Services Marketing Session 3 rd Dated: BY: -Neeraj Gupta

2 Product Pricing Promotion Place People Process Physical evidence Service Marketing mix

Core level Tangible level Augmented level The pricing of services is very different from pricing of goods. 3 Pricing  The pricing of services is very different from pricing of goods  Higher price - Better Quality  High Fixed Cost - Low Variable Cost  Prices depends on Demands

Promotion of services cannot be carried out in isolation. High level of perceived risk for service consumer as compared to product consumer. Service personnel & customer participation 4

Physical location Physical appearance & ambience of place Decision to use particular types of intermediaries. 5 People  Co-producer in designing the service.  Service organizations involve their personnel at frontline delivery & production process  Perception of a service by a customer also depends on the other customers receiving the same service

Expanded marketing-mix for services Product Price Promotion Place o People o Employees o Recruiting o Training o Motivation o Rewards o Teamwork o Customers o Education o Training o

Expanded marketing-mix for services

Physical evidence Facility design Signage Employee dress Other tangibles  Reports  Business cards  Statements  Guarantees

Process Flow of activities  Standardized  Customized Number of steps  Simple  Complex Customer involvement

Buying Situations faced by Customers in case of Services Customers find themselves in different buying situations, from purchase to purchase and service transaction to service transaction. In other words, two trips to the retail bank for two different purposes (e.g., the first to deposit a cheque in his savings account and the second for a home loan) may not have the same purchase decisions. The second buying situation would differ greatly from the first if one or more of the following factors are absent:  The customer is aware of the service product category and service brands.  The customer has definite decision-making criteria about the purchase of the service offer.  The customer is competent enough to evaluate the service offer and also has definite evaluation criteria.

Classifying Business Buying Situations Classifying Business Buying Situations  Straight Rebuying  Straight Rebuying Recurring purchase decision in which a customer repurchases a good or service that has performed satisfactorily in the past  Modified Rebuying  Modified Rebuying Purchase decision in which a purchaser is willing to reevaluate available options for repurchasing a good or service Buying Situations by Howard and Sheth

 New-Task Buying  New-Task Buying First-time or unique purchase situation that requires considerable effort by the decision Makers  Reciprocity  Reciprocity Policy to extend purchasing preference to suppliers that are also customers

14 Consumer Decision Making Process Need Perception Search for Information Evaluation of alternatives Purchase decision Post-purchase evaluation Environmental Factors Culture Subculture Social class Reference groups Family Marketer Activities External sources Personal sources Commercial sources Public sources Experiential sources Internal sources

Purchase process for Services

Need arousal Aroused using cues or drives or an unsatisfied need Cues can be commerical and socially oriented Commercial cues can be: -  Service product  Price  Display  Signage  Advertisement and Promotions  Distribution and Outlets

Recognition of the Need Primary needs Secondary needs

Level of Need This is an indication of the amount of time and effort invested by the consumer in the decision-making process. If the consumer is not confident on the purchase decision or is not aware of the product, brand or even the service category, he will spend more time in the decision-making process. If he perceives the offer to have complex features, fears more risk in the consumption, or if there are more number of users, then he is bound to take more time in deciding.

Purchase process for services Search for Information and Identification of Alternatives Evaluation of alternatives Decision Purchase action and other decisions

Post Purchase Behavior and Feelings Feelings of pleasure or pain Dissatisfied Satisfied Delighted Can experience Dissonance also because of doubts over his purchase decision may be because of his own intrinsic nature or because of nature of services. These consumers require reassurance to reduce their cognitive dissonance or disequilibrium.

Purchase Process and Buying Situations It is not mandatory that all customers will follow all the eight steps of the decision-making process all the time. Those customers who are familiar with the service offer and the brand are in the Routinized Response Behaviour or Straight Re-buy situation of Howard and Sheth - and they will not be following the whole sequence. Even brand Loyal, low-involvement, daily necessity service offers all steps may not be followed. For limited or modified rebuy situations they will go for evaluation of alternatives and features after need recognition. But if the service offer is completely new to the customer, the situation that he faces is New Task, Critical or Extensive Problem Solving as explained by Howard and Sheth. The customer goes through all the steps of the decision-making process.

Factors Affecting Buyer- Supplier Relationships Availability of alternatives Supply market dynamism Complexity of supply Importance of supply © Copyright 2008 Pearson Education Canada 6-22

Any questions