UNIT–III: SERVICES MARKET SEGMENTATIONS

The process of market segmentation, selecting the appropriate customer

portfolio, positioning a service in the market, value addition to the service
product, new service development.

Market segmentation:
Introduction:
Market is composed by the customers and sellers, and different customers
may have different needs, characteristics, behaviour or buying attitudes.
Each customer is a separate entity, they have unique wants. Therefore,
sellers may divide a market into different groups of individual markets.
Every consumer group is a market segment, each segment is the
tendency of buyers with similar wants or needs. They divide the market
into distinct groups who have distinct needs, wants, behaviour or who
might want different products and services. This action is known as
marketing segmentation.
Definition:
• Market segmentation is the process of dividing a potential market
into distinct sub-markets of consumers with common needs and
characteristics.
• According to Philip kotler , “ Market segmentation is sub- dividing a
market into distinct and homogeneous subgroups of customers,
where any group can conceivably be selected as a target market to
be met with distinct marketing mix.”
• Marketing segmentation is a process of grouping the customers into
number of different divisions on the bases of similar characteristics.
It is a customer-oriented philosophy.
Objectives of market segmentation:
The main objective of market segmentation is to determine the
differences among customers. The marketer can frame his marketing
policies and strategies on the basis of these differences to provide
maximum satisfaction to customers.
Ø to identify the needs, tastes, priorities, buying motives of the target
consumers.
Ø to determine marketing strategies, targets and goals of the firm.
Ø to make the activities of the firm consumer-oriented.
Ø to identify areas where the customers may be created and market area
can be explained.
Reasons For the Development of Market Segmentation:
It increases the understanding of real needs of the target consumers and
results n maximization of their satisfaction. There are many reasons which
increases the acceptability of market segmentation strategy by the
manufacturers of consumer and industrial products such as;
Ø Customer orientation
Ø Technological advancement
Ø Use of cost reducing techniques
Ø Increase in purchasing power
Ø Increase in competition
Importance of market segmentation:
Market Segmentation is the reality of the market situation. This benefits
both the marketers and the consumers. Following advantages are receive
from market segmentation:
Ø Knowledge of marketing opportunities
Ø Adopting effective marketing programme
Ø Proper allocation of resources
Ø Better assessment of the competition
Ø Knowledge of customer’s needs
Ø Adjustment in products
Ø Effective advertising appeals
Ø Enhances marketing efficiency
Ø Increase in sales volume
Ø Benefits to customers
Types of Market Segmentation or strategies
Market segments are groupings of two or more consumers for a product or
service so that their needs are better served.
Market segmentation is of four types as mentioned below:
Demographic Segmentation- This market segmentation strategy
involves sorting the market into customer demographics. These are age,
education, gender, income, race, or occupation. Demographics is the most
commonly used form of Segmentation as it assumes that people with
similar demographics will have similar tastes and needs. For example,
most Users of a new video game console may be young men with
disposable income.
Geographic Segmentation- This strategy is helpful for larger
organisations that seek to expand into different locations and branches.
Geographic Segmentation can technically be a subset of demographic
Segmentation. It assumes that individuals within a given geographical
area may have similar preferences and needs. An organisation can
determine where to sell and advertise by understanding the climates of
the customer groups. It can segment its customers according to city,
state, country, climate, rural or urban. For example, a clothing company
may advertise more rain suits in the Pacific Northwest Area than in the
Southwest locations.

Psychographic Segmentation- This segmentation strategy strives to

classify the customers based on their lifestyle, personality traits, values,
and interests. In other words, it determines the psychological aspects of
consumer behaviour. Though this segmentation approach is not easy to
achieve, it provides the Strongest market segment results by grouping
people based on intrinsic motivators. For example, a fitness clothing
company may sort its target customers into groups of individuals who are
interested in fitness and healthy living.
Behavioural Segmentation- This approach relies on consumer actions
and decision-making patterns of target customers. These patterns include
lifestyle, purchase, and usage. It divides customers based on how they
previously responded to the markets and products. Spending habits may
indeed change with time. But this approach assumes that customers’ prior
spending habits indicate what they might purchase in the future. For
example, new generations are traditionally more likely to buy more craft
beer. On the contrary, older consumers are in the habit of Buying national
brands.
Process of Market Segmentation
Meaningful market segmentation involves certain steps. A market
segmentation process to be effective should not be based on any
assumptions rather it should be based on detailed study and accurate
facts.
The process of market segmentation is also known as the steps involved
in building a meaningful market segmentation strategy. The necessary
steps for the market segmentation process are as follows:

Identify the Market Segments

The process of market segmentation begins with the identification of the
market segments. A marketer should know to whom he is going to sell his
offerings. On the first side, he may not be able to identify the particular
segments he has to go through a particular way, he himself be capable to
enter such segments.
He may make his market identification effective and meaningful by
focusing on such factors as consumer’s taste, need, preferences, age
group, consumer size, sex group, product characteristics. Let’s suppose
you have a fast-food restaurant, to whom will you target? Maybe
teenagers or young people or adults.
Develop the Profiles for Each Segment
After successfully identification of market segments, a marketer should
analyze each segment to determine their characteristics, similarities, and
dissimilarities. Each segment has distinct characteristics which a marketer
needs to understand.
For each segment, a separate profile needs to develop. And, different
marketing strategy is also required for each market segment. E.g. you
may develop profiles for girls, boys, kids, adults, etc.
Evaluate of Market Segments
In this stage of the market segmentation process, the market should
evaluate all the market segments to find out their value for marketing
operations. A marketer may consider the following aspects while
evaluating market segments,
 Reachability to such market segment.
 Cost to enter on such segment.
 The demand for products and services.
 The competitive position of the firm in each segment.
 Segment size and potneital profit size.
 Potential firm’s goals and objectives in the target market.
In addition, the marketer also has to gauge whether the marketing
program needed to reach a segment will create customer product and
brand attitude consistent with corporate objectives. And, finally, all the
possible opportunities from all segments should be listed properly. E.g.
here you may evaluate either girls, boys, kids, or adults who prefer more
fast foods.
Select Target Market (Best Market Segment)
After the proper evaluation of each market segment, a marketer finally
selects the best market segment. The best market segment is one that
holds greater opportunities for the firm. Here, the opportunities are
concerned with the profits, business firm’s image, meeting firm’s goals &
objectives, strengthening firms competitive position in the market,
enhancing firm’s sustainability, etc. The selected segment is referred to as
the target market.
If a business firm feels that it can enter into more than one market
segment because of adequate opportunities, it selects more than one
segment. However, the marker needs to adopt a separate marketing
program for each of the target markets.
E.g. here you may target teenagers rather targeting adults. As more
teenagers prefer to have fast foods where adults are savvier.
Develop a Positioning Strategy
After the selection of a target market, the marketer needs to develop a
product positioning strategy. Product positioning involves setting the
strategies for how the product sits in the mind of target market
consumers.
The marketer needs to identify the attributes and images of each
competitor’s products and choose a position of its product for making the
target market more accessible. Because immediately after selecting a
target market, the marketer cannot reach quickly to the market as the
product may be quite new for the market or the market may be quite new
to the firm. For reaching the target market, the marketer must develop a
positioning strategy that can best appeal to its potential customers within
the descriptive or functional discipline.
Focusing On Marketing Program
The last stage of the market segmentation process is doing marketing
programs. As the ultimate goal of market segmentation is to understand
the target market and apply accordingly marketing strategy to make them
satisfied and achieve businesses objectives.
To make an effective marketing plan and program the marketer can use
various components of the marketing mix to communicate with the target
market easily. And, finally, he may implement his positioning strategy to
achieve organizational objectives. In addition, he also needs to review the
performance of the marketing plan and positioning strategy, either it is
going as planning or not.
Segmentation by service
One area which has received relatively little attention is the consideration
of how customers respond to varying service offerings. This may be
considered a subset of benefit segmentation, but it is of sufficient
importance to be addressed separately. The various elements of customer
service that can be offered, and possible differentiation in terms of service
levels within these elements, represent a considerable opportunity to
design service package appropriate to different market segments.
Segmenting markets by service involves addressing the following issues:
 Can groupings of customers be identified with similar service
requirements?
 Can we differentiate our service offering?
 Do all our products require the same level of service?
The types of segmentation outlined above are illustrative of the main
forms of segmentation used by services companies. they are, however, by
no means exhaustive. To a large extent the identification of segmentation
bases involves and element of creativity. Those marketing services should
constantly be considering alternative ways of segmenting the market and
seeking ways in which they can create differential advantage over their
competitors. This stage of the segmentation process should result in the
selection of the best base(s) for segmentation.
The segmentation process should result in one of four basic
decisions being reached:
1. The service firm may be decide to target one segment of the market.
2. The service firm may decide to target several segments and so will
develop different marketing mix plans for each segment.
3. Management may decide not to segment the market bout to offer the
service to he mass market. This may be appropriate if the market is very
small and single portion would not be profitable. It also may be the case
that the service company dominates the market so that targeting a few
segments would not increase volume or profit.
4. Analysis may show that there is no viable market niche for the service
offering.
The relevance of market segmentation if now being increasingly
recognized in the services sector. A number of studies have pointed to the
importance of market segmentation. One study ranked ‘problems in
recognizing, defining, understanding and segmenting markets’ as the
most important problem facing the senior executives surveyed. Another
survey ranked segmentation as the third most important
marketing tool out of eighteen surveyed. However, despite the recognition
of the importance of market segmentation, and the developments that
have been made in market segmentation methodology, some service
firms are still basing their marketing strategies and tactics on either
abroad approach to the market, or a relatively unsophisticated approach
to segmentation. May service firms need to be more disciplined in their
focus on their marketplace.
Segmentation is at the heart of marketing strategy and is concerned with
the development of a market position that minimizes competition’s
strengths and maximizes the strength of the service providers.
Segmentation and the associated steps of positioning provide the
opportunity to tailor the service offered to better meet the needs of
specific segments.
Positioning and Differentiation of Services
Services firms are not identifying their key market segments and then
determining how they wish consumers to perceive both their company
and its products and services. Positioning is of particular significant in the
services sector as it places an intangible service within a more tangible
frame of reference. Thus the concept of positioning stems from a
consideration of how an organisation wishes its target customer to view its
products and services in relationship to those of its competitors and their
actual, or perceived, needs.
Positioning can be defined as follows:
“Positioning is concerned with the identification, development and
communication of a differentiated advantage which makes the
organization’s products and services perceived as superior and distinctive
to those of its competitors in the mind of its target customers.”
Positioning offers the opportunity to differentiate any service. Each service
firm and its goods and services has a position or image in the consumer’s
mind and this influences purchase decisions. Positions can be implicit and
unplanned and evolve over a period of time or can be planned as part of
the marketing strategy and then communicated to the target market. The
purpose of planned positioning is to create a differentiation in the
customer’s mind which distinguished the company’s services from other
competitive services. It is important to establish a position of value for the
product or service in the minds of the target market, i.e. it must be
distinguishable by an attribute, or attributes, which are important to the
customer. These attributes should be factors which are critical in the
customer’s purchase decision.
There is therefore no such thing as a commodity or ‘standard’ service.
Every service offered has the potential to be perceived as different by a
customer. Buyers have different needs and are therefore attracted to
different offers. It is therefore important to select distinguishing
characteristics which satisfy the following criteria:
 Importance – the difference is highly valued to a sufficiently large
market
 Distinctiveness – the difference is distinctly superior to other offering
which are available.
 Communicability – it is possible to communicate the difference in a
simple and strong way.
 Superiority – the difference is not easily copied by competitors.
 Affordability – the target customers will be able and willing to pay for
the difference. Any additional cost of the distinguishing characteristic(s)
will be perceived as sufficiently valuable to compensate for any additional
cost.
 Profitability- the company will achieve additional profits as a result of
introducing the difference
Each product or service has a set of attributes which can be compared to
competitive offerings. Some of these attributes will be real, others will be
perceived as real. A company wishing to position itself should determine
how many attributes and differences to promote to target customers.
Some marketers advocate promoting one benefit and establishing
recognition as being the leader for that particular attribute. Others
suggests that promoting more than one benefit will help in carving out a
special niche which is less easily contested by competitors. The selection
of the differentiating attribute(s) is most successful if it confirms fact
which is already in the mind of the target market. Denying or fighting
customers’ perceptions of different offerings in the market is unlikely to be
successful. A successful positioning strategy takes into account
customers’ existing perceptions of market offerings. It determines needs
which customers value and which are not being met by competitors’
services. It identifies which unsatisfied needs could be satisfied. The
positioning strategy seeks to integrate all elements of the service, to
ensure that the perceived position of the service is strongly reinforced.
Services have a number of distinguishing characteristics which have
special implications for the positioning and selection of which attributes to
emphasize. Three of the key characteristics of services, make positioning
strategies of particular importance in marketing a service. These are the
intangibility, the degree of variability or heterogeneity in quality of a given
service, and inseparability – the fact that the performance of a service will
often occur in presence of a customer.
Positioning can permit an intangible service bendfit to be represented
tangibly. It can help the customer see an intangible benefit – cleanliness;
and this view can be reinforced by plastic covered glasses in rooms and a
paper cover over the lid of a lavatory stating ‘sanitized for your
protection’. This helps the customer to associate cleanliness with the
service offering, reinforcing the position that the hotel wishes to portray.
Service companies often promote their reputations in an attempt to ad
tangibility.
Services are also highly variable and rely to a great extent on input from
company employees for their production. For example, in a restaurant the
waiter is the main point of contact with the customer and his service
performance will be a major factor in the say the establishment will be
judged. His performance will vary at different times, and there will also be
variance between his service and that of another waiter
or waitress in the restaurant, as a result, the quality of the delivered
service can vary widely.
Further, the quality of small elements of a total service offering may affect
the received quality of the service as a whole. For instance, a poor check-
out procedure from a hotel, may greatly affect the perceived quality of the
overall experience of staying on it. The customer’s perception of the
quality of the service is therefore greatly affected by the quality of the
overall experience of staying in it. The customer’s perception of the
quality of he service is therefore greatly affected by the quality of the staff
who are responsible for delivery. An advantage can be gained by providing
better trained and more highly responsive people. A positioning strategy
may therefore include the distinctive characteristic of employing ‘better
people”.
Services tend to be inseparable and are characterized by the fact that
they are performed in the presence of the customer.
The distinctive features of the services outlined above provides the basis
for competitive positioning strategy.
Positioning can be considered at several levels:
Industry positioning – the positioning of the service industry as a whole.
Organizational positioning – the positioning of the organization as a
whole.
Product sector positing – the positioning of a range or family of related
products and services being offered by the organisation.
Individual product or service positioning – the positioning of specific
products.
Process of Positioning
Product positioning involves a number of steps including the following:
Determining levels of positioning
Identification of key attributes of importance to selected segments
Location of attributes on a positioning map
Evaluating positioning options
Implementing positioning.
Determining levels of positioning
The first step in positioning is to determine which level(s) – service level,
product sector level, corporate level – are to receive explicit positioning
attention. Some examples will illustrate the choices that are made by
some service organizations. The level or levels of positioning to be
undertaken are usually fairly clear out, although some organisation, have
placed different emphasis on these levels at different points in time.
Identification of attributes Once the level of positioning has been
determined it is necessary to identify the specific attributes that are
important to the chosen market segments. In particular, the way in which
purchasing decisions are made should be considered. Individuals use
different criteria fro making a purchase decision of a service.
Location of attributes on positioning map
The positioning process involves the identification of the most important
attribute and location of various companies’ services, for these attributes,
on a positioning map. Where a range of attributes are identified, statistical
procedures exist for combining these attributes into aggregate
dimensions. Such dimensions are referred to by various names such as
principal components, multi-dimensional scales, factors etc. depending
upon how the data were elicited and which statistical procedures were
used. Usually two dimensions are used on positioning maps and these
often account for a large proportion of the ‘explanation’ of the customer’s
preferences.
Products or services are typically plotted on a two-dimensional positioning
man such as show in the following figure. The positioning map can be
used to identify the position of competitors’ services in relation to the
selected attributes. The analysis can be further developed by drawing
separate positioning maps for each market segment. Customers in each
market segment may perceive the service and its benefits differently and
different map will show these different positions.
Positioning maps can be based on either objective attributes or subjective
attributes Maps can also use a combination of objective and subjective
attributes.

Evaluation positioning options

 Strengthening current position against competitors to avoid head-on
attack.
 Identifying an unoccupied market position that was not filled by a
competitor
 Repositioning the competition.
Once a company had identified where it is positioned at present, it then
needs to determine how to enhance or sustain its position relative to its
competitors.
Criteria for good positioning
 The positioning should be meaningful.
 The positioning must be believable.
 The positioning must be unique.
Implementing positioning and the marketing mix
How a company and service is positioned needs to be communicated
throughout all of its implicit and explicit interactions with customers. This
suggests that all elements of the company, its staff, policies and image,
need to reflect a similar image which together conveys the desires
position to the market place. This means that a company must establish a
strategic positioning direction, which is followed through in all of its
tactical marketing and sales activities.
A successful positioning strategy should make the service clearly
distinguishable by features which are desirable and important to the
target customer segment. This means that the positioning strategy should
be examined from time to time to ensure that it does not become
outdated and that it is still relevant to the target market segment.
The marketing mix is the key to implementing a positioning strategy. The
design of the marketing mix to implement the positioning must be based
on the key salient attributes relevant to the target segment. These
attributes should be identified in the context of analysis of competitors,
whose positions should be assessed to discover their vulnerability. All the
elements of the marketing mix can be utilized to influence the customer’s
perception and hence the positioning of the product or organisation
concerned. The marketing mix can be used to develop a coherent totality
that creates the positioning in the customer’s mind.
Importance of Positioning
Positioning involves both launching new brands into the marketplace (new
brand positioning), and repositioning old brands. It is concerned with the
differentiation of products and services and ensuring that they do not
degenerate into a commodity. To maximize its potential a company should
position itself in its core market segments,
where it is objectively or subjectively differentiated in a positive way over
competing offerings.
Positioning is particularly import for services in the market. As a result of
competitive pressure the consumer is becoming increasingly confused by
the huge offering of services within each market sector. These offering are
communicated by a vast number of advertising messages promoting
different features of the services. The key to a successful positioning
strategy is to promote the feature which the company is best and which
exactly matches the needs of the customer.
Because of intangibility and other features associated with services,
consumers find that differentiation of services can be more difficult and
complex. Successful positioning makes it easier for the customer to see a
company’s services as being different from others and exactly what is
wanted.
Positioning is a strategic marketing tool which allows managers to
determine what their position is now, what they wish it to be and what
actions are needed to attain it. The permits market opportunities to be
identified, by considering positions which are not met by competitors’
products. It therefore helps influence both product development and the
redesign of existing products. It also allows consideration of competitor’s
possible moves and responses so that appropriate action can be taken.
The concept is often considered at the product level although it is also
relevant at the product sector and organizational level. Positioning
involves giving the target market segment the reason for buying your
services and thus underpins the whole marketing strategy. It also offers
guidelines for development of a marketing mix with each element of he it
being consistent with the positioning.
Conclusion:
Market segmentation, Targeting and positioning are at the heart of
modern marketing. Successful profitable marketing depends on asking
and getting good answers two questions: What is target market segment?
What are we going to offer customers in this segment to make them
prefer us to competitors? If you answer these two strategic questions
properly, the rest of the planning is very straightforward.

NEW SERVICE DEVELOPMENT (NSD)

Introduction:
Competitive intensity and customer expectations are increasing in nearly
all service industries. Thus, success lies not only in providing existing
services well, but also in creating new approaches to service. Because the
outcome and process aspects of a service often combine to create the
experience and benefits obtained by customers, both aspects must be
addressed in new service development.
SERVICES
Services can be defined as economic activities between two parties,
implying an exchange of value between seller and buyer in the
marketplace. Intangibility, Inseparability, Perishability, and Variability are
the basic characteristics of Services.
Example: Bike repair, spa
New Service
A service can be termed as a new service when it is innovative. Some new
services are adaptive replacements. They are the improved versions of
the existing service product either in technology, style, status or
performance.
(K. Rama MohanaRao)
New Service Attribute/characteristics
According to Professor G.L.Shostack, new service should have the
following attributes –
It must be objective, not subjective
It must be precise, not vague
It must be fact driven, not opinion driven
It must be methodological, not philosophical

New service development process:

A new service design

process may be
imprecise in defining
the nature of the
service
concept because the
people involved
believe either that
intangible process
cannot be
defined precisely or
that everyone knows
what is meant.
A new service design
process may be
imprecise in defining
the nature of the
service
concept because the
people involved
believe either that
intangible process
cannot be
defined precisely or
that everyone knows
what is meant.
Business strategy development

New service strategy development

Idea Generation

Idea Screening

Concept Development and Testing

Business Analysis

Development

Testing

Commercialization

Post introduction evaluation:

1. Business strategy development:

The first Step is to review the vision and mission of the company.

2. New service strategy development:

The product portfolio strategy and a defined organizational structure
for new product / service development are critical for the foundation
of success. (Possibility in terms of markets, types of services, time
horizon, profit criteria).

The framework allows an organization to identify possible directions

for growth.
some of the most common approaches.
Ø
There should be formal mechanism for ensuring an ongoing stream of
new service possibilities.
Ø
the mechanism may include a formal new service development
department with responsibility for generating new ideas, suggestion boxes
for employees, customers, new service development teams to identify
new services.

3. Idea Generation
Ideas may be generated in many ways. They can arise inside the
organization and outside it, they can result from search procedures (e.g.
marketing research) as well as informally; they may involve the
organization in creating the means of delivering the new service product
or they may involve the organization in obtaining rights to services
product, like franchise.
4. Idea Screening
This stage is concerned with checking out which ideas will justify the time,
expense and managerial commitment of further research and study. Two
features usually associated with the screening phase are:
i. The establishment or use of previously agreed evaluative criteria to
enable the comparison of ideas generated (e.g. ideas compatible with the
organization’s objectives and resources);
ii. The weighing, ranking and rating of the ideas against the criteria used.
5. Concept Development and Testing
Ideas serving the screening process then have to be translated into
product concepts. In the service product context this means concept
development and concept testing.
(a) Concept Development
This phase is concerned with translating the service product idea, where
the possible service product is defined in functional and objective terms,
into a ser vice product concept, the specific subjective consumer meaning
the organization tries to build into the product idea.
(b) Concept Testing
Concept testing is applicable in services contexts as well as in goods’
contexts. Concept testing consists of taking the concepts developed after
the stages of idea generation and idea screening and getting reactions to
them from groups of target customers.
6. Business Analysis
This stage is concerned with translating the proposed idea into a firm
business proposal. It involves undertaking a detailed analysis of the
attractiveness of the idea in business terms and its likely chances of
success or failure. A substantial analysis will consider in detail aspects like
the manpower required to implement the new service product idea, the
additional physical resources required, the likely estimates of sales, costs
and profits over time, the contribution of the mew service to the range on
offer, likely customers reaction to the innovation and the likely response of
competitors.
7. Development
This stage requires the translation of the idea into an actual service
product for the market. Typically, this means that there will be an increase
in investment in the project. Staff may have to be recruited or trained,
facilities may have to be constructed, and communications systems may
need to be established. The tangible elements of the service product will
be designed and tested. Unlike goods the development stage of new
service product development involves attention to both the tangible
elements of the service product delivery system.
8. Testing
Testing of new service products may not always be possible. Airlines may
introduce a new class of service on a selected number of routes or a bank
may make a new service available initially on a regional basis like
automated cash dispensers. But some new service products do not have
such an opportunity. They must be available and operate to designed
levels of quality and performance from their introduction.
9. Commercialization
This stage represents or organization’s commitment to a full-scale launch
of the new service product. The scale of operation may be relatively
modest like adding an additional service to an airline’s routes or large
scale involving the national launch of fast service footwear repair outlets
operating on a concession basis.
In undertaking the launch, the four points may apply:
(a) When to introduce the new service product;
(b) Where to launch the new service product, whether locally, regionally
nationally or internationally;
(c) To whom to launch the new service product usually determined by
earlier exploration in the new service product development process;
(d) How to launch the new service product. Unit trusts for example may
offer a fixed price unit on initial investments for a certain time period.
10. Post introduction evaluation:

At this stage, the information gathered during commercialization of the

service can be viewed and changes made to the delivery process, staffing
or marketing –mix variables on the basis of actual offering to the market
response.

NEW SERVICE DEVELOPMENT – SOME CRITICAL ISSUES

The buyer’s choice of a new service product may be influenced by
features associated with it. These features may be seen as a fundamental
part of the ‘core’ service by the consumers or as ‘peripheral’ to the core
service. In tangible product marketing the brand, the colour, the design or
the package may be important contributory factors to the consumer’s
purchase decision.
1. Branding
‘Branding, brand development and brand acceptance are usually not
prominent in the marketing of services. Certainly, branding is difficult
because of the problems of maintaining consistency of quality in service
settings. Example: In a study of brand loyalty in the context of the
computer rental market it was found there was no one reason why
customers terminated rental agreements or maintained or renewed their
agreements.
2. Patent
The intangibility of services means that there are no patents. It is thus
difficult to prevent competitors from copying service innovations though
trade names can be protected. This means that innovations can have
short life-cycles because they are easy to copy.
Warranty
Warranties are usually related to product sales. However, they can be an
important element in the strategy of service marketers. In law a warranty
is an undertaking on the vendor’s part that the thing sold by the vendor is
fit for use or fulfills specified conditions. Such undertakings are of two
kinds, implied and express. Warranties can be of importance in marketing
certain services. For example, investment schemes which guarantee
payments in spite of changes in external conditions can be a useful factor
in marketing financial services.
4. Service Product After-sale Service
After-sale service is usually associated with the sale of tangibles. However,
it too has relevance to services markets. For example, an airline can assist
passengers to arrange hire cars and book hotels as part of their service;
an insurance company can advise clients on changes they should make to
their policies as their personal circumstances change; a stockbroker can
assist the client to readjust a portfolio of shares; a dentist can provide a
check-up sometime after providing dental treatment. The elimination of
service of service products of course is not easy and indeed organizations
may adopt a number of strategies before doing so like selling overseas,
optimizing profitability over whatever life remains or revitalizing the
offering in some way. But these moves do not ultimately remove the need
for systematic procedures to assist with decision making in this area.
Conclusion:
Firms need to improve and develop new services to maintain a
competitive edge. Designing a service product is a complex task that
requires an understanding of how the core and supplementary services
should be combined, sequenced, delivered, and branded to create a value
proposition that meets the needs of target market segments. To do this,
we discussed the “Flower of Service,” branding strategies, and new
service development as key tools for product development.