Unit -1

SERVICESMARKETING

The world economy nowadays is increasingly characterized as a service economy. This is

primarily due to the increasing importance and share of the service sector in the economies of
most developed and developing countries. In fact, the growth of the service sector has long been
considered as indicative of a country‘s economic progress. Economic history tells us that all
developing nations have invariably experienced a shift from agriculture to industry and then to
the service sector as the main stay of the economy.

Thisshifthasalsobroughtaboutachangeinthedefinitionofgoodsandservicesthemselves.Nolo
ngeraregoodsconsideredseparatefromservices.Rather,services now increasingly represent an
integral part of the product and this interconnectedness of goods and services is represented on
goods-services continuum.

Services get more importance as there is a requirement of keeping the customer

delightedtosustain and grow in the industry. There has to be speedy response to the customer
expectation.

DEFINITION

The American Marketing Association defines services as- ―Activities, benefits and
satisfactions which are offered for sale or are provided in connection with the sale of goods.‖

CHARACTERISTICSOFSERVICES
The defining characteristics of a service are:
 Intangibility:Services are intangible and donot have a physical existence.Hence services
cannot be touched ,held ,taste dorsmelt.Thisismostdefiningfeatureofaservice and that
which primarily differentiates it from a product. Also, it poses a unique challenge to
those engaged in marketing a service as they need to attach tangible attributes to an
otherwise intangible offering.
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 Heterogeneity/Variability: Given the very nature of services, each service offering
isunique and cannot be exactly repeated even by the same service provider. While
productscanbemassproducedandbehomogenousthesameisnottrueofservices.eg:All

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 burgersofaparticularflavoratMcDonaldsarealmostidentical.However,thesameisnot trueof
theservicerenderedbythe same counter staffconsecutivelyto two customers.
 Perishability: Services cannot be stored, saved, returned or resold once they have
beenused. Once rendered to a customer the service is completely consumed and cannot
bedelivered to another customer. eg: A customer dissatisfied with the services of a
barbercannot return the service of the haircut that was rendered to him. At the most he
maydecidenot to visit that particular barber in thefuture.
 Inseparability/Simultaneity of production and consumption: This refers to the
factthat services are generated and consumed within the same time frame. Eg: a haircut
isdelivered to and consumed by a customer simultaneously unlike, say, a takeaway
burgerwhich the customer may consume even after a few hours of purchase.Moreover, it
isvery difficult to separate a service from the service provider. Eg: the barber is
necessarilyapart ofthe serviceof ahaircut that he is deliveringtohis customer.

Services,unlikemanufacturing,havenodifferentiationbetweenoperationsandmarketing.Inter
nalcustomerfocusisimportantthanexternalcustomerorientation.Furthercustomersareoften involved
in theproduction ofservice.

Significanceof servicemarketing

 Creationandexpansionofjobopportunities
 Anoptimalutilizationofresources
 Pavingavenuesfortheformationofcapital
 Increasingthestandard ofliving
 Environment-friendlytechnology

TYPESOFSERVICES / Classification of sevices

Servicescanbe classified by the method of delivery, whether they are delivered bypeople
or equipment, whether they are for profit or not for profit and whether or not they
aregovernmentsponsored.Apeople-basedserviceisaservicethatrequiresskilledlabororprofessionals.
Equipment-based services have less inconsistency because people are people
areremovedfromtheprovisionoftheservice.Innonprofitorganizations,excessesinrevenueover

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expenses are returned to the organization's treasury for continuation of the service.
Historically,nonprofitorganizations havelimited their useof marketingpractices.

Core Services: A service that is the primary purpose of the transaction. Eg: a haircut
ortheservices of lawyer or teacher.
Supplementary Services:Servicesthatare renderedasa corollary tothe sale of
atangibleproduct. Eg: Home deliveryoptions offered byrestaurants aboveaminimum bill value.
Periodical transaction volume: The volume of a transaction in a given time
periodstandsasamajorconsiderationinserviceindustry.Thehyper-markethasverydifferentoperation
challenges from the local grocery store, not least in simply managing the flow ofhundredsof
customers in store.
Mode of service Delivery: The retail sector provides a good example of this
diversity,with face-to-face service in traditional store, remote service through mail order and
telephoneshoppingand the lost latest internet based service.

IMPORTANCE OFMARKETINGOFSERVICES

Given the intangibility of services, marketing them becomes a particularly

challengingandyet extremelyimportant task.

Due to the increasing homogeneity and capability of companies to include all features
inproduct offerings, the services provided are emerging as a key differentiator in the mind of
theconsumers. Eg: In case of two fast food chains serving a similar product, more than the
product itis the service quality that distinguishes the two brands from each other. Hence,
marketers
canleverageontheserviceofferingtodifferentiatethemfromthecompetitionandattractconsumers.

In today‘s highly competitive scenario where multiple providers are vying for a
limitedpool of customers, retaining customers is even more important than attracting new ones.
Sinceservicesareusuallygeneratedandconsumedatthesametime,theyactuallyinvolvethecustomer in
service delivery process by taking into consideration his requirements and feedback.Thus they
offer greater scope for customization according to customer requirements thus
offeringincreasedsatisfaction leadingto higher customer retention.

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DIFFERENCEBETWEENSERVICESANDGOODS

Services Marketing refers to the marketing of services as against tangible goods.

Servicesare inherently intangible, are consumed simultaneously at the time of their production,
cannot bestored, saved or resold once they have been used and service offerings are unique and
cannot beexactlyrepeatedeven bythe same serviceprovider.

Marketing ofservicesisarelatively newphenomenoninthedomainofmarketing,having

gained in importance as a discipline only towards the end of the 20th century. Servicesmarketing
first came to the fore in the 1980‘s when the debate started on whether marketing ofservices was
significantly different from that of products so as to be classified as a separatediscipline. Prior to
this, services were considered just an aid to the production and marketing ofgoodsand
hencewerenot deemed as havingseparaterelevanceof their own.

Table.1.Differencebetweenservicesandgoods

BASIS SERVICES GOODS

Tangibility Fullyintangiblemayhavesome Fullytangible
physicalevidence
Inseperability of buyer Bothmustbepresent Remotetransaction easy
andprovider
Easeof inventory Cannotstoretheservice Easilystored
Qualitycontrol Measure and control people Measureandcontrolproduct
processesinsteadofproduct qualityonly.
Sensitivityto time Neededon demand orsale is lost Canusuallywaittoreceivethe
product
Degreeofrisk Costof failureveryhigh Productcanbe replaced
Consumption of the Customizationlikelytoenhance Customizationincreasescost,
offering customer perception butlikelytoenhanceperceivedpr
oductquality
ofperceivedquality
Personalizationofbuyer Relationshipcanbeasimportant Productisthefocusofthe
relationship asservice transaction

The 1980‘s however saw a shift in this thinking. As the service sector started to grow
inimportance and emerged as a significant employer and contributor to the GDP, academics
andmarketing practitioners began to look at the marketing of services in a new light.
Empiricalresearch was conducted which brought to light the specific distinguishing
characteristics
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ofservices.Bythemid1990‘s,ServicesMarketingwasfirmlyentrenchedasasignificantsub

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 discipline of marketing with its own empirical research and data and growing significance in
theincreasingly service sector dominated economies of the new millennium. New areas of
studyopenedupinthe fieldandwere the subjectofextensive empiricalresearchgiving rise toconcepts
such as - the product-service spectrum, relationship marketing, franchising of
services,customerretention etc.

SERVICE MARKETING ENVIRONMENT

Definition

There are several factors which affect a firm. All the things which affect the operations of a firm are
known as marketing environment. Few of these factors can be controlled by the firm but not all. In
order to deal with these factors firm must understand their market environment so that positive and
negative factors would be managed accordingly.

“A company’s marketing environment consists of the actors and forces outside of marketing that
affect marketing management ability to build and maintain successful relationships with target
customers”. – Philip Kotler
Internal Environment factors

The internal marketing environment of a firm comprise of all those factors which are inside firm,
including the firms employees, firms policies, firms capital assets, firms organizational structure
and its products. Firm can control these factors.

External Marketing Environment

External marketing environment consist both Micro environment and Macro Environment. These
factors are not controlled by a firm, but they greatly influence the decision of marketers during
marketing strategy.

Micro Environment Factors

The Supplier: Business success depends on the suppliers when they enjoy an authority. The
supplier of a company holds the power when they are the only one in market or when they are the
largest supplier of the goods. The buyer is not essential to the suppliers business, as the supplier’s
good is core ingredient of the finished product of buyer.

The Resellers: The success of companies marketing strategy also depends on resellers if the
finished goods of a company is taken to market by market intermediaries or any other third party.
These forces include wholesaler, retailers etc. For example If the retail seller holds a reputable name
in the market then their reputation can impact the marketing of company’s product.

The Customers: The success of marketing strategy also depends on the customers of company’s
product. The nature of customer such as b2c, b2b, international or local and the reason for buying
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the product will play a role in establishing the marketing strategy of company and how they
approach the customers and serve them.

The Competition: Market competition exists when two or more firms sell same or similar products
and services. The companies must take into account the way they approach the customers and sell
their products to the customer, what price and product differentiation they have for their customer.
These factors can be taken into account to get edge over their competitors.

The General Public: The satisfaction of general public is a duty of organization. Company must
take decisions while taking the perspective of general public into consideration and how they will
get affected by their decision. The customers hold the power to make a win-win situation for a
company by helping it reach the goals.

Macro Environment Factors

Demographic Factors: Demographic forces do impact the different market segments, which
includes region, country, age, educational level, ethnicity, lifestyle, cultural norms and values.

Economic Factors: The organizations production and decision making process of customer also
affected by the economic environment.

Natural/physical Factors: The Company must take into account the renewal of the natural
resources of the earth such as agricultural product, forest, marine resources etc. The organizations
production can also be affected by the non renewable resources which includes coal, oil mineral.

Technological factors: The organization must consider the technological factors as the knowledge
and skills used in production of goods. The technology and materials used in production of goods
and services helps in smoothing the process of business.

Political and Legal Factors: The organization should take into consideration the political and legal
development relating to market and organization during decision making process.

Social and Cultural Forces: The impact of your organization’s services and products on the
society must be taken into consideration. If there is any element used in production process or
product that is harmful to society should be avoided as it is a social responsibility of an
organization. A most recent example is the environment and the organizations and sectors who
have reviewed their services and products to be considered environmentally friendly.

MARKETSEGMENTATION
The market segmentation is mentioned as being one of the key elements of
modernmarketing and is, as mentioned, the process of dividing the market into several groups
and/orsegment(s) based on factors such as demographic, geographic, psychological and

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behaviouralfactors. By doing so the marketers will have a better understanding of their target
audience andthereby make their marketing more effective. This is due to the fact that by using
the analyticalprocess that puts customers first, the marketer will get more satisfied customers and
thereby gaina great advantage over competitors. Market segments can be characterized in
different ways
onwayistocharacterizethepreferencesofthetargetcustomers;homogeneouspreferences,referring
tocustomersthatroughly havethesamepreferences.Secondly there
arediffusedpreferenceswhichmeanthatthecustomersvaryintheirpreferencesandfinallyclusteredpref
erences which mean that the natural market segments emerge from groups of consumers
withsharedpreferences
When talking about market segmentation it is necessary to briefly mention the three
areasof marketing which is to be taken into consideration when market a product. The first area
ismass marketing. It covers the area of mass producing, mass distributes and mass promotes
onproduct to all buyers. However, marketers have realized the great variety in each
individualcustomer and therefore the market segmentation is a helpful tool for the marketers to
customizetheirmarketingprogrammeforeachindividualcustomer.Thesecondareaisproductdifferenti
ated marketing. The marketer produces two or more products that display differentfeatures,
styles, quality, sizes etc.The third, and dominating, area is target marketing.
Themarketerdistinguishesamongavarietyofmarketsegments,choosesoneormoreofthesegmentsandt
hen developsproducts andmarketingmixescustomised toeach segment

BASESFORSEGMENTATION
There are various variables to divide the market into segments, however all variables
maybe categorized in toany one of thebasesnamely-demographics,geographic,
psychographicsandbehavioural.

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DemographicSegmentation
The demographic segmentation divides customers into segments based on
demographicvaluessuchasage,gender,familysize,familylifecycle,income,occupation,education,rel
igion, race, generation, social class and nationality The demographic segmentation is oftenused
in market segmentation for the reason that the variables are easy to identify and
measure.Furthermore the demographic variables are associated with sale of many products and
servicesand finally they provide a description of the target customers so media buyers and others
cantarget a desired target market. Each of the variable are useful knowledge when
segmentingmarketsand some ofthe abovementioned variables willbeelaborated in thefollowing
Age
The consumer‘s needs and wants may change with age. Therefore some companies
useage as a base for segmentation. Furthermore the age wise segmentation is associated with
buyingpatterns.
MaritalStatus
Preferences of customers change based on their marital status. For example
unmarriedpeople may have no other economic obligations. This is opposed to married people,
who have alargeeconomicobligation and therebytheyprioritizetheireconomydifferent
Gender
Gender is used to differentiate the needs and wants between men and women due to
thefact that men and women have different attitudes toward a product. The gender segmentation
has long been applied in connection with clothing, hairstyling, cosmetics and magazines.
Furthermore it must be taken into consideration that metro sexuality has become a
commongender-factor and thus the marketers must not only define a product as being masculine
orfeminine
Income
Incomedividesthemarketintodifferentincomegroups.Itisusedinautomobiles, clothing,
cosmetics, financial services and travel.Many companies within the mentioned categories seek to
target the high-income customers. Others seek to target the customers with alower income in
order to gain consumer loyalty and lessen the competitive pressures. However, companies must
consider the fact that the income does not always predict the most suitable

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customers for a given product due to the fact that some customers may have other preferences
and prioritize their money different
Generation
Each generation is influenced by the times in which they grow up i.e. the music,
themovies, politics and other significant events characteristic of that period. Marketers
thereforemarkettoa generation byusingiconsandimages thatisrelatable accordingtothegeneration.
SocialClass
Social class divides the customers according to their preferences in cars, clothing,
homefurnishings, leisure activities, reading habits and retailers. However, although the tastes of
socialclasses changes,many companies design productsforspecificsocial classes
Geographicsegmentation
The geographic segmentation divides customers into segments based on
geographicalareas such as nations, states, regions, counties, cities or neighbourhoods. A
company can targetone or more areas and must be aware of the fact that data according to
geographic segmentationmay vary due to population shift. It is important to segment according
to geographic, due to thefact that the purchasing behaviour of the customers is influenced on
where they live, work etc.).Therefore many companies customize their products, advertising,
promotion and sales efforts tofit the needs of the geographical variables. The geographic
segmentation is useful when there aredifferences in a location where a product is marketed. The
differences can be caused by culturalfactors, traditions, politics etc. and furthermore the
differences can be significant in one segment,where as in othersegmentsthe
differencescanbeminor and lesssignificant.
As a result of an increase in the globalisation today the geographic segmentation has
beenlinked to other differences in socio-economic and demographic characteristics. The result of
thistype of segmentation is referred to as geo-demographics The geo-demographic segmentation
combines the geographic segmentation with the demographic segmentation and there by
combines the study of the target customers with where they live. Hence the geo-
demographicclassifies the customers according to where they live in comparison to the way the
social classdefines consumers by their occupation and thereby the companies are more capable of
predictingconsumerbehaviour.

Psychographicsegmentation
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 The psychological variables derive from two principal types of customer;
personalityprofilesandlifestyleprofiles(psychographics).Psychologicalprofilesareoftenusedasasup
plement to geographic and demographics when these does not provide a sufficient view of
thecustomerbehaviour.Whilethetraditionalgeographicalanddemographicalbases(sex,age,income
etc.) provide the marketer with accessibility to customer segments, the psychological variables
provide additional information about these and enhance the understanding of the behavior of
present and potential target markets.
Psychographic segmentation therefore divides people according to their attitudes, values,
lifestyles, interests and opinions. Furthermore some marketers have used personality variables
tosegment the markets, for example the landline telephone is ‗outdated‘and a commercial
couldappear to target elder people whereas the actual purpose is that the commercial is aimed at
amuchbroader personalitygroup
Behaviouralsegmentation
Behavioural segmentation is based on the customers‘attitude toward, use of, or
responseto a product. Many marketers believe that the behavioural variables such as occasions,
benefits,user status, usage rate, buyer-readiness stage, loyalty status and attitude are the best
startingpoints for constructing market segments and thus these variables will be described further
in thefollowing.
Occasions
Occasions are when the customers are divided into segments based on the time of
day,week, month and year. People is therefore being grouped according to the time (occasions)
onwhich they get the idea to buy, make their purchase or use the purchased item This can
forexample be during the time around holidays such as Christmas. A company may choose one
kindof marketing strategy around Christmas and another at Valentine‘s Day in February and
thusbeingable to targetas manydesiredtarget customers as possible.
Benefits
Benefit segmentation divides the customers according to the different benefits they
mayseek from a product. Benefit segmentation seeks to find the benefits people look for in a
certainproduct, the kinds of people who look for each benefit and the brands that deliver each
benefit.The benefit segmentation identifies market segments by casual factors rather than
descriptivefactorssuchas e.g. demographics.

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 Userstatus
Bysegmentingaccordingtononusers,ex-users,potentialusers,first-timeusersandregular
users of a product a company can customize its marketing for each group Where regularusers of
a certain product request one kind of marketing approach, potential users may
requestanotherkindofmarketingapproach,andthusitisnecessarytodividethecustomersintodifferents
egments and target them in different ways.
Usagerate
The usage rate segmentation divides the customers according to how much they use
aproduct. They are divided into groups of non-users, light, medium and heavy product users
andcompanies often seek to target one heavy user rather than several light users. This is due to
thefact that the heavy users constitute a small percentage of the market but account for a
highpercentage of the total buying. Thus a company should seek to adapt their marketing
strategyaccording to these customers. However, it should bementioned that it is of certain
importancenot to exclude the non-users, light users and medium users due to the fact that these
users mayprovideapositiveprospect forfutureexpansions.
Finallytheusageratedividesthecustomersintermsoftimeandplacei.e.acompanymay sell one
product at one part of the day, month, year and another product another time of theday, month,
and year as is the similar case when using occasion segmentation Buyer-ReadinessstageBuyer-
readiness stage refers topeople‘s awareness andinterest of the product.
Somepeopleareunawareoftheproduct,some are aware,some are informed, some are
interested,some desire the product and some intend to buy. The purpose is to lead the customer
along so heorshe will purchasetheproduct in the end.
Loyaltystatus
A market can also be segmented according to the loyalty of the customers. It is
assumedthat customers are always loyal by buying the same product. These customers are
referred to ashard-core loyals. Other people that are loyal toward two or three brands and buy
these on arandom basis are referred to as being split loyals. A third group of people are those
who shiftfrom one brand to another and staying with that brand for a period of time until they
shift toanother brand. These customers are referred to as shifting loyals. The fourth and final
group ofloyalsarethosewhodonotshowloyaltyorpreferencetowardsoneparticularbrand,but rather

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Buy aproduct or brand that is on sale or available at the time of the occasion. These customers
are referred to as switchers.
Attitude
Peoplecanbedividedintosegmentsbasedonwhethertheyhaveanenthusiastic,positive,
indifferent, negative or hostile attitude toward a product. By considering the customers‘attitudes
toward a brand or product the company will get a wide-ranging view of the market
anditssegmentsBycombiningthedifferentbehaviouralvariables,itispossibleformarketerstogeta
view of a market and its segments and thereby the marketer can enhance its targeting
strategies.Demographic and behavioural segmentation are the most important ones when
designing marketstrategies of a telephone. This is due to the fact that a telephone company
should consider,amongst others, the ages of their target customers in order to communicate the
irmessage accurately. Furthermore the attitudes, amongst others behavioural variables, toward
the product,in this case beinga landline telephoneand/or amobile telephone,areimportanttorealize
inorderfor thecompanytodesign anappropriate market strategy.

STRATEGIESBYMARKETSEGMENTS

When a company has defined the target customers the next stage in the
segmentationprocess is to evaluate the market segments and then decide which segments to
direct their marketing
strategies.Thusthecompanyshouldseektodesigntheirmarketingstrategyaccording to these factors.
For example, peoplefrom the USA may have limited knowledgeabout a product from the UK. So
in order for the product to be successful in the USA, thecompany should adapt their marketing
strategy according to the limited knowledge an Americanmayhave.
Positioning
The positioning statement will clearly define the product being offered to the
subjectproperty‘s target market customers. This should be done as an overall hotel product
definition, aswell as by each respective market segment targeted by the property. Each profit
center shouldalsohaveaclearlydefined positioningstatement(definition).

Thesemarketsegmentsmayinclude(others maybeaddedasidentified):
--Social/Leisure --Banquet-Food
--Corporate/Individual --Banquet-Beverage

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 --Government --RoomRental-ServiceCharge
--Packages --Restaurant-Food
--Group-Association --Restaurant-Beverage
--Group-Corporate --Lounge-Beverage
--Group-Tour --Lounge-Food
The basic outline format for identifying these strategies is as
follows:Statethe market segmentation
Listthespecificsalesandmarketingprogram
StatethedesiredresultsofthissaleandmarketingprogramStatet
he step-by-stepprogram
Listprogramelementcosts.
Statemethodsto evaluatetheprogram‘seffectiveness.
Each market segmentation strategy plan shouldinclude consideration of eachof
themarketing disciplines in order to achieve the objective. All of these disciplines do not
necessarilyhave to be included in the attainment of each marketing segment objective. They
should beconsidered onlywhen pertinent.

SERVICESMARKETINGMIX
The service marketing mix is also known as an extended marketing mix and is an
integralpart of a service blueprint design. The service marketing mix consists of 7 P‘s as
compared to the4 P‘s of a product marketing mix. Simply said, the service marketing mix
assumes the service asa product itself. However it adds 3 more P‘s which are required for
optimum service delivery.Theproductmarketingmixconsistsofthe4P‘swhichareProduct,Price,
Promotion,andPlace.

The marketing mix for a service has additional elements because the characteristics of
aservice aredifferent to the characteristics of aproduct.

To certain extent managing services are more complicated than managing products.
Forexample, products can be standardized but services could not be. The extended service
marketingmixplaces3 furtherP‘swhichincludePeople, Processand Physicalevidence.

Product
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 The product in service marketing mix is intangible in nature. Like physical products
suchas soap or a detergent, services cannot be seen, touched, or measured. Tourism industry or
theeducation industry can be an excellent example. At the same time services are heterogeneous
andperishable. The services thus have to be designed with at most care. Generally, services
blueprintingis doneto definethe serviceproduct.

UnderstandingCustomerExpectation:-
Customer expectation and belief about service delivery that functions as standard
ofreferencespointsagainstwhichperformanceisjudged.Becausecustomerscomparetheirperceptions
ofperformancewiththesereferencespointswhenevaluatingservicequality,thoroughknowledgeabout
customer expectation iscritical to servicemarketers.
Measurementof CustomerExpectation:-

 Assurance
 Empathy
 Reliability
 Responsiveness
 Tangible

ConsumerExpectationModel:-

 Idealservicelevel
 Desiredservicelevel
 Adequateservicelevel
 Predictedservicelevel
 Zoneoftolerance

Zone of Tolerance: Services are heterogeneous in that performance may vary

acrossproviders, across employees from the same provider, and even with the same
serviceemployee.Theextenttowhichcustomersrecognizeandarewillingtoacceptthevariation
is called thezoneof toleranceandis shown in figureaside.
ManagingConsumerExpectation:-
Managing consumer expectations is a critical component in the marketing plan of
aservicebusiness.Consumerexpectationmustbemanagedduringtheprepurchasephase,the

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serviceencounterandthepost-
purchasephase.Customerexpectationscanbemanagedduringeachphaseof thepurchaseprocess.
 Duringtheprepurchasephase
 Duringtheserviceencounter
 Duringthepostpurchasephase

Place

Place in case of services determine where is the services going to be offered. The
bestplace to open up a petrol pump is on the highway or in the city. A place where there is
minimumtrafficis awronglocation to start a petrol pump.

Delivery of service differs significantly from that of the manufacturing

goods.The production of goods is followed by distribution whereas services usually
cannot beseparatedfrom theserviceprovider.

DISTRIBUTIONPLACE

 Location
 Accessibilityand Availability
 ChannelofDistribution
 Service Inventory
 ManagingChannels

Promotion

Promotions have become a critical factor in the services marketing mix also.
Thoughservices cannot be copied as it is personalized based on the service provider and the
beneficiary,there requires a communication to showcase the uniqueness in better and effective
means. It isbecause competition in this servicesector is generallyhigh.

Marketingcommunicationisessentialprocesstoacompany‘ssuccess.Withouteffective
communication, prospects may never learn of a service firm‘s existence. What it has
toofferthem,orhowtouseitsproductstobestadvantage.Customersmightbemoreeasilylured

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away by competitors and competitive offerings, and there would be no proactive
managementandcontrol of thefirm‘sidentity.

Promotionmixreferstothecombinationofvariouspromotionalelementsasadvertising,
personal selling, sales promotion and sponsorship techniques used by a business firmto create,
maintain and increase demand of the service product. It involves an integration of allthe above
elements of promotion. Usually a firm chooses more than one type of promotional tooland the
manager of the firm is to decide how he is going to choose the communication media
andblendthem into an effective promotion.

AccordingtoPhilipKotler ―Acompany‘stotal marketing communicationmixalsocalled its

promotion mix consists of special blend of advertisement, personal selling, sales
promotion,publicity and the direct marketing tool that the company uses to pursue its advertising
andmarketinggoals.‖

Elements:

 Advertising
 Salespromotion
 Publicrelations
 DirectMarketing
 Adventuremarketing
 PersonalSelling
 Corporateidentity
 Cause-relatedMarketing

Service marketers have used the marketing tool to great advantage in using their
service,adding tangibility and value to their offer. Promotion is used only as a temporary tool and
iscommunicationoriented.Infieldofservicepromotionmarketingmix playsanimportantrole.

Promotion is a descriptive term for the mix of communication activities which

serveorganizationcarryoutinordertoinfluencethosepublicsonwhomtheirservicedepends.According
to Philip Kotler ―Promotion compassesall the toolsin the marketing mix whose majorrole
ispersuasivecommunication.‖

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 CHARACTERISTICS:

 Customersareinformedabout theproduct orserviceof thecompany.

 Customersareremindedoftheproductorservice ofthecompany.
 Customersarerequestedandpersuadedtopurchasetheproductandserviceofthecompa
ny.
 Promotionsincludesadvertising,personalsellingandothersalespromotiontechnique
s.
 Promotionsactivitiesareperformedbythemanufactureraretheimportantsourceto
attract with packaging and important promotional tool.

NEEDOFPROMOTION:

Promotion is the tool in marketing mix serves to inform, persuade and remind
peopleabout and organization‘s individual goods, service, image, ideas, community, involvement
andimpactof thesociety.

Typesofcommunication:

 InternalCommunicating–Thecommunicationwhichiscarriedintotheorganization
between their employees from top level to the service level are comes underthat category.
This communication is basically the best way of interaction regardingcompany‘soverall
objective.
 People/
ExternalCommunication:Theexternalcommunicationincludethecommunicationbetweenth
esuppliers,shareholders,businessman,foreignclients,governmentand various
boardsdependingon thenatureof servicebusiness.

CommunicationIssuesofServiceMarketers

 Technology
 BudgetaryConstraints
 Content
 Delivery

Price
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Price in case of services is rather more difficult than in case ofphysical goods. Ifyouwere a
restaurant owner, the charging is done not only for the food that is served but also then forthe nice
ambience it is built. Generally pricing the services need consideration on labor andmaterialcost
alongwithalloverheads.

People

People are one of the elements of services marketing mix. People define a service. In
caseof a restaurant, the chef and the service staff defines the product. In banks, apart from
theschemes, the employees of the bank and their behavior towards customers define the product.
Incase of service marketing, people can make or break an organization. Thus many
companiesnowadaysareinvolvedintospeciallygettingtheirstafftrainedininterpersonalskillsandcusto
mer service with a focus towards customer satisfaction. In fact many companies have
toundergoaccreditation to show thattheir staff is betterthan the rest.

The service is predominantly people-based. The personnel of the marketing

departmentaswellasothersareverymuchinstrumentalinperformingthemarketingfunctions.Thismake
sit essential that one should clearly understand the common purpose and spirit of the task to
beperformed and its backward and forwardlinkagewith theothertask.

NATUREOFSERVICEDELIVERY

 Inseperabilityofproduction andconsumption
 Difficultyinbalancingthe demandandsupply
 Lackofstandardizationinservice
 Recoveryservices

The role of the employee in services marketing varies according to situation and the
levelof interaction. Frequently this depends on the degree of tangibility of a service. The level
ofcontact can be determined by classifying the service according to whether it is labor-
intensiveserviceoran equipmentbased service, asfollows:

 PeopleBasedservice
 Equipmentbasedservice
 SelectionandRecruitment

20
 TrainingandDevelopment
 Empowerment

21
 Unit -2

Pricing
MethodsCost-
plusPricing
Cost plus pricing refers to the simplest method of determining the price of a product.
Incost-plus pricing method, a fixed percentage, also called mark-up percentage, of the total cost
(asa profit) is added to the total cost to set the price. For example, XYZ organization bears the
totalcost of Rs. 100 per unit for producing a product. It adds Rs. 50 per unit to the price of
product as‘profit. In such a case, the final price of a product of the organization would be Rs.
150. Cost-pluspricing is also known as average cost pricing. This is the most commonly used
method inmanufacturingorganizations.
MarkupPricing
Markup Pricing refers to a pricing method in which the fixed amount or the percentage
ofcost of the product is added to product‘s price to get the selling price of the product.
Markuppricing is more common in retailing in which a retailer sells the product to earn profit.
Forexample, if a retailer has taken a product from the wholesaler for Rs. 100, then he/she might
addupamarkup ofRs. 20 togain profit.
Demand-basedPricing
Demand-based pricing refers to a pricing method in which the price of a product
isfinalized according to its demand. If the demand of a product is more, an organization prefers
toset high prices for products to gain profit; whereas, if the demand of a product is less, the
lowprices are charged to attract the customers. The success of demand-based pricing depends on
theability of marketers to analyze the demand. This type of pricing can be seen in the hospitality
andtravel industries. For instance, airlines during the period of low demand charge lesser rates
ascompared to the period of high demand. Demand-based pricing helps the organization to
earnmoreprofit if thecustomers accept theproduct atthe pricemorethan its cost.
Competition-basedPricing

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 Competition-based pricing refers to a method in which an organization considers
theprices ofcompetitors‘ productstosetthe prices of its own products.The organization maycharge
higher, lower, or equal prices as compared to the prices of its competitors. The aviationindustry
isthe bestexample of competition-based pricing whereairlinescharge the same orfewer prices for
same routes as charged by their competitors. In addition, the introductory pricescharged by
publishing organizations for textbooks are determined according to the competitors‘prices.
ValuePricing
Value Pricing implies a method in which an organization tries to win loyal customers
bycharging low prices for their high- quality products. The organization aims to become a low
costproducer without sacrificing the quality. It can deliver high- quality products at low prices
byimproving its research and development process. Value pricing is also called value-
optimizedpricing.
TargetReturnPricing
Target Return Pricing helps in achieving the required rate of return on investment
doneforaproduct.In other words,thepriceofaproduct isfixed on thebasis of expectedprofit.
GoingRatePricing
Going Rate Pricing implies a method in which an organization sets the price of a
productaccording to the prevailing price trends in the market. Thus, the pricing strategy adopted
by theorganization can be same or similar to other organizations. However, in this type of
pricing, thepricesset bythe market leadersare followed byall theorganizationsin the industry.
TransferPricing
Transfer Pricing involves selling of goods and services within the departments of
theorganization. It is done to manage the profit and loss ratios of different departments within
theorganization. One department of an organization can sell its products to other departments at
lowprices. Sometimes, transfer pricing is used to show higher profits in the organization by
showingfakesales of products within departments.

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Process

Services process is the way in which a service is delivered to the end customer.
Theprocess of a servicing company in delivering its product is of utmost importance. It is also
acritical component in the service blueprint, wherein before establishing the service, the
companydefinesexactlywhat should be theprocess of theservicereachingtheendcustomer.

The service processisan element of segmentedmarketing mixand vital point of thevalue

chain. This has received less attention though it is an important part of marketing task.
Theadoption of the processes, which add value to the service offering without incurring major
costdisadvantage,arebeneficial to thecustomers andtheorganization.

CharacteristicsofServiceProcess:-

 Customerparticipationprocess
 Locationofservicedelivery
 Serviceitself
 High-contact
 Degreeofstandardization
 Complexity of the

serviceDELIVERYOFSER

VICE:-

Blueprinting is a graphical approach proposed by ―shostack‖designed to overcome

problems that occur where a new service is launched without adequate identification of
thenecessarysupport functions. A customer blueprinthas threebasicfunctions:

 Alltheprincipalfunctionrequiredtomakeanddistributeaserviceareidentified,alongwith
theresponsible companyunit.
 Timingandsequencingrelationshipamongthe functionsaredepicted graphically.
 Foreach functions, acceptabletoleranceareidentified.

ROLEOFTECHNOLOGYINSERVICEMARKETING:-

24
 Technologyisdramaticallychangingthenatureofservice,resultingintremendouspotentialfo
rnew servicesofferingsnotimaginable evena decade ago.Technologyidprofoundly

25
changinghowservicesaredeliveredenablingbothcustomersandemployeetogetandprovidebetter,mor
eefficient,customized.

Someofreason whyinformationtechnologynot havingthe desiredimpact on service:

 Wastefulandinsufficient useofIT
 LeggedEffect
 Outdatedmethod of productivityMeasurement
 Impactofotherproblems
 LevelofAggregation

PhysicalEvidence

Servicesareintangibleinnature.However,tocreateabettercustomerexperiencetangible
elements are also need to be delivered with the service. Take an example of a restaurantwhich
has only chairs and tables and good food, or a restaurant which has ambient lighting, nicemusic
along withgoodseating arrangement and this also servesgoodfood. Several times,physical
evidence is used as a differentiator in service marketing. When a person gets any servicefrom the
bank they give a physical evidence for the transaction. The quality of the physicalevidence
enhances the satisfaction.

A distinction is made in services marketing between two kinds of physical

evidence,namely,peripheral evidence andessential evidence.
PeripheralEvidence:
Peripheral evidence is actually possessed as part of the purchase of a service. It
hashowever little or no independent value. Thus a bank cheque book is of no value unless backed
bythe funds transfer and storage service it represents. An admission ticket for a cinema equally
hasno independent value. It merely confirms the service. It is not a surrogate for it.
Peripheralevidence ‗adds to‘ the value of essential evidence only as far as the customer values
thesesymbols of service. The hotel rooms of many large international hotel groups contain
muchperipheral evidence like directories, town guides, pens, notepads, welcome gifts, drink
packs,soaps and so on. These representations of service must be designed and developed with
customerneeds in mind. They often provide an important set of complementary items to the
essential coreservicesought bycustomers.

26
 Essential Evidence:
Essential evidence, unlike peripheral evidence, cannot be possessed by the
customer.Nevertheless essential evidence may be so important in its influence on service
purchase it
maybeconsideredasanelementinitsownright.Theoverallappearanceandlayoutofahotel;the
‗feel‘ of a bank branch; the type of vehicle rented by a car rental company; the type of
aircraftusedbyacarrier areall examples of physical evidence.

Services being intangible, customers often rely on tangible cues, or physical evidence,
toevaluate the service before its purchaseand toassess their satisfactionwith the service
duringandafterconsumption.They includeallaspectsof theorganization‘sphysicalfacility
(theservicescape) as well asotherformsof tangiblecommunication.

Elements of the services cape that affect customers include both exterior attributes
(suchas parking, landscape) and interior attributes (such as design, layout, equipment, and
decor). It isapparent that some services communicate heavily through physical evidence (e.g.
hospitals,resorts,childcare), whileothersprovidelimitedphysical evidence(e.g.insurance,
expressmail).

SCOPEOFSERVICESMARKETINGMIX

Use of the marketing mix applies at different stages of your business but the whole
mix,whetherthisisthecoreorextendedmix,shouldbefundamentaltothemarketingplan.Thisisthetactic
al aspectof theplanningprocess and shouldbe fed fromthecompanystrategies.

 Helpstofocusonamore limited(andachievable) setofobjectives.

 Lowerriskthroughimprovedforecastaccuracy.
 Improvecompetitiveadvantagethroughgreaterflexibility.
 Easily calculate the effects of specific marketing tactics across business units,
channels,geographies,product lines andtime horizons.
 Lower marketing expenses by more frequently predicting the performance of
marketingcampaignsat different levels.

Key steps in formulating services marketing involves - Defining customers and

27
markets;Looking at the progress of business and decide which of the mix matters most it needs;
andEnsuringthat the maincomponents complement and support oneanother.

28
 Theelementsthatmakeupthefour"I's"ofservicesareintangibility,inconsistency,inseparabilitya
nd inventory.

 Intangibility of service means that the services cannot be held, seen, or touched before
thepurchase.
 Developing,pricing,promoting,anddeliveringservicesischallengingbecausethequalityof
serviceis ofteninconsistent.
 Inseparabilityofservicesmeansconsumersoftencannotdistinguishtheserviceitselffromthedel
iverer oftheservice.
 Theinventorycosts ofservices include salaryof serviceproviderandequipment costs.).

In terms of promotion, shopping goods stress product differentiation from

competitors.With respect to distribution, specialty goods are the most limited. Promotions for
specialty goodsstress status and uniqueness of brand. Unsought goods are products which the
consumer does notknow about, or knows about but does not initially want. With respect to
promotion, unsoughtgoodsrequire generation ofawareness.

A major consideration of business goods is that their sales are often the result of
deriveddemand,that is,sales ofindustrial productsfrequentlyresultfrom thesaleofconsumergoods.

Factorsaffectingdevelopmentofservicemarketing:

 Organizationsizestructure
 Regulatorybodies
 Growthinserviceindustry
 Characteristicsofservices
 Customer/Employeeinteraction
 Servicequality
 Specificservicesector

Service promotion

29
Unit 3
ServicesMarketingSystem

Many elements contribute to the customer‘s overall view of the service

organization.These includes the communication efforts of the advertising and sales department,
telephonecalls,lettersfromservicepersonnel,billingfromtheaccountingdepartmentandrandom
exposure to service personnel and facilities, new stories and editorial in the mass media word
ofmouth comments from current or former customers and even participation in market
researchstudies collectively these components plus those in the service delivery system and up to
what istermedas servicemarketingsystem.

SERVICEQUALITY

Company personnel need a common understanding in order to be able to address

suchissues at the measurement of service quality, the identification of causes ofservice
qualityshortfallsanddesign andimplementation of correctiveaction.

Approachestomeasurementofquality:

 Transcendentapproach
 Product-basedapproach
 User-basedapproach
 Manufacturingbased-approach
 ValueBased-approach

Dimensionsof quality:
 Performance
 Features
 Reliability
 Conformance
 Durability
 Serviceability
 Aesthetics

Measurementtoservicequality:
 Tangiblesdimensions
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 ReliabilityDimensions
 ResponsivenessDimension
 AssuranceDimension
 EmpathyDimension

SERVQUAL is built on the expectancy-disconfirmation paradigm, which in simple terms

means that service quality is understood as the extent to which consumers' pre-
consumption expectations of quality are confirmed or disconfirmed by their actual
perceptions of the service experience. SERVQUAL is a multidimensional research
instrument (i.e. questionnaire or measurement scale) designed to measure service quality
by capturing respondents‘ expectations and perceptions along the five dimensions of
service quality, namely, Reliability, Assurance, Tangibles, Empathy, and Responsiveness.
A questionnaire is designed to be administered in a face-to-face interview and requires a
moderate to large size sample for statistical reliability. In practice, it is customary to add
additional items such as the respondent's demographics, prior experience with the brand or
category and behavioural intentions (intention to revisit/ repurchase, loyalty intentions and
propensity to give word-of-mouth referrals). It has become the dominant measurement
scale in the area of service quality. In spite of the long- standing interest in SERVQUAL
and its myriad of context-specific applications,

.GAPMODELOFSERVICEQUALITYDELIVERY
31
Gap1:Notknowingwhatcustomer expect

This is basically of ‗Customer Service‘ and ‗Company Perception‘ as expected service

isthe highest level of desired service existing in the mind of customer. Company perception
ofconsumerexpectationisnothingbut thecompany‘sunderstandingofwhattheconsumerwant.

Gap2: Inabilityto settherighttypeofStandards

The customer may have service standard expectations that may be either higher or
lowerthanthestandards set byyou.

Gap3:Not deliveringtheservicestandards

 Lackofrighttypeofemployees
 Lackofempowerment
 Lackoftraining
 Failuretopredict
 Insufficientcustomereducation

Gap4:Mismatchbetweenpromisesandperformance

Thisisphysicallyimpossibleorfinanciallyunviabletoprovideallthatwaspromised.
Thisis usuallyresultingin customer disappointment.

 Unrealisticcommunicationtocustomers
 Overpromisingthrough advertising
 Lackofinternalcommunication

GAP5:Gapbetweenexpectedserviceandexperiencedservice:thisgapariseswhentheconsumermisinter
prets theservicequality.

RELATIONSHIPMARKETING

Relationships are a key factor when it comes to the marketing of services. Since
theproduct is intangible, a large part of the customers‘ buying decision will depend on the degree
towhich he trusts the seller. Hence, the need to listen to the needs of the customer and fulfill
32
themthrough the appropriate service offering and build a long lasting relationship which would
lead torepeatsales and positiveword of mouth.

One of the things of most value to a company is its relationships—with

customers,employees, suppliers, distributors, dealers, and retailers. The company‘srelationship
capital isthe sum of the knowledge, experience, and trust a company has with its customers,
employees,suppliers, and distribution partners. These relationships are often worth more than the
physicalassetsof acompany. Relationships determinethe futurevalue of thefirm.

Any slips in these relationships will hurt the company‘s performance. Companies need
tokeep a relationship score-card that describes the strengths, weaknesses, opportunities, and
threatsin regard to the relationship. Your company needs to move fast and repair any important
butweakeningrelationships.

Traditional transaction marketing tended to ignore relationships and relationship

building.The company was viewed as an independent agency always maneuvering to secure the
bestterms. The company was ready to switch from one supplier or distributor to another if there
wasanimmediateadvantage.Thecompanyassumedthatitwouldnormallykeepitscurrentcustomers,
and it spent most of its energy to acquire new customers. The company neglected
theinterdependenceamongitsmainstakeholdersand theirrolesinaffectingthecompany‘ssuccess.

Relationship marketingmarks a significant paradigm shift inmarketing, a

movementfromthinkingsolelyintermsofcompetitionandconflicttowardthinkingintermsofmutual
interdependence and cooperation. It recognizes the importance of various parties—
suppliers,employees, distributors, dealers, retailers—cooperating to deliver the best value to the
targetcustomers.Herearethe main characteristics ofrelationshipmarketing:

 Itfocusesonpartners andcustomersratherthanonthecompany‘sproducts.
 Itputsmore emphasisoncustomerretentionand growththan oncustomeracquisition.
 Itreliesoncross-functionalteamsratherthanondepartmental-levelwork.
 Itrelies moreon listeningandlearningthanon talking.

Relationshipmarketingcallsfornew practiceswithinthe4Ps

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 Theshifttowardrelationshipmarketingdoesnotmeanthatcompaniesabandontransactionmark
etingaltogether.Mostcompaniesneedtooperatewithamixtureofthetransactional and the relational
marketing approaches. Companies selling in large consumermarkets practice a greater
percentage of traditional marketing while companies with a smallernumberof customers
practiceahigherpercentageofrelationship marketing.

Relationship Marketing

MixProduct

 Productsarecustomizedtothecustomers‘preferences.
 Newproductsaredevelopedand designedcooperativelywithsuppliersanddistributors.

Price

 Thecompanywillsetapricebasedontherelationshipwiththecustomerandthebundleoffeatures
andservices ordered bythecustomer.
 Inbusiness-to-
businessmarketing,thereismorenegotiationbecauseproductsareoftendesignedforeachcusto
mer.

Distribution

 Moredirect marketingtothecustomer, thusreducingtherole ofmiddlemen.

 Offeringalternativestocustomerstochoosethewaytheywanttoorder,payfor,receive,install,an
d even repair theproduct.

Communication

 Moreindividualcommunicationanddialoguewithcustomers.
 Moreintegratedmarketingcommunicationstodeliverthesamepromiseandimagetothecustom
er.
 Extranetswithlargecustomerstofacilitateinformationexchange,jointplanning,ordering,and
payments.

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MARKETINGPLAN

MISSION

A mission statement is a formal description of the mission of a business. The

purposeshould be specific but concise in its presentation for each of the mentioned categories.
Themission should be periodically reviewed and updated asrequired. The mission statement
mightbe published in several places (e.g. at the front of an annual report and accounts, on
promotionalmaterial,in the boardroom and on thefactoryfloor).

There is no standard format for a mission statement. However, an effective

missionstatementshould contain the followingcharacteristics:

 Brief– itshould be easytounderstand andremember

 Flexible–it shouldbeable toaccommodate change
 Distinctive– itshould makethebusiness stand out

MARKETINGGOALSANDOBJECTIVES
Broadbutwelldefinedgoalsshouldbesetintheareasofrevenuegeneration(byindividual market
segment, as well as for the entire property), guest satisfaction and
employeesatisfaction.Anexampleofanundefinedgoalwouldbe―toincreasetravelagentbusinessdurin
g thenextyear‖.Abetterdefinedgoalwouldbeto―increasetravelagentbusinessby10%during the next
fiscalyear –from Rs.100,000to Rs.110,000‖.

35
ELEMENTSOFMARKETINGPLAN

MarketingPlanisuniquetoorganizationandneeds.Includeboardand/orothersupporting
groups in the Marketing Plan development; most certainly, this will ensure
greatersupportforproject(s)andimprovetheprobabilityofsuccess.However,theonlypersononthis
―onepersonmarketingventure,‖willmostlikelyhaveashortenedversionofaMarketingPlan. Even
though it may be scaled down, it is wise to include (at some level) the various componentsof an
authentic Marketing Plan. A marketing plan addresses – market, customers, timetable
orcalendarofevents, goals,andbudget through manyactivities aslisted below.

Planning

 Whatdoesthebusinesswant toachieve?
 Howareyougoingtoachieveyourbusinessgoals?(whattasksneedtobedoneandwhen)
 Whendoyouwanttoaccomplishthegoalsandobjectivesofthebusiness?(Milestones/
benchmarks)

Research

 Themoreyouknowaboutyourcustomerthegreaterthelikelihoodofreachingthemthroughmark
etingactivities
 Identifycompetitions‘ strengthsandweaknesses
 Whatistheoperatingenvironment(legal,environmental,ethical, etc.)

Implementation

 Doingwhatyourplanningandresearchindicateisthemostlikelytoachieveyourgoalsandobjecti
ves

Control

 Controlsrefertothesystemsputin placetomonitor yourmarketingplan

 Controlsshould quantifyresults
 Who is doingwhat, when, andwhy

36
 Evaluation

 Evaluatetheperformanceofplanon a regularbasis withpartner

CUSTOMERRELATIONSHIPMANAGEMENT

CRM is a strategy adopted by business firms in recent years and includes the
formulationof methodologies and tools that help business manage customer relationship in an
organizemanner. CRM processes are extremely helpful in indentifying and targeting the best
customer ofthebusinessfirmandgeneratingqualitysalesleads,aswellasintheplanningand

37
implementationofmarketingcampaignanddefinitegoalsandobjective.AccordingtoGartner
―CRMisa businessdesign to optimizeprofitability, revenueand customersatisfaction‖

CRMINSERVICE INDUSTRY

CRMwasinitially intheindustrialcontext,theserviceindustry isalsofocusedonmaintaining

and enhancing customer relationship. Services are produced and delivered by thesame
institutions. The success of the service provider depends upon the long term
customerrelationshipthat develops betweenthecustomer and theserviceprovider.

CHARACTERISTICSOFCRM

 Shareofcustomer
 Lifetimevalueofthe customer
 Customer equity
 Greaterfocusonhighvaluecustomers

NEEDFORCRM

 Provideupdated information
 Customizedstrategies
 Anticipatesproblem
 Promptfollow ups
 Problemresolvingmechanism
 Assessescustomerinterest
 Integratingfunctionalsystem

TYPESOFCRM

ProactiveVsReactiveCRM

In this type of categorization, the practice of a company to anticipate and respond to

thecustomer need with suitable offerings is contrasted with the practice of simply responding to
thecustomerstimulus that comes in throughsuggestions and complaints.

Operational,Collaborativeand AnalyticalCRM

38
BUILDINGCRM

 Enquiry
 Interaction
 Exchange
 Co-ordination
 AdoptionIMPO

RTANCEOFCRM

 Increasedsalesrevenue
 Increaseswinrates
 Increasemargins
 Involvecustomersatisfaction
 Decreasesgeneralsales
 Lowercostofrecruitment customers

BARRIERSOFCRM

 Companyownershipisbased onCapitalistsystem
 Requiretop-managementsupport
 Confusionin attributes
 Probleminimplementation
 Buildingrelationship
 Customerdissatisfaction
 Incapability
MAKINGCUSTOMERSINTOFRIENDS
Acceptanceofthecentralimportanceoftheguestexperiencehassomemajorimplications for
the management of hospitality and tourism service providers. Policies that
train,support,andempowerfrontlinestaffbecomeessentialandhavetobe seenascoretothemanagement
task. Training frontline staff in how to build friendly relations with a
stranger/guestisnotjustaniceidea,oranexpensiveluxurytobejettisonedwhentimesgettough.Similarly
,themanagementofstaffretentioniscoretobeingabletobuildtherelationship.Itisimpossibletotrainfront
linestaffappropriatelyifthereisaconstantchurnofnewemployeesthroughthe

39
organization. The returning guest will not feel like a friend if there is no continuity amongst
thepeople who meet, greet, and serve them. There is now a well-proven link between
employmentpractices,employeesatisfaction,andcustomersatisfaction.Acceptanceoftheemotionali
mportance and the need to establish friendly relations with guests intensify the needs for
stableemploymentrelationships and recognition oftheasset value ofservicepersonnel.
Marketing strategy has tended to be given a higher budget and priority than the quality
ofthecustomerexperienceortheskillsneededtodeliverthoseexperiences.Insomecases,marketingactiv
itiesdeliverincreasedcustomerfootfall,butalsocreatemoredissatisfiedcustomers, because
appropriate service quality standards and employee performance have notbeen established first.
The approach being advocated in this chapter suggests that this must bereversed. The quality of
the guest experience must be at the core of commercial strategy,
andhostingskillsarecrucialelementsofdeliveryofthoseexperiences.Marketershavetobeconcerned
with these people management and operational issues as dimensions of the marketingmix. There
is a need for a more multi-disciplinary approach to the role of the Marketers than isfoundin
moretraditionalfunctionallyspecialized organizations.

CHALLENGESINSERVICEINDUSTRY

Servicemarketersarefacedwiththeneedtoprovidevaluetoconsumersbasedonintangibles that
can be difficult to quantify and deliver.Increasingly, consumers are requiringhigher and higher
levels of service and more convenient access to information. With
tangibleproducts,consistencycanbemaintainedmorereadilyandqualitycanbemonitoredandimpacted
.

Inservice industries,the number ofpeopleortouch-points involved in the deliveryprocess

and the inconsistencies in human behaviors and actions make maintaining quality
andbrandconsistencyanongoingchallenge.Ultimatelypastexperiencegivenbytheserviceprovider
plays a vital role in making future decisions regarding consumption of the servicerepeatedlyfrom
thesameserviceprovider.

Innovation in service is also expected by youth centric customers that pose a challenge
inservicesmarketing.Theprofitacustomerisexpectedtogeneratewhilehemaintainsarelationshipwith
the company.

40
 Unit -4

MARKET LEADERSHIP STRATEGIES

Expand the total market strategy:
Market leader firms can normally gain the maximum when the total market expands. The
focus of expanding the total market depends on where the product is in its life cycle. This
strategy can be used when a product is in the maturity stage. For example, the Japanese
increased their car production to enter new countries.

Market leaders can look for new users, new uses, and more usage of its products when the
product is in the maturity stage of the product life cycle. ICICI Bank, for instance, entered
into rural banking and agri business financing when it felt the heat of competition in the
overcrowded and super-saturated urban market. Maruti Udyog started True Value car
division—used cars certified by Maruti engineers—to expand their market in the rural and
urban markets well.

2. Defending market share strategy:

When the leader tries to expand the total market size, it must also continuously defend its
current business against enemy attacks. For example, Coca-Cola must constantly maintain
its guard against Pepsi-Cola. Similarly, Hero Honda should constantly maintain its guard
against Bajaj, Honda, Suzuki and TVS in the two-wheeler market. In this strategy, the
leader firm must keep its costs down, and its price must be consistent with the value that
customers see in the product.

There are six ways that a market might use to protect its market position:
(i) Position defence:
This strategy involves allocating maximum resources into the current successful brands. To
overcome a position defence an attacker therefore typically adopts an indirect approach
rather than the head-on attack that the defender expects. For example, HUL increased its ad-

41
spend on Clinic Plus and Sun silk shampoos and gave heavy promotions through price
reduction.

(ii) Flanking defence:

This strategy both guards the market position of leading brands and develops some flank
market niches to serve as a defensive corner either to protect a weak front or to establish an
invasion base for counterattack, if necessary. An ideal example is how HUL successfully
nourished its first Rs.100 crore Indian-made brand Vim in a competitive dish wash market.
It was able to check the attack of competitors through product innovation, attractive public
campaigns, road shows and public relations.

(iii) Pre-emptive defence:

This defence strategy manoeuvre involves the launching of an offence against an enemy
before it starts an offence. For example, Titan launched more brands and sub-brands to
corner the market share of HMT watches in the early 1990s.

(iv) Counter offensive defence:

This is a strategy of identifying a weakness in an attacker and aggressively going after that
market niche so as to cause the competitor to pull back its efforts to defend its own
territory .When a leader is attacked, he may base his counterattack in the attacker’s territory.

The attacker has to deploy resources to this territory for defence. When Ceat tyres attacked
TVS Srichakra in Tamil Nadu markets, TVS decided to expand its coverage to Ceat tyre’s
hub in the north and west of India through innovative campaigns like road rallies, road
shows and attractive public campaigns.

42
(v) Mobile defence:
This strategy involves the leader broadening and expanding its territories to new market
areas by diversifying. The leader takes innovation works in both these directions. For
instance, a five-star hotel can become a foreign exchange dealer, inbound and outbound tour
operator, flouriest and so on. Such diversification into related areas comes under mobile
defence strategies.

(vi) Contraction defence:

This strategy involves retrenching into areas of strength and is often used in later stages of a
product life cycle or when the firm has been under considerable attack. For example, HUL
decided to concentrate on its core business areas, that is, soaps and detergents, and has
emerged as the clear leader in the toilet industry.

CREATING AND MAINTAINING VALUED RELATIONSHIPS

Successful businesses don't just communicate with prospects and customers for special
sales. Today, making your company indispensable is a vital key to marketing success. It's a
terrific way to add value, enhance your brand and position against your competition. Here
are seven relationship-building strategies that will help you transform your company into a
valuable resource:

1. Communicate frequently. How often do you reach out to customers? Do the bulk of
your communications focus on product offers and sales? For best results, it's important to
communicate frequently and vary the types of messages you send. Instead of a constant
barrage of promotions, sprinkle in helpful newsletters or softer-sell messages. The exact
frequency you choose will depend on your industry and even seasonality, but for many
types of businesses, it's possible to combine e-mail, direct mail, phone contact and face-to-
face communication to keep prospects moving through your sales cycle without burning out
on your message.

2. Offer customer rewards. Customer loyalty or reward programs work well for many
types of businesses, from retail to cruise and travel. The most effective programs offer
43
graduated rewards, so the more customers spend, the more they earn. This rewards your
best, most profitable clients or customers and cuts down on low-value price switchers-
customers who switch from program to program to get entry-level rewards. Whenever
possible, offer in-kind rewards that remind your customers of your company and its
products or services.

3. Hold special events. The company-sponsored golf outing is back. With the renewed
interest in retaining and up-selling current customers, company-sponsored special events are
returning to the forefront. Any event that allows you and your staff to interact with your best
customers is a good bet, whether it's a springtime golf outing, a summertime pool party or
an early fall barbecue. Just choose the venue most appropriate for your unique customers
and business.

4. Build two-way communication. When it comes to customer relations, "listening" can be

every bit as important as "telling." Use every tool and opportunity to create interaction,
including asking for feedback through your Web site and e-newsletters, sending customer
surveys (online or offline) and providing online message boards or blogs. Customers who
know they're "heard" instantly feel a rapport and a relationship with your company.

5. Enhance your customer service. Do you have a dedicated staff or channel for resolving
customer problems quickly and effectively? How about online customer assistance? One of
the best ways to add value and stand out from the competition is to have superior customer
service. Customers often make choices between parity products and services based on the
perceived "customer experience." This is what they can expect to receive in the way of
support from your company after a sale is closed. Top-flight customer service on all sales
will help you build repeat business, create positive word-of-mouth and increase sales from
new customers as a result.

6. Launch multicultural programs. It may be time to add a multilingual component to

your marketing program. For example, you might offer a Spanish-language translation of
your Web site or use ethnic print and broadcast media to reach niche markets. Ethnic
44
audiences will appreciate marketing communications in their own languages. Bilingual
customer service will also go a long way toward helping your company build relationships
with minority groups.

7. Visit the trenches. For many entrepreneurs, particularly those selling products and
services to other businesses, it's important to go beyond standard sales calls and off-the-
shelf marketing tools in order to build relationships with top customers or clients. When was
the last time you spent hours, or even a full day, with a customer-not your sales staff, but
you, the head of your company? There's no better way to really understand the challenges
your customers face and the ways you can help meet them than to occasionally get out in the
trenches. Try it. You'll find it can be a real eye-opener and a great way to cement lasting
relationships

45
Unit 5

MARKETING OF

HOSPITALITYMEANING

Ingeneral,hospitalitymeans,―Thefriendlyandgenerousreceptionandentertainmentof guests,
visitors, or strangers‖ or relating to ordenoting the business of entertaining
clients,conferencedelegates,orotherofficialvisitors.Inindustry,Hospitalityisthebusinessrelationship
transmission between the visitor, guest, customer, and host. This includes privatedinner parties,
hotel chains, restaurants, and casinos. This also includes places like
Disneyland.Thisindustrymakes billionsin eachyear from disposable income.

Hospitality is the distinguishing factor for success in this new, service economy. In
theinformation age, competitors know how to offer the same products and services, but the
cultureandexperiencecompanies createfortheircustomers will help themstand out.

HospitalityMarketing

Hospitality marketing is marketing efforts directed towards the increase of revenue in

thehospitalityindustry.Learnabout educationandcareersin thehospitalitymarketingindustry.

46
 Marketing is the process for getting a company's product or service out to
consumers.Hospitality marketing is how segments of the hospitality industry, such as hotels,
restaurants,resorts, amusement parks and other entertainment and accommodations businesses
promote theirproductsor services.

TheHistoryofHospitality

The hospitality industry is as old as humanity/ It all started with Abraham. He

lookedaroundhistentandthought,―onlyoneentrance?whatifpeoplecomefromallfourdirections and
see a closed tent- that's not welcoming or cool at all- I'm going to leave all 4 sides open so
alltravelerscanchillatmyplace,graba bitetoeatandrelaxbeforetheycontinueontheirjourney‖.

HOSPITALITYINDUSTRY

Hospitality industry is the field that specializes in delivering services to direct

customers.Thehospitalityindustryensuresthattherecipientsarewelltreatedtoensurethattheyenjoythei
rleisuretimetothemaximum.Someofthesefieldsincluderestaurants,flightattendantsaswellastourguid
ing.

The hospitality industry is a broad category of fields within the service industry
thatincludes lodging, event planning, theme parks, transportation, cruise line, and additional
fieldswithin the tourism industry. The hospitality industry is a several billion dollar industry
thatmostly depends on the availability of leisure time and disposable income. A hospitality unit
suchas a restaurant, hotel, or even an amusement park consists of multiple groups such as
facilitymaintenance, direct operations (servers, housekeepers, porters, kitchen workers,
bartenders, etc.),management,marketing,and human resources.

Categories:

1. Accommodation
Hostels
Hotels
Motels
Resorts
2. Restaurantsandbars
47
 CafesNigh
tclubs
Pubs and Public
housesRestaurants
Bars
3. Travelandtourism
Flightattendants
Travel
agentsTour
operatorsLocalt
ourism

HospitalityandTourismManagement

48
HospitalityandTourismManagement(HTM)isamultidisciplinaryfieldofstudywiththe purpose of
preparing people with the expertise, commitment, and skills for
management,marketing,andoperationspositionsintheexpandingindustrythatprovidesfood,accommo
dations,andtourismservicestopeopleawayfromhome.Asafieldofstudy,Hospitality and Tourism
Management is interdisciplinary. It draws upon a wide range of basicdisciplines to provide the
fundamental knowledge and skills that are required to fulfill the
diversedemandsplaceduponindividualsinmanagementpositionswithinthehospitalityindustry.Casino
Management,ClubManagement,LodgingManagement,FoodandBeverageManagement(Commercial
andNon-Commercial),andTourism,ConventionandEventManagement

Hospitality includesfood,drinkandaccommodationandalsoisconcernedwiththeapproach to
be adopted e.g. welcoming, respectful and genuine. Hospitality is offered and theextent or
limitation of it is based on the needs and the purpose of the guests/strangers.
Alliancesareinitiallydevelopedthroughhospitalitybetweenfriends,householdsandstates,andarestren
gthenedthroughcontinuingmutualhospitality.Hospitalityoncegrantedbetweenindividuals,househol
dsandstatesisalsograntedtodescendantsandthroughextendedfriendships.

In this context, an understanding of hospitality as a human relationship involving

peoplein host and guest roles is essential to better inform the marketing of hospitality and
tourismoperations.Throughabetterunderstandingoftheprovisionofhospitalityandactsofhospitablen
ess, commercial organizations are better able to recognize the emotional
experiencesinvolvedandensurethatmanagementpracticefocusesontheirproduction.initiallypropose
dthata three-domainmodelhelpedtosetthecontextof hospitality using anadmittedly crudeVenn
diagram, not only to distinguish between cultural/social, private/ domestic, and
commercialdomainsbutalsotoshowhowtheypotentiallyoverlapandinfluenceeachother.Thisisreprod
ucedas

The three domains to take place and the following paragraphs will highlight some of
theemergingissues that haveimplications forthe marketingof hospitalityandtourism.

 Thesocial/culturaldomain

49
  Thedomestic/private domainofhospitality
 Thecommercialdomain
TheSocial/CulturalDomain
Destination marketing often makes reference explicitly and implicitly to the
hospitalityand welcome given to visitors. Tourism marketing research shows that nine out of
every tenoverseas visitors to Ireland claim Irish friendliness and hospitality as the primary
reasons forvisitingthecountry.TheJamaicansmileandwelcome,andtheworld-
famous‗Southernhospitality‘ in the USA are also examples of the claims about the welcome
strangers will
receiveindifferentcultures,whichareemployedinthemarketingofparticulardestinations.Thequotatio
n from Derrida given above suggests that these are claims made by all cultures and areindications
of the human decency with which a society seeks to define itself. The problem is thatboth
Derrida and tourism marketers tend to downplay the extent to which these obligations to
behospitablevarybetweencultures,andovertime.adominantculture-relateddefinitionofhospitality
across societies is that it involves ‗converting strangers into friends‘and
providesexamplesspanningcontinents, religions,andcultures.InWestern settings,
Apart from the general obligation to offer succor and support to travelers, strangers,
andthe poor, reciprocity is also an important consideration of the hospitality relationship; in
otherwords, the host may one day be the guest. Reciprocity was an important feature of tourism
inAugustinian Rome. Families built up networks of mutual relationships through offering
andreceivinghospitality,andtoured betweenthe various networkmembers.

There were strong cultural obligations to offer hospitality to strangers, travelers, and
thehomeless.Inparticular,thehostwasrequired,asamoralandsacredobligation,toofferprotection and
safety to the guest, as well as shelter and nourishment. Heal argues that
HandbookofHospitalityMarketingManagementfiveunderlyingprincipleshavegovernedEnglishhos
pitalityduringtheperiod. Theseare:

 Therelationshipbetweenhostandguestisa‗natural‘one(i.e.,itisgroundedinthenatureof social
life);
 Anintrinsicpartofbeingahostishavingregardforthe‗sacrednature‘oftheguest(whichrefers,
broadly, tothe honorand status which aguestmaybringto thehost);
 Hospitalityis noble;
50
  ‗Altruisticgiving‘isanestablishedandexpectedpartofEnglishsociallife;and
 Thesocialrelationshipsandexchangesthathospitalityengendersareatleastasimportantasthose
formed in themarket place

Theobligationsclearlyextendbackthroughhumanhistoryand,untilrecently,in
‗modernsocieties‘carriedstrongmoralsanctionsforthosewhofailedeithertoofferhospitalityasahostort
obehaveappropriatelyasaguest.Inthelattercase,guestsoverstayingtheirwelcomewereasignificantconc
ern.SherringhamandDaruwalla(2006)remindusofanOldItaliansaying,whichroughlytranslatesas,‗Gu
estsarelikefish,afterthreedaystheystink‘.
As further confirmation of these strong obligations in recent history, it is interesting
tonote that Shakespeare makes references to hospitality and inappropriate host and guest
behaviorsmany times in his plays. Typically, he uses transgression of the laws of hospitality as a
way onincreasingthevillainyofthecharacterandaction.Whilsttwenty-firstcenturyaudiencesmaywell
need to have the significance explained to them, it is likely that contemporary Jacobeanaudiences
well understood that the murder of Duncan whilst he was a guest in Macbeth‘s
housefurtherintensifiedtheoutrageofthecrime.Justincase,however,ShakespearehasLadyMacbeth
feign horror on the discovery of the murder by saying, ‗What in our house?‘ In otherwords,
reminding the audience that the King has been murdered whilst the Macbeths should havebeen
protecting him. In King Lear, when Buckingham is about to have his eyes removed byLear‘s
sons-in-law whilst he is entertaining them in his home, he says, ‗But you are my guests‘.In both
cases, Shakespeare uses the contemporary audience‘s understanding of the obligations
ofhospitality for dramaticeffect,todistance theperpetratorsfromnormal,moral,anddecentsociety.
Clearly, current cultural and religious pronouncements rarely consider these obligationstooffer

Marketinghospitalityandtourismexperiencesprotectionandhospitalitytoguests,though
traces sermons by religious leaders stretching into the nineteenth century wherethevirtues of
extending hospitality are extolled. Even in the 1930s, in the United States, the
CatholicWorkers‘movementadvocatedreengagingwithmedievalideasofhospitalityasawayofprovid
ing support for unemployed and poverty-stricken people. The key point here is that
theobligationstobehospitabletostrangersandtothepoorhaschangedinindustrialsocieties,

51
thoughthereisnoreasonwhytheycannotbeasourceofinspirationtohospitalityandtourismmarketers,an
d cannot be re-introduced as modelsforcurrent practice.

Hospitablecommunitiesmaywellrefusehospitalitytocertaingroupsthataredeemedtobeundes
ervingandunworthy.Contactwithstrangerscanresultinabatementintheobligationtobehospitable,whe
nguestsbehaveinawaythatfailstotreatthehostwithrespect,orwhenguestsdonotmeettheirobligations.I
tcouldbe thatthe
commercialrelationshipimplicitinmasstourismandhospitalitysectoractivitiesreducestheobligations
onbothhostsandguests.Whether‗commercialhospitality‘canbe‗hospitable‘isaquestionthatwillbedi
scussedfurther,laterinthechapter.Finally,theimpactoftourismoncommunitiesisnotevenlyspread.For
somesectionsofacommunity,hospitalityandtourismactivitiesrepresentemploymentandbusinessopp
ortunities,butforotherresidentstheyrepresentnoise-disturbanceandathreatto
theirenvironment

TheDomestic/Private DomainofHospitality

Whilst the social/cultural domain of hospitality provides a set of broadly shared

socialnormsandexpectationsabouthospitalityandtheobligationsofhostsandguests,theprivate/
domestic domain is the key arena for learning the behaviors of being a host and being aguest.
Typically most households will both entertain non-household members as guests, and beinvited
to be guests in other households. The expectations on acceptable behavior will be broadlyshared
through social/cultural norms. Most dinner party guests, for example, would feel that
theobligations of hospitality had been broken by a host who expected them to pay for each glass
ofwine, yet in many cultures it would be expected that they bring with them wine or food
ascontribution to occasion. Within this broad setting, hosts have a degree of control over how
theyshape guest experiences and commercial hospitality operations can learn from and employ
theexperiences of hospitality in the private/domestic domain.Differentiation between
hospitalityand hospitableness provides an important insight for marketers because it gives an
insight intobeing a good host, which extends beyond culturally shared obligations of hospitality.
Being agoodhost has clearrelevanceto commercialcontexts.

Marketing hospitality andtourismexperiencesgenuine needstoplease

andcareforothersincluding-thedesireto pleaseothers, stemmingfromgeneralfriendliness and

52
  benevolenceorfromaffectionforparticularpeople,concern,orcompassion;
 thedesiretomeetanother‘sneed;
 thedesiretoentertainone‘sfriends ortohelpthoseintrouble; and
 the desireto havecompanyor to make friends,and the desirefor the
 Pleasuresof entertaining – whatwemaycall thewish toentertain asa pastime.

The key concern for hospitality and tourism marketing is the extent thatthese motivesand
desires can be captured, promoted, and deliveredin a commercial context. In principle,Telfer
suggests that where hosts are offering hospitality for personal gain, or for vanity or
solelyoutofasenseofduty,theactionsarenotgenuinely hospitable.Fromatwentieth-centuryChristian
perspective, Nouwen (1975) argues that hospitality should consist of the followingfacets:

 Freeandfriendlyspace–createsphysical, emotional,andspiritual space forthestranger.

 Strangerbecomesaguest–treatsastrangerasaguestandpotential‗friend.‘
 Guestprotected– offers sanctuaryto the guest.
 Hostgives gifts – thehostwelcomes the guestbyprovidingthebestgiftspossible.
 Guestgivesgifts –theguestreciprocates andgivesgiftstohost.
 Allguestsareimportantandgifted– thehostvaluesthe guestand gains valuefromthem.
 Acceptance,nothostility–
especiallythekindsofsubtlehostility,whichmakesfunofstrangersorputs them into
embarrassingsituations.
 Compassion –hospitalityisbasicallya senseofcompassion.

TheCommercialDomain

The nature of the relationship between those offering hospitality experiences in

bars,hotels, and restaurant sites and the recipients of those experiences is of key importance to
ananalytical understanding of the commercial domain of hospitality. For some, these are
economicrelationships. Customers are not guests in the sense outlined earlier in this chapter; they
arecustomers entering into a contractualeconomic relationship. Customers receive a bundle
ofproducts and services, and for this they pay money in exchange. This type of thinking implies
asubstantially rational relationship and one in which emotional needs of the service encounter
arerecognizedbutgivenasubordinateroleintheeconomictransaction.Servicedeliverersare

53
required to provide emotional labor through an appropriate emotional performance, but this
isonlyoneelement of the servicedelivery.

These more traditional definitions of hospitality, concerned with delivering

hospitalitythroughthegenuinehospitablenessofhosts.Byprovidinghospitalityexperiencesthataredeli
vered by individuals who are welcoming and hosting guests in a way that converts ‗strangersinto
friends,‘ it is possible to develop a loyal base of ‗customers who are friends‘. One of the
keydebates that have emerged over the commercial domain of hospitality is the extent to which it
ispossible to engage these traditional relationships in what is essentially an economic
transaction.As we have seen earlier in the chapter, Telfer‘s comments on the motives of
hospitablenesssuggestthat commercialhospitalityproviders have

MARKETINGHOSPITALITYANDTOURISMEXPERIENCES

They deliver hospitality goods and services for profit; the level and extent of the
serviceprovided will always be dependent on their ability to turn in a profit. Frontline staff
providing theserviceis doingso as employees,andcustomersarenot theirguests.

Service staff is often required by their employers to provide an emotional

performancethey frequently do not feel and, hence, they have to engage in working at the
emotions requiredfortheirjob.From1000respondentssuggestedthatwhenaskedabouttheirdining-
outexperiences,a majority consideredthatdiningindomestic/private
venuesinvolvedgenuinehospitality,whereasdiningincommercialsettingsdidnot.Ritzer,throughhisw
orkon
‗MacDonaldization,‘ (1993, 2004) suggests that hospitality services are subject, like all
services,to corporate pressures to increase control, calculability, predictability, and efficiency
that leadultimately to ‗inhospitable hospitality‘. These systems, informed by Taylorism
developed
inmanufacturing;ultimatelyminimizehumandiscretionandpersonalinitiative,resultinginstandardize
dand scripted service interactions,which areinconsistentwithgenuine hospitalityand actsof
hospitableness.

AlthoughTelfer‘sexplorationofthephilosophyofhospitablenesssuggeststhattheulterior
motives associated with commercial hospitality might reduce the genuine quality

54
ofhospitableness, she hints that it might be more complex than it initially appears. When
discussingcommercialhospitality,Telfersuggeststhatitisnotinevitablethatcommercialhospitalityis

55
inhospitable. It is possible that individuals who are naturally hospitable are attracted to work
inthesectorandprovidehospitablebehavior,evenasemployeesofessentially‗inhospitable‘firms.She
also points out that many small firms may be operated for other than commercial
reasons,andthesemayoffergenuinelyhospitableexperiences.Lashleyetal.
(2005)foundthatinterviewees were able to recognize hospitality experiences as being genuine in
both commercialanddomesticsettings.

When asked to recount their most memorable meal experiences, about half the
occasionsthey recounted were in domestic settings, whilst the other half were in commercial
settings.Interestingly, both appeared to be recognized as having authenticity, though the language
ofdomestichospitalitywasusedtoevaluateexperiencesincommercialsettings.Emotionalrequirement
s to feel safe and secure, welcome, and genuinely valued dominate the assessment ofauthenticity
in both settings.Hospitality venues in the form of bars andcafes, and restaurantsplay an important
role in providing the setting for new forms of urban cultural life. In many waysthey perform as
the community meeting point which, Adelmann et al. (1994) suggest, willbecome an increasing
feature of service in cities where many people have an individualizedexistence.Bars,cafes and
restaurants provide

In other words, they play a key role in providing social networking, which develops
anauthenticity in its own right. The delivery of hospitality and tourism experiences can be
betterinformed by recognizing the fundamental role that guest and host relations play in
contemporarysocial life. This chapter argues that guest and host relations are at the heart of all
hospitalitytransactions,irrespectiveoftheirimmediate setting–thedomestic/private
orthecommercial,

or in the way destination residents interact with tourists. This chapter also argues that
thosewishing to market particular destinations – nation, region, or city – need to set the host–
guesttransaction at the centre of their marketing and service delivery strategies and manage the
servicein a way that pays attention to the emotional dimensionsof the guest experience. In
particular,the guest needs to feel like a guest in a domestic/private setting. They need to feel
wanted andrespected as individuals; they need to feel important and that their needs will be both
recognizedand met. Guests need to feel that they will be safe and secure, and comfortable. Hosts,
therefore,need to be motivated by the desire to be hospitable and to ensure the happiness and

56
wellbeing
oftheguest.Mostimportantly,commercialhospitalityexperiencesmustextendbeyondformulaic

57
standardizedtransactionswhereinbothcustomersandthestaffhostingthemareultimatelyunimportant
as individuals because theprocessesareessentiallydehumanizing

THEGUEST–HOSTTRANSACTION

If the guest experience is to be such as to create memorable experiences and

ultimatelyenable the guest to feel a bond of friendship, hosting behavior needs to reflect the
traditions
ofhospitalityandhospitableness.Inaddition,hostsneedtohavehighlevelsofemotionalintelligenceand
abilitytopredictandconnectwithguests‘emotionalneeds.Acultureofhospitality within commercial
hospitality and tourismorganizations would reflect traditionalhospitality values and obligations.
Accepting all visitors as guests irrespective of their likelihoodof becoming regular visitors is at
the heart of this approach. All strangersand guests are treatedaspotential friends.

Acultureofhospitality
 Thestrangeristreatedasaguestandpotential‗friend‘
 Guestincludedintothesocialcontextwithoutlimits
 Acceptanceofallguestsasequallyvaluedindividualsirrespectiveofguestcharacteristics
 Noevidenceofhostilitytoguests
 Guestprotected andprovidedwithasafeandsecureenvironment
 Hostgives gifts – thehostwelcomes the guestbyprovidingthebestgiftspossible
 Hostexpressescompassion fortheneeds ofothers
Qualitiesofhospitableness
 Thedesireto pleaseothers
 Generalfriendlinessandbenevolence
 Affectionforpeople;concernforothersandcompassion
 Thedesiretomeetanother‘sneed
 Adesiretoentertain
 Adesireto helpthose introuble
 Adesiretohavecompanyortomakefriends

58
  Adesireforthepleasuresof entertaining
Displayingemotionalintelligence
 Hostsrecognizetheirownemotionsand areable toexpressthem toothers
 Hostsrecognizeandunderstandtheemotionsof guests
 Hostsuseemotionswithreasonandemotionalinformationinthought
 Hostsregulateand managetheir ownand the emotions ofothers
 Hostscontrolstrongemotionalstates –anger,frustration,excitement,anxiety,etc.

DeliveringHost–GuestTransactions

Given the crucial importance of host performance in the delivery ofguest experiencesthat
will develop friendly relations with guests and ultimately loyal customers, the managementof
frontline personnel is of paramount importance. Recruiting staff that have a positive profile
ashosts, with clear qualities of hospitableness and with a good level of emotional intelligence,
willenable a commercial hospitality or tourismorganization to build a workforce committed
todeliver remarkable guest experiences. A planned program of training, role modeling, and
bestpractice sharing will reinforce and further develop the culture of hospitality and commitment
toguest experiences. Similarly, prioritizing staff retention is crucial because guests will not
feelwelcome and important if they never see the same person twice. Ensuring that staff are
recruited,trained, supported, and retained is not just a nice idea, somehow ‗other worldly‘ in a
‗toughcommercial environment;‘ it is an essential element of the business strategy on which to
basecompetitiveadvantageand long-term profitability.

Marketingstrategy

Making traditional hospitality and the emotional dimensions of guest experiences at

theheart of commercial hospitality and tourism marketing is, in principal, advocating a
businessstrategy which aims togain competitive advantage through the uniqueness of the service
quality.Conventional services marketing literature suggests that a strategy that aims to compete
viaquality is less easily replicated than a strategy that aims to compete on low prices. A
qualitystrategy is likely to develop more loyal customers and will be less susceptible to
competitorpressures.

59
 Theapproachadvocatedhereaddsafurtherdimensiontothisbecausetraditionalhospitality
suggests that good hosting leads to strangers becoming friends. In commercial contextthe
approach suggests that making customers into friends intensifies the levels of loyalty becauseof
the emotional attachment of the relationship. Communications with customer/friend needs tobe
consistent with friendship. In other words it has to be sensitive to the needs of each
individualcustomer,theirlikesanddislikes,preferencesandneeds.Sendingoutbirthday,weddinganniv
ersary, and Christmas cards is consistent with how friends operate, but these need to avoidoverly
formulaic and corporate outputs that often lack the personaltouch.Invites to specialevents and
being given special access to corporate events as honored friends are all examples ofbuilding
ongoing contacts and communications that help to establish the special relationship.
TheBritishpubcompanyJDWetherspoonhasanincentiveschemeforbarstaffwhogetstoknowthe
personal details of one hundred of their regular customers. A hotel known to the authorprovides
regular guests with a complimentary favored drinkin their room after they have
dinedinthehotel‘sdiningroom.Thekeypointisthatcommunicationsatcorporate,unit,andindividuallev
elareconsistentwith‗guestsas friends‘ratherthanascustomers.

Public relations outputs, advertising messages, and the brand image must link to
valuesand obligations of traditional hospitality. This practice can be illustrated in the following
quotefrom the brochure of Le Petit Hotel, St. Martin: ‗Enjoy the spirit of our intimate island
home,where you arrive a stranger and leave as our cherished friend‘. In some Marketing
hospitality
andtourismexperiencescases,thehotelnameisusedtounderscorethepotentialrelationship.Frontline
staff and managementare the crucialmarketing interfacewith guests. Under thisapproach, staffs
are more than service deliverers, they are the hosts who provide guest withexperiences. It is vital,
therefore, that staff are recognized as performing this marketing role, notjustup-
sellingandcomplaint handling, butdeliveringthe core brand valuesto guests.

They are also the means of responding to eachcustomer‘s needs and the
variationsamongst service types and of recognizing the potential service needs of the same guests
whenthey arrive with different service needs in mind. They must recognize and respond to the
criticalsuccessfactors relevant to thatcustomer‘svisit.

HISTORYOFTHOMAS COOK

60
 Thomas Cook began his international travel company in 1841.Thomas suggested that
aspecial train be engaged to carry the temperance supporters of Leicester to a meeting in
Loughborough. On 5 July 1841 roughly around 500 passengers were conveyed in open carriages
theenormousdistanceof 12miles and back for ashilling

ThomasCookToday
ThomasCookUK&IrelandisthesecondlargestleisuretravelgroupintheUKwitharound19,000
employeeshas a networkofmorethan 800 high streetstores
ThomasCookAirlines,operatesafleetof44aircraftandfliesfromvariousregionalairportstodestination
sworldwide.

LEISURE/HOLIDAYINDUSTRY
Services provided are Travel Insurance, Airport parking, Car Hire, Airport
lounges,Travel Vouchers, Attraction tickets, Foreign Exchange(Currency, Prepaid Cash
Passport, CreditCard,Moneygram Transfer, Corporate Foreign Exchange,and thelike
ClassificationofService
 Degreeofintangibility
 Skilllevelofserviceprovider
 Labourintensiveness
 Degreeandnatureof customercontact
 Goalofserviceprovider
Degree&Natureof Customer Contact
Thisisalsoknownas―peopleprocessing‖.Customersmustphysicallyenterthesystem.
Sometimes, the service provider goes to the customer with necessary tools. People must
bepreparedtospendtimeactivelyco-operatingwiththeserviceoperation.Thelevelofinvolvement may
vary,depending on the service that is being offered.Managers must thinkabout processes/outputs
in terms of what happens to the customers or what benefits are created.When booking a holiday,
customers need to have almost full involvement in the service process.Unless the customer
initiates the process, the process cannot be started and the service. Customerparticipates
primarily in the ‗Front of Stage‘ interaction, while seeing physical evidence of
theservicethroughout theentireencounter.

61
CATEGORIESOFTOURISMPRODUCTS
Naturetourism
Exploring conservation areas by walking or riding in the forest, or on the mountain
orbeach, navigation in rivers, lakes and the sea, observation of flora, fauna and other
naturalattractionssuch as waterfalls, caves, etc.
Experientialculturaltourism
Livingwith nativecommunities, includingparticipation indailylifeactivities and
variousculturalevents, suchasmusic,danceandarts, ritesor religious holidays,etc.
Agri-tourism
Visiting rural communities to participate in agricultural production,
livestock,handicrafts,and othertraditional agricultural activities.
Historicaltourism
Visitingspecialsitestoseemonuments,sculptures,architecture,civil,militaryorreligiousartefa
cts,archaeologicalremainsofancientcultures,localmuseumsandsitesofpaleontologicalinterest.
Healthandwellnesstourism
Today, increasing interest in fitness, disease prevention, maintaining good health,
newage remedies and alternative treatments to alleviate various types of stress are key
tourismmotivators. Such tourism may include visits to holy sites with communities; participation
inritualsand treatments with healersand shamans.
Medicaltourism
This has been defined as the practice of travelling across international borders to
obtainhealthcare.
Religioustourism
Religioustourismalsocommonlycalled―faithtourism‖,thisinvolvestravelforreasons offaith,
forpilgrimage,missionaryand other related purposes.
Sportstourism
Recreational fishing and hunting, sports that require specialized training and
equipment:canoeing,climbing, rappelling, etc.
Scientifictourism

62
 Observationandstudyofflora,faunaandgeology,localfoodplantsandancestralmedicinalknow
ledgeand itsapplications in theconservation ofbiodiversity.

DestinationMarketing
Destinationsareplacesthatattractvisitorsforatemporarystay,andrangefromcontinents to
countries to states and provinces, to cities, to villages, to purpose built resort areas.At the
foundation level, destinations are essentially communities based on local governmentboundaries.
Tourists travel to destinations. Destinations are places with some form of actual orperceived
boundary, such as the physical boundary of an island, political boundaries, or evenmarket-
createdboundaries.
Destination marketing refers to a management process through which the national
touristorganizationsand/ortouristenterprisesidentifytheirselectedtourists,actualandpotential,comm
unicate with them to ascertain and influence their wishes, needs, motivations, and likes
anddislikes, on local/rural, regional, national and international levels, and to formulate and
adapttheir tourist products accordingly with a view to achieving optimal tourist satisfaction,
therebyfulfillingtheirobjectives.
The marketing concept is often used inappropriately, reducing it to thepromotion andsale
of products and tourist destinations, and in particular to advertising and to tourism fairs
andevents.Whilethesefunctionsareimportant,thereismuchmoretomarketing.Tourismdestinations
are probably among the most difficult ―products‖to market, involving large
numbersofstakeholdersandabrandimage.Adestinationmarketingorganizationisanyorganization, at
any level, that is responsible for the marketing of a destination. This
thereforeexcludesseparategovernmentdepartmentsthatareresponsibleforplanningandpolicy.Destin
ationmarketingorganizations(DMOs)areconcerned withthesellingofplaces.
Sevenphasesofthetravelexperience:
 accumulationofmentalimagesaboutvacationexperiences;
 modificationofthose images byfurther information
 decisionto takeavacation trip;
 traveltothedestination;
 participationatthedestination;
 returnhome;and

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  modificationofimagesbasedonthevacationexperience
BrandingaTourismDestination
Tobrandatourismdestinationistodevelopaclearidentity,or―brand‖,basedonreality, while
alsoreflectingthe core strengths and ―personality‖of the destination. Thepurposeof a brand is to
establish a distinctive and memorable identity in the marketplace that represents asource of value
to the consumer. Branding is perhaps the most powerful marketing weaponavailable to
contemporary destination marketers confronted by tourists who are
increasinglyseekinglifestylefulfillment and experiences.
Only those destinations that have a clear market position and appealing attractions
willremain at the top of consumers‘ minds when they book their holidays. In the highly
competitiveand dynamic global tourism environment, strong branding will help a destination
stand out fromthe crowded marketplace. Building and maintaining brand value is the key to
business successand, as a result, brand management is quickly shifting from a peripheral
marketing concern to thecorebusiness strategy.
The fundamental challenge is to somehow develop a brand identity that encapsulates
theessence or spirit of a multi-attributed destination, representative of a group of sellers as well
as
ahostcommunity.Tourismmarketingisgenerallyconcernedwiththesellingofdreams,asexpectationso
fanintangibletourismservicecanonlyberealizedaftertravel.Theimagesheldbyconsumers
thereforeplayacritical rolein theirdecision-making.
Most destinations have superb resorts and attractions, every country claims a
uniqueculture, landscape and heritage, each place describes itself as having the friendliest people,
andhigh standards of customer service and facilities are now expected. As a result, the need
fordestinations to create a unique identity – to differentiate themselves from their competitors –
ismorecritical thanever.

Importanceof DestinationMarketing
People normally choose a destination before they choose the airline or decide on
thehotels and attractions to visit. There is no pro-poor tourism strategy if there are no visitors to
thedestination. Hence destination marketing to increase tourism is very important. The marketing
ofa destination is based on the concrete experiences, services and options that are part of a
globalidea and branding of a ―destination‖. Thus, a broad multi-stakeholder policy and strategic

64
frameworkthatarticulatesthedifferentactors,levelsanddestination―components‖insuchways
thatbenefits areequitablydistributed andcontributeto povertyreduction isfundamental.

TourismMarketingPlan
Atourismmarketingplanrepresentsastrategyandisacombinationoftechniques,toolsandresourc
es designed to achievecommercial and social objectives.
Product
Atourismproductisthesetofassetsandservicesthatareorganizedaroundoneormoreattractionsi
n order to meet theneeds of visitors.
Anattraction
Thesearethe―rawmaterials‖ofthetourismproductandassucharepartoftheterritory where the
business is located. They consist of the natural and cultural resources, places andevents that, by
their characteristics or location in a context, awaken the visitor‘s interest andmotivatehis/her
action.
Facilitiesandservices
Tourist facilities refer to the infrastructure, equipment and services that make the
tourismactivitypossible: the tourist enjoysthe attractions and doesso in asafeenvironment.
Accessibility

Thisfacilitatesvisitorstoaccesstothetouristdestinations,includinginfrastructure,transport
and communication services. Tourism product development is designed to increase theincome in
the sector. Tourism product development involves implementation of a comprehensiveplan of
action that will guide towards dealing with estimated increase in business over the
short,mediumand long-terms.

The action strategies for the development and management of tourist destinations
shouldconsidertheneedsandinterestsofallstakeholdersinthetourismsystem:local/
ruralcommunity,entrepreneurs, investors, governments,tourists andotherstakeholders.
Tourism product development aims at long-term sustainable development by the execution of
anumber of strategies. These strategies bring into focus a generic idea to increase
competitiveness,build an inclusive industry by promoting closer integration of people and
develop and maintaintheenvironment.

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MARKETINGOFFINANCIALSERVICE:-

The financial service industry in India has experienced massive changes since the
early1990s. Prior to this time, banks served differentcustomer needs, often catering to different
setsof customers. Regulatory frameworks and traditional business practices meant that there
wasvirtually no competition between types of institution. Building societies offered savings
andmortgages while banks provided current accounts, loans and business finance. Insurance
andinvestmentwerelargelydealt with byspecialistbrokers.

CHARACTERISTICS:

 Intangibility
 Inseperability
 Variability
 Perish ability
 Highinvolvementpurchases
 High levelof brand liability

SERVICEQUALITYOFFINANCIALSERVICES

Quality of service is very important for customer satisfaction. A high level of

externalcustomersatisfactionlargelydependsuponthelevelofinternalcustomersatisfactionandcorres
pondingnatureofservicequalitydeliveredbyinternalcustomertotheexternalcustomerin financial
service industry. Customer satisfaction for financial service is also depends upon
therelationshipof thecustomerwith theemployeeof theorganization.

Perspectivesoffinancialservicesquality

 FunctionalQuality
 TechnicalQuality
 Reliability
 Assurance
 Tangible
 Empathy
 Responsiveness

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Improvingfinancialservices

 Assessingproductandcustomerattributes
 Strivingthe qualitymission
 Continuous qualityimprovement
 Encouragingemployeeinitiatives
 Collectingandanalyzinginformation
 Traininganddevelopmentprogramme
 Rewardingqualityadherence

UnderstandingCustomerExpectation

Customer expectation understanding is must for every organization. Because

customerdissatisfaction or even worse situation will create a hurdle in organization growth. So
proactivelyconductingcustomersurveyabouttheir satisfactionis
mustforeveryfinancialorganization.

UnderstandingCustomer

 Interviewcustomertodesignaquestionnaire.
 Typicaltopiccoveredin customersatisfaction.
 Overallsatisfaction
 Performanceoffrontline staff
 Design afeedback formandaskcustomertorate servicequality
 Useaconsultant to design andif necessaryconduct a survey.

Segmentingfinancialservice

 Demographic
 Psychographic
 Behavioralsegmenting

TargetingofFinancialServices

 PrimeCustomers
 HighlyValued Customers

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  Prosperous but Mobile – This group is generally aware of its prospects is not loyal
andwill frequently shop around for the best deal and will move readily to take advantage
ofthebest offer.
 PrimeProspects
 MiddleMajority
 PriceShoppers
 Tomorrow‘sValuedCustomers
 NoFrills
 SocialResponsibilities

PositioningofFinancialServices

Positioning presents particular challenges to the financial service industry, owing to

theintangibility of its products, the absence of patent protection and the ease with which
productsand services can be copied to competitors. Arguably, positioning is still in its infancy in
manyareasof financial services around the world.

DevisingFinancialServices

 BankingMarketing
 InsuranceMarketing
 HomeLoan
 CreditCards

NEEDSOFFINANCIALSERVICES CONSUMER

Cash accessibility: Customers need to have frequent access to cash and look to various
moneytransmission tools that cater to these needs such as ATMs, credit cards and cheques as
well astelephonebankingwhichenables quickandeasymovement offunds

Asset Security: Consumers need physical security of assets and one of the most basic
functionsof banks is that of safekeeping. Consumers also need to protect one's assets from
depreciation byearningareturn on theirmoney.

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Money transfer: This refers to the need to be able to move money around.
Technologicaldevelopmentshavemadethis possibleandalso havereduced relianceoncash.

Financial Advice: Financial products increase in number and complexity, consumers have
agreaterneedforinformationandadviceinordertomakeappropriatepurchasedecisionsFinancialneeds
or objectives forma hierarchy,which evolveover time.

MarketingTechniquesinBanking

In simple terms application of marketing techniques in banking means a

coordinatedorganizational effort to reach the customer tofulfillhis specific needs for getting his
patronageby maximizing customer satisfaction. In other words, the customer and his needs are
central tomarketing and the specific needs are satisfied through utilization of people, products or
services,price, promotion, processes and branch location and distribution.. In the analysis of
marketingtechniques, facilities and amenities inside the branch arid the processes are being
looked into indetail. In recent years Indian banks have urged their branches to adopt more and
more marketingtechniques for achieving their business goals. The growing competition in the
banking sector,both within India and outside, has made itimperative for them to adopt various
marketingstrategies to gain competitive edge over each other. Customer's needs have been made
the focalpoint of attention bybanks.

BranchLocationandDistribution

The starting point for the marketing of financial services to the customer is his
localbranch. Because the business of a bank is largely centralized through its individual
branches, it isimportantto select themostpromisinglocations wherever itispossible.

FINANCIALSERVICESMARKETING -TECHNIQUESANDSTRATEGIES

In marketing, distribution is the means through which a seller makes his product
availableto the buyer. The channels of distribution for bank's services should be thought of as
any meansused to increase the availability antler convenience of the services that help to
maintain existingbankusers orincreasetheir useamongexisting ornew customers,'

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 However, banking today is not about where the branch is but where the customer is
andbanks are resorting to the use of technology so that customers can access their accounts
fromremotelocations.

Technology

Advancementintechnologyhashadaprofoundeffectonthedeliveryoffinancialservices in the
last decade, and the pace of change and level of impact is continually increasing.Technology was
first used in branches of banks as a means of reducing the cost of many routineprocesses,butnow
itprovidesa costeffectiveandcompetitive solutiontothe delivery ofproducts and communication
with customers. Technology has enabled banks to target customers,provide customized products
and services to match their individual requirements. It has alsoenabled banks to strengthen
relationships with its customers as they now use the convenienceoffered by technology to stay in
touch with their branch and their accounts more FinancialServicesMarketing -Techniques and
Strategies

Computerisation

PublicSectorbarkshavebeendoingBranchAutomationsince1993.Thehistoricagreement of
October 1993 with the staff unions has opened up the vistas of computerization inevery
functional area of banking. Central .vigilance commission has also directed the banks
tocomputerize at least 70 percent of their total business by January 1,2000, makingnon-
negotiablewith the unions has cleared the road for bank managements to take advantages of
bankingtechnology to improve the efficiency and decision making process for customer value
creation.Branch Mechanization is given top priority in State Bank of Travancore. The Bank had
320 fullycomputerized branches and 76 partially computerized branches ason 31'' March 2003.In
orderto harness technology for better advantage, user friendly back office automation software
hadbeendevelopedin-houseandthepackagehadbeenimplementedin71non-
computerizedbranches.Totalbusiness capturedthroughcomputersreached80%asatthe
endofMarch2003.

Telebanking

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 Face to face encounters are giving way to telephone encounters. Personal serve is
beingreplaced by self-service, often through the medium of computers or easy to use machines.
Websitesarebeginningto replaceor supplementvoicetelephonecontacts

PRICING

MarketingFinancialServicesunexpectedrelationshipbetweenpriceandconsumerdemand in
specific markets further highlights the critical importance of setting prices correctly
infinancialservices.

The complexity of financial services prices and the cost structure of financial
servicesorganizations have a great impact on how financial services pricing is practiced. We will
discussthe unique aspects of pricing in financial services and how it differs from the practice of
pricingin other contexts. We will then discuss common approaches used for pricing specific
types offinancial services commonly used by consumers. The chapter will conclude with a
discussion ofstrategicand tactical aspects of pricingfinancial services.

Pricingisoneofthemostimportantdecisionsinthemarketingoffinancialservices.Price serves
multiple roles for the financial services organization as well as for the individualswho use those
services. To the financial services organization, price represents the sole source ofrevenues. Most
activities that an organization undertakes represent costs and an outflow of funds.When
advertising, for example, one has to spend money purchasing advertising space in anewspaper or
media time on radio or TV. When employing staff in a sales department salariesand benefits
need to be paid. All of these activities represent an outflow of funds, and the onlyway
torecovertheseexpendituresisthroughrevenuesobtainedby charging pricesforthefinancial services
provided. It is critical not only to appreciate the importance of price, but also tobe certain that
one‘s prices are at optimal levels. Pricing too low or too high can have detrimentaleffectson
profitabilityoffinancialservices organizations.

In addition, price is the most visible component of the marketing strategy of a

financialservices organization. Unlike advertising style, product strategy, or sales force
incentives, whichmightbedifficulttoquantify
precisely,priceisalwayspresentednumerically,andcanbeobserved and compared by consumers,
regulators, and competitors. Therefore, a second

71
functionofpriceistocommunicatetothemarketplacetheidentity,marketpositioning,andintentionsof

72
a financial services organization. Lowering of prices or an upward movement of premiums
mightsignal a shift in marketing strategy to competitors and may provoke reactions from them.
Thisfact raises the strategic importance of price and highlights the great impact that price has
beenfound to have in shifting the balance of power among competing financial services
providers. Athird function of price is to serve as a signal of quality to customers. As mentioned
in
earlierchapters,thequalityofafinancialservicemaybehighlyelusiveandvague.Determiningwhether
one insurance policy is better than another or if an investment advisor will
providerecommendations that generate high returns on one‘s investment portfolio, is difficult if
notimpossible for many. It has been well established in consumer research that in such
situationswhere quality isnot clearly evident,consumerstend to rely onprice asa proxy for
quality.1They might therefore assume that higher-priced financial services are of better quality,
and
theloweringofpricesmaynotnecessarilybeassociatedwithmorepositiveconsumerimpressionsofthe
financial service.Thepotential forthis

ChallengesinPricingFinancialServices

Financial services prices are unique in several ways. The unique aspects of price
infinancialservicesareimportanttorecognizewhendevelopingmarketingstrategiesandanalyzingcons
umers‘decisiondynamics.Someoftheseuniqueaspectsarelistedbelow:FinancialServicesPricesareOf
tenMulti-Dimensional:Oneofthemostnotablecharacteristicsof financialservicespricesisthatthey
are complexandoften consistof multiple numericattributes. For example, an automobile lease is
often communicated in terms of the combinationof a monthly payment, number of payments, a
down payment, the final balloon payment, wear-and-tear penalties, and mileage charges for
driving over the allowed number of miles. Therefore,unlike the sticker price for the cash
purchase of a car, which is a single number, the lease priceconsists of many different numbers.
As a result, to evaluate an offered lease accurately, theconsumer will have to conduct
considerable amounts of arithmetic. To calculate the total dollarlayout for an automobile lease,
for example, the monthly payments and the number of paymentshaveto be multiplied and added
to thedown payment.

Thecomplexnumericnatureoffinancialservicespricesandtherequirementofaminimalnumber

73
ofnumericcomputationsmakefinancialservicespricesamongthemostcomplexitemsthatconsumersha
vetoevaluateintheirpurchasedecisions.Researchhas

74
established that conducting arithmetic tasks associated with the evaluation of a financial
serviceprice can be highly stressful, and consumers have a tendency to simplify such tasks by
findingmentalshort-cutstrategiesthatwouldallowthemtoavoidcarryingoutthedemandingarithmetic.

EconomicForces

The pricing of financial services is further complicated by the fact that the
attractivenessof a financial service may be affected by the general economic environment. For
example, inorder to appreciate the value of an investment option a consumer must compare the
expected rateofreturn with the ratesofreturn experiencedinthefinancial markets.

PoorConsumerPriceKnowledge

Thepricingoffinancialservicesneedstotakeintoaccountthefactthatconsumermemory for
financial services prices is quite weak. The unexciting and complicated nature offinancial
services often results in poor recall of the prices of financial services. For example,many
consumers have a difficult time remembering the cost of their banking services, such as
themonthly maintenance fees for checking account services and ATM transaction charges, or
whatyearly premiums they are paying for their automobile insurance. As a result, the general
level ofprice knowledge with which consumers interact with financial services providers might
be quitelimited.

DifficultyinDeterminingCustomerProfitability

Anadditionalchallengepresentedinthepricingoffinancialservicesisthattheprofitability
associated with a given customer may be difficult to assess. This is because a singlecustomer
may purchase multiple services from a financial services provider, some of which arehighly
profitable and others that represent losses. For example, a bank customer might use thebank‘s
checking and savings account services, which may not be highly profitable to the bank.However,
she may also conduct her investment and retirement planning, transactions with thiscustomermay
beperceivedtobeunprofitable,othertransactionsmaycompensateforthisshortfallmakingthe
individual ahighlyvaluablecustomerto thebank overall.

IndeterminableCosts

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 Determining the costs associated with a specific financial product or service might be
anumericallychallengingtaskgiventhefactthatvariouselementsofafinancialservicesorganization
contribute to the service experience that is delivered to the customer. The limitedability
topinpointcostsaccurately canthereforecomplicatethetaskofpricing afinancialservice.

ConflictsofInterest

The pricing of financial services is further complicated by the significant conflicts

ofinterest that may exist in the selling process. For example, brokers may use different
componentsof price, such as trading fees or commissions earned on the sale of specific financial
products, asthe means for their earnings. Therefore, the link between price and the incentive
mechanism usedto compensate the broker might influence the types of products that the broker
would be inclinedto recommend to the client. The expected broker behavior would be to
recommend products witha price structure that provides her with higher commission earnings.
This further complicates thepricingdecision byintroducingissues of trust andethics to
thealreadycomplexpricingprocess.

INSURANCESERVICES

According to the Encyclopedia Britannica, insurance is ―a contract for reducing losses

from accident incurred by an individual party through a distribution of the risk of such
lossesamong a number of parties.‖The definition goes on to say: ―In return for a specified
consideration, the insurer undertakes to pay the insured or his beneficiary some specified
amountin the event that the insured suffers loss through the occurrence of a contingent event
covered bythe insurance contract or policy. By pooling both the financial contributions and the
‗insurablerisks‘ of a large number of policyholders, the insurer is typically able to absorb losses
incurredover anygivenperiodmuchmoreeasilythanwouldthe uninsuredindividual‖

A briefer definition of insurance as a phenomenon is ―the practice of sharing among

many persons, risks to life or property that would otherwise be suffered by only a few. This
iseffected by each person paying a sum of money called a premium which, with those paid by
allthe others, is put into a ‗pool‘ or insurance fund, out of which money is paid to the few
whosuffer loss‖

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 Thepolicyholderthuspayssomeoneelseapremiumtobearhisorherrisk,knowingthata possible
future loss will be compensated for according to the premium paid. If lucky, thepolicyholder will
never have to experience the tangible results of the service of reduced riskduring the contracted
policy period. On the other hand, the policyholder maintains a certainuncertainty towards the
service that he or she pays for, something that adds to the peculiarity ofinsuranceservices.

INSURANCE PRODUCTS

A way to consider the different kinds of insurance is to view them in terms of

objectsinsured, contingencies insured against, payment methods for premiums, and possible
benefits.Objectsinsuredcanbeoftwokinds:eitherpropertyorpersonincludingtheobject―corporate
person.‖

Theterm ―property‖encompassesmost tangible forms of property,rangingfrom personal

effects via real estate and bank deposits, to ships and goods in transit. The person
insuredincludesforexampleaspectsoflifeandhealth,abilitytowork,andretirementincome.Contingen
cies insured against may include almost anything, but a few examples are naturalaccidents, such
as fire and earthquakes, theft, professional malpractice, personal accidents, andeven
mismanagement of a corporation. The manner of payment in both directions may
varyconsiderably,dependingmainlyon the typeof policy.

PROPERTY/CASUALTYINSURANCE

Theinsuranceproduct,albeitaservice,hasmanydifferentforms.Followingtheclassification
above, we start with property insurance. The main types of contracts within thisfield are
homeowner‘s and commercial, often subdivided into insuring agreements, identificationof
covered property, conditions, stipulations, and exclusions. Homeowner‘s insurance covers, asthe
name indicates, individual and non-business property. Commercial, or business
propertyinsurance, follows a similar pattern to that of individual property, although in some
policies it ismorecommontocovermanykindsofproperty.InEnglishthisisoftenreferredtoas―building
and personal property coverage‖ (BPP). In such a policy, the business owner may cover
thebuildings,fixtures,machinery,equipment,andthepersonalproperty ofthosefor
whomtheownerisresponsible.Thepolicymayalsohaveextensionscovering,forexample,valuable

77
records. Casualty insurance provides the policyholder with cover against loss to persons
andproperty, including classes such as liability, theft, aviation, and worker‘s
compensation .Casualtyinsurance is often put into the same insurance category as property
insurance, and in insurancejargon they are referred to as PC, short for property/casualty. Related
to casualty insurance forcompanies, there is often a clause in liability insurance that covers the
insured person‘s possibleliability for indemnification of losses like personal injuries, property
damages, or managerialmisconduct.

LIFE/HEALTHINSURANCE

Life insurance includes all insurance that relates to an inevitable event, in the sense
thatthe event must occur at some time. Life insurance is mainly related to a person‘s death or in
thecase of a pension plan, the date on which he or she reaches a certain age and retires.
Lifeinsurance consists of a plan for distribution of funds under which the larger group of
individualscan balance the burden of loss from death for the insurance beneficiaries. There are a
number ofdifferent types of life insurance contracts, such as term life for a specific period and
whole lifecontracts that run throughout the whole of the insured person‘s life. Life insurance may
also beclassified according to type of customer, where the major types are ordinary, group, and
credit.Ordinaryinsuranceconcerns individualspayingan annual premium.

The group insurance market consists mainly of employers covering their employees
bygroup contracts. Credit life insurance is sold to individuals as part of a purchase contract
wherethe seller is protected for the balance of the unpaid debt should the insured die before
completionof the contract. Health insurance, within the private sector, is usually financed on a
group basis,with the money going into a special fund in order to cover hospital costs, disability,
and othermajor medical expenses, often subsidized by the government and sponsored by the
employer. Ininsurance policies, life and health insurance are often treated together. Another type
of insurance,representing a growing business as a result of deregulation, is the unit link. Unit link
insurance islife insurance where the policyholder has the possibility of influencing the savings
part. Thecustomer pays premiums that accumulate in the form of shares in a mutual fund, which
he or shemayalter ifthe revenueis not atasatisfactorylevel.

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This form of saving that includes insurance services (or the other way around), is
increasinglyprevalent and is a trend related to the presently decreasing rates of interest of
ordinary bankaccounts.

INSURANCECOMPANIES

The three traditional functions of the financial markets in any country are to
facilitatereallocation of saving and consumption or investments, contribute to the reduction and
allocationof risks of and between participants, and to develop and maintain well functioning,
efficient, andrational payment systems. Insurance companies have in a natural way inheritedthe
role ofcontributingto thereduction and spread of risks.

Hence insurance companies constitute important actors in the financialmarkets alongwith

other players, including banks, investment companies, building societies, custodians,
andsecuritiesbrokers.Thetaskoftheinsurancecompaniesistomanageandleveloutrisks;something
they do by aggregating a large number of policyholders into the same group. Thisgroup consists
of both high and low risk customers. From the evaluated risk of the aggregatedgroup as a whole,
the premium of each member of the group is calculated in order to be able tooffer the service of
coverage by the insurance in question. The policyholder thus pays theinsurancefirm to bear hisor
her risk

Banks, insurance companies, and most of the other financial companies and
institutionshave many things in common. Their products and production methods are similar, and
theyreceive payments, keep and bear interest capital, and repay the received means according
tocontracts established. However, there are still substantial differences among different lines
ofbusiness.Thefinancialmarketsareexperiencingamajortransformation.Deregulationandinternation
alisation have increased the level of competition, as banks and insurance companieshave entered
each others‘ domains and multinational companies have started their own
financialcompanies,servingtheirown needs

A pertinent question these days is how to define a financial institution. Are there
anylonger banks that only provide traditional bank services or insurance companies that offer
onlytraditional insurance services? A term encompassing both insurance firms and banks is
FinancialServicesOrganisations(FSOs),whichmightbemoreappropriatetousewhenthefinancial

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business offers a mix of services. However, for reasons of simplicity, this report
conceptuallymaintainsthedivision between insurancefirmsand banks.

The insurance business can be said to be divided into two completely separate lines
ofoperation: property/casualty and life insurance. Reinsurance is a subgroup of property
insurance,denoting the sharing of risks among two or more insurance companies, where each
actor
takesresponsibilityforafixedpartofanylossandreceivespremiumsaccordingly.Insurancecompanies
in the life insurance business must legally be reciprocal companies, which is to saythat they are
owned by the insurance subscribers. A property/casualty insurance company can, onthe other
hand, either be a reciprocal or a public limited company. In Sweden there is a principleof
separation which says that an insurance company managing both property/casualty and
lifeinsurancemust keep thetwo areas entirelyseparate.

Themajorityoftheinsurancecompanies‘serviceproductsarefoundwithintheproperty/casualty
business. The most important lines of insurance in this field are
primarilycommercial/industrialandpropertyinsurance,marineandtransportinsurance,professionaldr
iver and aviation insurance. During the last decade, there has been a development towards
anexpansion of mainly large-scale enterprises or corporate groups to form captives. These
areinsurance companies owned by a firm in order to, as far as possible, be able to level out
andeliminate incurring riskson its own and thus lower its insurance costs.The captive firm is
runlike a subsidiary, and itinsures either directly or indirectly via reinsurance companies, parts
ofthe company‘s risks. The main difference between private and commercial insurance is that
thelatter is less standardised and much more complex in its nature. Corporate customers often
wantindividually adapted solutions, countered by ―insurance packages‖by the insurers, including
combinationsof individual insurance.

RELATIONSHIPMARKETINGININSURANCE BUSINESS

One of the subjects that were mentioned initially was the nature of the influence
ofinsurance marketing on relationship management. Based on the research presented above,
theconclusionscould be developed into thefollowing conceptual statements:
 insuranceservicesareinherentlyintangiblebynature

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 insuranceservicesare characterised byvaryinglevels of complexity

81
  thecustomer‘slevelofcomprehensionisdependentontheinsurancemanager‘sexperience in,
knowledge of, and skill in, managing the complexity and intangibility
oftheserviceprovided
 insurancerelationships mayinvolveaspectsof mutual distrust
 goodstrategiesinrelationshipmanagementarerequiredtoenhancecustomercomprehensibility
and to lowercustomer mistrust inan insurancerelationship
 theneedforefficientrelationshipmanagementisincreasingin insurancemarketing
 theconceptsof relationshipmarketingandservicemanagementareinterrelated
 customerretentionandcustomerloyaltyareviewedaskeyvariablesformanagingincreasedcom
petition in generalas well asin theinsurancebusiness
LEASESERVICES

Lesseesare interestedinthe technical andeconomic efficiencies of leased

equipment,thuspayforthe ―timeand skills‖imbeddedintheequipmentandnaturalpersonsinvolvedin
service provisionorareassociatedwiththeleasingfirm;thuslease servicesmustbe wellbranded.It is
important to understand the peculiarity in leasebranding, as the services
areintangibleanddifficulttobedescribed.Thebrandnameoridentifyinglogooftheleaseorganizationis
particularlyimportant in the consumer‘s (lessee‘s)decisions

The lease service marketers in relationship with the consumers (lessees) believe in
thevalueoflongtermrelationshipthatcumulatestotrust,familiarity andcostsavings,hencemeasure
corporate success in terms of a series of assignments, a subscription and long-termcontractas
products of open-endedrelationship

Lessors should encourage lessees to discuss their (lessors‘) offer, as the offer is made
tooffer extra ordinary customer value for enhanced satisfaction, and making follow-up calls
forlessees‘ equipment efficiency inspection. This is because lease service providers like
specialprofessionalsinmedicaldiagnosesandlegalserviceshavecredencepropertiesandcharacteristic
sthattheconsumermayfinddifficulttoevaluateevenafterpurchaseandconsumptionofleaseserviceThe
gossipaidsleaseproviderssustainachievedconsumersatisfactionin leaseproducts
throughinformationexchange.

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 Lessors based on lessees‘ group meetings, reference groups, seminars and other vital
forashould create acceptable image for (image for lessors) themselves and leasing. This could
also beused as means of informing intending lessees about the benefits of equipment leasing
based onlessees‘experience.

VendorLeasingMarketingStrategy

Vendorleasingexistsinarelationshipbetweenequipmentmanufacturerandanindependentor
subsidiary firmchargedwiththe responsibility of leasing
outmanufacturedproducts.Thisindependentorsubsidiaryiscalledindependentlessororcaptivelessorr
espectively.

Lease marketing activities, thus should integrate lease vending programme for
improvedmarket coverage. However, lease experts point to the fact that e-marketing of lease
services willnegatetheimport ofrelationshipfactor in leaseservicemarketing

FACTORING

A financing method in which a business owner sells accounts receivable at a discount to

athird-partyfundingsourceto raise capital

One of the oldest forms of business financing, factoring is the cash-management tool
ofchoice for many companies. Factoring is very common in certain industries, such as the
clothingindustry,wherelongreceivables arepart ofthe business cycle.

In a typical factoring arrangement, the client (you) makes a sale, delivers the product
orservice and generates an invoice. The factor (the funding source) buys the right to collect on
thatinvoice by agreeing to pay you the invoice's face value less a discount--typically 2 to 6
percent.Thefactorpays75percentto80percentofthefacevalueimmediatelyandforwardstheremainder
(less thediscount) whenyour customerpays.

Because factors extend credit not to their clients but to their clients' customers, they
aremore concerned about the customers' ability to pay than the client's financial status. That
means acompanywith creditworthycustomers maybeableto factorevenif it can't qualifyforaloan.

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 Once used mostly by large corporations, factoring is becoming more widespread.
Still,plentyof misperceptionsabout factoringremain.

Factoring is not a loan; it does not create a liability on the balance sheet or
encumberassets. It is the sale of an asset--in this case, the invoice. And while factoring is
considered one ofthe most expensive forms of financing, that's not always true. Yes, when you
compare thediscount rate factors charge against the interest rate banks charge, factoringcosts
more.But ifyou can't qualify for aloan, it doesn't matter what the interest rate is. Factors also
provideservices banks do not: They typically take over a significant portion of the accounting
work fortheir clients, help with credit checks, and generate financial reports to let you know
where youstand.

The idea that factoring is a last-ditch effort by companies about to go under is

anothermisperception. Walt Plant, regional manager with Altres Financial, a national factoring
firmbased in Salt Lake City, says the opposite is true: "Most of the businesses we deal with are
verymuch in an upward cycle, going through extremely rapid growth." Plant says you may be
acandidate for factoring if your company regularly generates commercial invoices and you
couldbenefit from reducing the time receivables are outstanding. Factoring may provide the cash
youneedto fund growth orto takeadvantageofearly-paymentdiscounts suppliersoffer.

Factoring is a short-term solution; most companies factor for two years or less. Plant
saysthe factor's role is to help clients make the transition to traditional financing. Factors are
listed inthe telephone directory and often advertise in industry trade publications. Your banker
may beable to refer you to a factor. Shop around for someone who understands your industry,
cancustomizeaservicepackageforyou,and hasthefinancial resourcesyou need.

Particularly in the service industry, small businesses are prone to cash flow
challengessuch as late customer payments, payroll increases and fluctuating overhead. For
companies inmarketing services, accounts receivable factoring (also called ―invoice factoring‖)
is the ideal solution! With invoice factoring, marketing service companies like yours can get fast
access tothefundingnecessarytokeepyourbusiness competitiveintoday‘sglobalmarketplace.

InvoiceFactoringandMarketingServices

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 Fast A/R Funding offers accounts receivable financing. Marketing service companies
sellustheir invoices, andwe provide fundinginas little as48hours!It‘s easy:

 Youapplyonlineusingourfast,paperless application process.

 Wequicklyandcarefullyreviewyour applicationforinvoicefinancing.
 Weprovideyourmarketingservicescompanyaninvoicefinancingapproval,usuallyinjust
24hours!
 Wecollectonyouroutstandinginvoices,andhelpmanageyourcreditriskandaccountsreceivabl
e.

InvoiceFactoring ForMarketingServices Companiesvs.SmallBusinessLoans

Smallbusinessloansputyourcompany indebtwhilerequiringlengthyapplicationprocesses
with approvals largely dependent on your personal credit and assets. For businesses
inmarketingservices, loansand receivables issimplythe better choice.

Fast A/R Funding provides fast approvals for factoring facilities to marketing
servicescompanieseveryday.Webaseinvoicefactoringserviceapprovalsonyourcustomers‘creditwor
thiness and the value of your invoices, paying up to 95% of your invoices‘ face
valueandprovidingfundinginas little as 48 hours.

For companies in marketing services, factoring firms just makes sense. Fast A/R
Fundingis the industry leader in accounts receivable factoring services. Put our proprietary
technology,expert management, and highly trained customer support to work for your marketing
servicescompanytoday

MARKETINGOFNON-PROFIT ORGANISATION

Activities and strategies employed by a nonprofit organization that are designed to

spreadthe message of the organization, as well as to solicit donations and call for volunteers.
Nonprofitmarketing involves the creation of logos, slogans and copy, as well as the development
of amediacampaign to exposethe organization toan outsideaudience.

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 Anonprofitorganizationcanapproachmarketinginthesamewayasafor-profitbusiness. It
should identify its target market (the one it wants to reach), develop marketingmaterials to send
to that target market, and determine the objectives that a marketing campaignshould meet. In this
sense, the nonprofit organization follows the four P's of marketing: product,place,priceand
promotion.

Such organisations are: schools, hospitals, charitable institutions, welfare societies,

clubs,public libraries, resident welfare association, sports club etc. These are called Not-for-
ProfitOrganisations (NPOs). Theseorganisations provide services to their members and to the
publicin general. Their main source of income is membership fees, subscription, donation, grant-
in-aid,etc.Asthemoneyisinvolvedintheactivitiesoftheseorganisations,theyalsomaintainaccounts.
These organisations preparecertain statements to ascertain the results in financialtermsof
theiractivities foraparticular period say,oneyear.

CharacteristicsofNot-for-profitorganisations(NPOs)

 The objective of such organisations is not to make profit but to provide service to
itsmembersand to thesocietyingeneral.
 The main source of income of these organisations is not the profit earned from
purchaseand sale of goods and services but is admissions fees, subscriptions, donations,
grant-in-aid,etc.
 These organisations are managed by a group of persons elected by the members
fromamongthemselves. This groupis calledmanaging committee.
 They also prepare their accounts following the same accounting principles and
systemsthatarefollowedbybusinessforprofitorganisationsthatarerunwithanobjectivetoearnp
rofits :

In a crowded marketplace of ideas, it is important for non-profit organizations to

establisha well-defined niche. While most non-profits are not selling products, they are selling
theirorganization's mission, their ideas, their programs, and their services. In a world where
everyoneis inundated with information, a strong image is the key to community awareness.
Developingand maintaining a visible and credible identity through marketing will increase local
support foryourorganization.

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 Many non-profit organizations believe their programs will sell themselves based on
theirinherent worth. They operate with the assumption that support and recognition will
automaticallycome to a good cause. Unfortunately, this is a false premise. Even the best of
programs will fadeinto obscurity unless non-profit management intentionally makes othergroups,
associations,businesses, and individuals aware of their mission and continuously maintains that
level ofawareness.Communicationbuildsunderstandingandadvocateschange.Non-
profitsshoulddefine their intended audiences, target their messages to these groups, and outline
strategic plansthatwill best uselimitedresources tomeet organizational goals andobjectives.

Effective communication and a consistent image also enhance the ability of non-
profitorganizations to raise money. If local community members do not have an awareness of the
goodwork that a non-profit does, it is unlikely that they will contribute to a fund raising
campaign. Inturn, if private foundations do not see financial support at the local level, they may
be lessinclined to award grants. Foundations also look at grant proposals to see how an
organizationplans to communicate the results of their program. Marketing is an on-going,
cumulative strategythat can build financial partnerships. Regardless of an organization's size or
mission, here aresome essential elements of successful marketing that will work to build
community awarenessand support:

Maintainconsistentcommunication

Planyourcommunicationsstrategyforthenextyear.Developatimelineforpressreleases,newsle
tters, special events, and other marketingefforts.

Createavisualidentity

Communicate visually as well as verbally. Frequently display your organization's

nameand logo on newsletters, reports, signs, and brochures. A memorable, well-designed visual
imagewillstrengthenawareness ofyour organization.

Usemessage repetition andvariation:

An audience is more likely to remember a message if is reiterated in different types

ofcommunication.Forexample,printyourmissionstatementinabrochure,writeitinaPSA,and

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tell it to a news reporter. Slogans are a way to effectively capture the essence of a message
inbriefandmemorable form.

Employ multiple communications tactics: Nonprofit organizations often target

severalaudiences, which may respond to different approaches. Various communications
campaigns canhelpestablish and maintain a morewidespread positive image.

Selectanduseappropriatemedia:

Plan to use a combination of approaches best suited to reaching your targeted

audiencesand that make best use of your financial resources. Include a variety of methods
including phonecalls,letters, e-mail, newsletters, PSAs,press releases, andeditorials.

Developastrong,well-knownidentityovertime:

Buildingvisibilityandawarenessisagradualprocess. Bepatient,persistent, andconsistent

CHARITIESANDPUBLICSERVICES

By'publicservices'wemeanservicesthatpublicauthoritiesnormallyprovideorcommission.
Not all public services are provided under a legal duty; some are provided underdiscretionary
powers (in other words, they are optional). Even when there is a legal duty, the lawdoes not
alwaysspecifyexactlywhat level of servicemust beprovided.

Itisuptocharitiestodecideonthemosteffectivewaytomeettheirbeneficiaries'needs.
Tothosecharitiesthatchooseto engageinpublic servicedelivery,we advise:

 sticktoyourmission;
 guardyourindependence;and
 Knowyourworth.

Thecharitylaw framework

There is nogeneral legal prohibition on charities delivering public services under

afundingagreementwithapublicauthorityorusingtheirownfundstodoso.Thisdoesnotalter

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thetrustees'responsibilitytocomplywithcharitylawandtherequirementsofthecharity'sgoverningdocu
ment.

The following legal rules apply to all charities but are particularly relevant to
charitiesdeliveringpublicservices:

 charitiesmust onlyundertakeactivities that arewithin theirobjects andpowers;

 charitiesmustbeindependentofgovernmentandotherfunders;
 trusteesmust actonlyintheinterests of thecharityand itsbeneficiaries; and
 trusteesmust makedecisions inlinewiththeir dutyofcareand dutyto actprudently.

Understandingtherisks

Public service delivery presents both opportunities and risks for charities. Key risk
areasincludefinancialrisks,theriskofcompromisingthecharity'sindependence,thedangerofmissiondr
ift, servicedeliveryand contractual risks, and reputationalrisks.

Any charity that is considering public service delivery should weigh up the risks and
theopportunities. It is important to recognise and manage risks, and ensure they are
appropriatelysharedbetween thecharityand thepublicauthority.

Trustees must not agreeto any contract or funding agreement unless they are
satisfiedthatitstermsareinthecharity'sinterests.Theyshouldthereforeconsidertheneedforprofessiona
l(legal and accountancy)adviceon theterms ofsuchdocuments.

Public services' include a wide range of services provided or commissioned by

publicauthorities.Theseservices include:

 adviceandadvocacy;
 careof theelderlyand provision ofsheltered accommodation;
 education;
 medicalcareandtreatment;
 museums,artgalleriesandlibraries;
 recreationalandleisureservices;

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  recycling,refusecollectionanddisposal;
 socialhousing;and
 urbanorruralregeneration.

For centuries, charities have undertaken activities that people now tend to think of
as'public services', and charity often pre-dated and prompted, statutory provision. For
example,state education didn't exist until the mid 19th century, and the National Health Service
wasfoundedin1948.Beforethen,schoolsandhospitalswereprovidedbycharities.Publicperceptionof
whatgovernmentshouldprovide changesovertime,asdorelativelevelsofprovision by the charitable
and public sectors. Public authorities have taken over responsibilityfor some services in response
to changing public expectations, government policy and statutoryduties. More recently, whilst
retaining responsibility for the provision (or funding) of services,public authorities have
contracted out delivery of some services to private or voluntary sectororganisations.

Public authorities do not always have legal duties to provide all of their services;
someservices are provided under discretionary powers (in other words, they are optional). Even
whenthere is a legal duty to provide a service, the law does not always specify the level of
service thatmust beprovided.

The Commission cannot give authoritative advice on the duty of public authorities
toprovide or fund particular services, but section I of this guidance sets out some of the steps that
acharitymaytaketo obtain clarification ofapublicauthority's duty.

EDUCATIONASASERVICE
Acountry,societyandculturebecomerichwhentheeducationalsystemiswell-established.
Educational institutes needs to adopt the ‗student centric approaches‘ to remainunbeaten in the
turbulent market. To promote the services of professional institutes,
‗servicesmarketingtriangle‘approachesmustbeadopted.Tosaletheproductsi.e.studentsoftheeducati
onal institute in the competitive market, institutes should cultivate ‗professionalism‘
andinculcate the same among their students. They must ensure quality output from their
institutions.Positive‗word-ofmouth‘canbeascertainedtocreateawarenessamongthetargetsegment.

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Educational services organizations ought to focus on building stronger network with the
existingandprospectiveemployersinthecountryandabroad.Inthiscontext‗Industry-
AcademiaInterface‘canbebuilt.Longtermrelationshipmustbebuiltwiththeemployeesandemployers.
‗Student Relationship Management‘ (SRM) i.e. relationship with the alumni, can be very
usefultoolforpromotingthe present students and theinstitution as awhole.
Services are those separately identifiable, essentially intangible activities, which
providewant satisfaction and are not necessarily tied to the sale of the product another service.
Educationisa servicewhich is geared primarilyto theconsumermarket
MARKETINGMIXOFEDUCATIONAL SERVICES
Product
In case of educational services, the product means the students and the services means
theintangible offers (like the course itself, the services rendered by the faculty etc.) made by
theeducationalinstitutions.Here,servicesmaketheproductofaninstitute.Throughtheproductsand
services the educational institutions promotes their organization and develop the brand
valueinthecompetitive market
Price/ Fees
The price is the amount a student pays for the services availed by him or her. It
isdetermined by a number of factors including competition, service quality, placement,
reputationof the institution, private or public ownership, infrastructure, facilities provided,
location of
theinstitute,modeofeducation,brandnameoftheeducationalinstitutionetc.Here,pricereflectsthe
quality of services provided to the students. Hence, it can be used as marketing tool by
theinstitutions.
Place
Place represents the location where an educational institute is established. It is
oftenreferred to as the service centre. If the institute is located at a Metro city, it will provide
muchmore competitive edge, than if it is locatedin rural place.So, place is also a vital
promotionaltool forthem.
Promotion
Promotionrepresentsallofthecommunicationsthataserviceproviderusesinthemarketplace.
Promotion has a few distinct elements such as advertising, public relations, word
ofmouth,pointofsale,publicity,direct&webmarketing,etc.Educationalinstituteemphasizes
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mainly on two components of promotion viz. advertising and web-based marketing, rather
thanall. As far as promotion tool is concerned, positive word-of-mouth communication has
beenfoundthebest tool forthem.
People
Here,thepeoplemeanteaching fraternity andnon-teachingcommunity directly andindirectly
associated with the services rendered to the students. Satisfaction andretention of thestudents
solely depends on the way the teachers are in a position to deliver their best services
tothem.Teachersarenottreatedas‘guru’,rathertheyareknownasfacilitators/
servicesproviders.Growthandexistenceofaneducationalinstitute,particularlytheprofessionaleducati
onalorganizationdependsonthecompetency,effectiveness,efficiency,sincerity,dedication and
devotion of the teaching community of the institute. People proved as the mostvibrantcomponent
of educational services marketingmix.
Process
Theprocedures,mechanismsandflowofactivitieswhichleadtoanexchangeofvalueare called
the process. The way service providers render services to the students, plays a
pivotalroleingainingthecompetitiveadvantages.Iftheserviceprocessishasslefree,simple,understand
able, student friendly and technology based, it will definitely make the institution
withdifference.Examples might include the way a student is treated by a staff member and
renderedservicebyateacher,or thelength oftime astudenthas to waitto get services fromthem.
PhysicalEvidence
It is the direct sensory experience of a service that allows a student to measure whether
heor she has received adequate facilities by the educational institution. Examples might include
thephysical environment in which service is delivered, the physical facilities provided and
theinfrastructure created by the organization for them. It might include state-of-art
technology,building, total ambience, parking facility, play ground,gymnasium, swimming pool,
indoorstadium, transportation facility, hostel, AC class room facility, computer laboratory,
canteen,library, number of books and journals, different modern teaching aid etc. All of these
play acrucialrolein marketingofeducational institute.
GAPANALYSISOFEDUCATIONALSERVICE
ProviderGap1
Educationalinstitutionsdonotknow theexpectationsofthestudents.

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 ProviderGap2
Institutionsarenothavingthedesiredservicedesignsandstandardstomeettherequirements
ofthestudents.
ProviderGap 3
Educationalinstitutionsarenotdeliveringservice standardsasrequiredtodeliver.
ProviderGap4
Theyarenotmatchingperformancetheyaresupposedtoshowandaspromisedtothestudents.
ProviderGap5
Therearelotofdifferencesbetweenexpectationsofthestudentsandtheirperceptions,whichis
known as Customer Gap
STRATEGIES OFEDUCATIONALSERVICES
Make It Easy: The centerpiece of any successful program is aninteractive
websitedesigned specifically for the targeted audience the company is seeking to reach. The
website‘ssophistication mirrors the organization‘s training and communications needs and
budget. Butregardless of those factors, the site must have the appearance and usability of
polished consumerwebsitesthatusersareaccustomedtovisiting.Itmustcatertotheneedsoftime-
starvedprofessionalsto find andprocessinformation quickly.
Make It Relevant: A successful educational marketing solution also must include
topicsand formats that are customer-driven, covering not just how to use specific products, but
alsorelated topics that help customers achieve their fundamental goals and objectives that are
drivingthem to consider your products and services. Savvy customers expect more to win their
trust. Forexample,imaginethatyourcompanymanufacturesandsellshighquality,ultra-
efficientwindows. To build an intimate customer relationship and firmly establish your brand,
you wouldwant to offer more than product specifications and energy efficiency data—those
elements are agiven. You might want to offer a learning guide educating homeowners on how
they can conductan energy efficiency audit of their home. You might want toprovide details on
federal
incometaxincentives,andcaseexamplesofthebestwaystomaximizeyourcredit.Oryoumightwantto
develop a design simulator that lets homeowners and professional designers envision
whatyourproducts might looklikeandwhat efficienciestheymight achievewith them.

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 Make it fresh: People tend to lose interest in web sites that don‘t provide a
compellingreason for them to return. Companies need to post fresh educational content on a
regular basisjust as they dowith other typesofcontent,andbe boldabout retiringcontent thatusers
ratelower or don‘t access frequently. Customers should be invited to subscribe to content alerts
by e-mail
Manage It: Behind the scenes, an effective educationalmarketing website needs
tocapturecriticalcustomerinformation,such as what contentyour
Measure It: Scorecards and dashboards make it easy for decision makers to see
theimpact of educational marketing. As noted above, an educational marketing website can
providerichdatathatcanprovidekeeninsightstoyourcustomers‘andprospects‘interestsandbehaviors.
Website analytics and content consumption data enable marketers to see the impact
ofcustomereducationonproductsalesandgainmacro-levelinformationtofocusmarketingcampaigns.
TELECOMMUNICATIONMARKETING

A telecommunicationsserviceprovider (TSP)isatypeof communicationsserviceprovider

thathastraditionallyprovided telephone andsimilarservices.Thiscategoryincludes
incumbentlocalexchangecarriers, competitivelocalexchangecarriers,and mobilewireless
communication companies. While some people use the terms "telecom service
provider"and"communicationsservice provider" interchangeably, the term TSP
generallyexcludes Internet service providers (ISPs), cable television companies, satellite TV, and
managedservice providers. TSPs provide access to telephone and related communications
services. In
thepast,mostTSPsweregovernmentownedandoperatedinmostcountries,duetothenatureof capital
expenditure involved in it. But today there are many private players in most regions ofthe world,
and even most of the government owned companies have been privatized.Now-a-days telecom
services have become the most important as well as common thing which helppeople to stay
connected well. Also it helps organization to grow faster. Telecom services
canincreasethefunctionalityofan organizationasit canmaketheworkquicker aswell aseasier.

When it comes to telecommunications marketing, marketers are tasked with

executingintegrated campaigns that not only increase engagement andgenerate revenue but that
alsoleveragetheveryproductsandservicestheyprovide.Consumers,individualsandcorporations

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alike, depend on telecom businesses for transparent communication. Thus, when it comes
tofurtheringclientrelationsandconsumerengagement,marketersmustemploythelatesttechnology --
taking a multi-platform approachin amassing their global footprint,
retainingcustomerloyaltythroughon-
targetmessaging,interestingcontentandcompellingconversation.

Such a large and diverse industry requires that marketers have an acute understanding
ofthe various audience segments they serve. From enterprise customers to telecom carriers
andequipment manufacturers to mobile consumers, telecom companies must remain cognizant of
thefact that not all content appeals to every audience, and that certain platforms are more
effectivemeansof communicationwhenpresented to theappropriate audience.

As a telecom marketer, it's hard not to jump to defend the industry'slong

standingreputation as one ridden with hidden surcharges, exorbitant monthly rates, complex
contracts andoverpriced devices. However, Virgin Mobile has been leading the pack in terms of
friendlinessand approachability. In an attempt to target a younger demographic, specifically 18-
24 year-olds,Virgin's US-based marketing team, led by CMO Ron Faris, sought to hit the pain-
point of mostyoung mobile users nationwide-- high monthly chargeson voiceusagewhen the
majority oftheirtimewasspentnottalking
onthephone.Asaprepaidmobileprovider,Virgintookadvantageof their marketposition,aswellastheir
knowledge oftheir targetaudience,todevelopa campaignwithdata,not voiceusage, atits core.
Virgin'sstrategywasspot on.

When Samsung sat downto craft their marketing strategy for the Android-based
GalaxyS3 in anticipation of the iPhone 5 release, marketers knew they had to focus on touting
their ownproduct and its unique capabilities while acknowledging the existence of their direct
competitor'sachievements. As seen in the case of Virgin, focusing on consumer pain points is
always anexcellent way to garner a reaction; Apple, Samsung's biggest competitor, was banking
on theirexisting brand cache and customer loyalty in order to hit proposed sales and revenue
targets forthe iPhone. And, while the iPhone 5 was expected to be a huge success technologically
speaking,Samsung took advantage of Apple's ongoing triumphs when crafting an integrated
marketing forthereleaseof their own device.

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 Samsung chose to forgo traditional marketing tactics and decided to go viral with
socialvideo. The result was a subtle and very clever commercial addressing the central pain
points
ofiPhoneuserssuchasexorbitantcosts,longlinesatretaillocations,softwareglitches,incompatible
power adapters, screen size and so forth. The video's placement on YouTube
wasanotheragilestrategy;giventhemassivevolumeoftrafficYouTubeamasseseachmonth.According
to a recent study by AYTM Market Research, nearly 60% of Internet users visited thevideo
platform in March 2013, and 21.7% of users frequented the social network each day.
Byshowcasing the commercial on YouTube, Samsung recognized its viral potential and the value
ofYouTube'spotential as an innatebroadcastingandpublicitytool.

Whileuser experienceanddesignmay beattheforefrontofyourconsumer-

drivenmarketingcampaign,it'simportanttofocusonmultimedia,inallitsmediums,asamaindriverofco
nsumer engagement.

TransportServices

Transport or transportation isthemovementofhumans,animalsand goods

fromonelocationto another.

Modes of transport include air, land (rail and road), water, cable, pipeline and space.
Thefield can be divided into infrastructure, vehicles and operations. Transport is important
because itenablestradebetweenpeople,whichisessentialforthedevelopmentof
civilizations.Transport infrastructure consistsof the fixed installations including roads,
railways,airways, waterways, canals and pipelines andterminalssuchas airports, railwaystations,
busstations, warehouses,truckingterminals,refuelingdepots(includingfuelingdocksand
fuelstations)and seaports.

Terminals may be used both for interchange of passengers and cargo and
formaintenance.Vehicles traveling on these networks may include automobiles, bicycles, buses,
trains, trucks,helicopters,watercraft, spacecraft, and aircraft.

Operations deal with the way the vehicles are operated, and the procedures set for
thispurpose including financing, legalities, and policies. In the transport industry, operations

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andownershipofinfrastructurecanbeeither publicorprivate, dependingonthecountryandmode.

97
 Passengertransportmaybe
public,whereoperatorsprovidescheduledservices,orprivate.Freighttransporthasbecomefocusedon
containerization,although bulktransport isused for large volumes of durable items. Transport
plays an important part in economic growthand globalization, but most types cause air pollution
and use large amounts of land. While it isheavily subsidized by governments, good planning of
transport is essential to make traffic flowandrestrain urban sprawl.

ANCILLARYSERVICES

Ancillary services as: "those services necessary to support the transmission of

electricpower from seller to purchaser given the obligations of control areas and transmitting
utilitieswithin those control areas to maintain reliable operations of the interconnected
transmissionsystem."

Ancillary services are the specialty services and functions provided by the electric
gridthat facilitate and support the continuous flow of electricity so that supply will continually
meetdemand.Thetermancillaryservicesareusedtorefertoavarietyofoperationsbeyondgenerationand
transmissionthatare requiredtomaintaingridstability
andsecurity.Theseservicesgenerallyincludefrequencycontrol,spinningreservesandoperatingreserv
es.Traditionally ancillary services have been provided by generators, however, the integration
ofintermittent generation and the development of smart grid technologies have prompted a shift
intheequipment that can beusedto provideancillaryservices.

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