INTEGRATED SERVICES MARKETING MIX

Physical/Service products and marketing

Production

Marketing

Consumption

Service (production) process Service consumption

Marketing ??

Physical/Service products and marketing

Company
Company

Product/ marketing triangle Product

Market

Service/ marketing triangle

Customers

Personnel Technology Knowledge Customers time Customer

So whats it all about?

No ownership

Not inventoried
Intangible dominated Customer involvement in production

Other customers may form part of the product

More variability than products More difficult to evaluate

Time = important

8Ps
Product Promotion Processes Customer service/ Experience Price

Place

People

Productivity & Quality

Physical evidence

PRODUCT

PRODUCT ELEMENTS

Core

product Services

Supplementary

Delivery

process

Core & Supplementary Services in a Luxury Hotel

Reservation Cashier Business Center A Bed for the Night in an Elegant Private Room with a Bathroom Valet Parking Reception Baggage Service

Room Service Wake-up Call T elephone

Cocktail Bar
Entertainment/ Sports / Exercise

Restaurant

The flower of service

Information Payment

Consultation

Billing

Core

Order Taking

Enhancing services Facilitating services

Hospitality Exceptions Safekeeping

The flower of service:Core product surrounded by cluster of supplementary services, Adopted from Lovelock & Writz (2004) p.103

PLACE & TIME

Distribution for Core & Supplementary Services

Many core services require a physical location but

many supplementary services are information

based and can be distributed by other means, to reduce the cost and enhance the efficiency.

Information and Physical Processes of the Augmented Service Product

Use alternative channels e.g. online

Information Processes
Payment

Information Consultation
OrderTaking

Billing Exceptions

Core

Hospitality Safekeeping

Physical Processes

Determining the Type of Contact: Options for Service Delivery

There are 3 types of interactions between customers and service firms
Customer goes to the service provider (or

intermediary) Service provider goes to the customer Interaction at arms length (via the Internet, telephone, fax, mail, etc.)

Use of intermediaries to reduce cost

Splitting Responsibilities for Delivering Supplementary Services

As created by originating firm

As enhanced by distributor

As experienced by customer

Core

Core

PRICE

What Makes Service Pricing Strategy Different (and Difficult)?

No ownership of services--hard for firms to calculate financial costs of

creating an intangible performance

Variability of inputs and outputs--how can firms define a unit of

service and establish basis for pricing?

Intangibility of services makes it hard for customers to

evaluate--what are they getting in return for their money?

Importance of time factor--same service may have more value to

customers when delivered faster

Delivery through physical or electronic channels--may create

differences in perceived value

Paying for Service: The cost to Customers

Customer expenditures on service comprise both financial and non-financial outlays Financial costs:
price of purchasing service expenses associated with search, purchase activity, usage

Time expenditures Physical effort (e.g., fatigue, discomfort) Psychological burdens (mental effort, negative feelings) Negative sensory burdens (unpleasant sensations

affecting any of the five senses)

Trading off monetary and non- monetary costs

Which clinic would you patronize if you needed a chest x-ray (assuming all three clinics offer good quality) Clinic A ? Clinic B Clinic C
Price $45 Located 1 hour away by car or transit Next available appointment is in 3 weeks Hours: Monday Friday, 9am 5pm Estimated wait at clinic is about 2 hours Price $85 Located 15 min away by car or transit Next available appointment is in 1 week Hours: Monday Friday, 8am 10pm Estimated wait at clinic is about 30 45 minutes Price $125 Located next to your office or college Next appointment is in 1 day Hours: Mo Sat, 8am 10pm By appointment estimated wait at clinic is about 0 to 15 minutes

PROMOTION

People as communication platform Virgin Atlantic vs. Singapore airlines

http://www.youtube.com/watch?v=EPIjCS9YRw4

Singapore Airlines

http://www.youtube.com/watch?v=ykSBMqffuQ8

Common educational and promotional objectives

Create tangible, memorable images Build awareness and interest to stimulate trial Communicate brands strength and benefits Counter competitive claims Reposition service relative to competition

Teach customers how to use the service Manage demand levels Reduce uncertainty by providing useful information and advice Provide reassurance (eg service guarantees) Recognise and reward valued customers

The integrated services communications mix

Messages originating within the organization
Front-line staff Service outlets Advertising Sales promotions Direct marketing Personal selling Public relations E-comms. Word of mouth

A U D I E N C E

Messages originating outside the organization

Media editorial

PROCESSES
Design of an effective service delivery process, specifying how operating and delivery systems link together to create the promised value proposition
Flowcharting
Blueprinting

PEOPLE

People
(providing the service)

Our employees are our

Success of marketing a

greatest asset Most talented people will be attracted to the best employers

service tied to: Selection Training Motivation Management

Frontline works are difficult and stressful

Because they are :
Boundary spanning Source of conflict

Organisation/Client Conflict Person/Role Conflict Inter-client Conflict

Emotional Labour

Physical Evidence

Dimensions of the Service Environment

Ambient Conditions Music (e.g, fast tempo and high volume increase arousal levels)

Scent (strong impact on mood, affect and evaluative responses, purchase intention and in-store behavior) Color (e.g, warm colors associated with elated mood states and arousal but also increase anxiety, cool colors reduce arousal but can elicit peacefulness and calm)

Dimensions of the Service Environment (cont)

Spatial Layout and Functionality Layout refers to size and shape of furnishings and the ways it is arranged Functionality is the ability of those items to facilitate performance Signs, Symbols and Artifact Explicit or implicit signals to communicate the firms image, help consumers find their way and to convey the rules of behavior

PRODUCTIVITY & QUALITY

Importance of Productivity and Quality for Service Marketers

Productivity Helps to keep costs down

lower prices to develop market, compete better increase margins to permit larger marketing budgets raise profits to invest in service innovation

May impact service experience (must avoid negatives) May require customer involvement, cooperation & co-creation

Quality Gain competitive advantage, maintain loyalty Increase value (may permit higher margins) Improve profits

Hard and Soft Measures of Service Quality

Hard measures refer to standards and measures that can be

counted, timed or measured through audits typically operational processes or outcomes e.g. how many trains arrived late? Soft measures refer to standards and measures that cannot easily be observed and must be collected by talking to customers, employees or others e.g. SERVQUAL, surveys, and customer advisory panels. Control charts are useful for displaying performance over time against specific quality standards.