely a function of perception. If
the customer perceives that the service meets their expectations then they will be satisfied. If not,
they’ll be dissatisfied. If they are dissatisfied then it will be because of one of the five customer
service “gaps” shown below.
Gap 1: Knowledge Gap
The knowledge gap is the difference between the customer’s expectations of the service and the
company’s provision of that service.

Essentially, this gap arises because management doesn’t know exactly what customers expect.
There are a number of reasons this could happen, including:
 Lack of management and customer interaction.
 Lack of communication between service employees and management.

 Insufficient market research.

 Insufficient relationship focus.

 Failure to listen to customer complaints.

Gap 2: The Policy Gap

The policy gap is the difference between management’s understanding of the customer needs and
the translation of that understanding into service delivery policies and standards.

There are a number of reasons why this gap can occur:

 Lack of customer service standards.

 Poorly defined service levels.

 Failure to regularly update service level standards.
Gap 3: The Delivery Gap
The delivery gap is the difference between service delivery policies and standards and the actual
delivery of the service.

This gap can occur for a number of reasons:

 Deficiencies in human resources policies.

 Failure to match supply to demand.

 Employee lack of knowledge of the product.

 Lack of cohesive teamwork to deliver the product or service.

Gap 4: The Communication Gap

The communication gap is the gap between what gets promised to customers through advertising
and what gets delivered.
 there are a number of reasons why this can happen:

 Overpromising.

 Viewing external communications as separate to what’s going on internally.

 Insufficient communications between the operations and advertising teams.

Communication gaps lead to customer dissatisfaction. This happens because what they receive
isn’t what they were promised. In the worst case, it may cause them to turn to an alternative
supplier.
Gap 5: The Customer Gap
The customer gap is the difference between customer expectations and customer
perceptions. This gap occurs because customers do not always understand what the service has
done for them or they misinterpret the service quality.

Many organizations can be completely blind to this gap. This gap can happen because of one of
the other four gaps, or simply because the customer perceives the quality of the
service incorrectly. In a worst-case scenario, it could lead to a business losing a large proportion
of their customers overnight. Although the company thought there was no gap, the reality was
that their customers were just waiting for someone to fill their perceived gap.

Q4. Explain the Schematised Product Life Cycle.

ANS:

Products, like people, have life cycles. The product life cycle is broken into four stages:
introduction, growth, maturity, and decline. This concept is used by management and by
marketing professionals as a factor in deciding when it is appropriate to increase advertising,
reduce prices, expand to new markets, or redesign packaging.

The process of strategizing ways to continuously support and maintain a product is

called product life cycle management.

The life cycle of a product is associated with marketing and management decisions within
businesses, and all products go through five primary stages: development, introduction, growth,
maturity, and decline. Each stage has its costs, opportunities, and risks, and individual products
differ in how long they remain at any of the life cycle stages.

1. Development

The product development stage is often referred to as “the valley of death.” At this stage, costs
are accumulating with no corresponding revenue. Some products require years and large capital
investment to develop and then test their effectiveness. Since risk is high, outside funding
sources are limited. While existing companies often fund research and development from
revenue generated by current products, in startup businesses, this stage is typically funded by the
entrepreneur from their own personal resources.

2. Introduction

The introduction stage is about developing a market for the product and building product
awareness. Marketing costs are high at this stage, as it is necessary to reach out to potential
customers. This is also the stage where intellectual property rights protection is obtained. Product
pricing may be high to recover costs associated with the development stage of the product life
cycle, and funding for this stage is typically through investors or lenders.

3. Growth

In the growth stage, the product has been accepted by customers, and companies are striving to
increase market share. For innovative products there is limited competition at this stage, so
pricing can remain at a higher level. Both product demand and profits are increasing, and
marketing is aimed at a broad audience. Funding for this stage is generally still through lenders,
or through increasing sales revenue.

4. Maturity

At the mature stage, sales will level off. Competition increases, so product features may need to
be enhanced to maintain market share. While unit sales are at their highest at this stage, prices
tend to decline to stay competitive. Production costs also tend to decline at this stage because of
more efficiency in the manufacturing process. Companies usually do not need additional funding
at this stage.

5. Decline

The decline stage of the product life cycle is associated with decreasing revenue due to market
saturation, high competition, and changing customer needs. Companies at this stage have several
options: They can choose to discontinue the product, sell the manufacturing rights to another
business that can better compete or maintain the product by adding new features, finding new
uses for the product, or tap into new markets through exporting. This is the stage where
packaging will often announce “new and improved.”

Q5. Discuss the role of intermediaries in delivering services.

ANS: While the retail channel is most familiar to students, wholesalers play an important role as
intermediaries. Intermediaries act as a link in the distribution process, but the roles they fill are
broader than simply connecting the different channel partners. Wholesalers, often called
“merchant wholesalers,” help move goods between producers and retailers.

Purchasing

Wholesalers purchase very large quantities of goods directly from producers or from other
wholesalers. By purchasing large quantities or volumes, wholesalers are able to secure
significantly lower prices.
Imagine a situation in which a farmer grows a very large crop of potatoes. If he sells all of the
potatoes to a single wholesaler, he will negotiate one price and make one sale. Because this is an
efficient process that allows him to focus on farming (rather than searching for additional
buyers), he will likely be willing to negotiate a lower price. Even more important, because the
wholesaler has such strong buying power, the wholesaler is able to force a lower price on every
farmer who is selling potatoes.

Warehousing and Transportation

Once the wholesaler has purchased a mass quantity of goods, it needs to get them to a place
where they can be purchased by consumers. This is a complex and expensive process. McLane
Company operates eighty distribution centers around the country. Its distribution center in
Northfield, Missouri, is 560,000 square feet big and is outfitted with a state-of-the art inventory
tracking system that allows it to manage the diverse products that move through the center.It
relies on its own vast trucking fleet to handle the transportation.

Grading and Packaging

Wholesalers buy a very large quantity of goods and then break that quantity down into smaller
lots. The process of breaking large quantities into smaller lots that will be resold is called bulk
breaking. Often this includes physically sorting, grading, and assembling the goods. Returning to
our potato example, the wholesaler would determine which potatoes are of a size and quality to
sell individually and which are to be packaged for sale in five-pound bags.

Risk Bearing

Wholesalers either take title to the goods they purchase, or they own the goods they purchase.
There are two primary consequences of this, both of which are both very important to the
distribution channel. First, it means that the wholesaler finances the purchase of the goods and
carries the cost of the goods in inventory until they are sold. Because this is a tremendous
expense, it drives wholesalers to be accurate and efficient in their purchasing, warehousing, and
transportation processes.
Second, wholesalers also bear the risk for the products until they are delivered. If goods are
damaged in transport and cannot be sold, then the wholesaler is left with the goods and the cost.
If there is a significant change in the value of the products between the time of the purchase from
the producer and the sale to the retailer, the wholesaler will absorb that profit or loss.

Marketing

Often, the wholesaler will fill a role in the promotion of the products that it distributes. This
might include creating displays for the wholesaler’s products and providing the display to
retailers to increase sales. The wholesaler may advertise its products that are carried by many
retailers.

Distribution

As distribution channels have evolved, some retailers, such as Walmart and Target, have grown
so large that they have taken over aspects of the wholesale function. Still, it is unlikely that
wholesalers will ever go away. Most retailers rely on wholesalers to fulfill the functions that we
have discussed, and they simply do not have the capability or expertise to manage the full
distribution process. Plus, many of the functions that wholesalers fill are performed most
efficiently at scale. Wholesalers are able to focus on creating efficiencies for their retail channel
partners that are very difficult to replicate on a small scale.

Q6. Explain the Micro and Macro environmental forces in detail.

ANS: Every business organization is a part of the business environment, within which it
operates. No entity can function in isolation because there are many factors that closely or
distantly surrounds the business, which is known as a business environment. It is broadly
classified into two categories, i.e. micro environment, and macro environment. The former
affects the working of a particular business only, to which they relate to, while the latter affects
the functioning of all the business entities, operating in the economy.
Micro Environment

Microenvironment refers to the environment which is in direct contact with the business
organization and can affect the routine activities of business straight away. It is associated with a
small area in which the firm functions.

Microenvironment is a collection of all the forces that are close to the firm. These forces are very
particular for the said business only. They can influence the performance and day to day
operations of the company, but for a short term only. Its elements include suppliers,
competitors, marketing intermediaries, customers and the firm itself.

 Suppliers are the ones who provide inputs to the business like raw material, equipment
and so on.
 Competitors are the rivals, which compete with the firm in the market and resources as
well.
 Marketing intermediaries may include wholesalers, distributors, and retailers that make a
link between the firm and the customers.
 Customers / Consumers are the ones who purchase the goods for their own consumption.
They are considered as the king of business.
  The firm itself is an aggregate of a number of elements like owners like shareholders or
investors, employees and the board of directors.

Macro Environment

The general environment within the economy that influences the working, performance, decision
making and strategy of all business groups at the same time is known as Macro Environment. It
is dynamic in nature. Therefore it keeps on changing.

The study of Macro Environment is known as PESTLE Analysis. PESTLE stands for the
variables that exist in the environment, i.e. Population & Demographic, Economic, Socio-
Cultural, Technological, Legal & Political and Environmental. These variables, consider both
economic and non-economic factors like social concerns, government policies, family structure,
population size, inflation, GDP aspects, income distribution, ethnic mix, political stability, taxes,
and duties, etc.
Q7.Discuss the purchase decision making process that you will follow for this
purpose.

ANS: It is every marketer’s goal to get inside the head of a consumer. You want to figure out
how the consumer makes decisions and how you can get them to make a decision to purchase
your product or service. There are 5 steps in a consumer decision making process a need or a
want is recognized, search process, comparison, product or service selection, and evaluation of
decision.

Problem Recognition

Most decision making starts with some sort of problem. The consumer develops a need or a want
that they want to be satisfied. The consumer feel like something is missing and needs to address
it to get back to feeling normal. If you can determine when your target demographic develops
these needs or wants, it would be an ideal time to advertise to them. For example, they ran out of
toothpaste and now they need to go to the store and get more.

Search Process

Most of us are not experts on everything around us. In the searching phase we research for
products or services that can satisfy our needs or wants. Search Engines have become our
primary research tool for answers. It is an instant and easy way to find out what you are looking
for.

In this stage you are also beginning your risk management. You might make a pro’s vs. con’s
diagram to help make your decision. People often don’t want to regret making a decision so extra
time being put into managing risk may be worth it. People also remember bad experiences over
good ones, take that into account.

Evaluating Alternatives

Once the consumer has determined what will satisfy their want or need they will begin to begin
to seek out the best deal. This may be based on price, quality, or other factors that are important
for them. Customers read many reviews and compare prices, ultimately choosing the one that
satisfies most of their parameters.
Selection Stage

After tallying up all the criteria for the decision the customers now decide on what they will
purchase and where. They have already taking risk into account and are definite on what they
want to purchase. They may have had prior experience with this exact decision or maybe they
succumbed to advertising about this product or service and want to give it a try.

Evaluation of Decision

Once the purchase has been made, does it satisfy the need or want? Is it above or below your
expectations? The goal for every marketer is not for a one-time customer but a repeating lifetime
customer. One bad experience of buyer’s remorse and your brand perception could be tarnished
forever. On the other hand, one superb experience can lead to a brand loyal customer who may
even become a brand evangelist for you.

Q8. Design an integrated marketing communication.

ANS: There are typically six steps in the IMC planning process. Each are important in their own
right and can be applied to practically any business or organization, no matter the size or
industry. While your plan might utilize each marketing communications function differently, the
overall idea remains the same.
Below are the major steps to keep in mind when developing your IMC strategy.
Step 1: Know your target audience
As a general rule, there is no “general audience”. You always want to communicate with a
specific audience to make the most effective use of your resources.
Segmenting specific audiences into groups based on characteristics will help you identify who
are most likely to purchase or utilize your products and services.
Step 2: Develop a situation analysis
Commonly referred to as a SWOT Analysis, this is basically a structured method of evaluating
the internal strengths and weaknesses, and external opportunities and threats that can impact your
brand.
A situation analysis can provide much insight into both internal and external conditions that can
lead to a more effective marketing communications strategy.
Step 3: Determining marketing communication objectives
In this step, you basically want to document what you want to accomplish with your IMC
strategy. Objectives should be measurable if you truly want to map your campaign’s
effectiveness at the end of your plan’s term.
Step 4: Determining your budget
Having a realistic idea on what you have to work with is important as it will shape the tactics you
develop in the next step. Once you determine your overall budget, you will want to come back to
this after completing step five to further refine your budget allocations.
Step 5: Strategies and tactics
Looking back at the objectives you created in step three, you will want to develop strategies
which are ideas on how you will accomplish those objectives. Tactics are specific actions on how
you plan to execute a strategy.
Step 6: Evaluation and measurement
Almost as important as the plan as a whole, you want to outline a method of how you will
evaluate the effectiveness of your IMC strategy. Sometimes elements of your plan will not work.
It’s important to know what did or didn’t, try to understand why, and make note for future
planning.
The more focused on how you will utilize your resources for promoting your business, the more
you will understand where you money is going and how it’s performing. An IMC strategy is
important for any business or organization.
Q9. Explain the steps of designing a service blueprint.

Ans: Service blueprints are diagrams that visualize organizational processes in order to optimize
how a business delivers a user experience. They are the primary tool used in service design.
service blueprinting should be the result of a collaborative process informed by well-defined
goals and built on research. Successful service blueprints drive alignment and organizational
action.
5-Step Framework for Service Blueprinting
1. Find support

Level-set and educate on service blueprinting. First, pull together a crossdisciplinary team that
has responsibility for a portion of the service and establish stakeholder support for the
blueprinting initiative. Support can come from a manager, executives, or clients.

2. Define the goal

Choose a scope and focus. Identify one scenario (your scope) and its corresponding customer.
Decide how granular the blueprint will be, as well as which direct business goal it will address.
While an as-is blueprint gives insight into an existing service, a to-be blueprint gives you the
opportunity to explore future services that do not currently exist.

3. Gather research

Unlike customer-journey mapping where a lot of external research is required, service

blueprinting is comprised of primarily internal research.

A. Gather customer research.

Begin by gathering research that informs a baseline of customer actions (or, in other
words, the steps and interactions that customers perform while interacting with a service to
reach a particular goal). Customer actions can be derived from an existing customer-
journey map.

B. Gather internal research.

Choose a minimum of two research methods that put you in direct line of observation with
employees. Use a multipronged approach — select and combine multiple methods in order
to reveal insights from different angles and job roles:

 Employee interviews
 Direct observation
  Contextual inquiry
 Diary studies

4. Map the blueprint

A. Set up

It’s useful to organize a short workshop session (2–4 hours) to do steps 4 and 5. This helps
create a shared understanding amongst your team of allies and ensures that the blueprint
remains collaborative and unbiased.

If all workshop participants are in the same physical location, set up by hanging three
oversized sticky notes on the wall side by side. Each member should have a pad of post-its.
The result of the workshop will be a low-fidelity version of an initial blueprint. While any
mapping method is collaborative at its core, blueprinting can still be done individually. If
this is the case, be sure to share your blueprint with stakeholders and peers early and often.

B. Map customer actions.

In a service blueprint, customer actions are depicted in sequence, from start to finish. A
customer-journey map is an ideal starting point for this step. Do note that a blueprint’s
focus is the employee experience, not the customer’s experience, thus this portion does not
need to be a fully baked customer-journey map — rather, you can include only the user
touchpoints and parallel actions.

C. Map employees’ frontstage and backstage actions.

This step is the core of a service-blueprint mapping. It is easiest to start with frontstage
actions and move downward in columns, following them with backstage actions. Inputs
should be pulled from real employee accounts, and validated through internal research.
(Remember the old lesson from field research: how things are supposed to be done is
rarely how they’re done. You need to discover and document the latter.)

D. Map support processes and evidence.

 Add the process that employees rely on to effectively interact with the customer. These
processes are the activities involving all employees within the company, including those
who don’t typically interact directly with customers. These support processes need to
happen in order to deliver the service. Clearly, service quality is often impacted by these
below-the-line interaction activities.

5. Refine and distribute

Refine by adding any other contextual details as needed. These details include time, arrows,
metrics, and regulations .The blueprint itself is simply a tool that will help you communicate
your understanding of the internal organization processes in an engaging way. At this point, you
need to create a visual narrative that will convey the journey and its critical moments, pain
points, and redundancies.

Q10: Explain the benefits of branding to a service operation.

Ans: “Branding” seems to be something that startup companies are constantly hearing. If you’ve
ever visited an entrepreneurial conference or watched a startup business video online, chances
are you’ve heard the word brand hundreds of times in one hour.

Benefits of branding:

1. Customer Recognition
Never underestimate the power of familiarity. When a customer is shopping and sees the
unmistakable typography/colors/images of a brand that they recognize, they’re more likely to
grab that product than the sea of others that are surrounding it.

2. Customer Loyalty
Once shoppers begin to recognize and buy a service or product, a good brand can keep them
coming back for more—and can make them loyal “followers” of that brand. When a company
combines a great product with engaging branding that hits all the right notes with shoppers, a
business will see their customer loyalty begin to build and build and build.
3. Helps Keep Marketing Consistent
Once a business has its branding in place—a company philosophy, marketing, colors,
typography, print, website, etc.—it can begin to modeling the rest of its efforts after it. When
there’s “set” branding foundation in place, it makes other choices much easier, and all of the
company’s future marketing can branch off of it.
4. Brand Equity Maximizes New Product Launches
whatever new flavour is arriving, everyone pays attention because they’re so familiar with those
guys. A huge benefit to strong branding is that it helps promote new products and services.
People will be automatically interested because they’re already familiar with a brand.
5. Increases Credibility

When a business has solid branding, it increases that company’s credibility within its industry, as
well as with customers.

Innovative marketing paired up with phenomenal customer service and interesting visuals will
establish a company as a serious professional business.
6. Attracts Talent
When a business has great branding, people notice. And often, those people who are noticing are
very talented influencers, social media marketers, or website designers, or concept builders.
When a business is doing an excellent job with branding, this caliber of thinker often wants to be
a part of what that business is doing. And when a company allows people like this in, they’re
adding to their creative powerhouse.

7. Allows Shared Values

When a company connects with their customers through shared values, it can create loyalty for
life, and can even go into future generations.
8. Gives Confidence
Here’s a nice one: good branding not only gives confidence to the customer, it does a lot for the
actual business owner. With great branding, all of the energy, time, money, and work that has
gone into a company comes together as a complete and professional presentation. Branding
exists to further the original product or service. It pushes it forward by grabbing the public’s eye
and making them pay attention. Good branding is for the public, but it’s also for the business
owner to appreciate what they have created and built.
Q11: Explain in detail the steps firms should take in determining the
positioning strategy.

Ans: The process of creating an image of a product in the minds of the consumers is called
as positioning. Positioning helps to create first impression of brands in the minds of target
audience. In simpler words positioning helps in creating a perception of a product or service
amongst the consumers.

Steps to product Positioning

Marketers with the positioning process try to create a unique identity of a product amongst the
customers.

1. Know your target audience well

It is essential for the marketers to first identify the target audience and then understand
their needs and preferences. Every individual has varied interests, needs and preferences.
No two individuals can think on the same lines.

Know what your customers expect out of you.

The products must fulfill the demands of the individuals.

2. Identify the product features

The marketers themselves must be well aware of the features and benefits of the
products. It is rightly said you can’t sell something unless and until you yourself are
convinced of it.

A marketer selling Nokia phones should himself also use a Nokia handset for the
customers to believe him.
3. Unique selling Propositions

Every product should have USPs; at least some features which are unique. The
organizations must create USPs of their brands and effectively communicate the same to
the target audience.

The marketers must themselves know what best their product can do.

Individuals purchase “Dabur Chyawanprash “to strengthen their body’s internal defense
mechanism and fight against germs, infections and stress. That’s the image of Dabur
Chyawanprash in the minds of consumers.

USP of a Nokia Handset - Better battery backup.

USP of Horlicks Foodles - Healthy snack

Communicate the USPs to the target audience through effective ways of advertising. Use
banners, slogans, inserts and hoardings.

Let individuals know what your brand offers for them to decide what is best for them.

4. Know your competitors

 A marketer must be aware of the competitor’s offerings. Let the individuals know
how your product is better than the competitors?
 Never underestimate your competitors.
 Let the target audience know how your product is better than others.
 The marketers must always strive hard to have an edge over their competitors.
5. Ways to promote brands
 Choose the right theme for the advertisement.
 Use catchy taglines.
 The advertisement must not confuse people.
 The marketer must highlight the benefits of the products.
 6. Maintain the position of the brand
 For an effective positioning it is essential for the marketers to continue to live up
to the expectations of the end - users.
 Never compromise on quality.
 Don’t drastically reduce the price of your products.
 A Mercedes car would not be the same if its price is reduced below a certain
level.
 A Rado watch would lose its charm if its price is equal to a Sonata or a Maxima
Watch.

Q12: Define the seven types of risk involved in purchasing a service.

Ans: risk is the uncertainty a consumer has when buying items, mostly those that are particularly
expensive, for example, cars, houses, and computers. Every time a consumer considers buying a
product, he or she has certain doubts about the product, especially if the product in question is
highly priced.

Understanding the Different Types

 Functional - Perceived risks can include the fear and or doubt a consumer has that the
product they are buying will fail to perform its intended function. The consumer might be
afraid that if they buy a car, the engine or other parts may malfunction.
 Social - This type of risk pertains to a consumer’s social status. If a person is of a high or
wealthy social class, they want to buy products that their friends would also buy. For
example, they may decide not to buy a cheap car for fear that their friends would
disapprove or that it might impact their social status among their peers.
 Financial - Every consumer suffers some extent of financial risk. They are afraid that a
purchase might strip them of their income sources at that time or in the future. For
example, buying a car could leave them with little to no money or with loans that will
affect their income for the next few months or even years.
  Physical - An item that could cause bodily harm to a person or their family causes
perceived risk. Buying a gun, for instance. The gun could accidentally malfunction and
cause an accident. A book, on the other hand, can rarely cause any physical harm.
 Time - If a product breaks or fails a few days after purchase and needs replacement, this
is a time risk. You’ll need to go back to the store and wait in line to have it replaced or
repaired, thus wasting time.

Q13: Explain blueprinting and how a service can use it?

Ans: A service blueprint is a diagram that visualizes the relationships between different service
components — people, props (physical or digital evidence), and processes — that are directly
tied to touchpoints in a specific customer journey.

\
Q14: ‘Process’ and ‘Physical Evidence’ are very important to financial service
organizations. Explain with relevant examples.

Ans: Services can range from financial services provided by the banks to technology services
provided by the IT Company or hospitality services provided by hotels and restaurants Services
marketing are dominated by the 7 Ps of marketing namely Product, Price, Place, Promotion,
People, Process and Physical evidence.

Physical evidence
Physical evidence is the ability and environment in which the service is delivered. Both tangible
goods that help to communicate and perform the service, and the intangible experience of the
existing customers and the ability of the business to relay that customer satisfaction to .Physica
l evidence is the element of the service mix which allows thecustomer again to make judgments
on the organization. Consumers will make perceptions based on their sight of the service
provision which will have an impact on the organizations perceptual plan of the service.
Some points stating the importance of physical evidence in service marketing are-

Physical evidence is ‘packaging’ for services, therefore creation of service environment should
not be left to chance.

Customer judges the service quality through the process of deduction.

Peripheral evidences are small and trivial but have impact oncustomer perception about services
and are real source of competitive differentiation.

It makes the intangible service apparent.

Physical Environment of Hotel:

location

– What kind of customers prefers a city centre?

– What kind of customers prefers a hotel at seaside?

Signs and logos

Many hotels belong to chains and their signs and logos are well known. Different chains help
hotels to profitable business. Competition is very hard nowadays. Good reputation and
recommendations help very much a hotel to get new customers and also make them to come
again.

Style, furniture, colors, lighting

Clean air: some customers want luxury, and they are ready to pay for it. Other customers are
satisfied with a little lower level.

Reception

What is good customer service at the reception?

Office, information, customer service

Process. Solid procedures and policies that are in place, which pertains to the company’s
products and/or service, is an extremely valuable element to the marketing strategy. Customers
want to understand more than just your product; they also want to focus on the shape and form
your business will take.

Q15: Draw and explain the stages in the purchase process for services.

Ans: The customer buying process (also called a buying decision process) describes the journey
your customer goes through before they buy your product. Understanding your customer’s
buying process is not only very important for your salespeople, it will also enable you to align
your sales strategy accordingly.

The five stages framework remains a good way to evaluate the customer’s buying process:
1. Problem/need recognition

This is often identified as the first and most important step in the customer’s decision process. A
purchase cannot take place without the recognition of the need. The need may have been
triggered by internal stimuli (such as hunger or thirst) or external stimuli (such as advertising or
word of mouth).

2. Information search

Having recognised a problem or need, the next step a customer may take is the information
search stage, in order to find out what they feel is the best solution. This is the buyer’s effort to
search internal and external business environments, in order to identify and evaluate information
sources related to the central buying decision. Your customer may rely on print, visual, online
media or word of mouth for obtaining information.

3. Evaluation of alternatives

As you might expect, individuals will evaluate different products or brands at this stage on the
basis of alternative product attributes – those which have the ability to deliver the benefits the
customer is seeking. A factor that heavily influences this stage is the customer’s attitude.
Involvement is another factor that influences the evaluation process. For example, if the
customer’s attitude is positive and involvement is high, then they will evaluate a number of
companies or brands; but if it is low, only one company or brand will be evaluated.

4. Purchase decision

The penultimate stage is where the purchase takes place. Philip Kotler (2009) states that the final
purchase decision may be ‘disrupted’ by two factors: negative feedback from other customers
and the level of motivation to accept the feedback. For example, having gone through the
previous three stages, a customer chooses to buy a new telescope. However, because his very
good friend, a keen astronomer, gives him negative feedback, he will then be bound to change
his preference. Furthermore, the decision may be disrupted due to unforeseen situations such as a
sudden job loss or relocation.

5. Post-purchase behaviour

In brief, customers will compare products with their previous expectations and will be either
satisfied or dissatisfied. Therefore, these stages are critical in retaining customers. This can
greatly affect the decision process for similar purchases from the same company in the future,
having a knock-on effect at the information search stage and evaluation of alternatives stage. If
your customer is satisfied, this will result in brand loyalty, and the Information search and
Evaluation of alternative stages will often be fast-tracked or skipped altogether.

On the basis of being either satisfied or dissatisfied, it is common for customers to distribute
their positive or negative feedback about the product. This may be through reviews on website,
social media networks or word of mouth. Companies should be very careful to create positive
post-purchase communication, in order to engage customers and make the process as efficient as
possible.
Q 16: What are the four bases on which the selling price of a service is
determined? Elucidate.

Ans: An organization has various options for selecting a pricing method. Prices are based on
three dimensions that are cost, demand, and competition.

The organization can use any of the dimensions or combination of dimensions to set the price of
a product.

The different pricing methods (Figure-4) are discussed below;

Cost-based Pricing:
Cost-based pricing refers to a pricing method in which some percentage of desired profit margins
is added to the cost of the product to obtain the final price. In other words, cost-based pricing can
be defined as a pricing method in which a certain percentage of the total cost of production is
added to the cost of the product to determine its selling price. Cost-based pricing can be of two
types, namely, cost-plus pricing and markup pricing.

These two types of cost-based pricing are as follows:

i. Cost-plus Pricing:
Refers to the simplest method of determining the price of a product. In cost-plus pricing method,
a fixed percentage, also called mark-up percentage, of the total cost (as a profit) is added to the
total cost to set the price.

Demand-based Pricing:
Demand-based pricing refers to a pricing method in which the price of a product is finalized
according to its demand. If the demand of a product is more, an organization prefers to set high
prices for products to gain profit; whereas, if the demand of a product is less, the low prices are
charged to attract the customers.

The success of demand-based pricing depends on the ability of marketers to analyze the demand.
This type of pricing can be seen in the hospitality and travel industries. For instance, airlines
during the period of low demand charge less rates as compared to the period of high demand.
Demand-based pricing helps the organization to earn more profit if the customers accept the
product at the price more than its cost.

Competition-based Pricing:
Competition-based pricing refers to a method in which an organization considers the prices of
competitors’ products to set the prices of its own products. The organization may charge higher,
lower, or equal prices as compared to the prices of its competitors.

The aviation industry is the best example of competition-based pricing where airlines charge the
same or fewer prices for same routes as charged by their competitors. In addition, the
introductory prices charged by publishing organizations for textbooks are determined according
to the competitors’ prices.

Other Pricing Methods:

In addition to the pricing methods, there are other methods that are discussed as follows:
i. Value Pricing:
Implies a method in which an organization tries to win loyal customers by charging low prices
for their high- quality products. The organization aims to become a low cost producer without
sacrificing the quality. It can deliver high- quality products at low prices by improving its
research and development process. Value pricing is also called value-optimized pricing.

ii. Target Return Pricing:

Helps in achieving the required rate of return on investment done for a product. In other words,
the price of a product is fixed on the basis of expected profit.

iii. Going Rate Pricing:

Implies a method in which an organization sets the price of a product according to the prevailing
price trends in the market. Thus, the pricing strategy adopted by the organization can be same or
similar to other organizations. However, in this type of pricing, the prices set by the market
leaders are followed by all the organizations in the industry.
iv. Transfer Pricing:
Involves selling of goods and services within the departments of the organization. It is done to
manage the profit and loss ratios of different departments within the organization. One
department of an organization can sell its products to other departments at low prices.
Sometimes, transfer pricing is used to show higher profits in the organization by showing fake
sales of products within departments.

Q17. Explain the factors that impact the service pricing decisions.

Ans: The influencing factors for a price decision can be divided into two groups:
(A) Internal Factors and

(B) External Factors

(A) Internal Factors:

1. Organisational Factors:
Pricing decisions occur on two levels in the organisation. Over-all price strategy is dealt with by
top executives. They determine the basic ranges that the product falls into in terms of market
segments. The actual mechanics of pricing are dealt with at lower levels in the firm and focus on
individual product strategies. Usually, some combination of production and marketing specialists
are involved in choosing the price.

2. Marketing Mix:
Marketing experts view price as only one of the many important elements of the marketing mix.
A shift in any one of the elements has an immediate effect on the other three—Production,
Promotion and Distribution. In some industries, a firm may use price reduction as a marketing
technique.

Other firms may raise prices as a deliberate strategy to build a high-prestige product line. In
either case, the effort will not succeed unless the price change is combined with a total marketing
strategy that supports it. A firm that raises its prices may add a more impressive looking package
and may begin a new advertising campaign.

3. Product Differentiation:
The price of the product also depends upon the characteristics of the product. In order to attract
the customers, different characteristics are added to the product, such as quality, size, colour,
attractive package, alternative uses etc. Generally, customers pay more prices for the product
which is of the new style, fashion, better package etc.

4. Cost of the Product:

Cost and price of a product are closely related. The most important factor is the cost of
production. In deciding to market a product, a firm may try to decide what prices are realistic,
considering current demand and competition in the market. The product ultimately goes to the
public and their capacity to pay will fix the cost, otherwise product would be flapped in the
market.

5. Objectives of the Firm:

A firm may have various objectives and pricing contributes its share in achieving such goals.
Firms may pursue a variety of value-oriented objectives, such as maximizing sales revenue,
maximizing market share, maximizing customer volume, minimizing customer volume,
maintaining an image, maintaining stable price etc. Pricing policy should be established only
after proper considerations of the objectives of the firm.
(B) External Factors:
1. Demand:
The market demand for a product or service obviously has a big impact on pricing. Since
demand is affected by factors like, number and size of competitors, the prospective buyers, their
capacity and willingness to pay, their preference etc. are taken into account while fixing the
price.

2. Competition:
Competitive conditions affect the pricing decisions. Competition is a crucial factor in price
determination. A firm can fix the price equal to or lower than that of the competitors, provided
the quality of product, in no case, be lower than that of the competitors.

3. Suppliers:
Suppliers of raw materials and other goods can have a significant effect on the price of a product.
If the price of cotton goes up, the increase is passed on by suppliers to manufacturers.
Manufacturers, in turn, pass it on to consumers.

4. Economic Conditions:
The inflationary or deflationary tendency affects pricing. In recession period, the prices are
reduced to a sizeable extent to maintain the level of turnover. On the other hand, the prices are
increased in boom period to cover the increasing cost of production and distribution. To meet the
changes in demand, price etc.

Several pricing decisions are available:

(a) Prices can be boosted to protect profits against rising cost,

(b) Price protection systems can be developed to link the price on delivery to current costs,

(c) Emphasis can be shifted from sales volume to profit margin and cost reduction etc.
5. Buyers:
The various consumers and businesses that buy a company’s products or services may have an
influence in the pricing decision. Their nature and behaviour for the purchase of a particular
product, brand or service etc. affect pricing when their number is large.

6. Government:
Price discretion is also affected by the price-control by the government through enactment of
legislation, when it is thought proper to arrest the inflationary trend in prices of certain products.
The prices cannot be fixed higher, as government keeps a close watch on pricing in the private
sector. The marketers obviously can exercise substantial control over the internal factors, while
they have little, if any, control over the external ones.

Q18. Explain the methods firms can use to improve productivity in service
sector.

Ans: Productivity improvements in the service sector are possible and a number of ways of
improving service productivity are suggested.

1. Improving Staff:
One way is through improving the knowledge, skills, attitudes and behaviour of existing and new
staff involved in service delivery and performance through better systems of recruitment,
training, development and motivation.

2. Introducing Systems and Technology:

Service organisations can reap productivity improvements if they become more systems and
technology oriented. The systems approach looks at the task as a whole. It attempts to identify
key operations to be undertaken, examines alternative ways of performing them, devises
alternative methods, removes wasteful practices and improves co-ordination within the system as
a whole.

3. Reducing Service Levels:

Productivity can also be improved by reducing the quantity of service and/or the quality of
service (e.g. doctors could give less time to each patient). There are dangers in these approaches
particularly where a service organization has promised to deliver a higher level of service in the
past. Also competitors can differentiate their services by broadening and upgrading their service
quantity and quality.

4. Substituting Products for Services:

Productivity can be improved by providing a product substitute for the service (e.g. new data
transfer technology has removed the need for the telegram service).

5. Introducing New Services:

It is possible to design a more effective service that eliminates or reduces the need for the less
effective service. For example, transatlantic travel by air has largely replaced transatlantic travel
by sea; the credit card has replaced the former system for obtaining overdrafts.

6. Customer interaction:
It is possible to change the way in which customers interact with service providers. This is
particularly possible with ‘high contact’ services. Using the consumer more in the production
process demands greater understanding of consumer behaviour and its underlying causes. Ways
have to be found to hardness consumers or to change the behaviour through education and
persuasion for the benefit of service delivery.

7. Reduce the Mismatch between Supply and Demand:

A significant feature of many service organizations is the mismatch that often exists between
supply of the service and demand for it. A major goal in marketing services is to get greater
control over supply and demand and to obtain a better balance between the two. If more people
want to use an airplane than there are seats available then business may be lost to competitors;
unsold seats for a theatrical performance mean revenue lost forever.

Q19. Explain the pricing strategies for Services in detail.

Ans: Price is the value that is put to a product or service and is the result of a complex set of
calculations, research and understanding and risk taking ability. A pricing strategy takes into
account segments, ability to pay, market conditions, competitor actions, trade margins and input
costs, amongst others. It is targeted at the defined customers and against competitors.
Pricing strategies for Services

Premium pricing: high price is used as a defining criterion. Such pricing strategies work in
segments and industries where a strong competitive advantage exists for the company. Example:
Porche in cars and Gillette in blades.

Penetration pricing: price is set artificially low to gain market share quickly. This is done when
a new product is being launched. It is understood that prices will be raised once the promotion
period is over and market share objectives are achieved. Example: Mobile phone rates in India;
housing loans etc.

Economy pricing: no-frills price. Margins are wafer thin; overheads like marketing and
advertising costs are very low. Targets the mass market and high market share. Example:
Friendly wash detergents; Nirma; local tea producers.

Skimming strategy: high price is charged for a product till such time as competitors allow after
which prices can be dropped. The idea is to recover maximum money before the product or
segment attracts more competitors who will lower profits for all concerned. Example: the earliest
prices for mobile phones, VCRs and other electronic items where a few players ruled attracted
lower cost Asian players.

Short Questions:

(a) Define Service Marketing.

Ans: The American Marketing Association defines services as - “Activities, benefits and
satisfactions which are offered for sale or are provided in connection with the sale of goods.”
Service marketing is marketing based on relationship and value. It may be used to market a
service or a product. With the increasing prominence of services in the global economy, service
marketing has become a subject that needs to be studied separately. Marketing services is
different from marketing goods because of the unique characteristics of services namely,
intangibility, heterogeneity, perishability and inseparability.
(b) What do you mean by Service Blueprint?

Ans: A service blueprint is an operational planning tool that provides guidance on how a service
will be provided, specifying the physical evidence, staff actions, and support systems /
infrastructure needed to deliver the service across its different channels. For example, to plan
how you will loan devices to users, a service blueprint would help determine how this would
happen at a service desk, what kinds of maintenance and support activities were needed behind
the scenes, how users would learn about what’s available, how it would be checked in and out,
and by what means users would be trained on how to use the device.

(c) Is Service and Good same thing? If no, what is difference between them?

Ans: Given below are the fundamental differences between physical goods and services:

Goods Services

A physical commodity A process or activity

Tangible Intangible

Homogenous Heterogeneous

Production and distribution are separation Production, distribution and consumption are
from their consumption simultaneous processes

Can be stored Cannot be stored

Transfer of ownership is possible Transfer of ownership is not possible

(d) What is role of marketing research in services?

Ans: Market Research is the only way for a business to obtain in depth analytical information
about the industry, the existing and likely future competitors and also in providing information to
investors pertaining to the extent your product or service can help in solving the prevailing
problem in the market.

(e) What do you mean by Positioning Map?

Ans: Positioning refers to the perception of a product in the minds of consumer in relation to its
competing product. Positioning map is a graphical device to study and analyse the positions or
perception of each of a group of competing products in respect of two specific product
characteristic.

(f) What is customer role in service delivery?

Ans: Customer participation at some level is inevitable in service delivery. Services are
actions or performances, typically produced and consumed simultaneously. In many
situations employees, customers and even others in the service environment interact to
produce the ultimate service outcome. As the customers receiving the service participates in
the service delivery process. He or she can contribute to the gap through appropriate or
inappropriate, effective or ineffective, productive or unproductive behaviors.

(g) Write any three components of Integrated Marketing Communication for

Services.

Ans: IMC components are:

1. Advertising
2. Direct Marketing
3. Interactive/ Internet Marketing
4. Sales promotion
5. Publicity
6. Public Relation
7. Personal Selling
 (h) What is use and objective of Pricing in Services?

Ans: Pricing objectives are the goals that guide your business in setting the cost of a product
or service to your existing or potential consumers.Some examples of pricing objectives include
maximising profits, increasing sales volume, matching competitors' prices, deterring competitors
– or just pure survival.

(i) How can service marketer manage waiting lines?

Ans: 6 Strategies for Managing Customer Wait Times

1. Employee Training. Those who are picked to be on the front-line, are the ones who can help
create a great customer experience.
2. Set the Expectation.
3. Communicate With the Customer.
4. Create A Pleasant Waiting Area.
5. Provide Distractions
6. Service Recovery

j) What do you understand by customer lifetime value?

Ans: Customer lifetime value can also be defined as the monetary value of
a customer relationship, based on the present value of the projected future cash flows from the
customer relationship. Customer lifetime value is an important concept in that it encourages
firms to shift their focus from quarterly profits to the long-term health of their customer
relationships. Customer lifetime value is an important metric because it represents an upper limit
on spending to acquire new customers.

(k) What are the 7P`s of Services Mix?

Ans: 7P`s of Services Mix are:

1. Product

2. Place

3. Price
4. Promotion

5. People

6. Process

7. Physical Environment