UNIT - II

EIGHT COMPONENTS OF INTEGRATED SERVICE MANAGEMENT

The Service Marketing Mix (THE 8 P’s OF SERVICES MARKETING)
In order for your business to sell its products and services as successfully as possible
 you need to look at what products you are selling in detail to ensure they will be attractive and
needed;
 the price to ensure it is not too cheap or too expensive;
 where you are best distributing your product; and
 how you can create interest and awareness for your products.
All these elements need to be targeted at the right people at the right time.
1) Product element: Managers must select the feature of both the core product (either a good or
service) and the bundle of supplementary service elements surrounding it, with reference to the benefit
desired by customers and how well competing products perform. In short, they must be attentive to all
aspects of the service performance that have the potential to create value for customers
2) Price and other user costs: - This components addresses management of the expenditures and other
outlays incurred by customers in obtaining benefits from the service product. It is not
only related to traditional pricing tasks of establishing selling price to customers, setting trade margins
and getting credit terms but also, how to minimize other burdens of customers while purchasing such as
time, mental and physical efforts and unpleasant sensory experiences such as noises and smells.
3) Place , cyberspace and Time:- Delivering product elements to customers involves decisions on the
place and time of delivery as well as on the methods and channels employed. Delivery may involve
physical or electronics distribution channels or both),depending on the nature of the service being
provided.
4) Promotion and education:- No marketing program can succeed without effective communications.
This component plays three vital roles: -
a)Providing needed information and advice (awareness).
b)Persuading target customers of the merits of a specific product. (Concentrating on a particular
segment of the market).
c)Encouraging to take action at a specific time (purchase). Communication is educational in nature for
new customers. Communication can be delivered by individuals such as sales people and trainers, media
such as TV, radio, newspaper, magazines, postures, websites etc. This promotion is usually used as
incentives to catch customer’s attention and to motivate them to act.
The above four are the traditional marketing mix. The EXTENDED marketing mix for services
marketing is as follows :
5) People: - Many services depend on the direct, personal interaction between customers and a firm’s
employees (such as getting a haircut or eating at a restaurant). This interaction strongly influences the
customer perception of service quality. So, successful service firm devote significant effort to
recruitment, training and motivating their personnel.
6) Physical evidence:- The appearance of buildings, landscaping, vehicle, interior furnishing, equipment,
staff members, signs, printed materials, and other visible cues all provide tangible evidence of the firms
service quality. The service firms need to manage physical evidence carefully because it can have a
profound impact on customers’ impression as the service itself is intangible. A tangible element such as
insurance and advertising is often employed to create meaningful symbols. E.g.: - umbrella may
symbolize protection and a fortress, security.
7) Process: - It is the method and sequence of actions in which service operating system works.
Badly designed process: - annoys customers which leads to likelihood of service Failures.
8) Productivity and quality: - Productivity relates to how inputs are transformed into outputs that are
valued by customers. Improving productivity keeps costs under control

PRODUCT MIX
Introduction
‘Product’ includes name, design, features, quality, operational case, packaging, warranties, appearance,
range and size. It also includes pre-sale and post-sale services like training, repairs,
maintenance and replacements. According to Philip Kotler “a product is anything that can be offered to
market for attention, acquisition use or consumption that satisfy a want or need. It includes physical
objects (TV), service (banking), person (political person), place (holiday resort), organization (red cross)
and idea (aid awareness).” Conventionally, a product is an object, which is delivered and consumed.
However, in services there is no or very little tangible elements. Hence, what is offered for sale is
benefits.
Service is a bundle of benefits and has relevance for a specific target market. Hence, the package of
benefits should have a customer’s perspective.
Levels of product:
Kotler has identified 5 levels of a product
1) Core product
2) Basic product
3) Expected product
4) Augmented product
5) Potential product
Kotler suggested that a product should be viewed in three levels.
1. Core Product: What is the core benefit your product offers? This is the fundamental benefit or service
that the customer is buying. For eg. A customer going to a Hotel is buying rest, sleep etc.
2. Basic Product: Basic functional attributes. All Hotels provide rest and sleep. The aim is to ensure that
your potential customers purchase your one service. Thus the functional attributes like Room, Bed, Bath
are important.
3. Expected product: Set of attributes that the buyer expects (Clean room, large towels, quietness)
4. Augmented product: What additional non-tangible benefits can you offer? This meets the customer’s
desires beyond his expectations – (Prompt room service, music, aroma etc)
5. Potential product: The possible evolutions that can be made to make the product a distinguishedoffer
(all suite room)
In a Bank these can be
 Core Product :Safety of deposits, Interest, Easy loans
 Basic product : Savings deposit, FD, Recurring deposit
 Expected product : Correct transaction records, timely service, convenient timing
 Augmented product : Congenial waiting room, Water cooler
 Potential product : Greetings for New Year, 24 hour banking
The PACKAGE CONCEPT of Service product:
 It suggests that what you offer to the market is a bundle of different services – tangible and
intangible.
 There is a core service and around it are built the auxiliary or facilitator service.
 Without this the service would collapse (a bell boy in a Hotel).
  Yet another service is the supporting service – it is used to increase the product value (a car
rental in a hotel).
 The basic product is not equivalent to the service product which the customer perceives, which
is in fact based on customer’s experience and evaluation.
 Therefore there is a need for an augmented product – like Accessibility (number and skills of
personnel, convenient timing, location, infrastructure etc.,)
 Interaction with service organization (between employees and customer, with physical and
technical resources, with other customers) Consumer participation.(how well the customer is
aware about the process of service delivery, his willingness to share information and use service
equipments).
 The package should also include the management of service image through encouraged word of
mouth and market communication.
BRANDING:
One of the most important decisions a marketing manager can make is about branding. The value of
brands in today’s environment is phenomenal.
Brands have the power of instant sales; they convey a message of confidence, quality and reliability to
their target market.
Brands have to be managed well, as some brands can be cash cows for organizations.
In many organizations they are represented by brand managers, who have huge resources to ensure
their success within the market.
A brand is a tool, which is used by an organization to differentiate itself from competitors.
Eg., What is the value of a pair of Nike trainers without the brand or the logo? How does your
perception change?
BRANDING OF SERVICES AND ITS IMPORTANCE:
Philip Kotler defines a brand as “a name, a term, a symbol, or a designed or a combination of them
which is intended to identify the goods and services of one seller or a group of sellers and to
differentiate them from those of competitors”. Brand decision is important for tangible goods. But in the
case of service offering branding is still in its infancy, there importance is expected to rise due to the
following reason.
1. Service market is getting more competitive and there is as increasing proliferation of brands in the
service sector.
2. It is five times cheaper to retain customer than to attract new ones.
3. As a new service development assumes greater importance, the risk of product launch is reducing in
the context of umbrellabranding.
4. As service itself does not offer unique tangible benefits, brand development tangibilises the service.
Eg .,Customer gives more significance to the service provider than the individual service products that
the provider offers. Therefore, this leads to branding the service providers cooperate image. Banks
especially have recognized the importance of corporate image and identity and have used slogans, logos
and other means to brand themselves. Ones the corporate brand is developed it is found that service
firms move with relative easy to other service product categories.
Primarily companies resorts to corporate brand building with a goal of maximizing market capitalization
and creating shareholders wealth. In case of service firms corporate branding reflects the service itself.
Airlines, fast-food restaurants, banks, professional firm are usually differentiated on the basis of their
corporate name and reputation rather than the specific service they offer. The service organization
brand name is reinforce by courteous employees, professional looking uniform, advertising etc.
However no matter how good the corporate brands may be the quality of service determines the
success of the image. There are instance where the service itself is branded. Example Suvidha Account
of Citibank, the various schemes of LIC like Jeevan Kishore, Jeevan Mitra etc.
Advantages of branding services
1. To tangibilise the intangible.
2. To support the positioning strategy.
3. Offers a powerful tool for relationship building.
4. To create an image of quality and consistency.
5. To reduce price comparison.
6. Keeps current customers satisfied by developing and sustaining
a unique service advantage.
7. Encourages repeat usage using sales promotions.

THE DIFFERENT STAGES IN THE SERVICE LIFE CYCLE:

Products and services experience a life cycle over the course of their existences, just as living beings do.
Life cycles of products and services are similar and include four distinct phases: introduction, growth,
maturity and decline. Each stage of the life cycle requires business to employ various strategies to
attract and retain customers. Service providers and manufacturers also adopt different tactics
throughout the life cycle to establish and protect their share of the consumer market from competitors
offering comparable services and items.

The four stages of service life cycle are as follows:

Introduction
After development, a product or service provider introduces its offering to the public for sale. Since the
idea is new, little or no competition exists during the life cycle’s introduction phase. Public recognition of
and desire for the new item remain low during this stage as a business’ marketing efforts begin to
educate potential buyers about the item’s existence and benefits.
During the introduction phase, service and product providers will either offer their items at low or high
prices. Assigning high prices keeps manufacturing and distribution costs low as the market slowly
welcomes and absorbs the item. Charging a low price for a service makes it more attractive and
affordable to a larger clientele base within a shorter time period.
Growth
During the growth phase of the life cycle, consumers become increasingly aware of an item’s existence
and desirability. As a result, sales of a company’s product or service grow at a faster rate than during the
introduction stage. The product or service originator attempts to establish a clear identity for its item.
The originator also tries to secure a loyal clientele base as competitors begin to introduce comparable
products to consumers. During the final part of this stage, the sales and profits of the original product or
service attain their highest levels.
Maturity
The life cycle’s maturity phase involves increased competition from other product and service providers.
Competitors continue to introduce different versions of the original item to consumers until the market
becomes saturated with alternatives. The originator of the item will maintain its high level of sales
during the beginning of this stage but, due to the drastic increase in the number of competitive
products, will also experience an eventual decline in sales before the maturity stage finishes.
The original producer typically reduces the price of its item during the maturity stage in an attempt to
retain its loyal clients. Communicating the differences between the original item and its competitors to
the public will become necessary for the item to maintain its desirability among consumers.
As the market becomes overly saturated toward the end of the maturity phase, some competitors cease
production of their products and services.
Decline
The decline phase represents the end of the public’s interest in purchasing the original item and
competing facsimiles. Consumers either already have a version of the product or service or have simply
wearied of the item altogether. Consumers have begun to have interest in another product or service
altogether and are spending their money accordingly. As a result, competing products become scarce as
competitors begin production of other, more profitable items.
A comparatively small segment of the public may retain a residual interest in purchasing the original
product or service during the decline stage. When even this segment loses interest, the product or
service will have experienced the end of its life cycle.

NEW SEVICE DEVELOPMENT

Stages in New Service Development
Professors Zeithaml, Bitner, Gremler and Pandit, have published the stages of new service development
from various sources in their book entitled “Services Marketing” in 2008. The stages are depicted in
Figure 11.2 below. These stages are discussed in some detail in the following paragraphs.
Stage 1: Business Strategy Review
At this stage we must review and understand the vision, mission, values and strategic orientation of our
company. The vision of transporting goods, i.e., cargo service would be different from the vision of
transporting mail, i.e., courier service. In 1997, Michael Treacy and Fred Wiersema have written about
three value disciplines that companies must choose from. These include: 1. the operationally excellent
firm, which is efficient and delivers services at the lowest cost to the customer, 2. the product/service
leader, i.e., offering innovative services under a strong brand, and 3. The customer intimate firm, that
excels in customer attention and customer service.
Next, we must understand the strategic orientation that our company has decided to take to excel in
the marketplace. A strategy is essentially a means to reaching business goals that our company has
decided for itself. Generic strategies are game plans for operating and surviving in the marketplace.
Michael Porter has written about three generic strategies in 1980. These are: 1. cost leadership strategy,
i.e., becoming the lowest cost provider of services, 2. differentiation strategy, i.e., providing unique set
of benefits to the customers which are not offered by our competitors, and 3. focus strategy, i.e.,
focusing on a niche or narrow market segment and fulfilling the needs of that segment through its
service offerings.
 1 Business strategy review    

Developing new service

2    
strategy

Front-end 3 Idea generation Screen ideas against new service strategy Drop
planning
Concept development Test concept with customers and
4 Drop
and evaluation employees

Developing the business

5 Test for Feasibility and profitability Drop
case

Service development and

6 Conduct service prototype test Drop
testing

7 Market testing Test service and mix elements Drop

Implementation
8 Commercialisation    

Post-introduction
9    
evaluation

Figure 19-1: Stages in New Service Development

 Stage 2: Developing New Service Strategy
We must decide the strategy that our company would like to take to grow in the marketplace and align
new service development in that direction. These include 1. intensive growth, 2. integrative growth and
3. diversification.
For intensive growth, the company would strive to increase market share for its current services in the
current market or develop and launch new services in existing markets or take current services to new
markets. These strategies are depicted in the matrix (see Figure Error! No text of specified style in
document..2) published by Professor H. I. Ansoff in 1965. A company can increase its market share by
changing the style of operations and enhancing its customer intimacy, for instance. Ordinarily, service
businesses choose to grow by taking their current services to new markets, i.e., new countries and cities
and adapt the offering to the preferences of the customers in the new market. You may have noticed
how McDonald’s opened its outlets in various cities in India, one after another. On the other hand, post
offices in India started providing fixed deposit services and passport related services in the same
markets where they were offering postal services. Similarly, a customs agent may launch courier services
in the city where they are located, as an example of growing their business by offering new services in
existing markets.
    Market
    Current New
New Service
New (Diversification)
Development
Services
Increasing Market
Current
market share development
Figure 11.3 Ansoff's Matrix indicating Intensive Growth Strategies
For integrative growth, the company would form joint ventures or alliances with other companies in
order to deliver complementary services, such as catering services for airlines. It might also like to
acquire other companies or merge with them.
Under the diversification strategy, the company develops and launches new services in new
markets. This step is risky as the company does not have prior experience with the new service in the
new market. However, once the intensive and integrative modes of growth have been exhausted, a
business would have no choice other than to diversify its business into new services in new markets.
Knowledge about the above strategic orientation of our company will help us formulate the new service
strategy. We can now initiate the new service development process in alignment with the new service
strategy.
Stage 3: Idea generation
As indicated in Figure 11.2, the third stage of new service development is that of idea generation. This
stage requires a formal department to be set up in our company. The activities in this stage would
include conducting idea generation exercises like brainstorming and focus group discussion with
customers, observing customers in different situations wherein they receive the same benefit through
similar or ernative services and learning about the services provided by competitors. The company must
also place suggestion boxes and institute suggestion reward schemes to attract suggestions from their
employees. Listening to customers is the best way to receive ideas, not only for improvements in the
current services offering, but also for entirely new services. The idea must align with the new service
strategy; otherwise the idea must be dropped or shelved. It must also undergo preliminary evaluation
regarding the potential market for the benefit that customers are willing to receive from the service. We
must keep in mind that the quantum of investments starts increasing rapidly from this point onwards for
developing each idea. Unless the idea has clear potential, it must be dropped, otherwise the company
will face further losses if the idea is allowed to be developed further and is dropped at a later stage due
to lack of feasibility.
Stage 4: Service Concept Development
An idea that appears feasible and profitable is taken up for development of the service concept. The
service concept is the description of the service in terms of the value it will provide customers, the form
and function of the service, the type and level of experience that customers are likely to receive from
the service, and the outcome of the service. The concept is developed by involving customers, service
personnel, service managers, suppliers and other professionals such that it is acceptable to all and
everybody agree that it is likely to provide much needed benefits to the customers. Further details
about the service concept are discussed in Lesson 12. The service concept is tested with customers and
employees and is dropped if it is not found to offer substantial benefits to customers in comparison to
existing alternate methods by which customers can satisfy their need.
A blueprint of the service can also be drawn at this stage as elaborated in Figure 19-2. The blueprint
would help in laying out the service process and estimating various costs involved in delivering the
service to customers. This would help in estimating the profitability of the service business and
developing the business case as discussed in the following section.
Stage5: Developing the Business Case
The service concept is then tested for marketing, technical and economic feasibility as discussed in
Lesson 6. It is ensured that it will be possible to deliver the services in a manner acceptable to
customers, the customers are willing to purchase the service, and the service remains profitable with a
three-year ROI/ROCE that is greater than the prevailing bank interest rate. If the service does not seem
to be profitable, it must be dropped without incurring any further cost in developing the concept
further. The profitable business case is then developed for approval of the management and
representatives of the shareholders and investors.
Figure: Blueprint of a Typical Restaurant Service

Stage 6: Service Development and Testing

Once the business case for the service has been approved, it is taken up for development of the actual
service. The blueprint of the services is further developed and the service prototype is tested with actual
customers. For example, a bank can test new ideas by reorganizing current branches for the test period
and observing and collecting data from actual customers about the benefits of the new idea. One bank
found that installing TVs with CNN channel reduced the perceived waiting time for the customers and
then the same was taken up for implementation in big branches. In this way all new concepts are tested
and those ideas that do not provide substantial benefits to customers are promptly dropped.
Stage 7: Market Testing
Once the service prototypes have been tested, these are put together for a pilot test. Alternative
marketing mix elements or 7Ps options are tested at this stage. At first, the pilot service is offered to the
employees of the organisation and their feedback is collected. The service is then modified according to
the feedback received and is offered to actual customers for a short period and their feedback collected.
The feedback is analysed for effecting further modifications in the service and tying up any loose ends. If
the service passes the market testing phase and it is found that customers are enthusiastic about the
new service and the service is estimated to generate profits, the service development is taken to the
next stage.
Stage 8: Commercialisation
The plan for rolling out the new service is then drawn up. It is usually rolled out in a phased manner by
opening it up in the least risky markets and then quickly spreading it to other markets if the feedback is
favourable. Commercialisation has two important objectives. The first objective is to elicit the support of
the large number of service personnel who are going to deliver the services. At this stage the new
service is marketed to the employees of the organisation as a new smart offering that generates profits
and bonuses for the organisation. The second objective is to monitor the service throughout the period
that customers purchase and use the service. Every interaction at the moment of truth and every detail
is monitored and feedback collected from the customers as to whether the latter’s needs are being
fulfilled, whether they are deriving benefits from the service and are satisfied and what modifications
they would like to be made in the service. The service is constantly modified based on the feedback
collected. Customers’ comfort with the price and other marketing mix elements is thoroughly ensured
by the service manager and adjustment and improvements are continuously made so that customers
feel a compelling need to purchase the service.
Stage 9: Post-launch evaluation
The service is reviewed for performance according to a pre-planned period of review. Customers,
employees, the market and the context keep changing with time. It is important to effect necessary
changes periodically in the service in line with the changes in the above dimensions. The service
blueprint comes in handy at this stage. It is also inspected for alternate ways to gain further efficiency
and pass on part of the benefits so accrued to the customers and part of the same to the organisation.
Customers and employees are requested for new ideas for this new service and same are incorporated
to be able to provide the latest to the customers and to remain ahead of competitors in the
marketplace.

Managing the organization’s service portfolio, and developing and positioning new services, are
functions critical to the organization’s success. According to Booz, Allen and Hamilton, there can be six
categories of new products.
i. New to the world products
The products are really innovative and the world has not witnessed such products earlier. These
products create an entirely new market.
ii. New product lines
The products are not new to the market but new to the company. A company may add a new
business to the existing one and enter an established market for the first time.
iii. Additions to the existing product line
A company may add new products to the established product lines in order to strengthen the
product lines.
iv. Improvements and revisions of existing products
A company may modernize its products by adding new values or replacing the existing products
with improved ones.
v. Repositioning
The existing products of a company may be targeted to new markets or new market segments.
vi. Cost reductions
Companies may develop new products that are capable of providing similar performances at a
lower cost than that of earlier products.

EXAMPLE FOR STEPS IN THE DEVELOPMENT OF A NEW SERVICE [ or ] EXPLAIN THE TYPES OF NEW
SERVICE DEVELOPMENTS AND ITS STAGES. [ CASE STUDY ]
Eg., THE PERFECT BRIDE
OVERVIEW OF THE SERVICE
“Perfect Bride” is a service firm which helps the would-be brides or girls who are about to get married to
learn and train themselves to better adapt to the change that they are about to witness in their lives.
We conduct sessions where in girls are trained in various aspects of married life like:
 Inter personal relationship handling
 Time management
 Personal grooming
 Fund management
 Inter cultural training
 House hold learning

We also provide services of wedding planner which will take care of all the activities of the wedding
including decorations, various rituals planning, guests handling, caterers, venue handling, wedding
couture, bridal make up, etc. One of the striking features of our service is that we give inter cultural
training to girls having inter caste marriages where in we train them in various aspects of the new
cultural that they are being married into like dress, food type, rituals, language, etc.

 STAGES OF NEW SERVICE DEVELOPMENT

IDEA GENERATION

The new service development process starts with the search for ideas. New service ideas can come from
customers, competitors, employees, interacting with various groups or top management. There was a
brain storming session conducted by the company with the top management discussing about various
customer requirements. Various informal sessions were also conducted where customers talked about
their needs and wants. Thus various ideas were generated.

IDEA SCREENING

The basic need for idea screening is to eliminate poor ideas as early as possible because with each
service development step, the cost of development rises. All the ides were submitted to the idea
manager which was then reviewed by the idea committee. The ideas were then divided into groups of
promising ideas, marginal ideas and rejects. The idea in the group of promising ideas was then
researched by the committee. The committee reviewed the idea against set criteria like: a)      Will the
service meet a need)

b)      Can the service be appropriately advertised)

c)      Does the company have enough capital for the service?

CONCEPT DEVELOPMENT

In this stage the service had to be described in detail. The company needed to develop a concept about
the service to describe it to its customers

To develop a concept for this service the company had to think about many questions like-

who will use this service? Teenage girls or would be brides.

Second, what benefit will it provide them? Better adjustment after marriage or experience sharing about
married life.

Third, when will people use this service? After being engaged, after graduation or after marriage. After
considering various questions for developing a concept for the service, our company finally formed the
concept of an opportunity for would be brides who want overall knowledge and experience sharing
about marriage life for leading happy married life.
CONCEPT TESTING

Concept testing involves presenting the service concept to appropriate target customers and getting
their reactions. The more the tested service resembles the final service, the better it is. Concept testing
involved elaborating the customers upon the concept of the service and getting their reactions and
acceptability of the service. We elaborated on the concept as providing services that will help girls who
are about to get married to learn about the various aspects of being married and leading a happy
married life by training them on handling relationships, time management, personal grooming, adapting
to new cultures in case of inter caste marriages, wedding planner and many more.

BUSINESS ANALYSIS

After the management developed the service concept and tested the feasibility of the service, it
prepared a sales, cost and profits projections to analyze the entire service.

Estimating total sales: Sales in term of this service would mean as to how many people avail this service
and enrol for such programs. This is a repeated purchase service i.e. people keep getting married and
thus customers demanding such a service will not go down torero. So sales are estimated to be
favourably good in this kind of a service.

Estimating costs and profits: The initial cost of this service would include the cost of advertising and
marketing the service, hiring teachers and experienced work staff to train the people whoenroll and
collaborating with various people who will be needed to ultimately plan the wedding for their clients.
Profits are expected to be fairly good because as in a country like India where people spend lavishly for
weddings, profits are expected to be good over a period of some time.

MARKET TESTING

After the management was satisfied with the concept of the service and the business aspect of it, they
decided to go for market testing where the consumers are offered the product and its acceptability can
be checked. We went in for alpha testing where we tested our service within our organization. We went
to few of our friends and one of our relative who were about to get married and explained them about
our concept. The customers we approached towered quite excited about this service and wanted to
enrol for it.

COMMERCIALISATION

Now is the time to finally launch the service in the market. Before the service is launched in the market,
several decisions are to be taken like:
WHEN: This involved deciding upon the market entry timing. As this is a very new service concept which
does not exists, we will surely enjoy the first mover advantage by way of grabbing key distributors and
customers.

Secondly, we have decided to come out with this service in the month of September, as this is the time
when the wedding season which is considered auspicious in our country is about to start. Thus it will be
a good time to start this service.

WHOM: Our target customers will be upper middle class and upper class society people who can afford
to and will be willing to spend lavishly at weddings.
WHERE: During our initial launch, we will be starting up with our service in Delhi and Mumbai which are
big metropolitan cities and have population who might be willing to avail such a service.
HOW: this decision basically includes how the service will be launched. It requires deciding upon the
marketing strategy and promotional techniques of launching the service in the market. The marketing
strategy has been explained in terms of the following:
PRODUCT:

Our product is basically a service that provides would-be brides withal detailed learning experience
about the new life they are about to enter. It provides services like relationship handling, fund
management, time management, personal grooming and wedding planner.

PLACE:

We have decided to start our service in metropolitan cities like Delhi and Mumbai where the population
will be willing to spend on wedding planning and learning courses.

PRICE:

The price list for our services is as below: We have courses in:

Relationship handling: Rs. 6000 for 15 classes twice a week

Time management: Rs.4000 for 10 classes twice a week

Fund management: Rs. 4000 for 10 classes twice a week

Personal grooming: Rs.7000 for 15 classes twice a week

Wedding planner: as per requirement

Household learning: Rs.5000 for 10 classes twice a week

Cross cultural training: Rs.4000 for 19 classes twice a week

Entire package cost without wedding planner: Rs.25000 + taxes as applicable

Entire package cost with wedding planner: Rs.25000 + cost as per wedding requirement+ taxes as
applicable

PROMOTION:

The various promotion techniques that will be used for promoting the service willbe:1)

1)      Newspaper advertisement in matrimonial section of the newspaper2)

2)      Online marketing on matrimonial sites like shaadi.com and vivaah.com3)

3)      Promotion by setting up stalls at wedding exhibitions like Vivian, bridalasia,bride and groom,etc4)

4)      Printing ads in wedding magazines5)

5)      Radio jingles6)

6)      Printing brochures and pamphlets7)

7)      Advertising at various popular beauty salons

PEOPLE:

Our services will be provided by people who have been specially trained to provide relationship
counselling, cross cultural training incise of inter caste marriages, time and fund managers who will train
clients, interior decorators and planners for wedding planning.

PHYSICAL EVIDENCE:

All the members who enrol for our service will be given an automated i-cardwhich will serve as an
identity proof for them and which can be used for entering personal data on our website, any personal
queries and will also be used to track class records and take back up classes.

PROCESS
The entire course will be conducted by experienced trainers who would create real life situations for
clients and then teach them and help them deal with situations. Practical learning sessions will also be
conducted for personal grooming sessions which would include cooking classes, personal make up
sessions, etc.For the purpose of relationship handling, counselling sessions and open discussions will be
conducted where personal queries can also be taken.
Steps to be taken for starting medical transcription for hospitals in the USA are as follows:
1. Business strategy review: The vision of the company is to be formulated. An example of the vision
could be “to be the provider of transcription services matching world standards for all. The value to be
provided are 24 x 7 superior quality services at the lowest cost. The medical transcription has to be
prepared based on the audio tapes of conversation and prescription by doctors in the USA. For this,
centres have to be established in locations where people skilled in English language live in considerable
numbers.
Developing new service strategy: Once the company is well established for US markets, i.e., when we
are able to successfully meet all the demands of our US clients, we can think of taking the services to
new places (like Germany, France, Italy, etc.) Further, this transcription service can be extended to
diversified domains like education, where video/audio of lectures can be documented.
Idea generation: Competitor analysis can be done to set the lowest prices. New processes needs to be
identified in order to meet those demanding low cost, Process improvement and work force efficiency
can be the mode of survival in this industry.
Service concept development: Once we decide how our transcription services will be delivered, we
need to focus upon the value offered to the customer. In this business, the role of the person doing the
back office work, i.e., the actual transcription becomes very important as its quality is of utmost
importance for customers.
Pricing: Various components like office expenses, manpower training and development cost, etc. Needs
to be calculated to arrive upon the actual pricing. ROI should be substantial and sustainable.
Testing: The service can be tested with low load offering hospitals on pilot basis, On being successful, it
can be extended to the entire target segment.
Feedback: This is very important component of this service.
b. refuse collection services for a town municipality
       Answer: The steps in establishing the business of refuse collection in town municipality is as follows:
1. Business strategy review: The vision of the company would be to provide world class refuse collection
services. The value added would be in the form of efficient, low-cost services to the citizens of the town.
Since this will be a contract based services, which is generally won after bidding tenders, hence, we have
to be the lowest cost provider of the
services for which operational efficiency would be a must.
Developing new service strategy: The company would strive to take the current services to new market
place (i.e. market development). If current services do not satisfy the needs of the citizens, then, new or
modified services can be offered for current markets (i.e., new service development)
Idea generation: For refuse collection, we can go for new technologies and techniques that can help in
efficient refuse collection. For this, brainstorming, competitor analysis and benchmarking against the
best practices of industry can be done.
Service concept development: Once we decide the technique by which refuse will be collected and
disposed, we have to decide upon the value to be offered to the citizens like, cleanliness, health
improvement, etc. Delineation of the roles of service personnel, service supervisors/managers along
with suppliers and customers will be very important for concept development.
Pricing: Calculation of cost components have to be done to decide the actual price. Based on the fixed
and variable costs, we have to calculate the cash flows and breakeven price. ROI/ROCE should be high
enough for the venture to be sustainable.
Testing: We can test our services in part in various localities. If successful, we can roll out our services in
the entire city/town.
Feedback: Feedback has to be collected on the performance of our services. It will help us understand
customer needs in depth and will help in modifying our services to meet customer needs better.

PRICE MIX
Introduction:
This element of the marketing mix is related to the decision influencing the fee structure, rate of
interest, commission charged and paid by the service generating organizations. It is considered
to be the most critical component of the marketing mix. Both from economic and social standpoint, the
management of pricing is important but at the same time more critical and challenging. We find pricing
decisions important because the pricing decisions are to influence the maintenance, development and
expansion plans of an organization.
Guidelines for service pricing:
1) Pricing strategy should enable handling demand fluctuations successfully. As services cannot be
inventoried, pricing should encourage customers to use the service during period of low demand.
2) As services need to have some tangible element attached to it, service pricing should be based on
costs so as to take into account the tangible clues.
3) Service price as an indicator of quality: Services not having specific brand names to indicate
quality, customers use price as an indicator of quality. This in particular in some cases, where the price
variation is too much with in a particular class of service (e.g. Tour operators). Also,
where the risk associated with the service is high (e.g. Heart surgery). Price is taken as an indicator of
quality. Thus pricing too low can give wrong signals and pricing too high can set
expectations that the firm may find it difficult to match in service delivery. Because goods are dominated
by search qualities. Price is normally not used to judge quality.
4) Pricing strategy should cope-up with the degree of competition operation with in certain geographic
and time zone. E.g. Bus operators will have to consider prices of train. It also includes the stage of
strategic low pricing to attract first time customers.
PRICING STRATEGIES
 KINDS OF PRICING:
1.1 Absorption pricing
Types of pricing in which all costs are recovered. The price of the product includes the  variable cost of
each item plus a proportionate amount of the fixed costs and is a form of cost-plus pricing
1.2 Contribution margin-based pricing
Contribution margin-based pricing maximizes the profit derived from an individual product, based on
the difference between the product's price and variable costs (the product's contribution margin per
unit), and on one’s assumptions regarding the relationship between the product’s price and the number
of units that can be sold at that price. The product's contribution to total firm profit (i.e. to operating
income) is maximized when a price is chosen that maximizes the following: (contribution margin per
unit) X (number of units sold).
1.3 Cost-Plus pricing
Cost-plus is the simplest pricing method. The firm calculates the cost of producing the product and adds
on a percentage (profit) to that price to give the selling price. This method although simple has two
flaws; it takes no account of demand and there is no way of determining if potential customers will
purchase the product at the calculated price.
This appears in two forms, full cost pricing which takes into consideration both variable and fixed costs
and adds a percentage as markup. The other is direct cost pricing which is variable costs plus a
percentage as markup. The latter is only used in periods of high competition as this method usually leads
to a loss in the long run.
1.4 Creaming or skimming
In most skimming, goods are sold at higher prices so that fewer sales are needed to break even. Selling a
product at a high price, sacrificing high sales to gain a high profit is therefore "skimming" the market.
Skimming is usually employed to reimburse the cost of investment of the original research into the
product: commonly used in electronic markets when a new range, such as DVDplayers, are firstly
dispatched into the market at a high price. This strategy is often used to target "early adopters" of a
product or service. Early adopters generally have a relatively lower price-sensitivity - this can be
attributed to: their need for the product outweighing their need to economise; a greater understanding
of the product's value; or simply having a higher disposable income.
This strategy is employed only for a limited duration to recover most of the investment made to build
the product. To gain further market share, a seller must use other pricing tactics such as economy or
penetration. This method can have some setbacks as it could leave the product at a high price against
the competition.[2]
1.5 Decoy pricing
Method of pricing where the seller offers at least three products, and where two of them have a similar
or equal price. The two products with the similar prices should be the most expensive ones, and one of
the two should be less attractive than the other. This strategy will make people compare the options
with similar prices, and as a result sales of the most attractive choice will increase. [3]
1.6 Freemium
Freemium is a business model that works by offering a product or service free of charge (typically digital
offerings such as software, content, games, web services or other) while charging a premium for
advanced features, functionality, or related products and services. The word "freemium" is a
portmanteau combining the two aspects of the business model: "free" and "premium". It has become a
highly popular model, with notable success.
1.7 High-low pricing
Method of pricing for an organization where the goods or services offered by the organization are
regularly priced higher than competitors, but through promotions, advertisements, and or coupons,
lower prices are offered on key items. The lower promotional prices are designed to bring customers to
the organization where the customer is offered the promotional product as well as the regular higher
priced products.[4]
1.8 Limit pricing
A limit price is the price set by a monopolist to discourage economic entry into a market, and is illegal in
many countries. The limit price is the price that the entrant would face upon entering as long as the
incumbent firm did not decrease output. The limit price is often lower than the average cost of
production or just low enough to make entering not profitable. The quantity produced by the incumbent
firm to act as a deterrent to entry is usually larger than would be optimal for a monopolist, but might
still produce higher economic profits than would be earned under perfect competition.
The problem with limit pricing as a strategy is that once the entrant has entered the market, the
quantity used as a threat to deter entry is no longer the incumbent firm's best response. This means that
for limit pricing to be an effective deterrent to entry, the threat must in some way be made credible. A
way to achieve this is for the incumbent firm to constrain itself to produce a certain quantity whether
entry occurs or not. An example of this would be if the firm signed a union contract to employ a certain
(high) level of labor for a long period of time. In this strategy price of the product becomes the limit
according to budget.
1.9 Loss leader
A loss leader or leader is a product sold at a low price (i.e. at cost or below cost) to stimulate other
profitable sales. This would help the companies to expand its market share as a whole.
1.10 Marginal-cost pricing
In business, the practice of setting the price of a product to equal the extra cost of producing an extra
unit of output. By this policy, a producer charges, for each product unit sold, only the addition to total
cost resulting from materials and direct labor. Businesses often set prices close to marginal cost during
periods of poor sales. If, for example, an item has a marginal cost of $1.00 and a normal selling price is
$2.00, the firm selling the item might wish to lower the price to $1.10 if demand has waned. The
business would choose this approach because the incremental profit of 10 cents from the transaction is
better than no sale at all.
1.11 Market-oriented pricing
Setting a price based upon analysis and research compiled from the target market. This means that
marketers will set prices depending on the results from the research. For instance if the competitors are
pricing their products at a lower price, then it's up to them to either price their goods at an above price
or below, depending on what the company wants to achieve.
1.12 Odd pricing
In this type of pricing, the seller tends to fix a price whose last digits are odd numbers. This is done so as
to give the buyers/consumers no gap for bargaining as the prices seem to be less and yet in an actual
sense are too high, and takes advantage of human psychology. A good example of this can be noticed in
most supermarkets where instead of pricing at $10, it would be written as $9.99. This pricing policy is
common in economies using the free market policy.
1.13 Pay what you want
Pay what you want is a pricing system where buyers pay any desired amount for a given commodity,
sometimes including zero. In some cases, a minimum (floor) price may be set, and/or a suggested price
may be indicated as guidance for the buyer. The buyer can also select an amount higher than the
standard price for the commodity.
Giving buyers the freedom to pay what they want may seem to not make much sense for a seller, but in
some situations it can be very successful. While most uses of pay what you want have been at the
margins of the economy, or for special promotions, there are emerging efforts to expand its utility to
broader and more regular use.
1.14 Penetration pricing
Penetration pricing includes setting the price low with the goals of attracting customers and gaining
market share. The price will be raised later once this market share is gained. [5]
1.15 Predatory pricing
Predatory pricing, also known as aggressive pricing (also known as "undercutting"), intended to drive out
competitors from a market. It is illegal in some countries.
1.16 Premium decoy pricing
Method of pricing where an organization artificially sets one product price high, in order to boost sales
of a lower priced product.
1.17 Premium pricing
Premium pricing is the practice of keeping the price of a product or service artificially high in order to
encourage favorable perceptions among buyers, based solely on the price. The practice is intended to
exploit the (not necessarily justifiable) tendency for buyers to assume that expensive items enjoy an
exceptional reputation, are more reliable or desirable, or represent exceptional quality and distinction.
1.18 Price discrimination
Price discrimination is the practice of setting a different price for the same product in different segments
to the market. For example, this can be for different classes, such as ages, or for different opening times.
1.19 Price leadership
An observation made of oligopolistic business behavior in which one company, usually the dominant
competitor among several, leads the way in determining prices, the others soon following. The context
is a state of limited competition, in which a market is shared by a small number of producers or sellers.
1.20 Psychological pricing
Pricing designed to have a positive psychological impact. For example, selling a product at $3.95 or
$3.99, rather than $4.00. There are certain price points where people are willing to buy a product. If the
price of a product is $100 and the company prices it as $99, then it is called psychological pricing. In
most of the consumers mind $99 is psychologically ‘less’ than $100. A minor distinction in pricing can
make a big difference is sales. The company that succeeds in finding psychological price points can
improve sales and maximize revenue. This pricing strategy makes the customer thinks that, the highest
price of a product is the best or quality product.
1.21 Target pricing
Pricing method whereby the selling price of a product is calculated to produce a particular rate of return
on investment for a specific volume of production. The target pricing method is used most often by
public utilities, like electric and gas companies, and companies whose capital investment is high, like
automobile manufacturers.
Target pricing is not useful for companies whose capital investment is low because, according to this
formula, the selling price will be understated. Also the target pricing method is not keyed to the demand
for the product, and if the entire volume is not sold, a company might sustain an overall budgetary loss
on the product.
1.22 Time-based pricing
A flexible pricing mechanism made possible by advances in information technology, and employed
mostly by Internet based companies. By responding to market fluctuations or large amounts of data
gathered from customers - ranging from where they live to what they buy to how much they have spent
on past purchases - dynamic pricing allows online companies to adjust the prices of identical goods to
correspond to a customer’s willingness to pay. The airline industry is often cited as a dynamic pricing
success story. In fact, it employs the technique so artfully that most of the passengers on any given
airplane have paid different ticket prices for the same flight. [6]
1.23 Value-based pricing
Pricing a product based on the value the product has for the customer and not on its costs of production
or any other factor. This pricing strategy is frequently used where the value to the customer is many
times the cost of producing the item or service. For instance, the cost of producing a software CD is
about the same independent of the software on it, but the prices vary with the perceived value the
customers are expected to have. The perceived value will depend on the alternatives open to the
customer. In business these alternatives are using competitors software, using a manual work around, or
not doing an activity. In order to employ value-based pricing you have to know your customer's
business, his business costs, and his perceived alternatives.It is also known as Perceived-value pricing.

THE PLACE MIX.

INTRODUCTION
Another important element of the marketing mix is place mix, which focuses our attention on the
offering of services by the providers to the ultimate users and the place of location for the
service generating organizations. In some of the cases we find that providers have no option but to
locate the units/branches as per the instructions of the apex body. Some of the essential features are
taken into consideration such as easy and convenient accessibility, safety or protection availability of the
infrastructural facilities, attractive and healthy surroundings or so.
Due to the intangibility, services cannot be stored, transported and inventoried. Hence the traditional
channels of product marketing like wholesalers cannot be used. Eevn retailing cannot be an
independent activity. Similarly because of inseparability they have t be produced and sold
simultaneously. Due to this tele channels of distribution are made very short. At the most there can be
one agent like in the case of insurance, travel agency, courier eye. The better thing is direct selling.
Agents when employed can have two types of functions – either they market the services lke travel
agents, insurance agents etc, who market the tangible part of the service offering OR there can be
agents who are trained to provide the service Like a Shahnaz
Hussain Beauty parlour. Further as there is no actual transfer of ownership, the creation of time and
place utility is very important. Hence proper location to cover maximum cuxtomers becomes important.
Banks often have extension counters or use money collectors.
Capacity Planning.
It is not sufficient that we are interested only in managing our present. It is much more significant that
we keep our eyes open, minds active to know about the future and continue to enrich our potentials to
manage the future. The organizations not managing the future fail in managing the demand and supply
position, make it difficult to optimize the development of marketing resources to cope with the changing
requirements, make possible a contraction in their resistance power and both on quantitative and
qualitative fronts, we find them moving backward. By capacity planning, our emphasis is on the
management of strength.
Capacity planning is known as planning the capacity in the face of future. This throws light on both the
aspects-first, the organizations are supposed to know the demand position so that the potentials are
enriched to increase the quantity or capacity of generating the services and second, the organizations
are also required to know about the likes and dislikes, preferences, expectations, attitudes which make
an advocacy in favor of technologies to fulfill their expectations and this is not possible unless we think
in favor capacity planning. The strategic plan would make the ways for the mobilization of financial
resources to cater to their increasing
requirements. We can’t deny the fact that if an organization succeeds in maintaining the process of
profit generation, the financial health of that organization becomes so sound that the task of satisfying
the employees and investors is simplified considerably. If an organization is strong, the task of facing the
challenges and threats in the markets is simplified considerably. It is against this background that
strategic planning assumes a place of outstanding significance. When we talk about capacity planning,
our prime focus is on strategic planning since the process of enriching strength can’t be made possible
within a couple of days.
Capacity Scheduling.
How much of what (service) will be needed to achieve its predetermined goals is an important
consideration that makes an advocacy in favor of capacity planning and scheduling. There are
a number of critical variables requiring due consideration in the process such as, goals of the service
firm, availability of capital and the quality of human resources, market segments served and the level of
service quality aimed at. A detailed scheduling of man, materials, money and machines (four M’s) is
essential for each element of the service mix.
 PROMOTION MIX
INTRODUCTION:
The promotion mix is found instrumental in informing, sensing and persuading the prospects or
customers. The marketers bear the responsibility of using the different components of promotion in
such a way that the measures adopted for promoting the goods or services are found productive. The
promotion communicates to customer’s information on the other elements of marketing mix, such as
product, pricing and place. The advantage of product itself, details on the place through which it is sold
and details on the pricing are transmitted through promotion.
COMPONENTS OF THE PROMOTION MIX:
1) Advertising:
Advertising is paid form of persuasive promotion since it plays an effective role in informing and sensing
the customers. The creativity is found to be an essential aspect of advertising, which increases the
importance of professional excellence in making the advertising processes
productive.
2) Publicity/public relations:
All the organizations need to develop and strengthen the public relation activities to promote their
business. This component of promotion is found effective though the organization don’t make any
payment for publicity. The most important thing in the context of public relations is the instrumentality
of executives in projecting a positive image of the services offered. They should have the potentials to
throw a positive imprint on the prospects. It is also significant that they know the art of developing
rapport with the media people.
3) Personal selling:
The personal selling is found instrumental in promoting the business of service generating organizations.
Personal selling is a process of informing the customers besides persuading them to purchase products
being influenced by personal communication. It is just a process of communication in which an
individual exercises his or her personal potentials, tact, skill and ability to influence the impulse of
prospects and to transform them into customers. Personal selling is basically a method of
communication. It involves not only individual but the social behavior too; each of the person in face-to-
face contact, salesman and prospect influence the other. Thus we find personal selling a personal
communication, seller-buyer interaction, inter-personal communication and more so direct selling. The
following facts are observed regarding the personal selling:
a) It is a direct personal relation between the buyer and seller.
b) It is an oral presentation in conservation.
c) It is two-way communication.
d) It is personal and social behavior.
e) It is an exercise for selling the goods and services.
f) It is found more effective in the service generating organizations.
g) It is based on the professional excellence of an individual.
h) It is an important element of the promotion mix.
4) Sales promotion:
Marketing activities other than personal selling, advertising and publicity that stimulate customers and
dealers effectively, such as display shows, exhibitions, demonstrations and various non-recurrent selling
efforts not in the ordinary routine are the sales promotion measures. Sales promotional activities are
devices aimed at reaching the consumer at home or in his business establishment. The tools are
generally in the form of samples, contest, demonstrations and coupons. Sales promotion directed at
consumers may be done with a view to increase the products rate of use among existing customers or to
attract new customers to the company’s product.

Top Ten Promotional Strategies

Product promotion is one of the necessities for getting your brand in front of the public and attracting
new customers. There are numerous ways to promote a product or service. Some companies use more
than one method, while others may use different methods for different marketing purposes. Regardless
of your company's product or service, a strong set of promotional strategies can help position your
company in a favorable light with not only current customers but new ones as well.

Contests:
Contests are a frequently used promotional strategy. Many contests don't even require a purchase. The
idea is to promote your brand and put your logo and name in front of the public rather than make
money through a hard-sell campaign. People like to win prizes. Sponsoring contests can bring attention
to your product without company overtness.

Social Media:
Social media websites such as Facebook and Google+ offer companies a way to promote products and
services in a more relaxed environment. This is direct marketing at its best. Social networks connect with
a world of potential customers that can view your company from a different perspective. Rather than
seeing your company as "trying to sell" something, the social network can see a company that is in touch
with people on a more personal level. This can help lessen the divide between the company and the
buyer, which in turn presents a more appealing and familiar image of the company.

Mail Order Marketing:

Customers who come into your business are not to be overlooked. These customers have already
decided to purchase your product. What can be helpful is getting personal information from these
customers. Offer a free product or service in exchange for the information. These are customers who are
already familiar with your company and represent the target audience you want to market your new
products to.

Product Giveaways:
Product giveaways and allowing potential customers to sample a product are methods used often by
companies to introduce new food and household products. Many of these companies sponsor in-store
promotions, giving away product samples to entice the buying public into trying new products.

Point-of-Sale Promotion and End-Cap Marketing:

Point-of-sale and end-cap marketing are ways of selling product and promoting items in stores. The idea
behind this promotional strategy is convenience and impulse. The end cap, which sits at the end of aisles
in grocery stores, features products a store wants to promote or move quickly. This product is
positioned so it is easily accessible to the customer. Point-of-sale is a way to promote new products or
products a store needs to move. These items are placed near the checkout in the store and are often
purchased by consumers on impulse as they wait to be checked out.
Customer Referral Incentive Program:The customer referral incentive program is a way to encourage
current customers to refer new customers to your store. Free products, big discounts and cash rewards
are some of the incentives you can use. This is a promotional strategy that leverages your customer base
as a sales force.
Causes and Charity:
Promoting your products while supporting a cause can be an effective promotional strategy. Giving
customers a sense of being a part of something larger simply by using products they might use anyway
creates a win/win situation. You get the customers and the socially conscious image; customers get a
product they can use and the sense of helping a cause. One way to do this is to give a percentage of
product profit to the cause your company has committed to helping.

Branded Promotional Gifts:

Giving away functional branded gifts can be a more effective promotional move than handing out simple
business cards. Put your business card on a magnet, ink pen or key chain. These are gifts you can give
your customers that they may use, which keeps your business in plain sight rather than in the trash or in
a drawer with other business cards the customer may not look at.

Customer Appreciation Events:

An in-store customer appreciation event with free refreshments and door prizes will draw customers
into the store. Emphasis on the appreciation part of the event, with no purchase of anything necessary,
is an effective way to draw not only current customers but also potential customers through the door.
Pizza, hot dogs and soda are inexpensive food items that can be used to make the event more attractive.
Setting up convenient product displays before the launch of the event will ensure the products you want
to promote are highly visible when the customers arrive.

After-Sale Customer Surveys:

Contacting customers by telephone or through the mail after a sale is a promotional strategy that puts
the importance of customer satisfaction first while leaving the door open for a promotional opportunity.
Skilled salespeople make survey calls to customers to gather information that can later be used for
marketing by asking questions relating to the way the customers feel about the products and services
purchased. This serves the dual purpose of promoting your company as one that cares what the
customer thinks and one that is always striving to provide the best service and product.

These are some of the tools of sales promotion offered to both, the providers as well as the users. The
motivesare increasing the selling activities, touching the target, excelling the competition, increasing the
market share, clearing the old products to be declared absolute in the near future.

5) Word-of-mouth promotion:
Much communication about the performance of the service generating organizations actually takes
place by word-of-mouth information, which is also as word-of-mouth promotion. The wordof- mouth
recommendations the hidden sales force make the process of communication effective. The growing
sensitivity of the words and experiences of hidden sales force simplify the task of promoting the
business. The advertisements, sales promotion measures, the personal selling may of course be effective
but the word-of mouth recommendations are found acceptable in all the conditions by almost all the
prospects.

6) Telemarketing:
Telemarketing is found instrumental in promoting the business. The telemarketing helps in activating
the process of advertisement in addition to its instrumentality in increasing the sale. The service
generating organizations in general and the banking, insurance, transport, hotel, tourism organizations
in particular have been found using telemarketing with the two-fold objectives of selling and advertising.
The instrumentality of telephones and televisions are found effective in the process of promoting the
business. The instrumentality of telemarketing in persuading the users is substantially influenced by the
quality of personnel supposed to discharge the responsibility. The telemarketing minimizes the
dependence of service generating
organizations on the sales people since just a counter or a center listed in the call numbers serves multi-
dimensional purposes.

PROMOTION OBJECTIVES
1) Develop personal relation with client
2) Make a strong impression of competency, honesty and sincerity
3) Should be able to use indirect selling techniques (create a derived demand – mobile companies give
free sim card)
4) Manage to maintain a fine image by positive word of mouth
5) Packing and customization of service offering

TARGET AUDIENCE
1) Buyer (or user/influencer/gatekeeper)
2) Employees (discussed in detail under people)

PLANNING THE PROMOTION MIX

1) Advertisement should have positive effects on contact personnel
2) It should be able to capitalise on word of mouth
3) It should provide tangible clues to the customers
4) It should make the service offering easily understandable
5) It should promise only what is possible to deliver
6) It should contribute to the continuity

CONSUMER PROMOTION IN SERVICE MARKETING

1) Sampling is less frequently used compared to Goods (Sampling gives consumer a free trial – though
now becoming popular)
2) Gift premiums are frequently used to give an element of tangibility
3) Price/quantity promotions can be used to get long term commitments from consumer (frequent flyer
programme or group booking in Hotels)
4) Use of coupons are less frequent (coupon with straight price cut OR discount or fees waiver for one or
more purchases with original purchase OR Discounts on augmented products – like a
free wax polish with car wash)
5) Future discounts are less frequent
6) Prize promotions are frequently used (prize for mobile bank use etc)

GUIDELINES FOR SELLING SERVICES

1) It is personal relationship rather than the service itself that results in satisfaction
2) Buyer’s confidence in the seller’s ability to deliver the results is important – hence make a strong
impression of competency, sincerity, and honesty.
3) As what is sold is intangible – indirect selling techniques have to be adopted (Hotels selling tour
programmes)
4) As word of mouth is important – building up a favourable is image is essential.
5) A service provider sells “services” and not just a single service – hence ability to customise the service
offering is important (Jain food in Air-lines Hotels etc)
6) Public relations becomes important – particularly in industries where advertisement cannot be used
as a promotional tool like Hospital industry.

PROMOTION & ADVERTISING STRATEGY

Promotion is one of the key elements of the marketing mix, and deals with any one or two-way
communication that takes place with the consumer. This article concentrates is a high level introduction
to developing a promotional strategy for your business focusing on advertising and other 'pull' tactics.

DEVELOPING A PROMOTIONAL STRATEGY

Deciding on a marketing communications strategy is one of the primary roles of the marketing manager
and this process involves some key decisions about who the customer is, how to contact them, and what
the message should be. These questions can be answered using a three stage process, which is equally
relevant for all elements of the marketing mix:
Segmentation
Dividing the marketing into distinct groups
Targeting
Deciding which of these groups to communicate with, and how to talk to them
Positioning
How the product or brand should be perceived by the target groups
Messaging
Delivering a specific message in order to influence the target groups

1. SEGMENTATION
Dividing potential customers into discrete groups is vital if you want to increase the success rate of any
communications message. If you don't know who you are talking to, it's unlikely you will get much of a
response. Who are the potential customers? How many sub-groups should you divide them into? How
do these groups differ? Hopefully, most of this information will be readily available from your market
research. Once you have an idea of the customer, you should further drill down to explore them in more
detail.
 What are their media consumption habits?
 What are their expectations and aspirations?
 What are their priorities?
 How much disposable income do they have?
 What are their buying habits?
 Are they likely to have children?
 How many holidays do they take a year?
 How much money do they give to charity?
 How can you help them?
This information can be obtained in a variety of ways, from commissioning a specialist market research
agency, to examining sales patterns or social media interactions.
Commonly used market research methods include:
 Sales analysis and buying patterns
 Questionnaires
  Desk research
 Website statistics, especially social media
 Focus groups
 Face-to-face interviews
 Specialist market research companies

Once you have built up an accurate picture of your customer, it's time to get their attention…

2. TARGETING
For the purposes of advertising, targeting is the process of communicating with the right segment(s) and
ensuring the best possible response rate. The methods you use to target your audience must relate to
your marketing plan objectives - are you trying to generate awareness of a new product, or attract
business away from a competitor?
METHODS OF MARKETING COMMUNICATIONS
Advertising is just one element of the marketing communication arsenal, which can be divided into the
following areas:
ADVERTISING – A MASS MEDIA APPROACH TO PROMOTION
 Outdoor
 Business directories
 Magazines / newspapers
 TV / cinema
 Radio
 Newsagent windows
SALES PROMOTION - PRICE / MONEY RELATED COMMUNICATIONS
 Coupons
 Discounts
 Competitions
 Loyalty incentives
PUBLIC RELATIONS - USING THE PRESS TO YOUR ADVANTAGE
 Press launches
 PR events
 Press releases
PERSONAL SELLING – ONE TO ONE COMMUNICATION WITH A POTENTIAL BUYER
 Salesmen
 Experiential marketing
 Dealer or showroom sales activities
 Exhibitions
 Trade shows
DIRECT MARKETING - TAKING THE MESSAGE DIRECTLY TO THE CONSUMER
 Mail order catalogues
 Bulk mail
 Personalised letters
 Email
 Telemarketing
 Point of sale displays
 Packaging design
DIGITAL MARKETING – NEW CHANNELS ARE EMERGING CONSTANTLY
 Company websites
 Social media applications such as Facebook or Twitter
 Blogging
 Mobile phone promotions using technology such as bluetooth
 YouTube
 E-commerce
DECIDING WHICH MEDIA CHANNEL TO USE
In nature, evolution occurs most rapidly when competition for resources is intense. The same process is
now occurring with promotional media. All traditional media channels are now saturated, and
competition for consumer attention is intense. At the same time, the impact of any one medium is
becoming diluted. There are many more TV and radio channels, consumer have the ability to skip
adverts and free information is now much more accessible. As a result, companies are becoming
increasingly innovative in their approach to communications and a host of new media channels have
emerged. As a result, media choice is becoming a tricky task, which is why detailed segmentation is so
important - it's no use starting a Twitter campaign if none of your target market are regular users of the
site.
Highly targeted communications often lead to better results. You can usually expect a response rate of
under 1% for a relatively generic mass mailing. However, personal letters to a handful of your most loyal
customers would lead to a dramatically increased rate of return. When deciding which media to use
consider the reach, frequency, media impact and what you can expect for your budget but most of all,
ensure your target customer will see the message in the first place.
Media choice is a matter of compromise between volume of people versus the personalisation of the
message.
ENSURING YOUR MESSAGE REFLECTS THE STAGES OF THE PURCHASING FUNNEL
Once you have made the audience aware of your brand, work doesn't stop there. The customer needs
to be guided through the purchasing process. This means identifying the key stages in the customer
journey and ensuring communications messages are personalised and relevant.
INTEGRATED MARKETING COMMUNICATIONS
Once you have decided which media channel to concentrate on, the next step is to ensure an integrated
approach is taken. Regardless of whether you are promoting a new product or raising awareness, it's
important that all ads across all media work together towards a common goal by using similar messaging
and 'look and feel'. An integrated approach can dramatically increase the effectiveness of any campaign
and will help create your brand image.
GETTING THE BEST RESPONSE
To get the best response from your target market, you need ensuring the message is relevant and clear
– once you've managed to gain the valuable attention of your customer the last thing you want is for
them to be confused about what you're saying. Determine the objectives of the advert and ensure these
aims are addressed clearly. Think about the next steps you would like the audience to take, whether this
is visiting a website, ringing a number, or being able to recall your brand when they are next in the
shops.
3. POSITIONING
Positioning is the process of developing an image for your company or product. This can be achieved
partially through branding, but it's important to realise that all elements of the marketing mix combine
to provide the full picture. You must ensure that all areas of your business live up to expectations in
order to successfully position yourself in the way you hope. Positioning also considers the competition,
and you need to explain why you are unique in the marketplace and better than the other products on
the shelf.
BRANDING AND MESSAGING
Branding is a powerful tool for positioning your product. Branding is used on almost all customer facing
elements of a product, from the packaging design to the style of writing used on posters. Every
communication a customer received adds up to form a mental picture of your brand and can influence
the price they are willing to pay for your products. This ability to charge more due to the positioning of
your product is known as 'brand equity'. Your branding also needs to consider your unique selling points
(USPs) and ensure these are easily recognised through your messaging – is your product the best value,
longest lasting, sweetest smelling or fastest?
CORPORATE IDENTITY
A corporate identity is a useful tool to ensure that your branding is used in a consistent way throughout
the company. This detailed document runs through almost every conceivable customer touch point and
provides guidance on the presentation and style which should be used. This could include use of logos,
colours, tag lines, uniform and the type of coffee to serve guests. A CI guide is particularly useful if any
creative work it outsourced to agencies or freelancers or if you have many offices worldwide. The most
powerful brands can be identified by many elements of their communications material, not just a by
their logo or slogan and this is due to successful implementation of a recognisable corporate identity.
Recognition is a key part of any purchase decision so a corporate identity should for a core element of
your advertising strategy.
4. DEVELOPMENT OF THE ADVERTISING MESSAGE
Once you have determined the positioning for your brand, it's time to develop the message in order to
influence your target groups. Advertising objectives should be directly linked to your marketing plan,
and tend to fit into the following generic categories:
 Inform - raising awareness of your brand & products, establishing a competitive advantage
 Persuade - generating an instant response (usually driving sales)
 Remind - to maintain interest and enthusiasm for a product or service
It's a documented fact that creative, well branded, distinctive advertising generates the best results so
ensure you use the best possible creative team you can get your hands on, and give them a detailed
brief. Remember that a message will only be successful if it appeals to the target audience, so constantly
refer back to the customer and tailor the ads to them.

PEOPLE MIX
INTRODUCTION
The employees of an organization represent the organization in the eyes of the customers. If they are
not give proper training in representing the organization and its goals the service efforts will fail. Hence
the most important marketing strategy is to market the service first to the organization’s employees.
There are two types of contact personnel – HIGH CONTACT PERSONNEL and LOW CONTACT PERSONNEL
(eg .in a hospital a nurse is a high contact personnel and ward boy may be a low contact personnel) In
addition there can be a NON CONTACT PERSONNEL
SERVICE TRIANGLE
When company makes efforts to do external marketing, it should have strategies of Internal marketing.
External marketing is nothing but promises made, which needs to be fulfilled – this
needs internal marketing enabling the company to keep up the promises made. Unless the employees
are able and willing to deliver, the service promises will fail. This will result in proper interaction of the
customers with the service providers whichhelps the organization to keep the promises (Interactive
marketing)
EMPLOYEE SATISFACTION, CUSTOMER SATISFACTION, AND PROFITS
There is concrete evidence that satisfied employees make more satisfied customers (and satisfied
customers can, in turn, reinforce employees’ sense of satisfaction in their jobs). So unless service
employees are happy in their jobs, customer satisfaction will be difficult to achieve. The underlying logic
connecting employee satisfaction and loyalty to customer satisfaction and loyalty and ultimately profits
is illustrated by the service profit chain shown in the figure.
The service profit chain suggest that there are critical linkages among internal service quality; employee
satisfaction; productivity; the value of services provided to the customers; and ultimately customer
satisfaction; retention and profits. Service profit chain researchers are careful to point out that the
model does not cause customer satisfaction; rather the two are interrelated and feed ff each other. The
model does imply that companies that exhibit high levels of success on the elements of the model will
be more successful and profitable than those who do not.
HUMAN RESOURCE STRATEGIES:
Human resources decisions and strategies primary goal is to motivate and enable employees to deliver
customer-oriented promises successfully. The strategies presented here are organized around four basic
themes. To build a customer oriented, service-minded workforce, an organization must:
1) Hire the right people
2) Develop people to deliver service quality
3) Provide the needed support systems
4) Retain the best people
1) Hire the right people:
One of the best ways to close gap 3 is to start with the right service delivery people from the beginning.
This implies that considerable attention should be focused on hiring and recruiting
service personnel.
a) Compete for the best people:
To get the best people, an organization needs to identify them and compete with other organizations to
hire them. The firm act as marketers in their pursuit of the best employees, just as they use their
marketing expertise to compete for customers. Thinking of recruiting as a marketing activity results in
addressing issues of market (employee) segmentation, product (job) design, and promotion of job
availability in ways that attract potential long term employees.
b) Hire for service competencies and service inclination:
Once potential have been identified, organizations need to be conscientious in interviewing and
screening to truly identify the best people from the pool of candidates. It has been suggested that
service employees need two complementary capacities: they need both service competencies and
service inclination. Service competencies are the skills and knowledge necessary to do the job. Achieving
particular degrees and certifications validates competencies, such as attaining a doctor of law degree
and passing the relevant state bar examinations for lawyers. Service competencies may not be degree
related, but may instead relate to basic intelligence or physical requirements.
c) Be the preferred employer:
One way to attract the best people is to be known as the preferred employer in a particular industry or
in a particular location. Other strategies that support a goal of being the preferred employer include
providing extensive training, career and advancement opportunities, excellent internal support and
attractive incentives and offering quality goods and services that
employees a proud to be associated with.
2) Develop people to deliver service quality:
To grow and maintain a workforce that is customer oriented and focused on delivering quality, an
organization must develop its employees to deliver service quality. That is, once it has hired the right
employees, the organization must train and work with these individuals to ensure service performance.
a)Train for technical and interactive skills:
To provide quality service, employees need ongoing training in the necessary technical skills and
knowledge and in process or interactive skills. Examples of technical skills and knowledge are working
with accounting systems in hotels, cash machine procedures in a retail store, underwriting procedures in
an insurance company, and any operational rules the company has for running its business. Most service
organizations are quite conscious of and relatively effective at training employees in technical skills.
Companies are increasing their use of information technology to train employees in the technical skills
and knowledge needed on the job. Service employees also need training in interactive skills that allow
them to provide courteous, caring, responsive, and empathetic service.
b) Empower employees:
Empowerment means giving employees the desire, skills, tools, and authority to serve the customer.
While the key to empowerment is giving employees authority to make decisions on
the customer’s behalf, authority alone is not enough. Employees need the knowledge and tools to be
able to make these decisions and theyneed incentives that encourage them to make the right decisions.
Organizations are well suited to empowerment strategies to ones in which (1) the business strategy is
one of differentiation and customization, 2) customers are long-term relationship customers, (3)
technology is nonroutine or complex, (4) the business environment is unpredictable, and (5) managers
and employees have high growth and social needs and strong
interpersonal skills.
c) Promote teamwork:
The nature of many service jobs suggests that customer satisfaction will be enhanced when employees
work as teams. Because service jobs are frequently frustrating, demanding and challenging, a teamwork
environment will help to alleviate some of the stresses and strains. Employees who supported and that
they have a team backing them up will be better able to maintain enthusiasm and provide quality
service. By promoting teamwork an organization can enhance the employee’s abilities to deliver
excellent service while the camaraderie and support enhance their inclination to be excellent service
providers.
3) Provide need support systems:
To be efficient and effective in their jobs, service workers require internal support systems that are
aligned with their need to be customer focused. Without customer-focused internal support and
customer-oriented systems, it is nearly impossible for employees to deliver quality service no matter
how much they want to. In examining customer service outcomes researchers found that internal
support from supervisors, teammates, and other departments as well as evaluations of technology used
on the job were all strongly related to employee satisfaction and ability to serve customers.
a) Measure internal service quality:
One way to encourage supportive internal service relationships is to measure and reward internal
service. By first acknowledging that everyone in the organization has a customer and then measuring
customer perceptions of internal service quality, an organization can begin to develop an internal quality
culture. Internal customer service audits and internal service guarantees are two strategies used to
implement a culture of internal service quality. Through the audit, internal organizations identify their
customers, determine their needs, measure how well they are doing, and make improvements.
b) Provide supportive technology and equipment:
When employees don’t have the right equipment, or their equipment fails, they can be easily frustrated
in their desire to deliver quality service. To do their jobs effectively and efficiently, service employees
need the right equipment and technology. having the right technology and equipment can extend into
strategies regarding workplace and workstation design.
c) Develop service-oriented internal processes:
To best support service personnel in their delivery of quality service on the front line, an organization’s
internal processes should be designed with customer value and customer satisfaction in mind. In other
words, internal procedures must support quality service performance. In many companies internal
processes are driven by bureaucratic rules, tradition, cost efficiencies, or the needs of internal
employees. Providing service and customer oriented internal processes can therefore imply a need for
total redesign of systems. This kind of wholesale redesign of systems and processes has become known
as “process reengineering.”
4) Retain the best people:
An organization that hires the right people, trains and develops them to deliver service quality, and
provides the needed support must also work to retain the best ones. Employee turnover,
especially when the best service employees are the ones leaving, can be very detrimental to customer
satisfaction, employee morale, and overall service quality. Some firms spend lot of time attracting
employees but then tend to take them for granted, causing these good employees to search for job
alternatives.
a) Include employees in the company vision:
For employees to remain motivated and interested in sticking with the organization and supporting its
goals, they need to share an understanding of the organization’s vision. People who deliver service day
in and day out need to understand how their work fits into the big picture of the organization and its
goals.
b) Treat employees as customers:
If employees feel valued and their needs are taken care of, they are more likely to stay with the
organization. Many companies have adopted the idea that employees are also customers of the
organization, and thus basic marketing strategies can be directed at them. The products that the
organization has to offer its employees are a job and quality of work life. To determine whether the job
and work life needs of employees are being met, organizations conduct periodic internal marketing
research to assess employee satisfaction and needs.
c) Measure and reward strong service performers:
If a company wants the strongest service performers to stay with the organization, it must reward and
promote them. Often the reward systems in organizations are not set up to reward service excellence.
Reward systems may value productivity, sales or some other dimension that can potentially work
against good service. Reward systems need to be linked to the organization’s vision and to outcomes
that are truly important.

IMPORTANCE OF EMPOWERING PEOPLE IN SERVICES:

An organization that emphasizes customer service needs people at the frontline to do the service, to use
discretions be concerned about the customer, to take initiative to provide satisfaction through
exceptional service. The person at the front must fell empowered to do in the circumstances.
Empowering cannot be done through a formal delegation of authority. A person with authority may not
exercise that authority, if he does not feel empowered.
Example
A peon who takes responsibility to direct the fireman in a burning office to areas housing the most
important documents is acting without formal authority. He feels empowered to do so, meaning that
feels a sense of dedication to the organization, that he feels it is his duty to save the organization as
much as possible , that he is doing the right thing .
Following are the importance of empowering the people in services:-
1) An empowered employee focuses on results. He is not inhabitant by formalities of position ,
authorityor function .
2) He does not consider himself bound by rules and procedure.
3) He believes that the organization expects him to be aware of the ends to be achieved and to act in
furtherance thereof. He “sees” constraints but not does not feel prevented thereby , from
what is to be done , instead he tries to overcome the constraints.
4) He believes that the organization will not find fault with him for having one something new and
nusual. On the contrary, he believes that the organisation will applaud him for having done
something that had to be done.
5) He believes that he is expected to take the initiative and ensure that the customer needs are met and
thereby maintain and enhance the reputation of the organization.
6) He feels that he is dedicating to satisfy the customer to upgrade organization reputation
7) An empowered employee may be willing to challenge company policies at meetings with sensors.

PHYSICAL EVIDENCE MIX

THE EVIDENCE OF SERVICE
As services are intangible, the customers are searching for evidence of service in every interaction they
have with an organization. The figure depicts the three major categories of evidence as experienced by
the customer: people, process, and physical evidence. These categories together represent the service
and provide the evidence that tangibilizes the offering.
The new mix elements essentially are evidence of service in each moment of truth.
All of these evidence elements, or a subset of them are present in every service encounter a customer
has with a service firm and are critically important in managing service encounter quality and creating
customer satisfaction.
When a guest enters the hotel for a stay the first encounter of the guest is the door attendant and
frequently with receptionists at the reception. The quality of that encounter will be judged by how the
registration process works (How long is to wait? Is the registration system computerized and accurate?)
The actions and attitudes of the people (Is the receptionist courteous, helpful, knowledgeable? Does she
handle the enquiries fairly and efficiently?) and the physical evidence of the service (is the awaiting area
clean and comfortable). The three types of evidence may be differentially important depending on the
type of service encounter (remote, phone, face – to – face). All these types will operate in face – to- face
service encounters as in the one just described.

PHYSICAL EVIDENCE
MANAGING THE FIRM’S PHYSICAL EVIDENCE
INTRODUCTION:
Managing the firm’s physical evidence includes everything tangible, from the firm’s physical facilities, to
brochures and business cards, to the firm’s personnel. A firm’s physical evidence influences the
consumer’s experience throughout the duration of the service encounter. Consider the average
consumer’s restaurant experience.
EXAMPLE SCENARIO:
Prior to entering the restaurant, customers begin to evaluate it based on advertising they may have seen
on television or in the phone book. As the consumer drives to the restaurant, the location of the
restaurant, the ease with which the location can be found, the restaurant’s sign, and the building itself,
all enter into the consumer’s evaluation process. Similarly, the availability of parking spaces, the
cleanliness of the parking lot, and the smells that fill the air once the customer steps out of the car affect
consumer expectations and perceptions.
Upon entering, the restaurant’s furnishings, cleanliness, and overall ambience provide further evidence
regarding the quality of the ensuing experience. The appearance and friendliness of the firm’s personnel
and the ease with which customers can move about and find telephones and restrooms without asking
also enters into the consumer’s mind. When seated at a table, the customer notices the stability and
quality of the table and chairs, the cleanliness of napkins, silverware, and the table itself. Additional
evaluations occur as well:
 Is the menu attractive?
 Is it readable or crumbled and spotted with food stains from past customers?
 How are the wait staff interacting with other customers?
 What do the other customers look like?
Once the meal is served, the presentation of the food is yet another indicator of the restaurant’s quality.
Consumers will make comparisons of the food’s actual appearance and the way it is pictured in
advertisements and menus. Of course, how the food tastes also enters into the customer’s evaluation.
Upon completing the meal, the bill itself becomes a tangible clue. Is it correct? Are charges clearly
written? Is the bill clean, or is it sopping wet with spaghetti sauce? Are the restrooms clean? Did the
waitstaff personnel say thank you and really mean it?
PHYSICAL EVIDENCE
Physical evidence is everything that a company physically exhibits to the customer. It includes the physical
environment of the service outlet, the exterior, the interior, all tangibles like machinery, furniture, vehicles,
stationery, signboards, communication materials, certificates, receipts, service personnel, and so on. Physical
evidence provides tangible cues to customers to develop service quality expectations. The physical environment
facilitates performance of service by the service provider as well as the service customers.

1.Service Scape
A service represents the physical environment designed in a service outlet. Research studies have proved that the
design of the service scape influences customer’s choice, expectations, satisfaction, and other behavior. The nature
of the service activity and service consumption experience sought by consumers will influence the design of a
service scape. The basic principle that guides the design is user friendliness. Therefore, service companies should
first identify the users of the service scape. Based on usage, services scapes can be classified into three types self
service, interpersonal service and remote service.
 Self-service
In a self-service environment, the customer performs most of the activities and very few employees
are involved. ATMs, fast-food centres and movie theatres are examples of self-service
environments. If the service firm is focusing on a self-service environment, it has to attract the right
market segment and offer easy-to-use facilities.
 Interpersonal services
In this type of service scape, both employees and customers will be given adequate importance. In
the case of hospitals, educational institutions and banks, the service scape must be planned to
attract, satisfy and facilitate both employees and customers simultaneously. The service scape
should contribute to social interactions between and among customers and employees.
 Physical environment
 Modes and content of communication
 Price of the service
 Appearance and conduct of service personnel,
 Tangible elements accompanying service
 Brand
 Noise: The noise level ranging from absolute silence to high-decibel sounds will have an influence on
the behavior. Noise may be from inside or outside. If the noise is from inside, but unavoidable (noise
generated in operating machines for service processes), care must be taken to reduce the effect by
using sound-proof material or keeping the customer contact point away
 from the sound generator place. If it is from outside, it is better to avoid such a location or to use
sound-proof material to minimize the disturbance.
 Music: Music is a very powerful stimulator of feelings in human beings. People have different
preferences in music. Some like classical, some like we stern, some like old, and some like new. If
music is arranged, while taking into consideration the preferences of the customer groups, positive
behavior can be expected.
 Smell: People have different likings as far as smell is concerned. A right combination will make the
environment pleasant.

Figure 3.7 Service scape Dimensions

 Space/function
The living space and functional support facilities form an important part of the service scape. The
following are the influencing factors with regard to space/ function on the behavior of employees
and customers;
The quality of the materials used in the construction of physical structures at work, the presence of
certificates and photographs, the floor coverings and architectural values communicate symbolic
meanings and create an aesthetic impression. Signs, symbols and artefacts influence the forming of
the firs impressions of customers. When customers are not familiar with the service environment,
they look for environmental clues for initial help.
The physical environment will have an impact on the behavior of both customers and employees. Three kinds of
internal responses get generated in them.
They are: cognitive responses, emotional responses and physiological responses.
 Cognitive responses are influenced by beliefs, the way in which the individual categorizes the
stimulation and the symbolic meanings he develops for the stimuli.
 Emotional responses are influenced by the mood of the individual and also the attitude he has
developed against the service firm.
 Physiological responses include pain, comfort, movement and physical fitness. The interplay of
these factors finally result in customer response or employee response.
 Social interaction is an important dimension of physical environment. The service scape influences
the nature and quality of customer-employee interactions. Environmental variables such as physical
proximity and seating arrangements have an influence on customer employee
 interactions and also customer-customer interactions. Research studies have confirmed that the
environmental conditions will influence such social behaviors as small group interactions, friendship
formation, participation, aggression, withdrawal and helping.
The appearance, behavior and number of service personnel and the quality and quantity of other
customers have a psychological impact on the social behavior of the customers.
Dowell and Gamble described service environment in the following ways:
 An environment surrounds, enfolds and engulfs and one can only participate in it.
 The environment has a definite impact on the senses in more than one way.
 It is impossible to build an environment which does not have any impact.
 Peripheral and central information is always present in the environment.

THE STRATEGIC ROLE OF PHYSICAL EVIDENCE:

Due to the intangibility of services, service quality is often difficult for consumers to evaluate objectively.
As a result, consumers often rely on the tangible evidence that surrounds the service to help them form
their evaluations. The role of physical evidence in the marketing of intangibles is versatile. When
developing servicescapes, physical evidence is comprised of three broad categories:
(1) facility exterior;
(2) facility interior; and
(3) other tangibles.
Facility exterior includes the exterior design, signage, parking, landscaping, and the surrounding
environment. For example, the facility may be built on a mountainside, overlooking a lake.
The facility interior includes elements such as the interior design, equipment used to serve the
customer directly or to run the business, signage, layout, air quality, and temperature.
Other tangibles that are part of the firm’s physical evidence include such items as business cards,
stationery, billing statements, reports, employee appearance, uniforms, and brochures.
The extensive use of physical evidence varies by the type of service firm (see Figure 8.1).

Service firms such as hospitals, resorts, and child-care facilities often make extensive use of physical
evidence in facility design and other tangibles associated with the service. In contrast, service firms such
as insurance providers and express mail drop-off locations (e.g., Federal Express) use limited physical
evidence. Regardless of the variation in usage, all service firms need to recognize the importance of
managing their physical evidence in its multi-faceted role of:
 Packaging the service;
 Facilitating the flow of the service delivery process;
 Socializing customers and employees alike in terms of their respective roles, behaviors, and
relationships; and
 Differentiating the firm from its competitors.

PACKAGING
 The firm’s physical evidence plays a major role in packaging the service.
 The service itself is intangible and, therefore, does not require a package for purely functional
reasons.
 However, utilizing the firm’s physical evidence to package the service does send quality cues to
consumers and adds value to the service in terms of image development.
  Image development, in turn, improves consumer perceptions of service while reducing both
levels of perceived risk associated with the purchase and levels of cognitive dissonance after the
purchase.
Eg., One example of using physical evidence to package the service involves the Airbus A380. This new
jumbo jetliner which weighs 308 tons took Airbus 11 years to build and cost approximately $13 billion.
The A380 is 80 feet tall (equivalent to a seven-story building), 239 feet long, boasts a wingspan of 262
feet and can fly approximately 8,000 nautical miles. The A380 can carry up to 840 passengers on two
decks, or, if preferred, the space can be redesigned to include shops, a casino, and restaurant on the
lower deck with passenger space maintained above. Ultimately, the firm’s exterior, interior elements,
and other tangibles create the package that surrounds the service.
Similarly, in an online environment, the site’s homepage creates the package that surrounds the
site’s content—and sometimes less of a package is a strategic advantage.
The firm’s physical facility forms the customer’s initial impression concerning the type and
quality of service provided. For example, Mexican and Chinese restaurants often utilize specific types of
architectural designs that communicate to customers their firms’ offerings.
The firm’s physical evidence also conveys expectations to consumers. Consumers will have one
set of expectations for a restaurant with dimly lit dining rooms, soft music, and linen tablecloths and
napkins and a different set of expectations for a restaurant with cement floors, picnic tables, and peanut
shells strewn about the floor.

FACILITATING THE SERVICE PROCESS

 Another use of the firm’s physical evidence is to facilitate the flow of activities that produce the
service.
 Physical evidence can provide information to customers on how the service production process
works. Other examples include signage that specifically instructs customers.
 Menus and brochures explain the firm’s offerings and facilitate the ordering process for
consumers and providers.
 Physical structures direct the flow of waiting consumers, and barriers, such as counters at a dry
cleaner’s, separate the technical core of the business (backroom operations) from the part of
the business in which customers take part in the production process.
SOCIALIZING EMPLOYEES AND CUSTOMERS
Organizational socialization is the process by which an individual adapts to and comes to appreciate the
values, norms, and required behavior patterns of an organization.
The firm’s physical evidence plays an important part in the socialization process by conveying expected
roles, behaviors, and relationships among employees and between employees and customers.
The purpose of the socialization process is to project a positive and consistent image to the public.
However, the service firm’s image is only as good as the image each employee conveys when interacting
with the public.
Physical evidence, such as the use of uniforms, facilitates the socialization of employees toward
accepting organizational goals and affects consumer perceptions of the caliber of service provided.
Studies have shown that the use of uniforms:
 Aids in identifying the firm’s personnel;
• Presents a physical symbol that embodies the group’s ideals and attributes;
• Implies a coherent group structure;
• Facilitates the perceived consistency of performance;
• Provides a tangible symbol of an employee’s change in status (e.g., military uniforms change as
personnel move through the ranks); and
• Assists in controlling the behavior of errant employees.

A MEANS FOR DIFFERENTIATION

 The effective management of the physical evidence can also be a source of differentiation.
  Service differentiation through the purposeful use of physical evidence has been long
exemplified by the lodging industry through the effective management of facility exterior,
facility interior, and other tangibles associated with the hotel experience.
 The appearance of personnel and facilities can also serve as differentiating factors and can have
a direct impact on how consumers perceive the firm will handle the service aspects of its
business.
 Eg., Numerous studies have shown that well-dressed individuals are perceived as more
intelligent, better workers, and more pleasant to engage with in interactions.
 Eg., Similarly, nicely designed facilities will be perceived as having the advantage over poorly
designed alternatives.
 Differentiation can also be achieved by utilizing physical evidence to reposition the service firm
in the eyes of its customers.
 Eg., Upgrading the firm’s facilities often upgrades the image of the firm in the minds of
consumers, and may also lead to attracting more desirable market segments, which further aids
in differentiating the firm from its competitors.
 Eg., On the other hand, note that a too-elaborate facility upgrade may alienate some customers
who believe the firm may be passing on the costs of that upgrade to consumers through higher
prices. This is precisely why many offices, such as insurance, dental, and medical offices are
decorated professionally, but not too lavishly.
The SOR Model
The science of utilizing physical evidence to create service environments and its influence on the
perceptions and behaviors of individuals is referred to as environmental psychology.
The stimulus-organism-response (SOR) model explain the effects of the service environment on
consumer behavior. The SOR model consists of three components:
 A set of stimuli (sight, sound, touch, taste, and smell);
 An organism component (employees/customers who are recipients of stimuli); and
 A set of responses or outcomes (approach/avoidance behaviors by employee/ customers).
Stimuli: In a service context, the different elements of the firm’s physical evidence, such as exterior,
interior design, lighting, and so on, compose the set of stimuli. It is collected through the five senses of
sight, sound, touch, taste, and smell and can be effectively managed to create compelling service
atmospheres.
Once received and interpreted by an individual, the combined stimuli lead to expectations and
perceptions about the service firm via the firm’s environment.
The organism component, which describes the recipients of the set of stimuli within the service
encounter, includes employees and customers alike.
The responses of employees and customers to the set of stimuli are influenced by three basic emotional
states: pleasure-displeasure, arousal & non-arousal, and dominance-submissiveness.
The pleasure displeasure emotional state reflects the degree to which consumers and employees feel
satisfied with the service experience.
The arousal & non-arousal state reflects the degree to which consumers and employees feel excited
and stimulated.
The third emotional state, dominance-submissiveness, reflects the feelings of control and the ability to
act freely within the service environment. Ideally, service firms should utilize physical evidence to build
environments that appeal to pleasure and arousal states and avoid creating atmospheres that
encourage submissiveness.
Finally, consumer and employee responses to the set of environmental stimuli are characterized as
approach behaviors or avoidance behaviors. Consumer approach and avoidance behaviors and
outcomes can be demonstrated in any combination of four ways (employees exhibit similar behaviors):
1. A desire to stay (approach) or leave (avoid) the service establishment.
2. A desire to further explore and interact with the service environment (approach) or a tendency to
ignore it (avoidance).
3. A desire to communicate with others (approach) or to ignore the attempts of service providers to
communicate with customers (avoid).
4. Feelings of satisfaction (approach) or disappointment (avoidance) with the service experience.

THE DEVELOPMENT OF SERVICESCAPES

 The term service scapes refers to the use of physical evidence to design service environments.
 The servicescape framework presented in Figure 8.3 is a comprehensive application of the SOR
model that directly applies to the influence of the service firm’s physical evidence on
consumers’ and employees’ behaviors.
 Due to inseparability, the model recognizes that the firm’s environment is likely to impact
consumers and employees alike.
 However, in the end, the servicescape should be designed to meet the needs of those
individuals who spend the most time within the confines of the service firm.

Remote, Self-Service, and Interpersonal Services

As customer involvement in the coproduction of services varies, so should the design of the
servicescape. As such, service firms can be characterized as remote, self-service and interpersonal
services.
In remote services, employees are physically present within the service operation while customer
involvement in the service production process is at arm’s length. In other words, these services require
very little of the customer’s physical presence to complete the service. Consequently, facility design
should facilitate the employees’ overall efforts and enhance employee motivation, employee
productivity, and employee satisfaction. Eg., mail order, coupon-sorting houses, and telephone and
utility services.
Self-service environments are dominated by the customer’s physical presence and include
services such as ATMs, miniature golf courses, postal kiosks, and self-service car washes. The
environment of self-service establishments should be located in conveniently accessible locations and
constructed to attract customers and enhance satisfaction.
Interpersonal service is different from remote and self-service environments. Here the physical
space is shared jointly by consumers and employees (and in some cases like hospitals, the patient’s
family is also involved and physically present). The environments of interpersonal services should be
developed with the needs of both parties in mind, and should facilitate the social interaction between
and among customers and employees. Eg., restaurants, hospitals, hotels, banks, and airlines comes
under interpersonal services,

To understand the importance of coproduction role of the end-user with regard to servicescape
design, the services are differentiated as high-contact and low-contact service firms.
Facility location:
The choice location for the firm’s service operation depends upon the amount of customer contact that
is necessary during the production process.
If customers are an integral part of the process, convenient locations located near customer’s homes or
workplaces will offer the firm a differential advantage over competitors. For example, with all other
things being equal, the most conveniently located car washes, dry cleaners, and hairstylists are likely to
obtain the most business.
In contrast, low-contact service firms should consider locations that may be more convenient for labor,
sources of supply, and closer to major transportation routes. For example, mail-order facilities have little
or no customer contact and can actually increase the efficiencies of their operations by locating closer to
sources of supply and major transportation alternatives, such as near interstate highways for trucking
purposes or airports for overnight airline shipments. In many cases, these types of locations are less
expensive to purchase or rent, since they are generally in remote areas where the cost of land and
construction is not as expensive as inside city limits where other businesses are trying to locate close to
their customers.
Facility Layout:
In regard to the layout of the service operation, high-contact service firms should take the
customers’ physical and psychological needs and expectations into consideration.
When a customer enters a high-contact service operation, that customer expects the facility to
look like something other than a dusty, musty, old warehouse. Professional personnel, clearly marked
signs explaining the process, enough room to comfortably move about the facility, and a facility suited
for bringing friends and family are among consumer expectations.
In contrast, low-contact facility layouts should be designed to maximize employee expectations
and production requirements. Clearly, designing facilities for high-contact services is often more
expensive than designing for their low-contact counterparts.
Product Design:
High-contact services that produce purely intangible products such as education and insurance are
defined almost solely by the physical evidence that surrounds the service and by the thoughts and
opinions of others.
In low-contact services, the customer is not directly involved in the production process, the product is
defined by fewer attributes.
Process Design:
In high-contact operations, the physical presence of the customer in the process itself must also be
considered. Each stage in the process will have a direct and immediate effect on the customer.
Consequently, a set of mini-service encounters and the physical evidence present at each encounter will
contribute to the customer’s overall evaluation of the service process. For example, a hotel guest is
directly involved in the reservation process, the check-in process, the consumption process associated
with the use of the hotel room itself, the consumption processes associated with the use of hotel
amenities such as the restaurant, pool, and health club, and the check-out process.
In contrast, since the customer is not involved with many of the production steps in low-contact
services, their evaluation is based primarily on the outcome itself.
STAGE 1: PHYSICAL ENVIRONMENTAL DIMENSIONS:
The service scapes model depicted in Figure 8.3 consists of five stages and begins by recognizing the set
of stimuli that are commonly utilized when developing service environments.
In broad terms, the set of stimuli include ambient conditions, space/function, and signs, symbols, and
artifacts.
Ambient conditions reflect the distinctive atmosphere of the service setting and include elements such
as lighting, air quality, noise, music, and so on. Environmental dimensions that pertain to the use of
space/ function include elements such as the layout of the facility, equipment, and the firm’s
furnishings.
Signs, symbols, and artifacts include signage that directs the flow of the service process, personal
artifacts, which lend character and individuality that personalize the facility, and the style of decor, such
as southwestern, contemporary, or traditional, to name a few.

STAGE 2: HOLISTIC ENVIRONMENT:

Once the physical environmental dimensions noted above are in place, perceptions of the firm’s holistic
environment are formed.
Hence, the holistic environment portion of the servicescape model pertains to the perceptions of the
servicescape that employees and customers form based on the physical environmental dimensions. In
other words, the holistic environment is a perceived overview or image of the firm based on the physical
evidence, which is referred to in the model as the perceived servicescape. The perceived servicescape is
difficult to define precisely, and perceptions of the same establishment will vary among individuals.
Essentially, the perceived servicescape is a composite of mental images of the service firm’s physical
facilities.
Strategically managing the perceived servicescape aids in establishing a positioning strategy that
differentiates the firm from competitors and ultimately influences the customer decision process when
choosing among competing alternatives. The firm should develop the servicescape with its target market
in mind.
Economic customers, who make purchase decisions based on price, will avoid service establishments
that appear too fancy or elaborate based on the perception that such an establishment will be a higher-
priced provider. Economic customers tend to be attracted to environments that reflect quality, and
those that are clean and modern.
In contrast, personalized customers desire to be pampered and attended to, and are much less price
sensitive when choosing among competing alternative providers. Firms catering to personalized
shoppers create environments that reflect the status their customers seek by investing more in items
such as marble entrance hall, glass and brass fixtures, and furnishings that encourage customers to shop
at a leisurely pace. Similarly, firms that service apathetic customers, who seek convenience, and ethical
customers, who support smaller or local as opposed to larger or national service providers should create
their servicescapes accordingly.

STAGE 3: INTERNAL RESPONSE MODERATORS:

Customer and employee responses to the firm’s servicescape are influenced (moderated) by a number
of factors. The internal response moderators component of the service scapes model simply pertain to
the three basic emotional states of the SOR model discussed earlier: pleasure-displeasure, arousal-non-
arousal, and dominance-submissiveness.
The three response moderators mediate the reaction between the perceived servicescape and
customers’ and employees’ responses to the service environment.
For example, if a customer desires to remain in a state of non-arousal and spend a nice, quiet evening
with someone special, that customer will avoid bright, loud, and crowded service establishments and
will be attracted to environments that are more peaceful and conducive to conversation. Similarly, the
employees’ responses to the firm’s environment will also be affected by their own emotional states.
Sometimes employees look forward to engaging in conversations with customers.

STAGE 4: INTERNAL RESPONSES:

The Servicescape Model proposes that the servicescape consists of a variety of physical environmental
dimensions. These dimensions form the individual’s overall (holistic) perception of the servicescape.
Moreover, the individual’s reaction to the servicescape will be moderated by their current emotional
state. The next step in the Servicescape Model attempts to describe how individuals respond to the
firm’s servicescape, which can be described at three different levels: cognitively, emotionally, and
physiologically.
Cognitive Responses Cognitive responses are the thought processes of individuals and, according to the
model, include beliefs, categorization, and symbolic meaning. In the formation of beliefs, the firm’s
environment acts as a form of non-verbal communication and influences a consumer’s beliefs about the
provider’s ability to perform the service. The physical evidence may assist customers with beliefs
pertaining to the provider’s success, price for services, and competence. Similarly, employees form
similar types of beliefs about their own firm based on the overall perceived servicescape.
Categorization is the second type of cognitive response. Restaurants and nightclubs operate within a
number of environments. Some are fine dining establishments, while others cater strictly to local
clientele or specific market segments. The process of categorization facilitates human understanding at
a quicker pace. Consumers assess the physical evidence via their five senses, quickly categorize the
service establishments with existing types of operations and then access the appropriate behavior script
for the type of operation and act accordingly. For example, a dimly lit restaurant typically symbolizes a
higher caliber of restaurant, and cues customers to talk softly while enjoying their meal.
Emotional Responses In addition to forming beliefs, individuals will also respond to the firm’s physical
environment on an emotional level. Emotional responses do not involve thinking, they simply happen,
often unexplainably and suddenly. Specific songs, for example, may make individuals feel happy or sad,
or recreate other past feelings that were associated with the particular piece of music. Scents have
similar effects on individuals. Obviously, the goal of effective physical evidence management is to
stimulate positive emotions that create atmospheres in which employees love to work and customers
want to spend their time and money.
Physiological Responses In contrast to cognitive and emotional responses, physiological responses are
often described in terms of physical pleasure or discomfort. Typical physiological responses involve pain
and comfort. Environments in which music is played very loudly may lead to employee and customer
discomfort and movement away from the source of the noise.

STAGE 5: BEHAVIORAL RESPONSES TO THE ENVIRONMENT:

Individual Behaviors The Servicescape Model concludes with an individual’s behavioral response to the
physical environment. Individual behaviors in response to environmental stimuli are characterized as
approach and avoidance behaviors. In retail settings, the store’s environment influences approach
behaviors such as:
• shopping enjoyment,
• repeat visits,
• favorable impressions of the store,
• money spent,
• time spent shopping, and
• willingness to stay and explore the store.
Social Interactions An interpersonal service firm’s servicescape should ultimately encourage interactions
between employees and customers, among customers, and among employees. The challenge in creating
such an environment is that often what the customer desires, employees would prefer to forego so that
they can complete their tasks with a minimum of customer involvement. Environmental variables such
as physical proximity, seating arrangements, facility size, and flexibility in changing the configuration of
the servicescape define the possibilities and place limits on the amount of social interaction possible.
Consider the seating arrangements of a Japanese steakhouse, which combines different groups of
customers at one table as opposed to traditional seating arrangements in which each party has its own
table. Obviously, for better or worse, “community seating” t a Japanese steakhouse encourages
interaction among customers. In addition, each table is assigned its own chef who interacts with the
customers during the production process.
Eg., For increasing consumer interaction at restaurants tables are numbered overhead and equipped
with phones that enable customers to call one another.

MANAGING THE SENSES WHEN CREATING SERVICESCAPES:

When developing the servicescape, the service firm must consider the physical and psychological impact
of the atmosphere on customers, employees, and the firm’s operations. Just as the firm cannot be all
things to all people, the servicescape must make tradeoffs to meet its human resource, marketing, and
operations needs. Experts suggest answering the following questions before implementing a
servicescape development plan:
1. Who is the firm’s target market?
2. What does the target market seek from the service experience?
3. What atmospheric elements can reinforce the beliefs and emotional reactions that buyers seek?
4. How do these same atmospheric elements affect employee satisfaction and the firm’s operations?
5. Does the suggested atmosphere development plan compete effectively with competitors’
atmospheres?
Ultimately, individuals base their perceptions of a firm’s facilities on their interpretation of sensory cues.
The following section discusses how firms can effectively manage the senses of sight, sound, scent,
touch, and taste in creating sensory appeals that enhance customer and employee attraction responses.
Sight Appeals
The sense of sight conveys more information to consumers than any other sense and, therefore, should
be considered the most important means available to service firms when developing the firm’s
servicescape. Sight appeals can be defined as the process of interpreting stimuli, resulting in perceived
visual relationships. On a basic level, the three primary visual stimuli that appeal to consumers are size,
shape, and colors. Consumers interpret visual stimuli in terms of visual relationships, consisting of
perceptions of harmony, contrast, and clash.
Harmony refers to visual agreement and is associated with quieter, plusher, and more formal business
settings. In comparison, contrast and clash are associated with exciting, cheerful, and informal business
settings. Hence, based on the size, shape, and colors of the visual stimuli utilized and the way consumers
interpret the various visual relationships, extremely differing perceptions of the firm emerge.
Size: The actual size of the firm’s facility, signs, and departments conveys different meanings to different
markets. In general, the larger the size of the firm and its corresponding physical evidence, the more
consumers associate it with importance, power, success, security, and stability. For many consumers,
the larger the firm, the lower the perceived risk associated with the service purchase. Such consumers
believe that larger firms are more competent and successful and more likely to engage in service
recovery efforts if problems do arise.
On the flip side, some customers may view large firms as impersonal and uncaring and seek out smaller,
niche firms that they view as more personal, intimate, and friendly.
Shape: Shape perceptions of a service firm are created from a variety of sources, such as the use and
placement of shelves, mirrors, and windows, and even the design of wallpaper if applicable. Studies
show that different shapes arouse different emotions in consumers.
 Vertical shapes or vertical lines are perceived as “rigid, severe, and lend[ing] a masculine quality
to an area. It expresses strength and stability … gives the viewer an up-and-down eye movement
… tends to heighten an area, gives the illusion of increased space in this direction.”
 In contrast, horizontal shapes or lines evoke perceptions of relaxation and restfulness.
 Diagonal shapes and lines evoke perceptions of progressiveness, proactiveness, and movement.
 Curved shapes and lines are perceived as feminine and flowing.
Color: The color of the firm’s physical evidence often makes the first impression, whether seen in the
firm’s brochure, the business cards of its personnel, or the exterior or interior of the facility itself. The
psychological impact of color upon individuals is the result of three properties: hue, value, and intensity.
Hue refers to the actual family of the color, such as red, blue, yellow, or green.
Value defines the lightness and darkness of the colors. Darker values are called shades, and lighter
values are called tints.
Intensity defines the brightness or the dullness of the hue.

Hues are classified into warm and cool colors. Warm colors include red, yellow, and orange hues, while
cool colors include blue, green, and violet hues. Warm and cool colors symbolize different things to
different consumer groups, as presented in Figure 8.5.
In general, warm colors tend to evoke consumer feelings of comfort and informality. For example, red
commonly evokes feelings of love and romance, yellow evokes feelings of sunlight and warmth, and
orange evokes feelings of openness and friendliness. Studies have shown that warm colors, particularly
red and yellow, are a better choice than cool colors for attracting customers in retail settings. Warm
colors are also said to encourage quick decisions, and work best for businesses where low-involvement
purchase decisions are made.
In contrast to warm colors, cool colors are perceived as aloof, icy, and formal. For example, the use of
too much violet may dampen consumer spirits and depress employees who have to continuously work
in the violet environment.
Despite their different psychological effects, when used together properly, combinations of warm and
cool colors can create relaxing, yet stimulating atmospheres.
The intensity of the color also affects perceptions of the service firm’s atmosphere. For example, bright
colors make objects appear larger than do duller colors. However, bright colors are perceived as harsher
and “harder,” while duller colors are perceived as “softer.” In general, children appear to favor brighter
colors, and adults tend to favor softer tones. For firms serving international markets, cultural
perceptions of color must be taken into consideration (see Figure 8.6).
Location The firm’s location is dependent upon the amount of customer involvement necessary to
produce the service. While low-contact services should consider locating in remote sites that are less
expensive and closer to sources of supply, transportation, and labor, high-contact services have other
concerns.
Architecture The firm’s architecture conveys a number of impressions as well as communicating
information to its customers, such as the nature of the firm’s business, the firm’s strength and stability,
and the price of its services.
Signage The firm’s sign has two major purposes: to identify the firm and to attract attention. The firm’s
sign is often the first “mark” of the firm the customer notices. All logos on the firm’s remaining physical
evidence, such as letterhead, business cards, and note cards, should be consistent with the firm’s sign to
reinforce the firm’s image.
Ideally, signs should indicate to consumers the “who,” “what,” “where,” and “when” of the service
offering. The sign’s size, shape, coloring, and lighting, all contribute to the firm’s projected image.
Entrance The firm’s entrance and foyer areas can dramatically influence customer perceptions about the
firm’s activities. Worn carpet, scuffed walls, unprofessional artwork, torn and outdated reading
materials, and unskilled and unkempt personnel form one impression. In contrast, neatly appointed
reception areas, the creative use of colors, distinctive furnishings, and friendly and professional staff
create a much different, more positive impression. Other tactical considerations include: lighting that
clearly identifies the entrance; doors that are easy to open; flat entryways that minimize the number of
customers who might trip; nonskid floor materials for rainy days; and doors that are wide enough to
accommodate customers with disabilities and large materials being transported in and out of the firm.
Lighting: Lighting sets the mood, tone, and pace of the service encounter. Consumers talk more softly
when the lights are low; the service environment is perceived as more formal, and the pace of the
encounter slows.
In contrast, brightly lit service environments are typically louder, communication exchanges among
customers and between customers and employees more frequent, and the overall environment
perceived as more informal, exciting, and cheerful.
Sound Appeals:
Sound appeals have three major roles: mood setter, attention grabber, and informer. Proactive methods
for purposely inserting sound into the service encounter can be accomplished through the strategic use
of music and announcements. Music helps set the mood of the consumer’s experience while
announcements can be used to grab consumers’ attention or inform them of the firm’s offerings. Sound
can also be a distraction to the consumer’s experience; consequently, sound avoidance tactics should
also be considered.
Music: Studies have shown that background music affects sales in at least two ways. First, background
music enhances the customer’s perception of the store’s atmosphere, which in turn influences the
consumer’s mood. Second, music often influences the amount of time spent in stores.
Playing faster tempo music increases the pace of consumer transactions. Slowing down the tempo of
the music encourages customers to stay longer. Still other studies have indicated that consumers find
music distracting when considering high-involvement purchases, but found that listening to music
during low involvement purchases made the choice process easier.
Announcements: Another common sound in service establishments is the announcements made over
intercom systems, such as to alert restaurant patrons when their tables are ready, to inform airline
passengers of their current location, and to page specific employees within the firm. The professionalism
with which announcements are made directly influences consumer perceptions of the firm.
Sound Avoidance: When planning the firm’s facilities, it is as important to understand the avoidance of
undesirable sounds as it is to understand the creation of desirable sounds. Desirable sounds attract
customers, and undesirable sounds distract from the firm’s overall atmosphere. Within a restaurant
setting, sounds that should be strategically masked include those emanating from kitchen, dish room,
and restroom
areas. Other tactics for eliminating unwanted noise include installing durable hallway carpets to
eliminate the distracting sounds of clicking heels, strategically placing loud central air conditioning units
in areas away from those where the firm conducts the majority of its business, and installing lower
ceilings and sound-absorbing partitions so that unwanted sounds can be reduced even further.
Scent Appeals
The servicescape of the firm can also be strongly affected by scents. When considering scent appeals the
service managers should pay as much attention to scent avoidance as to scent creation. Stale, musty,
foul odors affect everyone and are sure to create negative impressions. Poor ventilation systems that fail
to remove odors and poorly located trash receptacles are common contributors to potential odor
problems.
On the other hand, pleasurable scents often induce customers to make purchases and can affect the
perception of products that don’t naturally have their own scent.
Touch Appeals
The chances of a product’s selling increases substantially when the consumer handles the product. But
how does one touch an intangible product? Service firms such as mail-order retailers have a tangible
component that can be shipped to customers.
For purer services with a smaller tangible component, touch appeals can be developed through the use
of “open houses” where the public has a chance to meet the people providing the service. Shaking
hands and engaging in face-to-face communications with potential and existing customers is definitely a
form of touch appeal.
Taste Appeals
Taste appeals, the final sensory cue, are the equivalent of providing the customer with samples. Within
the service sector, the usefulness of taste appeals when developing service atmospheres depends upon
the tangibility of the service. Service firms such as car washes, dry cleaners, and restaurants may use
taste appeals to initially attract customers.
PROCESS
In a service organisation, the system by which you receive delivery of the service constitutes the
process. In fast food outlets the process comprises buying the coupons at one counter and picking up
the food against that at another counter.
The process of a delivery function which can be compared with that of operations management implies
the conversion of input into the finished product. But in a service organisation there is no clear cut input
or output. Rather it is the process of adding ‘value’ or ‘utility’ to system inputs to create outputs
which are useful for the customers.
Services can be described on the basis of the types of processes used in the delivery of the services. The
three kinds of delivery processes that are applicable in case of service products are line operations, job
shop operations and intermittent operations. Self-service restaurants and shops are examples of line
operations. The consumer moves through logically arranged operations which are arranged in a
sequence. In a self-service departmental store, the consumer starts picking up the items he needs and
pays for them near the exit. This kind of delivery process is relevant when the service you are providing
is fairly standard and the consumers’ requirement is of a routine nature. When the consumers require a
combination of services using different sequences, the job shop type of operation is more useful.
Hospitals, restaurants and educational institutions usually have this type of delivery process. In a
hospital, some patients need only consultation in the Out Patient Department, some others may need
consultation as well as medication or X-ray, some patients require hospitalisation for surgery,
medication or investigations. All these categories of consumers require a different combination of
dishes. A college
may offer courses for full-time students as well as for working people through correspondence.
Intermittent operations are useful when the type of service is rarely repeated. Firms offering
consultancy for projects use this kind of delivery system. Advertising agencies also use the intermittent
delivery system since each advertising campaign requires a unique set of input factors. As a manager
you are interested in optimising the efficiency of your organisation without sacrificing the qualitative
aspect. Some of the critical questions you need to focus upon are:
a) What are the steps involved in delivering the service to the consumer?
b) Are they arranged in the most logical sequence?
c) If not, can some steps be eliminated, combined or rearranged to form a smoother sequence?
d) What are the steps in which the consumer is involved?
e) Can the consumers’ contact be reduced or totally eliminated?
f) Can we introduce automation to speed up the delivery process?
You will appreciate that the importance of process management is that it assures service availability and
consistent quality. Without sound process management, balancing service demand with service supply is
extremely difficult. Service cannot be inventoried; therefore, it becomes essential to find out ways and
means to handle peak load to optimize different customer needs with varied expertise levels within the
service organization.
In marketing management, operations management has been recognized as an integral function. In
manufacturing sector, for example, logistics in distribution are vital to satisfy the customer needs.
Similarly in services sector, where there is no tangible product, the operations management is vital to
deliver satisfaction because here the operations management would decide how the process of service
delivery would function, or in other words, the interactive experience that would deliver the service
benefits to the consumers. Cowell identified that the issues in operations management or process
management are many, as summarized in Table 7.3. However, the degree to which these issues are
successfully managed would decide or determine not only the satisfaction but it might also give a
competitive edge to anorganization.

Shostack gave a much-simplified version and described the ‘process’ in three stages. First, a process can
be broken down in logical steps to facilitate analysis and control. Secondly, there are more than one
available options of processes in which output may differ. Finally, each system includes the concept of
deviation or tolerance standards in recognition that the processes are ‘real time’ phenomena that do
not conform perfectly to any model or description, but functions within a norm.
Shostack further observed that in marketing literature no description on process is found although
concepts, which relate to process like ‘standardization’ and customization’, are frequently mentioned. In
her article Shostack described
The first way is according to the steps and sequences that constitute the process and she termed it as
‘complexity of process’.
The second is according to the exceptional latitude or variability of those steps and sequences, which
she called ‘divergence’. Any service process is a combination of both complexity and divergence.
Analyzing the number can identify a service’s complexity and intricacy of the steps required and the
degree of freedom inherent or allowed in a process step or sequence can be called its divergence.
In reality there could be services where process can be of high complexity and low divergence. Such
services are called standardized services.
For example, housing loan from any financial institution. On the other hand, there could be services with
low complexity and high divergence. Such services can be called customized services. When we are
developing clarity on understanding of process management, an understanding of above described
phenomenon is essential as complexity and divergence are not fixed rather they are factors that can be
changed or adjusted for efficiency in the process. A change in overall complexity or divergence generally
indicates one of the four overall strategic directions, each with positive consequences and also the risks,
as summarized in Table 7.4
One can observe that how changes in complexity and divergence influenced their market position. For
managers in service industries, taking a structural approach can help increase their control over some of
the critical elements of the service system management. Therefore, for marketers in service industries,
process design may be a tool that can substantially increase their impact and role in marketing their
services.