Service Marketing

Service marketing is marketing based on relationship and value. It may be used to

market a service or a product. With the increasing prominence of services in the global
economy, service marketing has become a subject that needs to be studied separately. There
are mainly seven p’s in service marketing mix

 Product
 Price
 Place
 Promotion
 People
 Physical evidence
 process

CLOUD KITCHEN

Cloud kitchens are commercial facilities purpose-built to produce food specifically for
delivery. A Cloud Kitchen is something that is on the rise in the past couple of years. People
are tired of the traffic and the useless time spent on the road and then waiting in queue in the
restaurant and then waiting for the food to be cooked. Order food from a cloud kitchen and
enjoy at the warmth of your home. A cloud kitchen works on a hub and spoke model, where a
mega central kitchen is there and it delivers to outlets from where the food is again
distributed. It takes some time to estimate the demand.A cloud kitchen can be setup with a
very low Capital Expenditure compared to a Cafe or a Restaurant. Also the space required to
build a cloud kitchen is much smaller than a normal Restaurant.

Impacts of Cloud Kitchen

 Improve operational efficiency. Restaurants are enabled to prepare their delivery

orders offsite during busy lunch and dinner hours without disrupting the dine-in
guest experience.

 Help scale and growth. Restaurants can leverage the scale of cloud kitchens to test
new geographies and consumer adoption without investing in expensive real estate.

 Offer competitive menu prices. Cloud kitchens can invest the majority of their
financial resources into creating delicious dishes, testing new menu items, and
expanding their digital footprint. They can price menus more reasonably as they
don't need to generate additional revenue to cover investment in other areas of the
business.
Seven p’s based on traditional restaurant

 Product: Product can be defined in a restaurant industry “food” however services can
be add value to it as food presentation and quality need careful consideration.
Management need to make sure that food quality and ingredients will meet the
customers’ needs or demands. Presentation of food often refers to its visual
composition on the plate. It is very important for the kitchen staff to pay their full
attention while presenting the food to the customers. Ingredients make taste therefore
it is very important that your customers are satisfied and chef should maintain the
same taste using same ingredients.
 Price: It is a controllable and variable element of the marketing mix however it may
become a hung challenge for management due to complexity of the interaction
between competitor and customers. Studies shows that pricing hold a big influence of
competition therefore business strategy itself not enough to set a fix price to generate
the target profit. Price is a value of product in the reflection of money which a
customer or end user agreed to pay for their product or service. In restaurants when
management creates the menu it contains not only color, flavor or other attractions but
price. Setting a price for dishes in the restaurant`s menu is the most important strategy
as manager need to consider the cost, raw materials, labour, other expense.

 Promotion: There are three types of promotions strategies which can be adopted by
the restaurant`s management. First element” Word-of mouth” is very important in the
term of promotion but reputation also as studies shows that WOM is nine time better
than regular advertisement. WOM can influence customers in any buying decision, as
it is very difficult for customer to measure and judge before actual purchases.
Therefore WOM gave a positive impression and guarantee to the customers. Branding
is a good advertising strategy for the restaurant, Branding also give identity to the
service, restaurants can design their advertising strategy by designing unique logo and
themes. Logos sometime speak itself about the nature of service and food flavour. To
take advantage of the customers buying behaviors sales promotion can be used, Sales
promotion give a awareness of specific product by reducing the price or giving other
incentive e.g. buy one get one free. However sales promotion needs to be planned
well to take maximum competition advantage.

 Place: Location is the most critical factor towards restaurant success. Choosing the
right location is not always easily as it contains many element e.g. rest image of the
area, attraction nearby, customers access, parking and competitor. Before selecting the
restaurant there are number of factors to be considered. Factors for restaurant are
Rent, Area population, Competition, Customer Access, Parking.

 Physical evidence: It is very important marketing mix factor that will helps the
restaurant to improve their marketing strategies. Restaurant should consider their
physical evidence such as decoration, dining room, table design, menu cards, plates,
uniforms, and overall servicescape. Author says that physical evidence has direct
impact on five senses which are sound, sight, scent, taste and touch. Two type of
physical evidence peripheral and essential. Peripheral physical evidence includes
complimentary, overall quality of the food, and other hand essential physical evidence
 can be lines on the table, structure of the restaurant, uniforms, wall papers and overall
themes.

 People: In restaurant industry people are playing very important role specially chef as
they are the back bone of the business. Studies show that many restaurants get popular
due to unique taste and restaurant named on their chef names. Management need
haired skillful people and trained them according to restaurant polices and procedure
to deliver the best service and food.

 Process: In restaurant process also play important role as serving time, overall
operations and information. There are many type of processes, in restaurant mainly
management should looks at the system used to deliver the food and service for
example food serving time. Other example of process is how customer will pay and
how to main all records and bills in place.

Seven p’s based on Cloud Kitchen

 Product: Product is one of the important marketing mixes for services. Consumers
find a product of interest by visiting the website of the retailer directly or by
searching among alternative vendors using a shopping search engine. Once a
particular product has been found on the website of the seller, most online retailers
use shopping cart software to allow the consumer to accumulate multiple items and
to adjust quantities, like filling a physical shopping cart or basket in a conventional
store.

 Price: The cost of setting up the kitchen will vary depending upon the cuisine and
food you are offering. For example, the cost of setting up a cloud kitchen that wants
to serve items like Burger, Pizza, Pasta, and Sandwiches will not cost more than Rs
2,00,000.

 Promotion: Managing a virtual kitchen, online marketing is a great way to get in

touch with your customers. Make sure your brand is present on different social
media platforms such as Instagram, Facebook and LinkedIn. Marketing your brand
and creating traction will get you on track for success.

 Place: Location is the biggest differentiator that reduces the cost of opening a cloud
kitchen as compared to a traditional dine-in restaurant. Also, the location should be
chosen based on the customer demography and the type of food product that you are
selling. The cloud kitchen should be located where there is a high demand for the
food that you’d be offering.
  Physical Evidence: cloud kitchens don't have to worry as much about their physical
location as they do about a traditional restaurant. They can be located in low rent
areas and smaller spaces, saving even more. Another point is that the “cloud
kitchen” can be shared by several restaurants from different networks, which makes
the application delivery operation much more efficient and economical.

 People: A cloud kitchen because of the lack of a dine-in or take away facility does
not require any wait staff, but it does require a highly skilled kitchen staff. Your
food is the only thing that the customer is in contact with, so it has to be flawless. In
a cloud kitchen, the same chef may prepare the food of different brands, or there
may be different chefs designated for each brand.  A good relationship with
employees would increase the staff retention rate which would indirectly help your
business grow. It is important to build a good culture and morale with them.

 Process: The only aim is to provide fulfilling dishes to the customers. It gives you
enormous time to work on the menu with unique names, experiment new items,
improvise based on the feedback collected, etc

Advantages of cloud kitchen

 Low risk: Cloud kitchens can also be explored as a potential option for
existing brick and mortar restaurants looking to scale up, but are concerned
about high expansion budgets.

 Competitive pricing: Another direct advantage of having lower operation

cost is that cloud kitchens can use some of the profit margins to offer much
more competitive pricing. Since there’s no need to invest in several areas
that a traditional restaurant business normally would have to, virtual
kitchens can price their menus more reasonably.

 Cheaper advertising: Since cloud kitchens are solely online-based

businesses, the most efficient marketing channels for them is social media.
With a smart social media strategy, these restaurants can reach out to their
core audience.
 Disadvantages of Cloud Kitchen

 Online only visibility: Trust and loyalty are essential to the growth and sustenance
of any brand and cloud kitchens will need to think out of the box and adopt
innovative strategies in order to attract a dedicated customer base.

 Dependence on technology: A cloud kitchen’s business model is totally dependent

on technology. With more advances in the field like artificial intelligence, Voice
Assistants, AR, and VR, drones, etc. productivity and convenience are expected to
increase for both businesses and customers.

Challenges of Cloud Kitchen

 Technological Expenses: The biggest problem with cloud kitchen model is that it has
replaced real estate costs with technological costs. Cloud kitchens have astronomical
technical costs. This is because these kitchens have to communicate with a lot of food
delivery apps. The orders have to be received and communicated to the kitchen
which is the nearest to the customer’s location. There are cloud-based solutions
available which allow restaurants to go high tech without any major upfront costs.
However, the monthly subscriber fee also burns a hole through the wallets of many
startup kitchens. Hence, the costs end up being very similar to traditional restaurants.
However, the number of the users is severely restricted since these outlets do not
provide the dine-in facility.

 Hygiene: The cloud kitchen model is difficult to scale. The problem is that many
times companies build their kitchens in unhygienic conditions. This is done in order to
lower the costs as much as possible. Customers don’t really want to be served from
prime real estate. However, any chosen kitchen needs to be hygienic so that the food
is edible. There have been many cases reported on social media wherein the food
served to customers was unhygienic.

 Demand Incentive: The demand incentive available for the three-wheeler segment is
expected to have a positive impact on the overall return of investment of the vehicle.

 Battery swapping: While a number of theoretical and operational challenges exist

around battery swapping systems, but the policy may be a step in the direction of
ensuring practical (& commercial) use of battery swapping technologies.
Conclusion

Cloud kitchens are a relatively new invention. However, they help serve a very important
market niche which was earlier being neglected by traditional restaurants. As a result, they
are not taking market share away from current restaurant owners. Instead, they are expanding
existing markets thereby benefitting the industry as a whole.