BANKING

INTRODUCTION:
The banking sector in India has been widening its scope due to liberalization.
Banks today are not mere suppliers of money. They have become providers of
services such as selling insurance, mutual funds, investment opportunities, etc. In
the past, the banks did not find any attraction in the Indian Economy because of the
low level of economic activities and few business prospects. Today we find
positive changes in the National Business Development Policy. The private
sector banks failed in serving the society. This resulted in the nationalization of 14
commercial banks in 1969.
Nationalization of commercial banks paved the way for the development
of Indian economy and canalized financial resources for the upliftment of
weaker sections of the society. The involvement of Public Sector banks
transformed the Indian economy. It was felt that bankers review their services not
only as financial intermediary but also as a pacesetter.
Adequate financial resources are required for completing welfare
projects. The entrepreneurs need large-scale credit facilities on liberal terms and
conditions. Individuals have developed new hopes and aspirations from banks and
the rural population and backward regions strongly claim their right for a sound
and balanced development.
BANKING MARKETING:
The banking industry is undergoing a revolution caused by deregulation. This
scenario is reflected in the evolution of bank marketing. Banking systems may
vary in different parts of the world, the reasons for the variation maybe due to
features like social banking, low degree of technological sophistication and
cumbersome legal systems.
Marketing of banking services is concerned with product, place, distribution,
pricing and promotion decisions in the changing socio-economic and business
environment.
The users of banking services or the prospects play a very significant role
in the formulation of overall marketing strategies. The bank marketing activities
are concerned with the designing of product strategies keeping in view the needs
and requirements of prospects.
The causes of Bank Marketing can be seen as:
 Rising customer needs and expectations due to improvements in general
standard of living.
 Entry of foreign and private sector banks in India.
 Economic liberalization of Indian economy.
 Phenomenal growth of competition due to economic liberalization.
 Rise in the Indian middle class with considerable resources.
 Government intervention in protecting the interests of consumers.
A comprehensive definition of bank marketing by Deryk Weyer of Barclay’s bank
states that: -
“It consists of identifying the most profitable market now and in future by
assessing the present and future needs of the customer. This is done by setting
business development goals, making plans to meet them, managing and promoting
the various services to achieve these goals. Bank marketing is not just advertising
and promotion campaigns but a managerial process by which services are
matched with markets. This indicates evolving a suitable marketing strategy
which suits the need of the customer.”
BANKING STRUCTURE IN INDIA

SOCIO-ECONOMIC FACTORS AFFECTING SAVINGS:

The social and economic factors have a far-reaching impact on the behaviour of
customers. This is due to the fact that human beings are directly influenced by
the socio-economic consideration.
SOCIAL FACTORS
a) Group of family,
b) Family life-cycle,
c) Family decisions, and
d) Role of opinion leaders.
ECONOMIC FACTORS
a) Disposable income,
b) Price Index,
 c) Stages of economic transformation,
d) Global economic co-operation.
MARKET SEGMENTATION
In Banking services, the banks are expected to satisfy rural customers, urban
customers, and high-earning and low-earning customers, small-scale and large-
scale entrepreneurs and so on.
IMPORTANCE OF SEGMENTATION IN BANKING SERVICES:
Since the banks have to deal with different types of customers from different fields
and localities, banking services need segmentation.
The purchasing power of potential customers is different. In respect of term
deposits of different maturities or deposit schemes, the potential customers are
required to be influenced. These potential customers may be located in various
pockets of urban areas.
In the Indian setting, we find the emergence of a wide rural market. Here, it is
necessary that the segmentation be done in tune with the changing socio-economic
conditions of the rural customers.
Thus, market segmentation is important not only from the perspective of
expanding the market but also with the motto of satisfying the client. If the
marketing decisions of the banks are on the basis of micro-level market segment,
only then a fine blend of service and profit elements is possible.

MARKETING MIX

PRODUCT
BANKS PRODUCTS:
(A) DEPOSITS:
Savings, Current, Fixed etc.
(B) ADVANCES:
(1) Fund Oriented:
a) Term Loan,
b) Clean Loan,
c) Bills Discounting,
d) Advances,
e) Pre-shipment Finance,
f) Post-shipment finance,
g) Secured and Unsecured lines of credit.
(2) Non-fund oriented:
a) Guarantees, and
b) Letter of Credit.
 (C) INTERNATIONAL BANKING:
a) Letter of Credit, and
b) Foreign Currency.
(D) CONSULTANCY:
a) Investment Counselling,
b) Project Counselling,
c) Merchant Banking, and
d) Tax Consultancy.
(E) MISCELLANEOUS:
a) Traveller Cheques,
b) Credit card,
c) Remittances,
d) Collections,
e) Sale of Drafts,
f) Standing instructions, and
g) Trusteeship.
In the banking the products are services. Services cannot be seen or protected like
goods. The potential buyer of the services can form an opinion about the services
offered.
The changing trends in the non-banking investments compel certain modifications
to be made in the existing product line. The product should suit the market needs.
Bank services are viewed in terms of the satisfaction they deliver and not just the
things that are created with value. For instance, a bank account is seen in terms of
customer satisfaction such as safety, convenience of paying dues, keeping records,
transferring funds, status, and pride in one’s bank. The various deposits, loans and
advances, consultancy services, international banking, safe deposits, credit cards,
etc. are the products sold by the bank.
Bankers need to identify their core and supplementary product services as it has
more marketing implication. The banker should offer an optimum mix of the core
and augmented products.
• CORE PRODUCT: It is the fundamental benefit the customer buys from the
bank. They define what kind of business the firm does, for example, the business of
commercial bank. But customers do not buy the core product, they only buy the
benefit. The role of the bank marketer is to convert the core products into a generic
product, which satisfies the needs of the customer.
• AUGMENTED PRODUCT: This is the basic product with some ancillary
attached to it. For example, when one opens a Suvidha Account with Citibank,
he gets an ATM Card free. The bank marketer must offer a multidimensional
product or what is called a ‘product package’.
The product related strategy includes:
 Introduction of new schemes- EXAMPLE: DEMAT ACCOUNT.
 Modification of the product offered by incorporating technological
development – EXAMPLE: Telebanking, Online Banking, etc.
 Change in the product line or package – EXAMPLE: From
Corporate Banking to Personal Banking; or even deleting an existing service
line.
PRICE
Pricing in Banking relates to the interest rates paid by the banker on deposits,
interest charged by the banker on loans and demand drafts, charges for various
types of transactions and fees for certain services. In India, banks adopt
administered pricing structure to some extent as the deposit and lending rates are
prescribed by RBI. The charges for banking services are agreed upon by
Indian Banks Association. Pricing policy of a bank is considered important for
raising the number of actual customers. But even in this regulated pricing
environment, pricing
can be used as a tool in their marketing strategy. The specific pricing methods that
can be adopted in deregulated environments are:
 Cost plus pricing which calls for a detailed analysis of cost structure of
various bank products and services.
 Market Oriented Approach which indicates what the market can bear
or accept as in the case of a corporate client who may not be price sensitive as
against an individual client.
 Competition related Approach, where the price is decided based on the
competitor’s price. In this case, the ‘value’ like high return, convenience, and
speedy service must be highlighted.

The banks are required to frame two-fold strategies. Strategies concerned with
interest and commissions to be paid to the customers and interest and
commissions to be paid by the customer for different types of services.

PROMOTION
The objects of a promotion programme are to inform about the new service
product, to persuade the customer, to remind the customer, build image of the
bank, etc.
Banking services can be promoted in two ways:
1. Personal promotion: The bank marketer gets the best opportunity to
tangibilise the product through personal selling; persuasion is more effective with
direct contact. It helps in creating impulse buying.
2. Impersonal Promotion: i.e. advertising, publicity and sales promotion
measures. An advertisement in banking is a promise- a promise of satisfaction to
prospects who buy the service offered by the bank. Banks use all types of
advertisement such as newspaper, radio, television, magazines and hoardings. Also,
sales promotion devices such as Point of Purchase material, brochures and
advertisement specialties like ball pens, calendars, diaries, etc.
Publicity is a major strength as a promotion tool than advertising as customers
tend to believe a news item rather than an advertisement. Word of promotion is
yet another important promotion tool as it is a better persuader and convincer
than advertising and personal selling, as banking services are narrated by
customers themselves. Besides, as Social Welfare and Corporate Social
Responsibility are considered to be an important part of banking services, the
publicity measures need due care.
PLACE
The place decision mainly deals with selection of a suitable location for the
branch. Sound location decisions help in activating the business. The location
should have adequate availability of transportation, communication, electricity
and other necessary facilities for the smooth functioning of the bank.
Technological developments, increased customer satisfaction, inadequacy of the
traditional channel to serve all customer segments have brought bout ATM,
telebanking, home banking, Internet banking and now SMS Banking.
Another significant development is a strategic alliance set up by the private
banks to overcome the handicap of limited branch network. In such alliances
the branch network of one branch will be used by the other for selected transactions
like bill collection, cheque collection, etc.

PEOPLE
Banking products cannot be separated from the person (banker) who markets them.
The product and the seller together constitute the banking product. Banks
should adopt internal marketing in order to make the whole business customer-
oriented. The bank products should be marketed to the employees first before they
are marketed to customers. The corporate mission should be communicated
repeatedly and effectively to all employees by the top management.
The placement policy should emphasize that the recruits should not only be
conversant with all aspects of banking business but also have the skill for
social interaction and tolerance for interpersonal contact.

PROCESS
It involves all activities right from the product conception stage, to product
designing and development down to its marketing at the branch level. Banks
which were more focused or activity-oriented have shifted to customer-oriented
service delivery. This is essentially due to the technological advances. Automation
of transactions, accounting procedures, data handling, as well as process re-
engineering has helped reduce delays in processing transactions- example: Loan
applications, clearing cheques, etc.

PHYSICAL EVIDENCE
Banking products are intangible and physical evidence focuses the banker’s
attention on this aspect. The environment of banks is changing. It is becoming
friendlier with attractive layouts and décor. Most private and foreign banks like
ICICI, Citibank, and HDFC portray a new welcoming and friendly look to the
customers rather than drudgery banking counters. Attractive brand names, logos,
symbols, etc. add to the customer’s perception of service quality.

PRODUCTIVITY
Productivity relates to how inputs are transformed into outputs that are valued
by customers. Improving productivity keeps cost in control.
Banks have improve productivity through computerization, by changing
transaction systems – like the new banks do not have pass books – they only send
quarterly statements; the specimen signatures are also checked through the
computers.

LATEST DEVELOPMENTS

ATMs MAY BE TREATED AT PAR WITH BANK BRANCHES: -

The spreading ATM culture looks set to get hard knock with the Reserve Bank of
India planning to treat them at par with bank branches.
The RBI on Saturday sent a draft circular on a branch authorization policy to all the
banks. For the purpose of authorization, the RBI said a “branch” would include a
full-fledged branch, a
satellite office, an extension counter as well as offsite ATMs. However, call centers
have been kept out of it.
This means that the banks will need the RBI’s advance approval for setting up as
well as closing down ATMs. So far, banks could set up ATMs on their own and
keep the local RBI offices informed at the time of operationalising them.
The State Bank of India has over 7,000 ATMS – roughly half the number of its
branches. ICICI Bank has about 2,000 ATMs, four times its branch network. UTI
Bank and HDFC Bank, too, have sizable number of offsite ATMs. The total
number of ATMs could be 18,000 throughout the country.

TELEBANKING AND ELECTRONIC BANKING: -

A customer can access information about his/her account through a telephone call
and by giving the coded Personal Identification Number (PIN) to the bank by
Telebanking. Some banks like SBI, Andhra Bank, etc. have made this facility
available to some branches.
Automatic withdrawals and transmission of cash balance data and other
information about an account is another facility that is offered by banks in a
consolidated form through fax or telex. Some banks have also adopted the use of
E-mail service for data and information transmission.
Banks have also started with the Electronic display of information through Satellite
Communication System and transfer of funds through the same channel for inter
branch and inter-bank adjustment and clearance of cheques, drafts, etc.

CELL PHONE BANKING AND INERNET BANKING: -

Through Inter-net banking one can visit the web-site of each bank by entering his
password and know the account balance and even pass his own credit and debit
entries.
This means that we can do our banking through our personal computer sitting at
home. Banks may soon allow zero balance savings accounts through Internet
facility only.
Customers can now make balance enquiries, download statements and open fixed
deposits over the net. They will soon be able to carry out all their transactions over
the net. So visiting a bank would become needless.
Time to come, Mobile phones will drive banking transactions. These mobile
phones will be equipped with smart cards that are embedded with banking and
other information. This mobile phone banking facility is yet to come but the
mechanics of linking the banking with the cell phone is being sorted out.
Teller machines are being installed in the banks for the Electronic banking facility.
The use of e-mail for banking will open up new avenues for Internet banking.
Banking will be on wheels and mobile by the use of smart banking.

CHARACTERISTICS OF SERVICES – with reference to Banking

Intangibility
Financial services are generally intangible, but the service providers go to
considerable lengths to ‘tangibilise’ the service for customers. Regular bank
statements, ‘gold’ credit cards, and insurance policies are all examples of the way
in which the financial services are presented to
customers. They can enhance the image of the service and the provider can even
bestow status or implied benefits upon the user as with a gold card. Physical
reminders of the service product, brand name and value serve to reassure the
consumer and help the organisations positioning.

Inseparability

The degree of inseparability depends upon the type of service and the actual
supplier. Many everyday transactions are carried out now via automated services-
the automated teller machines (ATMs), net banking etc.
Additionally, many financial services are sold by brokers and agents of various
kinds. Services are frequently handled by agents are credit card and other
currency/travelers cheque encashment.

Heterogeneity/variability

The complexity of the service transaction process will determine the extent of
variability and this can differ to a large extent between institutions and even with
one institution. The greater the degree of automation within any transaction
process, the greater the degree of standardization. Thus simple transactions may be
carried out via ATMs and completely standardized or via branch counter where
they might be fairly standardized but subject to some variation in quality.
Total standardization is not necessarily desirable from the consumer’s point of
view. A friendly greeting or being addressed by name can enhance service delivery
and while an ATM cannot arrange an emergency overdraft facility when funds are
low, branch staff can look at the standing of individual customers and make
arrangements when appropriate, satisfying the customer and profiting from charges
applying to the account.

Perishability

The degree of Perishability depends on the type of service. If a cheque needs to be

cleared by a certain date and the system causes delay then the benefits to the
consumer are lost so the service could be said to be perishable. By and large,
money and financial services are enduring in nature. If a bank’s reserves are not
fully utilized profitably through lending or investment they will still retain their
worth and may be utilized again at a later date. A bank branch, which does not
have any customers at all on a particular day, may actually gain rather than lose
profit as staff may be able to use the peace and quite to catch up on other work.

PEST Analysis for financial services

Political/ Legal
Influences which have an impact on financial services and consumer confidence
include the following:
• State provision of pensions
• Government encouragement of savings and investment (for e.g. via tax
benefits)
• Regulatory control and protection (to prevent the collapse of financial
institutions and protect investors money)

Economic
Economic factors are key variables which have an impact on the activity in the
financial services sector. The level of consumer activity is governed by income
levels and personal wealth. As income levels grow, more discretionary income is
available to spend on financial services. Consumer confidence in the economy and
in job security also has a major impact; if lean times are foreseen ahead, savings
will take priority over loans and other forms of expenditure. Consumers may also
seek easy access savings and be willing to tie up their money for longer periods
with potentially more attractive investments.

The main economic factors that should be monitored with regard to fianacial
services marketing are as follows:

• Personal and household disposable income

• Discretionary income levels
• Employment levels
• The rate of inflation
• Income tax levels and taxation structures
• Savings and investment levels and trends
• Stock market performance
• Consumer spending & Consumer credit

Socio-cultural
Many demographic factors have an important bearing on financial services
markets.
• Changing attitude towards consumer credit and debt
• Changing employment patterns
• Numbers of working women
• The ageing population
• Marriage/divorce/birth rates
• Consumption trends

Technological
Technology has a major impact on many industries including financial services and
banking in particular. ATM services which not only provide cash but also allow for
bill payments, deposits and instant statements are widely used. From the
customers’ viewpoint, technology has played a major role in the development of
the process whereby the service is delivered. Automated queuing systems have
made visits to the bank easier and more convenient. Telephone Banking and
insurance services are now being used in place of the traditional branch-based
service process. Technology has also played a major role within organizations,
bringing about far greater efficiency through computerized records and transaction
systems and also in business development, through the setting up of detailed
customer databases for effective segmentation and targeting.

The main technological developments fall within these categories;

• Process developments
• Information storage and handling
• Database system
MERCHANT BANKING
Merchant banking may be defined as an institution, which covers a wide range of
activities such as management of customer services, portfolio management, credit
syndication, acceptance credit, counseling, insurance, etc.
The notification of the Ministry of Finance defines a merchant banker as, "any
person who is engaged in the business of issue management either by making
arrangements regarding selling, buying or subscribing to the securities as
managers, consultant, adviser or rendering corporate advisory service in relation to
such issue management"
Services of Merchant Banks:

 The services of merchant bankers are described in detail in the following way:
 Project Counseling:
 Issue Management:
 Underwriting of Public Issue:
 Managers, Consultants or Advisers to the Issue:
 Portfolio Management:
 Advisory Service Relating to Mergers and Takeovers:
 Off Shore Finance:
 Loan Syndication:
 Corporate Counseling:

MUTUAL FUND
INTRODUCTION:
A mutual fund is an investment vehicle where a number of investors come together
to pool their money with common investment goal. An investor can invest his
money in one or more schemes of a mutual fund according to his choice and
becomes the unit holder of the scheme. Each mutual fund is managed by qualified
professional man, who uses this money to create a portfolio which includes stock
and shares, bonds, gilt, money – market instrument or combination of all. Thus
mutual funds will diversify your portfolio over a variety of investment vehicles.
Mutual fund schemes are managed by respective asset management company
(AMC) sponsored by financial institution, banks, private companies or
international firms. The biggest Indian AMC is UTI while Alliance, Franklin
Templeton etc are international AMC’s.
BENEFITS OF INVESTING IN MUTUAL FUND:
Mutual funds offer several benefits to an investor that unmatched by the other
investment options. The major benefits are good post – tax returns and reasonable
safety, the other benefits in investing in mutual funds are: -
Professional management:
Mutual funds employ the services of experienced and skilled professional and
dedicated investment research team. The whole team analyses the performance and
balance sheet of companies and selects them to achieve the objectives of the
scheme.
Potential return:
Mutual funds have the potential to provide a higher return to an investor than any
other option over a reasonable period of time.
Diversification:
Mutual funds invest in a number of companies across a wide cross section of
industries and sectors.
Liquidity:
The investor can get the money promptly at the net asset value related prices from
the mutual funds open – ended schemes. In close – ended schemes, the units can be
sold on a stock exchange at the prevailing market price.
Transparency:
Mutual funds have to disclose their holding, investment pattern and the necessary
information before all investors under a regulation framework.
Flexibility:
Investment in mutual funds offers a lot of flexibility with features of schemes such
as regular investment plan, regular withdrawal plans and dividend reinvestment
plans enabling systematic investment or withdrawal of funds.
Affordability:
Small investors with low investment fund are unable to high – grade or blue chip
stocks. An investor through mutual funds can be benefited from a portfolio
including of high priced stock.
Well regulated:

All mutual funds are registered with SEBI (Securities and Exchange Board of
India), and SEBI acts a watchdog, so the mutual funds are well regulated.

HOSPITAL INDUSTRY

INTRODUCTION

Hospitals are not for profit making, they are social institutions to make available to
society the required Medicare services. Previously hospitals were set up as
charitable institutions to take care of the sick and poor. Today it is a place of
diagnosis and treatment of human ills, for the training research, promoting health
care activities and to some extent a center helping biosocial research. WHO states
that hospitals are socio-medical organization whose functions are: curative,
preventive, patient services and training of health workers in biosocial research.
Today it also acts as an institution that provides accommodation to patients for
medical nursing and care.

“HEALTH CARE INDUSTRY”

Health care-a wide and intensive form of services. Health is a social sector. Health
care services are provided at state level with the help of central government.

MAJOR INPUTS OF HEALTH CARE INDUSTRIES

1. Hospitals
2. Medical insurance
3. Medical software
4. Health equipments

MAJOR PLAYERS

1. Apollo
2. Max India ltd
3. Fortes health care
4. Wockhardt
5. Mayo-U.S.A
6. Massachusetts general-U.S.A
7. Sloan Kettering-U.S.A
Apollo currently has 3 big hospitals as follows: -
1. Indira Prastha hospital (Delhi)
2. Apollo hospital (Hyderabad)
3. Apollo hospital (Chennai)
All India institute of medical sciences (AIIMS)

CLASSIFICATION OF HOSPITALS

There are different types of hospitals as there is a distinction in their structure and
performance.

A. On the basis of objective

HOSPITALS

Teaching-cum General Special

Research Hospitals Hospitals Hospitals
Teaching cum research hospitals: - These hospitals are teaching based. Health care
is their secondary objective. They are found engaged in promoting the research
activities and training medical students.
All India medical institute New Delhi and post graduate medical education and
research institute Chandigarh is good examples.
General hospitals: - The main objective of these hospitals is to provide medical
care. They also offer teaching and research facilities but these are secondary
objectives.
Special hospitals: - These hospitals concentrate on a particular organ of the body or
a particular disease. The main objective is to provide specialized medical services.

B. On the basis of medicine

HOSPITALS

Allopathic Ayurvedic Homeopathic Unani

Other
Hospitals Hospitals Hospitals Hospitals
Hospitals

C. On the basis of ownership

HOSPITALS

Government Semi-government Voluntary

Private
Hospitals Hospitals Agencies
Charitable
Hospitals
Hospitals

The government hospitals are owned, managed and controlled by the government
whereas the semi-government hospitals are autonomous body. The voluntary
agencies hospitals are owned and managed by voluntary organizations whereas the
private parties own and manage private charitable hospitals.

D. On the basis of size

HOSPITALS
 Teaching District Tehsil/Taluka
Primary
Hospitals Hospitals Sub-divisional
Health
Hospitals Center

The teaching hospital generally has five hundred beds, which can be increased
according to the number of students.
The district hospital generally has two hundred beds, which can be increased up to
the hundred depending on the population.
The primary health center generally has six beds that can be raised to ten beds.

8 P’S OF HOSPITALS

1. Product: - A product is a set of attributes assembled in an identifiable form.

The product is the central component of any marketing mix. The product
component of marketing mix deals with the variety of issues related to
development, presentation and management of the product, which is to be offered
to the market place. It covers issues such as service package, core services and
peripherals, managing services offering and developing service offering.
The main product in a hospital maybe any of the following:

• Medical Services
• Medical Training
• Medical Education
• Medical Research
The main products of hospitals are medical services. The services rendered by
hospitals or public health centers occupy a place of significance, especially while
designing the product mix. In addition to medical care, some hospitals also impart
education, training and research facilities and some hospitals also educate and train
paramedical officers, nurses and other technical staff. It is thus clear that the nature
of the hospital governs the designing of product mix

Medical services can further be classified as follows:

♦ Emergency
♦ Out-Patient
♦ In-Patient
♦ Intensive Care
♦ Operation
SUPPORTIVE SERVICES

To enrich the hospital services certain supportive services are found to be

important e.g. sterilization, supply and maintenance of instruments, materials and
garments etc. The catering department comprises the kitchen, bulk food stores and
dining rooms and supplies meals in the hospital. Heated trolleys have to be used to
transport meals to patients. Pharmaceutical services also occupy a significant place
as they influence the treatment programme of a hospital. An official laundry is
essential to provide bacteria free garments and clothes. The patients need to be
provided with disinfected and clean linen. The laboratories need to be properly
manned and proper diagnosis needs to be given by them to enable right medical
prescription. The establishment of laboratories should be between the OPD and
indoors so that both areas are covered without delay or disruption. Clinical
pathology, blood bank and pathological anatomy are important areas to streamline
functional management of hospital laboratories. The radiology department should
have hi-tech facilities keeping in mind patient load of the hospital. Currently
ultrasound scanning and CAT scanning have been found significant in improving
services of the radiology department. The nursing services are also important
among supporting services. Nursing services are managed by a matron who is
assisted by a sister-in –charge. The norms accepted by the Indian Nursing Council
should be followed. An ideal nurse-patient ratio is 1:5 which is hardly found in
Indian hospitals.

AUXILIARY SERVICES

Auxiliary services consist of registration and indoors case records, stores

management, transportation management, mortuary arrangement, dietary services,
engineering and maintenance service etc. It is important that these services are
maintained properly which would govern the successful operation of a particular
department. The security arrangements, supplies, transport facilities etc cannot be
ignored. For a hospital registration is a must as it helps in collecting statistics for a
hospital e.g. admission, discharge and average stay of patients in the hospital. The
central store issues bulk items. There are different types of stores like pharmacy
stores, chemical stores, linen stores, glassware stores, surgical stores etc. For
carriage of supplies and patients trolleys, wheelchairs and stretchers are used. The
hospital also needs a cold storage or mortuary for preservation of dead bodies till
they are claimed by relatives or for post-mortem. The dietics department plays a
vital role as it provides the hospital menu to meet the needs of patients. The
services of well-qualified and trained dieticians help in providing nutritious diets.
The engineering and maintenance services are concerned with hospital building,
furniture and other equipment. A security force is essential to provide protection to
the hospital property. Personnel related with defense or police should be given
preference while appointing the security force.

Thus the line services, supportive services and auxiliary services are mainly
concerned with Medicare facilities available in a hospital. The designing of product
mix is meant to make suitable arrangements for improving the level of services in
all concerned areas and in this context the medical education, training and research
services play a significant part.

Other Auxiliary services provided by some hospitals include

 Rehabilitation center
 Physio therapy
 Occupational Therapy: Occupational therapy trains individuals on activities of
daily living which will allow them to return home after getting cured from long
drawn diseases
 Speech Therapy:
 De-addiction & mental health:
 Volunteer services: A few examples of areas volunteers can work include:
• Community Education
• Emergency Department
• Environmental Services
• Information Desks
• Marketing and Community Relations
• Medical Records
• Nutritional Services
• Patient Care

MEDICAL EDUCATION: TRAINING AND RESEARCH

The teaching hospitals are mainly engaged in offering medical education facilities.
Research and training facilities are also made available in these hospitals where
patients are used as inputs for teaching and research both by the teachers and by
those who are taught. Medical institutes and medical colleges both offer education,
training and research activities with one difference being that the institutes are
specialized in a particular field and colleges are generalized.

2. Price: - Price is one of the most prominent elements in the marketing mix.
Price charged must be acceptable to the target customer and it should co-ordinate
with other elements of the marketing mix. Price charged by the hospitals usually
depends on treatment prescribed by the respective consultants and the facilities
offered to the patients.
As the service is intangible it is very hard for determining the price of the particular
service rendered on admission, an initial deposit will be collected at the
impatient billing counter. The amount depends on the category of room and the
treatment/surgical planned. Various category of rooms, ranging from the general
ward, which attends to the need of the lower classes to the deluxe suite, which
attends to the need of the middle and the upper classes. The prices vary from Rs.
250 for the general ward to Rs 20,000 for the deluxe suite.
A hospital does not believe in profit maximization, it aims at providing quality for
its customer at a reasonable price.

Government hospitals fee/charge

Free for no income

Subsidized (for low
income group) (2)
group (1)

Discriminatory pricing

Cost + losses from 2 Cost + surplus to make

(Middle-income up the losses of 1 (high
group) (3) income group) (4)

1 = No income group. He/she is not in a position to earn something and so free of

charge services.
2 = Low-income group. He/she earns something and so should contribute a portion
of cost.
3 = middle-income group. He/she earns more than low-income group and so should
make up the
losses on account of low-income group.
4 = High-income group. He/she earns more and should make up the losses on
account.

Pricing methods in private hospitals

1. Cost based pricing

2. Competition based pricing
3. Demand based pricing

Perceived value

1) Value is low price Could be offered on weekends.

Health spas in off-season.
Differentiated as incentives.
Free consultancy by dentist/doctors.
 2) Value is everything
I want in service
3) Value is everything
I get for the price I pay
4) Value is all that I get
For all that I give
Prestige pricing (health clubs)
Bombay hospitals for Arabs
(Value is high quality)
Market segmentation pricing
based on affordability to pay.
Value is affordable quality.
Value is getting excellent
treatment in shortest possible time.

DIFFERENT PRICING IN THE HOSPITAL INDUSTRY HAPPENS

 EXTERNALLY (BETWEEN TWO HOSPITALS) &

 INTERNALLY (WITHIN A HOSPITAL)

EXTERNALLY: - Between 2 hospitals even to provide the same treatment, the

prices differ. Even though the operation to be might be the same, pricing differs
due to the kind of the service provided pre-post operation cost is associated with
the kind of service you provide & so the hospital is bound to charge the patient for
it.
Lilavati believes that it is not only a service organization but also a business
organization but Nanavati believes that providing health care service is a charity it
provides 250 free beds thus differentiating it. Lilavati’s location, the training
provider hygiene/ ambience all is other contributing factors.

INTERNALLY: -There is a price differentiation even between the 2 wards of the

same hospitals. There is a difference between general ward and special ward where
the rooms are air-conditioned and extra services are provided.
Thus the pricing would be different even the doctors visiting/consultation
charges are different. Sometime if the patient is very poor then the doctor may
wave his fees.

3. Promotion: - promotion function of any service organization involves the

transmission of message to present, past and potential customers. Customers need
to be made aware of the existence of the service provided. Promotion includes
advertising, sales promotion, personal selling and publicity. Hospitals do not
normally undertake aggressive promotion; they rely a lot on favorable word of
mouth. To increase the clientele a hospital may continuously introduce different
services like the acupressure clinic, master health programs and diabetes health
check up apart from annual health check up provided to different co-operate
clients.
Hospitals conduct camps in rural areas to give medical check up at a
reasonable price so that the rural people approach the hospital again in future. They
also sponsor frequent visits to the spastic society, old age forms etc. hospital
generally advertise in health and fitness magazines.

Marketing hospitals

Marketing in Hospitals is unethical was the frequent refrain in the eighties, when
very few hospitals realized that it was necessary to incorporate marketing as an
integral function in the hospital operations. But the major argument at that time lay
in understanding whether this professional orientation was really required for its
viability, profitability and sustainability. This argument however became favorable
in the late nineties as corporate companies like Wockhardt and Max India started
venturing into the hospital industry, apart from the ongoing mergers and
acquisitions that were already taking place at that time. Hospitals started building
tie-ups with corporate clients, as there was already an abysmal utilization of
resources in the existing hospitals. In addition to the above a major factor that
contributed to the acceptance of marketing in hospitals was an increase in the
delivery of services.

Perception of patients was another important consideration for hospitals, as they

felt that the patients would take them as profit oriented organization rather than
service-oriented organization. Ultimately, marketing was accepted only by a few
while others discarded the concept Hospitals who accepted marketing also carried
out their function by concentrating around corporate clients. Lately it has been felt
that many Indian hospitals have a dilemma regarding the functions of marketing.
In an era where hospitals are experiencing a major shift in their clientele, they are
worried more about the patients’ perception of hospitals and therefore the concept
of brand restructuring and brand engineering is vital.

As hospitals spend millions of rupees in technology and infrastructure, it becomes

necessary, that they attract patients and generate funds. In order, to do the same,
the hospitals follow various marketing and brand building exercises. Some of them
are listed below:

1. Many hospitals have eminent personalities from the industry in their Board of
trustees. This indirectly leads to increase in, inflow of patients, working in the
companies of these Trustees. Besides the presence of eminent personalities creates
a sense of confidence in the minds of people.
2 Private hospitals can attract their shareholders by offering discounts. For
example, a special discount of 20 percent on all preventive health checks is offered
to all shareholders of Apollo Hospitals Limited.

3. Hospitals have a long-term understanding with PPO’s (Preferred Provider

Organization), which further have understanding with corporates. Any case of
sickness found in the employees of these corporates refer them to the PPO’s which
further sends them to the hospital for check-ups and treatment.
4. The success rate of crucial operations and surgeries, reflect the technological
and knowledge- based edge of the hospital over the’ competitors. Such successes
are discussed in health magazines and newspapers, which become a natural
advantage for the hospital.

5. Some hospitals by means of their past track record have created a niche market
for themselves. For example, Hinduja is known for its high-quality healthcare at
reasonable rates, whereas Lilavati Hospital is known for its five star services.

6. Hospitals hold seminars and conferences relating to specific diseases, where

they invite the doctors from all round the country, for detailed discussion. This
makes the hospital well known amongst the doctors, who could in future refer
complicated cases to the hospital.

7. Hospitals can also promote medical colleges. This helps them to generate extra
resources in form of fees using the same infrastructure.

4. Place: - place refers to contact point between the service provider and the
customer, who gets the benefit of the service. This element in the marketing mix
leads to the identification of a suitable location.
The two main issues considered regarding the decision of a place are
accessibility and availability of the service to customer’s accessibility refers to the
ease and convenience with a service can be purchased, used or received.
Availability refers to the extent to which a service is obtainable or capable of being
purchased, used and received.
Factors influencing the placing decision are market size and structure by
geographical regions, number and types of complaints in the region, location of
potentially attractive consumer segments, local infrastructure, good road access
facilities and public transportation network. A hospital must be ideally located and
must be easily accessible to all.

5. People: -The People component reflects the important role played by

individuals in the provision of services. People are also important element in the
marketing mix.
Service personnel play an important role in an organization, which
provide services. The behavior and attitude of the personnel providing services will
influence other customer’s by over all perception of the service. Customers are a
source of influencing other customers by word of mouth.
It is necessary that the staff in a hospital is trained to provide quality
patient care with human touch using state of art technology.
The objective of providing quality service to the patient can be achieve by:
1) Motivating employees to be efficient, dedicated and loyal to the organization.
2) Providing regular on job training of employees to ensure continuous
improvement in health care.
3) Utilizing services of professionally competent medical consultants.
5) Use of latest technology.
Motivation is not necessarily be giving high salaries. There are many other ways to
motivate the employees. Concession should be given to the employees near once.
There should be regular liaison with them at all times know what the employees
want. There should be active participation of the employees in the activities of the
hospital.
In a hotel, where the clientele is happy, free from any kind of tension, the job of
the staff becomes much easier. Whereas in a hospital, the staff has to cater to the
needs of sick, depressed and an agitated let. Warm ambience with cheerful and
efficient staff help make the experience of the public a memorable one. Therefore it
is very important that the staff of the hospital is friendly and comforting, always
wearing a smile.

6. Process: - Process is a set of activities that take an input, convert it and add
valve to the input and finally create an output. Process has only recently been given
much attention in the service sector although it has been the subject to study in
manufacturing for many years. Processes are designed by blue prints, which sets a
standard for action to take place and to implement the service. In a hospital, the
process is divided into 3 phases:

The arrival of patient

Joining phase

Registration

Diagnosis
The intensive
consumption Treatment
phase
Information about future action

Discharge of the patient

Detachment
Phase
Payment

Feedback
Fill the evaluation form
 General process organization in a hospital

Finance department
Billing

Purchase Patient
Stores Doctors
department (external
7. Physical evidence: - Physical evidence is the environment in which the service
customer)
is delivered with physical or tangible commodities and where the firm and the
customer interact. Physical evidence plays an important role in hospitals services.
The staff follows a dress code to show professionalism and to maintain discipline.
Nurses
The staff is trained to be understanding, warm and comforting because the clientele
that goes to the hospital is usually disturbed or unhappy. It is necessary to be
centrally air-conditioned with good lighting. Ventilation is taken care of by air-
conditioning.
Special care should be taken to maintain hygiene, cleanliness and whole hospital
must be will lit. This is taken care of by the housekeeping department. A hospital
has to keep in mind both the aspect of physical evidence that is essential and
peripheral evidence. Physical evidence particularly plays an important role in the
hospital where the patients are already depressed or traumatized and a good
atmosphere could make all difference.
Hospitals put up boards, showing list of visiting Doctors along with their
qualifications, and details other well-known hospitals they visit.

8. PRODUCTIVITY AND QUALITY

Productivity in services is how we transform the inputs into outputs, which are
valued by the customer. Quality is the degree to which the service satisfies a
customer by meeting their wants and expectations.

TRUE OR FALSE

1. GYMNASIUM IS A HEALTH CARE: - TRUE

It provides total health care, besides just physical fitness gyms have come up with
cardio machines like tread mill, cycles, steppers, and etc. which help pump more
blood into the heart steam and sauna, massage centers provide over all relaxation.
2. POLYCLINIC IS A PANACEA (REMEDY) ALL TYPE OF
ILLNESS/HEALTH PROBLEMS: - FALSE

A polyclinic is a place where specialist doctors come and provide consultation for
couple of hours in a day. That means that is a day, a policlinic will have different
illness but still few diseases are not curable like cancer- terminal cares AIDS etc.

3. PRIVATE HOSPITAL SERVICES ARE MORE PREFERRED THAN

PUBLIC/ GOVERNMENT HOSPITAL SERVICES: - TRUE

Private hospitals are more professional and the quality of service provided is better
than that in a government hospital they give you value for money even though
there are more expensive however this would depend on the disposable income on
an individual.

4. QUALITY OF TREATMENT IN A HOSPITAL IS PROPORTIONATE TO

THE COST OF TREATMENT: - TRUE

Everything comes for a price and to provide better service, a hospital is going to
charge its patients. Hence the quality is proportionate to the cost of treatment.

SWOT ANALYSIS

STRENGTHS:

a. Quality of doctors, nurse & staff

b. Medical facilities & equipments & infrastructure. (Ac room, phone lines
etc.)
c. Ambience & the general atmosphere of the hospital.
d. Attitude of the staff, even the menials.
e. Specialization
f. Low pricing in public hospitals due to government aid.

WEAKNESS:

a. The “ I DON’T CARE” attitude of the government hospitals.

b. Medicine & drugs fraud by the menials. Even organ selling by doctors to make
more money.
c. The patients are completely at the mercy of the doctors.

OPPORTUNITY:

a. More training of the staff for improving their behavior and medical knowledge.
b. To increase the facilities they provide.
c. To became more special in various fields.

THREATS:

a. The government is reducing the grants given to hospitals, thus making it

impossible to cater to the poor people.
b. The unions of the menials and even doctors, they can go on a strike, disrupting
the functioning of the entire health care unit.

LATEST INNOVATIONS

A hospital is a center for tertiary medical care, & India is home to some of the
largest hospitals in Asia. The latest treatment options should always be available at
these centers as a beacon to guide the entire medical community while providing
top-notch medical care to patients. Often a country’s medical prowess is judged by
the condition of its hospitals.

Here we will discuss in brief some of the latest developments in major hospitals
in India.
 Aromatherapy at Apollo.
 Biventricular pacing.
 Bone bank at AIIMS.
 Hospital administration.
 Medical records management.
 Oxygen under pressure treatment at Apollo.
 Waste management.
 Telemedicine.
 Virtual Hospitals

THE FUTURE IS BRIGHT

Health care industry is booming all over the world. In the U.S. it is already the
largest service sector and worldwide it is started to be a $ 4 trillion market by 2005.
The corporate hospitals will play a positive role in the health care sector by taking
the load off government hospitals, whose performance hasn’t been up to the mark.

In the last 5 years, approximately 750 mergers acquisition have taken place in
U.S.A hospitals major advantages of merging is more toward more integrated
health-care systems, that can achieve economies of scale, by combining capacity&
amalgamation of functions such as information technology, consultants, emergency
transport, database & research& development. But health care is primarily a local
market business & it very important to consider the following factors before going
in for mergers: -
1. Relative sizes of the hospitals.
2. Their geographical proximity.
3. Strength of ties individual hospitals & physicians.
4. Degree of unity in leadership structures of separate in

The key to success appears to be a strong orientation to performance as well as

standardization & integration work processes, functions, suppliers & investment
but not necessarily on a centralized basis for example, Apollo in Chennai,
Hyderabad & Delhi will be separated hospitals, post merger, but function will be
centralized.
More competition and therefore a more uniform pay structure there may be
improvement in both quality & quantity of healthcare available in India.
In India, telemedicine services are not very relevant as yet though with the
increasing use of Internet, information regarding health & medicines is being
increasingly exchanged.
Thus, the most important modes of trade of healthcare services in the short run
would be the category of service providers.

Scope of health care services

gymnasiums
 alternative medicine centers
spiritual cleansing centers. (like reiki, yoga etc)

RELATING CHARACTERSTICS OF SERVICES WITH HEALTH CARE.

The service industry has the following characteristics

Intangibility:

a) The marketer should visualize the product/service for the patient in case of
hospitals any visual of the hospital displaying the well-maintained interiors, the
high-tech equipments used for treatment would help to tangibles the product.
b) The association of a hospital with any well-known personality would help as a
good image building exercise. It would also give the customer a certain level of
confidence regarding the serviced provided in the hospital.
c) Physical Representation: Intangibility could also be overcome in case of
hospital through physical representation in the form of
1) Uniforms- the white uniforms of the Doctors and Nurses in every hospitals
2) Symbols- The Red Cross is the common logo with which people identify
hospitals.
3) Building- In case of hospitals the external appearance of the building or the
maintenance i.e. how well maintained it is.
4) Documentation- There are a number of hospitals, which have received ISO
9000certification. E.g. Apollo Hospital
5) Tie up with other well known hospitals (Wockhardt tie up with Havard heart
institute)
 Perishability: A service cannot be stored. So if the service is not consumed
immediately then it loses its value e.g. if a doctor does not reach his dispensary on
time or has his clinic locked for that particular day, he loses all his patients for that
day. A situation may also arise when the doctor may be unable to attend to some of
his patients due to a huge rush in such a case again the doctor could lose out on all
his patients. Same would be the situation faced by the hospitals. In such a case the
hospitals too may lose al the patients for that day.
Solution to the problem of perishability:
a) In such a situation the doctor can appoint an assistant who could cater to the
excess patients or he could have students trainee under him who, during their
course of training could also help his with the excess patients.
b) Peak time essential service: In a rush hour situation when there are too man
customers to attend to only essential services should be catered to part time
volunteers for national emergencies.
c) Patients can be asked to take prior appointments – so the demand can be
spread over the time.

Variability: It means that the quality of service provided to different people may
not be the same irrespective of the fact that the job carried out by them is the same
The service quality may differ because they may be from different backgrounds
having different aptitude, skills, attitude etc.

Solutions:
1) The internal customers or the fresh recruiters could be given training. They
could be given a chance to perform the small parts of an operation in order to gain
experience
2) The doctors could be given training and could be updated with all the latest
happenings in the medical field in regular intervals.
Training of external customers: e.g. Diabetic patients are trained to inject insulin on
their own.
Inseparability: For any service to take place it is necessary that both the service
provider and the customer be present in the location at the same time. E.g. an
operation cannot be conducted without the doctor’s presence. As a result a number
of patients due to geographical distances lose out on the opportunity to get
themselves treated from the very best surgeons and doctors.
Solutions;
1) Training of internal customer- Here one experienced person can provide
training to amateurs. E.g. A surgeon during an operation is surrounded by interns
watching the operation. They could also carry out some small parts of the
operation.
2) Innovational service- Psychiatrists have innovated group therapy where they
call in 10+ patients together to an oval conference table and encourage them to talk
about themselves and other ailments.
3) Video conferencing- Business conferences, consultancy and the Medical world
only recently have instructors for operation through video conferencing been
initiated but mostly video conferencing has been in the medical world as a
pedagogical tool
4) Medical camps can be arranged – similarly mobile hospitals can be used.

INFORMATION TECHNOLOGY (IT) SERVICE

INTRODUCTION
Information Technology (IT) is the industry which helps in spreading the
knowledge through the use of computers and other supporting equipments. The
term information technology includes computer and communication technology
along with other associated software’s.
In IT industry on demand side are the economic sectors and application of IT and
on the supply side are computer hardware, software, telecommunication equipment
and micro electronic based industries.
The IT revolution has opened up new possibilities of economic and social
transformation from which both the developing and developed countries can
potentially benefit. The IT sector is one of the fastest growing segments of Indian
industry. 60% is accounted for by software and remaining 40% by hardware. Again
software comprises the bulk of the export. Software export of Rs 36500 cr accounts
for 86% of total IT export. Hardware export of Rs 5,871 cr account for only 14%.
The growth of the sector has led to tremendous pay-off in terms of wealth creation
and generation of high quality employment. Advancements in IT have a profound
impact on the economy and the quality of human life.
The phrases information technology refers to the creation, gathering , processing ,
storage, and delivery of information, process and devices that make all this
possible. The tasks that are handled using information technology continue to
increases.

DEFINITION
Information technology means the use of hardware, software services and
supporting infrastructure to manage and deliver information using voice, data and
video.

EXAMPLES OF INFORMATION TECHNOLOGY:

1. Users of PCs and software.
2. Telephone, radio equipments and switches used for voice communication.
3. Traditional computer application that include data storage and program to
input, process and output the data.
4. Software and support for office automation system such as word processing
and spreadsheets as well as computers top run them.
5. Video conferencing equipment.
6. The state radio communication network.
7. computers and network system used by teachers, trainers and students for
educational purpose.

MAJORE ISSUES IN INFORMATION TECHNOLOGY

The working group set by the ministry of information technology has identified
four categories of issues in information technology.
1. Infrastructure and services.
2. Electronic governance.
3. Education
4. Mass campaign for it awareness

Infrastructure services:
It is desirable to improve the reach of the it services to the common man as various
forms of information delivery system such as radio, TV, Telephones, newspaper,
personal computers and internet have been developed into one unified system.

The following are the major issues to be dealt with.

(a) cost of access devices
(b) Installation cost
(c) Provision in large parts unviable
(d) Recognition of non-branded PCs
(e) Use of regional language
(f) Integration of services
(g) Availability of bandwith
(h) Procedural delay
(i) Availability of data circuits

Electronics governance
The use of IT, especially computers, is being encouraged in various departments of
central and states governmental, district administration, municipal services at block
/ panchayat level. The government and its varied agencies are the major services
providers in the country.
It is found the most of the application of IT in govt services have been confined to
back office computerization. The improvement in the quality of services has not
taken place in a reasonable way.
The aspect of e- governance needs to be altered and strengthened.

Education
Quite a good number of high quality jobs exist in the IT sector and therefore it is
necessary to train the required number of personnel to take advantage of these job
opportunities. There are two kinds of personnel needed. (a) for Hardware &(b) for
software.
For software the country needs educational institutions which can provide training
in the operation of computers to suit the needs of different vocation.

Mass campaign for IT awareness:

In India, largely a common man is not aware about the potentials and use of IT
technology in day to day life. A mass campaign should be launched to increase IT
awareness.
The ministry if information technology has set up a working group on IT for
masses. The working group has set a target of 100 Million internet connection by
the year 2008 and one million internet enabled it kiosks / cybercafeto be
established in the country.
Following are the recommendation of the committee.
(a) Established IT infrastructure in 60,000 schools over a period of five yrs.
(b) Results of public examination to be made available on internet.
(c) All the govt information to be on the net.
(d) State govt portals to help rural artisans and entrepreneurs.
(e) Launching mass awareness campaign through IT yatras & other programmes.
(f) Compulsory IT literacy for govt recruitment.
(g) No licenses and control for setting up IT infrstructure and services.
(h) Promote development of Indian language content over internet.
(i) Earn marking upto 5% budget for IT induction in govt dept
(j)
INFORMATION TECHNOLOGY – ENABLED SERVICES
IT enabled services or remote processing services are today being considered a
major growth market for the Indian software and services industry and are expected
to generate significant employment opportunities in the future.
Opportunities in major segments on IT – enabled services
Call centers / customer interaction services
Business process outsourcing
Insurance claims processing
Medical transcription
Legal databases
Digital content development
Online education
Data digitization
Payroll / HR services

Web services

ESSENCE AND FUTURE OF INFORMATION TECHNOLOGY

Information industry has pervaded a wide range if industries viz, manufacturing ,
education, defence, entertainment, trade , communication etc.
IT has integrated the world by use of internet. It is now possible to download
information from any particular part of the world after the introduction www.
Internet economy has become very powerful.
The IT industry has tremendous potential to generate foreign exchange earnings,
high quality employment and also contribute to the productivity. IT sector can
benefit from international boom ana also use it in domestic economy to achieve
higher level of efficiency.
The computers have penetrated the Indian market. At present we have 4% 1000. it
is expected to grow to 10% 1000 by the end of 2000.
The major part of the IT industry is in the private sector and it accounts for 76% of
its total production in electronic hardware. It reach to 86% by end of 2002.
Following are some recommendation.
(1) encouraging private software technology parks.
(2) Opening of net gateway access to private net services providers.
(3) Income tax exemption to software and service exports
(4) Zero excise and custom duty on IT software.
(5) Promoting e-commerce, center duty on IT software.
(6) Framing cyber laws.
(7) Financial package for buying computer.
(8) Networking of all universities and research institution.
(9) Earn marking 1%-3% budget for every ministry for IT application.

IT industry has a great future. The government should make adequate provision in
the form of subsidies or charge different fees to enabled poor students acquire
computer education.

HOTEL INDUSTRY

INTRODUCTION
The concept of hotel originated in the 6th century B.C. in the form of Inns. These
were run by couples and provided sleeping arrangements in big rooms, similar to
dormitories in the youth hostel. Hence the hotel industry has its roots in the past in
almost every country.
DEFINITION
According to welester :
“A building of institution providing lodging, meals & service for the people.”

According to “Chamber twentieth century dictionary.” says:

“It means a superior house for the accommodation of strangers”
CLASSIFICATION OF HOTELS

(A) Classification on the basis of nature:

1. Residential hotels
2. Commercial hotels
3. International hotels
4. Resort hotels
5. Floating hotels

(1)Residential hotels: Residential hotels are also called as the department hotels.
They charge rent on monthly, half-yearly or yearly basis. The accommodation may
be furnished or un-furnished. The hotels are generally found in big cities where no
meals are served to guests. Initially the residential hotels were developed in U.S.A..
The development of residential hotels are found in the western countries.

(2)Commercial hotels: Commercial type of hotels are meant for the people who
visit a place for business purpose & hence they are found at the commercial or
industrial centers. They focus their attentions to individual travel & are generally
run by owner. A number of commercial hotels receive the guests who are on
business tours.

(3)International hotels: These are modern luxurious hotels; classified on the basis
of international guidelines. These hotels are placed in various star categories.
Examples of international hotels are five star, four star; three star, two star& one
star. The international hotels are placed mostly owned by public companies where
management consisting board of directors is constituted for its control.

(4)Resort hotel: Resort hotels are meant for the holiday makers, tourists & for those
who need a change in the atmosphere mainly on health grounds. They are generally
located near the sea, mountain & other areas having a natural beauty & healthy
atmosphere. Entertainment and recreation facilities like tennis courts, swimming
pool, boating, self riding, golf course, in addition to restaurants & cafeterias,
lounges, conference rooms, entertainment etc have significant in resort hotel.
There are different types of resorts like summer resorts, winter resorts ,health
resorts & hill resorts.

5. Floating hotel:-
a) Floating hotels are located on water surface. Places like sea , lake rivers are
considered suitable for floating hotels.
b) They provide all facilities &services made available in a good hotel in India, the
house bound in Kashmir are supported to be floating hotels.

[B] Classification on the basis of standards and controls:-

1. Standards and controls
a. Approved hotels
b. Unapproved hotels

a.) Approved hotels:-

These are of international where the accommodations are available as per certain
criteria laid down by department of tourism. The approved hotels are officially
recognized &hence are reliable.

On the other hand unapproved hotels are not officially recognized. This doesn’t
mean that unapproved hotels do not maintain international standards. Even foreign
tourist stay in unapproved hotels.

The domestic or foreign tourists who are on official visits whose expenses are
borne by the governments, middle & low income group people bearing expenses
on their own account prefer unapproved hotels.

C. classification on the basis of star:-

The department of tourism has classified hotels under the star system into various
categories from one to five stars deluxe and heritage hotels

The department also classifies these hotels after every 3 years to see that the
requisites standards are maintained by them.

A] Users of hotel industry

1] Domestic
 Educationists
 Sportsmen
 Medical representatives
 Trade representative
 Officials
 Pilgrims
 Students

2] Foreign
 film stars
 cultural representative
 sportsmen
 Educationists
 Pilgrims
 Trade representative
 Political representative

Chains of Indian hotels

1. The Oberoi Chain
2. The Ashoka Chain
3. The Taj Group
4. The Ritz Chain
5. The Corporation Of India

CHARACTERISTICS OF HOTEL INDUSTRY

The industry’s ups and down reflect, in part, the limiting characteristics inherent in
hotel keeping.

Perishability

If the full capacities of the services are not utilized, the service becomes perishable.
If a hotel having an accommodation facility of 100 rooms is able to lease out only
70 rooms a particulars day, then the remaining 30 rooms or 30% capacity gets
perished a can never be reversed. The product is perishable a room not sold tonight
is lost forever. Hoteliers hence give off season rates, do contract bookings with
large tour operators etc. They also try to do maintenance/ room renovation during
non-peak seasons.

Variability

The service provider must find ways to reduce the perceived risk due to variability
- one method is to design services to be as uniform as possible – by training
personnel to follow closely defined procedures, or by automating as many aspects
of the services as possible. The hotel industry’s ability lies in their spontaneity and
flexibility to address individual customer needs. The danger with too much
standardization is that of loosing customization and hence reducing much of their
appeal. A second way to deal with perceived risk from variability is to provide
satisfaction guarantees or other assurances that the customer will not be stuck with
a bad result.

Inseparability:
This characteristic is interpreted differently by different service marketing
marketers, but all interpretations point out that special operation problems exist for
the firm's managers. One interpretation of this term is the inseparability of
customers from the service delivery process. In particular, many services require
the participation of the customer in the production process. Unlike goods, which
are often produced in a location far from the customer and totally under the control
of the manufacturing firm, service production often requires the presence and
active participation of the customer - and of other customers. Depending upon the
skill, attitude, cooperation and so on that customers bring to the service encounter,
the results can be good or bad, but in any event are hard to standardize.
In hotel industry, the customer has to go to the service provider in order to avail the
service. He cannot use the services just by sitting at his residence. Thus hotel
industry is an inseparable service.
Intangibility:

Intangible services are difficult to sell because they cannot be produced and
displayed ahead of time. They are therefore harder to communicate to prospective
customers. Marketers of services can reduce these risks by stressing tangible cues
that will convey reassurance and quality to the prospective customers. These
tangible cues range from the firm's physical facilities to the appearance and
demeanor of its staff to the letterhead on its stationery to its logo.
Thus the industry has to provide these tangible cues.

Swot analysis (four hotel industries)

Strengths

Land is the single largest cost item in the construction of a hotel in India. Moreover
it is very difficult to find vacant land in cities such as Mumbai and Delhi
companies operating in these two cities are therefore relatively protected.

Weaknesses

In the short term the outlook for the industry appears bleak due to a significant
oversupply and weak socio – economic conditions
Tourist arrivals have also seen a marginal decline due to devaluation of the Asian
currencies, which have made these countries cheaper than India. The next two –
three years is not expected to provide any succor to hotel industry due to the
overall recession in India an Asia. This has resulted in most five star hotel operated
at very low occupancy rates. They have been forced to offer discount on the rack
rates.

Opportunities

In the long term the hotel industry is India has latent potential for growth. This is
because India is an ideal destination for tourists as it is the only country with the
most diverse topography. At present India attracts approximately 2.5 million
tourists every year which is just 0.4% of the world tourist arrivals. In fact it is the
2nd largest foreign exchange earner after textiles and garments. Infrastructure
facilities have been improved; travel facilities with an increase in flight seat
capacity, expansion in rail and road network will commensurately increase the
industry prospects. Moreover the existing player have a definite edge as they enjoy
a strong brand equity chain hotels such as Taj and Oberio are better equipped to
cater to the tourists commercial in the tourist circuit
Threats

Chains of hotels like IHCL, EIH, and ITCH are better placed than single location
hotel like BHL, AHL. Though the latter have hotels at strategic location (Mumbai
and Delhi) they risk associated with single location hotel is always higher. As there
was hereto not much competition, the big five hotel majors were able to unabatedly
increase their rooms’ tariffs. Moreover, with the major international hotel chains
having evinced interest in setting up hotel, there is bound to be price war.

Market segmentation in hotel industry

There are different variables for market segmentation and the marketer has to look
from the micro as well as the macro level. The federation of hotel and restaurant
association of India has divided the country into four geographic regions viz.
northern region covering UP, Rajasthan, Delhi, and other northern states. Calcutta
region covering Orissa, West Bengal and other eastern territories, western region
covering Maharashtra, Gujarat, MP and Goa, Diu and Daman and southern region
covering Andhra Pradesh, Karnataka, Tamil Nadu, Kerala and the union territory
of Pondichery.
The region wise segmentation makes it convenient to satisfy the customers. The
guests expectations are minutely studied and while offering service to them it is
convenient to identify their preferences.

Earnings Sensitivity Factors

Profitability in the hotel Industry is dependent on many factors; a few salient ones
are listed below:
Tourism:
This is the primary factor for the hotel industry. India has great potential of
becoming a major stop for tourists. However, lack of infrastructure has kept the
foreign tourist at bay. The government has been actively participating in
propagating India as an oasis for global travellers. India has always conjured up a
fascinating image in the mind of foreign tourists. India has an advantage of having
diverse cultures, languages and religions, which makes it an exciting tourist
destination for people all over the world.

Business factor:
Liberalization has brought home a new class of MNCs, which has increased the
number of corporate travellers visiting India. Other than metros, developing cities
have also come into the limelight and hence there has been an increase in demand
for hotels in various places. This trend has enthused many hoteliers to set up
corporate hotels. This class of business travellers has reduced their dependence on
seasonal tourism. The industry is again headed for a hit, with the attacks on the
world's largest financial centre in the US.
Room occupancy:
The ARR and occupancy are the other critical factors that determine profitability.
These, in turn, depend on the location, star rating, amenities and quality of service.
The occupancy of Indian hotels and the ARR has been on the decline for the past
three to four years due to the turbulent socio-political environment in the nation
and also because of the East Asian economic crisis. However, the hotel industry
reported impressive earnings and revenue growth for the year ended March 2001.

Seasonality:
India being a tropical nation witnesses an inflow of leisure tourists, mainly during
the winter months of October to March. Hence the hotel industry has a better
second half. In the first half of the year, local tourists prefer April to May and
October in the second half due to summer and Diwali vacations respectively. Other
months being off-season periods, many hotels offer heavy discounts on room tariff
to ensure repeat customers such as corporates, airline crewmembers and tour
groups.

Political scenario:
In the past few years, the hotel industry has been going through a lean phase. Room
occupancy has been on a decline, mainly due to a steep fall in both business and
tourist arrivals. Though the exorbitant rates of five-star hotels as compared to the
quality of services provided is one of the factors for the decline, the fluid political
environment has also had a negative impact and foiled the dreams of the Indian
hotel industry.

Tax structure:
This industry is one of the heavily taxed sectors of India. State governments have
levied various taxes like expenditure tax, luxury tax and sales tax. This is apart
from the income tax levied by the central government. These taxes are as high as
30 per cent in cities like Chennai, while other Asian countries have a tax structure
of 4 to 5 per cent. As a result, Indian hotels are more expensive than their Asian
counterparts.

Industry bottlenecks:
Progress of the industry is held hostage to various bottlenecks existing within the
industry like high variable costs. The hotel industry is reeling under high variable
expenses. A high wage bill, maintenance costs and overhead expenses mark the
industry. Domestic hotel chains have a high man-room ratio as compared to their
overseas counterpart.

Total Product Concept

CORE PRODUCT
At the very center is the core product which satisfies the basic need of the
consumer. The core product in the hotel industry is ACCOMODATION. The role
of Hotel International is to provide basic accommodation facilities. Like a bed for
the night and a room with a bathroom.
FORMAL PRODUCT
When consumer’s expectations grows synchronized with increased competition,
the marketer offers some tangibility to the existing core product, that is, some more
features. Consumers prefer to pay more for these additions and the marketers have
more to offer than the competition.
Hotel International has to provide some additional features like:
Hygiene: It comes next to the basic function of accommodation. Hygiene plays a
very important role in the status of a hotel. An unhygienic hotel will never be able
to attract lot of people, especially if it has to attract a lot of people from foreign
countries where the hygiene conditions are top notch.
Room Service: When people go to hotels, they would expect good and prompt
room service. This means, when they order food or ask for any service, a hotel that
provides it promptly will have a great edge over the other hotels.
Price: The price of the rooms should be such that both the rich and the middle class
people can afford them. Not everyone can afford a very expensive room and also
not everyone will like to stay in a room that does not have some luxurious
facilities.
Etiquettes: The people who come in contact with the customers, that is, the
reception people, room service people, and waiters, all have to be trained well to
behave in a manner that pleases the customer. They should be civilized, cultured
and polite.
Laundry services
Food and Wine:The food should be of good quality and should be prepared in
hygienic conditions.
AUGMENTED PRODUCTS
With further higher expectations of the customer- again synchronized with intense
competition- marketers offer more and more intangible features. All the extra
things provided are service oriented.

ADD 8 Ps from Romeo Mascarenhas

Differential pricing:
Hotels in India typically offer discounts on published room tariffs to many clients.
As a result, though the occupancy rate of these hotels increases, the ARR does not
increase proportionally. However, the magnitude of discounts varies depending on
the nature of the client location and size of the hotel. Furthermore, in the dual tariff
rate system, there is a domestic currency rate for local travellers and a dollar rate
applying to foreign travellers. Hence there is need of a common yardstick for tariff
rates

TOURISM
Definition
Tourism is a temporary, short-term movement of people to destinations outside the
places where they normally live and work. It involves travels and stay for
temporary period to a place distant from the residence ranging from weekend to a
few weeks or months.
Introduction:
Who is Tourist ?
Tourist is a temporary visitor to a country other than the one, which he usually
resides for any reason other than following an occupation remunerated within the
country visited.
The temporary period should not be less than 24 hours. There is a considerable
cross border day traffic amongst many groups of neighboring countries. Such
visitors are defined as Excursionist.
The Tourism Industry
The tourism industry comprises of the following main and distinctive sectors:
 Transportation
 Accommodation
 Tour operators
 Tourism Destination Operators/ Destination Management
FORMS OF TOURISM
Tourism is a generic term, which includes several types of travel and stay
depending upon the motivations that impel people to move from place to another.
The main purpose of travel is to determine the form of tourism. Following are the
forms of tourism.
a. Domestic tourism/ Internal Tourism
b. International tourism/ External tourism
c. Holiday tourism-It has many forms. They are as follows.
 Recreational tourism
 Health tourism
 Sports tourism
 Cultural tourism
d. Business travel –
e. Common interest tourism - It includes visitors who travel for specific
purpose and objectives other than that of holiday and business. The return of
people to the country of their origin labeled as Ethnic Tourism also falls in this
category
Some Concepts :
Time Sharing
Vacation property ownership without the up-front cost of owning a property year
round, you pay for the time you use. You may use your home resort every year or
trade to thousands of other affiliated resorts worldwide.
The time-share market, across the globe, is approximately USD 6 billion industry
at present and is growing at an average rate of 20 percent every year.
There are only 45,000 – 50,000 timeshare owners in India registered with the RCI.
Reputed companies like Marriot, Hyatt, and Radisson etc are venturing into the
time-share business.
Pilgrimage Tourism- It involves visiting various places of worship. Today more
than 50% of the 9.2 million domestic tourists travel to such places. In 1998 more
than 95 lakh people assembled at the Kumbh Mela, the largest and the last of its
kind in the 20th century.
Beach tourism
India with its coastline of 7500 kms, offers some of the most exotic beach holidays
in the world. India boasts of many beaches of Goa, Kovalam and Gopalpur. On the
west coast, Lakshadweep offers a chain of coral islands and perfect beaches to the
tourists. On the other hand, Orissa offers its ample golden and sunny beaches to the
tourists. At the tip of the Indian mainland we have Kanyakumari.

Adventure tourism
India’s vast geographical diversity provides a vast potential for adventure tourism
and also the prices here are very low. Travel agents offer packages for individuals
and groups. Mountaineering, trekking, etc are some of the possibilities. There are
sports like skiing, scuba driving, angling, wild life and bird watching, etc.
Features Of Tourism Product Are As Follows:
 Each component of tourism is highly specialized and together makes the final
product and cannot be provided by single enterprise.
 Sales intermediaries like tour operators, travel agent and hotel brokers play a
dominant role.
 Demand for tourism is highly unstable due to seasonal, economic, and political
factors.

MARKETING MIX.

PRODUCT.
The panoramic view of the location, travel to the destination, the accommodation
and
facility as well as entertainment at the destination all forms the tourism product.
 Components Of Tourist Product.
WITH RESPECT TO THE
BENEFIT MEANING TRAVEL AND TOURISM
INDUSTRY
The fundamental benefit or Traveling
1. CORE
service that the customer is
BENEFIT
buying
2 BASIC Ticketing, hotel reservation
Basic, functional attributes
PRODUCT
3 Customer friendliness, good
Set of attributes/conditions the
EXPECTED food
buyer normally expects
PRODUCT
4 Prompt services, comfortable
AUGMENT That meets the customers desires and convenient trip, spectacular
ED beyond expectations sights, music
PRODUCT
5 Totally customized tour
POTENTIA The possible evolution to packages, A grade service at
L distinguish the offer every stage
PRODUCT
Transportation.

Without the transportation facility the attraction is of no use. The infrastructure and
equipment are the components of transportation
Apart from the various components of tourist product, there are three levels of
service package for tourist products and they are as follows:
Core product: comprises of essential need or benefit sought by customer. For e.g.:
relaxation, fun, self-fulfillment etc.
Tangible product: comprises of the formal offer the product as set out in the
brochure. For e.g.: inclusion of breakfast, facilities like television, swimming pool
etc.
Augmented product: it expresses the idea of value added over and above the formal
offer. For e.g.: free entrance tickets to local attractions, complimentary bottle of
wine on arrival.
All these components help in identifying the images and perceptions of the tourist
products as well as tourist organizations.
PRICE.
The objective of pricing is to fetch a target market share, to prevent competition,
and to take care of the price elasticity of demand.
Methods Of Pricing In Tourism Industry.
Cost based pricing: the price charged must be sufficient to cover fixed and variable
cost to have a reasonable return on investment. Organization resort to price fixation
at marginal cost to attract more customers.
Demand based pricing: refers to balancing costs and revenues. This pricing will
suit to the seasonal characteristics as at peak times many leisure facilities have
excess demand so firms use high price as tactic.
Competition based pricing: in case of new tourism product, if the strategic
objective is market penetration, then prices must be set very competitive to attract
more customers. In case of niche strategy, the price should portray this aspect
complimented with additional benefits of the service offer.
PROMOTION.
The promotion mix plays a vital role as the users of service feel a high degree of
involvement and uncertainty about the product and their role in the buying process.
The important aspects of promotion are advertising, publicity, sales support and
public relations. Advertising the messages attractively and sales promotion
activities in tourism can be effective when supplemented by publicity and personal
selling. The word-of-mouth promotion is an important tool in tourism marketing.
Apart from that, incentives to be given for a short period of time like price cuts,
discounts, free gifts etc. and circulating brochures to the customers are also an
important tool in tourism marketing.
PLACE
In most of the cases the tourist destinations may be natural, historical attractions.
But, infrastructural facilities, transportation, communication are important for the
development of a tourist center. Place or distribution management is concerned
with two things – availability and accessibility.
 To extend the number of sale or access, away from the location at which
services are performed or delivered.
 To facilitate the purchase of service in advance.
 Different distribution strategies may be selected to reflect the company’s overall
objectives. The tourist products are bought by the travel agent or tour operator.
However, the late
 Best mode of reaching the tourist is through internet. Ticket booking can be
done through the internet and payment is made with credit card.
People.
We can’t deny the fact that sophisticated technologies have been successful in
accelerating the pace of development. We also agree with this view that new
generation of information technologies have simplified the task of decision makers.
At the same time we also have to accept the fact that the sophisticated technologies
can’t deliver goods to the development process if the employees operating and
maintaining these technologies are not of world class. Technologies need due
support of human resources who invent, innovate and develop technologies. Like
other industries, the tourism industry depends substantially on management of
human resources. The tourism industry is an amalgam of the services of a lot of
people and hence this industry cannot work efficiently if the travel agents, tour
operators and travel guides lack world class professional excellence. Of course the
office of travel agents depends on the new technology but after all employees and
the other staff contribute significantly to the process. The travel guides need
professional excellence since the projection of a positive image regarding a
destination in particular requires their due cooperation, failing which even the
world class services offered by the travel agents are found meaningless. The tour
operators also need to manage human resources efficiently.
In the management of people, the related organizations are required to think in
favour of developing an ongoing training program so that we find a close relation
between the development of technologies and the quality of personnel who are
supposed to operate and maintain the same. They need a lot of credentials to fulfill
the expectations of the customers. The organization has to make the environmental
conditions conducive and focus has to be laid on the incentives to the employees
for energizing the process of performance orientation. Employee orientation
requires due weightage to efficiency generation, value-orientation and perfection.
In the tourism industry the travel agents and the travel guides are the two most
important people who speak a lot about the industry. Hence it is imperative that
they have to be at their best at all times. Travel guides especially, are expected to
have a lot of patience, good sense of humor, tact to transform the occasional
tourists into habitual ones, thorough knowledge of the places, linguistic skills etc.
PROCESS.
The operation process of the tourism firm will depend on the size of the tourist
firm. The steps involved in the delivery of the tourist product are as follows:
 Provision of travel information- refers to information regarding the travel is
provided at a convenient location where the tourist seeks clarifications about his
proposed tour.
 Preparation of itineraries- it is composition of series of operations that are
required to plan a tour
 Liaison with providers of services-contracts have to be entered with the
providers of services like transportation companies, hotel accommodation etc.,
before any form of travel is sold to a customer.
 Planning and costing tours- the task of planning and costing the tour will depend
on the tour selected as well as individual requirements.
New concepts in Tourism Industry:
Eco Tourism:
Eco Tourism is an enlightening travels experience that contributes to the
conservation of the eco system while respecting the integrity of the host
communities.
PRODUCTIVITIY /QUALITY
Productivity in services refers to how you transform the inputs into outputs, which
are valued by the customer. Quality refers to the degree to which the service
satisfies the customer by meeting their wants and expectations. Productivity and
quality need to be omnipresent for the industry to complete its service obligations
aptly. Only if your firm is productive and the quality meets the requirements of the
customers can your performance be graded as excellent.
Here are five key things to consider when developing the performance strategy for
your business.
 Have you found a way to fit marketing into your schedule?
 Do you keep track of both your long and short-term projects (including
marketing projects), and review that list daily?
 Do you have a way of combating procrastination and delay?
 Do you maintain the highest standards of integrity and excellence?
 Are you continually working to improve your skills in all areas of your
business?
PROMOTION
Includes advertising, publicity, Sales, public relations etc.
Creation of awareness has a far-reaching impact. The tourist organizations bear the
responsibility of informing, persuading and sensing the potential tourists in a right
fashion. The marketers need to use the various components of promotion optimally
so that they succeed in increasing the number of habitual users. Promotion helps in
maximizing the duration of stay, frequency of visit by offering new tourist products
in the same country to areas, which hitherto have remained untapped or partially
tapped. The various dimensions of tourism promotion are as follows:
Advertising: Advertisement helps in furnishing important information to the actual
and potential tourists. Its coverage is wide. Advertising is aimed at the public to
create awareness of the travel offers available on a resort and its attractions to
influence their business decisions. Intangibility can be compensated with the help
of visual exposure of scenes and events. We can project hotel bedrooms, well-
arranged restaurants and cafeterias, swimming pools etc.
Publicity: It focuses attention on strengthening the public relations measures by
developing a rapport with media people and getting their personalized support in
publicizing the business. It helps in projecting the positive image of tourist
organizations since the prospects trust on the news items publicized by the media
people. Eg. Kumarakom in Kerala after Prime Minister A B Vajpayee’s visit. The
publicity programme include regular publicity stories and photographs to the
newspapers, travel editors, contact with magazines on stories etc. There are
different groups in publicity, such as advertising publicity, projected publicity,
structural publicity and personal publicity.
Sales promotions: Sales promotion measures are the short term activities seeking to
boost sales at peak demand periods to ensure that the firms obtain its market share
and are used to help launch a new product or support an ailing or modified one.
The tool of sales promotions is designed to appeal particularly to those customers
who are price-sensitive. There are a number of techniques to promote sale and the
tourist professional need to use them in the face of their requirements vis-à-vis the
emerging trends in the business. Eg. In the tourism industry, a travel company
offers give-always to their clients, such as flight bags, wallets for tickets and Forex
and covers of passport. The hotels offer a number of facilities like shoe shine
clothes, first aid sewing kits, shower caps and shampoo. Further, the VIP clients
also get fruits and flowers in their rooms.
Thomas Cook offered 3 tier sales promotion based on price and one more novel
technique as detailed below:
• Cook agreed to match the price of any holiday they sold which was known as
price promise.
• Money back guarantee to the clients who purchase the product or any tour
operator known as trading charter.
• Matching of customers need with a particular holiday known as formal
guarantee.
• A business travel challenge in which the details of expenditure on staff business
travel booked through other agents over a 3 months period were submitted by
companies to Cook, specially to calculate expected savings, provided the bookings
are made through them.
Word-of-mouth Promotion: Most communication about tourism takes place by
word-of-mouth information, which in a true sense is word-of-recommendation. In
the tourism industry it is found that the word-of-mouth promoters play the role of a
hidden sales force, which instrumentalize the process of selling. The high
magnitude of effectiveness of this tool of promotion is due to high credibility of the
channel, especially in the eyes of the potential tourists. The sensitivity of this tool
makes it clear that tourist organizations need to concentrate on the quality of
services they promise and offer. The marketers or the tourist organizations need to
keep their eyes open, identify the vocal persons or the opinion leaders and take a
special care of them so that they keep on moving the process of stimulating and
creating demand.
Personal Selling: Personal Selling is based on the personal skill of an individual.
The oral representation in conversation bears the efficacy of transforming the
motivation into persuasion. The travel and hotel business depend considerably on
the personal selling. The development of travel and tourism has been possible due
to well-educated and trained sales personnel. The development of tourism business
has been influenced by the services rendered by the travel agents and travel guides
since they work as information carriers. Personal selling is the personal
presentation of a tangible product or intangible services or ideas to the personal
customers. It is important to mention that in the tourism industry, the personnel
who attend tourists form an essential ingredient of the product, such as sales
personnel are found responsible for dealing with customers behind the counter, the
resort representatives cater to the need of tourists when they reach the destination
etc. all of them play a vital role in ensuring that the tourism products satisfy the
tourists. The phrase- the customer is always right applies specifically to the tourism
industry. No reduction in price would compensate for impolite and indecent travel
guide, a solvent waiter and a surly or a haughty coach driver. These facts are
testimony to the proposition that the travel business is linked with the performance
and behaviour of sales personnel or travel staff.
Telemarketing: it is a method of selling in which a professionally sound
telemarketer expands the business. The quality of technology and the
communicative ability of the telemarketers determine the magnitude of success of
this component. In tourism, the travel agents, offices of airways, receptionist, and
secretaries can’t work efficiently if the telephonic services are not up to the mark.
This makes a strong advocacy in favour of recruiting a person considered to be
professionally sound, personally committed sales personnel having an in-built
creativity, innovation and imagination.

PHYSICAL EVIDENCE
Broachers, Travel mementos etc.
Major players in tourism industry:
These players can be divided into 2
1. The ones, which take the local residents out of the country
2. The others, which get the foreigners into the country.
For eg: SOTC
SOTC floated a new package called “Brahman Mandal” aimed at Marathi speaking
population and “Vishwa Darpan” aimed at Hindi speaking population of the
country. This kind of segmentation will enable the companies to target effectively
to boost their revenues. Infact, SOTC business improved substantially in Mumbai
& Pune circles after the announcement of these separate packages.
Factors affecting tourism industry:
1. Cross border terrorism in Jammu & Kashmir
2. Terrorist Attack in April 1999
3. 11th September Attack on US
4. Gujarat riots
SWOT Analysis:
Strengths:
India a culmination of deserts, forests, mountains, beaches& it has a diversity of
culture i.e. a blend of various civilizations & their traditions, a number of
archeological sites & historical monuments.
Weaknesses:
Lack of adequate infrastructure & improper marketing of Indian tourism abroad.
Opportunities:
Growth of domestic tourism and special packages offered.
For eg: Thomas Cook says “Travel Now Pay Latter.” Affordable traveling at
leisure, plenty of job opportunities.
Threats:
Economic conditions and political turmoil in other countries affects tourism.
Aggressive strategies adopted by other countries like Australia, Singapore, in
promoting tourism.
Current scenario:
Growth in domestic tourism in the country during the last one-decade 146 million
tourist visits in 2000.
Tourism provides enormous opportunities for employment generation. 9.3 million
in India for every 10 lakh invested in hotels/restaurants.
Future scenario:
The industry body, Confederation Of The Indian Industry (CII) has a vision for
tourism in India called “Tourism Vision 2020” CII expects to host 40 million
tourists by then & the tourism economy contributing Rs.1tn.
Problems:
1. Lack of Infrastructural facilities.
2. Lack of reasonable priced accommodation.
3. Tax burden for industry leaders. For eg: for every $ spent in India by a tourist he
pays as much as 27% in taxes on average with figures going upto 35% in states
such as West Bengal, but for other major global destinations the tax burden is only
in the range of 4-8%
4. Along with expenditure tax, tourist has to pay service tax, sales tax, and luxury
tax.
PEST Analysis of the Industry:

Environmental influences can be analysed by using the PEST analysis.

Political/Legal
Political factors are the main driving force of the industry. Govt. support & co-
operation to Indian Tourism Industry, railways and roads, hotel industry, airline
industry, tourist operators. Downfall of tourism industry because of unconducive
political environment eg Kashmir,
Legal:

Law is different for different country & is the major determinant for the industry.
“Tax paid by tourists in India is the highest in the world. Indian hotels charge about
40% tax compared to other Asian countries where it varies between 3% and 6%".
Economic:

The criteria here is the more the people spend the more the industry grows. As we
are concentrating on the International tourists, this has led to the tourism boom.
Increase in spend has led to increase in the number of luxury hotels, & increase in
air industry.
Social:

The general perception for tourism destruction of the social fabric of a place. The
more the tourists coming at the place the more the risk of that place loosing its
identity.
Technology:

1. Better technology in cheaper cost to remote and inaccessible area.

2. It can help the country to get connected to the world.
3. It is very much necessary to have better technology to have that place on
world tourist map.
4. Frequent flights.
Various innovations in the tourism
 Euro rail : Euro rail International is one of North America’s leading sources for
European rail. The main feature is that it has a concept wherein a passenger can
buy a single ticket and travel all over Europe without any stoppages as this railway
line covers the entire Europe almost up to Russia.
 Palace on wheels : This concept is very much prevalent in the state of
Rajasthan where people come to experience the historical palace, and royal way of
living. in this every thing is made available in the coaches of train so as to make the
trip exciting.
 Ring route : this is one plan in mass rapid transit system, which is being
developed in thane district to make transportation better. It will be 16.2 Km long.
This will help the commercial as well as the industrial sector. It will transport more
economical, efficient and environment friendly.
 Cruise liners : in this era people try different forms of travel cruise is one such,
in India many cruise liners have come to existence like star, Virgo etc. and every
Childs dream Disney cruise.
 Safari : exploration of lesser-known area. Tourists are more attracted towards it
as this gives them adventure. Safari is generally via road. There is some destination
where one has to go by foot long distance.
POTENTIAL FOR GROWTH OF TOURISM
Although India is at the lowest ebb in international tourism (only 0.34% of global
tourist traffic), there are several distinguishing features that would help in
achieving its set goal. Some of these are given below:
1] The rate of growth in tourist traffic to India has been greater than the global
average.
2] The average duration of stay of foreign tourist in India is one of the highest in
the world. On an average, it exceeds 27 days in the case of non-package tourist and
is 14 days in the case of package tourist.
3] The major share of the international visitors emanates from West Europe and
North America.
4] The tourists on package tours spend nearly 65 per cent of their expenditure on
shopping.
5] There is high degree of seasonality in the foreign tourist traffic.
6] The hotels and tourism related industry has been declared as a "High Priority
Industry" for development.

TYPES OF CUSTOMERS & SEGMENTATION

Users Of Tourism Services
The users of tourism services can be categorized in a number of ways.
One such way of classifying the users is by dividing them into categories such as
General, Sex, Region, Education, etc.
 General: Domestic, Foreign Kids, Teens, Youths, Seniors Students,
Executives, Artists Politicians, Movie stars
 Sex: Men, Women
 Region: Rural, Urban
 Education: Literate, Illiterate
 Status: Rich, Poor
 Profession: Executives, Academics, Sportsmen, Artists
 Occupation: White collar, Blue collar
Another method of classifying users of tourism services is on the basis of the
frequency of usage of services.
 Non-users: They lack the willingness, desire and ability (income & leisure time).
 Potential Users: They have the willingness but the marketing resources have not
been used optimally to influence their impulse.
 Actual Users: They are already using the services generated by the tourist
organizations
 Occasional Users: They have not formed the habit of traveling
 Habitual Travelers: They have formed a habit and avail of the services regularly.
Need For Segmentation
Consumer behavior can be defined in psychological terms as the whole range of
the generation of wants and their transformation into buying or using decisions.
Users have values, perceptions, preferences and expectations, which are the result
of environmental influences. There are a number of factors that influence the
behavioral profile of consumers. In recent years, the users have become more
discriminating in their using habits and therefore their needs for different services,
products and brands change constantly. This makes it essential that the marketers
analyze their behavioral profile and undertake segmentation so that they know the
level of expectations.
In a nutshell, tourist organizations need to undertake segmentation in order to
simplify their task of creating and stimulating demand. In this way they can
identify the potential tourists, transform them into actual tourists and further into
habitual tourists.
Segmentation
Though there are a number of bases for segmentation of tourists, one of the most
important is Lifestyle. Traveling decisions are fantastically influenced by changing
lifestyles. They are also affected by other factors such as level of income,
availability of leisure time, etc.
Such segmentation is useful when deciding the offerings to target a particular
segment. For example:

♠ The mass market consists of vacationists that travel in large groups and prefer
all-inclusive tours. They are generally conservative.
♠ The popular market consists of smaller groups going on inclusive or semi-
inclusive tours. This group includes pensioners and retired people.
♠ The individual market consists of chairmen, senior executives, etc.
♠ As the lifestyle changes, consumption of services might change. For
example, a newly married couple might prefer romantic holidays, but once
they have children they would prefer family vacations where there are plenty
of activities to entertain kids.

♠ Teens and youth might prefer adventure holidays whereas senior citizens would
probably prefer more relaxing vacations.

T CONCEPT
Unique Characteristics Of The Tourism Industry
 Inflexibility: The tourism industry is highly inflexible in terms of capacity. The
number of beds in a hotel or seats on an airplane is fixed so it is not possible to
meet sudden upsurges in demand. Similarly, restaurant tables, hotel beds and
airplane seats remain empty and unused in periods of low demand. The seasonal
nature of tourism activity exacerbates this problem. Offering attractive and
discounted prices is strategy to overcome this problem.
 Perishability: Tourism services are highly perishable. An unused hotel bed or
an empty airplane seat represents an immediate loss of that service as a means of
earning profit. This has an impact on overall industry profitability.
 Fixed location: Tourism destinations are fixed locations so effort must be
concentrated in communicating the facility to the potential consumer. A consumer
can conveniently watch a Hollywood movie at the local cinema but has to be
persuaded to travel to India to see the Taj Mahal.
 Relatively Large Financial Investment: Every modern tourist establishment and
facility requires large investment, frequently over a long time scale. This means
that the level of risk and the rate of return are critically important to tourism
management.
 Tourism Services are high contact services, as people interact with people at
virtually EVERY stage of the way. Tourism services are very people-oriented
services, and the service people are plenty and have high contact with the
consumers. The consumer interacts with a myriad of service people starting from
when he books his ticket and throughout the course of his holiday.

INTRODUCTION

Housing is closely connected with the physical quality of the life and it is one of
the community. Therefore provision of better housing facilities is an important
objective of the development efforts.
Housing assumes significance in the overall socioeconomic development because
its stimulate economic activity and employment. However, the growth of the
housing sector as been consistently hampered by the lack of financial resources,
high land prices, cost escalation in the prices of the raw material etc.
The growth of urban population, rapid industrialization and regional development
are the factors aggravating the housing problem in the towns and cities in
Maharashtra .The total requirement dwelling units is calculating on the basis of
criteria adopted by the national building organization. Efforts to solve the problems
of the housing to some extend are been made under the programmes drawn up by
the government.
It is the responsibility of the state government to formulate and implement the
housing the programmes.
The central Government helps the state governments in their efforts.

HOUSING FINANCE

Over the years, the government has supported housing industry and encourages
individual home ownership but providing various fiscal incentives in the union
budget. In addition, various exemptions and measures have been taken by the
government to make housing more affordable. The robust growth in the demand
for housing finance in recent years has been remarkable. Lower interest rates,
higher disposable incomes, tax incentives massive competition by providers of
housing finance has helped consumers considerably. The primary market for
housing finance has now matured.
Housing finance as a financial intermediation process commenced only in
1978,with the establishment of Housing Development Finance Cooperation
(HDFC) as specialized lender to households and corporate entities specifically for
housing purpose. State housing boards like MHADA, MSRDC add PWD were
introduced further for promotion of housing industry.
The implementation of housing finance policies pre-supposes efficient institutional
arrangements. Although there were a large numbers of agencies providing direct
finance to individuals for house constructions, there was no well-established
finance systems till mid-80's in as much as it had not been integrated with the main
financial system of the country.

NATIONAL HOUSING BANK (NHB)

The National Housing Bank (NHB) was established on 9th July 1988 under an Act
of the Parliament viz. the National Housing Bank Act, 1987 to function as a
principal agency to promote Housing Finance Institutions and to provide financial
and other support to such institutions. The Act, inter alias, empowers NHB to:
» Issue directions to housing finance institutions to ensure their growth on sound
lines
» Make loans and advances and render any other form of financial assistance to
scheduled banks and housing finance institutions or to any authority established by
or under any Central, State or Provincial Act and engaged in slum improvement
and
» Formulate schemes for the purpose of mobilization of resources and extension
of credit for housing

OBJECTIVES OF NHB: -
NHB has been established to achieve, inter alias, the following objectives:
a. To promote a sound, healthy, viable and cost effective housing finance system
to cater to all segments of the population and to integrate the housing finance
system with the overall financial system.

b. To promote a network of dedicated housing finance institutions to adequately

serve various regions and different income groups.

c. To augment resources for the sector and canalize them for housing.

d. To make housing credit more affordable.

e. To regulate the activities of housing finance companies based on regulatory and

 supervisory authority derived under the Act.

f. To encourage augmentation of supply of build able land and also building

materials for housing and to upgrade the housing stock in the country.

g. To encourage public agencies to emerge as facilitators and suppliers of serviced

land, for housing.

HOUSING AND URBAN DEVELOPMENT CORPORATION (HUDCO):

Incorporated on 25th April 1970, HUDCO was an expression of the concern of

the Central Government in regard to the deteriorating housing conditions in the
country and a desire to assist various agencies in dealing with it in a positive
manner.
The principal mandate of HUDCO was to ameliorate the housing conditions of
all groups and with a thrust to meet the needs of the low-income group (LIG) and
economically weaker sections (EWS).
OBJECTIVES OF HUDCO: -
· To provide long-term finance for construction of houses for residential
purposes in urban and rural areas and finance or undertake Housing and Urban
infrastructure development programmes in the country.
· To finance or undertake, wholly or partly, the setting up of the new or satellite
towns.
· To subscribe to the debentures and bonds issued by the state Housing and
Urban Development Boards, Improvement Trusts, and Development Authorities
etc. especially for the purpose of Housing and Urban Development programmes.
· To finance or undertake the setting up of industrial enterprise for building
material.
· To administer the monies received, from time to time, from the Government of
India and other sources as grants or otherwise for the purpose of financing or
undertaking housing and urban development programmes in the country.
· To promote, establish, assist, collaborate and provide consultancy services for
the projects of designing and planning of works relating to housing and Urban
Development in India and abroad.

7 Ps of service marketing

 Product:

In the housing industry

• The core product consists of: permanent accommodation / living space
• The format product consists of: locations, utilities, electricity, brand name,
availability of schools and hospitals nearby, reputation of the locality and the builder.
• The augmented product consists of: security available, clean environment,
amenities, recreational facilities, etc.
Special treatment
This is concerned with the product delivery or project completion. This is the
marketing of the goods, which “delights” the consumer. In construction and
housing industry, examples of such special treatment are:
• Builders: garden layouts, carpentry and curtains, kitchen, bathroom and bedroom
furnishing
• Civil engineering: site refurbishment and replacement, staff training, hiring local
labor, giving access to schools and colleges, provision of landscaping / open spaces.
• Architecture and design: choice of design, early delivery and extensive customer
liaison
• Building products: instructions in how to use, precise guaranteed delivery times
(industrial and commercial), after sales service.
• Consultancy: a range of answers and options plus full briefing on each maintenance
manuals, cost-benefit studies.

Price
Agreeing the price for a piece of work seals the relationship between contractor
and client. It is the central feature, and reflects the value placed on the relationship.
It indicates strongly the quality, volume and duration of work required and the
amount of commitment entered into by each party. It may also indicate a
propensity to re-engage the relationship for subsequent activities and projects,
provided all goes will.
Price is based on combination of:
• What the market expects
• What the client can afford
• The nature of competition in the sector
• What the contractor can afford to work for
• Any specific factors concerning the particular job, e.g. time, quality constraints,
location materials to be used
• What is being agreed and paid for – whether the completion of a building or
facility; or a wider process often supported by maintenance, presales and after-care
agreements.

Pricing Considerations
For the housing and construction industry, there are many considerations:
• Capital projects and building activities are priced so that variable costs – the costs
incurred as the result of gaining the work – are covered. Ideally, the price also makes a
contribution to the fixed cost/total cost of the contracted organization. It is also
necessary to consider charges incurred by the contractor as result of having to
underwrite the project from inception to delivery and from the need to acquire any
specialist equipment and expertise necessary.
• Building products are priced so that an individual perception of quality, value and
service are given at a level that the size and nature of the market can sustain. It is also
increasingly common to find differentiated pricing approaches as competitors seek real
and perceived price advantages.
• Building services, consultancy agency provisions are priced according to
expectations and perceptions of nature and quality of expertise demanded by the client
base and which the specialist, operator or consultant wishes to present. Where charges
are high, clients expect their problems to be solved as the result of using a particular
service. Charges also reflect the quality, scarcity and demand for the service on offer.
Building materials are priced according to quality, volume and delivery methods; and
the latter has specific regard to frequency and regularity. Depending on the nature of
the work, a price may be agreed with a quantity-surveying agency or directly between
the quantity surveyor or purchasing officer and supplier.
• Architecture and design services are priced much more specifically. There is likely
to be a fee for an initial proposal, a fee for a revised or final proposal, and a fee for the
proposal once accepted. There is again a price, quality, value, volume, time mix and
again depending on the standing and reputation of the practice, charges reflect the
perceived and actual quality, scarcity and demand for its services

 Promotion
The construction industry is concerned with the following forms of promotion:
• The promotion of its capabilities and expertise to client and potential clients
• The promotion of its finished products to the community and society at large
• The promotion of professions within the industry to each other promoting specific
general and continuing inter-relationships and confidence between architecture,
contractor, quality surveyor, planner, other consultant, civil engineers and
subcontractors.
• Awareness raising and image building, general presentation of information in the
most advantageous way.
• Brand building and reinforcement – the creation of equivalent of brand around the
name of the company in question
• The promotion of the general confidence, public sympathy and support for
activities.

Place
Product has to reach to the ultimate buyers, so company works with its
intermediaries to bring their product to their market. Marketing channel performs
he work of moving the goods from the producers to the consumers.
In the housing and the construction industry, constructions cannot be transferred
but here intermediaries transfer information to distinct places about the availability
of accommodations so that people not having any idea about these constructions
get to know about it. In this industry distribution is done through real estate agents,
who act as the connecting tool between the consumer and the provider.
People
The people in the housing and construction industry can be divided into two
groups.
Those who develop the product
They consist of location hunters’ architects and builders. They are required to have
technical skills of geological mapping soil testing building designs and so on. The
possession of these skills is of utmost importance because buildings cannot be
constructed all types of land. Also the materials use to build houses in different
regions differ because of climatic differences. E.g. in England most houses are
builds of wood whereas wood is not a viable option in the tropical area. Builders
who do the final construction consist of civil engineers skilled and unskilled labor.
Those who market the product
These consist of marketing people who may or may not have a civil engineering
background but certainly have the skills of understanding the customer as well as
the product. The marketer uses all the tools that help to overcome the unique
characteristics the service industry. It includes the construction of a sample flat,
which will break the tangibility factor intensive advertising to overcome the
perishability factor and so on.

Process
Service Company can design a superior delivery process. Because of heavy initial,
capital investment, long gestation period and a speculative tendency (irregular
demand) housing and construction industry works on other people’s money. i.e.
Construction begins with advance booking and then customers are supposed to pay
in installments. Most of the payment is made after the product has been handed
over. This strongly experiences intangibility aspect of this industry.
In this industry tangible industry is supported by services in which the services
offered enhance the client appeal for the product. This relates to all aspects of
building and civil engineering where the creation of a particular facility is
supported by project and environment management, client liaison and specialist
consultancy services and sometimes through maintenance refurbishment,
upgrading and facilities management services and for public projects sometimes
also for general services to the wider community.

Physical evidence

A service industry can develop a more attractive service environment where a

service can be delivered. In the housing and the construction industry model of
constructions, sample houses photographs and posters of previous achievement can
be displayed in construction offices or those can be shown to the customers when
they come for enquiry, so that the customer gets attracted to it.