SMU

ASSIGNMENT
SEMESTER – 4
MK0015

SERVICES MARKETING &

CUSTOMER RELATIONSHIP
MANAGEMENT
Set-1
SUBMITTED BY:
GYANENDRA KUMAR
MBA
ROLL NO:-520941253

Q.1 Mention the different types of services with few examples and briefly give a note on
service sector.
Ans.: Different types of services:

The underlying objective in any service classification scheme is to get a deeper understanding of the
service product. Despite the diversity in the range of service products, it is possible to classify and explore
them on the basis of certain factors.

There have been more than sixteen studies regarding the classification schemes. Naturally, some are
worthwhile in developing marketing strategies, with others suffer shortcomings. Christopher Lovelock
identifies certain issues as important in the classification of services. He points out that:

a) Service industries continue to be dominated by operations, with the service managers insisting that their
tasks and challenges in their industry are unique and have nothing in common with those from other service
industries.
b) A managerial mind set evident in many service argues that the marketing of a service industry has
nothing in common with the marketing of another service industry. For example, the marketing of an
airline service has nothing in common with marketing of a banking service or a financial service.
c) Classification schemes should offer strategic marketing insights so as to have managerial value. Any
other simple classification would be insufficient.

Payne identifies a wide range of factors, which are used in various classification schemes.

They are:

a) Type of services,
b) Type of seller,
c) Type of purchaser,
d) Demand characteristics,
e) Rented versus owned services,
f) Degree of intangibility,
g) Buying motives,
h) Equipment based versus people based,
i) Amount of customer contact,
j) Service delivery requirements,
k) Degree of customization and
l) Degree of labour intensity.

A simple form of classification is to list out the service industries, like transpiration, banking, health care,
education etc. Obviously, such listing is not helpful to identify the features relevant to the marketing of
services. Recent researchers have sought to classify the service in a more meaningful manner that gives
insight into the strategic dimensions of service marketing.

Various classification schemes, clubbing various groups of services that share marketing commonalties,
rely on good marketers to gain strategic marketing insights. The underlying aim for such classification
scheme is to gain a deeper understanding of the service product. Service products are education, legal
services, management constancy, accounting travels etc., In spite of such diversities, the services can be
classified and on the basis of some criteria they can be explored to provide a deeper insight into the nature
of services.

Service Sector:
The American Marketing Association defines services as activities, benefits or satisfactions, which are
offered for sale and are provided with the sale of goods. This definition is considered to be too broad as
products also offer benefits and satisfaction to customers. So, there were attempts to differentiate physical
products from services by defining characteristics, which are present in service but are not found in case of
products.

Kotler defines a service as “any act or performance that one party can offer to another that is essentially
intangible and not results in the ownership of anything. Its productions may or may not be same to a
physical product”. Adrian Payne defines it as “an activity which has some intangibility associated with it,
which involves some interaction with property with it, which involves some interaction with customers or
with property in their possession, and does not result in a transfer of ownership. A change in condition may
occur and production of the service may or may not be closely associated with a physical product”.

A more mundane definition in the Indian context is provided by section 2 (r) of the Monopolies and
Restrictive Trade Practices Act, 1969. Under the said statute a “service means service which is made
available to potential users and includes the provision of facilities in connection with banking, financing,
insurance, chit fund, real estate, transport, processing, supply of electrical or other energy, board or loading
or both, entertainment, amusement or the purveying of news or other information.

Stanton defines services and identifies factors, which distinguish products from services, which are
accepted by most of the commentators. According to Stanton “Services are those separately identifiable,
essentially intangible activities that provide want-satisfaction, and that are not necessarily tied to the sale of
a product or another service. To produce a service may or may not require the use of tangible. However,
when such use is required, there is no transfer of the title (Permanent ownership) to these tangible which
distinguish goods”. Stanton emphasizes four characteristics, which distinguish service from products. They
are, intangibility, inseparability, heterogeneity and penetrability and fluctuating demand. Kotler also
emphasizes on intangibility, variability and perishability.

A service is an activity which has some element of intangibility associated with it, which involves some
interaction with customers or with property in their possession, and does not result in a transfer of
ownership. A change in condition may occur and production of the service may or may not be closely
associated with a physical product.

Q.2 According to you, what are the customer expectations and customer responses if they
don’t receive the desired service quality? If you were the service provider, how would you
address customer complaints and conflicts?

Ans.: Customer Expectation of services

Companies often have different perspectives on customer service. These include:

· All the activities required to accept process, deliver and fulfill customer orders and to follow up on any
activity that has gone wrong.
· Timeliness and reliability of delivering products and services to customers in accordance with their
expectations.
· A complex of activities involving all area of the business which combine to deliver the company’s
products and services in a fashion that is perceived as satisfactory by the customer and which advances the
company’s objectives.
· Total order entry and all communications with customers, all invoicing and total control of defects.
· Timely and accurate delivery of products and services ordered by customers with accurate follow up and
enquiry response including timely delivery of invoice.
These alternative views illustrate the extent to which the meaning of customer service varies considerably
from one company to another.
The more pragmatic view of customer service is broader than any of these definitions and that it is
concerned with the building of bonds with customers and other markets or groups to ensure long-term
relationships of mutual advantage, which reinforce the other marketing, mix elements. Customer service
can thus be seen as an activity, which provides time, and place utilities for the customer and which also
involves pre – transaction and post-transaction considerations relating to the exchange process with the
customer.

Customer Responses:

Quality can be viewed from two perspectives – internal and external. Internal quality is based on
conformance to specifications. External quality is based on relative customer perceived quality. It is
essential that quality is measured from the customer perspective, not from what managers within a
company think their customer views are!
Parasuraman and his colleagues have developed a model, which helps to identify the gaps between the
perceived service qualities, that customers receive and what they expect.

The model identifies five gaps:

1. Consumer expectation – management perception gap.

2. Management perception – service quality expectation gap.
3. Service quality specifications – service delivery gap.
4. Service delivery – external communications to consumer’s gap.
5. Expected service – perceived service gap.

Customer complaints, conflicts and solution:

Addressing customer complaints are part of running any business. No matter how successful your business
is, you will occasionally deal with a dissatisfied customer. Rather than viewing a complainer as a nuisance,
look at his complaint as an opportunity to learn how to improve your product or service. Be open to hearing
what he has to say and be proactive in your response.

1 Have an action plan for customer complaints. When a customer complains, what she is really doing is
telling you how you can improve your service. Have a system in place so customer-service employees can
document complaints. Create a customer-grievance form your employees can fill out when a customer is
unhappy. Management should collect the grievance forms periodically and review them to identify
recurring complaints.

2 Survey all customers for feedback on their buying experience. There are a number of ways to do this.
You can have survey forms that can be filled out and dropped in a container. Or you can hand customers a
survey form as they leave the store, offering incentives such as a 10 percent discount if they bring or mail it
back. You could also have an online survey that offers a printable store coupon when completed. Your
survey form can be as simple as the customer choosing a level of satisfaction from one to five in any given
area of service, but leave space for additional comments.

3 Make adjustments based on customer feedback and complaints. Knowing what customers are
complaining about will not help you reduce complaints unless you are willing to make changes. Have a
brainstorming session with managers and employees to see what changes can be made to prevent
customer’s dissatisfaction.

4 Train employees to provide excellent service. A well-treated customer is less likely to complain than a
poorly treated one. The last thing a business owner wants is to have a customer become frustrated by a rude
employee. Employees should be trained to treat customers with excellence and be given some leeway in
their ability to address customer needs.
Examples of Preventive Customer Complaint Management Initiatives at Individual Businesses:
A pizza chain widely advertises that when its pizzas do not arrive within a certain time the pizza is free. By
establishing an up-front policy about delivery and offering clear. Compensation for when the commitment
is not met, customers have an assured outcome (Either pizza on time or free pizza). Customers know in
advance what to expect so complaints are minimal, and the “on time or free” policy becomes an important
competitive advantage.

Q.3. Construct a service gap for an imaginary service based company assuming that there
are several gaps found in its functioning.

Ans.: Suppose there are five gaps:

1. Consumer expectation – management perception gap.
2. Management perception – service quality expectation gap.
3. Service quality specifications – service delivery gap.
4. Service delivery – external communications to consumer’s gap.
5. Expected service – perceived service gap.
Gap – 5 is the service quality shortfall as seen by the customers, and gaps 1-4 are shortfalls within the
service organization. Thus gaps 1-4 contribute to gap – 5.

These gaps are given in the following figure.

Q.4. Explain the concept of service design and service delivery in services marketing.
Ans.: Service Design:

Service Design is the activity of planning and organizing people, infrastructure, communication and
material components of a service, in order to improve its quality, the interaction between service provider
and customers and the customer's experience. For example, a restaurant may choose to have a Service
Design agency change the way its menu is set out, or change the layout of the restaurant to improve the
customer's experience. Customers can mean paying patrons, but also can be within an organization, so long
as they are the direct recipients of a service e.g. an organization implements a new payroll interface for its
staff - therefore the staff are effectively 'customers' of the payroll interface. To do this, Service Design
methodologies are used to plan and organize people, infrastructure, communication and material
components used in a service. The increasing importance and size of the service sector, both in terms of
people employed and economic importance, requires services to be accurately designed in order for service
providers to remain competitive and to continue to attract customers.

The design (or redesign) of a service may involve re-organizing the activities performed by the service
provider (Back office), e.g. how letters from customers are processed internally; and/or the redesign of
interfaces and interactions that customers use to contact the service provider (Front office) e.g. website, in
person, telephone, blogs etc.

Service Design is increasingly used by blue-chip private and public sector organizations as a means of
creating the step change their customers require in terms of service experience. Service Design agencies
apply design tools, techniques and thinking to service challenges, either to improve existing services or to
create new ones. Typically, the work is based upon deep insights gathered by shadowing service users. This
technique produces more accurate insights into the usability of a service than traditional remote surveys
because what people say they do is frequently different to what they actually do. Concepts and ideas
generated are captured in sketches or in service prototypes. The strong visual element, combined with the
opportunity to test and rapidly change services and interfaces, delivers real value in today's competitive
markets.

The active participation of customers and other actors traditionally considered as external to a firm’s
boundary emphasize the need for a proper design activity that organizes the interaction among those actors,
thus planning sequences of events, material and information flows. Furthermore the involvement of “non
technical “ actors, such as customers, implies that the activity of service design be analyzed not only from a
functional perspective (with the aim of optimizing flows and resources and reducing time of operations) but
also from the emotional perspective (creating meaningful events, motivating customers, communicating the
service). Because of those considerations service design became the focus of studies and research in the
discipline of design, initially as part of the activities related to web design and Interaction Design, and later
as an autonomous professional and research area.

Service Delivery:

Positioning involves both launching new brands into the marketplace (new brand positioning), and
repositioning old brands. It is concerned with the differentiation of products and service and ensuring that
they do not degenerate into a commodity. To maximize its potential, a company should position itself in its
core market segments, whether it is objective or subjective, differentiated in a positive way over competing
offerings.

Positioning is particularly importance for services in the market. As a result of competitive pressure, the
huge offering of services within each market sector is increasingly confusing the customer. These offerings
are communicated by a vast number of advertising messages promoting different features of the services.
The key to a successful positioning strategy is to promote the feature, which the company is best at, and
which exactly matches the needs of the customer.
Because of intangibility and other features associated with services, consumers find that differentiation of
services can be more difficult and complex. Successful positioning makes it easier for the customer to see a
company services as being different from others and exactly what is wanted.

Positioning is a strategic marketing tool, which manages to determine what their position is now, what they
wish it to be and what actions are needed to attain it. It permits market opportunities to be identified, by
considering positions, which are not met by competitor’s products. It therefore, helps influence both
product development and the redesign of existing products. It also allows consideration of competitor’s
possible moves and responses so that appropriate action can be taken. The concept is often considered at
the product level although it is also relevant at the market segment, the reason for buying your services and
thus underlines the whole marketing strategy. It also offers guidelines for development of a marketing mix
with each element of it being consistent with the positioning.

Q. 5 a. What is services marketing? Explain its importance.

Ans: Service marketing and it’s important:

There are a number of marketing managements that have special significance for services marketing. It is
worth commenting on some of those aspects, as they are important in developing an awareness of problems
and key issues in services marketing.

Productivity and Quality

In striving to gain and maintain competitive advantage, both productivity and quality are of key
importance. However, the nature of services implies that it is difficult to avoid a trade-off situation, when
improvements in service productivity can lead to sacrifices in the level of quality. This is most sensitive in
productivity and can lead to sacrifices in the level of quality. This is most sensitive also in services
marketing where people are the service delivers. If a bank cashier or travel agent needs to process
customers more quickly to improve productivity, how can organizations ensure that is no resulting drop in
quality?

The American Marketing Association defines services as activities, benefits or satisfactions, which are
offered for sale and are provided with the sale of goods. This definition is considered to be too broad as
products also offer benefits and satisfaction to customers. So, there were attempts to differentiate physical
products from services by defining characteristics, which are present in service but are not found in case of
products.

Kotler defines a service as “any act or performance that one party can offer to another that is essentially
intangible and not results in the ownership of anything. Its productions may or may not be same to a
physical product”. Adrian Payne defines it as “an activity which has some intangibility associated with it,
which involves some interaction with property with it, which involves some interaction with customers or
with property in their possession, and does not result in a transfer of ownership. A change in condition may
occur and production of the service may or may not be closely associated with a physical product”.

A more mundane definition in the Indian context is provided by section 2 (r) of the Monopolies and
Restrictive Trade Practices Act, 1969. Under the said statute a “service means service which is made
available to potential users and includes the provision of facilities in connection with banking, financing,
insurance, chit fund, real estate, transport, processing, supply of electrical or other energy, board or loading
or both, entertainment, amusement or the purveying of news or other information.
Stanton defines services and identifies factors, which distinguish products from services, which are
accepted by most of the commentators. According to Stanton “Services are those separately identifiable,
essentially intangible activities that provide want-satisfaction, and that are not necessarily tied to the sale of
a product or another service. To produce a service may or may not require the use of tangible. However,
when such use is required, there is no transfer of the title (Permanent ownership) to these tangible which
distinguish goods”. Stanton emphasizes four characteristics, which distinguish service from products. They
are, intangibility, inseparability, heterogeneity and penetrability and fluctuating demand. Kotler also
emphasizes on intangibility, variability and perishability.

A service is an activity which has some element of intangibility associated with it, which involves some
interaction with customers or with property in their possession, and does not result in a transfer of
ownership. A change in condition may occur and production of the service may or may not be closely
associated with a physical product.

Put in the simple terms, ‘services are deeds, processes and performances’. The core offerings of hospitals,
hotels, banks and utilities comprise primary deeds and actions performed for customers. Services are
produced not only by service business such as those just described but are also integral to the offerings of
many manufactured goods procedures. For example, car manufacturers offer warranties and repair services
for their cars, Computer manufactures offer warranties, maintenance contracts and training. All of these
services are examples of deeds, processes and performances.

b. Is there any need to segment services? Give reasons for your answer.

Ans.: Yes, service segmentation is especially important for services in the current competitive marketplace.
Service industries are suffering from increasing competition both in the number of competitors and in the
proliferation of service offerings. Market segmentation helps prevent the waste of valuable resources by
directing effort into those areas that will help achieve success.

Service products are frequently not clearly differentiated. Market segmentation offers the opportunity of
gaining competitive advantage, in a highly contested market, through differentiation. The market
segmentation approach involves identification of the benefits which different homogeneous groups seek,
allowing relevant features and requirements to be determined and used as a source of service
differentiation.

Different customers have different needs. A hotel, which aims to satisfy the prestige executive market,
needs to consider the specific requirements of this segment. These might include full secretarial and office
facilities, conference amenities, twenty-four hour catering, a fitness facility and late check out options.
Successful marketing identifies specific needs and preferences for services, and then develops strategies to
satisfy these preferences.

A single service or product cannot meet the needs of all customers, but it can meet the needs of a specific
group of customers. A service business should be positioned to serve particular segments of the attractive
parts of the market, so that it can serve them effectively and produce the greatest profit.

The segmentation process, shown in the figure is concerned to divide a heterogeneous process and follows
four broad steps:

i) The definition of the market to be addressed.

ii) The identification of alternative bases for segmentation.
iii) An examination of these based and the choice of the best base or base for segmentation.
iv) The identification of individual market segments, an assessment of their attractiveness and the selection
of specific target market.

Once the market segment has been selected, the process of target marketing involves developing a
positioning for the target segments selected and then developing a marketing mix for each target market.

Q. 6. Examine the recent issues in services marketing.

Ans: Recent issues in marketing:

Service Marketing Management

There are a number of marketing managements that have special significance for services marketing. It is
worth commenting on some of those aspects, as they are important in developing an awareness of problems
and key issues in services marketing.

Productivity and Quality

In striving to gain and maintain competitive advantage, both productivity and quality are of key
importance. However, the nature of services implies that it is difficult to avoid a trade-off situation, when
improvements in service productivity can lead to sacrifices in the level of quality. This is most sensitive in
productivity and can lead to sacrifices in the level of quality. This is most sensitive also in services
marketing where people are the service delivers. If a bank cashier or travel agent needs to process
customers more quickly to improve productivity, how can organizations ensure that is no resulting drop in
quality?

Service quality is measured on two levels:

· Technical Quality – the overall efficiency with which a bank handles its customer accounts in terms of
prompt statements, rates of interest offered and so on.

· Functional Quality – the way the service is actually delivered; this includes personal courtesy, the service
environment in terms of comfort and décor, and the customer’s own role.

The importance, which is attached to functional and technical quality, depends on the type of service, and
the benefit sought by the consumer.

Services Marketing Triangle

A useful way to conceptualize the questions and decisions that need to be made is presented in the services
marketing triangle.

Company (Management)

The triangle suggests that there are three types of marketing that must be successfully carried out in a
service organization to succeed, and that all of them revolve around making and keeping promises to
customers.

On the right side of the triangle are the external marketing efforts that the firm engages in, to set up its
customers’ expectations and make promises to customers regarding what is to be delivered. Anything that
communicates to the customers before service delivery can be viewed as part of this external marketing
function. In service firms, there are many factors that communicate to customers beyond the traditional
elements of advertising, special promotions, sales, and public relations, for example, the firm’s personnel
and the physical facilities themselves.

On the bottom of the triangle is what has been termed interactive marketing, or what some refer to as real-
time marketing. Here the actual service delivery takes place-the firm’s employees interact directly with
customers. It is at this point that the promise is delivered or not delivered. Having a positive link between
what is promised through the external marketing in the world is useless if promises cannot be kept.
The left side of the triangle suggests the critical role played by internal marketing, which enables
employees to keep the promises that have been made to customers. Internal marketing refers to the
activities the firm must carryout; to train, motivate, and reward its employees. Unless service employees
are able and willing to deliver on the promises made, the firm will not be successful keeping its promises
and the services marketing triangle will collapse. Internal marketing hinges on the assumption that
employee satisfaction and customer satisfaction are inextricably linked.

What the triangle implies is that all three sides are critical to successful services marketing and
management. Without one of the sides in place in the triangle, the total marketing effort cannot be
supported. Each side represents significant challenges for most service businesses, and as we proceed
through the text we will find approaches and strategies for dealing with all three.

1) Marketing Implications

Intangibility presents several marketing challenges. Services cannot be inventories, and therefore
fluctuations in demand are often difficult to manage. For example, there is tremendous demand for resort
accommodations in Simla/Ooty in May, but little demand in December. Yet resort owners have the same
number of rooms to sell year-round. Services cannot be patented legally, and new service concepts can
therefore be communicated to competitors. Services cannot be readily displayed or easily communicated to
customers, so quality may be difficult for consumers to assess. Decisions about what to include in
advertising and other promotional materials are challenging, as is pricing. The actual cost of a “unit of
service” is hard to determine and the price/ quality relationship is complex.

2. Inseparability

Services are created and consumed simultaneously and generally they cannot be separated from the
provider of the service. The service provider customer interaction is a specialty of service marketing.

Unlike the tangible goods, service cannot be distributed using conventional channels. Inseparability makes
direct sales as the only possible channel of distribution and thus delimits the markets for the seller’s
services. This characteristic also limits the scale of operation of the service provider. For example, a doctor
can give treatment to limited number of patients only in a day.

This characteristic also emphasizes the importance of the quality provided to clients in services. This poses
another management challenge to the service marketer. For example, an airline company may provide
excellent fight service, but a discourteous onboard staff may keep the customer permanently off that
company.

There are exemptions also to the inseparability characteristic. A television coverage, travel agency or stock
broker may represent and help marketing the service provided by another service firm.

Marketing Implications

Because services often are produced and consumed at the same time, mass production is difficult if not
impossible. The quality of service and customer satisfaction will be highly dependent on what happens in
“real time”, including actions of employees and the interactions between employees and customers.

3. Heterogeneity

This characteristic is referred to as variability by Kotler. We have already seen that services cannot be
standardized. They are highly variable depending upon the provider, the time and place where they are
provided. A service provided on a particular occasion is somewhat different from the same service
provided on other occasions. Also the standard of quality perceived by different consumers may differ
accordingly. For example, the treatments given in a hospital to different persons on different occasions
cannot similar. Consumers of services are aware of this variability and by their interaction with other
consumers they also get influenced or influence others in the selection of service provider.

Marketing Implications

The services are heterogeneous across time, organizations, and people ensuring consistent service is fully
controlled by the service supplier; such as the ability of the consumer to articulate his or her needs, the
ability and willingness of personnel to satisfy those needs, the presence (or absence) of other customers,
and the level of demand for the services.

4. Perishability and Fluctuating Demand

Perishability refers to the fact that a seat in an airplane or in a restaurant, an hour of a lawyer’s time, or
telephone line capacity not used cannot be reclaimed and used or resold at a later time. This is in contrast to
goods that can be in inventory or resold another day, or even returned if the consumer is unhappy.

Marketing Implications

A primary issue that marketers face in relation to service perishability is the inability to inventory. Demand
forecasting and creative planning for capacity utilization is therefore important in challenging the decision
areas. The fact that services cannot typically be returned or resold also implies a need for strong recovery
strategies when things do go wrong. For example, while a bad haircut cannot be returned, the hairdresser
can and should have strategies for recovering the customer’s goodwill if and when such a problem occurs.
 SMU
ASSIGNMENT
SEMESTER – 4
MK0015

SERVICES MARKETING &

CUSTOMER RELATIONSHIP
MANAGEMENT
Set-2
SUBMITTED BY:
GYANENDRA KUMAR
MBA
ROLL NO:-520941253
Q.1 Mention the 5 engines of e-CRM and explain the process involved.

Ans.: 5 engines of e-CRM: Properly configured, these five engines collectively form a robust, scalable,
and flexible platform for e-CRM. Prefabricated and custom-made software can be seamlessly integrated
into the platform to provide a virtual shopkeeper to millions of customers. Equipped with such
infrastructure, companies can continually create significant customer value at Internet speed, automating
the who, what, when, where, and how of sales and marketing.

Engine 1: The Customer-centric Information Store

e-CRM initiatives depend on a 360-degree customer view. A Customer-centric Information Store integrates
data from disparate information sources such as web sites, transactional systems, operational databases, call
centers, enterprise resource planning systems, and third party data. This engine enables companies to
recognize and respond accurately to customers, whether they purchase products through a physical store;
telephone a call center; or browse a web site. Consequences of an incomplete customer view are often
harsh. Presenting customers with inappropriate offers that dilute loyalty and trust stall e-CRM efforts.

Developing a Customer-centric Information Store requires large-scale integration of disparate data from
multiple sources. Three factors are critical to its success:

* Scalability: Companies tend to underestimate the volume of data that is required for developing a
comprehensive 360degree view of customers and visitors. Clickstream data alone can consume several
gigabytes every day. Transactional data, third party, and ERP data add exponentially to the volume.
Detailed, atomic level capture and retrieval of every customer's profile, preferences, and transaction history
places additional capacity demands on the technology architecture. Companies must plan for terabyte-sized
Customer-centric Information Stores.

Flexibility: The Customer centric Information Store must accommodate multiple data models and database
architectures and allow for integration with other back-end information systems. Without this flexibility,
the usefulness of this engine will diminish over time. Customer information stores are dynamic, growing
entities that have to keep up with every customer's interaction with the company.

* High Performance: Speed and accuracy of access to customer-centric information is essential for enabling
a true value exchange with customers. Likewise, the ability to aggregate information at differing levels of
abstraction (e.g., transaction, customer, and zip code) makes it possible to discern patterns of customer
behavior (e.g., sizes of clothing sold by zip code). In automotive engineering, sports car engines provide the
ability to drive at high speeds, turn around tight corners precisely, and deliver flawless performance on
bylines, country roads, or highways. Similarly, a high performance Customer-centric Information Store
provides accurate information that can be captured in any part of the information store at any level of
granularity with maximum flexibility and responsiveness to demand.

Engine 2: The Analysis And Segmentation Engine

Building trusted customer relationships depends on accurate customer segmentation. The Analysis and
Segmentation Engine performs business analysis, segmentation, and prediction so that customer
interactions take place in an appropriate and personalized manner. Without this engine, e-CRM lacks the
intelligence to be effective--even if it has massive volumes of customer-centric information.

There are three major categories of analysis and segmentation techniques: Online Analytical Processing
(OLAP), Data Mining, and Statistics. Briefly, OLAP tools perform complex queries on a database, Data
Mining tools discover unforeseen associations using pattern-matching algorithms, and Statistical tools
perform complex mathematical operations on sets of data. Each technique has its strengths.

No one technique covers the gamut of e-CRM applications. E-CRM requires a combination of Statistics,
Data Mining, and OLAP solutions to perform rapid, accurate, and consistent customer segmentation. The
new breed of analysis and segmentation is built on iterative, "Collaborative" ROLAP (Relational OLAP)
tools and ads the best features of Statistical and Data Mining analysis techniques. Together, they iterate to a
final answer to analytical questions. E-CRM marketing campaigns are inherently iterative since they
require ad-hoc questions about customer preferences, demographics, and transaction patterns. With
Collaborative ROLAP, campaign formulation evolves through experimentation and discovery. Iteration
takes place between a server, where data is stored, and the "middle tier" applications that are used for
complex analytical operations. This approach is essential for extracting maximum benefit from an
integrated Customer-centric Information Store. The hybrid will successfully hypothesize, target a sub-
segment of customers, and verify results.

Engine 3: The Personalization Engine

New technology makes it possible to personalize products and services for large numbers of customers in a
cost-effective manner by lowering the marginal cost of personalization. Until now, personalized attention
and service were labor intensive and not scalable to serve a large customer base without high costs.
Naturally, most companies provide personalized attention to a small group of selected clients who are
"worth it." Today, every Amazon.com customer gets personal recommendations for books--in large part
due to Amazon's personalization technology. The addition of thousands of customers to Amazon's base has
a minimal marginal effect on their cost to sustain this high level of service. This "scalable" personalization
is unprecedented in business history.

Achieving this level of one-to-one service requires a robust Personalization Engine. Engine 3 identifies
appropriate messages and offers necessary tools to create valued one-to-one customer relationships with
millions of customers. It builds customer profiles, enables customized products and services offerings, and
fosters trusted relationships. The Personalization Engine leverages the Customer-centric Information Store
to provide a "virtual storekeeper" who knows each customer, looks out for their needs, and knows when
and how to reach them.

Classic approaches to personalization fall into three broad categories: Rules-based, Collaborative Filtering,
and Inference Models. Customer Experience Personalization (CEP) utilizes all three approaches in
conjunction with large volumes of information to create a uniquely holistic experience for each individual
customer.

CEP is proactive and data driven. For example, regular National Weather Service reports on pollen count
could be used in conjunction with patient profiles to alert specific asthma patients to renew their allergy
medication. This is superior to personalization that solely relies on static information about customer
transaction patterns. Customers and visitors dislike information clutter. Given a chance, they will clearly
indicate their preferences for the type of information they like to receive, the periodicity of subsequent
communication, and the device for reaching them. This information is a powerful tool to enhance the level
of personalization of customer experience. For example, a bank to package news of an impending rate hike
can leverage a customer’s self-stated interest in receiving news on Federal interest rate changes with an
offer for a low-interest credit card or home equity loan. A good Personalization Engine should include a set
of tools to create subscription services and interfaces that provide "in-a-box" capability.

Engine 4: The Broadcast Engine

Continuous customer interaction and value exchange require 24/7 access to customers. While the web is
becoming increasingly pervasive, few customers are on-line all day. However, they are increasingly
reachable through other communication devices. A recent META Group study projects that the average
number of communication devices per consumer will quadruple in the next three years.

Growing appetite for non-web communication is not just a consumer phenomenon, but a business shift, as
well. Corporate use of wireless technology is increasing dramatically. Successful e-CRM requires an
engine that reaches millions of customers wherever they are: at home, via phone, or TV set-top box; at
work; via e-mail; or on the road, via WAP phone or pager. A scalable Broadcast Engine that is built on an
open architecture and supports all communication devices enables this level of customer interaction.

Engine 5: The Transaction Engine

An effective Transaction Engine promotes information exchange between every customer and the
enterprise. Like the small town shopkeeper who often conversed with his customers and remembered
significant details, the Transaction Engine maintains customer contact and transmits information to the
Customer-centric Information Store for later use. Leveraging the other four e-CRM Engines, the
Transaction Engine develops informed lifelong customer relationships.

The Transaction Engine facilitates the value exchange and provides a single interface to any set of
information sources. The Transaction Engine also acts as a third-party purchase facilitator for the
consumer. The consumer provides relevant preferences via any device and the Transaction Engine vends
the relevant information. Smart consumers want trustworthy product information before every potential
purchase. To gain confidence in their product purchases, customers will interact with many vendors to
gather information, conduct comparative analysis, and then decide which products to buy. The Transaction
Engine promotes and ultimately brokers customer transactions.

The Transaction Engine manages the flow of information and services through each customer device and
provides appropriate value-added features and functionality. This is achieved by integrating closely with
the Broadcasting and Personalization Engines.

Companies will have billions of interactive customer contacts a year. They have to avoid inundating
customers with unwanted information and services. Through the utilization of subscription methods (via
web, wireless, or voice) customers can sign up for unique interactive information services based on their
own preferences. The Transaction Engine performs this function, keeps track of the customer subscriptions,
and uses this information to initiate interactions with individual customers.

Q.2 Explain the concepts of customer retention and Customer lifetime value with its
applicable strategies.

Ans.: Customer Retention: Customer Retention is the activity that a selling organisation undertakes in
order to reduce customer defections. Successful customer retention starts with the first contact an
organisation has with a customer and continues throughout the entire lifetime of a relationship. A
company’s ability to attract and retain new customers, is not only related to its product or services, but also
strongly related to the way it services its existing customers and the reputation it creates within and across
the marketplace.

Customer retention is more than giving the customer what they expect, it’s about exceeding their
expectations so that they become loyal advocates for your brand. Creating customer loyalty puts ‘customer
value rather than maximizing profits and shareholder value at the center of business strategy’ [1]. The key
differentiator in a competitive environment is more often than not the delivery of a consistently high
standard of customer service.
1.Past and Current customer behavior is the best predictor of Future customer behavior. Think
about it. In general, it is more often true than not true, and when it comes to action-oriented activities like
making purchases and visiting web sites, the concept really shines through.

We are talking about actual behavior here, not implied behavior. Being a 35-year-old woman is not a
behavior; it’s a demographic characteristic. Take these two groups of potential buyers who surf the ‘Net:

People who are a perfect demographic match for your site, but have never made a purchase online
anywhere

People who are outside the core demographics for your site, but have purchased repeatedly online at many
different web sites

If you sent a 20% off promotion to each group, asking them to visit and make a first purchase, response
would be higher from the buyers (second bullet above) than the demographically targeted group (first bullet
above). This effect has been demonstrated for years with many types of Direct Marketing. It works
because actual behavior is better at predicting future behavior than demographic characteristics are. You
can tell whether a customer is about to defect or not by watching their behavior; once you can predict
defection, you have a shot at retaining the customer by taking action.

2. Active customers are happy (retained) customers; and they like to "win." They like to feel they are
in control and smart about choices they make, and they like to feel good about their behavior. Marketers
take advantage of this by offering promotions of various kinds to get consumers to engage in a behavior
and feel good about doing it.

These promotions range from discounts and sweepstakes to loyalty programs and higher concept
approaches such as thank-you notes and birthday cards. Promotions encourage behavior. If you want your
customers to do something, you have to do something for them, and if it’s something that makes them feel
good (like they are winning the consumer game) then they’re more likely to do it.

Retaining customer’s means keeping them active with you. If you don't, they will slip away and eventually
no longer be customers. Promotions encourage this interaction of customers with your company, even if
you are just sending out a newsletter or birthday card.

The truth is, almost all customers will leave you eventually. The trick is to keep them active and happy as
long as possible, and to make money doing it.

3. Retention Marketing is all about: Action – Reaction – Feedback – Repeat.

Marketing is a conversation, as the Clue-Train Manifesto and Permission Marketing have pointed out.
Marketing with customer data is a highly evolved and valuable conversation, but it has to be back and forth
between the marketer and the customer, and you have to LISTEN to what the customer is saying to you.

For example, let's say you look at some average customer behavior. You look at every customer who has
made at least 2 purchases, and you calculate the number of days between the first and second purchases.
This number is called "latency" - the number of days between two customer events. Perhaps you find it to
be 30 days.

Now, look at your One-Time buyers. If a customer has not made a second purchase by 30 days after the
first purchase, the customer is not acting like an "average" multi-purchase customer. The customer data is
telling you something is wrong, and you should react to it with a promotion. This is an example of the data
speaking for the customer; you have to learn how to listen.
This site and the Drilling Down book are all about how to discover, manage, and listen to customer data.
The data is speaking for the customer, telling you by its very existence (or non-existence) there has been an
action (or non-action) waiting for a reaction.

Customer Life time value:

In marketing, customer lifetime value (CLV), lifetime customer value (LCV), or lifetime value (LTV) is
the net present value of the cash flows attributed to the relationship with a customer. The use of customer
lifetime value as a marketing metric tends to place greater emphasis on customer service and long-term
customer satisfaction, rather than on maximizing short-term sales. One of the first accounts of it is in the
1988 book Database Marketing, and includes detailed worked examples.

Customer lifetime value has intuitive appeal as a marketing concept, because in theory it represents exactly
how much each customer is worth in monetary terms, and therefore exactly how much a marketing
department should be willing to spend to acquire each customer. In reality, it is difficult to make accurate
calculations of customer lifetime value. The specific calculation depends on the nature of the customer
relationship. Customer relationships are often divided into two categories. In contractual or retention
situations, customers who do not renew are considered "lost for good". Magazine subscriptions and car
insurance are examples of customer retention situations. The other category is referred to as customer
migrations situations. In customer migration situations, a customer who does not buy (in a given period or
from a given catalog) is still considered a customer of the firm because she may very well buy at some
point in the future. In customer retention situations, the firm knows when the relationship is over. One of
the challenges for firms in customer migration situations is that the firm may not know when the
relationship is over (as far as the customer is concerned).

Everyone wants to retain his or her existing customers. Few companies, however, are implementing
positive strategies aimed at retention. Most companies are organized for acquisition. Their advertising and
sales programs are designed to find and promote their products and services to new customers. The
companies are organized on a product or brand basis, not on a customer segment basis. While they all have
customer service departments, and most have a customer service toll free number, they lack an integrated
marketing strategy that is directed at retention, and that defines retention as the measurement of success. In
this article, we will explore the meaning of a retention strategy, showing how it can be set up, and how
lifetime value can be used to measure it.
Q.3 What do you understand by customer defined service standards? Explain it’s relevant
in services marketing.

Ans.: Customer defined service standards:

A customer service standard is the interaction between a business and its customers. Customer service
standards are excellence, response time, accessibility, delivery time and commitment. All business leads
back to the customer in one form or another, so it is imperative that companies continuously strive to
improve the level of service they deliver. Customer service standards must be constantly monitored and
incorporated into the strategic planning of the company.

Excellence in Customer Service

Handle customers with care and reap the rewards long after the service has been given. Business image by
Clark Duffy from Fotolia.com
You must meet and exceed expectations and guarantee a quality product.
Timely

How a product is delivered is what the customer will remember. Two business -men holding
clock image by Ricardo Verde Costa from Fotolia.com
Deliver your product or service efficiently. Categorize response time. For instance, if the request is for
general information, respond to the customer no later than 24 hours after receipt of his request.

• Accessible

Be accountable, providing a contact for inquiries. telephone image by

MATTHIEU FABISIAK from Fotolia.com

• Periodically contact the customer to assess any need or special request. Provide feedback and
ideas and hear what the customer wants. Use this a tool for improving customer service.
Committed

Communicate to your customers your committment and loyalty and they will do the
same in most cases. Handshake image by Du...¡an Zidar from Fotolia.com

• Be professional, courteous and responsible to the customer

Factors necessary for appropriate service standards.

-Standardization of service behaviors and actions.

•Expert services cannot be standardized viz; Accounting, consulting, engineering, dentistry, etc.

•Recurring tasks can be standardized viz; checking in patients, weighing, billing, collecting payment, etc.
“Hard” customer defined standards. Things that can be counted, timed, or observed through audits (time,
numbers of events)

“Soft” customer defined standards.

Opinion-based measures that cannot be observed and must be collected by

talking to customers (perceptions, beliefs)

Q.4. Mentor Institute provides educational support services to different colleges and
universities. Now, they want to start consulting services for distance education programmes
and career counseling. Suggest some steps on how to market their consulting services once it
gets initiated.

Ans.: Steps for marketing: The process of setting objectives consists of the following three levels:

1. Level – 1: Setting broad marketing objectives. The broad marketing objectives would be concerned with
long-term profitability, and be related to the organizational objectives.

2. Level – 2: Setting objectives for key result area. Here the objectives are defined more precisely and
specifically relating to different functions.

3. Level – 3: Setting subjective to support the broad objectives; these objectives would be based on sales
volume goals, geographical expansion, and service offering extension.
Marketing objectives help determine where the organisation want to go and also provide yardsticks by
which it can measure its performance. Marketing objectives should meet several criteria, and should be:

· Relevant – the marketing objective should be relevant in relation to the corporate mission and objectives.

· Specific – it should focus on clear and identifiable goals.

· Measurable – the objective should be quantified.

· Time Bound – it should have an achievement day attached to it.

· Challenging – objectives should be realizable, but should stretch people in achieving them.

· Focused – marketing objectives should focus on issues relating to both the markets – products and
services, which the company wishes to address.

Marketing objectives and strategies to achieve the target include:

• Increased productivity
• Sales force effectiveness;
• More efficient distribution;
• Pricing strategies; and
• Improved customers service
·
Increased revenues from:
• Market penetration;
• Service development;
• Market development; and
• Diversification
·
Decrease expenses:
• Scale related; and
• Non-scale related

Each of these elements needs to be systematically investigated to determine its potential impact on reducing
the identified gap. Further there is Estimated Expected Results and Identify Alternative Mixes in Service
Quality. They are

a) Estimated Expected Results in service quality:

The purpose of examining the expected results from the marketing strategies is to ensure that marketing
strategies will actually deliver the desired marketing objectives. Once the strategies have been determined
and decisions made about the marketing mix to be developed in each market segment, the financial
implications of the strategies need to be evaluated. Estimating expected results involves the detailed review
of sales revenues, cost of sales, marketing costs, operating expenses and overhead expenses. The financial
analysis should show that the strategy would produce anticipated results. The marketing strategies need to
be examined further to see how they can be redeveloped to achieve the desired results. This, like all steps in
the marketing plan, may be an interactive process.
b) Identify Alternative Mixes in service quality:

The purpose of considering alternative mixes is to discover if more effective marketing strategy is available
before the plan is implemented. A marketing manager may evaluate a number of mixes, using both analysis
and trial and error to find the best use of available resources, before selecting the final marketing mix to be
implemented as marketing programmes.

If the proposed marketing strategy is not likely to achieve the desired level of expected results, other
marketing strategies will need to be considered. However, even if the proposed marketing strategies will
deliver the desired results, alternative marketing mixes should also be investigated to determine if they
could deliver improved results. Thus, several further sets of marketing strategies should be developed and
evaluated.

At this point the development of contingency plans should be considered. Although it is not possible to
establish a contingency plan for every eventuality, the impact of different sets of assumptions should be
assessed and, where appropriate, broad contingency plans needs to be considered. In spite of best
intentions, changed situations can force marketing strategies to be altered.

It is especially important that responsibility for determining why variances have occurred, and for taking
appropriate corrective action. It is delegated to specific managers to ensure that plan objectives can be met
by marshalling the necessary resources and by taking positive and timely action.

Phase – IV: Resource Allocation and Monitoring

The list phase in the marketing planning process is resource allocation and monitoring. This involves two
final steps: marketing programmes; and monitoring control and review.

Marketing Programs for Service Quality

The purpose of marketing programmes is to ensure that all firm’s staff know what actions they are
responsible for and to determine how to allocate physical and financial resources available to secure
success in each marketing segment.

Each element of the marketing mix will have its own specific programmes, which in turn will be linked to
specific marketing objectives. Marketing programmes are similar to marketing objectives and strategies in
that they should do the following:

· Have an established timetable and be able to be carried out within a defined period of time.

· Identify the resources needed to carry them out.

· Provide for monitoring and control of performance.

Programmes should clearly describe the resources needed to accomplish marketing strategies and the time
horizon in which to achieve them. Programmes provide the opportunity for all members of the marketing
team to work together in an integrated manner.

Programmers involve the development of a practical, fact based, results oriented approach, which act as a
road map for management to implement marketing activities. A detailed marketing budget needs to be
prepared at this point to ensure that the necessary budget allocations reflecting projected costs are available
to carry out the programmes.
A further task within programmes is the development and prioritization of important marketing activities,
subjects and tactics. This involves the preparation of marketing activities, sub activities and tactics. This
involves the preparation of marketing programme timetables to help ensure that key tasks are accomplished
on schedule.

Marketing programmes need to be closely linked with the final stage of monitoring control and review to
ensure success.

Q. 5 Duress Components Ltd. wants to use technology in its CRM system. Kindly help the
company with suitable suggestions.

Ans.: Developing technology for CRM:

A service company should focus especially on customer service and keep customer satisfaction levels
under constant review. Usually there is a need for a complaint system, which allows unhappy customers to
be identified, and corrective action taken. Above all else, a service company needs to stay in touch with the
changing needs of the customers in terms of customer service.

Channels

A channel, according to the American Marketing Association, is the structure of intra company
organization units and extra company agents and dealers wholesale and retail, through which a commodity,
product or service is marked. It includes all the stages and organizations through which a product passes
between its points of production and consumption. In the process, three participants, viz., the service
provider, intermediaries and customers are involved. The principal function of a distribution channel is to
provide a link between the production and consumption by filling away the gaps/discontinuities existing.

The discontinuities mentioned above may arise from a number of causes/some of them are:
1) Geographic separation
2) Time (in services fluctuations in supply and demand are generally unlikely and so this factor may not
have much relevance),
3) Information,
4) Ownership (this also has little importance in services as transfer of legal title to ownership rarely
occurs),
5) Sorting.
A channel may be simple when there is a single, direct transaction between producers and consumers. This
form of distribution is common in some service sectors (e.g. professional services).
When there is a concentrated production and the consumers are widely diffused, different channels develop
and coexist with a variety of intermediaries such as advertising agencies which act as brokers for a number
of related services including media buying, print and production. Travel agents act as middlemen for
airlines, hotels and leisure services. A recruitment agency provides a service as intermediary between
employer and employee.
The broad channel options for services are outlined in the following figure and include:
· Direct sales e.g. accounting and management consulting services.
· Agent or broker, insurance broker, estate agent and travel agent.
· Sellers and buyers agents or brokers, e.g. stockbrokers and affinity groups.
· Franchises and contracted service deliverers e.g. fast food, car services and dry-cleaning.
This illustrates that although many services are intangible and inseparable and direct sales may be the
appropriate channel, services can be distributed by considerable number of other channel options. In
financial services sector range of distribution options are being used. These include the following.

· Direct face-to-face sales

· Use of tied or untied sales representatives
· Direct mail
· Telemarketing
· Computer networked distribution
· Professional service firms, e.g. estate agents and consultants
· Cable TV
One approach to considering the channels is how they compare with those of the competitors, is suggested
by Light. His framework has these main sectors:
· The channel participants and their relationship
· The various functions that participants perform using material and technological supports.
· The service they create.

Location and Channel Choice

The choice of both distribution and channels for service largely depends on the particular requirements of
the market and the nature of the service itself. Technology has some instances, changed the advantage to be
gained by proximity of a service to the customers market. For example, electronic banking has removed the
need for banks to deliver their services. Many banking transactions can now be performed easily without
personal contact. Technology has allowed changes in the location decision in many service industries, but
the decision o where and how to distribute services is often still dependent on the needs of the customers.

Services delivery channels are often the service providers. This highlights the importance of the selection
of the appropriate delivery channel.

CRM uses the electronic media to operate and simplify customer related business processes, reducing the
cost of customer facing operations. While achieving the CRM’s primary goal is to enhance the customer
experience, it ensures that various companies share a single view of the customers, and that the customers
get a single view of the company.

CRM derives from CRM techniques, which leveraged call center and direct marketing technology to
market mass-produced goods and services to small market sub-segments. CRM expands on this technology
by using next generation segmentation and analysis technologies, comprehensive customer interaction data
multi-channel communications and one-to-one interactions to market customized products and services to
ever-more precise segments.

CRM is essentially the adoption of CRM in the commerce environment and helps build and sustain
customer relationships using the net. It is a net based business strategy that requires development of a set of
integrated software applications to deal with all aspects of customer interactions like sales, marketing, field
support and customer service. It provides closed loop integration between the outbound marketing efforts
and the inbound customer responses to these, by analyzing them for efficient business operations. Thus, a
CRM exercise would mainly focused upon acquiring new customers, enhancing profitability of existing
customers, segment high value customers and maximize lifetime value of profitable customers.

In simplest terms CRM provides companies with a means to conduct interactive, personalized and relevant
communications with customers across both electronic and traditional channels. It utilizes a complete view
of the customer to make decisions about messaging, offers and channel delivery.

It synchronizes communications across otherwise disjoint customer-facing systems. It adheres to

permission-based practices respecting individual’s preferences regarding how and whether they wish to
communicate with you and it focuses on understanding how the economics of customer relationships affect
the business.

Thus precisely, CRM is customer centric on-line business model that optimizes the customer experience
across all phases of the on-line customer life-style, using a personalized and customized approach to
interact with prospects and customers.

Q. 6 a. What do you mean by CRM? Is it important in services marketing?

Ans.: CRM Definitions

CRM (Customer relationship management), which means “The relationship management of a customer by
an organization”

CRM means “The Goal of keeping the customers for the long term benefit of an organization”

CRM means “Acquiring, Developing and retaining satisfied royal customer, achieving profitable growth
and creating economic value in company’s brand”.

Finally CRM means “the establishing, the developing, the strengthening, and the trusting of good values
among the customer for company’s brand.

CRM is not a new concept but an age-old practice, which is on the rise because of the benefits it offers,
especially in the present market scenario.

So, CRM today is a discipline as well as set of discreet software and technologies which focuses on
automating and improving business process associated with managing Customer Relationship in the areas
of sales, marketing, customer service and support. It helps the companies understand, establish and nurture
long term relationships with clients as well as help in retaining current customers.

The most important step that an organization has to take in the direction of CRM is to create an
interdisciplinary team to review how the organization interacts with each customer and determines how to
extend and improve the relationship.
Importance of CRM:

· Increase in customer partnering

· Expansion of customer base

· Reduction in advertisement and other sales promotion expenses

· Generation of more and more loyal customers

· Easy introduction of new products

· Reduction in customer recruitment cost

· Increase in customer partnering

· Increase in the number of profitable customer

Another emerging concept in CRM is maintaining and creating a relationship with the existing customers
and new customers.

The company causes customer problems solving and timely attention of their grievances and the politeness
for the acceptance of the mistakes. Many managers believe that customers are the key to profitability
considering the traditional organization. Moreover the customer’s timely help in their problems and
product-based descriptions will be present trend in the customers. The customers are the main focal point
for the organizations to sort out the problems of the products, its growth, and its competition and so on.
Hence the customer is the decider of the growth of the company.

b. Give a note on integrated service marketing mix.

Ans.: Integrated services marketing mix:

It is the coordination and integration of all marketing communication tools, avenues, functions and sources
within a company into a seamless program that maximizes the impact on consumers and other end users at
a minimal cost.

Integrated marketing communications (IMC) is a process for managing customer relationships that drive
brand value primarily through communication efforts. Such efforts often include cross-functional processes
that create and nourish profitable relationships with customers and other stakeholders by strategically
controlling or influencing all messages sent to these groups and encouraging data-driven, purposeful dialog
with them. IMC includes the coordination and integration of all marketing communication tools, avenues,
and sources within a company into a seamless program in order to maximize the impact on end users at a
minimal cost. This integration affects all firm's business-to-business, marketing channel, customer-focused,
and internally directed communications.

Integrated marketing Components:

• The Foundation - corporate image and brand management; buyer behavior; promotions
opportunity analysis.
 • Advertising Tools - advertising management, advertising design: theoretical frameworks and types
of appeals; advertising design: message strategies and executional frameworks; advertising media
selection. Advertising also reinforces brand and firm image.
• Promotional Tools - trade promotions; consumer promotions; personal selling, database
marketing, and customer relations management; public relations and sponsorship programs.
• Integration Tools - Internet Marketing; IMC for small business and entrepreneurial ventures;
evaluating and integrated marketing program.

The Internet has changed the way business is done in the current world. The variables of segmentation,
targeting and positioning are addressed differently. The way new products and services are marketed have
changed even though the aim of business in bringing economic and social values remain unchanged.
Indeed, the bottom line of increasing revenue and profit are still the same. Marketing has evolved to more
of connectedness, due to the new characteristics brought in by the Internet. Marketing was once seen as a
one way, with firms broadcasting their offerings and value proposition. Now it is seen more and more as a
conversation between marketers and customers. Marketing efforts incorporate the "marketing mix".
Promotion is one element of marketing mix. Promotional activities include advertising (by using different
media), sales promotion (sales and trades promotion), and personal selling activities. It also includes
Internet marketing, sponsorship marketing, direct marketing, database marketing and public relations.
Integration of all these promotional tools, along with other components of marketing mix, is a way to gain
an edge over a competitor.

The starting point of the IMC process is the marketing mix that includes different types of marketing,
advertising, and sales efforts. Without a complete IMC plan there is no integration or harmony between
client and customers. The goal of an organization is to create and maintain communication throughout its
own employees and throughout its customers.

Integrated marketing is based on a master marketing plan. This plan should coordinate efforts in all
components of the marketing mix. A marketing plan consists on the following steps:

Situation analysis

Marketing objectives

Marketing budget

Integrated marketing communications aims to ensure consistency of message and the complementary use of
media. The concept includes online and offline marketing channels. Online marketing channels include any
e-marketing campaigns or programs, from search engine optimization (SEO), pay-per-click, affiliate, email,
banner to latest web related channels for webinar, blog, micro-blogging, RSS, pod cast, Internet Radio, and
Internet TV. Offline marketing channels are traditional print (newspaper, magazine), mail order, public
relations, industry relations, billboard, traditional radio, and television. A company develops its integrated
marketing communication programmer using all the elements of the marketing mix (product, price, place,
and promotion). Integrated marketing communications plans are vital to achieving success. The reasons for
their importance begin with the explosion of information technologies. Channel power has shifted from
manufacturers to retailers to consumers.