1

new service provider. Even in the case of a mature business, a

UNIT-III service marketer needs to reaffirm its positioning in the

POSITIONING OF SERVICES
minds of target customers. At times, a subtle shift in
positioning may also be necessary to keep up with the
Service positioning is a marketing strategy that helps a
changing consumer preferences or to cope with the
service stand out from its competitors. It involves
challenges from competitors.
establishing a brand's reputation and perception in the minds
of customers.
Meaning of positioning
Introduction Positioning is concerned with the identification,
development and communication of a differentiated
Frequently heard statements like “value for money”, “our advantage which makes the organization’s products and
people are the key”, or “convenience” are of little descriptive service perceived as superior and distinctive to those of its
or differentiating value for developing competitive strategy. competitors in the mind of its target customers.

Without knowing which product features are of the specific Services have a number of distinguishing features which
interest to customers, it’s hard for managers to develop an have special implications for the positioning and attributes to
appropriate competitive strategy for their firm and its emphasize. Three key characteristics for service positioning
products, and harder still to evaluate a product’s subsequent are the intangibility, the degree of variability or heterogeneity
performance in the marketplace.Once that target segment or in quality of a given service, and inseparability.
market is clear, the service marketer has to positionhimself
appropriately for that segment. Positioning, as is now well Briefly, the positioning is a mental image or picture that a
understood in marketing, is an integral part of strategy for a service provider wouldlike to have about it in the consumer’s
 2

mind. It is a deliberate attempt at building an identityof a sector banks in India have still not changed.
certain kind for the service. For example, McDonald’s in However,consumer tastes have changed; competitors in the
India has a slightly up marketimage than in the US, where it field have brought in modern viewsfrom the advanced
is viewed as cheap American fast food. Since a hamburgeris countries. Presently, every bank is trying to offer an
an everyday item of American food, it made sense for ambience, which isfriendly with smiling young tellers
McDonald’s to develop thatpositioning. In India, that slot is and receptionists, and customer service representatives,not to
already occupied by a variety of Indian alternatives. For mention the call centers and free photographs to open bank
example, the idli-dosa corner food stalls in the south, the accounts with. Thus,positioning can also be a function of a
paratha serving stalls in the north,or the tea and samosa time, and a place or a function of what the consumersexpect.
corners of Kolkata. Therefore, the mind space that Importance of Positioning
McDonald’s has tried to occupy is of two types. One, the
affluent, westernized teenager. Second, the modernupscale To Make Entire Organisation Market-oriented:
family possibly driven by children who enjoy the feeling of
eating at a McDonald’s. Product positioning is a part of the broader marketing
philosophy. It concerns with identifying superior aspects of
Positioning has a lot to do with the target segment to which product and matching them with consumers more effectively
we choose to market, and it has elements like price, than competitions. This philosophy makes the entire
packaging, communication and ambience, which reinforce organisation market oriented.
the positioning, attempted by the company.
To Cope with Market Changes:
Banks, for example, used to position themselves as austere,
dull but safe place, youcould trust until recently. Some public
 3

Once the product is positioned successfully doesn’t mean More meaningful promotional programme can be designed.
the task of manager is over. He has to constantly watch the Based on what advantages are to be communicated,
market. As per new developments in the market place, new appropriate means are selected to promote the product.
competitive advantages should be identified, discovered or Product positioning signifies those advantages that are
developed to suit the changing expectations of the market. It significant to consumers. When such benefits are promoted
makes the manager active, alert and dynamic. through suitable means of advertising, it definitely catches
the interest and attention of consumers.
To Meet Expectation of Buyers:
To Attract Different Types of Consumers:
Generally, the advantages to be communicated are decided
on the basis of expectations of the target buyers. So, product Consumers differ in terms of their expectations from the
positioning can help realize consumers’ expectations. product. Some want durability; some want unique features;
some want novelty; some wants safety; some want low price;
To Promote Consumer Goodwill and Loyalty: and so on. A company, by promoting different types of
competitive advantages, can attract different types of buyers.
Systematic product positioning reinforces the company’s
name, its product and brand. It popularizes the brand. The To Face Competition:
company can create goodwill and can win customer loyalty.
This is the fundamental use of product positioning.
To Design Promotional Strategy: Company can respond strongly to the competitors. It can
improve its competitive strength.
 4

To Introduce New Product Successfully: According to Jack Trout, positioning strategy must
establish position for firm or product in minds of customers.
Product positioning can assist a company in introducing a It should be distinctive, providing one simple, consistent
new product in the market. It can position new and superior message, must set firm/product apart from competitors and
advantages of the product and can penetrate the market must focus its efforts
easily.
1.5.1. Determining the levels of positioning: Step one is
To Communicate New and Varied Feature Added Later to settle on which level needs positioning attention and focus.
on: For e.g. Vodafone has separate corporate plans and individual
plans
When a company changes qualities and/or features of the
existing products, such improvements can be positioned 1.5.2. Identification of attributes: After step one, specific
against products offered by the competitors. Product attributes that customers seek comes into play. For e.g. the
positioning improves competitive strength of a company. purpose of using the banking service may be different for
Normally, consumers consider product advantages before business and personal service seekers. Timing also influences
they buy it. So, product positioning proves superiority of choice of service. For e.g. choice of going to a restaurant will
company’s offers over competitors. It may also help be different for a corporate meeting or a weekend family
consumers in choosing the right product. brunch. The service seeker also evaluates alternatives
available to him/her and makes a choice basis his perception.
Steps in Positioning of services This choice need not necessarily reflect the most important
attribute he seeks in a service. For eg. a customer using the
services of a particular bank ranks ‘rate of interest as the most
 5

important future scenarios help identify potential competitive responses

feature. But and helps in visualization of strategy.
mostly all EXAMPLE :AUTO MARKET
banks will
have similar Product: Ferrari, BMW, Kia, Range Rover, Saab, Hyundai
rates so he
makes his
choice basis The six products are plotted upon the positioning map. It

other factors can be concluded that products tend to bunch in the high

like, bank timings, atmosphere, friendly staff, netbanking price/low economy(fast) sector and also in the low price/high

facility etc. the service seekers perceptions of this process is economy sector. There is an opportunity in the low price/ low

the basis for developing positioning map. economy (fast) sector. Maybe Hyundai or Kia could consider
introducing a low cost sport saloon. However, remember that

1.5.3. Location of attributes on a positioning it is all down to the perception of the individual.Positioning is

map: Positioning maps is a useful way to represent consumer all about ‘perception’. As perception differs from person to

perceptions of alternative products in visual format. They are person, so do the results of the positioning map e.g what you

typically two attributes, but nowadays, 3-D models can be perceive as quality, value for money, etc, is different to my

used to portray positions on three attributes simultaneously. perception. However, there will be similarities.

They are also known as perceptual maps. Positioning maps

can be developed for each segment in the target market and
these maps will show the positions of different players, as per
the perceptions of the consumers in these segments. Mapping
 6

Products or services are ‘mapped’ together on a Designing a service delivery system in service marketing
“positioning map”. This allows them to be compared and involves conceptualizing the service, identifying components,
contrasted in relation to each other. This is the main strength and defining performance specifications. The goal is to create
of this tool. Marketers decide upon a competitive position a system that provides a consistent and efficient service to
which enables them to distinguish their own products from customers
the offerings of their
competition. Basic
Success Factors when Building
positioning map
template :
Service Design and Delivery
Process
The marketer would
draw out the map
and decide upon a
label for each axis. They could be price (variable one) and
quality (variable two), or Comfort (variable one) and price
(variable two). The individual products/services are then
mapped out next to each other. Any gaps could be regarded
as possible areas for new products.

DESIGNING SERVICE DELIVERY SYSTEM IN SERVICE

MARKETING
 7

The processes should focus on adding value without being

unnecessary or overly complicated.

• Look for pain points within the customer’s journey and think
of ways to making improvements to the experience.
• Look to the parts of the process that may be interfering with
the satisfaction of the entire experience.
• Consider asking for customer feedback to narrow down pain
points
• When establishing processes in terms of the “what to do” and
“how to do”, you may use the SERVQUAL model – an
empiric model designed by Zeithaml, Parasuraman and Berry
to understand customer expectations before translating them
into service quality specifications or processes.

2. Consider the Sequence

1. Focus on the Customer When determining the customer’s journey and all the steps it takes to
carry out the service, consider the sequence. The service involves steps

Look at this from the point of view of the customer. Even before you that are connected and performed in order. It’s important to detail that

decide to pen down your processes, the first thing that needs to be and include it within the process.

mapped out is the Customer Journey – what are the various

So, instead of simply listing steps that make up the process, list them in
touchpoints that a customer may have while interacting with your order and how they are handed off from one member of the team to the
organization in order to experience the product/service. next. For instance, a process in a restaurant could specify:

The idea is to consider the customer journey throughout the service,

with a focus on customer needs and expectations during this journey.
 8

• Welcoming, greeting and seating the customer responsibility for carrying it out and accountability for that stage of
• Introduction of server and the menu/specials of the day the process.
• Taking the order
Since carrying out a service involves a number of different roles, it
• Serving the order
• Taking feedback/asking for repeats can be extremely beneficial to get feedback on processes from the

• Clearing the order team members in those roles. This includes different levels of staff

• Billing members, and those who are front stage as well as backstage.
• Farewell
Also, remember the ability of your staff while designing the process,

Creating an effective process includes laying out the steps that make do not expect your frontline staff to be able to execute complex

up a service. It may involve adding steps, but it should also include processes with consistency.

taking away actions that don’t add value or that detract from the
value of the customer experience. For example, an action that makes 4. Allow for Flexibility
a guest jump through an unnecessary hoop should be removed to
improve the experience. Also, take away actions that make carrying
Back end processes can and should be rigid and regimented. When
out the service more difficult for staff members. The process should
you are setting them up, keep in mind efficiency and effectiveness,
focus on simplicity and only what is necessary.
you set up the process to be performed in the simplest manner, for
e.g.;- checklists (they essentially need to be followed blindly).
3. Consider Each Staff Role Within the Service
However, with front end processes that do involve the customer,
always remember that at the end of the day it is a human interaction,
Executing each service effectively depends on numerous roles within establish guidelines as far as the process is concerned and allow for
the organization, both front stage and backstage. It's essential to flexibility, allow for your staff to be able to adapt to the situation, do
determine which role is responsible for which part of the service, and not make front end processes so rigid and regimented that they
how that role should carry out that part. Giving each role a specific negatively impact the customer experience. Highly rigid and
part of the process creates ownership within that role, as well as
 9

regimented processes are the door opener for the “I will hide behind also think about how much value you provide to the
the rules” sin as a part of the Seven Sins of Customer Service. customer.

Above all, with processes, make sure that you can streamline (as per The approaches for services pricing are more or less same
the customers’ requirements) and track them.
as that of pricing of goods. There are three pricing
Overall, service design makes the customer experience the priority approaches which a marketer can choose depending upon the
and does everything possible to ensure that it is always a positive, market condition. These approaches are as follows:-
and satisfying experience. Back end process support this with
efficiency and effectiveness – leading to consistency, front end
1. Cost Based Pricing
processes bring in the human element, which can be variable but
setting up processes helps achieve some consistency here as well.
It is a traditional and simple method. The company
You will face situations where processes are not followed and there
are service breakdowns - that is where Service Recovery kicks in. determines the expense incurred- either direct or indirect- on
Error free service in a high touch industry is close to impossible, production and adds a desired profit margin to arrive a price.
which is why what sets organizations apart is how they recover from The popularity of this might be attributed top the simplicity
these breakdowns, our article on a robust Service Recovery of its application, the fact that is considered fair for both
Model can give you further insights into this. customers and competitors, and the price stability that it tends

Processes tell everyone on the team exactly what they need to do to to establish in an industry. The rationale of this method is to
meet (and sometimes exceed) the guest’s needs and expectations. add a percentage mark- up to cost of producing and
This creates customer satisfaction, which is the ultimate goal. delivering the service.(K. Rama Mohana Rao)

PRICING OF SERVICES IN SERVICE MARKETING

The basic formula for cost based pricing is
When pricing a service, you can consider things like your
costs, the market, and your desired profit margin. You can Price = Direct Cost + Overhead Cost + Profit Margin
 10

fluctuating demand trends cannot use this method. This

Here in Direct cost involved the material and labor method is criticized on following fronts:
associated with delivering the service, overhead cost are the
share of fixed cost and profit margin is percentage of full · It ignores the image and market position of the firm
cost.
· It ignores the demand- price relations
Special challenges in Cost- Based pricing for services-:
Various challenges faced by companies using these methods · Some hidden costs are usually forgotten. Therefore, true
are: margins may be lower than what are realized.

(i) Costs are difficult to trace in service businesses, · Competitors can lower the price to win the business by
particularly where multiple services are provided by firm having a lower cost base or lower profit margins
(ii) A major component of cost is employee time rather
than materials, and the value of people’s time is not easy to · It assumes that the company will achieve the sales target
estimate. to break even.(K. Rama Mohana Rao)
(iii) It involves defining the units in which service is
purchased, which is vague entity in case of manufactured
goods.(Valarie A.Zeithaml) 2. Competition- based Pricing -: This method uses
anticipated or observed price level of competitors as a
This approach is convenient when there is supply demand primary source for setting the price. There are two situations
balance at optimum capacity of firm. The firms have in which competition based pricing is most suitable- when all
the services provides offer the services more or less of the
 11

same standard, or when the oligopoly competitive situation is Objectives of Pricing

present in the market. Companies have three main choices
The objectives of pricing encompass a range of strategic
under this approach: pricing above the competition, below the
goals that businesses aim to achieve through their pricing
competition or at par with the competition. The decision
decisions. These objectives guide how products or services
depends upon the extent to which services differs from those
are priced and contribute to overall business success. Key
of their competitors, the intensity of competition and the
objectives of pricing include:
company’s position in the market.
1. Revenue Generation: Pricing can be used to maximise
total revenue by finding the optimal balance between price
3. Demand based Pricing
and quantity sold. This objective is particularly relevant
when a business aims to capture a larger market share.
This method is customer- oriented pricing because this
2. Market Ruler: A business would want to rule the market
approach takes into consideration the customer’s sensitivity
and acquire a significant share in the market against its rival
to non- monetary costs, the customer’s perception of the
firms. For this, it will try to increase its revenue and
value and customer’s acceptability of service at price. This
customer base. In order to do the same, the company will
method promotes “Value Pricing ’’concept which uses the
need to agree on an optimal price for its product/service that
value that a service delivers to the customers as main factor
the customers can afford.
for setting price. (K. Rama Mohana Rao).Here in this method
3. Survival: Pricing decisions focus on generating revenue
there is challenge to determine the value to customers of each
which helps the firm to survive in the market. Without
of the non- monetary aspects is involved. Under this method
revenue and profits, a firm can not survive for a longer
price isbased on what customers well pay for the services
period. Pricing generates revenue and revenue is used in
provided.
further production in order to produce goods.
 12

4. Profit Maximisation: One of the primary objectives of 2. Right-Level Pricing: Setting up the wrong prices can
pricing is to generate maximum profit for the business. even shut down the company due to the non-generation of
Pricing strategies are designed to ensure that the revenue revenue. A thorough market research is required before
generated from sales exceeds the costs incurred in producing setting up the final prices for the product.
and marketing the product or service. 3. Sales Promotion: As the basic idea of more sales
5. Attraction and Retention of Customers: Having a includes lowering the prices, a sales manager may suggest
proper and affordable pricing strategy helps the business in the business to cut down the prices in order to generate more
acquiring new customers and retention of previous sales.
customers. A more customer base means more revenue. 4. Flexible Element: Price is the most flexible element of

Importance of Pricing marketing in comparison to product, place, and promotion.

Price can be changed rapidly and is affected by many factors
Pricing is of paramount importance in the realm of business
like customer perception of value, inflation, economy,
and commerce due to its multifaceted impact on various
overall costs, etc.
aspects of an organisation’s operations, financial health, and
5. Profit Generation: Pricing directly influences a
overall success. The significance of pricing can be outlined
company’s revenue and profit margins. Setting the right
as follows:
price ensures that the revenue generated from sales exceeds
1. First Impression: Price is the first thing that the
the costs incurred in production, distribution, and marketing,
customers think of while purchasing any product/service.
thereby contributing to profitability.
Even if the customer makes his/her overall decision on the
6. Competitive Edge: Pricing strategies can differentiate a
overall benefit from the product he/she is going to get, they
business from its competitors. Appropriate pricing helps
are still going to compare the prices of other similar goods.
create a competitive advantage by appealing to customers
If the prices are too high than what customers can afford,
they are going to lose interest.
 13

through factors such as affordability, perceived value, or the decisions relating to pricing are taken from the
quality. viewpoint of the customer.
7. Demand Management: Effective pricing can regulate 2. Competitors: Competitors’ pricing strategies, market
demand for products or services. Price adjustments, share, and positioning can significantly impact how a
discounts, or promotions can stimulate demand during slow product is priced. Businesses may choose to price their
periods or manage peak demand to prevent stockouts. products at a premium, match competitors’ prices, or use

Factors Affecting Pricing Decisions other strategies to differentiate themselves.

3. Government Law and Regulations: Pricing decisions
The pricing of products is influenced by a multitude of
are also affected by federal and state regulations. Some laws
factors that businesses must carefully consider to determine
prevail in order to protect the customers from getting
an appropriate and effective pricing strategy. These factors
exploited at the hands of manufacturers, promotion of
can vary across industries, markets, and individual
ethical behaviours from the end of manufacturers, etc. For
businesses. Some of the key factors affecting product
example, Firms coming together and joining hands,
pricing include:
agreeing on charging higher prices for a particular type of
1. Customer’s Perception of Value: The customers’
product, is illegal.
expectation of the price of the product plays an important
4. Economy: Economic environment like fluctuations in the
role in deciding the price of the product. Customers only
general price level, interest rates, and unemployment level
bear the cost of a product that they can afford. If a business
also affects the pricing strategy of firms.
keeps the price of its product/service very high, it will have
5. Product Costs: The total cost that the manufacturer
a very small customer base. Customer-oriented price
incurred in the production of the product affects the pricing
approach is generally followed in order to cover the
decision. Production costs can be of several types, like fixed
customers’ perception of value. In a customer-oriented price
costs, variable costs, semi-variable costs, etc. Also,
approach, the customer is considered as the ‘king’ and all
 14

promotional costs, distribution channel costs, packing costs, allow for more flexibility in pricing compared to working
etc., are considered while deciding the price. through intermediaries.
6. Market Demand: The level of demand for the product at Pricing Strategies
different price points affects pricing decisions. High demand
Different pricing strategies that a company can adopt to
might allow for higher prices, while low demand could
decide the price of its product/service include:
require competitive pricing to attract customers. 1. New-Product Pricing Strategies
7. Elasticity of Demand: Price elasticity measures how The time business faces the most difficulty in setting up the
sensitive demand is to price changes. Inelastic demand pricing strategy is when they launch a new product/service.
allows for price increases without significant drops in The introductory stage is tough for almost all businesses. In
demand, while elastic demand requires more cautious this scenario, businesses mostly go for either Market-
pricing adjustments. Skimming Pricing or Market-Penetration Pricing. Market-
8. Market Segmentation: Different customer segments may Skimming Pricing is opted by those companies who have
have varying willingness to pay. Businesses can tailor launched new products and have no competition. They
pricing strategies to target specific segments and maximize charge high prices at first and later on lowers them. Market-
revenue from each. Penetration Pricing is the opposite of market-skimming
9. Branding and Positioning: Premium brands can pricing. In Market-Penetration Pricing, business sets low
command higher prices due to their reputation and perceived prices at first to gain a significant market share and later on
quality. Pricing can be used to reinforce the brand’s image increase their prices.
as luxury, value-oriented, or innovative. 2. Product Mix Pricing Strategies
10. Distribution Channels: The chosen distribution When a product is a part of the product mix, the business
channels can impact pricing. Direct-to-consumer sales might would like to charge higher prices for the product in order to
increase the overall profits of the product mix. There are
 15

various strategies coming under Product Mix Pricing 3. Price-Adjustment Strategies

Strategy, stated as: Companies keep on changing their pricing strategy to

account for various customer differences and changing
Strategy Description
situations. There are various strategies coming under Price-
Adjustment Strategies, such as:
Setting prices across an entire
Product Line Pricing
product line Strategy Description

Reducing prices to give

Pricing accessary or optional
rewards to customers for
Optional-product Pricing products sold with the main Discount and Allowance
exceptional responses like
product Pricing
paying early or promoting the
product
Pricing products that are
Captive-product Pricing complementary to the main
Adjusting prices to allow for
product
Segmented Pricing differences in customers,
products, or location
Pricing low-value by-products
By-Product Pricing
to get rid of them
Adjusting prices for
Psychological Pricing
psychological effect
Pricing bundles of products
Product Bundle Pricing
sold together
Promotional Pricing Temporarily reducing prices
 16

include market research, product development, and product

Strategy Description
quality monitoring.
to increase short-run sales
Retailers are business enterprises involved in selling goods
and services directly to the ultimate customer. They buy
Adjusting prices to account goods from wholesalers in large quantities and sell them in
Geographic Pricing for customers’ geographic smaller quantities to the ultimate customer. Apart from
location buying and selling, retailers are also involved in the
promotions, after-sales services, and are information
Adjusting prices continually providers. They extend their support to wholesalers and
to meet the needs of manufacturers as well as to the end consumers in various
Dynamic Pricing
individual customers and ways.
situations

Adjusting prices for

International Pricing
international markets

SERVICES ON RETAIL SECTOR

Services in the retail sector include customer service,

promotions, and after-sales services. Retail services can also
 17

Services offered by Retailers to Wholesalers and customers. With the help of such information, important

Manufacturers: marketing decisions can be taken.

1. Helps in the distribution of goods: Retailers are last in 5. Help in promotion: Manufacturers and Distributors carry

the distribution chain. With the help of retailers, finished out various promotional activities from time to time to

products are delivered to the final consumers. Manufacturers increase their sales. Retailers participate in these activities to

and wholesalers cannot reach directly to the end consumers make them successful. Manufacturers, with the help of

as they are less in number, so they need retailers who can retailers, offer coupons, gifts, etc., to consumers as part of

directly engage with the end consumers. promotional activity.

2. Personal selling: Retailers provide a personal touch in Services offered by Retailers to Customers:
the buying and selling process. They interact directly with
the customers and infuse personal selling efforts into the
process. Retailers act as a representative of the
manufacturers and help them in the process of actualising
the sale of the products.
3. Enabling large-scale operations: Retailers allow
manufacturers and wholesalers to be free from the tension of
individual sales to final consumers. Wholesalers and
Manufacturers can focus on other necessary activities.
4. Collecting market information: As retailers are in 1. Regular availability of products: The most important
direct contact with the final customers, they can gather aspect of a retailer is to maintain the regular availability of
information from them and pass it to the wholesalers and products for the end consumers, which enables the buyers to
manufacturers about the tastes, preferences and attitudes of choose from various products.
 18

2. New product information: Retailers are the last element increases customers’ level of consumption and satisfaction,
in the distribution channel. They give information to and ultimately improves their standard of living.
consumers about new products or services through the SERVICE LEVEL AGREEMENTS (SLA)
effective display of products and personal selling efforts.
A service level agreement (SLA) in service marketing is a
3. Convenience in buying: Retailers are situated very near
contract between a marketing team and a sales team that
to the residential areas and operate for long hours, which
specifies the services to be provided and the performance
gives convenience to the customers as they can buy products
standards to be met. SLAs can help improve performance
at times they need.
metrics and the quality of service provided.
4. Wide variety of products and services: Retailers offer a
wide range of products and services to the consumers, so IMPORTANCE OF A SERVICE-LEVEL AGREEMENT
that they can select products and services based on their use, INCLUDE THE FOLLOWING:
preference, needs and choice. Having various options to
• Agreement overview. This first section sets forth the
choose from is always good from the point of view of a
basics of the agreement, including the parties involved,
customer.
the start date and a general introduction of the services
5. After-sales services: Retailers provide important after-
provided.
sales services that include home delivery, supply of spare
parts, pre-installation services, online support, etc., which • Description of services. The SLA needs detailed
becomes a vital element in the customer’s decision to repeat descriptions of every service offered, under all possible
the purchase of the products. circumstances, with the turnaround times included.
6. Provide credit facilities: Sometimes, retailers offer Service definitions should include how the services are
products on credit to their regular customers, which delivered, whether maintenance service is offered, the
hours of operation, the locations of dependencies, an
 19

outline of the processes, and a list of all technologies established and clearly communicated between the
and applications used. parties.

• Exclusions. Specific services that are not offered should • Service tracking and reporting. This section defines the
also be clearly defined to avoid confusion and eliminate reporting structure, tracking intervals
room for assumptions. and stakeholders involved in the agreement.

• Service performance. Performance measurement metrics • Periodic review and change processes. The SLA and all
and performance levels are defined. The client and service established key performance indicators (KPIs) should be
provider should agree on a list of all the metrics they will regularly reviewed. The review process is defined as is the
use to measure the service levels of the provider. appropriate process for making changes.

• Redressing. Compensation or payment to the customer • Termination process. The SLA should define the
should be defined if a provider cannot properly fulfill its circumstances under which the agreement can be
SLA obligations. terminated or will expire. A notice period from either side
should also be established.
• Stakeholders. Clear definitions of the parties involved in
the agreement and their responsibilities. • Signatures. Finally, all stakeholders and authorized
participants from both parties must sign the document to
• Security. All security measures that will be taken by the
show their approval of every detail and process.
service provider are defined. Typically, this includes the
drafting and consensus on IT security and nondisclosure SERVICE MARKETING TRIANGLE

agreements.
The service marketing triangle is a model that shows how a
• Risk management and disaster recovery. Risk company, its employees, and its customers work together to
management processes and a disaster recovery plan are
 20

provide quality service. The model emphasizes the For marketing to be successful, a marketer should ensure that there is

importance of aligning these three groups. positive interaction between these three players. Furthermore, for this
success to be accomplished, three types of marketing must be
The services marketing triangle was created to handle the conducted. These are;
complexity that service marketers face when dealing with intangible
products. The service marketing triangle highlights three key players, • External Marketing — Making Promises: Involves communication
these are; by a company towards their consumer. This form of communication
allows the company to offer their services, and set the expectation of
service quality that the client can expect. In service marketing this
pays particular attention to physical evidence, such as the appearance
of the place of business or appearance of staff.
• Interactive Marketing — Keeping Promises: Interactive marketing is
revolved around the communication that occurs between the client
and the service delivery personnel. This is one of the most important
parts of successfully utilizing the services marketing triangle, as it is
the only time that the client will have face-to-face experience with
the company, via the providers.
• Company: The management of a company, including full-time
• Internal Marketing — Enabling Promises: A more modern addition
marketers and sales personnel. This is enabled through continuous
to the services marketing triangle, internal marketing centers on
development and internal marketing with their employees.
training employees to the highest standards so they can deliver
• Employees: This includes anyone that is working within close
exceptional service. Without internal marketing, there is a high
contact of the consumer. They play an integral role within the
chance that the client will receive sub-standard service.
interactive marketing of service marketing.
• Customers: Anyone that purchases the service of a company. They For the service marketing triangle to be implemented successfully, all
are also heavily exposed to the external marketing of a firm. departments of a company must work together to deliver the
highest quality of service that is possible. All members of an
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organisation must be conscious of their role in delivering service that an organisation should strive to monitor and implement all three points
quality, and understand what their marketing function is. of the triangle, instead of focusing on only one.

Furthermore, the advancements in technology are having a huge

impact on service quality and marketing frameworks. This is because
the changes in technology are allowing companies to communicate
with customers in a non-physical environment, such as through the
internet. This is transforming the services marketing triangle into a
services marketing pyramid, as all three factors can be bought
together through the clever use of technology.

One of the most significant downfalls to the service marketing triangle is

that firms often do not implement it as a triangle. Instead they will focus on
one point of the triangle, and neglect the others. This is particularly true to
internal marketing, as many organisations believe that if employees are
treating correctly, then it will naturally pass through into the external
environment. However, the fact that all three points are woven together,
and influence by each other, does present opportunities’ for organisations to
conduct their marketing efficiently and at a cheap cost.

Another criticism of the service marketing triangle is that it takes into

account to many marketing activities. Marketing is used merely as a tool to
coerce a consumer to purchase a good or service, and an organisation
shouldn’t have to focus on all three aspects of triangle. As service quality is
impacted by each individual point of the triangle, an organisation could,
theoretically, only focus on one point. However, as previously mentioned,
this can have unintended impacts on other facets of the triangle, meaning